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Introduction

This is essential reading for those of us who deal with the matters of “unfair dismissal” and “protected (adverse) Actions”; and not to mention the important of having well-constructed policies (in this case “media policy”) and contracts of employment.

Your “brand” is your bread and butter, reputational damage can destroy it!

Background

This was an appeal to the Full Bench of the Federal Court by a person who was senior employee (the “applicant”) of a prominent law firm claiming “adverse action” because of his political beliefs. The applicant was dismissed with being paid three month’s pay in lieu of notice (in accordance with his contract of employment) for breaching the firm’s Media Policy in that he criticised the Government departments, of which were either clients or potential clients.

The decision (appeal rejected)

The applicant previously having his case before a single judged dismissed.

Two of the three judges dismissed the appeal, with the third also dismissing the appeal but using different reasoning.

That is, according to the Full Bench, was that whether an employer contravenes the adverse actions’ section of the Fair Work Act 2009 by dismissing an employee because the employee repeatedly breaches the employer’s policy prohibiting its employees from criticising the Government (being a client of the employer) in the media when the employer reasoned that that conduct could affect its ability to continue to attract and earn income from fees from Government work.

The primary judge found that, consistently with his history of similar conduct, during November and December 2016, the applicant had criticised the Commonwealth Government twice in The Sydney Morning Herald. His Honour found that the conduct breached the firm’s media policy that in its practical effect prohibited such criticism in the media. The primary judge found, as facts, that first, the Firm dismissed the applicant because he disobeyed instructions and a policy not to discuss the Firm’s clients in public without first getting permission and secondly, the Firm did not terminate the applicant’s employment for having, or expressing, a political opinion. The Judge finding:

  • Two reasons which were “in the mind” of the Firm were “inextricably linked, i.e. that the Firm did not consider the applicant valuable enough to justify the repeated disobedience of his orders;
  • The Firm was motivated by three matters in reaching his decision to terminate the applicant’s employment: applicant’s disobedience to the media policy (and the not-to-be-questioned authority of the Firm’s managing partner), the Firm’s perception that he was not making the Firm much in the way of fees and the fact that the Firm was entitled to end the relationship on three months’ notice without any reason;
  • The applicant’s employment with the Firm was terminated because he expressed a political opinion and found that no one at the Firm cared about the applicant’s political opinion, but very much cared about his conduct being a threat to its business”. The “concerns” of the Firm’s managing partner “were more pedestrian” in that he “held a perception that the applicant was not bringing in much in the way of profit and he was infuriated by the applicant’s refusal to comply with the media policy and what he regarded as insubordinate behaviour by an employee who was not, to his understanding, profit enhancing; and
  • The applicant had been dismissed “because he disobeyed instructions and a policy not to discuss the Firm’s clients in public without first getting permission”.

Discrimination under the Fair Work Act

The Full Bench examined, as part of this decision, the section of the Fair Work Act pertaining to discrimination/Protected (adverse) action:

The relevant section of the FWA states:

“351       Discrimination

  • An employer must not take adverse action against a person who is an employee, or prospective employee, of the employer because of the person’s race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin”.

The guide to Pt 3.1 of the Fair Work Act in s 334 states that the Part provides general workplace protections and that, among others, “Division 3 protects workplace rights, and the exercise of those rights” and “Division 5 provides other protections, including protection from discrimination”.

Relevantly, the prohibitions in Pt 3.1 against an employer taking adverse action against an employee in s 340 (in respect of workplace rights generally), and specifically in s 346 (in respect of industrial activity), s 351 (in respect of discrimination) and s  352 (in respect of dismissal for illness and injury) are enlivened if the employer takes the particular adverse action “because” a fact or circumstance obtains or has occurred.

Practitioners may wish to read on…(it gets a bit legal):

Section 346, for example, which is in Div 4, relevantly proscribes an employer from taking adverse action, such as dismissal, against an employee “because” the employee is or was an official or member of an industrial association (s 346(a)) or engaged, is engaging or proposes to engage in industrial activity (s 346(b)).  And s 351(1), which is in Div 5 and is headed “Discrimination”, relevantly proscribes an employer from taking adverse action against an employee or prospective employee “because” of the particular employee’s specific characteristics, including physical or mental ones, his or her sexuality, beliefs or political opinion.

Section 361(1) creates a presumption in an application under Pt 3-1 that, where an employee alleges that the employer took, or is taking, adverse action for a particular reason, and “taking that action for that reason or with that intent would constitute a contravention of this Part”, “the action was or is being taken for that reason or with that intent unless the person proves otherwise”.  Importantly, s 360 provides:

‘360        Multiple reasons for action

For the purposes of this Part, a person takes action for a particular reason if the reasons for the action include that reason”.

Barclay High court decision

In Barclay 248 CLR 500, the High Court considered the operation of the adverse action provisions in the context of a claim under s 346 that an employer had taken adverse action against an employee “because” he was an officer of an industrial association and had engaged in industrial activity.

