The Federal Circuit Court has found that the Australian Baseball League did not take adverse action against a former general manager when it opted not to renew his contract after he made numerous complaints.

Implications for employers

This case illustrates that more and more employees are bringing general protections claims under the Fair Work Act 2009. To prepare for a potential claim, or to ensure a claim is avoided altogether, employers should ensure they have a good understanding of the adverse action provisions of the legislation, and should keep up to date with the evolving case law which continues to test how these provisions operate.

Employers should also ensure that clauses which stipulate an option to renew a fixed term contract are clear and provide total discretion to employers to exercise this right. On the facts of this case, Judge Vasta determined that the relevant wording which stated the employer ‘may’ extend, renew or offer an alternative contractual arrangement to the employee ensured the employer was under no obligation to renew the employee’s contract at the end of its term.

Further, not exercising an option to renew a contract at the end of a contractual term will not necessarily constitute a dismissal under section 386(2) of the Fair Work Act, so long as the contract comes to an end due to the effluxion of time and with the required amount of notice.

Background

In March 2013, the Australian Baseball League (ABL) advertised the role of General Manager of the Brisbane Bandits, one of the six teams or franchises owned by the ABL as part of its national baseball competition.

Mr Klein, an American citizen, was contacted on 14 August 2013 and after a three stage interview process was offered the General Manager role. On 12 September 2013, Mr Klein signed a one year contract which provided the ABL with the option to renew. Mr Klein was paid an annual salary with additional bonus payments and commissions payable on the Bandits reaching certain merchandising, sponsorship and ticketing sales targets.

Mr Klein arrived in Australia on 12 October 2013 and immediately commenced employment. By all accounts, the working environment Mr Klein found himself in was less than ideal. When Mr Klein commenced his duties he experienced a considerable degree of frustration at the ABL’s decision to move the Brisbane Bandits to Holloway Field. He also found there was a lack of support from the ABL in terms of payment of the club’s wages and reimbursements and, by his own evidence, Mr Klein stated that he worked 19 to 21 hour days to attempt to resolve these and numerous other difficulties he was experiencing in the role. From November 2013 to June 2014, Mr Klein sent at least 31 emails to employees and managers of the ABL raising these issues and problems, many relating to the non-payment of accounts by the ABL.

By May 2014, the ABL expressed concerns about Mr Klein’s performance at work and informed him that he needed to improve his management performance of the Bandits if he wished to stay employed. In June 2014, the ABL engaged a Mr Mark Ready as CEO of the Bandits and from that point on, Mr Klein reported to Mr Ready. In his first week of employment, Mr Ready updated the ABL with a number of sales he had made which reinforced the ABL’s view that Mr Klein’s performance was poor.

The ABL notified Mr Klein via email on 30 June 2014 that, based on his performance, they would not be exercising their option to renew his contract. They stated that the ABL may seek to employ Mr Klein in another capacity at the end of his contract term and would use the remainder of his current contract period to make that assessment.

In August 2014, it was determined that Mr Klein’s presence at work was more of a hindrance than a help. Consequently, by a letter dated 22 August 2014, Mr Klein was advised that his services were no longer required and there was no alternative offer of employment. The ABL paid Mr Klein his final salary entitlements and payment in lieu of notice.

Decision

Mr Klein described his actions in writing the 31 emails as "making complaints". He alleged that by exercising a workplace right to make these complaints, he was dismissed by the ABL in breach of section 342 of the Fair Work Act.

The key issue for Judge Vasta to consider was whether Mr Klein was dismissed within the meaning of section 386(2) of the Fair Work Act. If there was no dismissal, the matter would come to an end.

Judge Vasta first looked at Mr Klein’s contract and agreed it was in clear terms. He noted that either party could terminate the contract on one months’ notice and that by its letter of 22 August 2014, the ABL gave notice it was terminating Mr Klein’s contract.

Mr Klein argued the email of 30 June 2014, where the ABL notified Mr Klein that it would not be exercising their option to renew the contract but confirmed it "may" exercise its total discretion to offer an alternative position at the end of the current contractual term, granted him ongoing employment.

Judge Vasta said the ABL was under no obligation to renew Mr Klein’s contract and that Mr Klein had no rights to have the contract renewed. He considered that the email of 30 June 2014 did not dismiss Mr Klein, but rather, it explained what would occur between June 2014 and the expiry of the current contractual term in September. He noted it was quite instructive the word "may" was used as this led to the interpretation that the ABL "may" do something but equally "may not" do something. On that basis, Judge Vasta found Mr Klein was not dismissed. He said, "his employment came to an end because the contract of employment itself came to an end. Pursuant to s.386(2)(a) of the Fair Work Act 2009, this does not constitute a dismissal."

Judge Vasta determined that as there was no dismissal, there was no adverse action committed by the ABL. Notwithstanding this conclusion, Judge Vasta looked at what consequences would flow if there were adverse action. In particular, Judge Vasta considered that the ABL’s decision not to renew the contract was based on a combination of the following four reasons:

  1. the financial performance of the Bandits;
  2. feedback from the CEO of the Bandits, Mr Ready;
  3. feedback from Mr Klein’s colleagues about the shortcomings in Mr Klein’s managerial performance; and
  4. the CEO of the ABL, Mr Wermuth’s opinion of Mr Klein based on their interactions.

The ABL’s evidence was clear and unequivocal as to what the reasons were for making the decision and Judge Vasta found this would be sufficient to discharge the ABL’s onus.

Lastly, Judge Vasta remarked that Mr Klein’s conduct in the proceedings worked against him. Mr Klein was observed by Judge Vasta as seeing conspiracies around every corner and making outlandish submissions about people telling "lies" which had no basis in fact. Mr Klein was too close to the matter and had convinced himself of a sequence of events that did not objectively concur with common sense.