Adverse action: It’s not so much what you did, it’s why you did it

Adverse action: It’s not so much what you did, it’s why you did it

In the world of adverse action, the reasons for a decision are key. Two recent cases reinforce that Courts will focus on the subjective reasons for an employer’s actions – leading to results which may surprise.  Namely, while a plan to implement broad organisational change was unlawful, a decision to dismiss an employee for taking genuine sick leave, despite being harsh and unfair, was lawful.

National Tertiary Education Industry Union v Swinburne University of Technology (No 2) [2015] FCA 1080

In October this year, the Federal Court in the above case fined Swinburne University of Technology for taking adverse action against its teaching employees in circumstances where it had commenced planning reforms aimed at improving the overall financial viability of the University.  While such a decision would often be considered within the prerogative of the employer, the Court noted that:

 “Part of that plan (I accept, not the whole of it) included a consciousness that the entitlements of employees … could be adversely affected if the proposal went ahead. Indeed the cost savings and more favourable industrial landscape for Swinburne (especially at the expense of its casual and fixed-term employees) were motivating factors in the proposal.”

Accordingly, although the planned reforms were not carried out, the University’s actions in threatening to make, and taking steps towards implementing, decisions relating to the planned reform amounted to a threat to the employees’ workplace rights, including the diminution of security and continuation of their employment.

In her consideration of the facts, Judge Mortimer relied on the University’s commercial planning documents which included that the objectives of the change were to adjust existing employee entitlements.

Construction, Forestry, Mining and Energy Union v Anglo Coal (Dawson Services) Pty Ltd [2015] FCAFC 157

In this case, an employee who had his last minute application for annual leave rejected on operational grounds, said “Fine, I’m going to be sick anyway” and “I will get a medical certificate. You will find that very hard to challenge”.

The employee subsequently obtained a medical certificate and notified his employer he was taking personal/carer’s leave on the same dates he had initially sought as annual leave. After issuing a show cause letter and holding a meeting to discuss his conduct, the employer dismissed the employee for misconduct.

In dismissing the employee’s adverse action application, the primary Judge found that the employee had been dismissed because the employer did not believe he was sick on the days he was absent, and believed that he had been dishonest.  This was despite a finding that the employee had been genuinely sick on the days in question.

On appeal, the majority decision of the Federal Court upheld this ruling, confirming that the employer’s reason for the dismissal was the subjective belief that the employee had been dishonest, and not because he had exercised a workplace right.

In reaching this decision, the Court expressed concerns that the outcome was unjust, and noted that the applicant would have likely succeeded if he had instead pursued an ‘unfair dismissal’ application.   However, the majority of the Court found that the employer’s honest, albeit mistaken, belief was the real motivating factor for the dismissal, and that the application must therefore fail.

Lessons for employers

Employers must be mindful that the lawfulness of their conduct will not always be determined by whether their actions are reasonable or whether the outcome is fair.   These cases illustrate that a decision-maker’s subjective reasons will be jealously scrutinised.  A decision will be unlawful if, and only if, this analysis reveals that any adverse outcome is because of the existence, or exercise, of a workplace right.


This article was written by Jonathan Wright (Director and Principal) and Annette Tyrrell (Senior Associate). The information in this article is for information purposes only and does not constitute legal advice. You should obtain specific advice relevant to your circumstances.