In a recent decision, the Federal Court of Australia provided a warning to employers to refrain from using benefits such as special incentives to treat employees differently for proscribed reasons.

What happened?

Each of the parties and their employees were covered at various sites by an Enterprise Agreement which came to an end on 20 August 2011.  In late 2011, a number of employees of employers, Corinthian and Baltic, engaged in strikes, being protected industrial action.  Some employees at the sites took part in the strikes and some employees worked through the strike.

The employers decided to reward the workers who had worked through the industrial action by giving them Woolworths gift vouchers to the value of $300.  No gift card was given to those employees who had not worked during the industrial action.

The Union claimed that this conduct of Corinthian and Baltic was adverse action taken by them because the striking employees had exercised a workplace right.

The decision maker for the employers accepted, when it was put to him in cross-examination, that a reason for not distributing gift cards to certain employees was because they did not perform work during the industrial action.  The decision maker claimed that the reason the working employees received the gift card was that they showed their support for the employer during the course of the industrial action by not taking industrial action and for working under stressful conditions during a difficult time.

The decision

The Court dismissed the application because the differing treatment between the employees was not ‘because’ the employees had exercised their workplace right to take industrial action.  It was found that the fact that certain employees were taking protected action was not a ‘substantial and operating factor’ for them being denied the $300 gift voucher. 

The Court held that it needed to establish whether a consideration of whether the employee taking protected action was a ‘substantial and operative factor’ of the reason for the decision not to give them a gift card.

In this case there was overwhelming evidence that the exercise of the workplace right by the relevant employees was not the primary reason to deny vouchers to the striking workers.  The evidence clearly demonstrated that the reason for giving the gift vouchers to the employees who had not gone on strike was to reward those employees as a sign of gratitude by the company for having assisted the company to continue its business and to meet its commercial obligations during a difficult time.  The working conditions during the industrial action and its impact on the respondents were given considerable weight in this case. The operations were made more difficult by the strikes and picket lines as those attending work, whether or not union members, were often faced with abuse and intimidation. Those electing to work were frequently called upon to work longer hours than they would ordinarily have worked, and at times were called upon to do the jobs of others who were on strike. The judge noted that the industrial action put pressure on the employees who elected to work and also on the respondents to continue production to meet orders and other commercial obligations. The respondents continued to pay the non-striking workers their wages but also wanted to express their gratitude for the employees’ work which the respondents considered had been above and beyond the workers’ ordinary duties.

Lessons for employers

The decision warns employers that bonuses, gifts, gift vouchers and other special incentives should not be used to treat employees differently because they have (or have not) relied upon a workplace or legal entitlement – however, rewards given for additional work, superior performance or effort will not be discriminatory.

Giving some form of incentive to certain employees and not to others could be actionable so if such rewards are proposed employers should tread carefully in circumstances where this might lead to claims of discrimination / adverse action.

Specifically, if the discrimination was because the non-rewarded employees had exercised a workplace right (or for some other proscribed reason), this could be adverse action.