The High Court has today overturned a Full Federal Court decision that an “objective” test applies when determining the question of whether an employer has taken adverse action for a reason prohibited under the Fair Work Act 2009 (Cth) (FW Act).


Background

The FW Act prohibits employers taking “adverse action” (such as terminating employment or causing disadvantage) against employees, contractors and prospective employees/contractors where the individual has a “workplace right” or other protected attribute.

Importantly, where an applicant lodges an adverse action claim, the applicant must only establish that he or she has a protected attribute and that adverse action has been taken. The onus then shifts to the employer to disprove the employee’s assertion that the adverse action was taken because the applicant had the protected attribute.

In the Barclay case, Mr Barclay was both an employee of BRIT and an officer of the Australian Education Union. Mr Barclay emailed AEU members, suggesting that BRIT managers had requested staff to prepare misleading documentation in relation to an upcoming audit of BRIT. He did not raise this serious allegation with BRIT management. Dr Harvey, the CEO of BRIT, suspended Mr Barclay from access to the workplace and sought to progress disciplinary action. Mr Barclay claimed that this constituted adverse action, as he engaged in these activities in his capacity as a union official. It then fell to BRIT to disprove this claim.

First instance

At first instance, Justice Tracey of the Federal Court held that if an employer’s subjective evidence of motivation is accepted, this is sufficient to disprove an employee’s claim. He accepted Dr Harvey’s evidence, uncontradicted on the facts, that she took action against Mr Barclay in the same way as she would for any other employee, simply because he had engaged in misconduct. His union status and activities were not relevant.

Appeal to Full Federal Court

Mr Barclay appealed to a Full Federal Court. A majority found in his favour, holding that the test to be applied was an objective one. The Court’s job was to determine whether the employer’s reason for its decision was “dissociated” from the protected attribute. This required consideration of the employer’s “unconscious” reason. In this case, Mr Barclay’s union status was inextricably intertwined with the conduct and BRIT’s response. However, Justice Lander dissented, favouring the position taken by Justice Tracey.

The effect of the majority’s decision was that an employer could not be certain whether its evidence would be accepted as sufficient to discharge the onus, even if no other factual evidence contradicted it. This was so particularly in a case involving an employee engaging in union activities.

Appeal to High Court

BRIT appealed to the High Court. In three separate decisions, the High Court unanimously found in favour of the position taken by Justices Tracey and Lander.

Key findings are that:

  • an employer will be found to have taken adverse action if the prohibited reason was a “substantial and operative” reason for an employer taking adverse action;
  • determining whether the employer’s actions were taken for a prohibited reason is a question of fact. Direct, subjective evidence of the decision maker which is not contradicted by other evidence can be relied upon to discharge the employer’s onus. There is no need to search for an “unconscious” reason. Such a requirement would create an “impossible burden” on employers; and
  • the onus on the employer is not heavier simply because the employee in question is an officer of an industrial association or is engaging in industrial activity.

Implications

Employers must of course continue to ensure they do not take adverse action for prohibited reasons. However, it is anticipated that in cases where employers do not have a prohibited motive and no circumstances exist to suggest otherwise, the confirmation that a subjective test applies will assist employers seeking to defend adverse action claims.