Submission 167 Australian Council of Trade Unions Workplace Relations Framework Public inquiry

Remedies

In a number of countries reinstatement and/or compensation payments will be ordered by a court or tribunal if the dismissal is deemed unfair. Where reinstatement is ordered, the employee is typically entitled to wage arrears and social security contributions as if the employee had never been dismissed.

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  In Austria, the Czech Republic and Korea reinstatement is almost always granted or offered to the dismissed employee. The situation is the same in Portugal except in the case of procedural irregularity;
  
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  Non-OECD countries such as China, India, Indonesia, Latvia and the Russian Federation also provide the ability to order reinstatement for workers deemed to be unfairly dismissed;
  
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  However, in cases where discrimination has been found, reinstatement is never offered to workers in Belgium, Estonia, France, Luxembourg, Spain, Switzerland, Turkey and the Nordic countries, with the exceptions of Denmark and Norway. Compensation is offered instead.⁶⁵⁹
  

Adequately high and predictable compensation orders over and above amounts due for notice periods and severance pay are also an effective way of protecting workers against arbitrary behaviour. The highest typical compensation payments in terms of months of former pay where an employee has 20 years job tenure can be in the order of:

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  Sweden - 32 months' pay;
  
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  Italy - estimated 21 months' pay;
  
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  China - 20 months' pay;
  
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  Portugal - 17.5 months pay;
  
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  France - 16 months pay.
  

The OECD average is closer to six months' pay. By contrast, very low compensation, beyond ordinary severance and or notice is typically ordered in Estonia, Poland, Brazil and Saudi Arabia.⁶⁶⁰

In summary, the Australian compensation cap of effectively six months wages is in line with the OECD average, but operates unfairly in respect of employees who are dismissed after long periods of service. If the position advocated earlier in this submission of leaving the determination of compensation to the discretion of the FW Commission is not regarded as practical, then an alternative may be to link maximum compensation payments above the present cap to years of service, similar to the practice adopted in a number of comparable jurisdictions.

19	Employment Protections: (2) Unlawful Termination and General Protections

The General Protections and Unlawful Termination provisions are largely concerned with protection from discrimination. They have a long history and are informed by international instruments. Recent developments suggest a need for some reform in order to ensure the protection they promise is not illusory.

General Protections

The general protections provisions are to be found in Part 3-1 of the FW Act. The purpose of these provisions is to protect persons with certain attributes, or engaged in certain conduct covered by the FW Act, from ‘adverse action’ engaged in or initiated by another person. The intended effect of the general protections is beneficial and protective. They are designed to further and promote certain internationally recognised norms including, inter alia, the protection of persons engaged in lawful industrial activity.

The general protections provisions of the FW Act therefore play an essential role in Australian industrial and employment law. The provisions provide legal protection to employees, contractors and employers from egregious interference with their workplace rights and in doing so, reinforce the notion of freedom of association and the important role that workplace representatives play in the functioning of a fair industrial relations system.

Provisions akin to those contained in Part 3-1 of the FW Act, have existed in one form or another for many years in Australian jurisdictions.⁶⁶¹ However, with the introduction of the FW Act, many of the prior existing provisions were consolidated to create a greater consistency in the expressions used across a range of different types of conduct and attributes covered. In addition, the scope of conduct covered by the FW Act was expanded in certain areas, particularly in respect to the new limb of “discrimination”,⁶⁶² but also as result of the broadening of the definition of the protected activity of “making a complaint or inquiry”.⁶⁶³

Since the introduction of the general protections provisions in the FW Act, there has been a significant amount of litigation under relevant provisions, including two matters that ended up being the subject of judgments by the High Court of Australia. Because of their practical and legal importance, this submission concentrates on the state of the law in the aftermath of the High Court decisions in Board of Bendigo Regional Institute of Technology and Further Education v Barclay (“Barclay”)⁶⁶⁴ and the more recent decision in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (“CFMEU v BHP”).⁶⁶⁵

Both High Court judgments turn on the critical issue of how adverse action engaged in by the relevant employers was to be characterised. As will be shown below, the current state of the law on this point is unsatisfactory and uncertain and appears to allow for the essential purpose of the general protections provisions to be undermined by artificial and semantic descriptions of the reasons for employer conduct that belie objective reality.

The most important question to be decided in most proceedings under the general protections provisions will generally be whether adverse action was taken “because” of a prohibited reason - see for example s340, 346 and 351 of the FW Act. The word “because” was introduced under the FW Act. Previously the legislation had used the words “for the reason that” for most purposes It is generally accepted that this is a change of style rather than of substance.

Causation has always been a difficult issue in many fields of law. The question of causation in respect of the general protections is one on which the Courts have divided, both before and after the High Court decisions in Barclay and CFMEU v BHP⁶⁶⁶.

Prior to the various decisions in Barclay, the debate tended to focus upon whether a subjective or an objective approach should be taken. That was how the appellant employer framed the debate in the appeal to the High Court in Barclay.

