Adverse action again explained by court

Here is an extract from a very recent decision of the Federal Circuit Court which contains a classic summary of the challenges faced when a party is pursuing a general protections cases involving allegations of adverse action.

“The applicable law

  1. The Court respectfully adopts the statement of applicable law by Judge O’Sullivan in Annear v Spotless Facility Services Pty Ltd [2015] FCCA 1335 (6 July 2015) at paragraphs 31 to 54:

The legislation

The applicant’s claims raised for consideration the general protection provisions in Division 3-1 of the FW Act. The provisions of ss.340, 341, 342, 343, 344, 345, 349, 351, 360 and 361 of the FW Act are relevant.

Section 340(1) of the FW Act provides:

“(1) A person must not take adverse action against another person:

(a) because the other person:

(i) has a workplace right; or

(ii) has, or has not, exercised a workplace right; or

(iii) proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or

(b) to prevent the exercise of a workplace right by the other person.”

For the purposes of s.340(1) of the FW Act, the term ‘workplace right’ is defined in s.341(1) of the FW Act:

“(1) A person has a workplace right if the person:

(a) is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or
(b) is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; or
(c) is able to make a complaint or inquiry:

(i) to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or

(ii) if the person is an employee—in relation to his or her employment.”

A ‘workplace law’ is defined in s.12 of the FW Act and includes the FW Act and any other statutory law which regulates the employment relationship.

The circumstances in which “adverse action” is taken by an employer against an employee is set out in s.342(1) at Item 1 as follows:

“(1) The following table sets out circumstances in which a person takes adverse action against another person.

Meaning of adverse action
Item Column 1

Adverse action is taken by …

Column 2

if …

1 an employer against an employee the employer:

(a) dismisses the employee; or

(b) injures the employee in his or her employment; or

(c) alters the position of the employee to the employee’s prejudice; or

(d) discriminates between the employee and other employees of the employer.

2 a prospective employer against a prospective employee the prospective employer:

(a) refuses to employ the prospective employee; or

(b) discriminates against the prospective employee in the terms or conditions on which the prospective employer offers to employ the prospective employee.

3 a person (the principal ) who has entered into a contract for services with an independent contractor against the independent contractor, or a person employed or engaged by the independent contractor the principal:

(a) terminates the contract; or

(b) injures the independent contractor in relation to the terms and conditions of the contract; or

(c) alters the position of the independent contractor to the independent contractor’s prejudice; or

(d) refuses to make use of, or agree to make use of, services offered by the independent contractor; or

(e) refuses to supply, or agree to supply, goods or services to the independent contractor.

4 a person (the principal ) proposing to enter into a contract for services with an independent contractor against the independent contractor, or a person employed or engaged by the independent contractor the principal:

(a) refuses to engage the independent contractor; or

(b) discriminates against the independent contractor in the terms or conditions on which the principal offers to engage the independent contractor; or

(c) refuses to make use of, or agree to make use of, services offered by the independent contractor; or

(d) refuses to supply, or agree to supply, goods or services to the independent contractor.

5 an employee against his or her employer the employee:

(a) ceases work in the service of the employer; or

(b) takes industrial action against the employer.

6 an independent contractor against a person who has entered into a contract for services with the independent contractor the independent contractor:

(a) ceases work under the contract; or

(b) takes industrial action against the person.

7 an industrial association, or an officer or member of an industrial association, against a person the industrial association, or the officer or member of the industrial association:

(a) organises or takes industrial action against the person; or

(b) takes action that has the effect, directly or indirectly, of prejudicing the person in the person’s employment or prospective employment; or

(c) if the person is an independent contractor–takes action that has the effect, directly or indirectly, of prejudicing the independent contractor in relation to a contract for services; or

(d) if the person is a member of the association–imposes a penalty, forfeiture or disability of any kind on the member (other than in relation to money legally owed to the association by the member).

Section 343 of the FW Act provides as follows:

“(1) A person must not organise or take, or threaten to organise or take, any action against another person with intent to coerce the other person, or a third person, to:

(i) exercise or not exercise, or propose to exercise or not exercise, a workplace right; or
(ii) exercise, or propose to exercise, a workplace right in a particular way.”

