The Federal Circuit Court decision in Evans v Trilab Pty Ltd [2014] FCCA 2464 (30 October 2014) has again raised for consideration the nature of the “workplace rights” that form the basis of the protections offered to employees under Part 3-1 of the Fair Work Act 2009 (Cth) (FW Act).

BACKGROUND

Sections 340-341 of the FW Act protect an employee from dismissal or other adverse treatment (e.g. demotion), where the reasons for the employer’s action include the fact that the employee has exercised a “workplace right”. That concept includes the employee’s ability to make a complaint or inquiry in relation to his or her employment (section 341(1)(c)(ii)).

On the basis of several previous decisions, employees have been able to pursue adverse action claims based on their having raised issues with only a loose connection to their employment. For example, in Walsh v Greater Metropolitan Cemeteries Trust (No. 2) [2014] FCA 456 (9 May 2014), Justice Bromberg of the Federal Court took a broad view in finding that the employee’s raising of probity concerns about the awarding of external contracts was a “complaint or inquiry in relation to her employment”.[1]

In contrast, other decisions have taken a narrower approach to what constitutes a complaint or inquiry that can give rise to an adverse action claim. In Shea v TRUenergy Services Pty Ltd (No. 6) [2014] FCA 271 (25 March 2014), for instance, Justice Dodds-Streeton held that an employee’s complaint or grievance must be genuinely held in order to fall within the scope of the statutory protection of workplace rights. Further: “the making of false, baseless, unreasonable or contrived accusations of grave misconduct against fellow employees”, such as allegations of sexual harassment and of a lewd workplace culture, would not be protected. It was also determined that an employee’s complaint or inquiry must have some basis in an actual right or entitlement, such as those provided by a contract or employment, award or legislation.

THE FACTS IN EVANS V TRILAB

The employee was engaged as the State Manager – Engineering (Perth) by the employer, a company which undertakes soil and rock classification testing. The employee raised concerns with his superiors about the manner in which the company was undertaking testing, asserting that a wet testing method should have been used to ensure compliance with relevant Australian Standards.

The Chairman of the company’s Board of Directors met with the employee, and directed the employee to use the dry testing method and to cease telling other staff that they were using the wrong method. Another meeting took place four days later, with the Chairman informing the employee that he was to be dismissed because he refused to adopt the dry testing method; his performance management review “was a disaster” and he had not completed a proficiency test as requested (according to the Chairman’s evidence). The dismissal occurred only three week’s after the employee had commenced employment with the company.

The employee brought an adverse action claim under Part 3-1 of the FW Act, on the basis that he had been dismissed for exercising his workplace right to make a complaint or inquiry – i.e. the fact that he had raised questions about the company’s testing methods.

In response, the company asserted that the employee had been terminated solely for performance issues. It made an application to the Federal Circuit Court for summary dismissal of the employee’s claim, on the basis that the complaint (about the testing methods) is not capable of constituting a workplace right within section 341(1)(c)(ii).

JUDGE LUCEV’S DECISION

Judge Lucev of the Federal Circuit Court held that the employee’s questioning of the company’s testing methods was arguably capable of being characterised as an employment complaint or inquiry, so the claim should not be dismissed as having no reasonable prospects of success. This view was reached taking into account the employee’s duties, which included leadership of the employer’s Perth laboratory, day-to-day management and overall responsibility for test results.

In the course of making these findings, Judge Lucev reviewed relevant authorities on the question of what constitutes a complaint or inquiry in relation to employment under section 341(1)(c)(ii), noting that “divergent approaches” had been taken in – and by – different courts.

For example, in Harrison v In Control Pty Ltd [2013] FMCA 1341, the Federal Magistrates Court restricted the ability to make a complaint or inquiry to an ability to do so under a provision in legislation, a statutory instrument (e.g. an enterprise agreement), or an employment contract. A similar approach was later taken by the Federal Court in Shea v TRUenergy Services Pty Ltd (No. 6) [2014] FCA 271 (discussed above).

On the other hand, in Devonshire v Magellan Powertronics Pty Ltd and Others [2013] FMCA 207, the Federal Magistrates Court found that section 341(1)(c)(ii) does not require a formal mechanism or provision for an employee’s complaint or inquiry to constitute a workplace right. The employee’s complaints or inquiries about her salary package and payments therefore fell within the protection offered by section 341(1)(c)(ii).

Similarly, in Murrihy v Betezy.com.au Pty Ltd [2013] FCA 908, the Federal Court held that the employee’s ability to seek legal advice about her rights to remuneration and commission constituted a complaint or inquiry in relation to her employment. The Court stated: “That such an [unrepresented] employee should be able to have recourse to his or her solicitor, without the fear of repercussions in the nature of ‘adverse action’ taken by the employer, would be well within the purposes of [section 341(1)(c)(ii)] as they may be perceived in the legislative context ... .”

Judge Lucev also considered the Federal Circuit Court decision in Daw v Schneider Electric (Australia) Pty Ltd [2013] FCCA 1341, where the employee asserted (among other things) a workplace right not to comply with an unlawful or unreasonable direction from the employer. The Court found that while the employee was entitled to refuse to perform work in accordance with such a direction, in so doing the employee was not exercising a workplace right for purposes of the FW Act.

Judge Lucev concluded, in Evans v Trilab, that it is evident from the various cases “that it is arguable that a complaint or inquiry need:

  1. not arise from a statutory, regulatory or contractual provision before it can be a complaint or inquiry in relation to a person’s employment for the purposes of s.341(1)(c)(ii) of the FW Act; and
  2. only have an indirect nexus with a person’s terms or conditions of employment to come within the scope of s.341(1)(c)(ii), and may be a complaint about the conduct of another person in the workplace or about a workplace process which concerns or has implications for an employee’s employment.”

In this case, according to his Honour, even if the employee’s questioning of the company’s testing methods had no basis in any statutory, regulatory or contractual right or entitlement, that does not – on an arguable view of section 341(1)(c)(ii) – preclude the employee from being able to make that complaint or inquiry. Such a view is open based on the decisions in Devonshire v Magellan Powertronics and Murrihy v Betezy.com.au. Judge Lucev found that the employee’s claim should therefore be determined at hearing.

WHERE DOES THIS LEAVE EMPLOYERS?

  • While the conflicting authorities mean that the law in this area is presently unsettled, employers should assume that a broad range of expressions of discontentment by employees could give rise to an adverse action claim.
  • These could range from issues relating directly to an employee’s rights or entitlements under legislation, industrial instruments or contracts – through to matters relating to how work is performed, and even the employer’s relationships with third parties.
  • How employers respond to these complaints or issues, when raised by employees, will be of critical importance. Employers need to have effective complaint/grievance resolution processes in place, and apply them fairly when issues arise.
  • Employers also need to be careful when instigating, or continuing, disciplinary or performance management processes in respect of employees who raise employment-related issues or concerns.
  • In those situations, the employer will need to be able to explain and defend its decision-making process (e.g. leading to dismissal or disciplinary action) – in order to demonstrate that any adverse action taken against an employee was based on legitimate reasons and was not tainted by the employee having instigated a complaint.