Construction, Forestry, Mining and Energy Union v Endeavour Coal Pty Ltd

[2015] FCAFC 76

FEDERAL COURT OF AUSTRALIA

Construction Forestry Mining and Energy Union v Endeavour Coal Pty Ltd [2015] FCAFC 76

Citation:	Construction Forestry Mining and Energy Union v Endeavour Coal Pty Ltd [2015] FCAFC 76
Appeal from:	Construction Forestry Mining and Energy Union v Endeavour Coal Pty Ltd (No 2) [2013] FCCA 1518
Parties:	CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION v ENDEAVOUR COAL PTY LTD (ABN 38 099 830 476)
File number:	NSD 2190 of 2013
Judges:	JESSUP, PERRAM AND BROMBERG  JJ
Date of judgment:	3 June 2015
Catchwords:	INDUSTRIAL LAW – adverse action – employer adversely changes employee’s shift due to variable attendance record – variable attendance record largely constituted by instances of employee taking permissible leave under relevant industrial instrument – employer’s subjective reasons for shift change related to variable attendance record rather than taking of permissible leave – whether trial judge correct to conclude no adverse action – whether open to trial judge to conclude that the employer did not have the relevant subjective intention when the variable attendance record was constituted by the taking of permissible leave
Legislation:	Commonwealth Conciliation and Arbitration Act 1904 (Cth) ss 5, 9 Fair Work Act 2009 (Cth) ss 334, 336, 340, 341, 342, 346, 351, 360, 361 Fair Work (Registered Organisations) Act 2009 (Cth) Workplace Relations Act 1996 (Cth) ss 298K, 298L, 298V Industrial Arbitration Act 1912 (NSW) s 52 Industrial Arbitration (Amendment) Act 1926 (NSW) Workers Compensation Act 1987 (NSW) ss 241, 244 Explanatory Memorandum, Fair Work Bill 2008 (Cth) [1333], [1358], [1362], [1379]–[1380]
Cases cited:	AB v Western Australia (2011) 244 CLR 390 Australian Municipal, Administrative, Clerical and Services Union v Greater Dandenong City Council (2000) 101 IR 143 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2010) 193 IR 251 BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (2013) 219 FCR 245 Bindaree Beef Pty Ltd v Riley (2013) 85 NSWLR 350 Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500 Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 Connington v Council of Municipality of Kogarah [1913] AR (NSW) 40 Construction, Forestry, Mining and Energy Union v Coal and Allied Operations Pty Ltd (1999) 140 IR 131 Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2014) 314 ALR 1; 88 ALJR 980 Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2015] FCAFC 25 Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) (2012) 228 IR 195 Construction, Forestry, Mining & Energy Union v Endeavour Coal Pty Ltd [2013] FCCA 473 Construction, Forestry, Mining and Energy Union v Pilbara Iron Co (Services) Pty Ltd (No 3) [2012] FCA 697 CSR Limited v Della Maddalena (2006) 224 ALR 1 Eaton v McKenzie (1916) 12 TASLR 94 Farah Constructions Pty Ltd v Say Dee Pty Ltd (2007) 230 CLR 89 Federal Commissioner of Taxation v Unit Trend Services Pty Ltd (2013) 250 CLR 523 Fox v Percy (2003) 214 CLR 118 General Motors Holden Pty Ltd v Bowling (1976) 12 ALR 605; 51 ALJR 235 Grayndler v Broun [1928] AR (NSW) 46 Grayndler v Cunich (1939) 62 CLR 573 Greater Dandenong City Council v Australian Municipal Administrative, Clerical and Services Union (2001) 112 FCR 232 Hunt v Railway Commissioners for New South Wales; Ex parte Brown-Smith [1928] AR (NSW) 151 Klanjscek v Silver (1961) 4 FLR 182 Lewis Construction Co Pty Ltd v Martin (1986) 17 IR 122 National Union of Workers v Qenos Pty Ltd (2001) 108 FCR 90; 106 IR 373 Waugh v Kippen (1986) 160 CLR 156
Date of hearing:	19-20 February 2015
Place:	Sydney
Division:	FAIR WORK DIVISION
Category:	Catchwords
Number of paragraphs:	242
Counsel for the Appellant:	C Howell
Solicitor for the Appellant:	Slater and Gordon
Counsel for the Respondent:	J N West QC with S E J Prince
Solicitor for the Respondent:	Ashurst