Section 344 of the FW Act provides as follows:

“An employer must not exert undue influence or undue pressure on an employee in relation to a decision by the employee to:

(a) make, or not make, an agreement or arrangement under the National Employment Standards; or
(b) make, or not make, an agreement or arrangement under a term of a modern award or enterprise agreement that is permitted to be included in the award or agreement under subsection 55(2); or
(c) agree to, or terminate, an individual flexibility arrangement; or
(d) accept a guarantee of annual earnings; or
(e) agree, or not agree, to a deduction from amounts payable to the employee in relation to the performance of work.”

Section 345 of the FW Act provides:

“(1) A person must not knowingly or recklessly make a false or misleading representation about:

(a) the workplace rights of another person; or
(b) the exercise, or the effect of the exercise, of a workplace right by another person.

(2) Subsection (1) does not apply if the person to whom the representation is made would not be expected to rely on it.”

Section 349 of the FW Act provides:

“(1) A person must not knowingly or recklessly make a false or misleading representation about either of the following:

(a) another person’s obligation to engage in industrial activity;

(b) another person’s obligation to disclose whether he or she, or a third person:

(i) is or is not, or was or was not, an officer or member of an industrial association; or

(ii) is or is not engaging, or has or has not engaged, in industrial activity.

(2) Subsection (1) does not apply if the person to whom the representation is made would not be expected to rely on it.”

Section 351(1) of the FW Act provides:

“(1) An employer must not take adverse action against a person who is an employee, or prospective employee, of the employer because of the person’s race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin.”

In relation to the applicant’s claims of adverse action the FW Act provides that once an applicant has established either that they have a workplace right or an attribute (for the purposes of s.351) and that they have been subject to adverse action s.361 of the FW Act operates to reverse the normal onus of proof.

Section 361 provides:

“(1) If:

(a) In an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or with a particular intent; and
(b) Taking that action for that reason or with that intent would constitute a contravention of this Part;
It is presumed, in proceedings arising from the application that the action was, or is being, taken for that reason or with that intent, unless the person proves otherwise.

(2) Subsection (1) does not apply in relation to orders for an interim injunction.”

By virtue of s.360 of the FW Act a person takes action for a particular reason if the reasons for the action include that reason.

It is also necessary to note that s.140 of the Evidence Act 1995 (Cth) deals with the question of the standard of proof in these proceedings and provides:

“(1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.

(2) Without limiting the matters that the court may take into court in deciding whether it is so satisfied, it is to take into account;

(a) the nature of the cause of action or defence; and
(b) the nature of the subject-matter of the proceeding; and
(c) the gravity of the matters alleged.”

Approach to adverse action allegations

The leading authority on the approach to the adverse action provisions of the FW Act is Board of Bendigo Regional Institute of Technical and Further Education v Barclay and Another [2012] HCA 32; (2012) 290 ALR 647 (‘Barclay’). The High Court (French CJ, Gummow, Hayne, Heydon and Crennan JJ) upheld an appeal against a majority decision of a Full Court of the Federal Court that adverse action had been taken “because” the respondent had engaged or proposed to engage in industrial activities, an attribute proscribed by s.346 in conjunction with s.347 of the FW Act.

In that case, the High Court confirmed that the question of whether a particular action or decision was taken because of a proscribed reason, or for reasons which included a proscribed reason, is a question of fact to be determined on the whole of the evidence.

What their Honours describe as the “correct approach” is set out at paragraphs [41]-[45] of their reasons:

“41. The question of why an employer took adverse action against an employee is a question of fact arising from the operation of interdependent provisions of the Fair Work Act. These provisions must be construed together in accordance with the principles of statutory construction established by this Court, which must begin with a consideration of the text of the relevant provisions and may require consideration of the context including the general purpose and policy of the provisions.

Determining why a defendant employer took adverse action against an employee involves consideration of the decision-maker’s “particular reason” for taking adverse action (s 361(1)), and consideration of the employee’s position as an officer or member of an industrial association and engagement in industrial activity (“union position and activity”) at the time the adverse action was taken (ss 342, 346(a), 346(b), 347 and 361(1)).

Clearly a defendant employer interested in rebutting the statutory presumption in s 361 can be expected to rely in its defence on direct testimony of the decision-maker’s reason for taking the adverse action. The majority in the Full Court correctly rejected an argument put by the respondents that the introduction of the statutory expression “because” into a legislative predecessor to s 346, in place of the previous statutory expression “by reason of”, rendered irrelevant the state of mind of the decision-maker.

