General protections’ cases; conciliation requirements

In an interesting recent decision of the Federal Circuit Court, an applicant, who had resigned her employment, brought a breach of the general protections’ case against her former employer alleging various counts of unlawful adverse action. Although in a general sense the applicant alleged in her claim facts to the effect that she had been forced to resign as a result of the respondent’s conduct, in other words that she had been constructively dismissed, her amended statement of claim particularized the allegations as follows

1. “The applicant was employed by the first respondent from 3 April, 2017 to 2 November, 2018 initially as a human resources officer and subsequently as the human resources manager. She claims to have been put in the invidious position that she was responsible for human resources at a company which did not comply with its legal obligations towards its workforce. She alleges that she made various complaints and sought, to no avail, an indemnity from her employer in the event of an investigation by the Fair Work Ombudsman of the business.
2. On 15 January, 2020 the applicant filed an amended claim in these proceedings alleging contravention of certain of the general protections provisions within the Fair Work Act. It is accompanied by an amended statement of claim. In her amended statement of claim she alleges that in her role with the first respondent she concluded that the first respondent underpaid its staff and did not pay penalty or overtime rates to many of its staff. Nor did it pay the basic award rate of pay. She claims that she reported her conclusions to the management of the first respondent and she followed up her report with what she alleges are various complaints and inquiries in an effort to have the matters of concern to her rectified.
3. She also alleges that in her role she undertook the development of policies and procedures that were designed to help the first respondent meet its workplace health and safety responsibilities. She alleges that the workplace was visited by inspectors from the Department of Work Health and Safety and it was found to be non-compliant in a number of respects. The applicant set about rectifying some of the non-compliance but was obstructed, she says, by the third respondent, a person involved in the management of the first respondent.
4. She claims that in contravention of s.340 of the Fair Work Act adverse action was taken against her because she had, or had exercised workplace rights as defined by s.341 of the Act. She also claims that adverse action was taken against her because of her race, national extraction or social origin and an imputed disability contrary to s.351 of the Act.
5. The adverse action she pleads as having been taken against her is:
6. injuring her in her employment or altering her position to her prejudice by:
   1. removing the payroll process from her position;
   2. countermanding a verbal warning issued by her to an employee;

• employing a HR assistant;

1. removing Warehouse recruitment from her roll;
2. removing her WHS role;
3. advising her she did not fit the “culture” of the business;

• suggesting she was “unstable”;
• advising her a number of complaints had been made against her;

1. removing her from sales team recruitment duties;
2. progressively removing her core duties and responsibilities;
3. discriminating between her and other employees by:
   1. removing payroll process responsibility;
   2. removing Warehouse staff recruitment from her role;

• injuring her by causing her humiliation anxiety and distress; and

(iv) injuring her in her employment by exposing her to liability as an       involved person pursuant to s.550 of the Act to civil penalties for contraventions of the Act as a result of failure to rectify contraventions brought to the respondents’ attention by her in her roles as HR Officer and HR Manager.”

The respondent employer applied to the Federal Circuit Court to have the claim struck out on the basis of an argument to the effect that the claim was a contravention of sec 370 of the Fair Work Act because in all the circumstances it was “a general protections court application in relation to a dismissal” which of course cannot be pursued in the Federal Court or the Federal Circuit Court unless the Fair Work Commission has issued a certificate to the effect that it has conducted a conference and that it considers that all reasonable attempts to resolve the dispute other than by arbitration have been taken or are likely to be unsuccessful; see sec 368(3).

The judge would have none of it, and with the greatest respect to him, quite correctly too. Here are His Honours reasons.