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
FAIR WORK DIVISION	NSD 2190 of 2013

ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA

BETWEEN:	CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION Appellant
AND:	ENDEAVOUR COAL PTY LTD (ABN 38 099 830 476) Respondent

JUDGES:	JESSUP, PERRAM AND BROMBERG  JJ
DATE OF ORDER:	3 JUNE 2015
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The appeal be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
FAIR WORK DIVISION	NSD 2190 of 2013

ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA

BETWEEN:	CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION Appellant
AND:	ENDEAVOUR COAL PTY LTD (ABN 38 099 830 476) Respondent

JUDGES:	JESSUP, PERRAM AND BROMBERG  JJ
DATE:	3 JUNE 2015
PLACE:	SYDNEY

REASONS FOR JUDGMENT

JESSUP J

1. This is an appeal from a judgment of the Federal Circuit Court of Australia given on 3 October 2013, whereby the application of the appellant, the Construction, Forestry, Mining and Energy Union, alleging contraventions of Pt 3-1 of the Fair Work Act 2009 (Cth) (“the FW Act”) by the respondent, Endeavour Coal Pty Ltd, was dismissed. The Federal Circuit Court had published reasons for this judgment on 27 June 2013, and it is those reasons that are the subject of the appellant’s challenge in the present appeal.

2. The proceeding in the Federal Circuit Court related to adverse action which had been taken by the respondent against Alan McDermott, a maintenance fitter employed at its West Cliff Colliery (“the mine”), in September 2010 and April 2011. In relation to the September adverse action, the primary Judge held that Mr McDermott had previously exercised a workplace right within the meaning of s 341 of the FW Act (the terms of which are set out below), but his Honour found that the action had not been taken for a reason, or for reasons which included a reason, that would have made it unlawful under Pt 3-1. In relation to the April adverse action, his Honour held that it had been taken for a specific reason which did not amount to the exercise of a workplace right, and that no previous exercise of an arguably relevant workplace right by Mr McDermott was the reason, or part of the reason, why that action was taken.

3. The primary Judge’s conclusions with respect to the reasons for which the adverse action was taken against Mr McDermott are challenged in this appeal.

4. Mr McDermott had been on the permanent maintenance staff at the mine since November 2005. In the period leading to the events which became relevant in the proceeding in the Federal Circuit Court, he was employed on what was described as the “weekend day shift roster”, which involved him working on Fridays, Saturdays and Sundays. Between 21 December 2007 and 5 September 2010, he was absent from work on 15 occasions, covering a total of 29½ days, by way of sick leave, carer’s leave, or parental leave, which may be referred to compendiously as “personal leave”. In all but one instance (13 June 2010), this leave was within Mr McDermott’s entitlement under the agreement which applied to his employment, the West Cliff Colliery Workplace Agreement 2008 (“the agreement”), a “workplace instrument” within the meaning of s 341(1)(a) of the FW Act.

5. On 10 September 2010, the respondent moved Mr McDermott from the weekend day shift roster to the ordinary Monday-Friday roster. This was adverse action within the meaning of Pt 3-1 of the FW Act. The decision to make the change was made by Warwick Young, Engineering Manager at the mine. I shall return to the evidence about Mr Young’s reasons for making this change presently, but for the moment it is sufficient to note that they were substantially related to Mr McDermott’s absences from work as referred to in the previous paragraph.

6. Mr McDermott thereafter worked on the Monday-Friday roster until 8 November 2010, when he signed a document, described as an “agreement” between himself and the respondent, in the following terms:

   I agree to comply with the following terms and conditions, as a condition of my returning to Weekend Dayshift roster at West Cliff mine and in accordance with the West Cliff Mine Workplace Agreement 2008.

   1.I agree to take responsibility for properly managing my attendance at work, including managing the personal issues that I have raised with the Company.

   2.I agree to seek support and assistance in understanding how to manage my reactions to situations within the workforce and to provide evidence to the Company that demonstrates that I have developed in this area.

