Adverse action – the workplace right to make a complaint about employment
 
PIA Mortgage Services Pty Ltd v King (No 2) [2020] FCAFC 53
 
Executive Summary
 
A senior employee successfully claimed that he was dismissed for making complaints about his employment, including that he had been misled into accepting the employment.
 
Background
 
The employee was hired on a 5-year fixed-term contact as the employer’s Chief Executive Officer, and was responsible for building the company’s mortgage brokering service.
 
Soon after commencing employment, the employee discovered that the employer’s service had been engaging in unlawful practices to the point where banks refused to accept mortgage applications from the company.
 
The employer decided to “park” the mortgage brokering service and offered to terminate the employee’s employment and pay the employee four months of his salary.
 
The employee rejected this offer and claimed that he was misled about the profitability of the business and the employer was unlawfully terminating his contract. The employee then took a period of annual leave and did not return to the workplace.
 
The employer then summarily dismissed the employee because it believed that he had no intention of complying with his employment contract and had been absent from the workplace for ten days.
 
Following his dismissal, the employee brought an adverse action claim alleging that he was dismissed because he exercised a workplace right to make complaints in relation to his employment.
 
Those complaints were:
  • that the employer did not intend to honour the employment contract by employing him for five years, or paying him a sum in lieu thereof; and
  • that the employee had been misled about the potential that existed to grow the mortgage brokering service.
Decision at first instance
 
The Federal Court of Australia found that the employer had engaged in adverse action when it terminated the employee’s employment because he exercised a workplace right to make a complaint in relation to his employment.
 
The Court was not satisfied that the employer had rebutted the position put by the employee, noting that the sole director and shareholder of the employer (who had effected the dismissal) did not give evidence as to his reasons for the dismissal.
 
Decision on appeal
 
On appeal to the Full Court of the Federal Court of Australia, the employer argued that the employee did not have a workplace right to make those complaints.
 
The Full Court did not agree and affirmed the decision at first instance.
 
The Full Court found that the protection afforded to employees who have a workplace right to make a complaint or inquiry in relation to their employment should be read broadly.
 
Specifically, s341(1)(c)(ii) of the Fair Work Act 2009 (Cth) (FW Act) should be read so that an employee is able to make a complaint or inquiry under general law. An employee has a right to sue his or her employer for an alleged breach of their contract of employment, or for an alleged breach of a statutory provision.
 
Accordingly, the employee had exercised a workplace right by making complaints about a breach of his employment contract and the terms upon which he accepted employment in the first place.

What can your business learn from this decision?

The protections afforded to employees under the FW Act will be read broadly by the courts. In this case, the employee exercised his workplace right to make complaints about his employment. Those complaints included that his employer attempted to breach the terms of his employment contract and that he had been misled by the employer when accepting employment.
 
Complaints about employment that attract protection under the FW Act can be wide ranging and cover matters from the underpayment of wages to conditions of employment.
 
Employers should be aware that, when an employee makes a complaint about their employment, taking adverse action against the employee because of their complaint could result in a costly and time-consuming adverse action claim. 
 
 
Adverse action – the reverse onus on the employer
 
Tran v Macquarie University (No.2) [2019] FCCA 2049
 
Executive summary
 
A Macquarie University employee successfully claimed that her employment was terminated because she made complaints about her manager. Her successful claim was, in part, the result of the absence of evidence from the manager.
 
Background
 
The employee was employed as a Systems Accountant at Macquarie University before her employment was terminated by way of redundancy.
 
During her employment, the employee had lodged a grievance against her manager about her workload and the manager’s supervision of a colleague who reported to the employee. That grievance was mediated.
 
An issue later arose about the employee’s working arrangements and she was issued with a formal direction as to her hours of work. The employee made further complaints that she was being bullied by her manager, including by way of that the direction.
 
The employee subsequently made even more complaints to a senior manager and members of the HR department about her hours of work, her manager’s bullying conduct and the conduct of her colleagues.
 
In October 2016, the University announced a review of the Systems Team. The announcement identified that the employee’s position would be “disestablished”. Following the announcement, the employee’s access to certain systems was restricted. She subsequently requested that HR investigate the University’s conduct and the conduct of certain of her colleagues.
 
