Workplace investigation and disciplinary action are adverse action

Ordinarily, the commencement of a disciplinary investigation by an employer about an employee will constitute the taking of adverse action under the general protections. Generally, the issue will then turn to whether or not it was because of the exercise of a workplace right.

“Wells Fargo concedes that adverse action was taken in terminating Mr Batista’s employment: the FW Act, s.342(1), item 1(a).

Wells Fargo does not admit that the Warning Letter, Administrative Leave Decision, the Investigation and the findings of the Investigation constitute “adverse action”. As Wells Fargo submits, Mr Batista seeks to impugn every step of the disciplinary process as “adverse action”.

It is for Mr Batista to prove that “adverse action” was taken.

Mr Batista pleads that the disciplinary action constituted adverse action as it injured him in his employment and/or altered his position to his prejudice: the FW Act, s.342(1), item 1(b) and (c).

The case law on whether the commencement of disciplinary action (including issuing a warning letter and commencing an investigation) constitutes “adverse action” is divergent (see: Jones v Queensland Tertiary Admissions Centre Ltd (No.2) [2010] FCA 399 at [81]-[82] (“Jones”); Police Federation of Australia v Nixon [2008] FCA 467 at [48] (“Nixon”); Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Visy Packaging Pty Ltd (No.3) [2013] FCA 525 at [114] (“Visy Packaging”)).

It is accepted, however, that a failure to afford natural justice during an investigation (which Mr Batista averts to in his submissions) is not “adverse action”: Jones at [116]-[122]. Overall, the Court is not concerned with the “process”. Rather, it is concerned with the “action” when determining if s.342 is met.

In Visy Packaging, it was alleged that commencing an investigation into an employee’s conduct, the suspension of an employee and the issuance of a final written warning were each “adverse action”.

Here, the Written Warning contained the following paragraph:

The above matters are viewed seriously and you are hereby being issued with a Formal Warning. The company will institute a more severe form of disciplinary action against you which could include the termination of your contract of employment should there be repeated acts of misconduct on your part.

The Court finds that the Written Warning constitutes adverse action pursuant to s.342(1), item 1(c) of the Act. As a result of the Written Warning, any conduct engaged in by Mr Batista would be “subject to regular reviews” and further conduct “could lead to a more serious form of disciplinary action” than an employee who had not received a written warning would be subjected to: Construction, Forestry, Mining and Energy Union v Coal and Allied Operations Pty Ltd (1999) 140 IR 131 at [95].

The circumstances in which an investigation into an employee’s performance and conduct can constitute “adverse action” will depend on the particular circumstances of the case: Jones at [80].

It was held in Visy Packaging that the commencement of the investigation was adverse action as it reduced the security of future employment (at [103]). It was said that an investigation which threatens the possibility of dismissal (as it did in that case) will operate to reduce the security of future employment of the employee concerned. Here, the letter Mr Batista received outlining the scope of the Investigation indicated that “corrective action” may be taken. “Corrective action” can, and did in this case, equate to dismissal. On this basis, the Court finds that the Investigation (both the commencement of it and the findings of it) constitute adverse action.

In relation to the suspension, in Visy Packaging it was also held that this action was “adverse”. The same reasoning applies here. Mr Batista, like the applicant in Visy Packaging, was advised that he could not contact “any team members”: Mr Wilson’s Affidavit at Annexure JW-40.

While the correspondence Mr Batista received relating to his being placed on administrative leave indicated “…Administrative Leave is not a form of corrective action in itself.”, and thus could be considered not to have reduced the security of Mr Batista’s future employment, the Court is nonetheless satisfied that it was “adverse action”.

It can be accepted that Wells Fargo had a right to “suspend” Mr Batista (Clause 11 of Mr Batista’s employment contract) and Mr Batista also continued on full pay during the period of administrative leave (such that it can be said he was not injured or his position altered). However, in Nixon at [46], it was noted:

However, in my view, ‘alteration’ in this context requires a substantive change in, or reduction of, the advantages enjoyed by the employee in that capacity. Merely to be subject to a disciplinary inquiry or investigation does not, without more, constitute such a substantive change. Examples of relevant substantive changes include reduction of salary, deprivation of overtime, diversion to a less congenial shift, forced taking of leave, transfer to lower duties or suspension from duties.

The Court finds that, when considered together, the Investigation and Administrative Leave Decision created a real and substantial, not merely possible or hypothetical, alteration of Mr Batista’s position: Community & Public Sector Union v Telstra Corporation Ltd [2001] FCA 267 at [17]-[18]. They were adverse action.

Overall, the Court is satisfied that adverse action has been taken against Mr Batista in the form of the disciplinary process and his dismissal.”

 

BATISTA v WELLS FARGO INTERNATIONAL FINANCE (AUSTRALIA) PTY LTD (No.2) [2020] FCCA 829 (15 April 2020) (Judge Kendall)