Adverse action cases and the legal issues

This extract from a recent Federal Court decision in an adverse action case is useful summary of the legal issues involved in such cases.

 

“345    Part 3-1 of the FW Act is entitled “General Protections”. Amongst other things, it provides for a suite of protections designed to safeguard the exercise of “workplace rights”. One of those protections is provided for by s 340(1) of the FW Act, which provides (and, at all relevant times, provided) as follows:

Division 3 – Workplace rights

340 Protection

(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.

Note:     This subsection is a civil remedy provision (see Part 4-1).

346    Section 342(1) of the FW Act defines “adverse action”. Relevantly, an employer subjects an employee to adverse action if the employer:

(a)    dismisses the employee;

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

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

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

(FW Act, s 342(1), item 1).

347    Section 341(1) of the FW Act identifies the circumstances in which a person might be understood to possess a “workplace right”. It relevantly provides (and provided) as follows:

341     Meaning of workplace right

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

(c)     is able to make a complaint or inquiry:

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

348    Section 360 of the FW Act recognises that some adverse action might be taken for a variety of reasons, including some unrelated to reasons that Pt 3-1 of the FW Act proscribes. In order to be actionable under Pt 3-1 of the FW Act, it is sufficient that relevant adverse action is taken for reasons that include such proscribed reasons.

349    An application pleading a Pt 3-1 FW Act contravention has a special burden as such allegations are inherently serious and proceedings penal in nature. As a matter of fairness, the applicant is required to plead his or her allegations of the contravention under Pt 3-1 of the FW Act with sufficient precision to allow the respondent to know the case against it.

350    In Australian Building and Construction Commissioner v Hall and Others (2018) 261 FCR 347 per Tracey, Reeves and Bromwich JJ at [13]-[14], the Full Court said:

Stated compendiously, s 361(1) places an onus or burden on a person involved in a proceeding relating to a contravention of Pt 3-1 of the FWA to “prove otherwise” than that he or she took the contravening action for the particular reason, or with the particular intent, alleged in the applicant’s application. The consequence of a failure to discharge this burden is that it is presumed against the person concerned with contravening action was taken for that particular reason or with that particular intent. Before this presumption operates, however, two pre-conditions must be met. First, under s 361(1)(a) the particular reason or the particular intent for the contravening action must be alleged in the application. It is with respect to that alleged reason or alleged intent that the person concerned must prove otherwise. The word “particular in s 361(1)(a) must be given its ordinary and natural meaning. Relevantly, that is: “2. being definite one, individual or single, or considered separately: each particular item. 3. Distinguished or different from others or from the ordinary; noteworthy; marked; unusual. … 6 dealing with or giving details, as an account, description, etc., of a person; detailed; minute; circumstantial”. See Susan Butler (ed), Macquarie Dictionary (7th ed, Pan Macmillan, 2017) Vol 2 p 1096.

It follows that an allegation under s 361(1)(a) must precisely and distinctly identify the alleged reason, or the alleged intent, for the contravening conduct. This need for care and precision in making the allegations in connection with which the presumption may operate is similar to that required with respect to the analogous situation of averments in criminal prosecutions…

351    Whilst there is no obligation on an applicant to establish a prima facie connection between alleged adverse action and a prohibited reason, the Full Court in Australian Red Cross Society v Queensland Nurses’ Union of Employees [2019] FCAFC 215 per Greenwood, Besanko and Rangiah JJ stated at [73] that:

It may well be appropriate to describe the requirement that the evidence is consistent with the hypothesis that the respondent was actuated by a proscribed purpose a precondition or as operating before the presumption is engaged. After all, the presumption operates and continues to operate unless the person who took the action proves otherwise. However, we do not think a conclusion to that effect resolves the issue in this case which is whether it was necessary for the Union to prove, before the presumption was engaged, that Ms Emblem engaged in protected industrial action.

352    The Court’s inquiry will always be “why did the Respondent do what it did?” This question is one of fact, which must be answered in light of all the facts established in the proceeding. In proving otherwise, the employer is entitled to adduce such evidence as is necessary to satisfy the Court that the asserted proscribed reason was not a substantive and operative reason for the adverse action alleged. Direct testimony from a decision-maker which is accepted as reliable is itself capable of discharging the burden upon an employer: Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; 248 CLR 500.

353    The Court must determine whose mind or minds is “the operative mind of [the employer] in making the decision”. It is a pure question of fact where in particular circumstances the corporate mind may be located. Further, the corporate state of mind may be located in the mind of one or more officers: National Tertiary Education Union v Royal Melbourne Institute of Technology (2013) 234 IR 139 at [29] (Gray J) (NTEU); Wood v Lord Mayor Councillors and Citizens of the City of Melbourne (1979) 41 FLR 1 at 1.

354    The Court’s inquiry into the state of mind element of an alleged contravention must be framed by the alleged adverse action around which the allegation is built. One must first go to the adverse action alleged i.e. what decision is impugned by the pleading? One must then identify whose state of mind was the operative state of mind of the respondent corporation in relation to that decision.