1. The applicant does not allege she was dismissed in contravention of Part 3-1 of the Act. Whilst the circumstances of her resignation might mean that she was dismissed according to the definition in s.385 of the Act as the respondents argue, her case is not that she was dismissed in breach of a general protection.
2. Because she does not argue that she was dismissed in contravention of Part 3-1 of the Act she is not a person caught by s.370 of the Act. She is not a person who was entitled to apply under s.365 for the Commission to deal with her dispute. That is because she does not allege, and seemingly has never alleged, that she was dismissed in contravention of Part 3–1 of the Act. Whilst she does claim that the first respondent took adverse action against her, the adverse action that she alleges the first respondent took for one or more proscribed reasons does not include her dismissal, actual or constructive. Nothing in the previous proceedings taken by her in the Fair Work Commission indicates to the contrary. In those proceedings, she may have claimed that she was forced to resign but I do not understand that her case was that she was forced to resign because of the adverse action that was taken against her. In any event, that is not her case in these proceedings.
3. The applicant’s application is not liable to be summarily dismissed on the basis that her claims for relief are frivolous, vexatious or an abuse of the process of the Court. I cannot be satisfied that her claim generally has no reasonable prospects of success. She pleads material facts that, if accepted, may lead to the grant of the relief or part of it, that she claims. The basis of the respondents’ claims to have the proceedings dismissed is not made out. The applicant’s claim is not a dismissal dispute for the purposes of the Fair Work Act and she is not precluded from bringing these proceedings by s.370 of that Act.
4. As to the respondents’ alternative claim for relief, they argue that if the applicant was not dismissed because her resignation was voluntary, then the respondents cannot be liable to compensate the applicant for the consequences of her own decision.
5. In both her statement of claim and her evidence in chief, the applicant says that she resigned her employment to protect herself from exposure to liability for the misconduct of the respondents. She repeats the plea in paragraph 48(a) of her amended statement of claim. The reason she alleges she resigned was to protect herself from liability for what she perceived to be the respondents’ conduct which contravened the Fair Work Act. The respondents argue that she does not allege that she resigned because of the adverse action that was taken against her.
6. But that is not so. In paragraph 48 of the amended statement of claim the applicant sets out the compensation that she claims in the following way:

• Loss and damage as a consequence of the Adverse Action
• As a consequence of the Adverse Action, the Applicant:
• (a) resigned her employment as pleaded in paragraph 45 to mitigate her liability for contraventions of the FW Act as an involved person as defined in s 550 of the FW Act as pleaded in paragraph 47(d);
• (b) required medical treatment including medication to be calculated as a global sum of $500.00;
• (c) lost 4 months remuneration at the rate of $1,769.32 per week, totalling $28,307.60;
• (d) gained a further 6-month contract on a pro rata salary of approximately $75,000.00 p.a. plus superannuation resulting in a loss of $326.92 per week for 6 months totalling $8,499.99;
• (e) secured further employment on a salary of $70,000.00 p.a. plus superannuation resulting in ongoing loss of $423.08 per week for 10 weeks and ongoing totalling $4,230.77 as at the date of this claim;
• (f) suffered hurt and humiliation for which she claims the sum of $85,000.00

1. She pleads that as a consequence of the adverse action (which she defines in paragraph 47 of the amended statement of claim) she resigned her employment for a particular reason, namely to protect herself from accessorial liability. This is a curious way to plead her case, but it seems to underscore her contention that she was not forced to resign by the actions of the respondents but rather, she had a choice in the matter. The applicant, by pleading her case in that way, seems to draw a distinction between the adverse action – that is to say what it is that the first respondent did – and the consequences of the adverse action. The former establishes liability under the Act. The latter goes to the compensation, if any, for the effect of the adverse action upon her.
2. Subsection 545(2)(b) of the Act provides that an order awarding compensation may be made for loss that a person has suffered “because of the contravention”. The applicant accepts that there must be a causal connection between the contravention and the loss claimed. She argues that there is a direct causative relationship between the loss and the adverse action upon which she relies. She defines adverse action in the pleading at paragraph 47. For present purposes, it includes this:

• (d) injuring her in her employment by exposing her to liability as an involved person pursuant to s 550 of the FW Act to civil penalties for contraventions by the First Respondent of the FW Act as a result of the First Respondent’s failure to comply with the FW Act or rectify contraventions of the FW Act brought to its attention by the Applicant in her role as Human Resources Officer and Human Resources Manager as pleaded in paragraphs 13, 14, 20, 22, 27, and 40.

1. The respondents seem to misapprehend this aspect of the pleading because they argue:

• The employer’s failure to make changes desired by the Applicant is not “adverse action”; it cannot sound in compensation.
• The Applicant has tried to avoid the issue by framing the alleged underpayment as “injuring the Applicant in her employment” at paragraph 47(d). But there are two problems with this:
  • (a) “injury” within the meaning of s.342(1) item 1(b) is only “injuries of a compensable kind” (Patrick Stevedores Operations No 2 Pty Ltd v MUA (No 3) [1998] HCA 30; (1998) 195 CLR 1 at [4]. The Respondent is not, and is not alleged to be, liable to compensate the Applicant should she contravene the FW Act;19 and
  • (b) even if underpaying a third party was an “injury”, it unequivocally commenced before the Applicant’s various complaints.