   3.I agree to notify the Shift Undermanager as soon as I become aware that I may not be able to attend work, which shall be at least 2 hours prior to the start of that shift.  In cases where the Shift Undermanager cannot be contacted I will contact the Shift Engineer or the Maintenance Manager.

   4.I agree to arrange an alternate shift during the week when I have taken periods of unplanned absence, unless otherwise agreed by the Maintenance Manager.

   5.I agree to provide a medical certificate setting out the reason for my absence in support of all future absences on personal/carers leave.  I will ensure the medical certificate includes details of the specific illness or injury that has caused me to be unable to attend work.

   6.I agree to attend discussions with the Maintenance Manager after any future absences from work.

   7.I understand that the Company has a right and responsibility to manage the Operations and this may include moving me to another shift if my absenteeism cannot be self-managed.

   I understand the above agreement between the Company and myself and commit to the terms and conditions within it.  I understand that if I fail to comply with the terms and conditions in this agreement without reasonable excuse, the Company may take further action. 

   In consequence of Mr McDermott executing that document, he was returned to the weekend day shift roster, and remained there until 1 April 2011.

7. On 18 March 2011, Mr McDermott absented himself from work.  He claimed that this was because he was feeling unwell, but he did not, on that day or subsequently, provide any kind of medical support for that claim.  He did not comply with cl 16.7 of the agreement, which provided:

   16.7     Proof of illness or injury
   If required by the Company an Employee must prove to the satisfaction of the Company that the absence from work was on account of such illness or injury to themselves or an illness or injury or unexpected emergency suffered by a member of the Employee’s immediate family or household.

   Neither did Mr McDermott provide evidence of the kind referred to in s 107(3) of the FW Act.

8. On 1 April 2011, the respondent issued Mr McDermott with a final written warning with respect to absenteeism (to the terms of which I refer below), and again moved him from the weekend day shift roster to the Monday-Friday roster. This was the second instance of adverse action, within the meaning of s 342 of the FW Act, referred to above. The decision to issue the warning and to make the change – treated by the primary Judge as effectively a single process – was made by Mark Peace, who was then Engineering Manager at the mine. His reason or reasons for doing so were the subject of findings by the primary Judge, and I shall return to them. It is sufficient here to note that the action he took was at least responsive to his reading of the circumstances in which Mr McDermott was absent from work on 18 March 2011.

9. The provision of the FW Act upon which the appellant proceeded in the Federal Circuit Court was s 340(1)(a), which provides as follows:

   (1)       A person must not take adverse action against another person:

   (a)       because the other person:

   (i)        has a workplace right; or

   (ii)       has, or has not, exercised a workplace right; or

   (iii)proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; ….

   The meaning of the term “workplace right” which was relevant was that given in s 341(1)(a):

   (1)       A person has a workplace right if the person:

   (a)is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; ….

10. The following adjectival, but nonetheless important, provisions of Pt 3-1 of the FW Act were also relied on in the appellant’s case below:

    360     Multiple reasons for action

    For the purposes of this Part, a person takes action for a particular reason if the reasons for the action include that reason.

    361     Reason for action to be presumed unless proved otherwise

    (1)       If:

    (a)in an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or with a particular intent; and

    (b)taking that action for that reason or with that intent would constitute a contravention of this Part;

    it is presumed that the action was, or is being, taken for that reason or with that intent, unless the person proves otherwise….

11. I propose to commence with the case against the respondent in relation to the adverse action which it took in September 2010. The primary Judge held that, in absenting himself from work on the occasions, and in the circumstances, referred to in para 4 above, Mr McDermott had exercised a workplace right within the meaning of s 341(1)(a) of the FW Act, namely, the entitlement given to him under the agreement to take personal leave. That holding is not challenged by the respondent in the present appeal. The situation was, therefore, that it lay upon the respondent to discharge the onus of proving that its reasons for taking this adverse action did not include the circumstance that Mr McDermott had exercised that entitlement. His Honour held that the respondent did discharge that onus. His reasoning in this regard lies at the centre of the appellant’s appeal with respect to the September adverse action.