355    Where a decision to engage in certain action is made by way of a collective decision, the Court’s task is to focus on why those who resolved that the corporate body should conduct itself in that way were moved so to resolve: Wong at [84].

356    Where a decision has been made by an officer or group of officers, with input from others (that is, individuals other than those who decided to effect the conduct), this Court is bound by the Full Court decision in Elliott v Kodak Australasia [2001] FCA 1804. In Construction, Forestry, Mining and Energy Union v Clermont Coal [2015] FCA 1014, Reeves J, after referring to Kodak, made the following observations (at [121]):

…where the reasoning process is dispersed through an assessment process involving a number of persons, the task is much more complicated. In that situation, I consider the judgment in Kodak requires me to examine the reasoning process employed by each person whose involvement had a material effect on the ultimate decision. This inquiry does not involve a roving search of the minds of the employees of the kind rejected by Heydon J in Barclay (at [146]). Nor does it involve an objective inquiry of the kind rejected in Barclay (at [44] and [126]), nor import some “unconscious” reasoning to the ultimate decision-maker that was also rejected in Barclay (at [124] per Gummow and Hayne JJ, and [146] per Heydon J). Instead, it focuses on the conscious reasoning processes of those who had a material effect on the ultimate outcome to determine whether their reasoning processes were free of the alleged prohibited reason or reasons. If one or more of the reasons employed by one or more of them was a prohibited reason, that will impugn the ultimate decision. This is what I consider the Full Court meant by “inadvertently” adopting an “undisclosed prohibited reason” in Kodak…”

357    It is not, however, necessary for a respondent to call every person who might have influenced a particular decision. In Construction, Forestry, Mining and Energy Union v Anglo Coal [2015] FCAFC 157; 238 FCR 273 Jessup J stated at [32]-[34]:

Notwithstanding that relatively minor reservation, I am unpersuaded by the appellants’ case on appeal that her Honour’s conclusion as to Mr Power’s reasons was attended by error. While a party’s failure to lead particular evidence may tip the scales in favour of drawing an inference adverse to that party, the inference must still be fairly open on the evidence which has been called. In the present controversy, the questions presumptively in play were, first, whether the uncalled witnesses had advised Mr Power to dismiss Mr Byrne, and secondly, whether he followed that advice. At the first level, her Honour’s observation that the advice given by the three human resources staff members who did not give evidence related to matters of procedure has not been challenged. At the second level, Mr Power gave evidence, was tested on his reasons, and was believed by the trier of fact.

Although not specifically adverted to as a factor by the primary Judge, I think the circumstance that the participation of each of the three uncalled human resources staff members was limited to attendance at meetings at which others were present, either without or additionally to Mr Power, was also relevant to her Honour’s conclusion that no adverse inference should be drawn from the respondent’s omission to call them. Put the other way round, there was never an occasion when one or more of those staff members met with Mr Power in the absence of some who was called to give evidence. In respect of every occasion when Mr Power’s thinking was potentially exposed to the influence of others, at least one of those others was called as a witness.

Once the notion that, by the operation of s 361 of the FW Act, the respondent was under an obligation to call every person who might have influenced Mr Power in some way is rejected, there was nothing about the evidence, or the case generally, to justify the conclusion that the respondent ought to have called these three human resource staff members as an indispensable component of its evidentiary case. There was, correspondingly, no error in the primary Judge deciding the case by reference to the evidence which was called.

358    It is not for the Court to conduct a broad inquiry into whether Ms Peters has been subjected to a procedurally or substantively unfair outcome. Snaden J held in Wong at [81]-[83]:

Where, by way of rebuttal of the presumption established by s 361 of the FW Act, a respondent leads evidence as to why it engaged in the conduct that an applicant seeks to impugn, the relevant inquiry starts and ends with whether, in fact, those reasons relevantly actuated that conduct. It is not necessary for a respondent to prove that the reasons that actuated its conduct were procedurally or substantively fair: Khiani v Australian Bureau of Statistics [2011] FCAFC 109, [31] (Gray, Cowdroy and Reeves JJ).

Thus where, as here, a respondent employer cites, as its reasons for taking adverse action against an applicant, opinions that it formed about his or her conduct or capacity, the relevant inquiry is not whether those opinions were fairly or properly formed, or vindicated in fact. Rather and more simply, the relevant inquiry is whether the opinions were formed at all and, if they were, whether the respondent was moved to act as it did in consequence of them. A claim under Pt 3-1 of the FW Act “…is not a broad inquiry as to whether the applicant has been subject to a procedurally or substantively unfair outcome” Ermel v Duluxgroup (Australia) Pty Ltd (No 2) [2015] FCA 17, [48] (Bromberg J).”

 

 

Peters v Commonwealth of Australia [2021] FCA 1624 delivered 22 December 2021 per Anderson J