Relief for business in general protections decision: common law contract not a “workplace instrument”

Thu, 1 Sep 2011

In the decision of Barnett v Territory Insurance Office [2011] FCA 968, the Federal Court has ruled on an important interpretation of what is a "workplace instrument" for the purposes of the general protections provisions in the Fair Work Act 2009 (Cth) ("Act").

The Court rejected an employee's claim that he had been terminated from employment for exercising a "workplace right" under his common law employment contract and held that a contract is not a "workplace instrument" for the purposes of s 341 of the Act.

The Claim

A general protections claim must satisfy a two-tiered test: firstly, does the employee have a "workplace right", and secondly, has the employer taken "adverse action" against the employee because the employee exercised that right / was prevented from exercising that right?

In Barnett, the former employee sought compensation, as a result of "adverse action" being taken against him by his employer (namely, by dismissing him) because he had exercised a workplace right under a workplace instrument by carrying out his role of managing staff in accordance with his contract.

The critical issue for determination was whether that role or responsibility of managing staff was a right under a workplace instrument for the purposes of s 341(1).

Contract not a "workplace instrument"

The employee argued his contract of employment was "made under, or recognised by, a workplace law" for the purposes of s 341(1) of the Act and therefore fell within the definition of "workplace instrument".

However, Justice Mansfield ruled that the common law contract was not a "workplace instrument" and therefore no "workplace right" had been generated under the instrument.

His Honour observed that a common law contract underpins every employment relationship which the Act applies to, and it is unlikely that the concept of recognition by a "workplace law" was intended to refer to the contract itself. His Honour accepted that the term "workplace instrument" was intended to refer to instruments which are given particular "legal effect" or "legal life" by a statutory enactment (ie. such as enterprise agreements, and transitional agreements).

Implications for employers

This decision provides clarification for employers and employees alike but provides particularly welcome relief for employers. Prior to the Court's ruling on this issue, there was a level of concern that an employment contract could have been considered as a "workplace instrument" for the purposes of general protections, thus opening the door to claims (such as this one) based on any tenuous link between adverse action and alleged infringements of nebulous "workplace rights" arising from the employment contract.

Whilst this decision narrows the scope of the general protections provisions in the Act in one respect, employers still need to be aware of the vast range of workplace rights that may be relevant in the context of any potential action being considered (ie. disciplinary action or termination) and the risks involved if an employee can establish that action was taken against them because of their exercise of a "workplace right".

If you would like further information regarding this decision or any issues affecting your business, contact a Partner from FCB Workplace Law in Sydney on (02) 9922 5188 or Melbourne on (03) 9098 9400.