Category Archives: Industrial

Employers beware as the FWA takes flight

It’s not at all uncommon for a worker to sustain a compensable psychiatric injury due to mistreatment in the workplace. Whether it be dismissal, bullying or a significant alteration of their working conditions, these things can open up a whole suite of claims against an employer.

Let’s take the hot button issue of bullying as a hypothetical. Unbeknownst to the board of directors or business owner/s, a couple of longstanding, perhaps overly territorial, employees decide they will make life as difficult, even unpleasant, as they can for a fellow worker who they consider less competent or committed than them, or simply just unlikeable. One of them is a middle manager who decides to give the outcast employee artificially low ratings at consecutive performance reviews. Eventually, on the commendation of these protagonists, the pariah employee is made redundant. The business owners/directors think they’ve done the right thing – all in the name of efficiency and productivity!

Meanwhile, the sacked employee has seen a psychiatrist a couple of times whilst they remain an employee, as they labour under the stress caused by the mistreatment. In the beginning, the victim maybe doesn’t even say anything to anyone at work for fear of reprisal, or simply because they wonder whether they are just being too sensitive about it. By the time they do speak up, it’s near the time their termination is announced, which is the proverbial straw that breaks the camel’s back.

Six months later, the business finds itself in the Federal Court of Australia with an adverse action suit in respect of the termination, which also includes a claim for negligence in respect of a failure to have adequate protections in place to prevent the bullying the aggrieved employee has suffered at the hands of the two employees. There are also workers compensation claims by way of statutory and modified common law (“Work Injury”) damages available to the complainant. In these, the law heavily favours the employee and therefore a finding that the employer is liable for a breach of its non-delegable and quite rigorous, duty of care as well as being found vicariously liable for the two employees’ conduct towards their victim, is likely. There may also have been breaches of the employee’s employment contract and the two employees might themselves face claims personally for accessorial liability under the Fair Work Act 2009 (FWA)or as concurrent tortfeasors. Ouch! 

And recent applications of the law indicate that the employee holds all the cards here.

First of all, section 361 of the FWA gives the employee the benefit of that most delightful of evidentiary devices, the rebuttable presumption; at least for those who sit on the right side of it. That is, once the employee is able to establish on the objective facts that it appears one of the reasons the “adverse action” (eg. their dismissal) was taken is because they have exercised a “workplace right” eg. such as the right to complain about being bullied (see FWA s340), the employer must then prove otherwise. 

There is no questioning the rationale for the rule. The employee can’t possibly know what was truly in the mind of the employer in acting the way it did and therefore it is properly a matter for the latter to establish, or rebut in this case. But it still makes it hard for the employer.   

That brings me to the second little advantage the employee enjoys here. The reason for the adverse action the employee seeks to impugn need only be one among a number that were in fact at play when the employer reached the decision to act as it did (FWA s360). At least however for the employer’s sake, the objective material will need to establish that the impugned reason was a “a substantial and operative factor” in its decision making (Australian Building and Construction Commissioner v Hall [2018] FCAFC 83; 261 FCR 347). 

Thirdly, in rebutting the rebuttable presumption, the employer must demonstrate that the subjectively held belief of the key decision-maker/s, ie. manager or other superior, who carried out the action, was not that which the employee alleges. This will almost invariably lead to evidence having to be called from one or a number of persons (possibly no longer) within its organisation who are said to have been involved in the action alleged against it by the employee. All very uncomfortable and somewhat unpredictable. And it’s those persons’ subjectively held belief, not the Court’s objective view of the circumstances, that matters (Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500).  

The cases where all of this gets interesting are when the Court is forced to look behind the context, ie. employee complains, employee then gets sacked/demoted/etc. – to establish whether in the true order of events, the employer really has engaged in adverse action contrary to the law.

And now the recent decision of Rares J in Leggett v Hawkesbury Race Club Limited (no. 3) [2021] FCA 1658  offers the employee even more aces in this regard. That case was argued in the Federal Court on the basis that the worker had both a Work Injury (modified common law) damages claim (negligence on the part of the employer resulting in damages payable only in respect of past and future economic loss, as dictated by the Workers Compensation Act 1987 (WCA)) and an adverse action claim under the FWA.

Firstly, in cases of this kind, the question of whether the psychiatric injury “arose out of the employment” and when that happened are matters which will normally already have been determined by an arbitrator at the Workers Compensation Commission when the issue of statutory weekly workers compensation is decided. In Leggett, the Court ruled that this created an issue estoppel on these two key questions in the successive Federal Court proceedings. 1-nil to the Applicant worker.

Then, in Leggett (no 4) [2022] FCA 622, the Court was asked to decide how damages should be dealt with. If they were dealt with under the WCA, as the Respondent employer urged, they would be subject to the relevant statutory caps on weekly earnings and no pain and suffering damages could be awarded (given the WCA only allows for awards of past and future economic loss).

Applying s109 of the Constitution, Rares J deemed that the WCA, as a State Act being inconsistent with the FCA, a Federal Act, had no work to do on the issue of damages and that therefore the Federal statute covered the field. The broad scope of compensation that can be awarded under s545 of the FWA meant the worker got full freight on her past and future economic loss (less the weekly compensation payments she had already received) and a significant award for pain and suffering – plus interest. Another win for the worker.       

The only thing to be decided in Leggett now is costs. In adverse action claims under the FWA they are only awarded in limited circumstances (s570); they do not just follow the event. Given that the award of damages took place under the FWA but the Applicant also had success on her negligence and contract claims, it will be interesting to see what the Court does on this front.

Regardless, employers beware. Take care of them workers and if you need to dismiss, make sure the reasons are sound.               

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Filed under Civil, damages, Industrial, Negligence, statutory interpretation