Adverse action issues for employers

The taking of unlawful adverse action against another party under the general protections of the Fair Work Act depends essentially upon (a) the nature of the relationship between the parties (for example employer and employee and employer and prospective employee) and (b) whether the action is prohibited. The second criteria will depend very often upon the reason for the action taken. When the issue is tested in the courts this raises evidentiary matters such as onus and burden of proof. The following extract from a recent Federal Circuit Court decision identifies the nature of the proof and level of proof required in a classic adverse action case.

“The leading case on adverse action is Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500; (2012) 290 ALR 647; (2012) 86 ALJR 1044; (2012) 220 IR 445; [2012] HCA 32. In that case, French CJ and Crennan J said:

    1. 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)), … at the time the adverse action was taken (ss 342, 346(a), 346(b), 347 and 361(1)).
    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[19], in place of the previous statutory expression “by reason of”,[20] rendered irrelevant the state of mind of the decision-maker.[21]
    1. 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?”.[22]
    1. 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.[23] 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[24] 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.[25]

  1. In Pearce, an employee who was a member of an organisation registered under the Conciliation and Arbitration Act 1904 (Cth) was dismissed from his employment. A director of the defendant employer gave evidence that the employee was not dismissed “because of being in a union”, but rather because he was dissatisfied with his wages and conditions[40]. A question arose as to whether the director’s evidence was sufficient to satisfy the onus cast upon the employer. In deciding that the director’s evidence was sufficient, the majority in Pearce recognised that mere declarations of an innocent reason or intent in taking adverse action may not satisfy the onus on an employer if contrary inferences are available on the facts[41]. In the minority, Isaacs and Higgins JJ decided that the director’s evidence of his reasons for dismissing the employee did not satisfy the onus because other evidence given by the director had contradicted it. In considering this issue, Isaacs J recognised that it is not possible to “peer into [an employer’s] mind”[42]. Equally, it is not possible in a curial process to plumb the depths of “[an employer’s] unconscious”[43].
  1. Also in Barclay, Gummow and Hayne JJ said:
    1. With respect to the operation of s 9, Barton A-CJ said[57]: “No doubt, it is an inquiry in a large measure as to motive; and no doubt also, the motive is to be inferred from facts, and mere declarations as to the mental state that prompted the employer’s action are entitled to little or no regard.”

  1. 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 [or other protected 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.

  1. 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.
  1. Additionally, in Barclay, Heydon J said:
    1. Dr Harvey gave an account of her mental processes in an affidavit. The respondents’ searching cross-examination of her is recorded over seventy pages of the trial transcript. The record of her re-examination extends over three pages of that transcript. The assessment of a witness’s mental processes is an assessment of that witness’s state of mind. It is pre-eminently a matter in which a trial judge has a considerable advantage over an appellate court. In the course of his great speech in Nocton v Lord Ashburton, Viscount Haldane LC said:[110]

“it is only in exceptional circumstances that judges of appeal, who have not seen the witness in the box, ought to differ from the finding of fact of the judge who tried the case as to the state of mind of the witness.”

The trial judge possesses great learning in the present field. He has considerable experience of oral hearings. He said that Dr Harvey “provided convincing and credible explanations of why it was that she took the steps she did”. He said that she “maintained her denials of having acted against Mr Barclay for any reason associated with his union membership, office or activities”. He concluded: “I accept her evidence. I am satisfied that she did not act for any proscribed reason. Rather, she acted for the reasons which she gave”.[111] Of course, “mere declarations” by a witness as to his or her “mental state” may not be sufficient to discharge the appellant’s burden of proof under s 361[112]. External circumstances could put into question the reliability or credibility of those declarations. But Dr Harvey’s evidence did not consist only of “mere declarations”. There was nothing to suggest that her evidence was incorrect.

  1. Significantly, s.361 of the Act creates a statutory presumption that adverse action was taken for a prohibited reason, but that presumption may be rebutted by evidence. Also significantly, s.360 of the Act recognises that there may be multiple reasons for a particular action. It is sufficient for an applicant to establish that any one of the reasons for the adverse action was a prohibited reason, provided that it was a substantial and operative reason.
  1. In addition, in Western Union and Business Solutions (Australia) v Robinson (2019) 272 FCR 547; (2019) 290 IR 414; [2019] FCAFC 181, O’Callaghan and Thawley JJ said:
    1. First, putting to one side whether any of the exceptions in s 351(2) apply, the Court’s task in determining the application of s 351(1) is to determine, on the balance of probabilities, why the employer took adverse action against the employee, and to ask whether it was for a prohibited reason or reasons which included a prohibited reason — see: Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; (2012) 248 CLR 500 (Barclay) at [5] (French CJ and Crennan J); at [101] (Gummow and Hayne JJ).
    1. Secondly, where adverse action is taken as a result of a decision made by an individual within a corporation, the identification of the operative reasons for taking the adverse action turns on an inquiry into the mental processes of the relevant individual: Barclay at [140] (Heydon J); Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2014] HCA 41; (2014) 253 CLR 243 (BHP) at [7] (French CJ and Kiefel J); [85] (Gageler J).
    1. Thirdly, the object of that inquiry is to determine the actual reasons. These are determined from all of the facts and circumstances and inferences properly drawn from them. In light of s 361, one would ordinarily expect direct evidence from the individual responsible for the employer’s action as to their reasons for that action, which may properly include positive evidence that the action was not taken for a prohibited reason. Of course such statements must be assessed against all of the facts and circumstances. In Victoria v Grant [2014] FCAFC 184; (2014) 246 IR 441 at [32], Tracey and Buchanan JJ summarised the following propositions from Barclay at 517 (French CJ and Crennan J); 542 (Gummow and Hayne JJ); 545-546 (Heydon J) and BHP at [19]-[22] (French CJ and Kiefel J); [85]-[89](Gageler J):
      • 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 proscribed 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.
  1. Also, in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2014] HCA 41; (2014) 253 CLR 243; (2014) 314 ALR 1; (2014) 88 ALJR 980; (2014) 245 IR; [2014] HCA 41 Crennan J said at [56]:

… It is open to a trier of fact to accept as honest and credible a decision-maker’s explanation of his or her decision for taking adverse action, then to weigh all the evidence (including an assertion that the decision-maker did not act for any prohibited reason) but not be satisfied that an employer has discharged the statutory onus of proving that the reasons did not include any prohibited reason.”

 

 

Heather v Hikvision Australia Pty Ltd [2021] FCCA 196 delivered 5 February 2021 per Riley J