When considering disciplining an employee, employers usually turn their minds to the risk of an unfair dismissal claim, particularly where they are considering termination as the disciplinary action to be taken.  Whilst unfair dismissal is often front of mind, all too often, employers are unaware of the significant risk posed by the general protections provisions in the Fair Work Act 2009 (‘FW Act’).

The general protections provisions (also known as the ‘adverse action’ provisions) provide causes of action for employees (and prospective employees) before employment, during employment and after termination of employment.  The protections are broadly divided into four parts:

1. protections relating to ‘workplace rights’;
2. other protections, including from discrimination; or from termination for being temporarily absent due to injury or illness;
3. protections in relation to engaging in industrial activities; and
4. protections from sham contracting arrangements.

This employment update will focus on the first part of the general protections provisions, as we commonly see employees bringing claims against employers within the scope of those ‘workplace right’ provisions. We will examine why employers should be mindful of the general protections provisions, what the protections are, and look at a recent case where an employer very successfully defended a general protections claim, and assess what steps they took that earned the approval of the judge.

Why should employers be concerned about general protections applications?

While statistics released by the Fair Work Commission (‘FWC’) show that unfair dismissal applications remain the dominant application made by dismissed employees, comprising almost half of the matters dealt with by the FWC, general protections applications have seen a rise of almost 50% in the last 6 years.

At Aitken Legal, we have seen a steady increase in dismissed employees electing to make an application under the general protections provision rather than an unfair dismissal application. While there are significant, substantive differences between the two types of claim, we believe that employees are attracted to general protections applications because, unlike unfair dismissal claims which have a compensation ‘cap’ of 6 months’ pay, the general protections provisions have no cap on compensation. Unlike unfair dismissal, in successful general protections applications, employees can be awarded unlimited compensation, which can include monetary compensation for non-economic loss such as hurt, humiliation and stress. A recent high-profile case saw a Sydney employer ordered to pay more than $2.2m after it was unsuccessful in defending a former employee’s general protections claim.

General protections applications have no minimum period of service threshold and can be made from the first day of employment (or even pre-employment), compared with unfair dismissal applications which can only be brought by employees with 6 or 12 months’ continuous service, depending on whether or not the employer is a small business employer.

A breach of the general protections provisions can also result in an employer facing financial penalties of up to $66,600 per breach for a corporation, and up to $13,300 per breach for individuals involved in a contravention. In limited circumstances, a court can also order that these penalties be paid directly to the employee, which is an outcome often sought by employees who make these claims.

Finally, the general protections jurisdiction is one of very few areas of law where the onus of proof shifts from the applicant (usually the employee) to the respondent (usually the employer). Once an employee establishes that adverse action was taken and alleges that the employer took the adverse action because of a prohibited reason, then the court must presume the action was taken for that alleged reason unless the employer proves otherwise. This creates a situation in which the employer must lead evidence in court to disprove the allegation made by the employee. Conversely, when an employee makes an unfair dismissal application, they have the burden of proving that the dismissal was harsh, unjust or unreasonable within the meaning of the FW Act.

Another trend worth noting is that employees who seek representation from experienced employment lawyers or industrial advocates are also more likely to consider a claim in the general protections jurisdiction, whilst unrepresented employees tend to opt for the simpler and more well-known unfair dismissal jurisdiction.

What is protected?

The aspects of the general protections provisions that are the focus of this employment update prohibit a person from taking adverse action against another person because the other person has a workplace right, or they exercise or propose to exercise a workplace right.

Unlike unfair dismissal, general protections applications involving a dismissal do not concern whether the terminated employee was afforded procedural fairness. A dismissal which is made for a lawful reason, but which was lacking in procedural fairness, will not generally breach the general protections provisions.

‘Adverse Action’

An employer takes adverse action against an employee when they take the following action, or threaten to do so:

1. Dismiss an employee.

This is a termination at the employer’s initiative or where an employee is forced to resign because of conduct engaged in by the employer.