12. As mentioned above, the decision to transfer Mr McDermott to the Monday-Friday roster was made by Mr Young.  As to his reasons for doing so, the primary Judge set out the following evidence of Mr Young, which his Honour accepted:

    74.Mr Young said that Mr McDermott was moved to weekday shifts for reasons which included his six periods of unplanned absence from September 2009 to September 2010, some of which were due to family reasons. He said that the real reason for the action taken in relation to Mr McDermott was his poor attendance, regardless of the justification. Mr Young said that Mr McDermott’s absences were causing operational problems for the Mine.

    75.Mr Young agreed that the reasons for Mr McDermott’s absences did not matter to him, rather it was the fact of those absences that mattered. He said that Mr McDermott’s record of absences going back two years was unsatisfactory and that this was part of the reason he was removed from the weekend day shift.

13. The primary Judge also said:

    174.It can be accepted that Mr McDermott’s absences on the weekend day shift would have been very inconvenient and possibly expensive to Endeavour for the reasons elaborated by Messrs Young and Hannigan. I accept that Mr Young decided to move Mr McDermott from the weekend day shift because he was concerned for the economic effectiveness of that shift as well as for safety reasons which he mentioned.

    And:

    177.I have concluded that Mr McDermott was moved from the weekend day shift because Endeavour did not want to have workers on that shift whose attendance was not predictable and reliable and I am of the view that it used the Absenteeism Management Process as a procedure sanctioned by the Agreement as the means to achieve this. But even though in Mr McDermott’s case the Absenteeism Management Process operated by reference to occasions of leave which he had been entitled to take, I have concluded that it was the lack of predictability in Mr McDermott’s attendance which was the reason for the decision to move him from the weekend day shift, not the fact that he had previously exercised his rights to personal/carer’s leave.

14. It was the concluding passage in this extract from the primary Judge’s reasons that amounted to a finding that the respondent had discharged the onus of proving that its reasons for taking adverse action against Mr McDermott did not include his exercise of the entitlement to take personal leave.  At the purely factual level of Mr Young’s thinking, the appellant did not challenge this finding.  If that were the end of the matter, the present appeal could not succeed:  Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500 (“Barclay”).  However, it was submitted on behalf of the appellant that the absences from work by reason of which adverse action was undoubtedly taken against Mr McDermott were, in fact, the very absences which were covered by the leave to which he was entitled under the agreement.  On the primary Judge’s findings, it should have been held, and it should now be held, that, in taking action against Mr McDermott because of those absences, the respondent took action against him because he exercised that entitlement.

15. Consideration of this submission will require close attention to be given to the reasons of the High Court in Barclay, and in the later case in the same line, Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2014) 314 ALR 1 (“BHP Coal”).

16. In the facts leading to the judgment in Barclay, an employee, who was also an officer of the relevant union, was disciplined (and thereby subjected to adverse action within the meaning of s 342 of the FW Act) after he sent an email to the staff working for his employer, an institute of technical and further education, informing them that members of the union had witnessed, or been asked to participate in the production of, false and fraudulent documents for use in a forthcoming audit of the institute’s activities. He asked the staff not to engage in such conduct, and to contact the union if they were under pressure to do so. The email was signed by the employee in his capacity as an officer of the union, and it would seem to have been uncontroversial that the sending of it was, in point of fact, an “industrial activity” within the meaning of s 347 of the FW Act.

17. As set out in the reasons of French CJ and Crennan J in Barclay, the relevant decision-maker explained her reasons for disciplining the employee as follows (248 CLR at 511-512 [27]):

    “I considered the investigation into Mr Barclay’s actions necessary because it appeared to me that he had failed to notify either me or his direct manager of very serious allegations, being allegations of fraudulent conduct in the workplace, which were material to the Audit process.  Instead, he proceeded to cast aspersions and innuendo upon his colleagues by way of a widely circulated email.  I regarded this as prima facie evidence of a breach of the Code of Conduct and his obligations as … [an institute] employee.

    I made the decision to investigate Mr Barclay’s conduct in sending the Email on the basis that he is an employee of … [the institute] who is required to adhere to policy and procedures that govern his employment, not because of his membership of or role in the AEU ….

    I made the decision to suspend Mr Barclay because I was of the view that the allegations against him were serious and I was concerned that if Mr Barclay was not suspended he might cause further damage to the reputation of … [the institute] and of the staff … [of the institute].”

