Adverse action shock

Not long after the introduction of the Keating Government’s 1993 Industrial Relations Reform legislation, the then Minister, Laurie Brereton was forced into an embarrassing back down. The new unfair dismissal laws designed to protect ordinary workers from capricious dismissal was being used by senior management employees to claim hundreds of thousands of dollars in compensation. The government hastily amended the legislation to prevent the majority of employees who were considered high income earners from making a claim. An arbitrary remuneration limit of $60,000 per annum was introduced.

In what shapes up as an important test case for the legislation, a Chief Executive Officer has won a Federal Court injunction to prevent her employer terminating her employment. The CEO is arguing that the employer was proposing to terminate her employment because she exercised a “workplace right” and because she was participating in the process of making an enterprise agreement.

For many years industrial legislation has protected employees from prejudice in their employment because of their participation in union related activities or because they have insisted on their rights to minimum employment conditions. What makes the case of Jones v Queensland Tertiary Admissions Centre Ltd (QTAC) different, is that the employee has claimed that by representing her employer – not, one will note, other employees – in enterprise bargaining negotiations, she is entitled to the protection of the Act. The timing of events which led to the claim are perhaps a little unusual, but even if Ms Jones ultimately does not succeed in her action, the scope for the “adverse action” provisions of the Fair Work Act to become a heavy yoke for employers is slowly being exposed.

As CEO, Ms Jones represented QTAC in negotiations with the Australian Services Union for a new enterprise agreement. QTAC’s initial attempt to put an agreement to an employee vote was thwarted by the ASU obtaining a good faith bargaining order from Fair Work Australia. During the course of subsequent negotiations, the ASU and individual employees made complaints about Ms Jones conduct, which amounted to allegations of bullying and harassment.

QTAC initiated an investigation into the CEO’s conduct, as a result of which a report was produced. The findings of the report were adverse to the CEO and QTAC indicated to her that it was considering terminating her employment.

Enter Julia Gillard’s “adverse action” laws. Ms Jones successfully argued that there was a serious question for the court to consider as to whether her employment was under threat because of her participation in the enterprise bargaining negotiations. QTAC argued it was acting in good faith in order to prevent further instances of bullying and harassment of the type alleged against Ms Jones, consistently with its obligations under Queensland’s occupational health and safety laws.

By identifying the “timing of the allegations against Ms Jones… and the identity of the complainants, including the ASU” as factors weighing in favour of granting the injunction, the Court has left open a finding that the complaints were in fact industrially motivated. The Court recognised in its decision that if Ms Jones is ultimately successful in arguing that, as CEO, she had “workplace rights” as a consequence of the enterprise bargaining process, such a finding could have an impact on all CEO’s or executives who have those responsibilities. The court has yet to make its final determination, which will occur when the case goes to trial in early 2010 and there is no suggestion that the outcome of the enterprise bargaining negotiations were themselves negative for QTAC.

Quite aside from its impact in this case, the establishment of a “workplace right” for executives simply because they are involved in enterprise bargaining will potentially hobble the ability of employers to make business decisions about executives who behave inappropriately or who handle negotiations poorly.

Ironically, the consequences of an executive’s conduct might include an adverse action claim against the employer by unions or employees. Given the gusto of attacks on the apparent lack of executive accountability to shareholders, you have to wonder if that was really what was intended by the Rudd Government in making the Fair Work Act law. At some point, the Government will have to re-examine the scope of these laws. Hopefully before creative lawyers have their way with Fair Work.’

Peter Vitale is the principal of CCI Lawyers.