2. Injure an employee in their employment.

This is an injury of any compensable kind. This type of adverse action includes examples such as the employee suffering a loss of pay or reduction in rank or seniority. It has a wider meaning than merely a financial injury or loss sustained from a contract breach. 

3. Alter the position of the employee to their prejudice.

This is a broad category which captures any adverse effect to, or deterioration in, the employee’s working conditions. It is similar to an injury, but requires no actual loss or breach of a legal right.

4. Discriminate between the employee and other employees.

This means deliberately treating an employee, or group of employees, less favourably than other employees. Establishing the decision maker’s intent in this type of matter is key.

 

To be clear, the categories of adverse action set out in items 2, 3 and 4 above mean that it is possible for an employee to make a general protections claim whilst they remain in employment (or even-pre-employment).  Aitken Legal often sees general protections applications (not involving dismissal) made where employees are subject to some disciplinary action, such as being provided with a warning or placed under a performance management plan, and the employee believes that the disciplinary action is being taken because they exercised a workplace right.

It is important to note that an employer does not breach the general protections provisions simply by taking adverse action against an employee. Unless the adverse action was taken because of a prohibited reason, there will be no breach.

‘Because’

The “because” test is a subjective one and requires an assessment of what the decision maker’s particular reason for taking the adverse action was. An employer will almost always need to call on direct testimony of the decision maker(s) in order to disprove the employee’s allegation that the adverse action was taken for a prohibited reason.

The employee can displace direct evidence from a decision maker either by raising questions about the credibility or reliability of the decision maker’s testimony in court; by introducing contradictory objective evidence, such as internal emails; or where other objective facts contradict the decision maker’s evidence.

‘Workplace Right’

An employee has a workplace right if they:

1. are entitled to the benefit of a workplace law or instrument;

A workplace law is any legislation that regulates the relationship between employers and employees and includes workplace health and safety laws. A workplace instrument usually refers to an enterprise agreement or modern award but does not include an employment contract.

2. have a role or responsibility under a workplace law or instrument;

For example, the employee has been appointed as a bargaining representative for the negotiation of an enterprise agreement.

3. are able to initiate or participate in a process under a workplace law or instrument;

A very broad category of processes and proceedings are captured by this part, including court proceedings or FWC conciliation conferences.  It also extends to agreeing to cash out paid annual leave or making a request for flexible working arrangements.

4. are able to initiate a complaint or inquiry to a person or body with capacity to seek compliance with a workplace law or instrument; or

The FW Act does not restrict the person or body to whom a complaint or inquiry may be made.

5. are able to make a complaint or inquiry in relation to this employment.

The complaint or inquiry must have a relationship with the employment and be based on an  employee’s entitlement arising under a contract, industrial instrument or law. The complaint or inquiry must be able to be understood as an expression of grievance that the employer should take note of and consider. However, there is no requirement that the grievance be justified, or that an accusation of fault be capable of substantiation.

Defending a general protections claim – Green v Preston Motors

 The recent decision of Green v Preston Motors Pty Ltd [2022] is an instructive lesson in how to effectively defend a general protections application from a terminated employee. For the reasons discussed below, the employer was able to have the application dismissed by leading reliable and convincing evidence from the decision maker and supporting this testimony with objective evidence and facts.

Background

The employee was stood down during COVID lockdowns and then summarily dismissed by Preston Motors for serious misconduct after he disclosed sensitive confidential information to a third party.  Preston Motors’ actions were found by the court to constitute adverse action.

The employee alleged Preston Motors took the adverse action because he had made a series of complaints to the CEO and HR Manager about alleged bullying and intimidating behaviour by the CEO. On five separate occasions, the employee made complaints to the HR Manager following interactions with the CEO. On the court assessing the substance of those allegations it was established that all of them were without merit and none warranted any further investigation or action on behalf of the HR Manager. In any event, the five complaints, and the employee’s entitlement to make them, were accepted as constituting the exercise of a workplace right.

