The High Court has overturned a Full Federal Court decision that an “objective” test applies when determining the question of whether an employer has taken adverse action for a reason prohibited under the Fair Work Act 2009 (Cth) (FW Act).
Implications for employers
This decision clarifies that where an employer’s subjective evidence of motivation for the taking of adverse action is not contradicted by other evidence, this is sufficient to discharge the employer’s onus of disproving an adverse action claim. There is no need for a court to apply an objective test and search for an employer’s “unconscious” reason for a decision. It is to be hoped that this will simplify an employer’s task when defending an adverse action claim.
Background - legislation
The FW Act prohibits employers taking “adverse action” against employees, where a reason for taking the action is that the employee has a “workplace right” or other protected attribute. In the case of employees, “adverse action” is defined to include dismissal, alteration of the employee’s position to his or her prejudice, injuring the employee in his or her employment, or discriminating between the employee and other employees.
Among other things, adverse action must not be taken because an employee is an officer or member of a union, or engages or proposes to engage in industrial activity.
Importantly, where an employee lodges an adverse action claim, the employee is required only to establish that he or she has a protected attribute and that adverse action has been taken. The onus then shifts to the employer to disprove the employee’s assertion that the adverse action was taken for a prohibited reason.
Background - facts
Mr Barclay was both an employee of Bendigo Regional Institute of Technical and Further Education (BRIT) and the President of the BRIT sub-branch of the Australian Education Union (AEU).
BRIT was preparing for an audit. The outcome of the audit was critical to BRIT securing funding.
Mr Barclay emailed AEU members, suggesting that BRIT managers had requested staff to prepare misleading documentation in relation to the audit and warning them not to participate. He did not raise this serious allegation with BRIT management.
Dr Harvey, the CEO of BRIT, became aware of the email. She responded by suspending Mr Barclay from access to the workplace and electronic resources and commencing a disciplinary process. The suspension was later lifted after an interlocutory hearing, but Mr Barclay remained subject to disciplinary action.
Mr Barclay claimed that Dr Harvey’s actions constituted adverse action against him as he was engaging in industrial activities in his capacity as an AEU officer.
Decision at first instance
At first instance, Justice Tracey of the Federal Court held that if an employer’s subjective evidence of motivation is accepted, this is sufficient to disprove an employee’s claim. In light of this, he considered Dr Harvey’s uncontradicted evidence, which was that she:
- took the action because she believed Mr Barclay’s conduct constituted a breach of Mr Barclay’s obligations to BRIT and of BRIT policies and did not want Mr Barclay in the workplace where he might further damage the reputation of BRIT and its staff; and
- would have taken precisely the same action against an employee who acted in the same manner but was not an AEU member or officer.
Justice Tracey found in BRIT’s favour.
Mr Barclay appealed to a Full Federal Court.
The Full Federal Court’s decision
A majority of the Full Federal Court (Justices Gray and Bromberg) overturned Justice Tracey’s decision, holding that:
- the test to be applied was an objective one. The Court’s task was to determine whether the employer’s reason for its decision was “dissociated” from the protected attribute. This required consideration of the employer’s “unconscious” reason for its decision; and
- in this case, Mr Barclay’s union status was entwined with his conduct and BRIT’s response. In sending the email, he was acting in his union capacity and so BRIT should not have taken steps to discipline Mr Barclay, but instead should have raised the matter with the AEU.
Justice Lander dissented, favouring the position taken by Justice Tracey.
BRIT appealed to the High Court. The Federal Minister for Workplace Relations intervened, supporting Mr Barclay’s position.
The High Court’s decision
In three separate decisions (one by Chief Justice French and Justice Crennan; one by Justices Gummow and Hayne; and one by Justice Heydon), the High Court unanimously found in favour of the position taken by Justices Tracey and Lander. Key findings include that:
- the question of why an employer took adverse action is one of fact;
- reliable direct evidence of the decision maker as to his or her motivation can discharge the employer’s onus of proof;
- there is no need to search for an “unconscious reason”. Justice Heydon observed that to suggest otherwise would place an “impossible burden” on employers, who could never prove there was no “unconscious” reason;
- an employer will be found to have taken adverse action if the prohibited reason was a “substantial and operative” reason for an employer taking adverse action (Justices Gummow and Hayne); and
- the onus on the employer is not heavier simply because the employee in question is an officer of an industrial association or is engaging in industrial activity. It is not necessary that “the establishment of the reason for adverse action must be entirely dissociated from an employee's union position or activities” (Chief Justice French and Justice Crennan).
Subsequent decision on costs
In a subsequent decision, 100% of the costs of the appeal were awarded in BRIT’s favour.