In relation to the redundancy of her position, the employee formally objected on several occasions to the genuineness of that decision and requested that a formal review be conducted.
 
The employee applied for new positions within the new structure of the team but was unsuccessful. She also applied for other roles at the University that she believed she had the skills to perform but was again unsuccessful.
 
In April 2017, the employee took time off work based on medical advice and did not return to the workplace.
 
Her employment was eventually terminated in June 2017 with the stated reason being the redundancy of her position.
 
The employee claimed that she was “restructured” out of her position with the University because she exercised her workplace right to make complaints about her manager.
 
Decision of the Federal Circuit Court of Australia
 
At the hearing of the matter, the employee gave evidence on her own behalf. The University called three witnesses – crucially however, it did not call the employee’s manager to give evidence.
 
In its considerations, the Federal Circuit Court of Australia highlighted that, where there is an allegation of adverse action, the burden of proof falls to the employer to satisfy the Court that the adverse action was not taken for a prohibited reason. In this case, the prohibited reason was the employee making complaints about her manager.
 
The Court was satisfied that the redundancy of the employee’s position was adverse action. It found that the substantial and operative reason for the restructure was the employee’s complaints about her manager. Email evidence before the Court demonstrated that the employee’s manager considered her and the only other employee targeted by the restructure to be “poisonous to the team environment.”
 
For the Court, it was clear that the manager had an operative role in the restructure and that the outcome she sought was to remove the employee from her employment because the employee had made complaints about her.
The Court stated that the University’s failure to call the manager to give evidence rebutting this position, “means that the burden of proof has not been rebutted as to the presumption that the action was taken for a prohibited reason.”
 
Accordingly, the Court found that the University had contravened the adverse action provisions of the FW Act.
 
In a separate penalty decision handed down in May 2020, the Court ordered the University to pay $45,000 in penalties for breaches of the FW Act, and pay the employee $569,601 in compensation.

What can your business learn from this decision?

Under the FW Act, employees are protected from adverse action, such as dismissal, if they exercise a workplace right. Making a complaint about the work environment, such as workplace bullying, is the exercise of a workplace right.
 
Under the FW Act, employers bear the reverse onus of proof in adverse action cases and must be able to provide evidence from a decision-maker that any decision to take adverse action was not because of a prohibited reason such as the exercise of a workplace right.
 
In this case, the employer failed to produce any evidence from the employee’s manager which would demonstrate that the redundancy of the employee’s position was not because of her complaints.
 
Accordingly, the employer failed to discharge the reverse onus and was found to have breached the FW Act with significant penalties and compensation flowing from that outcome.
 
 
Unfair dismissal – the minimum employment period
 
Bronze Hospitality Pty Ltd v Hasson (No 2) [2019] FCA 1680

Executive summary
 
An employee in the hospitality industry successfully argued that her service as a casual employee should count towards the calculation of her minimum employment period, therefore granting her access to the unfair dismissal jurisdiction.
 
Background
 
The employer supplied labour to the hospitality industry in Western Australia.
 
The employee was initially employed as a casual Food and Beverage Attendant commencing in November 2017. From late January 2018 until June 2018, she was employed on a permanent basis. On 7 June 2018, the employee was dismissed.
 
The total period of her employment was 6 months and 10 days. She applied to the FWC seeking a remedy for unfair dismissal.
 
The employer objected to the unfair dismissal application on the basis that:
  • it was a small business employer, meaning the minimum employment period for the employee was 12 months; and
  • the employee had not served that minimum employment period.
The employer also argued that, if it is was not a small business employer, the employee had still not met the six-month minimum employment period because she was a casual employee for the first 54 days of her employment, and true casual service does not count towards the minimum employment period (as opposed to regular and systematic casual service, which does count).
 
In support of this point, the employer attempted to argue that the employee’s actual hours varied and the she could not have reasonably expected ongoing employment, having regard to the high turnover in the hospitality industry.
 
Decision of the Fair Work Commission
 
In short, the Fair Work Commission (FWC) rejected the employer’s arguments.
 
The FWC held that the employer was not a small business employer and therefore the correct minimum employment period was six months. The FWC found that the employer engaged a number of other regular and systematic casual employees at the time of the dismissal and those employees should have been taken into account when assessing whether or not the employer employed less than 15 employees. It was found to have employed not less than 17 employees at the relevant time, meaning that it was not a small business employer and the relevant minimum employment period was therefore six months.
 
