Adverse action; the legal principles explained

In this extract from a Federal Circuit Court decision, the approach taken to an unlawful adverse action case is explained by the trial judge.

“Consideration

  1. Ms Mercer alleges that Belgravia Health, in terminating her employment, contravened s.340(1) of the FW Act which provides as follows:

(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.

  1. Section 341(1) of the FW Act defines a “workplace right”, and provides as follows:

(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.

  1. Section 342 of the FW Act defines the meaning of “adverse action”. Relevantly, s.342(1), item 1, column 2(a) of the FW Act provides that adverse action is taken by an employer against an employee when an employer “dismisses” the employee. There is no dispute in the present circumstances that the dismissal of Ms Mercer constitutes adverse action as defined, and the real question is whether or not the adverse action was taken because of any workplace right that Ms Mercer had under s.340(1) of the FW Act, that is, whether the adverse action was taken for a prohibited reason.
  2. The word “because” in s.340 of the FW Act requires a causal link between the applicant’s workplace right and the adverse action: Russell v Institution of Engineers Australia t/a Engineers Australia [2013] FCA 1250 at [60] per Foster J. The meaning of “because” is not defined in the FW Act. Its meaning, albeit in relation to s.346 of the FW Act (which is similar terms to s.340), was discussed in Board of Bendigo Regional Institute of Technical & Further Education v Barclay & Anor [2012] HCA 32; (2012) 248 CLR 500; (2012) 86 ALJR 1044; (2012) 220 IR 445; (2012) 290 ALR 647; (2012) 64 AILR 101-722 (“Barclay”) at [100] to [104] per Gummow and Hayne JJ as follows:
  3. 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).
  4. 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.
  5. 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.
  6. 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.

  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 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.”
  2. Ms Mercer must establish that any alleged adverse action was taken “because” of the circumstances alleged and needs to “establish the existence of the circumstances as an objective fact…”: Tattsbet Limited v Morrow [2015] FCAFC 62; (2015) 233 FCR 46; (2015) 249 IR 440; (2015) 321 ALR 305 at [119] per Jessup J.
  3. If Ms Mercer can establish, on the balance of probabilities, that:
  4. a)the conduct alleged occurred;
  5. b)she has a “workplace right”; and
  6. c)Belgravia Health took “adverse action”,

the onus then shifts to the employer to prove that the adverse action was not motivated by an impermissible reason, but rather was taken for a reason unrelated to any workplace right held or exercised by Ms Mercer: Maritime Union of Australia v Geraldton Port Authority [1999] FCA 899; (1999) 93 FCR 34; (1999) 94 IR 244; (1999) 165 ALR 67; (1999) 47 AILR 4-239 at [221] per RD Nicholson J; Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333; (2011) 193 FCR 526; (2011) 205 IR 392; (2011) 63 AILR 101-330 at [368]-[369] per Barker J.

  1. The reverse onus is created by operation of s.361(1) of the FW Act which provides as follows:

(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.

  1. The principles, in determining whether an employer has proven otherwise were established in Barclay, and can be summarised as follows:
  2. a)the central question to be determined: “why was the adverse action taken?” is one of fact;
  3. b)the central question is to be answered having regard to all the facts established in the proceeding;
  4. c)the Court is concerned to determine the actual reason or reasons which motivated the decision-maker, but is not required to determine whether some proscribed reason had subconsciously influenced the decision-maker, and nor should such an inquiry be made;
  5. d)it will be extremely difficult to displace the statutory presumption in s.361 of the FW Act if no direct testimony is given by the decision-maker acting on behalf of the employer;
  6. e)even if the decision-maker gives evidence that they acted solely for non-proscribed reasons, other evidence, including contradictory evidence given by the decision-maker, may render such assertions unreliable; and
  7. f)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 of the FW Act.

See State of Victoria (Office of Public Prosecutions) v Grant [2014] FCAFC 184; (2014) 246 IR 441; (2014) 67 AILR 102-322 at [32] per Tracey and Buchanan JJ.

