07 Oct 2010

Adverse action - the new discrimination

by Glen Bartlett

Adverse action under the Fair Work Act has a potentially very wide application.

The "adverse action" jurisdiction is certainly living up to being a sleeper part of the Fair Work Act 2009. While there have only been a handful of cases dealing with adverse action, there is increasing clarity on what this all means for employers in managing risk in the workplace and especially, given its potentially broad application to issues arising in the industrial context, to discrimination matters.

The Federal Court's recent decision in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2010] FCA 590 will be of interest to employers as it illustrates the potentially broad nature of the adverse action jurisdiction and its implications for workplace processes and decision-making.

The disciplinary meetings, the termination, and the court case

In this case brought by the CFMEU, an employee of BHP Coal, Mr Lohmann, rolled the Hilux Duel Cab Ute he was driving on the mine site. Over the following days, Lohmann attended a number safety investigation meetings with various BHP Coal staff, including a human resources officer.

BHP Coal then called a disciplinary meeting with Lohmann pursuant to a clause under the relevant enterprise agreement. The relevant clause set out who could attend a disciplinary meeting and did not mention the presence of human resources staff. A BHP Coal human resources manager attended the meeting.

During the meeting, Lohmann's CFMEU representative requested the HR manager leave the meeting as the clause specified that the only participants at the meeting were to be the employee, the employee's representative and the employee's supervisor. The meeting proceeded with the HR manager present.

BHP Coal called another meeting the following week to discuss an investigation report with Lohmann. An HR officer attended the meeting. Lohmann's representative insisted the HR officer had no right to be at the meeting.

The mine manager suggested that Lohmann seek alternative representation as the advice that he not participate in the meeting was not in Lohmann's best interests and that if he didn't take part in the meeting, the outcome would not be the same as if he participated.

After further disagreement, Lohmann and his representative left, refused to attend subsequent meetings and provided his version of events to BHP Coal in writing.

Lohmann's employment was terminated on the grounds of serious misconduct relating to the vehicle incident.

The CFMEU claimed that under the relevant clause Lohmann was entitled to insist that only himself, his representative, and his supervisor be present at a disciplinary meeting and this entitlement amounted to a workplace right under the Act. The CFMEU further claimed that BHP Coal took adverse action against Lohmann because of his workplace right, as encouraging Lohmann to seek alternative representation and commenting on the consequences of not participating in the meeting amounted to an injury or threat to injure Lohmann's employment.

What is adverse action?

Under the Act, a person has a workplace right if they are:

  • entitled to the benefit of, or have a role or responsibility under a workplace law or instrument or an order made by an industrial body;
  • able to initiate or participate in a process or proceedings under a workplace law or instrument; or
  • able to make a complaint or inquiry to a person or body having the capacity under a workplace law to seek compliance with that law or workplace instrument, or if the person is an employee, in relation to his/her employment.

Under the Act, a person must not take adverse action against someone who has a workplace right.

Adverse action can be taken by a number of parties and in a number of ways as set out in the Act. For example, adverse action can be action taken by an employer against an employee or prospective employee, an employee against an employer, a principal against a contractor, and an industrial association or member against a person.

Employer action against an employee amounts to an adverse action if an employer:

  • dismisses the employee;
  • injures the employee in his/her employment;
  • prejudicially alters the employee's position; or
  • discriminates between the employee and the employer's other employees.

Threatening or organising to take the above action also amounts to adverse action.

Was there a workplace right?

After analysing the enterprise agreement's relevant clause, the Court found that as the meetings were held for investigation purposes, not disciplinary purposes, the clause did not apply. Accordingly, no workplace right was conferred on Lohmann.

Even if a workplace right was conferred, the Court found that the mine manager's comments did not constitute adverse action. The Court found that the comments merely encouraged Lohmann to participate and provide information as the manager was concerned that the outcome of the investigation would be worse for Lohmann if he was not given an opportunity to provide his explanation for the incident.

Importantly, the Court noted that the decision to terminate Lohmann's employment was based on all material before BHP Coal - including Lohmann's written communications.

The CFMEU's application was dismissed.

Key messages

While ultimately the CFMEU was not successful in its application, this case does demonstrate how potentially broad the adverse action jurisdiction is and how it might be applied. And in this case, the provisions were used to attack an employer's internal process when dealing with a workplace incident.

The adverse action jurisdiction also expressly extends to prohibiting adverse action on the grounds of a person's race, colour, sex, sexual orientation, age, physical or mental disability, martial status, family or carer's responsibilities, pregnancy, religion, political opinion, national extraction, or social origin.

Critically, as a reverse onus test applies in adverse action claims, employers should ensure that all decisions regarding employees, especially those that impact on workplace rights, are transparent, sound and defensible.

This means employers should:

  • review decision making procedures to ensure they set out clear guidelines, criteria and steps to follow;
  • provide reasons to employees for decisions that impact on work processes and conditions; and
  • document the decision making process (especially as non-dismissal adverse action claims can be made six years after the event).

Thanks to Laura Hillman for her help in writing this article.


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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.