A decision by an employer to subcontract out a charter job constituted the taking of adverse action against the employee under the general protections provisions of the Fair Work Act 2009 (Cth) (FWA). The Federal Court, on appeal, went on to hold that it was not unlawful because the company successfully demonstrated that the reason for the decision was a legitimate business and operational reason rather than for a prohibited purpose.

Implications for employers

Although an action may be taken by an employer which, in theory, constitutes adverse action under section 346 of the FWA, it does not necessarily follow that this will be found to be a contravention of the FWA if a legitimate business and operational reason can be proved to be the reason for the action.

Background

The Transport Workers Union of Australia (TWU) appealed a Federal Circuit Court of Australia decision alleging that the employer, Premier Motor Service Pty Ltd (Premier), contravened section 346(b) of the FWA by taking adverse action against its employee, Mr Cole, and other members of the TWU because they engaged, or proposed to engage, in industrial action. Mr Cole, the applicant, had been employed by Premier and was a member, then delegate, of the TWU for approximately 25 years.

Premier operated bus and coach services across the eastern seaboard. The bulk of Premier’s operations comprised regular and school bus run services. In addition, occasionally Premier offered private charter work to its drivers, which provided additional income for Premier and a change from regular runs for drivers.

Employees of Premier employed as bus drivers or conductors were covered by an enterprise agreement. Upon reaching its nominal expiry date, enterprise bargaining was underway. As a consequence of this bargaining, Mr Cole circulated a document at the request of the TWU to collect the names and contact details of TWU members. Mr Cole also intended to promote the TWU’s campaign to members at the depot.

Mr Cole alleged that he had entered into preliminary discussions with Premier to cover a charter job that was to take place. Mr Cole, through the TWU, also alleged that the removal of a long-standing roster sheet, which allowed drivers to indicate a willingness to accept the additional charter jobs, was an action that contravened the general protections afforded by section 346 of the FWA.

Decision at First Instance

The primary judge accepted that the apparent purpose of the form was to identify union members at a workplace to facilitate the possible future conduct of a protected action ballot by the Australian Electoral Commission.

Mr Cole’s circulation of the form “was a preliminary step which might ultimately lead to protected industrial action and hence related to taking protected industrial action. I accept that, on a broad view, this action constituted engaging in an industrial activity“, at least insofar as it constitutes conduct of the kind complained of (at [23]). His Honour also accepted that the TWU was entitled to identify its members in the expectation that bargaining at the enterprise level would be required at some future time, and that protected industrial action in support of that bargaining might become necessary depending on what occurred with respect to negotiations at the industry level (Transport Workers’ Union of Australia v Premier Motor Service Pty Ltd [2014] FCCA 9 (Primary judgment) at [24]).

None of these findings were challenged on appeal. Nonetheless, the primary judge held that no contravention of the FWA had been established.

  • First, his Honour held that, despite there being a preliminary arrangement for Mr Cole to perform the charter work, there was no adverse action taken by reason of Premier’s decision not to undertake the charter work but to subcontract it to other providers (at [26], Primary judgment at [40]).
  • Second, the removal of the roster sheet from the wall in the yard was not an adverse action because it did not destroy the drivers’ capacity to be informed of vacant permanent rosters and to have the opportunity to express an interest in taking over rosters (at [27], Primary judgment at [44]).

His Honour also found that Premier did not discharge the reverse onus of proof. That is, Premier was unable to demonstrate to the Court that the adverse action taken against Mr Cole was not because of his industrial activity.

Decision on Appeal

The central issue on appeal was whether the Federal Circuit Court had correctly held that the conduct in question did not constitute “adverse action” for the purposes of section 346(b). The TWU predominately alleged two errors in the decision at First Instance:

  1. first, in holding that the removal of a roster sheet system by which coach drivers were advised of vacancies in the roster and could express their interest in filling vacancies was not an adverse action; and
  2. second, in having regard to Premier’s reasons for “reallocating“ charter work allocated to Mr Cole, holding that the “reallocation“ was not adverse action and thereby circumventing the presumption in s 361 of the FWA that the “reallocation“ was undertaken for the impermissible purpose alleged.

The court held that Premier did not merely announce a future intention. Both Premier and Mr Cole had the expectation that the work would be undertaken and acted on that expectation. Mr Cole’s name was struck out on the office roster sheet for 10 August 2012, indicating that Mr Cole was not expected to be performing his usual route shift (at [40]). Mr Cole also recorded the job in his diary and made personal arrangements to be away from home for two nights (Primary judgment at [37]). That expectation was destroyed when the decision was taken to subcontract the charter work. The removal of the charter work did alter Mr Cole’s position to his prejudice and therefore constituted an adverse action within item 1(c) of the table in section 342(1) of the FW Act (at [47]).

Further, it did not necessarily follow from the finding that the removal of the charter work from Mr Cole was a consequence of Premier’s decision to subcontract the work and that the alteration to Mr Cole’s position fell outside item 1(c). While the question was ultimately one of degree, indirect or consequential alterations of position are caught by the definition in item 1(c) where the prejudicial alteration is real and substantial, rather than merely possible or hypothetical (at [50]).

Premier did not merely announce a future intention to provide optional additional work. Both Premier and Mr Cole had the expectation that the work would be undertaken and acted on that expectation. The failure to fulfil the expectation that Mr Cole would undertake the charter work altered his position to his prejudice given that Mr Cole found that work more attractive and pleasant than usual route work, and that charter work provided the chance to earn additional income (at [55] – [57]).

There was no basis for the complaint that the primary judge erred in finding that the removal of the vacant permanent roster sheets was not an adverse action. All drivers could still be made aware of vacant listings, through the fact that they were all in the same location, and that removal of the sheet did not prevent them becoming aware of openings (at [66]).

However, his Honour found that Premier had discharged its onus of establishing that the action was undertaken for reasons other than Mr Cole’s industrial activity. The primary judge was inconsistent in holding that the “operational reason” was the shortage of drivers and the need to ensure that Premier would cover its regular runs, and consequently, that it was a “business decision”. This, however, did not leave any room for a finding that the withdrawal of work from Mr Cole was because of any industrial action, and that this could form any substantial and operational part of Premier’s reasons (at [83]).

The Appeal was dismissed and the question of costs reserved for submissions.

Transport Workers Union of Australia v Premier Motor Service Pty Ltd [2015] FCA 650