In brief: The Full Court of the Federal Court of Australia has overturned a Federal Circuit Court decision which held that an employer had taken adverse action by dismissing an employee with a mental disability. Senior Associate Sikeli Ratu and Associate Tarsha Gavin report.


  • Employers may successfully defend adverse action claims even where there is a close relationship between the adverse action and a prohibited reason.
  • The evidence of the decision-maker is of central importance for an employer in discharging the onus on them to establish that a termination decision was not made for a prohibited reason.


Mr Grant, a solicitor with the Victorian Office of Public Prosecutions (OPP), was dismissed in early 2012 following a long history of repeated absences and an investigation into misconduct, which found that he had disobeyed lawful directions to complete work tasks and provide notification of his absences.

Before the misconduct investigation, Mr Grant had informed his supervisor, and provided a supporting medical report, which indicated that he had a long-term anxiety condition that had been exacerbated by excessive alcohol consumption and bouts of depression.

Mr Grant brought a claim against the OPP alleging that by terminating his employment it had taken adverse action against him because of his mental disability.

Mr Grant successful at first instance

The Federal Circuit Court found that the OPP had taken unlawful adverse action against Mr Grant. The court held that his misconduct was 'completely interwoven' with his mental illness. The court did not accept the evidence of the manager who terminated Mr Grant's employment, and who said that he excluded Mr Grant's ill health from his decision-making. Instead, the court held that the manager had knowledge of Mr Grant's mental illness and the facts of the matter indicated that Mr Grant's conduct arose wholly out of his medical condition and that therefore the illness and conduct could not be disaggregated. The court found that the manager's knowledge necessarily featured (even if only subconsciously) in his decision to terminate Mr Grant.

Appeal court finds in employer's favour

The Full Bench of the Federal Court overturned the Federal Circuit Court's decision, holding that there had been no adverse action taken by the OPP.4

In its decision, the Federal Court applied some of the key principles laid down by the High Court in the Barclay decision (for more detail, see our Client Update: High Court guidance on adverse action claims). In particular, the court confirmed that merely because there is a close relationship between the adverse action and a prohibited reason does not mean that the two cannot be disaggregated.

On the facts of the case, the court held that Mr Grant's illness and misconduct were not 'completely interwoven' and could in fact be disaggregated. The medical report provided by Mr Grant did not expressly or impliedly attribute the instances of misconduct to Mr Grant's illness, and there were several other explanations for aspects of the misconduct that were unrelated to his mental condition.

The court also applied the High Court's statement that reliable evidence from a decision-maker about the actual reasons for their decision can discharge the onus on the employer to establish that a decision was not made for a prohibited reason.

The court held that the manager's knowledge of Mr Grant's mental illness did not by itself mean his evidence on the reasons for the termination were unreliable, and found that, in fact, the decision to terminate had not been made because of Mr Grant's mental illness.