Federal Court clarifies scope of new adverse action provisions

20 April 2010

In the first substantive ruling under the new adverse action provisions in the Fair Work Act 2009 (Cth), the Federal Court has rejected an employee's claim that he was unlawfully suspended because of his union role and the activities he undertook in this capacity.

Facts

Mr Greg Barclay, a senior teacher at Bendigo Regional Institute of TAFE (BRIT), was also Sub-Branch President of the Australian Education Union (AEU). In his union role he forwarded an e-mail to AEU members employed by BRIT stating that he was aware of reports of serious misconduct by unnamed individuals within BRIT. He did not advise any of his line managers of the details of the misconduct either prior to or following his email.

A number of recipients forward the e-mail on to senior managers. BRIT's CEO, Dr Louise Harvey, was provided with a copy of the e-mail and copies of e-mailed comments made by other managers in response to the original e-mail. These emails were to the effect that the e-mail could potentially cause serious damage to BRIT's reputation. Mr Barclay was requested to show cause why he should not be disciplined for failing to report the misconduct referred in his e-mail to senior managers. He was suspended on full pay, had his Internet access suspended and was required not to attend BRIT premises during the period of the suspension (the adverse action).

Mr Barclay and the AEU alleged that, by taking this action, BRIT contravened various provisions of the Fair Work Act 2009, which are intended to protect the right of union officials and members to associate and pursue common goals.

It was alleged that the reasons BRIT had taken the adverse action against Mr Barclay included:

his union status; and
his engagement in lawful industrial activities - the forwarding of the email to AEU members at BRIT in his capacity as an industrial officer of the AEU and representing the interests of the AEU.

The Federal Court held that the issue in this case was whether the prejudicial action to which Mr Barclay has been subjected was taken by BRIT, acting through the CEO, for one or more of the reasons proscribed by the Act.

The Court accepted Dr Harvey's evidence that the employee was suspended because the allegations against him were serious and there was concern that, if not suspended, he might cause further damage to the reputation of BRIT and its staff. The decision to suspend him was made to provide him with the opportunity to respond to BRIT's specific concerns that:

the allegations of fraudulent conduct were made without first being raised senior management;
the language used in the e-mail was bound to cause distress to members of staff, bring the reputation of BRIT into question and undermine staff confidence in the Audit process; and
the employee was employed in the Unit responsible for overseeing the preparation of the Audit process.

The CEO denied that any adverse action was taken because of Mr Barclay's membership of the AEU or because of any role he held within that organisation or because he had engaged in industrial activity.

The Court dismissed the application on the basis that the disciplinary action was not taken because the employee was an officer of the AEU engaging in industrial activity or exercising a workplace right. It held that the decision to require Mr Barclay to show cause was made bona fide.

Justice Tracey stated:

"... the question of whether the institution of an enquiry, the issuing of a show cause notice or the laying of disciplinary charges constitute adverse action will depend on the particular circumstances of a given case. The variables may include the rules under which the action is taken by the employer, the practical impact of the taking of the administrative action on the employee and the bona fides of the employer in instigating the administrative processes. The greater the impact on the employee the more likely it is that the employer's action will be treated as "adverse action" for the purposes of the Act".

Importantly, the legislation did not prevent an employer taking prejudicial action against an employee who was a union member, although, such action could not be mounted against an employee because they held union membership.

The Court held that even if the suspension had been unlawful, the employee had no entitlement to compensation because he suffered no loss.

This case clearly demonstrates that the fact that an employee is a union member does not give them immunity from disciplinary action. However, if evidence can be provided that the union membership even partially influenced the decision to commence disciplinary action, this may be considered adverse action within the meaning of the Fair Work Act.

Recommendations for employers

Employers should ensure that they act fairly and reasonably when dealing with disciplinary matters, transfers, demotions and alterations to the terms and conditions of employment. All disciplinary action should be initiated on a bona fide basis and in accordance with any procedural rules, and not in response to an employee exercising a workplace or industrial right.

Employers should also ensure that appropriate processes are in place to defend any adverse action claims by employees. It is recommended that all disciplinary policies are comprehensively drafted and diligently followed. Importantly, all documentation relating to the disciplinary process must contain adequate detail and be reproducible if it is to be used as evidence in support of an employer's decision if a claim for adverse action is made.

Adverse action claims can be commenced within six years of the event.

Employers should ensure that information about the new general protection provisions and the associated procedures is included in training programmes for managers.

For further information, please contact:

Nigel Inglis | Associate
Lawyers
t +61 7 3224 0364
f +61 7 3224 0230
ninglis@mullinslaw.com.au