    This evidence had been accepted by the primary Judge, a course which was not thereafter challenged (either in the Full Court or in the High Court).

1. In their joint reasons, French CJ and Crennan J rejected the idea that s 346, and s 361, required only an objective inquiry into the defendant employer’s reason for taking adverse action. Their Honours continued (248 CLR at 517 [44]):

   The imposition of the statutory presumption in s 361, and the correlative onus on employers, naturally and ordinarily mean that direct evidence of a decision-maker as to state of mind, intent or purpose will bear upon the question of why adverse action was taken, although the central question remains “why was the adverse action taken?”

2. Their Honours also rejected the proposition that the employee was protected under Pt 3-1 of the FW Act because his “union position and activities were inextricably entwined with the adverse action” taken against him (248 CLR at 523 [61]). Their Honours held that an employer could discharge the onus of proof arising by reason of the terms of s 361 of the FW Act without proving that the reason for the adverse action in issue was “entirely dissociated from an employee’s union position or activities” (248 CLR at 523 [62]). They added that it was appropriate for a decision-maker to give positive evidence comparing the position of the employee affected by the adverse action with that of an employee who had no union involvement (248 CLR at 524 [63]).

3. In conclusion, French CJ and Crennan J said (248 CLR at 524 [65]):

   In this case the primary judge adopted the correct approach to the relevant provisions.  Dr Harvey gave evidence of her reason for taking adverse action against Mr Barclay and also gave positive evidence that this was not for a prohibited reason and that she would have taken the same action against a person circulating a similar email who was not an officer of the [union].

4. In the reasons of Gummow and Hayne JJ, the first of four questions said to arise in the appeal – whether the reasons of the decision-maker were to be identified objectively or subjectively (248 CLR at 540 [118]) – was not to be answered by reference to that simple dichotomy. Rather, the test was “whether adverse action [had] been taken because of a proscribed reason” (248 CLR at 542 [129]). In this respect, “the reasons of the decision-maker at the time the adverse action was taken … [were to be] … the focus of the inquiry” (248 CLR at 542 [127]).

5. The treatment given by Gummow and Hayne JJ to the remaining three questions in Barclay was concerned with the facts of the case, and would not add to an understanding of the matters presently under consideration.

6. The remaining member of the High Court in Barclay, Heydon J, commenced with the following proposition (248 CLR at 544 [140]):

   Examining whether a particular reason was an operative or immediate reason for an action calls for an inquiry into the mental processes of the person responsible for that action. 

   His Honour also said that, to “search for the “reason” for a voluntary action [was] to search for the reasoning actually employed by the person who acted” (248 CLR at 546 [146]). Rejecting the proposition that it was a logical consequence of the fact that the employee had acted for and on behalf of the union that the employer had to fail in discharging its onus of proof under s 361, Heydon J said the decision-maker’s “mental state did not turn on whom [the employee] was acting for, but on what he did” (248 CLR at 547 [148]).

7. In BHP Coal, a union delegate had, in the course of participating in a union protest outside the entrance to his employer’s premises during a period when most, but not all, of the relevant employees were on strike, held up and displayed a sign that contained the word “SCABS”, with apparent reference to those who were continuing to work.  The employee was dismissed.  Summarising what had been accepted by the primary Judge, French CJ and Kiefel J said that the reasons of the decision-maker (Mr Brick) for dismissing the employee (Mr Doevendans) were that –

   … the word “scab”, which appeared on the sign Mr Doevendans held up and waved, was inappropriate, offensive, humiliating, harassing, intimidating, and flagrantly in violation of BHP Coal’s workplace conduct policy (that policy required courtesy and respect to be accorded to fellow employees); Mr Doevendans was well aware of the policy; Mr Doevendans demonstrated arrogance when confronted with the objections to his conduct; and Mr Brick regarded the conduct as not only contrary to the policy, but antagonistic to the culture that Mr Brick was endeavouring to develop at the mine.

