High Court Picks the “Scab” Off  Adverse Action Case

We have all heard about adverse action and by now most of you know that it is unlawful for an employer to take adverse action against an employee because they are a union member or have engaged in lawful industrial activity. But what if an employee breaches company policies whilst engaging in industrial activity? What if they bully another employee whilst acting in their capacity as a union member? Are the employer’s hands tied? A recent ruling of the High Court has dealt with these issues.

The Law on Adverse Action and Industrial Activities

The Fair Work Act 2009 (Cth) (FW Act) prohibits the taking of adverse action against a person because that person is (or was) a union member, or engages (or has engaged) in lawful industrial activity.

The meaning of whether a person “engages in industrial activity” in the FW Act covers a number of circumstances. It includes organising or promoting lawful industrial activity, encouraging or participating in union promoted lawful industrial activity, and representing or advancing the views or interests of a union.

If the industrial action is found to be one of the reasons for an employer taking adverse action against an employee this is sufficient to found a claim under section 346 of the FW Act. There is no need for it to be the sole reason. The onus falls on the employer to establish that the action was not taken because of a prohibited reason.

What Happened in the BHP Case

During 2012, several employees of BHP Coal Pty Ltd (BHP) who  were members of the CFMEU, engaged in protected industrial action during negotiations for a new enterprise agreement. The CFMEU  had organised a stop-work protest at the entrance of the workplace. One of these employees waved a sign at the mine’s entrance which read:

The sign was aimed at non-striking employees entering the workplace, who complained to BHP that they felt intimidated by  the sign. BHP investigated the sign-waving employee’s conduct and terminated his employment. The reasons given in support of his termination  were:

  • the word “scab” was inappropriate, offensive, humiliating, harassing, intimidating and violated BHP‘s workplace conduct policy;
  • the employee was well aware of the policy;
  • the employee demonstrated arrogance when concerns with his conduct were raised;
  • the employee’s conduct was considered antagonistic to the mine site’s culture.

Federal Court Decision

The CFMEU commenced proceedings on the employee’s behalf, alleging a breach of section 346(b) of the FW Act. The Federal Court judge heard evidence from BHP’s site General Manager, that the employee had been dismissed because the language used on his sign was contrary to BHP Coal’s culture and policies.

Whilst accepting this evidence to a degree, the trial judge ruled in favour of the CFMEU, finding that the reasons given by BHP could not be distinguished from reasons relating to the employee’s participation in the industrial action. The employee was reinstated and a civil penalty was imposed on BHP as a result.

Full Federal Court Decision

BHP appealed the decision to the Full Court of the Federal Court, which reversed the decision in 2013. The Full Court found that the trial judge should have accepted the General Manager’s reasoning provided for the dismissal as determinative of the issue. The fact that the holding of the sign constituted protected industrial action was irrelevant, as the employee had been dismissed for breaching BHP Coal’s policies and for being “arrogant” and “antagonistic” during BHP’s investigation.

High Court Decision

The CFMEU appealed the Full Court’s decision to the High Court, which handed down its decision last month.

The High Court asked itself– what was it which motivated BHP to dismiss the employee? This question is distinct from the question of whether the termination was connected to the employee’s participation in the industrial activity.

In accepting the General Manager’s evidence, the majority of the High Court found that BHP did not terminate the employee because he engaged in industrial activity or advanced the CFMEU’s interests. The Court found that the fact that the conduct which warranted  the disciplinary action was connected to industrial activity did not mean that the disciplinary action was taken because the employee engaged in the industrial activity. The appeal was therefore dismissed.

Implications for Employers

The result may well have been different if the High Court had not accepted the General Manager’s evidence as to the reasons for the decision. It is therefore imperative that all decisions are carefully documented and investigations into suspected misconduct are thorough and impartial.

The High Court’s decision however was not unanimous, and the two dissenting judges found that the reasons for dismissal could not be disassociated from reasons relating to the employee’s participation in lawful industrial activity. Employers therefore need to be extra cautious when considering disciplinary action against an employee which relates to his or her conduct during industrial activities. Employees should be treated consistently and in accordance with company policies. Employers should also ensure their policies are up to date and that employees are aware of them.

Did You Know?

On 14 October 2014 the federal government announced that it intends to adopt a number of recommendations made in the recent Independent Review into Integrity in the Subclass 457 Programme “Robust Foundations”. At this stage, the federal government has confirmed its intention to:

  • streamline the application process to reward low-risk applicants;
  • provide greater flexibility in relation to English language testing and skill requirements;
  • keep the minimum salary for visa holders (the Temporary Skilled Migration Income Threshold) at $53,900 for the next two years; and
  • retain the requirement for employers to provide market rates and conditions to visa holders.

It is currently unclear whether the government intends to retain the controversial requirement to undertake labour market testing for some roles, which was described in the Review as neither “fully reliable” nor effective.

A timetable has not yet been set for the reforms, however further announcements are expected.

Employer Reminder

The Fair Work Commission is currently conducting the first four year review of Modern Awards since their introduction on 1 January 2010. As part of the review, the FWC is reviewing “common issues” across multiple Modern Awards, including (among other things) annual leave entitlements. A decision is expected in relation to annual leave cashing out, excessive annual leave and EFT issues before 1 December 2014. A hearing is also being held on 1 December 2014 to review annual close downs, granting leave in advance and annual leave as part of termination payments. Keep your eye out for any updates in our December Workplace View and the resulting impact on your business (if any!).