17 September, 2012

 

Legal News & Analysis – Asia Pacific – Australia – Labour & Employment

 

In brief

 

  • In a unanimous decision, the High Court of Australia today overturned the controversial decision of the Full Court of the Federal Court in Barclay v The Board of Bendigo Regional Institute of TAFE [2011] FCAFC 14.
  • The decision is an important and welcome development for employers, particularly in the current environment where adverse action is the claim of choice for many employees and unions, and often a fall back option where there is no other obvious legal cause of action available.
  • The decision re-affirms the traditional approach of having regard to the evidence of the decision-maker in light of the established facts in deciding whether adverse action has been taken for an unlawful reason.

 

The High Court has today overturned the controversial decision of the Full Court of the Federal Court in Barclay v The Board of Bendigo Regional Institute of TAFE [2011] FCAFC 14. The Full Court's decision had made the task of defending adverse action claims far more difficult, and created a defacto immunity for misbehaving union delegates in the workplace.

 

In overturning the decision, the High Court has re-affirmed the traditional approach of having regard to the subjective intention of the decision-maker in deciding whether adverse action has been taken for an unlawful reason. If the decision-maker's evidence that he or she did not act for a proscribed reason is accepted by the court, the claim will fail because the adverse action cannot have occurred because of, or to prevent the exercise of, a protected workplace right or industrial activity.

 

In relation to the employee's status as an officer of an industrial association, Chief Justice French and Justice Crennan made the following important findings in a joint decision: …

 

[I]t is erroneous to treat the onus imposed on an employer by s 361 [of the Fair Work Act 2009 (Cth)] as being made heavier (or rendered impossible to discharge) because an employee affected by adverse action happens to be an officer of an industrial association. …

 

Central to the respondents' argument on this appeal was the contrary and incorrect view that Mr Barclay's status as an officer of an industrial association engaged in lawful industrial activity at the time that Dr Harvey took adverse action against him meant that Mr Barclay's union position and activities were inextricably entwined with the adverse action, and that Mr Barclay was therefore immune, and protected, from the adverse action. If accepted, such a position would destroy the balance between employers and employees central to the operation of s 361 … . …

 

[I]t is a related error to treat an employee's union position and activity as necessarily being a factor which must have something to do with adverse action, or which can never be dissociated from adverse action. … The onus of proving that an employee's union position and activity was not an operative factor in taking adverse action is to be discharged on the balance of probabilities in the light of all the established evidence.

 

The success of the High Court appeal is an important and welcome development for employers, particularly in the current environment where adverse action is the claim of choice for many employees and unions, and often a fall back option where there is no other obvious legal cause of action available.

 

Adverse action claims were already difficult enough for employers to defend given the reverse onus and the inconsistency in decisions, particularly those coming out of the Federal Magistrates Court, without the additional complexity added by the Full Court's decision.

 

The outcome is also consistent with the recent recommendation of the Fair Work Review Panel to reinstate the conventional approach to determining adverse action cases. Nearly every employer who made a submission to the Panel sought that the decision of the Full Court be overturned legislatively.

 

Background – how did this all come about?

 

Mr Barclay was a senior teacher at by the Board of Bendigo Regional Institute of TAFE (BRIT) and a president of the sub-branch of the AEU. He sent an email to union members employed by BRIT which stated:

 

Subject: AEU – A note of caution

 

The flurry of activity across the Institute to prepare for the upcoming reaccreditation audit is getting to the pointy end with material having been sent off for the audience to look through prior to the visit in February.

 

It has been reported by several members that they have witnessed or been asked to be part of producing false and fraudulent documents for the audit.

 

It is stating the obvious but, DO NOT AGREE TO BE PART OF ANY ATTEMPT TO CREATE FALSE/FRAUDULENT [sic] DOCUMENTATION OR PARTICIPATE IN THESE TYPES OF ACTIVITIES. If you have felt pressured to participate in this kind of activity (as have several members to date) contact the AEU and see their support and advice.

 

Mr Barclay had not, prior to sending the email, raised the allegations referred to in the email with BRIT.

 

In response, BRIT suspended Mr Barclay, required him to refrain from entering BRIT's premises, denied him access to the BRIT internet and email system and commenced disciplinary proceedings against him including asking him to show cause why he should not be subject to disciplinary action.

 

Mr Barclay applied to the Federal Court alleging BRIT had engaged in adverse action on the basis that section 346 of the Fair Work Act 2009 (Cth) prohibits an employer from taking adverse action against an employee because the employee "is … an officer or member of an industrial association" or "engages …in industrial activity".