The facts in that case bear repeating. Mr Barclay was employed as a senior teacher by Bendigo TAFE. He was also the president of the Bendigo TAFE sub-branch of the Australian Education Union (AEU). In January 2010, Mr Barclay sent an email in his capacity as an AEU officer to all AEU members employed by Bendigo TAFE. In the email, Mr Barclay said, among other things, that several members had reported being asked to be part of producing 'false and fraudulent' documentation for an upcoming reaccreditation audit. Mr Barclay did not take his concerns to management.

The employer commenced a disciplinary inquiry. The decision maker asserted that the reasons for so doing were as follows:

1. 
   the allegations of fraudulent conduct were made without any complaint or report of conduct of that kind being raised any member of senior management;
   

2. 
   the language used in the email was bound to cause distress to members of staff, bring the reputation of the educational institution into question and undermine staff confidence in the Audit process; and
   

3. 
   the decision maker was also concerned that Mr Barclay was employed in the Unit responsible for overseeing the preparation for the Audit process.
   

The institution of a disciplinary inquiry against Mr Barclay led, at first instance, to an unsuccessful application to a single member of the Federal Court of Australia and was followed by an appeal to the Full Court of the Federal Court.⁶⁶⁷

The majority of the Full Court of the Federal Court in Barclay, found that the conduct in circulating the email was industrial activity within the meaning of s 347(b)(iii) of the FW Act⁶⁶⁸ because by sending the email on 29 January 2010 Mr Barclay was engaging in lawful industrial activity by encouraging members of the AEU to contact the AEU and seek support and advice; and had acted in his capacity as an officer of the AEU by retaining the confidences of AEU members who had approached him in this capacity.

The majority, whilst accepting that subjective reasons were relevant to the question of whether conduct occurred “because of” a prohibited reason, stated that the test was not confined to subjective reasons.⁶⁶⁹ The majority said the real reason for the conduct is not necessarily the reason the person asserts. What is required is a search for what actuated the conduct of the person, which may include the conscious or subconscious thoughts of the perpetrator. The majority found that as the disciplinary action was taken because of conduct which was protected, a contravention was established.

The reference by the majority in the Full Court to the subconscious of the decision maker was, with hindsight, unfortunate. It was seized upon in the High Court. The High Court unanimously overturned the Full Court decision.

The decisions of the High Court in the Barclay case are somewhat confusing. The Court correctly identified that the question to be decided for the purpose of s. 346(b) of the FW Act is whether adverse action was taken because an employee engaged in conduct which is protected. This is a question of fact, the answer to which will depend upon the particular circumstances of each case. Indeed, Justices Gummow and Hayne rejected the objective - subjective ‘dichotomy’ as “an illusory frame of reference”.⁶⁷⁰

The Court also reaffirmed the approach taken in the earlier decision General Motors Holden Pty Ltd v Bowling,⁶⁷¹ which has been applied by the Courts on many occasions. The reasoning in Bowling shows an appreciation of the complexities of identifying the operative reasons for adverse action in a case which considered the dismissal of a ‘shop steward’ who was annoying to the employer for a range of reasons including his union activism.

Much of the discussion in the High Court in Barclay, and the criticism of the majority in the Full Court, seems to indicate a lack of understanding of the reasoning of the Full Court majority. The various judgments do not explain with any clarity what approach should be taken to the determination of reasons for adverse action. Although a subjective approach is expressly disavowed, the reasoning seems to suggest at times that if the decision maker denies having a prohibited reason, and is believed, the respondent will have discharged its onus.

What the High Court did not seem to acknowledge or understand is that in some cases the issue will depend not on the subjective belief of the decision maker as to his or her reasons, but on the proper characterisation of those reasons. This is essentially the point the Full Court was making and is the issue which dominated the litigation leading up and including to the more recent High Court decision in CFMEU v BHP.

The case of CFMEU v BHP concerned the dismissal of Mr Henk Doevendans, a Vice President of the Saraji Lodge (that is, local union branch) of the main coal miner’s union, the CFMEU. Mr Doevendans was dismissed because he was observed in amongst a group of about 30 or so CFMEU members holding up a sign during a peaceful protest outside the Saraji mine in Central Queensland in 2012. The industrial context surrounding Mr Doevendans’ actions was a campaign of protected industrial action engaged in by about 3000 members of the CFMEU in pursuit of a new collective agreement covering seven coal mines operated by BHP Billiton (trading under the name of BMA) in Queensland.

Mr Doevendans held up a sign provided by the union which stated: “No Principles, SCABS, No Guts”. This was one of a number of signs held up by union members at the demonstration site, but Mr Doevendans was the only person singled out for disciplinary action. In terminating Mr Doevendans’ employment, BHP asserted that the reason for the dismissal was not because of any involvement in industrial activity, but because the sign held up by Mr Doevendans was offensive and contrary to the company’s Code of Conduct.

