Australia: High Court of Australia eases the burden (of proof) on employers responding to "adverse action" claims under the Fair Work Act
Industrial and Employment Law Alert: 14 Sep 2012

A landmark decision delivered in the High Court of Australia last week will be welcome news to employers facing claims of adverse action from employees.

In Board of Bendigo Regional Institute of Technical and Further Education v Barclay¹, the High Court overturned a controversial decision by the Full Federal Court of Australia that imposed an onerous and (arguably) impossibly high evidentiary burden on employers responding to claims that they have contravened the general protections outlined in part 3-1 of the Fair Work Act.

Under the legislation:

• when, for the purposes of such a claim, it is alleged that the employer took or is taking action for a particular reason; and
• taking that action for that reason would constitute a contravention of a general protections provision;

then it will be presumed that the action was or is being, taken for that reason, unless the employer can prove otherwise.

Here, partner Andrew Tobin and associate Damon King outline how the 'correct approach' outlined by the High Court eases the burden on employers seeking to discharge their statutory onus of proof.

Key points in the Barclay case

• Whether an employer's reason for taking adverse action was influenced by an unlawful consideration should be determined by looking at all of the available evidence.
• When looking at the facts, it is not legitimate to try to assess the 'unconscious reasoning' of the employer's decision-maker. In other words, it is not possible to "peer into the depths of an employer's unconscious mind".
• The decision in Barclay restores industrial balance because union members and officials are no longer a 'protected species' unable to have disciplinary action taken against them for misconduct that involves industrial activity taken in the course of their employment.
• This case demonstrates the continued importance of Human Resources and other supervisory staff being able to establish legitimate reasons for taking adverse action against a worker, preferably with contemporaneous written notes or other records.

The background and trial judge's findings²

Mr Barclay was a senior teacher employed at a technical college, and was active in his union.

An audit of the employer's business operations as an education and training provider was pending to determine the college's eligibility for continued accreditation and government funding. Before the audit, Mr Barclay forwarded an inflammatory email to a number of his co-workers - who were fellow members of the union - saying that other union members had informed him that some managers were falsifying documents for the purposes of the audit. He warned the union members not to be pressured into participating in these activities.

The email was brought to the attention of the employer's CEO before the auditor's arrival. Mr Barclay was promptly stood down from teaching duties on full pay and directed not to attend the college. His internet access was suspended for the duration of the audit. He was also asked by the employer to show cause why he should not face disciplinary action for alleged serious misconduct on the grounds that he had:

• received information about potential misconduct by other staff in the workplace, but did not report this to senior management;
• sent an email to his co-workers which questioned the integrity of other staff at the college; and
• refused to provide details of the complaints made by the union members when asked to do so by his manager, which meant that the college was unable to properly investigate the misconduct allegations.

Mr Barclay sued his employer, claiming that he was being subjected to unlawful adverse action, allegedly because of his lawful industrial activity and because he was exercising his workplace rights as a union official.

At first instance, a single judge of the Federal Court rejected the claim. The Court accepted that the employer had established through the evidence - including lengthy oral evidence from the CEO - that the suspension and disciplinary proceedings came about solely because of the inappropriate manner in which Mr Barclay had raised the fraud and misconduct allegations.

Full Federal Court decision³

The Full Federal Court upheld the appeal against that decision for the following reasons:

• The state of mind of the employer's decision-maker at the time of taking the adverse action, although centrally relevant, is not decisive, thereby rejecting the primary reasoning of the trial judge.
• It was enough to establish a contravention of the legislation if the 'real' reason for the adverse action included a causal connection with a prohibited reason. Put another way, the employer will not be able to avoid the statutory presumption where a prohibited reason, such as industrial activity, unconsciously forms part of the reason why the decision-maker took the adverse action on behalf of the employer.

The approach taken by the Full Federal Court would have required the trial judge to make a finding that it would have been impossible for the employer's CEO, when making the decision to take the adverse action against Mr Barclay, to divorce from her reasoning the objective fact that he had sent the email in his capacity as a union officer. It followed that the employer's actions were found to be unlawful because of the causal connection with his industrial activity.

High Court decision

The High Court has now dismissed this approach as being unworkable and inequitable. The Court observed that, where there is no evidence to the contrary, a decision maker's subjective reasons for taking adverse action will be able to satisfy the employer's reverse onus of proof.

However, the Court also observed that direct evidence given by the decision-maker might be found to be unreliable where it is contradicted by other evidence. In those cases the statutory presumption against the employer may prevail.

Other notable observations made by the various members of the High Court included:

• the relevant factual enquiry is neither an objective or subjective test; and
• it is appropriate for an employer seeking to discharge the reverse onus of proof to introduce positive evidence that compares the position of the employee affected by the adverse action with that of an employee who has no union involvement (or is not otherwise covered by some other 'general protection').

Lessons from this case

Generally speaking, it will be extremely difficult for an employer to discharge the statutory presumption that alleged adverse action was taken because of a prohibited reason, if no direct testimony is given by the decision-maker acting on behalf of the employer.

Further, being able to submit corroborative contemporaneous documentary evidence that supports evidence given by the decision-maker may help an employer to defeat any challenge to the decision-maker's testimony. Documentary evidence of this type may stop a claim from being made in the first place or, once disclosed in the proceedings, discourage the worker and their representatives from pursuing a claim further.

Footnotes

¹ [2012] HCA 32 (7 September 2012)

² Barclay v The Board of Bendigo Regional Institute of Technical and Further Education [2010] FCA 284 (25 March 2010)

³ Barclay v The Board of Bendigo Regional Institute of Technical and Further Education [2011] FCAFC 14

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