16 August 2012 Beware - Adverse Action may result in reinstatement

By Warwick Ryan, Partner and Nathan Huynh, Law Clerk

In Brief

The last thing any employer wants is to be forced into reinstating an employee after a messy general protections dispute. Until recently, most general protections claims have resulted in either the dismissal of an employee or an award of damages and compensation. However the recent case of CFMEU v Pilbara Iron Company (Services) Pty Ltd (No 3) [2012] FCA 697 highlights the possibility of reinstating employees subjected to adverse action.

Darren Lamberth ('the Second Applicant'), who was a member of the CFMEU ('the First Applicant'), was employed by Pilbara ('the Respondent') under a fixed term contract of 12 months, but unlike most others in his position, was not offered permanent employment.

The Respondent was also found to have marked down his performance review from a "pass" in the draft assessment to a "fail" in the final assessment, and rejected his nomination as a Health and Safety Representative.

The Federal Court rejected the Respondent's argument that the failure to extend the Second Applicant's contract was because of issues relating to his attitude, communication and behaviour. The court instead agreed with the Applicants' claim that the actions amounted to adverse action, actuated because of the Second Applicant's union membership, industrial activism and complaints and inquiries about workplace practices - reasons which are prohibited by ss340 and 346 of the Fair Work Act.

In reaching this decision, the Court applied an important earlier decision (currently before the High Court)1, which held that in determining whether actions taken by an employer were unlawful required a determination of the actual reasons as to why the action was taken, rather than the reasons asserted by the employer.

The Respondent was ordered to offer permanent employment to the Second Applicant, after the Court found that there was no evidence which suggested that re-employment was impracticable. At the time of writing this article, the Court has yet to decide whether a penalty will be imposed on the Respondent. 

What does this mean for employers?

Employers who are found to have taken adverse action face severe consequences, including significant penalties and even reinstatement of the employee. It is therefore our view that employers exercise extreme caution to ensure that disciplinary actions are not linked to unlawful reasons, including union membership or complaints made by the employee. We strongly recommend obtaining profession advice prior to exercising any disciplinary actions.

1Barclay v The Board of Bendigo Regional Institute of Technical and Further Education [2011] FCAFC 14

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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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