The perils of the adverse action jurisdiction

Tue, 23 Aug 2011

Be Informed (the key points in summary)

• In Stephens v Australian Postal Corporation [2011] FMCA 448, the Federal Magistrates Court reinstated a dismissed postal worker after finding the employer took adverse action against him because he had exercised a right to access workers' compensation and because of his physical disability (which had arisen from a workplace injury).
• Decision makers must do more than determine their subjective reasons for taking action against an employee - this case continues the authority from Barclay v Bendigo TAFE that they should also have regard to their "unconscious" reasons, leaving no room for inference that there could be reasons other than their stated reasons in motivating their actions. Detailed contemporaneous notes will be of significant assistance to the Court when determining whether no other unlawful reasons existed.

The Facts and the Claims

Larry Stephens (Employee) was dismissed by Australia Post (Employer) in January 2010 and subsequently made a claim for reinstatement pursuant to the general protection provisions of the Fair Work Act 2009 (Act).

The Employer's evidence before the Federal Magistrate's Court was that it dismissed the Employee for two reasons and that these were set out in his letter of termination, being that the employee had:

1. failed to collect mail from a customer; and
   
   
2. used inappropriate language during a discussion with his Manager.

The Law

Reverse onus of proof

If an employee brings an adverse action claim and establishes they have a "workplace right" the onus of proof shifts to the employer to prove the adverse action was not taken because of that "workplace right". That is, the alleged unlawful reason for the action is presumed unless proven otherwise by an employer (s.361).

Court to determine the decision maker's reasons for particular action objectively

Recent decisions have highlighted that a Court will determine objectively what a decision maker's real reasons were for taking action in relation to an aggrieved employee. This proposition was established by the Full Court of the Federal Court in Barclay v The Board of Bendigo Regional Institution of Technical and Further Education [2011] FCAFC 14. This allows a Court to look behind the subjective reasons provided by the decision maker(s) and instead assess the "real" reason for their action based on the surrounding facts and circumstances.

The Decision

The Court ultimately found the Employer had taken adverse action in respect of the Employee's workplace rights arising from his Workers' Compensation claim and his physical disability.

In reaching his decision, Federal Magistrate Smith indicated that he struggled to accept the Employer's evidence as to its asserted reasons for the dismissal because:

• there was almost a total lack of contemporaneous documentation in connection with the investigations and deliberations leading to the decision that was ultimately made;
• the decision maker's poor memory and guarded presentation as a witness in Court;
• the surrounding circumstances which, in the view of FM Smith, pointed to unexplained unfairness of procedures;
• the disproportionate response to the misconduct and poor performance of the Employee; and
• the unexplained failure of the Employer to call a significant witness from its Human Resources department who advised the ultimate decision maker.

These factors raised substantial doubt in the mind of FM Smith that there may have been an "additional, unstated, reason" for terminating the Employee's employment and he was not satisfied the reasons specified in the termination letter or those advanced by the Employer in defence of the proceedings were "the complete, 'real', or 'true' reasons for the termination."

FM Smith noted that "A hypothesis has not been dispelled from my mind on the balance of probabilities, that the decision might have been materially influenced by the relevant manager's and his advisor's knowledge of Mr Stephens' pending workers' compensation claim, and by Australia Post's consequential possible exposure to significant obligations to provide Mr Stephens with rehabilitation and suitable light employment if he continued as an employee."

For the reasons outlined above, FM Smith was not persuaded on the balance of probabilities that the Employer had satisfied the reverse onus of proof in relation to the adverse action contraventions and made an order that the Employee be reinstated.

Lessons for Employers

There are a number of significant lessons for employers arising from this decision. In particular, the need for decision makers to create and maintain clearly documented evidence in relation to:

• an investigation;
• a disciplinary process;
• a dispute resolution process; and/or
• any decision which may adversely affect an employee.

As demonstrated in this decision, it is critical to have comprehensive documentary evidence to support and ensure the "real" reasons for a decision are accepted by a Court. Without strong and compelling evidence, an employer will find itself in a difficult position to overcome the burdensome reverse onus of proof, particularly when a Court may view the surrounding facts and circumstances objectively.

To minimise legal risks, employers should adopt a proactive and consistent style in managing workers. In particular, all decision makers need to be trained and up skilled in relation to the general protection provisions of the Act, what might constitute adverse action, and legal risks and strategies to minimise those risks.

Getting it wrong can subject an employer to having a dismissed employee reinstated or an order to pay compensation (which is uncapped). Penalties of up to $33,000 per breach for the Company can be ordered along with penalties imposed on individuals involved in contraventions of up to $6,600 per breach.

For more information on the implications of this decision and the general protection provisions of the Act in the context of your workplace, please contact one of FCB Workplace Law's Partners in Sydney on (02) 9922 5188 or Melbourne on (03) 9098 9400.