The CFMEU sought relief for Mr Doevendans under the general protections provisions of the FW Act. Jessup J of the Federal Court, whilst accepting the evidence of the relevant decision maker that Mr Doevendans’ industrial activity did not play “any part” in his decision to terminate, nonetheless found that the dismissal was because of conduct protected by the general protections provisions of the FW Act – that is, it was not possible to separate the lawful industrial conduct engaged in by Mr Doevendans from the reasons for termination asserted by the employer.⁶⁷²

BHP appealed the decision of Jessup J to the Full Court of the Federal Court of Australia. During the appeal, it was accepted by both parties that in holding up the “scab sign”, Mr Doevendans was representing the views and interests of a registered organisation within the meaning of the general protections provisions of the FW Act.⁶⁷³ It was accepted that the decision maker dismissed Mr Doevendans because he held up the sign at the protest and because, inter alia, he regarded that conduct as having unacceptable attributes⁶⁷⁴.

However, the majority of the Full Court in a 2:1 judgment found that, once the evidence of the decision maker as to his state of mind set out above was accepted, there could be no contravention, despite the fact that the conduct for which he was dismissed (the waving of the sign) fell within the scope of the general protections. Naturally the Full Court majority relied upon the High Court in Barclay for this conclusion.

The CFMEU appealed the judgment of the Full Court of the Federal Court of Australia to the High Court. A five member High Court was convened to hear the appeal. In a 3:2 judgment, the High Court upheld the decision of the majority of the Federal Court. Which means that by the time of the final High Court judgment a total of 4 judges had found in favour of the CFMEU on the key issue of characterisation, and 5 judges had found in favour of BHP.

In CFMEU v BHP, the four High Court judgments each take a somewhat different approach to the issues presently raised. French CJ and Kiefel J in their joint judgment said that:

Section 346 does not direct a court to enquire whether the adverse action can be characterised as connected with the industrial activities which are protected by the Act. It requires a determination of fact as to the reasons which motivated the person who took the adverse action.⁶⁷⁵

Their honours considered that the conduct for which the employee was dismissed could be sufficiently separated from the protected industrial activities. On this reasoning the primary judge’s finding as to the reasons was not available because of the findings as to the state of mind of the decision maker. French CJ and Kiefel J did not directly address the question of characterisation of reasons.

Hayne J, in dissent,⁶⁷⁶ expressed the view that no useful distinction could be made on the facts between participation in a lawful industrial activity and the manner of participation in a lawful industrial activity.

Crennan J in dissent took a similar approach to Hayne J, observing that “Barclay does not hinder the drawing of available inferences which may controvert an honest decision-maker's assertion that he or she did not take adverse action for any prohibited reason”. ⁶⁷⁷

Gageler J addressed the central issue raised by the appeal by introducing a distinction⁶⁷⁸ between adverse action taken because the employee engages in an act or omission that has the character of a protected industrial activity and adverse action taken because of that act or omission having the character of a protected industrial activity. With respect, the proposition introduced by His honour is a difficult one to grasp. It also has the tendency to render many if not most of the general protections in Part 3-1 ineffectual.

This is because rarely will adverse action be taken merely because of the character of activity as industrial activity. To take the example of Bowling⁶⁷⁹, on the reasoning of Gageler J a shop steward could lawfully be dismissed because he was considered to be disruptive to productivity, even though the sole basis of the ‘disruption’ was in fact his or her legitimate trade union activities. Thus as a practical matter, there would be no protection for lawful industrial activities as long as the employer could plausibly characterise the reason for the adverse action as not being motivated by such a reason.

The majority reasons in Barclay and CFMEU v BHP have left the crucial question of how an employer’s actions are to be characterised, as open to doubt and confusion. In particular, the majority reasoning implies that an employer may escape liability if the decision maker is able to subjectively categorise relevant conduct as something other than the exercise of a workplace right. To take this reasoning to its logical extreme, an employer may have a policy which implicitly or expressly prohibits union membership – but if a decision maker sacks an employee and states that this was not because he or she is a union member, but because he or she breached the company’s policy, then there is no contravention.

The current state of the law on general protections cases means that the protections that Parliament envisaged as an integral aspect of the industrial relations framework in this country, have been effectively read-down by the Courts and are at risk of being undermined in a critical area.

This means that legislative amendment may be the only means of reinstating the essentially beneficial and protective operation of the general protections provisions of the FW Act. Such an amendment might positively describe the relevant test of characterisation as an objective test, in which the courts are required to take into account, but not treat as conclusive, the testimony of relevant decision makers. Alternatively, the relevant legislation could be expressed more narrowly to simply preclude a purely subjective approach to ascertaining the reasons for adverse action and requiring an inquiry into real or actual reasons. Either way, the current state of law cannot be allowed to continue to develop in the direction of diminished protection for employees engaged in lawful industrial activities.