The FWC also found that the employee had been engaged on a regular and systematic basis from the commencement of her employment and did, in fact, hold a reasonable expectation of ongoing employment. She had been told that she would work a lot of hours and the employer expected her to be reliable. The evidence showed that she worked five or six days a week from the outset.
 
This finding meant that her period of service as a casual employee counted towards the minimum employment period, which it was held she had therefore completed.
 
Appeal decisions
 
The employer appealed various aspects of the FWC’s single member decision to the Full Bench of the FWC. The Full Bench ultimately agreed that the employer was not a small business employer and the employee’s period of casual employment counted towards the minimum employment period.
 
The employer then sought judicial review of the Full Bench decision by the Federal Court of Australia.
 
The Federal Court rejected the employer’s application and held that there had been no error in the decisions of the FWC.

What can your business learn from this decision?

In order to access the unfair dismissal jurisdiction under the FW Act, an employee must have served the minimum employment period.
 
For small business employers (with less than 15 employees) the minimum employment period is 12 months. For other employers, the minimum employment period is six months.
 
Ordinarily, casual service does not count towards the minimum employment period. However, as demonstrated in this case, the service of a regular and systematic casual employee will count towards service.
 
Employers should ensure that they understand the true nature of the engagement of their casual employees in order to assess whether their service will count towards the minimum employment period.
 
 
Unfair dismissal – summary dismissal and other factors to be considered
 
Jolley v Cannon Hill Services Pty Ltd [2020] FWC 2404
 
Executive summary
 
An employee with a long and unblemished employment history successfully argued that his dismissal was unfair, despite his employer having a valid reason for the dismissal and following a procedurally fair process.
 
Background
 
The employer operated an abattoir and the employee was employed as a Boner.
 
The employee was caught on CCTV taking a can of drink from a vending machine when the door had been left open.
 
The employer commenced a disciplinary process against the employee during which, he admitted that he took the can of drink. The employee was remorseful in his responses, explained that it was out of character for him and that he took the can of drink because on numerous prior occasions, the machine had taken his money without providing a can of drink.
 
The employer summarily dismissed the employee on the basis of serious misconduct.
 
The employee then lodged an unfair dismissal application with the FWC.
 
The employee submitted that his dismissal was harsh in all of the circumstances because:
  • he had 9.5 years of service;
  • he had a clean disciplinary history;
  • the item was trivial in value;
  • the conduct was out of character and the employee admitted to the conduct;
  • the conduct was mitigated because the employee had lost a significant amount of money to the vending machine;
  • the dismissal meant that the employee was not paid pro-rata long service leave despite his length of service.
The employer maintained its position that the employee’s conduct was serious misconduct and breached its policies and trust. It submitted that the employee was dismissed for a valid reason and was provided with procedural fairness.
 
The employer also submitted that, if the vending machine was not working, there was a mechanism for the employee to raise an issue and get a refund but the employee had not done so.
 
Decision of the Fair Work Commission
 
The FWC held that there was a valid reason for the dismissal and that procedural fairness was afforded to the employee.
 
However, after taking into account all the circumstances of the dismissal the FWC found that the dismissal was unfair.
 
Specifically, the FWC highlighted that the employee immediately expressed remorse and had a long and unblemished history with the employer. Further, the incident was a one-off opportunistic and momentary lapse in judgement.
 
The FWC also took into account that the employee was dismissed just before completing 10 years of service and that the employee would suffer substantial loss of his long service leave entitlements if the dismissal for serious misconduct were to stand.
 
The employer was ordered to pay the employee $28,280 in compensation.

What can your business learn from this decision?

In determining unfair dismissal matters, the FWC can take into account any matters it considers relevant, including the employee’s employment history and length of service.
 
As demonstrated in this case, those factors can be persuasive even where there is a valid reason for dismissal.
 
When contemplating dismissal, employers should consider whether there are any factors relating to an employee’s employment history that might render the dismissal unfair and expose the employer to potential claims before the FWC. 

Should you require any further information or assistance, please contact our Director Shane Koelmeyer on (02) 9256 7500 or via email on sydney@workplacelaw.com.au.

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