The first High Court decision considering adverse action was handed down on 7 September 2012. The decision provides considerable guidance to employers and clarifies the approach that a court must take when deciding whether adverse action was taken for a prohibited reason. Taking a sensible approach, the Court overturned the lower court decision which required that a decision maker’s unconscious reasoning be taken into account when determining whether adverse action was taken for a prohibited reason. Providing clarity to employers, the High Court held that the “question of why an employer took adverse action against an employee is a question of fact… direct testimony from the decision-maker which is accepted as reliable is capable of discharging the burden upon an employer”.

Adverse action

The Fair Work Act prohibits an employer from taking adverse action against an employee for a prohibited reason, including because that employee has or exercises a workplace right, is an officer or a member of an industrial association or engages in particular kinds of industrial activity. Workplace right is broadly defined and includes for example, having an entitlement under an award, agreement or a workplace law, being able to initiate proceedings under a workplace law or making a complaint or inquiry in relation to employment. Adverse action will include dismissing or refusing to employee a person, discriminating against a person or otherwise injuring a person in their employment or altering an employee’s position to their prejudice. Importantly, where unlawful adverse action is alleged, the employer must prove that the conduct in issue does not amount to adverse action, or alternatively, that the action in issue was not taken for a prohibited reason.

Background to the appeal

Mr Barclay was employed by Board of Bendigo Regional Institute of Technical and Further Education (BRIT) and was also a union delegate. He sent an email to other union members employed by BRIT alleging that unnamed BRIT officers had engaged in misconduct. He did not report these allegations to BRIT prior to sending the email or provide information about his sources when asked to do so. BRIT subsequently suspended Mr Barclay from duty on full pay and asked him to show cause as to why he should not be subject to disciplinary action for failing to report the allegations and for making unfounded public allegations against BRIT. Mr Barclay applied to the Federal Court seeking a declaration that BRIT had taken adverse action against him because, among other things, he was an officer of a union and had engaged in particular kinds of industrial activity.

The first decision

At first instance, the Federal Court found no adverse action was taken and dismissed Mr Barclay’s application. In reaching that decision, the trial judge accepted evidence from the CEO of BRIT that:

  • Mr Barclay’s union activity played no role in her decision making process;
  • the action was taken because of Mr Barclay’s unfounded allegations of serious misconduct and failure to report the allegations to management; and 
  • the same action would have been taken in similar circumstances against a person who was neither a member nor an officer of a union.  

That decision was overturned on appeal to the Full Federal Court. The appeal Court held that despite the fact that the CEO believed she took action against Mr Barclay for the reasons described above, her subjective intention was not decisive in determining why the action was taken. The majority held that the real reason for a person’s conduct could be unconscious and that a decision maker cannot ignore the objective connection between the decisions he or she is making and the protected attribute (i.e. being able to engage in industrial activity). The Court went on to find that when considered from an objective perspective, the real reason for the CEO’s decision to take action against Mr Barclay was his participation in industrial activity. This is a prohibited reason, and accordingly BRIT had engaged in unlawful adverse action. BRIT appealed that decision to the High Court.

The High Court’s decision

The High Court overturned the decision of the Full Federal Court. Significantly, the High Court confirmed that:

  • there is no requirement to search for the unconscious elements in the reasoning of a decision maker; and
  • that reliable evidence from a decision maker will be accepted, even if the person who had adverse action taken against them is a union official or member.   

What can employers do to protect themselves against adverse actions claims?

The High Court’s decision means that employers can rely on the actual reasons for a decision and that there is no obligation to contemplate the decision maker’s unconscious state of mind. It puts employers in a better position to defend claims of adverse action where they can provide reliable evidence that adverse action was not taken for a prohibited reason.

While this decision is good news for employers, adverse action claims are increasing and present employers with a number of challenges. Prudent employers will minimise their exposure to adverse action claims by:

  • understanding the general protections laws and how they operate, including what attributes and activities are protected;
  • ensuring that all decisions that could support an adverse action claim are not taken for a prohibited reason;
  • being very clear about the reasons for taking action against employees and advising the employee of those reasons; 
  • ensuring that action taken against employees and the reasons for those actions are well documented; and
  • having a witness present at disciplinary meetings to avoid the risk of conflicting evidence and the need of the court to make a credit finding.