General Protections – Why Businesses Should Take Heed

Massive Payout Affirms Potency of the General Protections Jurisdiction in Australia

A claim for breach of the general protections, or as it is otherwise known, “adverse action”, is the lesser known of two predominant claims brought by employees in circumstances where their employment is terminated. While most employers are familiar with the threat of an unfair dismissal claim, fewer understand the risks associated with taking adverse action against an employee.

Several other factors make the general protections jurisdiction unique and powerful, namely that a claim can be brought by an individual whose employment has been terminated, as well as by an individual who is still employed, and anyone can bring a claim regardless of how much they earn. The general protections provisions are contained in the Fair Work Act 2009 (Cth) (“the Act”) and also apply to a broader category of worker including candidates who are subject to the recruitment process and contractors. It is interesting to note that employers are also able to bring a claim against individuals, although this is rarely done.

Who is covered?

1. Employees and employers;
2. Independent contracts and principals; and
3. Industrial associations (e.g., union or member of unions).

Adverse action can be taken against a variety of persons, however, for the purposes of this article, we will focus on adverse action taken against employees.

What are the general protections?

Employees enjoy general protections as set out in the Act. These protections broadly include:

1. Protections relating to workplace rights (freedom to exercise and enforce rights);
2. Engaging in industrial activities (freedom to be or not be a member of a union);
3. Protection from discrimination;
4. Protection from sham contracting arrangements;
5. Protection against being coerced to exercise or not exercise a workplace right;
6. Protection from undue influence or pressure to make an agreement or arrangement under the National Employment Standards, under an industrial agreement (for example, an award), with respect to an individual flexibility arrangement, deduction of amounts of payment or guarantee of annual earnings; and
7. Protection from dismissal in the event of temporary absence due to illness or injury.

Section 340 of the Act prohibits the taking of adverse action against another person because they:

1. have a workplace right;
2. have or have not exercised a workplace right;
3. propose or propose not to (at any time) exercise a workplace right; or
4. to prevent the exercise of a workplace right by the other person.

What is a workplace right?

Workplace rights are a broad collection of protected rights at work. These are rights such as:

1. rights which arise from a benefit set out in a workplace law, workplace instrument or an order made by an industrial body. For example, the right to take a break as provided for under an award;
2. the right to exercise a role or responsibility provided for under a workplace law, instrument or order made by an industry body. For example, to exercise your right to perform your role as a work health and safety officer, if provided for under work health and safety legislation or an award;
3. the right to initiate or participate in a process or proceeding under a workplace law or instrument. For example, to participate in alternative dispute resolution, such as mediation, provided for under an award or enterprise agreement;
4. the right to make a complaint or inquiry with a person or body with enforcement capacity to seek compliance with a workplace law or instrument. For example, the right to make a complaint to SafeWork NSW regarding a workplace safety incident; and
5. the right to make a complaint or inquiry relating to your employment. For example, to complain that you are being bullied at work.

What is adverse action?

Unlawful adverse action is any action that is taken against an employee for a prohibited reason, such as to prevent their exercise of a workplace right or to otherwise prevent their enjoyment of a general protection. Adverse action includes the following:

1. dismissing the employee;
2. injuring the employee in their employment (including psychological injury);
3. altering the position of the employee to the employee’s prejudice; and
4. discriminating between the employee and other employees of the employer.

For candidates, it can manifest as not offering the candidate employment, or discrimination as regards the terms and conditions of an offer or employment.

An example of proscribed adverse action would be where an employee makes a complaint that they are being bullied at work (i.e., a complaint relating to their employment), and their employment is terminated shortly thereafter, because of this complaint.

Importantly, under section 361 of the Act, an employer faces a reverse onus of proof when defending an adverse action claim. In other words, the Court will presume that the action was, or is being, taken for the reason(s) or intent alleged, unless the employer proves otherwise. The reverse onus of proof can present a significant evidentiary hurdle for employers, where it is apparent adverse action was taken for a prohibited reason.

What happens when it goes wrong?

Taking adverse action against an employee can expose an employer to liability in respect of a general protections claim. This type of claim is brought before the Fair Work Commission in the first instance in a very similar manner to that of an unfair dismissal. If the matter is not resolved by the Fair Work Commission, or in the case of a non-dismissal issue, the employee may make an application directly to the Federal Circuit and Family Court or Federal Court of Australia.

Unlike an unfair dismissal claim, where damages are capped (usually at 6 months of the applicant’s remuneration), there is no limit to the amount of compensation which can be awarded to an impacted employee in a general protections matter (as will become evident in the case discussed below). In addition, the Court has the ability to make civil penalty orders against not only the employer, but also any individual perpetrator who is effectively complicit or knowingly concerned in a breach of the general protections’ provisions.

It is most common for employees who have been dismissed from their employment to seek to bring a claim for breach of the general protections provisions by relying on the argument that they exercised a workplace right by making a “complaint or enquiry” in respect of their employment. There has been much judicial discussion about what is meant by the phrase “complaint or enquiry in respect of their employment.” Making a complaint or inquiry is an exercise of a workplace right and can be made to an employer, or an external body. Seeking legal advice has also fallen within the purview of an ‘inquiry.’

The current judicial position as set out in Alam v National Australia Bank Limited [2021] FCAFC 178 is:

1. there must be a relationship between the subject matter of the complaint and the employee’s employment;
2. the complaint must be founded on a source of legal entitlement or right (for example, the complaint must be in relation to a right set out in an award, contract, enterprise agreement or legislation); and
3. it is not necessary that in order to make a complaint or inquiry, that the ability to do so arises from a legal source. For example, in order to make a complaint about bullying, there does not have to be a clause in your employment contract or award that provides for a process or right to do so.