 

BRIT conceded that the first three actions were adverse action but not the commencement of disciplinary proceedings or issuing the show cause letter. However, BRIT denied that it had engaged in the conduct for a prohibited reason. The reasons given by the CEO who had determined to take the action were:

 

  • Mr Barclay sent the email to members of the AEU employed by BRIT without first having brought to the attention of senior management the allegations that were set out in the email.
  • The terms of the email itself were such as to cause distress to members of the staff of BRIT, to bring the reputation of BRIT into question and to undermine the confidence of staff in the audit process.
  • A concern that Mr Barclay would engage in further conduct of a similar kind.

 

At first instance, Justice Tracey found that, although there was adverse action, based on the evidence of the CEO about her subjective intention for engaging in the conduct, the conduct did not occur for a prohibited reason. Justice Tracey dismissed the claims.

 

The decision of the majority of the Full Court of the Federal Court

 

Mr Barclay and the AEU appealed the decision of Justice Tracey.

 

The majority (Justices Gray and Bromberg) found that BRIT had taken unlawful adverse action against Mr Barclay, finding that the subjective intention of the decision-maker is relevant, but not determinative.

 

Their Honours considered that it was necessary to determine the "real reason" for the conduct, which was not necessarily the reason the person asserted, even if he or she may genuinely believe that he or she was motivated by that reason. The majority essentially adopted an objective approach to ascertaining the state of mind of the decision-maker and determining a decision-maker's "true" reasons.

 

In the view of the majority, it would be "impossible" for BRIT to divorce from its reasons for action the objective fact that the email was sent in Mr Barclay's capacity as union officer and that all of Mr Barclay's activities as a union officer were protected. In order for an employer to establish that it did not act for a proscribed reason, the evidence must show that the real reason was "dissociated from the circumstances" that the applicant had the particular general protection, ie protected status as union officer or protection for engaging in lawful industrial action.

 

Justice Lander dissented, finding that the central consideration should be the subjective intention of the person taking the alleged adverse action. His Honour considered that a defence would be available if the subjective motivation of the decision-maker is free from any unlawful considerations.

 

The High Court's decision

 

BRIT appealed to the High Court, which reserved its decision following a hearing on 29 March 2012.

 

The High Court allowed the appeal and quashed the orders made by the Full Court of the Federal Court and, in their place, made orders that the appeal from the first instance decision was dismissed.

 

In unanimously allowing the appeal, the High Court held that:

 

  • the decision-maker's evidence that she had not taken adverse action against Mr Barclay because of his industrial activities or affiliation but rather because of the inappropriate way in which he had raised the allegations of serious misconduct, had been accepted by the trial judge at first instance and had not been challenged before the Full Court; and
  • this evidence established that the adverse action taken against Mr Barclay had not been for a prohibited reason. 

 

The High Court's decision endorses the minority judgment of Justice Lander and re-affirms the traditional approach to determining a decision-maker's reasons for acting, as reflected in the legislative history, relevant principles of statutory construction and authority.

 

This confirms that the central consideration in defending an allegation that adverse action has been taken for an unlawful reason is the evidence of the person taking the alleged adverse action. This evidence needs to be tested in light of the surrounding circumstances and established facts but, once ascertained, will be determinative. If the decision-maker's evidence that he or she did not act for a proscribed reason is accepted by the court, the proceeding will fail because the adverse action cannot have occurred because of, or to prevent the exercise of, a protected workplace right or industrial activity.

 

The wash-up – what does it all mean?

 

The High Court's decision re-affirms the traditional approach to deciding whether a decision-maker has taken unlawful adverse action. That is:

 

  • The onus will be on the decision-maker to establish that an unlawful motivation did not play a part in the decision to take adverse action;
  • The decision-maker's evidence about his or her reason for taking adverse action can be tested in light of the surrounding circumstances and established facts (for example, by cross examination during trial); 
  • If the decision-maker establishes to the satisfaction of the Court that his or her motivation for taking adverse action was free from any unlawful consideration (ie a workplace right, industrial activity or discriminatory attribute) this will be a successful and complete defence to an adverse action claim. It will not be open to the Court to draw some objective or unconscious connection between the decision to take adverse action and the protected attribute or activity and find a contravention of the adverse action provisions.

 

The High Court has also made it clear that it is incorrect to suggest that any conduct in a union capacity – regardless of whether it is inappropriate or in breach of an employer's policies or procedures – is immune from any adverse consequence being brought by an employer (most typically disciplinary action). Rather, an employee can appropriately be disciplined for employment misconduct and a distinction can lawfully be drawn between taking action for employment misconduct and taking adverse action for unlawful reasons. No heavier onus applies to an employer where an employee affected by adverse action happens to be an officer of an industrial association.

 

For further information, please contact:

 

Rachel Bernasconi, Partner, Ashurst

rachel.bernasconi@ashurst.com

 

Michael Tamvakologos, Partner, Ashurst

quyen.le@ashurst.com

 

Quyen Le, Ashurst

bilal.rauf@ashurst.com

 

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