There is no warrant to be derived from the text of the relevant provisions of the Fair Work Act for treating the statutory expression “because” in s 346, or the statutory presumption in s 361, as requiring only an objective enquiry into a defendant employer’s reason, including any unconscious reason, for taking adverse action. The imposition of the statutory presumption in s 361, and the correlative onus on employers, naturally and ordinarily mean that direct evidence of a decision-maker as to state of mind, intent or purpose will bear upon the question of why adverse action was taken, although the central question remains “why was the adverse action taken?”

This question is one of fact, which must be answered in the light of all the facts established in the proceeding. Generally, it will be extremely difficult to displace the statutory presumption in s 361 if no direct testimony is given by the decision-maker acting on behalf of the employer. Direct evidence of the reason why a decision-maker took adverse action, which may include positive evidence that the action was not taken for a prohibited reason, may be unreliable because of other contradictory evidence given by the decision-maker or because other objective facts are proven which contradict the decision-maker’s evidence. However, direct testimony from the decision-maker which is accepted as reliable is capable of discharging the burden upon an employer even though an employee may be an officer or member of an industrial association and engage in industrial activity.”

French CJ and Crennan J also considered the effect of s.360 of the FW Act at [57] to [59]. Their Honours adopted the reasons of Mason J in General Motors Holden Pty Ltd v Bowling (1976) 136 CLR 676.

At paragraphs [100] to [104], Gummow and Hayne JJ discuss the meaning of “because” in s.346 which is in similar terms to s.340 of the FW Act:

“100. The application of s 346 turns on the term “because”. This term is not defined. The term is not unique to s 346. It appears in s 340 (regarding workplace rights), s 351 (regarding discrimination), s 352 (regarding temporary absence in relation to illness or injury) and s 354 (regarding coverage by particular instruments, including provisions of the National Employment Standards).

The use in s 346(b) of the term “because” in the expression “because the other person engages … in industrial activity”, invites attention to the reasons why the decision-maker so acted. Section 360 stipulates that, for the purposes of provisions including s 346, whilst there may be multiple reasons for a particular action “a person takes action for a particular reason if the reasons for the action include that reason”. These provisions presented an issue of fact for decision by the primary judge.

Reference was made in argument to Purvis v New South Wales. That litigation concerned the application of the Disability Discrimination Act 1992 (Cth) to the suspension and expulsion of a disabled student from a State school. Section 5(1) used the expression “because of the disability”. Gummow, Hayne and Heydon JJ emphasised that s 10 of the statute stated that if an act is done for two or more reasons, one of which is the disability of a person, even if it not be the dominant or a substantial reason for doing the act, the act is taken to be done for that reason. This provision may be compared with s 360 of the Act just described.

With respect to what became s 346 of the Act, paragraph 1458 of the Explanatory Memorandum to the Fair Work Bill 2008 stated:

“Clause 360 provides that for the purposes of Part 3-1,
a person takes action for a particular reason if the reasons for the action include that reason. The formulation of this clause embodies the language in existing section 792 which appears in Part 16 of the WR Act (Freedom of Association) and includes the related jurisprudence. This phrase has been interpreted to mean that the reason must be an operative or immediate reason for the action (see Maritime Union of Australia v CSL Australia Pty Limited). The ‘sole or dominant’ reason test which applied to some protections in the WR Act does not apply in Part 3-1.” (emphasis added)

The phrase “operative or immediate reason” used in CSL is relevantly indistinguishable from the phrase “a substantial and operative factor” used by Mason J in Bowling.

In light of the legislative history of s 346 and the intention of Parliament outlined above, the reasoning of Mason J in Bowling is to be applied to s 346. An employer contravenes s 346 if it can be said that engagement by the employee in an industrial activity comprised “a substantial and operative” reason, or reasons including the reason, for the employer’s action and that this action constitutes an “adverse action” within the meaning of s 342.”

Their Honours warn at paragraph [121] of the dangers of an enquiry contrasting “objective” and “subjective” tests in applying s.346 of the FW Act. They conclude at paragraph [126]-[128]:

“126. The relevant frame of reference in this case is a statutory provision in which neither the words “objective” nor “subjective” appear. There is an inherent risk of misguidance when seeking to imply tests or requirements in the application of a statutory provision absent some persuasive basis to do so. Nothing was put in argument, nor are there any decisions of this Court, to provide such a basis. Indeed, no direct challenge was made to what had been said by Mason J in Bowling.

