In this recent decision, the Federal Circuit Court made it clear that unfair conduct by an employer will not necessarily give the affected employee a remedy under the adverse action provisions in the Fair Work Act 2009 (Cth) (FW Act).

Implications for employers

This decision reinforces that:

  • an employee cannot obtain relief under the adverse action provisions in the FW Act merely because an employer’s conduct is unfair. Relief can only be obtained if the employer’s actions were motivated by a reason prohibited by the adverse action provisions; and
  • care must be taken in selecting employees for redundancy. In particular, employers should ensure they do not take into account prohibited reasons and keep clear records. Where there is little evidence to indicate how and why one person was chosen over another, it will be more difficult to establish that decisions were not made for prohibited reasons.

Background: relevant law

Relevantly for present purposes, section 340 of the FW Act makes it unlawful for an employer to take adverse action (such as termination of employment, injury in employment, altering an employee’s position to his or her prejudice or discriminating between employees) against an employee because the employee has an attribute protected under section 351 of the FW Act.

The list of protected attributes includes (among others) family or carer’s responsibilities.

A reverse onus of proof exists where an adverse action claim is made. That is, where the employee can demonstrate the presence of both the protected attribute and adverse action, it is up to the employer to prove that there is no causal relationship between the two.

The High Court’s decision in Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2010] HCA 32 makes it clear that where a decision-maker gives evidence that the reason for the taking of the adverse action was not motivated by the workplace right and that evidence is accepted as reliable, this will be sufficient to discharge the employer’s onus of proof. There is no need to search for the decision-maker’s “unconscious” reasons for his or her decision.

Background: facts

Mr Wolfe was an Associate Director of the ANZ FX Institutional Sales NSW team. He reported to Mr Jones, Head of Institutional FX.

Mr Wolfe was eligible to participate in the Institutional Incentive Plan and, based on his performance assessment, had received bonuses under that scheme every year since 1999.

In May 2011, Mr Wolfe commenced an extended period of annual leave and long service leave to care for his infant daughter. That period of leave was due to end on 7 October 2011.

In March 2011, another Associate Director of the FX Institutional Sales NSW team resigned. Between March and June 2011, after unsuccessful attempts to secure a replacement, a decision was made to upgrade the role to a new position of Director. The Director position was not advertised internally, but was offered to an external candidate in June 2011. However, this change was not made formally until October 2011 and the appointee did not commence work until January 2012.

In August 2011, two Associate Director positions remained. At this time, ANZ made a decision to restructure the Corporate Sales Australia team. Among other things, a decision was made to merge the two Associate Director positions. At the time, Mr Jones expressed a preference for retaining the other Associate Director, “RG”, in the remaining Associate Director role.

Employees displaced by the restructure were able to apply for other positions by way of an internal voting process. Mr Wolfe was kept appraised of the situation and while on leave applied for the remaining Associate Director position. He did not apply for any other roles.

On 7 October 2011, Mr Jones decided to appoint RG to the Associate Director position, assessing his performance as superior to Mr Wolfe’s.

Mr Wolfe was ultimately made redundant effective 22 November 2011. He was assessed as ineligible for a bonus for the 2011 review year.

Mr Wolfe claimed that the following adverse action had been taken against him because of his absence due to family responsibilities:

  • termination of his employment;
  • the failure to give him the opportunity to apply for the role of Director;
  • appointment of a new employee to the role of Director;
  • the decision to retain RG instead of Mr Wolfe; and
  • the failure to pay him a bonus for the 2011 review year.

Decision

Noting the test in Barclay and that it was not appropriate to search for a decision-maker’s “unconscious” reasons, Her Honour Whelan FM held that ANZ had not taken prohibited adverse action, for the following reasons:

  • as to the issue of the termination, the relevant agreement was not complied with; the selection process was not transparent, there was little evidence to support the Manager’s reasoning; and it was likely that the preference expressed by senior staff prior at the beginning of any formal process may have meant that rejection of the Applicant was a foregone conclusion. However, an unfair process was not necessarily evidence of prohibited adverse action and there was no evidence that the decision to terminate Mr Wolfe was taken by reason of his leave or family responsibilities;
  • Mr Wolfe had no legal right to apply for the position of Director and the evidence was that he would not have been considered for the role if he had. His position was not altered to his prejudice, as there was no real prospect of him being successful in obtaining the position. Further, there was no discrimination between him and other employees, as the role was not advertised to other internal applicants. Finally, the Director role was not a reasonable alternative to his redundancy. The role had been filled in June 2011. It was not a vacant position at the time the Applicant was a candidate for redeployment in October 2011; and
  • Mr Wolfe’s absence on leave was a factor in the ranking which led to him being denied a bonus. However, he had not been performing well prior to commencing leave. The Court was not satisfied that the ranking would have been different had he been afforded credit for his performance results during his absence which were attributable to his prior work. This was particularly the case since Mr Wolfe had engaged in misconduct by emailing confidential bank documents to his home email address, and misconduct was a relevant factor in assessing whether a bonus would be paid.

Her Honour went on to consider some ancillary issues as to vesting of shares and payment of notice. Those matters were decided in ANZ’s favour.