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Can the act of Standing Down an Employee amount to unlawful Adverse Action by an Employer?

A recent decision of the Federal Court serves as a reminder to Employers to exercise extreme caution when determining whether an Employee should in fact be “stood down” from work.

Reeves J recently ruled that an Employer, who was a subsidiary of Rio Tinto, engaged in adverse action by standing down its employee in 2013 for a prohibited reason after he exercised his workplace right by commencing legal proceedings against his Employer.

In 2013, an employee was successful in legal action brought against his Employer in the District Court of Queensland (“QLD”) and was awarded $637,000.00 in common law damages for serious injuries he sustained at work.

Following on from the employee’s successful legal action, he continued in his employment with the Employer. In November 2013, the Employer sought to suspend the drill rig operator from performing his duties because a compulsory medical assessment declared him “unfit for work” and no longer able to work in a coal mine.

On the basis of that assessment, the Employer stood the employee down because he did not possess a “current” health assessment in accordance with the coal mine and safety regulations.

The employee remained on paid suspension until early 2014, at which time the employer ceased paying the employee’s wages on the basis that he had exhausted all of his leave entitlements. This action amounted to a breach of the Enterprise Agreement.

In August and November 2014, the employee successfully challenged the validity of the compulsory medical assessments in the Supreme Court of QLD. Despite the employee’s success, the Employer refused to reverse its earlier decision to stand the employee down and cease paying his wages.

In December 2014, the Construction, Forestry, Mining and Energy Union, on behalf of the mineworker, commenced proceedings in the Federal Court against the Employer alleging the following contraventions:

  1. Breach of the enterprise agreement in accordance with section 50 of Fair Work Act 2009 (Cth) (“FW Act”), by failing to pay the employee his wages in accordance with those provisions;
  2. Breach of section 340 of the FW Act for the Employer’s failure to provide the employee “work” or alternatively, “pay him wages” because he exercised a number of workplace rights (which included the employee’s right to commence proceedings); and
  3. Breach of section 351 by failing to provide the employee with work or pay him wages because of his physical disability.

Despite the Employer’s best efforts to defend its actions, Reeves J ruled in favour of the employee.

The Employer sought to argue that the action taken against the mineworker was motivated by the Employer’s “genuine concern” for its obligations under the legislation but that defence was not accepted by the Court. Instead, Reeves J determined that the Employer’s decision to suspend the employee was motivated by keeping insurance premiums down.

After weighing up all of the evidence, the Court found against the Employer and held that it had engaged in adverse action in contravention of the general protections provisions under the FW Act upon standing down the drill rig operator in 2013 for a prohibited reason (i.e. because the employee exercised a workplace right by launching legal action against his employer).

The Employer is appealing this decision, but the appeal will not be heard until after the Court makes orders on penalty, compensation and costs. NB: compensation orders made under the FW Act are uncapped.

Message for Employers

It is important for Employers to understand the relevant considerations the Court takes into account in weighing up whether an Employer has in fact taken adverse action against an employee, in particularly as the burden of proof falls to the Employer, which must demonstrate that it did not act unlawfully. Some of the factors considered by the Court in this case are listed below:

  1. The reason / reasons motivating the decision-maker to stand down the employee;
  2. All relevant circumstances were required be considered and taken into account, but the primary focus was centred on the reason / reasons motivating the decision-maker to take adverse action;
  3. The “substantial and operative” reason for the stand down was because the employee had exercised one (or more) of his workplace rights – this amounted to unlawful adverse action;
  4. The facts were assessed on a subjective basis.

Adverse action claims under the general protections provisions of the FW Act are legally complex and have the potential to expose an employer to significant losses and damage.

Employers should exercise extreme caution when making significant decisions about their employees, particularly where there are background issues such as past conflict with the employee, and seek legal advice before taking action.