Post-Barclay, adverse action cases still demonstrate the importance of a decision-maker's clear evidence explaining why that particular action was taken in relation to an employee.

Adverse action proceedings, or threats to bring such proceedings, appear to be increasing and are now often seen as a quasi unfair dismissal jurisdiction for senior employees who would not otherwise have access to that regime.

Last year’s decision of the High Court of Australia in Board of Board of Bendigo Regional Institute of Technical and Further Education v Barclay[1] drew significant interest from employment lawyers because it clarified the approach courts should adopt when determining whether adverse action had been taken for a prohibited reason.

Many months on, it is now worth stepping back to consider what trends are emerging in adverse action law in light of that High Court decision.

Adverse action — what are the risks?

Adverse action proceedings under the Fair Work Act 2009 (Cth) may be brought by employees who consider that adverse action has been taken against them in their employment for a discriminatory or prohibited reason.

The danger for an employer is that once an employee has established that adverse action has been taken against him or her, the onus then shifts to the employer. The employer must demonstrate that the prohibited reason was not the reason, or one of the reasons, that the adverse action was taken.

In the Bendigo v Barclay decision, the High Court confirmed that this reverse onus can often be satisfied by the employer in a straightforward way — by a court accepting evidence from the “decision-maker” that explains that the action was not taken for a prohibited reason.

Dismissal may be unfair, but it is not prohibited adverse action under the Fair Work Act

A snapshot of recent court decisions demonstrates that where the evidence of a decision-maker is accepted by a court, then the reverse onus will generally be discharged and the application will be dismissed.

In the February 2013 judgment of Wolfe v Australia and New Zealand Banking Group Ltd,[2] the applicant alleged that adverse action, including dismissal, had been taken against him for discriminatory reasons — in particular, family responsibility reasons. In that case, the court was critical of the decision-maker’s reasoning process, which it considered not to be transparent, not to be compliant with the collective agreement that was in place, and possibly to be unfair.

Nonetheless, the employer was not found to have taken adverse action for a prohibited reason. Rather, the decision-maker’s denial that he took adverse action for a discriminatory reason, coupled with a reasoning process for dismissing the employee that, although not objective, was “not … so completely irrational”,[3] were sufficient to discharge the burden of proof.

Similarly, in the March 2013 decision of Begley v Austin Health,[4] an employee who was made redundant was considered to have been treated “extremely shabbily” and “very unfairly” in the termination of her employment after having worked for an employer for almost 20 years.[5] However, despite the unfair treatment, the decision-maker gave evidence that the decision to terminate the employee’s employment was not made for a prohibited reason, and the decision-maker was found to have had sound reasons for dismissing the employee. Accordingly, the reverse onus was satisfied and the application was dismissed.

Decision maker’s evidence will not be automatically accepted

However, an employer who leads evidence from a decision-maker that adverse action was not taken for a prohibited reason will not always be successful in defending adverse action proceedings.

Rather, a court will be entitled to test and assess the reliability of any evidence given by a decision-maker.

In a case handed down by the Federal Magistrates Court in February, parts of the decision maker’s written evidence were found to be inconsistent with other evidence — including the decision-maker’s own oral evidence.[6] Accordingly, the decision-maker’s evidence was considered to be “in large part unreliable”, the reverse onus was not satisfied, and the applicant was awarded compensation of $32,872.87.

Importance of decision-maker’s evidence being led

Finally, Burke v Serco Pty Ltd,[7] a decision handed down in November 2012, demonstrates the importance of an employer leading some evidence from a decision-maker.

In that decision, the employer did not call upon the decision-maker to give evidence. The only witness called by the employer did not have any personal knowledge of the reasons for the employee’s termination and his evidence was found to have little probative value. Therefore, the employer failed to discharge the reverse onus and the employer was ordered to pay to the applicant compensation of $18,879.51, as well as a pecuniary penalty of $16,500.[8]

Conclusion

Importance of employer leading clear evidence from decision-maker

Adverse action cases decided in the intervening period since the Bendigo v Barclay decision continue to demonstrate the importance of an employer leading clear evidence from a decision-maker explaining the reason that particular action was taken in relation to an employee. While that evidence will not automatically be accepted by a court, a failure to lead any evidence from a decision will make an employer’s defence all but impossible.

Employees should think twice before bringing adverse action rather than unfair dismissal proceedings

These 2013 cases may also cause employees who have been dismissed to think twice before bringing adverse action proceedings, rather than unfair dismissal proceedings, against their former employer. While there are important advantages to bringing adverse action proceedings — including that the eligibility requirements are more relaxed and the potential compensation can be higher — in some circumstances, an employee who has arguably been unfairly dismissed will not also have been the victim of prohibited adverse action.

This article was first published in the Employment Law Bulletin, Vol 19 No 2, June 2013