  1. In Barclay the High Court also observed that the purpose of s.361 of the FW Act was to place on the defendant employer the onus of proving that which lies peculiarly within the employer’s own knowledge: Barclay at [50] per French CJ and Crennan J, at [86] per Gummow and Hayne JJ, and at [149] per Heydon J, all adopting what was said in General Motors-Holdens Pty Ltd v Bowling (1976) 51 ALJR 235; (1976) 12 ALR 605 at 617 per Mason J.
  2. In Barclay the High Court also said:
  3. a)the task of a court in a proceeding alleging a contravention by reason of adverse action “… 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 …”: Barclay at [5] per French CJ and Crennan J;
  4. b)adverse action will have been found to have been taken if the prohibited reason, or reasons including the prohibited reason, for the action was a “substantial and operative reason” for the employer taking adverse action against the employee: Barclay at [104] per Gummow and Hayne JJ;
  5. c)the test is whether adverse action has been taken because of a prohibited reason: Barclay at [129] per Gummow and Hayne JJ; and
  6. d)“[e]xamining whether a particular reason was an operative or immediate reason for an action calls for an inquiry into the mental processes of the person responsible for that action”: Barclay at [140] per Heydon J.
  7. This Court in Maslen v Core Drilling Services Pty Ltd & Anor [2013] FCCA 460 at [17] per Judge Lucev in relation to the approach adopted in Barclay said that it suggested that:

… the decision-maker’s subjective intention, if accepted by the primary judge in the context of relevant objective facts, will provide a defence to an adverse action claim. Mere assertion is not enough, however, and whether an employer took adverse action for a prohibited reason is a question of fact for a primary judge to determine on the evidence, bearing in mind the employer bears an onus to show that it did not take adverse action for a prohibited reason.

  1. It follows therefore that mere declarations of innocent reason or intent in taking adverse action may not satisfy the onus upon an employer if contrary inferences are available on the facts: Barclay at [54] per French CJ and Crennan J. The question is whether the proscribed reason was a substantial and operative factor such as to constitute a proscribed reason, or whether it was an operative and immediate reason for the adverse action: Barclay at [127] per Gummow and Hayne JJ; Storey v The Monitoring Centre Pty Ltd & Ors [2015] FCCA 3310 at [128] per Judge Manousaridis. The proscribed reason does not have to be the sole reason for taking the adverse action, and a person is regarded as having taken adverse action for a particular reason if the reasons for the action include that reason: FW Act, s.360.
  2. As has been observed by both the High Court and the Federal Court it is not a breach of s.340 of the FW Act if adverse action is taken for a reason whose underlying facts coincide with the existence or exercise of a workplace right so long as the adverse action is not taken because of the existence or exercise of the workplace right: Construction, Forestry, Mining & Energy Union v BHP Coal Pty Ltd [2014] HCA 41; (2014) 253 CLR 243; (2014) 88 ALJR 980; (2014) 245 IR 354; (2014) 314 ALR 1; (2014) 66 AILR 102-268 at [20] per French CJ and Kiefel J; Construction, Forestry, Mining & Energy Union v Endeavour Coal Pty Ltd [2015] FCAFC 76; (2015) 231 FCR 150; (2015) 250 IR 422 at [32] per Jessup J.
  3. The Court observes that:
  4. a)Ms Mercer alleges that she was dismissed for a prohibited reason in contravention of s.340(1) of the FW Act;
  5. b)specifically Ms Mercer alleges she was dismissed because she:
  6. i)raised concerns about the occupational, health and safety of a colleague (“Safety Issue”): Mercer Hearing Affidavit at [8]-[13] and [25(a)]; and
  7. ii)sought to engage the dispute resolution procedure (“DRP”) set out at cl.25 of the Belgravia Leisure Certified Agreement (“BLCA”): see paragraphs 6 and 7 of Part G of the Form 2 Claim;
  8. c)it is not in dispute that Belgravia Health dismissed Ms Mercer from her employment;
  9. d)it is for Belgravia Health to prove that the dismissal was not for a prohibited reason: s.361 of the FW Act;
  10. e)the prohibited reason must be a substantial or operative factor influencing the dismissal or, alternatively, an “operative or immediate reason” for the action: Barclay at [104] per Gummow and Hayne JJ, and [140] per Heydon J; and
  11. f)if the decision-maker gives direct evidence that:
  12. i)the decision-maker did not act for a prohibited reason; and
  13. ii)that evidence is accepted as reliable,

then the burden of proof imposed by s.361 of the FW Act will be discharged: Barclay at [45] per French CJ and Crennan J.

