Adverse action update

Two recent decisions in the Federal Circuit Court provide guidance for employers regarding the scope of the adverse action jurisdiction.

Adverse action fundamentals

The fundamentals of any adverse action claim are that:

  • The applicant has suffered “adverse action”: This is defined broadly to include termination of employment, failing to make an offer of employment, disciplinary action or any other prejudicial action; and
  • The applicant has a “workplace right”: This is defined to include (amongst other things)being “entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body.” A “workplace law” is defined as a law “that regulates the relationships between employers and employees (including by dealing with occupational health and safety matters).”

Once these two elements are established the respondent (normally an employer) must show that one of the reasons for the adverse action was not the exercise or purported exercise of a workplace right.

Privacy legislation not a workplace law

In Austin v Honeywell Ltd [2013] FCCA 662 (28 June 2013) the Federal Circuit Court considered whether the Privacy Act 1988 (Cth) was a “workplace law”.

Ms Austin claimed that, during a pre-employment screening process, Honeywell Ltd (Honeywell) required her to provide, among other things, an electronic copy of her signature and a digital copy of her passport. Ms Austin declined to provide those things because she was concerned about identity theft and the bona fides of the agent who was engaged by Honeywell to conduct the pre-employment screening.

Honeywell withdrew the offer of employment it had made to Ms Austin. Ms Austin said this constituted adverse action because Ms Austin had exercised a workplace right that arose under a workplace law, namely, the Privacy Act 1988 (Cth). Honeywell also stopped engaging Ms Austin as an independent contractor or a casual employee. Ms Austin said the cessation of the engagement was for the same reason.

After Ms Austin commenced the proceedings, Honeywell did employ her for a few months. However, her employment was then terminated. Ms Austin again claimed that this termination was adverse action taken against her because she had exercised her workplace rights as a prospective employee under the Privacy Act and on other grounds. Ms Austin sought remedies including reinstatement and compensation for future earnings of over $2 million.

Judge Riley dismissed Ms Austin’s application holding that the Privacy Act was not a “workplace law” as:

at most, [it] incidentally imposes duties on prospective employers to achieve ends that do not primarily concern the regulation of the relationship between employers and employees. Indeed, s.7B(3) of the Privacy Act 1988 specifically exempts acts or practices that directly relate to: (a) a current or former employment relationship between the employer and the individual; and (b) an employee record held by the organisation and relating to the individual.

Judge Riley similarly rejected Ms Austin’s arguments relating to the Best Practice Guide (relating to workplace privacy) issued by the Workplace Ombudsman and the Attorney-General’s stated intention to review the extent of the employee record exemption in the Act. In both cases, Judge Riley held that these instances were insufficient grounds on which to find that the Privacy Act is a workplace law.

Ms Austin’s other claim (relating to misrepresentations regarding her status as a contractor) was also dismissed.

Adverse action because employee exercised workplace right to take personal leave

In other decision of the Federal Circuit Court in CFMEU v Endeavour Coal Pty Ltd [2013] FCCA 699 (27 June 2013), Judge Cameron considered an adverse action claim based on allegations that Endeavour Coal Pty Ltd (Endeavour) had changed an employee’s roster from weekend to weekday work (leading to a loss of penalties) because the employee exercised his workplace right to take personal leave and had family or carer’s responsibilities.

The decision turned on Endeavour’s ability to meet its burden to essentially disprove the link between employee’s exercise of personal leave and family and carer’s responsibilities and the change in roster.

Judge Cameron found in favour of Endeavour by drawing a distinction between taking leave and being absent stating:

The evidence of Messrs Young and Hannigan satisfies me that their concern was not with why Mr McDermott was absent from work but with the fact that he was absent. It can be difficult to discern a distinction between an intolerance of leave and an intolerance of absence and in some cases it would be impossible. However, it is not impossible in this case because of the different attitudes exhibited by Endeavour in relation to weekend and weekday shifts. I did not detect in Messrs Young and Hannigan’s evidence any generalised opposition to Mr McDermott taking leave to which he was entitled. If they had been motivated to move Mr McDermott because he had exercised his right to take leave, it might have been expected that they would have been similarly intolerant of absences on weekday shifts. Instead, however, they expressed a considerable flexibility in relation to the leave which Mr McDermott might take if he were to work a weekday shift.

… I have concluded that Mr McDermott was moved from the weekend day shift because Endeavour did not want to have workers on that shift whose attendance was not predictable and reliable and I am of the view that it used the Absenteeism Management Process as a procedure sanctioned by the Agreement as the means to achieve this. But even though in Mr McDermott’s case the Absenteeism Management Process operated by reference to occasions of leave which he had been entitled to take, I have concluded that it was the lack of predictability in Mr McDermott’s attendance which was the reason for the decision to move him from the weekend day shift, not the fact that he had previously exercised his rights to personal/carer’s leave.

Notwithstanding the above, Judge Cameron did find a breach of the “Absenteeism Management Process” had occurred and stood the matter over for penalties etc. on this point.

Implications for employers

These cases provide guidance on two key elements of the adverse action jurisdiction: the existence of a workplace right and the link between that right and the adverse action.

Whilst confirmation that the Privacy Act is not a workplace law will be welcome news to employers, employers seeking to rely on the fine distinction between leave and absence in the Endeavour decision should exercise caution and consider whether the arguments put forward in Endeavour are similarly supported by their particular factual circumstances. It would also be prudent to review any “absence management” policies to ensure that they do not give rise to adverse outcomes due to an employee exercising their right to take personal leave under the Fair Work Act or a workplace agreement.

This article was written by Jane Wright, Director and Principal of Workdynamic Australia. 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.