New adverse action lessons for employers

Two recent Federal Court decisions contain important guidance for employers about the Fair Work Act’s adverse action provisions. Adverse action claims are becoming a substitute for unfair dismissal claims in many cases. One case heralds good news, the other greater cause for concern about how entrenched in the landscape adverse action claims will become.

In Bayford v Maxxia Pty Ltd, the Federal Magistrates’ Court found that an employee had been terminated for reasons of poor performance and consistent lateness to work. The employee’s claim had been that his lateness for work had been the result of a need for him to attend to family responsibilities. His claim was that he was required in the mornings at home to attend to the needs of his small child, who was teething. Consequently, it was argued, that the employee’s family responsibilities, which were known to the employer, must have been the reason for the termination of his employment.

The employer led detailed evidence about the counselling and warnings undertaken in respect of the employee. The Federal Magistrate applied the reasoning in the recent Full Federal Court decision of Barclay v Bendigo Regional Institute of TAFE that it was necessary to find the real reason for the employer’s conduct, by looking at all of the surrounding circumstances as well as the employer’s subjective reasons for making the relevant decisions.

On this basis, the Court found that the real reason for the termination of the employee’s employment was his poor performance and lateness for work.

The case demonstrates to employers the importance of following a transparent and comprehensive disciplinary process, particularly if there is a suggestion that the employee might rely on grounds for an adverse action claim. The fact that the employer is required to show that the prohibited reasons set out in the Fair Work Act were not the reason for termination places even more importance on these practices.

In the second case, Australian Licenced Aircraft Engineers Association v International Aviations Service Assistance Pty Ltd, the Federal Court found that a successful adverse action claim can lead to damages being awarded to an employee for hurt, distress and humiliation. The Act prevents Fair Work Australia awarding compensation for “shock distress or humiliation” in unfair dismissal cases, but the same limitations do not apply to adverse action claims. In this case the employer terminated the employment of an employee who refused to work overtime, because of concerns that he was not properly being paid overtime rates. The employee’s union contacted the employer regarding the dispute and shortly after that the employee was made redundant by the employer. As he was in Australia on a temporary work visa, there was a risk that the visa would be cancelled and that he would be required to leave the country.

The union initiated legal proceedings on the basis that the employee had been terminated not for genuine redundancy, but because of his actions as a member of a trade union. The employer consented to have the employee re-instated to his previous position, but later terminated him on the basis that an airline which was the employer’s customer refused to acknowledge the employee’s licence. This it was alleged had occurred because of the employer’s own negative performance of the employee’s performance. The employee left Australia. The Union commenced further legal proceedings claiming that the real reason for termination was the employee’s union activity and his previous claims against the employer. The Judge agreed with this claim and awarded compensation to the employee for loss of income. In the absence of any medical evidence also awarded $7,500 in damages for hurt and humiliation.

There is no doubt that the unusual circumstances of the case led to the award of these additional damages, however employers need to be aware that particularly blatant breaches of the adverse action provisions may well result in significant awards of damages for hurt and humiliation, particularly if medical evidence is used to establish significant psychological damage to the employee.

This article was originally published on where Peter is a regular contributor.

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