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This recent Federal Circuit Court decision reminds us of the need for employers to ensure that redundancies are implemented on the basis of genuine operational reasons.

A decision to terminate an employee’s employment or disestablish an employee’s position where there is a lack of evidence around the operational reasons for the decision is likely to be challenged, particularly where an employee has made a complaint or inquiry in relation to their employment.

The background

Ms Hein Minh Thi Tran (Ms Tran) filed a general protections claim, challenging the genuineness of her termination. The stated reason for Ms Tan’s termination was redundancy. Ms Tan submitted that her employment was terminated as she exercised her workplace rights by complaining about the treatment she had received from her supervisors.

Ms Tran reported to Ms Chellappah (Ms Chellappah), the Systems Manager. Ms Chellappah in turn reported to the Deputy Chief Financial Officer, Mr Lovelace (Mr Lovelace).

Throughout her employment Ms Tran made a number of complaints including:

  • lodging a grievance against Ms Chellappah concerning her workload;
  • complaining to her union about changes to her work hours;
  • raising with Mr Lovelace that she was feeling bullied by Ms Chellappah; and
  • that she had been doing her own work in addition to that of another employee.

In evidence was an email sent by Ms Chellappah in November 2015 that included the following detail:

“As you are aware Hein (Ms Tran) and Fouzia (Ms Zia) are difficult individuals and are poisonous to a team environment. I advised you some time back in the presence of Min-Ha that I am concerned if Hein would physically harm me. The university has known about Hein’s behaviour for a while and has not acted upon it. Hein has taken me to the union twice and has approached HR a number of times to make complaints that are unfounded.”

In October 2016, Mr Lovelace released a proposed change paper to all affected staff within the systems team. The paper proposed to disestablish Ms Tran’s position. The change paper also proposed to disestablish a position within the Student One group, potentially affecting Ms Zia.

The adverse action

Section 342 of the Fair Work Act 2009 (Cth) (FW Act) sets out the meaning of when an employer takes “adverse action” against an employee and it includes:

  • dismissing an employee;
  • injuring an employee in his or her employment; or
  • altering the position of the employee to the employees prejudice; or
  • discriminating between the employee and other employees of the employer.

It was put to the Court that a proposed workplace restructure which alters the positon of the employee to the employer’s prejudice, falls under the term of adverse action. It was accepted by the Court that the proposed restructure that disestablished Ms Tran’s position amounted to adverse action within the meaning of the FW Act.

The reasons for the action

Where an employee makes an allegation of adverse action, the employer bears the onus of satisfying the Court that the adverse action was not taken for a prohibited reason. In this case, the prohibited reason was alleged to have been Ms Tran making complaints about Ms Chellappah.

The FW Act provides that the prohibited reason need only be one of multiple reasons for acting, in order to be a contravention. It is well established that the prohibited reason/s must be a “substantial or operative factor” in influencing the adverse action, or alternatively, an operative or immediate reason for acting.

This requires that the Court, at a minimum, conduct an enquiry into the state of mind of the decision-maker. Where multiple people are involved in the decision making process, such an enquiry may involve taking into account all these decision maker’s reasons.

The Court found it difficult to accept an assertion by the employer that Ms Tran’s complaints had not formed part of the decision to undertake a restructure, particularly when the restructure targeted Ms Tran and Ms Zia, both of who were described by Ms Chellappah, as “poisonous to the team environment”.

The Court found that Ms Chellappah had a substantial role in the restructure proposal and it was essential from Mr Lovelace’s view that Ms Chellappah was happy that it would achieve the desired outcome.

The Court was satisfied that the desired outcome of the restructure included the removal of Ms Tran and Ms Zia from employment with the employer and that a substantial and operative part of that reason was that Ms Tran had made complaints about Ms Chellappah.

Of particular importance in this case was that the employer principally relied upon the evidence of Mr Lovelace. The employer did not call Ms Chellappah or any other members of the Executive group to give evidence. For the Court this meant it was not satisfied that the employer had been able to rebut the presumption that the adverse action was taken for a prohibited reason (being the complaints).

The lessons

To limit the risk of a successful general protections claim, employers should ensure that:

  • the reason for termination of an employee’s employment does not include a prohibited reason, particularly if there has been a history of conflict between a decision-maker and the employee;
  • there are objective criteria or reasons for the termination, including records of the reasons for selecting particular roles in a restructure; and
  • where possible, limit the number of decision-makers and, if necessary, prepare them for giving evidence on behalf of the employer.

For further information please contact our Employment + Workplace Relations team.

Erin Lynch, Partner
M +61 477 330 202