Business risks keep climbing as awareness grows of adverse action claims under the Fair Work Act 2009 (FWA).
When the FWA commenced in 2009, it included a new avenue for claims where an employee has been wronged, called a ‘General Protections’ action. This allows employees to claim that “adverse action” has been taken against them based on a breach of their “workplace right”, for example, they have been victimised or otherwise discriminated against by their employer as a result of possessing the workplace right. (Click here for further background information)
In a recent case, Roohizadegan v TechnologyOne Limited (No 2), the applicant claimed he was repeatedly bullied and then dismissed because he made numerous complaints and he proposed to exercise a workplace right to bring legal proceedings under the FWA.
The employee was a State Manager for an IT company on a substantial annual salary of $208,932, but importantly earned incentive payments that meant he earnt in the 2015/16 financial year a total of $845,128. He had been a very successful employee, but then suffered ongoing depression due to the guilt he felt at not being able to help his daughter with her illness because he prioritised his work over caring for her. Work became his “safe place where he could escape” the depression and he worked longer hours as a result.
When he was ultimately dismissed by the company, his action claimed he was diagnosed with a depressive disorder that meant he would not be able to work again.
The CEO provided evidence that the dismissal was because the employee was unable to get along with three other managers, that concerns were raised by his team and that revenue in Victoria was not growing. Unfortunately for the company, the Court dismissed these reasons and determined that the CEO and other senior managers lacked credibility as witnesses.
These types of matters lead to substantial payouts, mainly due to the future loss of earnings. In this case, the applicant sought 4 years and 4 months of payment equivalent to $2,825,000, from the date of his dismissal up until September 2020. Perhaps fortunately for the company, he did not claim up to his planned retirement date in 2027. Damages were awarded of $756,410 plus interest for forgone share options, $1,590,000 plus interest for breach of contract, $10,000 for general damages and $47,000 in penalties. The CEO was further personally liable for a penalty of $7000 as a deterrence to other CEO’s not to be tempted to “stand with the bullies rather than the bullied”.
The company has indicated that it will be appealing the judgement, and we will keep you informed of any major developments in the case.
ER Strategies Commentary
We have noted a trend of more and more cases being launched as General Protections matters (up 7% from 4508 cases in 2019 to 4832 cases in 2020). Employees are making these claims despite many of them also being able to to lodge an unfair dismissal claim because, in part, there is an ability to claim unlimited damages as a GP claim, whereas an unfair dismissal has maximum damages of 6 months wages.
- It is easy for the applicant to lodge an initial GP application because the filing fees are low and are initially able to be dealt with by the Fair Work Commission (FWC).
- The legislation provides a reverse onus of proof which means that the claims are treated as substantiated by the Court unless the employer can prove otherwise.
- The Court can award unlimited damages and also decide to reinstate the employee if it deems appropriate.
- Instead of making a simple unfair dismissal claim (where compensation is limited to 6 months’ pay), the applicant can put more pressure on the employer to settle because greater compensation can be ordered by a court.
- Although pursuing a GP claim in the Federal Circuit Court or Federal Court will generally require much greater expenditure, there are many ‘no win, no fee’ lawyers who are prepared to fund actions because of the greater pay-offs possible for such actions.
The approach to take
- The process of conciliation of GP claims at the initial FWC stage is crucial for employers, as this is often the best time to settle such matters, rather than be caught up in extensive legal proceedings.
- Prepare well for the conciliation by providing a substantial response that includes, where appropriate, statements of evidence.
Better still, avoid cases by seeking our advice prior to taking any action or offering a settlement, to ensure the process is undertaken as fairly as possible and to provide evidence that any action against an employee was not taken because of their workplace rights.
Getting Our Help
If you have any questions or need assistance with any employee claims or complaints, we encourage you to call ER Strategies on 1300 55 66 37.