   (314 ALR at 3, [3]). Referring to the reasons of the primary Judge, their Honours said (314 ALR at 3, [4]):

   His Honour did not find that the mere fact that Mr Doevendans had held and waved the sign was one of Mr Brick’s reasons for terminating the employment.  Mr Brick’s reasons had to do with the nature of Mr Doevendans’ conduct. His Honour accepted Mr Brick’s evidence that the fact that Mr Doevendans occupied certain positions within the CFMEU, and had engaged in industrial activity, did not play any part in Mr Brick’s decision.

8. Turning to s 346 of the FW Act, French CJ and Kiefel J said (314 ALR at 3-4 [7]):

   The focus of the inquiry as to whether s 346(b) has been contravened is upon the reasons for Mr Brick taking the adverse action. This is evident from the word “because” in s 346, and from the terms of s 361. The inquiry involves a search for the reasoning actually employed by Mr Brick. The determination to be made by the court is one of fact, taking account of all the facts and circumstances of the case and available inferences.

   Of the four sentences in this passage, three were footnoted with references to Barclay.  The first sentence contained a footnoted reference to paras 44, 127 and 140 of that judgment.  The third sentence contained a footnoted reference to para 146.  The fourth contained a footnoted reference to paras 45 and 127.  All but para 45 have been covered by what has been written above.  In para 45 of Barclay, French CJ and Crennan J had said, relevantly, that the question was one of fact, which had to be answered “in the light of all the facts established in the proceeding”.

9. Returning to the facts of the case itself, French CJ and Kiefel J said (314 ALR at 4 [10]) that “[n]one of the reasons given by Mr Brick, and accepted by the primary judge as true in fact, was a reason prohibited by s 346(b).” Their Honours continued (314 ALR at 4 [10]):

   Mr Brick did not dismiss Mr Doevendans because he participated in the lawful activity of a protest organised by the CFMEU (s 347(b)(iii)), nor did he dismiss Mr Doevendans because, in carrying and waving the sign, Mr Doevendans was representing or advancing the views or interests of the CFMEU (s 347(b)(v)), as the CFMEU alleged.  Mr Brick’s reasons related to the content of Mr Doevendans’ communications with his fellow employees, the way in which he made those communications and what that conveyed about him as an employee. Mr Brick’s reasons included his concern that Mr Doevendans could not or would not comply with the standards of behaviour which Mr Brick was attempting to instil in employees at the mine.

   Referring to the finding of the primary Judge that the display of the scabs sign constituted industrial activity, their Honours said (314 ALR at 6 [22]):

   The only inference which can be drawn from this additional reasoning is that, because the adverse action was based upon the sign which Mr Doevendans held and waved, this activity must be taken as one of the reasons for the action. That is to say no more than that the adverse action had a connection, in fact, to the industrial activity. That connection may necessitate some consideration as to the true motivations of Mr Brick, but it cannot itself provide the reason why Mr Brick took the action he did. That inquiry was concluded by his Honour’s earlier findings. His Honour, in effect, wrongly added a further requirement to s 361, namely that the employer dissociate its adverse action completely from any industrial activity.

10. The other member of the majority in BHP Coal, Gageler J, elicited the following proposition from Barclay (314 ALR at 18 [85]):

    Where the adverse action taken is in consequence of a decision made by a responsible individual within a corporation, the existence or non-existence of a particular reason as an operative and immediate reason for taking that adverse action turns on an inquiry into the mental processes of that individual.

    His Honour continued (314 ALR at 18 [87]):

    Two aspects of the background to the decision in Barclay are important to an understanding of the significance of that conclusion.  The first was that evidence of the chief executive officer accepted by the primary judge did include prominently among the reasons for taking the adverse action the fact that the employee had sent an email to other employees.  The second was that the majority in the Full Court of the Federal Court had made additional findings.  Those additional findings were that the employee, in sending that email, encouraged or participated in a lawful activity organised by his union, and represented or advanced the views or interests of his union. [Footnote omitted]..The conclusion in this court was reached without addressing, much less disturbing, those additional findings.  Whether or not the employee, in sending the email, encouraged or participated in a lawful activity organised by his union or represented or advanced the views or interests of his union was irrelevant to the reasoning adopted in this court to reach the conclusion. [Emphasis added]

    And (314 ALR at 19 [89]):

    In a case where the totality of the operative and immediate reasons for one person having taken adverse action against another person are proved, the question presented by s 346(b) is whether any one or more of those reasons answers the description of the other person having engaged in any one or more of the industrial activities listed in s 347(a) or s 347(b).