It is enough that the complaint or inquiry relates to a subject matter provided for by an employment contract or industrial instrument. For example, if an employee makes a complaint regarding underpayment but does so to the incorrect authority, (i.e.: not to the Fair Work Ombudsman) this will still be taken to be an exercise of a workplace right because the subject matter (which is the wage underpayment issue) still concerns the employment relationship.

In order to be successful in a claim for breach of the general protections, an employee must establish that they have exercised a workplace right or were prevented from doing so and as a result the employer took adverse action against them. There must be a causal connection between the exercise of the right and the adverse action which follows. However, as soon as the employee can establish that they exercised a workplace right and that there was adverse action, then it is for the employer to show that the adverse action was not taken for the reasons asserted by the employee. For example, if the employee complains to their manager that they are being bullied and the manager then terminates their employment, the employee will be able to allege that there was an exercise of a workplace right, being the complaint about the bullying and that there was also adverse action, being the termination. It is then a matter for the employer to persuade the Court that the termination was unrelated to the complaint. If the employer is unable to do so, the employee will be successful in their claim.

These matters usually resolve by negotiated settlement, and the relatively small number of claims that have ended up in Court have usually resulted in modest awards. However, this is not always the case and awards in this jurisdiction are increasing. It is important to note that unlike the unfair dismissal jurisdiction any employee can bring a claim regardless of how long they have been employed or how much they earn.

A cautionary tale: Leggett v Hawkesbury Race Club

In a landmark decision, a ‘broken’ worker has been awarded $2.8 million dollars – one of the largest sums of compensation in the adverse action jurisdiction. This remarkable amount of compensation is a ‘wake-up call’ (so to speak) for employers to understand the risks associated with taking adverse action against an employee.

Leggett v Hawkesbury Race Club Limited (No 3) [2021] FCA 1658 (24 December 2021)

In December last year, Justice Rares of the Federal Court of Australia found that the Hawkesbury Race Club (“the Club”) was liable to a long-standing employee for ongoing bullying and harassment resulting in the obliteration of her mental health. The employee in question, Ms Vivienne Leggett, worked at the Club from 1991 when she was 28 years old, through to March 2017.

From the outset of his arrival in May 2016, the new CEO, Greg Rudolf micromanaged Ms Leggett and questioned every decision she made to the extent that her job was effectively taken away from her. He publicly belittled her and took offence to the fact that as a marketing and sponsorship manager, she was effectively earning the same remuneration as him, after her commission payments were taken into account ($180,000). Months of this treatment culminated in an email sent from Ms Leggett to the CEO setting out a complaint regarding his behaviour and requesting it be escalated to the board of directors.

In response to the complaint, the CEO emailed her, inviting her to a meeting in which he indicated he would discuss her ‘work performance’ and invited her to bring a support person. Following the meeting, she emailed the CEO a medical certificate which set out a week’s sick leave due to work stress. This email was then forwarded by the CEO to his father-in-law suggesting she was ‘dropping like flies.’

Ms Leggett did not return to work and accepted the Club’s repudiation of her contract. She consequently brought an action, including a claim for breach of the general protections (among other claims for breach of contract and negligence). In her general protections claim, Ms Leggett set out the following adverse action:

1. The CEO’s email requiring her attendance at his office to discuss performance, injured or threatened to injure her in the course of her employment because of the exercise of her workplace right to complain about his conduct the day before; and
2. The CEO caused the Club to withhold her entitlements regarding a race meet from October 2016 to December 2016 and between January 2017 to March 2017. He further removed her name from the race book and told staff and sponsors she would not be returning to work. This was done in response to her taking sick leave, which is a workplace right under the Act, and because she had complained about the CEO.

As mentioned above, once an allegation of adverse action is made, it is presumed that the action was taken for a prohibited reason. It is then the responsibility of the employer to disprove that presumption. Whilst the Club put forward a counter argument that the CEO had sent the email to Ms Leggett to see how she was feeling and understand why she felt she was being unreasonably questioned, the Court was not convinced by this explanation, and found in Ms Leggett’s favour.

Leggett v Hawkesbury Race Club Limited (No 4) [2022] FCA 622

In May this year, Justice Rares was asked to determine whether NSW legislation relating to workers’ compensation would act to ‘cap’ any compensation potentially awarded to Ms Leggett. The Court confirmed the primacy of federal legislation over state law.

To that end, on 7 June 2022, Justice Rares ordered the payment of a total of $2.8 million dollars to Ms Leggett. This amount represents compensation for pain and suffering, past and future economic loss, as well as penalties and payment for legal costs in the sum of $300,000.

This significant decision and award of compensation serves as a blunt and timely reminder for employers as to the potency of the adverse action jurisdiction.

Key Takeaways

1. There is no cap on the monetary amount that can be awarded in respect of general protections claims;
2. If action such as disciplinary action or performance management is taken for a legitimate reason, be sure to have properly documented the progression of the issue so that it is clear as to why the business took that action. Failing to keep proper records may expose the employer to a claim that adverse action was taken because the employee exercised a workplace right which may be difficult to disprove in the absence of appropriate evidence; and
3. Employers should take extra care to ensure a safe place of work for employees, to take complaints seriously and to seek advice if they are unsure about how to respond to a grievance or workplace issue.

We regularly advise our clients on all aspects of employment and industrial relations matters, as well as responding to allegations of adverse action and general protections claims.

If you require any further assistance or information in relation to this client alert, please do not hesitate to contact us.

This alert is not intended to constitute, and should not be treated as, legal advice.