30 Jun 2011

More on adverse action: Employees have a right to raise concerns

by Joe Catanzariti

Employees have a right to raise concerns about their pay rates and entitlements without the fear of being dismissed or victimised.

Adverse action has been a high-profile issue since the introduction of the Fair Work Act 2009 (Cth), and judgments in Barclay v The Board of Bendigo Regional Institute of Technical and Further Education [2011] FCAFC 14 and Australia Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333 have helped explain how these new provisions operate.

The Full Court of the Federal Court decision in Barclay fleshed out the adverse action provisions and discussed how to address the reverse onus of proof that applies to an allegation of adverse action under the Act. The case is significant as it was the first successful adverse action judgment and the first Full Federal Court decision to have dealt with the adverse action provisions.

More recently, the decision in IASA awarded compensation, including damages for "hurt and humiliation" in an adverse action ruling relating to an employee being negatively assessed by his employer. The court in this instance reaffirmed that the protection of an employee's industrial freedom is paramount.

What led to the court case?

Mr Puspitono was working in Perth as a licensed aircraft maintenance engineer for the International Aviation Service Assistance (IASA), which carries out aircraft maintenance for major airlines including Garuda Indonesia Airlines.

In April 2009, Mr Puspitono had several concerns with his roster as well as overtime, and lodged a formal complaint to the management team of IASA. He then left work at the end of his scheduled roster without authorising the release of the late scheduled Garuda aircraft since his supervisor was not able to guarantee that his overtime would be paid.

Following this incident, IASA suspended Mr Puspitono and reviewed his performance. Initially Mr Puspitono was refused representation by IASA, but it later relented and allowed the Australian Licensed Aircraft Engineers Association to represent him. Nevertheless, his employment was eventually terminated.

Following an unfair dismissal claim under the then operating Workplace Relations Act 1996 (Cth), he was reinstated pursuant to orders of the Federal Court.

However, five months after the reinstatement, IASA passed a negative assessment to Garuda, which then did not re-authorise the engineer's qualification. His loss of authorisation with Garuda resulted in the termination of his employment.

Was "adverse action" taken against the employee?

The union submitted that adverse action was taken when:

  • IASA gave Mr Puspitono four weeks notice of dismissal;
  • IASA injured Mr Puspitono in his employment when it dismissed him;
  • IASA altered the position of Mr Puspitono to his prejudice when it dismissed him;
  • IASA solicited, counselled, procured, induced or caused Garuda to refuse to provide a renewal to Mr Puspitono, which had the effect of denying him the opportunity of continuing to certify Garuda planes and so had the effect of injuring him in his employment or altering his position to his prejudice; and
  • the negative assessment was made, as well as when it was given to Garuda.

The court's findings

The manager who signed off on the negative authorisation only knew Mr Puspitono for a short amount of time, and the other information he used to form the assessment would amount to hearsay. The court accepted that when Mr Puspitono was called to sign the renewal application, the manager did not bring the unsatisfactory ratings to his attention. With this, the court held that the employer failed to discharge its onus in proving that it did not take adverse action for a prohibited reason against the employee.

Justice Barker noted that the question is whether the identified adverse action was taken because Mr Puspitono both tried (unsuccessfully) to exercise his identified workplace right and/or because he (successfully) exercised it through the union representatives. The reverse onus application outlined in the Barclay decision was applied and the burden was cast on the employer to prove that the adverse action was not taken because of his workplace right or the exercise of it. The court found that IASA failed to adduce appropriate, cogent evidence of the actual decision-making process to prove the reason for the dismissal, and hence contravening sections 340 and 346 of the Act.

In terms of the negative assessment made by the employer, the court said the question is whether the assessment was made because of the circumstances mentioned in section 340 or because Mr Puspitono had engaged in industrial activity as defined in section 346.

The decision

Justice Barker found that the employer had taken adverse action against the employee, contravening both section 340(1) and section 346(1) of the Act by:

  • dismissing Mr Puspitono from his employment;
  • making a negative assessment; and
  • sending the negative assessment to Garuda.

Justice Barker also noted that by issuing a negative performance assessment, the company was possibly looking to reverse the consent orders by the Federal Court which reinstated Mr Puspitono's position after a successful unfair dismissal claim.

The Federal Court upheld the claim and in addition to awarding almost $77,000 in lost wages, awarded Mr Puspitono a further $7,500 for hurt and humiliation.

What does this mean for employers?

The decision in IASA emphasises that there are circumstances where the adverse action protections can be effectively enforced, despite the string of unsuccessful claims heard by Fair Work Australia.

Justice Barker noted that there has been an emphasis on the importance of industrial freedom of association in Australian workplace laws, and that the Fair Work Act "marks out industrial freedom of association as one of its important objectives".

This latest adverse action ruling sends a clear message to employers that employees have a right to raise concerns about their pay rates and entitlements without the fear of being dismissed or victimised.

This article was written when Joe was a partner at Clayton Utz and does not necessarily reflect his views as Vice-President of the Fair Work Commission.

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