Fair work general protections and contractual rights dissected

The sometimes complex interaction between statutory fair work rights under the Fair Work Act and an employee’s express and implied contractual rights is at the heart of an interesting Federal Court Circuit case delivered on Christmas Eve.
A pool supply company sacked its general manager after the directors alleged that he had misconducted himself in the sale of the business by putting his own interests before those of his employer. In the case the employer alleged that the applicant had amongst other things complained to the prospective purchaser “that it seemed a bit “unfair” that after so many years of service he ended up with nothing and the directors “walk away with a truck load of money” and (according to the judge’s description of the employer’s argued case at the hearing that ) other “… allegations made against (the applicant which) were of a serious nature, including an allegation that his interactions with (one of the directors of the purchaser) not only involved him advancing his own interests above those of (the) business, but also that he did do so to scuttle or otherwise prejudice the proposed purchase of the business, and that such conduct had (amongst other reasons) dissuaded (the prospective purchaser) from purchasing the (employer’s) business and, accordingly, had caused it serious harm.”

The applicant’s case brought to the Federal Circuit Court contended for a general protections breach namely that the employee had suffered adverse action because he had exercised a number of workplace rights. He also sought damages for breach of contract on the basis that his dismissal breached his contract because he had not been guilty of misconduct.

Adverse action case

The applicant’s case was that he had been dismissed (and therefore was the victim of adverse action) because he had made various enquiries to the directors and the prospective employer about the effect of the sale of the business upon the security of his employment conditions as general manager. It would also appear from the judgment that the applicant also contended that he had exercised a workplace right by making those enquiries of and to the prospective purchaser.

The judge was critical of the way on which the applicant’s case had been pleaded and presented but held that he was satisfied in any event that whether or not the conduct of the applicant could be said to be the exercise of a workplace right or workplace rights, the actions of the employer in dismissing him were not motivated by that, rather his conduct which the directors regarded as misconduct.
The judge also dismissed the argument that an enquiry to the prospective employer about whether he would have a job after the sale was not the exercise of a workplace right and that the applicant had not established a sufficient case to “enliven” the reverse onus of proof in sec 361 of the Act.

“There must be a relationship between the inquiry and an employee’s employment, albeit that this may be direct or indirect (O’Grady at 367). Consistent with the approach taken in Shea v TRUenergy Services Pty Ltd (No. 6) in Harrison v In Control Pty Ltd (2013) 273 FLR 190;[2013] FMCA 149 Federal Magistrate Burnett held that the inquiries protected by this provision must be sourced in some underlying contractual or statutory obligation between the employee and his or her employer (see [57] and [75]). Even if a broader view is taken as to the source of entitlement, I am not persuaded that any inquiry that “touched on” an aspect of one’s employment would amount to the exercise of a workplace right (also see Devonshire at [63] in which Lucev FM indicated that this provision protected complaints made by employees “direct to their employer” and also see the Explanatory Memorandum at [1370])…… Further, the notion that the phrase “in relation to his or her employment” in s.341(1)(c)(ii) is broad enough to capture the concept of an inquiry to a current employer about prospective employment with a different employer is misconceived. The Act includes a separate provision (s.341(3)) which deals with “prospective employment”. There is no basis to read “in relation to” in s.341(1)(c)(ii) as a concept so broad as to capture the subject matter of another provision of the Act……………I am not satisfied that the Respondent took adverse action against the Applicant by dismissing him without notice because of or for a reason that included the exercise of workplace rights on or about 4 May 2012 whether in the manner pleaded or as subsequently contended for by the Applicant. This aspect of (the applicant’s) general protections claim is not made out.
………”

Breach of contract

The applicant was however successful in winning an award of damages of $30,000 for breach of contract on the basis that his dismissal for misconduct was wrong.

According to Judge Barnes; “While the employee ‘gilded the lily’ in describing his own role and importance and, in so doing, denigrated or minimised that of the directors, I am not satisfied that this amounted to deliberate significant wilfulness or dishonesty or was aimed at scuttling the sale………I am not persuaded that this conduct was wilful dishonesty or gross disloyalty or otherwise such as to amount to a sufficiently serious breach of his obligation to his employer as to strike at the heart of the trust relationship between himself and the employer…. . . I am not satisfied that the employee’s conduct……….. amounted to serious misconduct warranting summary dismissal.”

Jeavons v Entram Pty Ltd ([2015) FCCA 3457 delivered 24 December 2015