The court was then required to consider whether the CEO made the decision to stand down and subsequently dismiss the employee because of the employee’s exercise of these workplace rights.

The Evidence

Testimony from decision maker

Justice Blake found that Preston Motors had not taken the adverse action because of the employee exercising his workplace rights, preferring the evidence given at trial by the CEO over that given by the employee.

In analysing the evidence and setting out his reasons for taking this view on the conflicting evidence between the two, the Judge observed that the CEO “answered questions directly, succinctly and with a degree of precision” and that he was a “more credible and reliable witness” than the employee. In contrast, the employee was found to give unreliable and inaccurate descriptions of the CEO’s conduct, which he alleged amounted to bullying and intimidating behaviour. In one example, he alleged the CEO sent him an “abusive” and “aggressive” email.  The email was presented as evidence during the trial and the Judge found that the email could not objectively be described in that way. Justice Blake said the reasonable and direct manner of communication in the email caused him to “seriously question and ultimately doubt” whether the employee had mischaracterised the other allegations against the CEO as well.

It was also relevant that the five complaints made to the HR Manager were never communicated to the CEO, and as such it was not possible that the employee’s making of the complaints could have formed any part of the CEO’s reason for taking adverse action against the employee.

Documentary Evidence

The CEO’s testimony was supported by documentary evidence which assisted the court in coming to this conclusion. The court was given the following written evidence, all of which referred solely to the serious misconduct of the employee as being the reason for the disciplinary process, and not to the complaints he had made:

1. letters to the employee inviting him to a disciplinary meeting and then terminating his employment;
2. internal emails between the CEO and HR Manager regarding the disciplinary and termination processes; and
3. file notes of the disciplinary meeting prepared by the HR Manager.

While the employer would not have been able to successfully disprove the employee’s allegations using this documentary evidence alone, and without the CEO’s testimony, the fact that this objective evidence was consistent with the reliably delivered testimony from the CEO assisted the employer in its case.

Proximity of Complaints to Dismissal

The employer’s prompt response to discovering the employee’s serious misconduct assisted it in convincing the court of the true reason for taking adverse action against the employee. The employee argued that the proximity of the complaints to the adverse action being taken should have displaced the evidence given by the CEO. Justice Blake rejected that argument firstly because some of the complaints were made well before any adverse action was taken, and only some of them occurred closer in time to the adverse action being taken. Secondly, the Judge accepted that the employer commenced the disciplinary processes quickly after discovering the employee’s serious misconduct, and that this prompt action demonstrated how seriously they regarded the employee’s conduct.

Key Takeaways

The lessons that other employers can take from this case, and which will place them in a more secure position should they be required to defend a general protections application are:

1. Respond to misconduct quickly and proportionately, taking into account the gravity of the conduct . If you are dealing with misconduct you allege to be serious misconduct, you should take prompt action (such as standing the employee down) to ensure you are demonstrating that you take the matter seriously.
2. Always keep accurate written records of the entire disciplinary / performance management process, including initial meeting invitations, file notes from meetings and documents confirming the outcome of the process (such as warning or termination letters). Make sure that any outcome related document, such as a warning letter or termination letter, are consistent with other documents issued during the process (such as meeting invitations, allegations letters and show cause letters) and spell out the reasons the outcome has been decided upon.
3. Ensure that any and all decision maker(s) are well informed on the matter before making a decision on the adverse action to be taken. This is ensure that if the decision maker is required to give evidence before a court, they will be well placed to ensure that they give reliable, consistent, and credible evidence.

Aitken Legal regularly advises clients on the risks posed by the general protections provisions, how to mitigate those risks, and we frequently represent employers in general protections matters (both those involving dismissal and those not involving dismissal). It is best to seek proactive legal advice before taking disciplinary action. If you have a general protections matter that you are dealing with, or you consider that your business is at risk of a general protections claim, please contact one of Aitken Legal’s experienced employment lawyers.