11. Gageler J finally referred to a submission made on behalf of the unsuccessful appellants in BHP Coal that the consequence of allowing the decision of the Full Court in that case to stand would be “to undermine the statutory protection afforded to protected industrial activity by allowing an employer to escape culpability by choosing to apply its own characterisation to otherwise protected industrial activity” (314 ALR at 19 [91]). His Honour answered that submission at two levels (314 ALR at 19 [92]-[93]):

    Part of the answer to that argument lies in recognition of the nature of the protection that is afforded to protected industrial activity through the operation of s 346(b). The protection afforded by s 346(b) is not protection against adverse action being taken by reason of engaging in an act or omission that has the character of a protected industrial activity. It is protection against adverse action being taken by reason of that act or omission having the character of a protected industrial activity.

    Another part of the answer lies in recognition of the significance of the combined operation of ss 360 and 361. An employer could not escape the proscription in s 346(b) merely by proving that the employer applied its own characterisation to an act or omission having the character of a protected industrial activity. The employer would need, in addition, to prove that the act or omission having the character of a protected industrial activity played no operative part in its decision.
    [Emphasis added in each case]

12. The other members of the court in BHP Coal, Hayne and Crennan JJ, dissented.

13. In the Full Court in the present case, there was some debate as to whether BHP Coal had a ratio decidendi at all.  The view that it did not was based on the premise that the reasons of Gageler J differed from those of French CJ and Kiefel J.  At the level of principle, I would not accept that premise.  Helpfully from the perspective of later courts, the reasons of Gageler J disclosed the essence of the decision of the majority in that case and, as their Honours found, of the decision in Barclay. The passages from the reasons of French CJ and Kiefel J which I have set out above reveal a distinction between the act done which is said to have amounted to participation in an industrial activity, on the one hand, and the thinking of the decision-maker with respect to that act, on the other hand. In essence, that was the same distinction that Gageler J referred to when his Honour said that the protection given by s 346 was not against adverse action being taken by reason of the employee engaging in an act or omission that had the character of a protected industrial activity, but, rather, it was protection against adverse action being taken by reason of that act or omission having the character of a protected industrial activity.

14. Counsel for the appellant in the present case based her argument seeking to distinguish Barclay and BHP Coal upon the holding of French CJ and Kiefel J in the latter that it was not sufficient for there to be a connection between the adverse action taken by the employer and the industrial activity in which the employee had engaged; and that, under s 361, it was not incumbent on the employer completely to dissociate the adverse action from any industrial activity. By contrast in the present case, counsel submitted, the absences from work by reason of which adverse action was taken against Mr McDermott were in fact the personal leave to which he was entitled under the agreement. Her client was not relying merely on some degree of association or connection between the two: Mr McDermott was subjected to adverse action for the very absences to which he was entitled.

15. The “connection” which was held not to be sufficient in BHP Coal was between the adverse action taken by the employer and the industrial activity in which the employee had engaged. It was not between two different characterisations of the conduct of the employee, in that case, as a contravention of the employer’s conduct policy and as participation in industrial activity. As French CJ and Kiefel J made clear, if adverse action was taken because the conduct involved such a contravention, it did not become a breach of s 346 merely because the conduct was, at the same time, participation in industrial activity. The existence of such a “connection” was insufficient. What was necessary was that the actual reason of the decision-maker, in his or her own mind, be the employee’s participation in industrial activity. To see their Honours’ reasons in this way is, in my view, to recognise the consistency of those reasons with the statements of principle contained in the reasons of Gageler J in the same case. Those statements represent the law after Barclay and BHP Coal.

16. We are here dealing, of course, not with s 346, but with s 340, of the FW Act. But the formula which the legislature has chosen to define the relationship between the adverse action and the factual circumstance involving the employee against whom the action was taken is the same in each instance. The law as I have identified it above is to be applied under s 340 no less than under s 346. The contrary was not submitted by either party in the present case.