1. The respondents argue that the applicant’s claim that the first respondent’s failure to make changes desired by the applicant is not adverse action for the purposes of the Act. I accept that submission, but that is not the point of the applicant’s case. She does not plead that the alleged underpayments of other employees injured her in her employment at paragraph 47(d) as the respondents argue. Rather she pleads that by not addressing the contraventions of the Act identified by her, the first respondent put her in the position where she was exposed to accessorial liability and thereby injured her in her employment. Her case is that she took steps to protect herself against that potential liability. She argues that her exposure to liability flows naturally from the respondents’ failure to rectify contraventions of the Act that she brought to the respondents’ attention.
2. Here, the adverse action alleged against the respondents, if proved, did not directly result in the applicant’s economic loss. She did not suffer that loss because of the adverse action. Rather, she suffered the claimed economic loss because of her own decision to leave her employment. It is not her case that she was forced to leave her employment because of the respondents’ adverse action against her, but rather she chose to do so to protect herself from perceived liability for the first respondent’s conduct.
3. Whilst the applicant does not accept that she has no reasonable prospects of success on this aspect of her claim, she does concede that at trial it may be more difficult to persuade the Court that it is appropriate to make an order for compensation in respect of her claimed economic loss.
4. She argues that her economic loss is a loss which may be characterised as “a not unlikely consequence of the taking of the adverse actions against the applicant”. Thus, she argues, the loss incurred after the applicant’s decision to resign her employment may therefore be argued to be loss which has a sufficient causal connection with the contraventions of the Act to be compensable. She argues that the Court may be persuaded to exercise the discretionary power to order that the respondents pay compensation in respect of part or all of that loss and that is properly a matter to be considered in the light of all the evidence at trial.
5. I accept that argument. The question of causation – that is to say what compensation is due to the applicant because of the adverse action taken against her – may be answered by an examination of the reasonableness of the applicant’s decision to resign her employment. It is not difficult to envisage that confronted with the situation as described by the applicant in her pleading, it would be a reasonable thing for her to resign her employment so as to limit her exposure to any accessorial liability. Her resignation might be seen as a reasonable and foreseeable consequence of the adverse action taken against her.
6. I cannot accept the respondents’ argument that merely because the applicant chose to resign her employment, she has no reasonable prospect of successfully pursuing a claim for economic loss. Given that the basis upon which the respondents seek to have this aspect of the applicant’s claim “struck out” is that she has no reasonable prospect of successfully pursuing this aspect of her claim, their application for relief must be refused.
7. That is not to say that her case is not without significant difficulty. Her case is predicated on the basis that the respondents were contravening the Fair Work Act by underpaying other employees and that she would be liable as an accessory for their contraventions. In paragraph 9 of her amended statement of claim she alleges that she concluded certain matters about the first respondent’s compliance with the Fair Work Act. She does not allege that her conclusions represented the true state of affairs rather than merely her own opinion. The respondents deny the accuracy of her conclusions and that the first respondent was contravening the Fair Work Act by underpaying other employees. Arguably, to succeed, the applicant would have to plead and prove each of the contraventions of the Act that she alleges informed her conclusion that the first respondent was contravening the Act. She would have to demonstrate on the balance of probabilities that she would have been liable for as an accessory so as to make good her case that she resigned to protect herself from that liability. She does not do that on her current pleading.
8. In the absence of a pleading that each of the matters leading to the applicant’s conclusion were true, the applicant’s case that her economic loss was a consequence of the first respondent injuring her in her employment by exposing her to accessorial liability probably cannot succeed. The causal connection between her claimed economic loss and the adverse action she alleges was taken against her would be missing because her decision to resign could not be said to be reasonable. In those circumstances the only conclusion that would be open is that the loss was occasioned by her voluntary decision to resign her employment.
9. The respondents also argue that paragraph 48(f) should be struck from the statement of claim on the basis that it is dependent upon the applicant’s claim for economic loss. Because I have rejected their application to strike out those parts of the statement of claim dealing with the applicant’s economic loss, it is appropriate to refuse relief in respect paragraph 48(f) as well.
10. The applicant seeks costs of the application in the event that it is dismissed. In my view, none of the necessary preconditions to the making of an order for costs as set out in s.570(2) of the Fair Work Act are engaged in this application and the power to make an order for costs is not enlivened.
11. In those circumstances, it is appropriate to order that the amended application in a case filed on 1 June, 2020 be dismissed.”

Oldfield v One Stop Warehouse Pty Ltd [2020] FCCA 1865 delivered 8 July 2020 per Jarrett J