The High Court's decision this morning in The Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32 means that the considerable risk and uncertainty employers faced when making decisions with an adverse effect on employees is substantially lessened and returns to the levels that were widely accepted prior to the Barclay decision.

How the Full Federal Court's test for adverse action increased the risk for employers

At trial, the judge had accepted the decision-maker's evidence that the applicant's union activity had played no part in the decision-making process.

The Full Federal Court said that this was not sufficient to discharge the reverse onus placed upon an employer to prove that adverse action was not taken because of union activity.

The majority held that the employer must "disassociate" the "real reason" from the protected attribute, and that although the subjective intention of the decision-maker was relevant it was not decisive.

In this case the majority held that the surrounding facts were sufficient to prevent the employer from successfully disassociating the reason for the action from the applicant's union activity, despite it not playing any part in the conscious decision-making process of the employer.

The High Court has eased the burden on employers

By overturning the Full Federal Court decision, the High Court has rejected what is an excessively high burden which was unlikely to have been able to be satisfied by employers in most cases.

Employers will now be able to focus on the actual reasons in the mind of the decision-maker. Provided that the Court accepts the evidence of those reasons (and the evidence that protected attributes or activities played no part in the decision-maker's decision) then the reverse onus should be satisfied.

This brings the focus of adverse action issues back to the consideration of the conscious reasons of the decision-maker and does not require analysis of unconscious or subconscious reasons.

What can employers do?

The High Court's decision, while helpful for employers, does not completely remove their risk. Employers should continue to protect themselves by:

  • understanding the adverse action / general protections laws and how they operate – including what attributes and activities are protected;
  • ensuring that the decision-making in matters that may have an adverse effect on employees is conducted for sound and substantial reasons unrelated to any protected attributes or activities; and
  • properly document the decision-making process to ensure that tangible evidence of the reasons for the decision are available for use in any proceeding.

Where to from here - legislative change?

The recent independent review of the Fair Work Act 2009 recommended that the legislation be amended to give primacy back to the subjective intention of the decision maker as the central factor in determining the reason for action to have been taken.

Given the decision of the High Court it is unlikely that legislative change will be required.