General Protections Complaint – Huge future economic loss $Pay-out due to COVID-19

$664,601.38 payout!

A staggering amount was awarded to an employee for breach of the General Protections – a substantial portion of this was assigned to the difficulty the applicant would have in obtaining employment in the current COVID-19, pandemic effected environment.

The Federal Circuit Court (FCC) has recently awarded an employee compensation to the tune of over $650,000 due to breaches of the general protection provisions of the Fair Work Act 2009 (FW Act) and for failing its obligations under the Macquarie University Staff Enterprise Agreement 2015 (EA). The recent hearing to determine remedy comes one year after the FCC established the liability of the employer in the decision of Tran v Macquarie University (No.2) [2019] FCCA 2049 (Decision).

In the context of rising employment claims due to the pandemic and the looming cessation of JobKeeper, the Decision is another reminder for employers of the importance of following procedure and undertaking due diligence when handling sensitive matters such as termination or employee complaints. The significance of the Decision is exemplified by more than $270K awarded for future economic loss taking into account:

·        The current pandemic – COVID-19

·        The workers age

·        Overall health

·        Time out of the workforce

·        Wages

Key facts of the Case

The Applicant, Ms Tran was employed as a systems accountant by Macquarie University (Macquarie) from 2007 up until Macquarie made her position redundant in July 2019. In about 2010, Ms Tran lodged a grievance against her direct supervisor due to concerns over her workload. This matter was dealt with by Macquarie via mediation and an amicable outcome was reached. In 2014 there was a change in upper management at Macquarie and it was during this period of transition that Ms Tran began to experience increased pressure from her direct supervisor in respect to workload and working hours. After failed attempts to resolve the issue with her supervisor, Ms Tran made formal complaints through various channels within Macquarie however she was unable to procure an outcome satisfactory to her. From 2014 until her termination, Ms Tran made several more complaints that largely related to her perceived ill treatment by her direct supervisor including allegations of bullying. The evidence before the FCC indicated that Ms Tran’s complaints were poorly handled by Macquarie, including one instance where Ms Tran was encouraged by upper management to quit her job if she did not like her direct supervisor.

In 2017, Macquarie announced its proposal to restructure the workplace which essentially disestablished Ms Tran’s role (and that of another employee) and created two new roles of a higher level within Macquarie’s classification structure. In the face of redundancy, Ms Tran expressed her interest to be redeployed within Macquarie. In accordance with the terms of the EA, Macquarie was required to give priority consideration for staff members seeking redeployment including a priority interview. Macquarie was also required to identify any position suited to Ms Tran’s skills and relevant experience or otherwise identify if retraining was possible. The FCC found that Macquarie had failed in its obligation to sincerely assess Ms Tran’s skills in relation to positions she applied for and failed to disclose the existence of available positions to which she was entitled to a priority interview.

It was alleged by Ms Tran that the restructuring was targeted at her specifically, with Macquarie’s intention being to remove her from her role due to the complaints she had made.

Breach of General Protections

The general protections found in Part 3-1 of the FW Act establish employees have certain workplace rights arising under workplace laws (such as the FW Act itself), workplace instruments (such as a modern award) or an order made by an industrial body (such as the Fair Work Commission or the FCC). The FW Act provides an employer must not take adverse action (such as dismissal, discrimination or demotion) against an employee because the employee has exercised their workplace rights (such as making a complaint). On that basis, an employee’s exercise of their workplace right is ‘protected’. For more information on general protections claims we encourage you to read our article regarding a General Protections claim our office successfully defended on behalf of our client.

The FCC considered the allegations made by Ms Tran in the context of the general protections provisions and based on the evidence presented it was satisfied that:

·        Ms Tran had exercised a workplace right within the meaning of s 341(1)(c) of the FW Act by making formal complaints in respect to several matters, including her treatment at the hands of her direct supervisor.

·        Macquarie’s proposed restructure that disestablished Ms Tran’s position amounted to adverse action within the meaning of s 340 and s 342 of the FW Act, and accordingly the adverse action was taken for a prohibited reason, that being, the adverse action was taken in response to the complaints made by Ms Tran.

Breach of Redeployment Obligations

Pursuant to s 50 of the FW Act, a person must not contravene a term of an enterprise agreement. In its Decision, the FCC held Macquarie’s failure to redeploy (or make sincere attempts) Ms Tran in accordance with the terms of the EA to be in contravention of the EA and therefore in breach of s 50 of the FW Act.

Macquarie’s obligations in respect to restructuring, redeployment, and redundancy under the EA were extensive and beyond the norm. That being said, employers should ensure they understand and comply with any consultation obligations arising from Modern Awards or enterprise agreements applicable. For more information on consultation obligations and the risks involved in failing to comply, please click the link to our article, How We Can Help? Ensuring Redundancies Are ‘Genuine Redundancies’.

Compensation

The FCC awarded compensation totaling $664,601.38 to Ms Tran included amounts for the following items:

·        $45,000 in pecuniary penalties paid directly to Ms Tran for Macquarie’s multiples contraventions of the FW Act;

·        $271,163.19 in compensation due to the FCC’s determination that reinstatement was not suitable in this instance (note that an additional $50,000 in salary had previously been paid into court);

·         $55,156.19 in superannuation payments (inc amount Ms Tran woud have accumulated had the payment been invested);

·        $278,282 in compensation for future economic loss;

·        $15,000 in non-economic loss due to the distress and humiliation experienced by Ms Tran due to being unlawfully made redundant.

The substantial sum awarded to Ms Tran should be alarming to employers however, of particular interest in this Decision, the FCC considered the long-term effect of the pandemic on the economy and job prospects in the context of awarding damages to Ms Tran for future economic loss. Admittedly, there were several mitigating factors considered by the FCC in the Decision and its mention of the pandemic was very brief however, its inclusion in the FCC’s assessment is perhaps indicative of future assessments. In our view, this may have wider implications on employers, specifically in regard to the dismissal of high wage earners during the pandemic who naturally may take longer to find a new role in the current climate.

Key Takeaways and tips for employers

Macquarie’s failure to address Ms Tran’s complaints adequately and her subsequent termination as a means to resolve the issue resulted in drawn out litigation and a hefty compensation pay out.

In order to reduce the risk of a successful claim being made against the business, employers should:

·        Implement thorough and consistent work practices in respect to dealing with employee complaints. Obviously, not everyone can be satisfied at times and personalities do clash within the workplace from time to time however, the key is to ensure a consistent and fair process is implemented and followed each and every time a complaint is made. Additionally, the complaint and ensuing process should be documented extensively so that the employer has evidence to rely on in the event a claim arises;

·        NEVER terminate an employee solely in response to a complaint;

·        Document all matters relating to and leading up to a termination (including performance, redundancy etc);

·        Ensure compliance with the terms of any applicable employment instrument or Modern Award.

If you are an employer dealing with difficult people management problems especially in the context of a potential general protections claim we offer an obligation free consultation – please call +61 (07) 3876 5111 to arrange an obligation free consultation to discuss your inquiries and we will do our best to provide a helpful, practical solution.

Written By

Jonathan Mamaril

Principal

NB Lawyers – Lawyers for Employers

[email protected]

+61 (07) 3876 5111

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About the Author

Jonathan Mamaril leads a team of handpicked experts in the areas of employment law and commercial law who focus on educating clients to avoid headaches, provide advice on issues before they fester and when action needs to be taken and there is a problem mitigate risk and liability. With a core value of helping first and providing practical advice, Jonathan is a sought after advisor to a number of Employers and as a speaker for forums and seminars where his expertise is invaluable as a leader in this area as a lawyer for employers.