  1. The Court has to determine who the decision-maker is in order to determine whether or not the decision-maker, or decision-makers, reason or reasons for dismissing Ms Mercer included a prohibited reason.
  2. Mr McIntosh asserts that the decision to dismiss Ms Mercer was his and his alone, and that he was thus the sole decision-maker: McIntosh Witness Statement at [10].
  3. Ms Mercer cross-examined Mr McIntosh in relation to this issue, and Mr McIntosh maintained that he made the decision to dismiss Ms Mercer: Transcript at second page 76 and second page 80.
  4. There is no doubt that Mr McIntosh spoke to both Mr Webb and Mr Farkas prior to making the decision to dismiss Ms Mercer, and that he had regard to the material in the Webb-McIntosh Email, but that the “ultimate decision” (to adopt the words in one of Ms Mercer’s questions in cross-examination: Transcript at second page 76) was his decision. Actual notification of the dismissal to Ms Mercer was made by Mr Webb as Mr McIntosh considered this to be appropriate as Mr Webb was Belgravia Health’s Centre Manager for the Loftus Recreation Centre: McIntosh Witness Statement at [12]. The Court notes that Mr Barber, to whom Ms Mercer sent an email on the evening of 22 January 2014, played no part in Mr McIntosh’s decision-making process.
  5. In all the above circumstances, the Court concludes that Mr McIntosh was the decision-maker with respect to the decision to dismiss Ms Mercer.
  6. The issue then arises as to whether or not the decision-maker, Mr McIntosh, made the decision to dismiss Ms Mercer for a prohibited reason.
  7. Mr McIntosh set his reasons out in the McIntosh Witness Statement at [10] and [11] as follows: (and see [11(g)] above) as follows:
  8. a)that Ms Mercer refused to follow reasonable directions;
  9. b)that Ms Mercer encouraged co-workers not to comply with directions; and
  10. c)that Ms Mercer abused Daniel Webb.
  11. Ms Mercer cross-examined Mr McIntosh in relation to the reasons that he gave as set out above. Much of the cross-examination related to the fairness of the reasons, whether Ms Mercer was given warnings, whether the DRP under the Certified Agreement had been invoked relative to what Ms Mercer characterised as a dispute between her and Mr Webb, and whether the reasons relied upon were in fact correct. Broadly speaking, much of the cross-examination was irrelevant, and elicited, quite properly, numerous objections from Counsel for Belgravia Health: see Transcript at second page 79, second page 80, second page 83 and second page 84.
  12. The evidence concerning the reasons for Mr McIntosh’s decision to dismiss Ms Mercer is within a very limited compass, and occurred within a period of approximately 16 to 17 hours on the mid to late afternoon of 22 January 2014 and the early morning of 23 January 2014, and reduced to its essence, comprised the following events:
  13. a)the meeting which took place between Ms Mercer and Mr Webb, and in which Mr Forster was also invited to participate, on the late afternoon of 22 January 2014;
  14. b)the sending of the Webb-Farkas Email on the evening of 22 January 2014, which does not appear to have been read by Mr McIntosh;
  15. c)the sending of the Webb-Mr McIntosh Email (with the Webb Note attached) later in the evening of 22 January 2014;
  16. d)conversations between Mr McIntosh and Mr Farkas, and Mr McIntosh and Mr Webb, early in the morning on 23 January 2014;
  17. e)Mr McIntosh’s decision to dismiss Ms Mercer being made;
  18. f)Mr McIntosh authorising Mr Webb to dismiss Ms Mercer; and
  19. g)Mr Webb advising Ms Mercer of her dismissal on the morning of 23 January 2014.
  20. Based on the evidence in the documents before Mr McIntosh, and the account of the conversations had by Mr McIntosh with Mr Farkas and Mr Webb, it is apparent that the evidence does not substantiate any of the alleged contraventions of a general protection made by Ms Mercer. There is no basis in the evidence for the allegation that Ms Mercer’s dismissal was based on a desire by Belgravia Health, or any of its officers, to prevent Ms Mercer from making, or pursuing, any workplace right that she may have had, including:
  21. a)any right to exercise dispute resolution procedures under the Certified Agreement, Mr McIntosh having not had any regard to the provisions of the Certified Agreement in making the decision to dismiss Ms Mercer: Transcript at second page 85 (Mr McIntosh’s evidence) and at second pages 93-94 (final submissions); or