In determining an application under s 346 the Federal Court was to assess whether the engagement of an employee in an industrial activity was a “substantial and operative factor” as to constitute a “reason”, potentially amongst many reasons, for adverse action to be taken against that employee. In assessing the evidence led to discharge the onus upon the employer under s 361(1), the reliability and weight of such evidence was to be balanced against evidence adduced by the employee and the overall facts and circumstances of each case; but it was the reasons of the decision-maker at the time the adverse action was taken which was the focus of the inquiry.

Whilst it is true to say, as do the respondents, that there is a distinction between discharging the onus of proof and establishing that the reason for taking adverse action was not a proscribed reason, there is nothing to suggest that the conclusions drawn by the primary judge, and the findings and reasons upon which these were based, did not take this into consideration. As Lander J concluded, if the reasons for the conclusions and the facts for which they were formulated are not challenged, then the contravention of s 346 cannot be made out. This proposition should be accepted. To hold otherwise would be to endorse the view that the imposition of an onus of proof on the employer under s 361(1) creates an rebuttable presumption at law in favour of the employee.”

Heydon J said at [146]:

“To search for the “reason” for a voluntary action is to search for the reasoning actually employed by the person who acted. Nothing in the Act expressly suggests that the courts are to search for “unconscious” elements in the impugned reasoning of persons in Dr Harvey’s position. No requirement for such search can be implied. This is so if only because it would create an impossible burden on employers accused of contravening s 346 of the Act to search the minds of the employees whose conduct is said to have caused the contravention. How could an employer ever prove that there was no unconscious reason of a prohibited kind? An employer’s inquiries of the relevant employees would provoke, at best, nothing but hilarity. The employees might retort that while they could say what reasons they were conscious of, they could say nothing about those they were not conscious of.”

Given the nature of the applicant’s claim(s) it is important to note that Collier J in Jones v Queensland Tertiary Admissions Centre Ltd (No.2) [2010] FCA 399 (“Jones”) explained the nature of the onus cast upon an applicant in an application, such as this as follows:

“10. That the employee is required to first prove the existence of objective facts which are said to provide a basis for the alleged adverse action, before the onus shifts to the employer in respect of the prohibited reason, was explained by Branson J in Construction, Forestry, Mining and Energy Union v Coal and Allied Operations Pty Ltd [1999] FCA 1531; (1999) 140 IR 131 at [161]- [162] and Moore J in Rojas v Esselte Australia Pty Ltd (No 2) [2008] FCA 1585; [2008] 177 IR 306 at 321-322 [49]- [50]. To paraphrase observations of Moore J in Rojas [2008] FCA 1585; [2008] 177 IR 306 at 322, it is not sufficient for Ms Jones to simply allege that she had a workplace right and that she was the subject of adverse action – rather on the assumption that Ms Jones is able to prove these allegations, the burden is then cast on to QTAC to prove that adverse action was not taken against Ms Jones because of her workplace right for the purposes of s 340 and s 361 of the Act.”

Finally in State of Victoria (Office of Public Prosecutions) v Grant [2014] FCAFC 184 the Full Court of the Federal Court said:

“32. As the trial judge recognised the leading authority on the operation of ss 360 and 361 of the Fair Work Act in the context of Part 3-1 of that Act (which includes s 351) is Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; (2012) 248 CLR 500. The principles which informed this decision were recently reaffirmed by a majority of the High Court in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2014] HCA 41. Relevantly, these authorities establish that:

The central question to be determined is one of fact. It is: “Why was the adverse action taken?”

That question is to be answered having regard to all the facts established in the proceeding.

The Court is concerned to determine the actual reason or reasons which motivated the decision-maker. The Court is not required to determine whether some proscribed reason had subconsciously influenced the decision-maker. Nor should such an enquiry be made.

It will be “extremely difficult to displace the statutory presumption in s 361 if no direct testimony is given by the decision-maker acting on behalf of the employer.”

Even if the decision-maker gives evidence that he or she acted solely for non-prescribed reasons other evidence (including contradictory evidence given by the decision-maker) may render such assertions unreliable. If, however, the decision-maker’s testimony is accepted as reliable it will be capable of discharging the burden imposed on the employer by s 361.”

Those ‘principles’ have since been considered in a number of Full Court decisions.”

KHORRAMDEL v BLUEFLY PTY LTD [2019] FCCA 1941 delivered 6 August 2019 per Altobelli