In reviewing a situation of disciplinary action for alleged workers’ compensation fraud, the Federal Magistrates’ Court has recently considered a broad range of issues relating to the Fair Work Act 2009 (Cth) (FW Act) adverse action jurisdiction.

Implications for employers

This case:

  • confirms the importance of an employer’s operative motive when determining whether there has been breach of the adverse action provisions in the FW Act;
  • operates as a reminder to employers to exercise caution when seeking to rely upon workers’ compensation documents to discipline or terminate employees; and
  • adds to the current conflict between cases as to what constitutes a disability for the purposes of section 351 of the FW Act, further complicating this issue.

Background - legislation

The FW Act prohibits employers taking adverse action against employees (including dismissal, alteration of the employee’s position to his or her prejudice, injuring the employee in his or her employment and discriminating between the employee and other employees) for reasons prohibited by the FW Act. Among other things, adverse action must not be taken because an employee has a disability (section 351) or has the following workplace rights (sections 340 and 341):

  • an entitlement to the benefit of, or a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or
  • ability to initiate, or participate in, a process or proceedings under workplace law or a workplace instrument; or
  • ability to make a complaint or enquiry to a person able to seek compliance with a workplace law or instrument, or to the employer in relation to the employment.

The FW Act does not forbid adverse action which is not motivated by a prohibited reason.

Also relevantly in the present context, section 572A of the Workers’ Compensation and Rehabilitation Act 2003 (Qld) (WCRA) prohibits use of workers’ compensation documents for purposes not permitted under the WCRA. We note that similar prohibitions exist in some other jurisdictions.

Background - facts

The employee, Mr Hayward, was injured while working for Leighton. His Workcover claim was accepted.

Subsequently, Leighton formed the view that Mr Hayward was prolonging the claim by misrepresenting the state of his injury. Leighton reached this conclusion based on:

  • credible reports from other staff that Mr Hayward had made fraudulent workers compensation claims in the past;
  • a medical report from a Dr Bourke suggesting that Mr Hayward’s injury was not serious; and
  • a commissioned surveillance report from an investigator, which suggested that Mr Hayward had greater physical capacity than he acknowledged.

Leighton provided the surveillance report to WorkCover, believing it was obliged by law to do so.

On 16 December 2011, Mr Donaldson and Mr Moncrieff of Leighton met with Mr Hayward and his CFMEU representative, Mr Pierce. Mr Donaldson advised Mr Hayward and Mr Pierce of Leighton’s concerns. Mr Hayward was stood down with full pay pending further investigation. This was confirmed in writing on 23 December 2011.

The CFMEU on Mr Hayward’s behalf sought compensation and penalties, claiming that Leighton had taken adverse action against Mr Hayward in respect of his rights under the WCRA.

The CFMEU also claimed that adverse action had been taken because Mr Hayward had a disability.

Decision

Burnett FM found in favour of Leighton, holding as follows.

  • The WCRA is a law which regulates and defines the employer/employee relationship and therefore is a “workplace law” for the purposes of adverse action protections.
  • Mr Hayward had two workplace rights arising from the WCRA:
    • the right to pursue a claim for applicable WorkCover entitlements; and
    • the right not to have his workers’ compensation documents (including his original claim application, Dr Bourke’s report, the surveillance report, and a summary document compiled from other workers’ compensation documents) used by Leighton in contravention of section 572A of the WCR Act.
  • Providing the surveillance report to Workcover was not in breach of section 572A, as it did not constitute a “use” of the document.
  • However, the workers’ compensation documents, with the exception of Dr Bourke’s report, had been used by Leighton in relation to its investigation in breach of section 572A (a statutory exemption applied to Dr Bourke’s report).
  • Commissioning the surveillance investigation was not an adverse action, as this did not alter Mr Hayward’s position. It was the outcome of that investigation which did so.
  • Subsequent to the investigation, Leighton did take adverse action against Mr Hayward by holding the 16 December 2011 meeting, putting its concerns to him, corresponding with him regarding those concerns, suspending him from the workplace and advising him that his employment was at risk. This altered his position to his prejudice.
  • The onus of proof therefore fell on Leighton to disprove Mr Hayward’s assertion that Leighton’s adverse action was motivated by a prohibited reason. Leighton had discharged that onus. The evidence showed that the operative reason for Leighton’s actions was not Mr Hayward’s workplace rights but instead “purely and solely” to address a concern that Mr Hayward had engaged in fraud in relation to his ongoing Workcover entitlements. There was no breach of section 340.
  • Leighton had also not breached section 351 by taking action based on Mr Hayward’s disability, as he did not have a disability within the meaning of section 12 of the FW Act. This finding is of interest as no other decision on the question of section 351 has suggested that the definition in section 12 is the one to be relied upon. This indicates that the question of what constitutes a disability for the purposes of section 351 remains open.
  • Further, Mr Hayward’s request for an injunction regarding use of the workers’ compensation documents was refused, as he was seeking to invoke the protection in order to prevent the documents being used to expose a fraud by him.

The application was dismissed.