  22. b)any alleged safety issue Ms Mercer might have been said to have raised with Mr Webb in the 22 January 2014 meeting.
  23. The closest the documentary evidence gets to indicating that the decision to dismiss Ms Mercer might have been based on a workplace right to make a complaint or inquiry is in that part of the Webb Note which was attached to the Webb-McIntosh Email, where Mr Webb says that he wants to ask Ms Mercer to “leave the facility and give her one week” on grounds including:
  24. Threatening to go to National HR on regular matters
  25. Advising me that “our processes are bull$hit”
  26. Even taking a very broad view of what might constitute a complaint or inquiry in the course of employment: see, for example, Murrihy v Betezy.com.au Pty Ltd [2013] FCA 908; (2013) 238 IR 307 and Evans v Trilab Pty Ltd [2014] FCCA 2464; (2014) 66 AILR 102-287, it is not apparent that what is being referred to in the part of the Webb Note set out above is a complaint or inquiry in relation to Ms Mercer’s employment. Rather, the matters referred to by Mr Webb in the Webb Note have the appearance of angry outbursts or expressions of annoyance or threats as opposed to complaints or inquiries for the purposes of s.341(1)(c)(ii) of the FW Act, and for that reason they could not be considered to be the exercise, or proposed exercise of a workplace right. Secondly, and more fundamentally, it is plain that Mr McIntosh did not base his decision to dismiss Ms Mercer on these matters, but rather on a more limited sub-set of conduct and performance related matters, as set out at [11(g)] and [33] above. And, even though the factual matrix underpinning the matters referred to by Mr Webb in the Webb Note, and the conduct and performance issues referred to by Mr McIntosh may be in part the same, Mr McIntosh’s rationale was plainly based upon the manner in which Ms Mercer conducted herself in her “discussions” with Mr Webb, rather than any possible exercise of a workplace right (assuming that it is a workplace right, which for reasons set out above, the Court does not consider it to be).
  27. In no sense does the Court consider that the reasons for Mr McIntosh’s decision, or, indeed to the extent that it is relevant, the recommendations of Mr Webb, were made to camouflage other reasons, and in particular prohibited reasons. Both Mr McIntosh and Mr Webb were steady, moderate and plausible witnesses, and entirely believable as to their evidence as to why, in Mr Webb’s case the recommendation to dismiss was made, and why in Mr McIntosh’s case, he and he alone, made the decision to dismiss Ms Mercer.
  28. It also needs to be borne in mind that the issue is not whether the reasons are right or unfair. Ultimately, even if the reasons for dismissal are wrong or unfair (and in this case the Court does not consider them to be so), and provided that they were not designed or intended to camouflage prohibited reasons (which in the Court’s view they were not in this case), the fact that the reasoning might be wrong or unfair does not alter the basis for the reasons not being prohibited reasons.
  29. One of the significant difficulties in this case was that it was apparent throughout that Ms Mercer did not appreciate that the focus of the Court’s inquiry is upon the issue of whether or not her dismissal was for a prohibited reason, despite the Court endeavouring on a number of occasions to make this plain to her: see for example Transcript at pages 18, 42, 46, 48 and second pages 80 and 95. This was not an unfair dismissal case, but Ms Mercer, particularly in her cross-examination of Mr Webb and Mr McIntosh, dealt with the evidence as if it were an unfair dismissal case, notwithstanding the Court’s advice that she needed to focus upon whether or not the dismissal was for a prohibited reason or reasons. General protections claims are quite specific and technical, and for the reasons set out above, it has not been established that there was a contravention of a general protection in this case. The proceedings demonstrate, and not for the first time, the dangers for self-represented litigants in pursuing proceedings in relation to their dismissal from employment without the benefit of proper advice as to the initiation and conduct of those proceedings.
  30. In all of the above circumstances, the Court finds that there was no contravention of a general protection by Belgravia Health in dismissing Ms Mercer from her employment.”

MERCER v BELGRAVIA HEALTH & LEISURE GROUP PTY LTD TRADING AS LOFTUS RECREATION CENTRE [2019] FCCA 2112 delivered 2 August 2019 per Lucev J