The High Court observed that the Parliament intended ss 360 and 361 to provide a balance between the parties to a workplace dispute by, first, establishing a presumption in favour of an employee who alleges that an employer had taken, or is taking, adverse action against him or her because of a particular circumstance or fact of the kind specified in any of ss 340, 346, 351 or 354 and, secondly, enabling the employer to rebut that presumption. The presumption and onus that ss 360 and 361(1) create are necessary because the employee cannot know or prove what was in the decision-maker’s mind when he or she took the adverse action. The court must enquire into, and make findings about, the mental processes of the decision-maker for taking the adverse action complained of.

Accordingly, the employer or decision-maker acting on its behalf who took the alleged adverse action must prove, as a fact, that none of his or her reasons for that action included as a substantial and operative factor any reason or intent that the Act proscribed him or her from having, the Court must determine the question of fact, namely “why was the adverse action taken?”

French CJ and Crennan J explained (248 CLR at 523 [61], [62] and see too per Heydon J at 547 [148]):

“Central to the respondents’ argument on this appeal was the contrary and incorrect view that Mr Barclay’s status as an officer of an industrial association engaged in lawful industrial activity at the time that Dr Harvey took adverse action against him meant that Mr Barclay’s union position and activities were inextricably entwined with the adverse action, and that Mr Barclay was therefore immune, and protected, from the adverse action. If accepted, such a position would destroy the balance between employers and employees central to the operation of s 361, a balance which Parliament has chosen to maintain irrespective of the fact that the protection in s 346(b) has a shorter history than the protection in s 346(a). That balance, once the reflex of criminal sanctions in the legislation, now reflects the serious nature of the civil penalty regime. Speaking more generally, that balance is a specific example of the balance of which Alfred Deakin spoke as being necessary for an effective conciliation and arbitration system.

Secondly, it is a related error to treat an employee’s union position and activity as necessarily being a factor which must have something to do with adverse action, or which can never be dissociated from adverse action. It is a misunderstanding of, and contrary to, [General Motors-Holden’s Pty Ltd v Bowling [(1976) 136 CLR 676] to require that the establishment of the reason for adverse action must be entirely dissociated from an employee’s union position or activities. Such reasoning effectively institutes an interpretation of the relevant provisions indistinguishable from that of Isaacs J in Pearce, which was rejected in Bowling. The onus of proving that an employee’s union position and activity was not an operative factor in taking adverse action is to be discharged on the balance of probabilities in the light of all the established evidence”. (Emphasis added.)

Gummow and Hayne JJ (248 CLR) and Heydon J rejected the argument that, in answering the question “Why was the adverse action taken?” the court could take into account any “unconscious” state of mind of the decision-maker or employer.

BHP High Court decision

In BHP Coal 253 CLR 243 French CJ and Kiefel J rejected as erroneous the reasoning of the primary judge (Jessup J) who had posited that the employer (or decision-maker) has to establish, under s 361(1), that no part of his or her reasons included the employee’s engagement in industrial activity (and see also at 268–269 [90]–[93] per Gageler J).  Their Honours said:

“The primary judge then went on to consider whether Mr Doevendans’ conduct constituted an industrial activity in the relevant respects. The only inference which can be drawn from this additional reasoning is that, because the adverse action was based upon the sign which Mr Doevendans held and waved, this activity must be taken as one of the reasons for the action. That is to say no more than that the adverse action had a connection, in fact, to the industrial activity. That connection may necessitate some consideration as to the true motivations of Mr Brick, but it cannot itself provide the reason why Mr Brick took the action he did. That inquiry was concluded by his Honour’s earlier findings. His Honour, in effect, wrongly added a further requirement to s 361, namely that the employer dissociate its adverse action completely from any industrial activity”.

In essence, in this passage, French CJ and Kiefel J applied the test that, even though Mr Doevendans’ conduct amounted to his engaging in industrial activity within the meaning of s 346(b) and that conduct was “a reason” for the decision-maker, Mr Brick, acting as he did, the conduct was not a substantial and operative reason in Mr Brick’s mind when he took the adverse action. That conclusion was consistent with the reasons in Barclay, based on the trial judge’s unchallenged findings of fact.

Endeavour Coal High Court decision

In Endeavour Coal 231 FCR 150, Jessup J (who, with Perram J constituted the majority) explained the principle established in Barclay 248 CLR 500 and BHP Coal 253 CLR 243 as follows:

The “connection” which was held not to be sufficient in BHP Coal was between the adverse action taken by the employer and the industrial activity in which the employee had engaged. It was not between two different characterisations of the conduct of the employee, in that case, as a contravention of the employer’s conduct policy and as participation in industrial activity. As French CJ and Kiefel J made clear, if adverse action was taken because the conduct involved such a contravention, it did not become a breach of s 346 merely because the conduct was, at the same time, participation in industrial activity. The existence of such a “connection” was insufficient. What was necessary was that the actual reason of the decision-maker, in his or her own mind, be the employee’s participation in industrial activity. To see their Honours’ reasons in this way is, in my view, to recognise the consistency of those reasons with the statements of principle contained in the reasons of Gageler J in the same case. Those statements represent the law after Barclay and BHP Coal”. (Emphasis added.)

Perram J came to the same conclusion.  He gave the example that, while a judge in giving reasons for his or her decision will have regard to the unsuccessful party’s submissions as an important part of arriving at that decision, those submissions will not be the reasons that are substantial and operative in why the judge made the decision: Endeavour Coal 231 FCR at 173.