Agreeing to an employee's request to be demoted constitutes adverse action Agreeing to an employee's request to be demoted constitutes adverse action

Agreeing to an employee's request to be demoted constitutes adverse action

25 August 2017 | Employer's Liability

The Federal Court of Australia found that although the employer's agreement to an employee's voluntarily request to transfer to a lesser paid position which was more vulnerable to redundancy constituted adverse action, that its reasons for doing so were not unlawful.

In Issue

  • Whether adverse action was taken for a prohibited reason in breach of the General Protections provisions of Fair Work Act 2009

The Background

Mr Barnes was employed with Hatch Associates Pty Ltd (Hatch) as a Project Manager. During his employment, Mr Barnes made complaints to Hatch about his manager, Ms Visman having harassed him and about her competency. However, these complaints were not, in his view, properly investigated.

On 1 August 2012, Mr Barnes met with Ms Els (Hatch’s Managing Director and a qualified engineer) during which:

  • he presented her with certain proposals relating to a project involving BHP, which needed to be submitted to BHP by 3 August 2012;
  • it became evident to Ms Els that Mr Barnes’ proposals were not workable and that Mr Barnes was not equipped to handle the job as Project Manager. She considered that if he was involved in the project that a suitable proposal would not be presented to BHP. Ms Els therefore decided to ‘bypass’ Mr Barnes to ensure that a suitable proposal could be presented to BHP by the 3 August deadline.

On 2 August 2012, Ms Els met with Mr Barnes who insisted that his proposals were workable. That afternoon, Mr Barnes sent her an e-mail requesting that he be removed as Project Manager of the BHP project.

At the time, Mr Barnes knew that this would result in him being transferred to an unassigned ‘pool’ of specialist staff which would mean he would receive less work and less pay and that he was more vulnerable to redundancy action (Demoted Position). However, he felt that he was forced to do so because:

  • of Hatch’s failure to take action regarding his complaints about Ms Visman; and
  • this would relieve him of major stressors that affected his mental health.

Ms Els wrote to Mr Barnes the next day agreeing to his request. Mr Barnes’ employment with Hatch ended on 20 August 2012 as a result of the redundancy of his position.

Mr Barnes then issued proceedings alleging that Hatch had taken adverse action against him in breach of the General Protections provisions of the Fair Work Act 2009 (Act) (FW Act).

Mr Barnes alleged, amongst other matters, that Hatch took adverse action against him in breach of the FW Act by forcing him to ask to be transferred to the Demoted Position because he had exercised his workplace rights to make complaints about Ms Visman.

The Decision at Trial

The primary judge found, amongst other matters, that:

  • Hatch had not taken adverse action against Mr Barnes because of his exercise of his workplace rights and that the termination was the result of a genuine redundancy occasioned by a downturn in available and prospective work; and
  • the mere acceptance by Hatch of Mr Barnes’ request to be transferred to the Demoted Position did not constitute adverse action as contemplated by the FW Act.

Mr Barnes appealed to the Federal Court.

The Issues on Appeal  

One of the issues that the Court of Appeal had to determine was whether the trial judge was correct in his findings that Hatch agreeing to Mr Barnes’ request to be transferred to the Demoted Position did not constitute adverse action.

The Decision on Appeal

The Court of Appeal held that this conduct did constitute adverse action. However, it also stated that:

  • what is prohibited is the taking of adverse action for any of the prohibited reasons set out in the FW Act (for example, because a person has exercised a workplace right); and
  • the question is always one of why the action was taken.

Although the Court of Appeal found that Hatch had taken adverse action against Mr Barnes by agreeing to his request to be transferred to the Demoted Position, its reasons for agreeing to this were merely because it was honouring his voluntary request.

Mr Barnes’ appeal was unsuccessful. 

Implications for you

Employers should be on notice that seemingly innocent acts such as agreeing to an employee’s request to be demoted will likely constitute adverse action. This may expose them to claims that they have breached the General Protections provisions of the FW Act. In that event, an employer will have to satisfy a Court that its reasons for agreeing to such a request were not related to any prohibited reason such as the exercise of an employee of his/her workplace rights.

Having a clear paper trail which demonstrates an employer’s reasons for taking adverse action, together with good witnesses who can give credible evidence about their reasons for making such a decision will be critical in assisting a Court in deciding whether or not the relevant action was taken for a prohibited reason.

Barnes v Hatch Associates Pty Ltd [2017] FCA 434

Costa Brehas

Costa Brehas

Senior Associate