As adverse action claims increase, it's becoming very clear that properly documenting your decisions affecting your employees is crucial – but what do you need to show?
Since the Full Federal Court's decision in Barclay v The Board of Bendigo Regional Institute of Technical and Further Education  FCAFC 14, which clarified the reverse onus of proof test applicable to an adverse action claim, there have been a string of cases which have upheld such claims, including the latest Federal Magistrates Court decision in Stephens v Australian Postal Corporation  FMCA 448.
These recent cases have shown that because of the reverse onus of proof, the employer has an obligation to evidence the real reasons behind its decision in order to successfully defend an adverse action claim by an employee.
The termination of the employee
Mr Stephens was employed by Australia Post as a driver/sorter on a part-time, fixed-term contract from May 2009 until January 2010 when his employment was terminated.
Mr Stephens sustained a work injury on 3 December 2009 when he was alighting from the passenger side of the vehicle, lost his footing and twisted his hip as he stumbled. He took time off work after the incident and completed the relevant paperwork for a workers' compensation claim.
On 5 January 2010, Mr Stephens was involved in two incidents. One of those related to a missed scheduled pick-up and the other to a confrontation Mr Stephens had with his supervisor. Mr Stephens provided explanations to both of those incidents: a conversation with his area manager about his compensation claim had led to him being behind time on his pick-ups, and the confrontation, which resulted in Mr Stephens swearing at his supervisor, was a one-off incident in the heat of the moment.
Nonetheless, Australia Post terminated his employment on 7 January 2010, noting the reasons for termination as the two incidents which occurred on 5 January.
A day before the termination, the compensation section of Australia Post had received Mr Stephens' paperwork for his workers' compensation claim.
The claims made against the employer
Mr Stephens made a number of allegations against Australia Post:
- the termination was in contravention of section 340(1) of the Fair Work Act 2009 (FW Act) as the adverse action was taken because he had "workplace rights" under the Safety, Rehabilitation and Compensation Act 1988 (Cth) (SRC Act), and because he had exercised some of those rights and could exercise other rights;
- in the alternative, the termination had the reason or intention "to prevent the exercise of" his workplace rights under the SRC Act;
- the termination breached section 351 of the FW Act, since the termination was taken because of a physical disability suffered as a result of the work injury; and
- the termination was in breach of section 352 of the FW Act, since it was taken because he had been "temporarily absent from work" because of his injury.
Mr Stephens applied to the Federal Magistrates Court for an order of reinstatement.
Did Australia Post take adverse action against Mr Stephens?
Australia Post defended its actions on a number of grounds, but there were two main arguments.
First, Mr Stephens’ termination was not adverse action under section 340(1), because any benefits to which he was then entitled under the SRC Act would not be "under a workplace law" within the definition of "workplace right" as the SRC Act does not fall under the definition.
Secondly, Australia Post had overcome the reverse onus of proof by proving on the balance of probabilities that the person who made the decision, Mr Brennan, was not acting for the reasons alleged by the employee, but rather was acting only on two legitimate performance considerations:
- On 5 January 2010, Mr Stephens failed to collect mail from a business customer and in doing so had failed to provide customers with products and services and failed to exercise due care in the performance of his work; and
- On 5 January 2010, Mr Stephens used inappropriate language when engaged in a discussion with his manager and in doing so had failed to treat everyone with courtesy and respect and caused embarrassment and offence to others in the workplace.
Did Mr Stephens have a workplace right under the Safety, Rehabilitation and Compensation Act 1988?
Federal Magistrate Smith found that the scheme of the SRC Act undoubtedly regulates the relationship between employers and employees at the most basic level of that relationship. The Act imposes financial and other obligations on the employer to meet the compensation and workplace needs of its injured employees, and regulates the employees’ entitlements to compensation.
Given this finding, Australia Post could not rely on the argument that Mr Stephens did not have a right to a benefit "under a workplace law" within the definition of "workplace right".
What was the reason for the termination?
Federal Magistrate Smith was not satisfied that Australia Post had demonstrated that the employee's workplace rights was not part of the reason for termination as:
- there was an almost total lack of contemporaneous documentation as to the investigations and deliberations leading to Mr Brennan's decision;
- Mr Brennan's poor recollection of some issues;
- there was unexplained unfairness in terms of the procedures implemented;
- the decision to dismiss was disproportionate; and
- there was an unexplained failure of Australia Post to call a significant witness from its Human Resources department who advised Mr Brennan.
Federal Magistrate Smith also found that Mr Brennan, the decision-maker, was aware of Mr Stephens' work injury and compensation claim before he decided to terminate his employment.
Given that the employee had an otherwise clean record, and the lack of comprehensive evidence of the real reasons for the termination, Federal Magistrate Smith concluded 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 advisors’ 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".
As the employer could not satisfy the reverse onus of proof, Federal Magistrate Smith ultimately found that adverse action had been taken against Mr Stephens because of his right to access workers’ compensation following a workplace injury, and that he had been discriminated against because of the physical disability arising from the injury. He ordered Mr Stephens' reinstatement.
What does this mean for employers?
For employers, this means that comprehensive and compelling evidence of the decision-making which leads to adverse action needs to be adduced in order to overcome the reverse onus and successfully defend a claim of adverse action.
Such evidence may be, but is not limited to:
- contemporaneous evidence of the factors considered in the decision-making process;
- investigation reports;
- evidence from those that advised the ultimate decision-maker;
- being able to demonstrate that the decision to dismiss was proportionate to the alleged unsatisfactory performance/conduct; and
- in some instances being able to demonstrate that the decision was made by a person without knowledge of the particular exercise of a workplace right, such that that workplace right could not have been the reason for the decision.
In particular cases, employers need to consider whether the exercise of a workplace right by an employee and the reasons for termination based upon the employee's conduct/performance can be appropriately separated and defended, or whether the legal risk of adverse action complaint is too high.
Thanks to Vanja Bulut for her help in writing this article