17. On the findings of the primary Judge, it was not the circumstance that Mr McDermott exercised his right to take personal leave which acted upon the mind of Mr Young when he took adverse action against Mr McDermott on 10 September 2010.  Rather, it was that the respondent “did not want to have workers on [the weekend] shift whose attendance was not predictable and reliable ….”  It was “the lack of predictability in Mr McDermott’s attendance which was the reason … [for the adverse action], not the fact that he had previously exercised his rights to [personal] leave.”  Anticipating the analytical framework later formulated by Gageler J in BHP Coal, the respondent satisfied the primary Judge that the character of Mr McDermott’s absences as personal leave played no operative part in Mr Young’s decision to take adverse action against him.

18. On these facts, I cannot distinguish BHP Coal.  I would dismiss the appeal in relation to the September 2010 adverse action.

19. The challenge to the primary Judge’s conclusion in relation to the April 2011 adverse action raises slightly different, and in some ways less complex, considerations. His Honour held that Mr McDermott was not entitled to be absent from work on 18 March 2011, because he had “failed to meet the s 107(3) and cl 16.7 tests”. In absenting himself from work on that day, he was not, therefore, exercising a workplace right within the terms of s 341(1)(a) of the FW Act. That aspect of his Honour’s decision is not challenged in this appeal.

20. However, it was the appellant’s case below that, when he took adverse action against Mr McDermott, Mr Peace took into account not only the absence on 18 March 2011, but also Mr McDermott’s unsatisfactory attendance record which led to the adverse action of September 2010.  When he was absent on those previous occasions, Mr McDermott had been exercising an entitlement which he had under the agreement and, if those earlier absences were an element in Mr Peace’s reasons for the action which he took in April 2011 (as to which the appellant had the benefit of s 360), the appellant should have succeeded in that part of its case that related to that action.

21. But the primary Judge rejected the appellant’s factual case in this regard.  His Honour said:

    The decision to remove Mr McDermott from the weekend day shift was prompted by Mr McDermott’s absence from work on 18 March 2011 and by his related failure to report that absence in the manner prescribed by the November 2010 agreement together with his failure to substantiate its legitimacy by a doctor’s certificate. Also relevant to Mr Peace’s concerns was the fact that the absence coincided with a period of annual leave which Mr McDermott had unsuccessfully requested, in that the coincidence of dates cast some doubt on the genuineness of the absence. At least as far as Mr Peace was concerned, it is apparent that Mr McDermott’s absence, which was neither substantiated by a medical certificate nor, in Mr Peace’s understanding, notified in accordance with the November 2010 agreement, was unacceptable in light of the existence of that agreement.

    His Honour said that he was –

    … not of the view that the character of many of Mr McDermott’s previous absences as exercises of a workplace right was of any particular significance to Mr Peace when he made his decision in March 2011.

    In conclusion with respect to the April roster change, his Honour said:

    Consequently, I accept Mr Peace’s evidence that the reason why he decided to move Mr McDermott from the weekend day shift was because the 18 March 2011 absence, coupled with its immediate circumstances, amounted to a breach of the November 2010 agreement which he was not willing to tolerate. Put another way, Endeavour has displaced the presumption that the reason or part of the reason for its decision to move Mr McDermott from the weekend day shift in April 2011 was the fact that in 2009, 2010 and 2011 he had exercised his workplace rights to take personal/carer’s leave, whether because of illness or because he had family responsibilities.

22. In relation to the issue to Mr McDermott of a final written warning on 1 April 2011, the primary Judge said:

    The final written warning was part of the process associated with the removal of Mr McDermott from the weekend shift in April 2011 and I see no reason to doubt that the same considerations motivated both steps. Consequently, for the reasons given earlier in relation to the reason for the shift change, I find that Endeavour has displaced the presumption that it issuing [sic] the final written warning because Mr McDermott had exercised his workplace rights to take personal/carer’s leave, whether because of illness or because he had family responsibilities.

    On appeal, the appellant did not seek to disturb so much of his Honour’s reasons as treated the roster change and the written warning as effectively aspects of the same process, motivated by the same reasons, whatever they were.  Its challenge was to so much of his Honour’s conclusion as held the events of September 2010 and earlier to have been no part of Mr Peace’s reasons for each of the steps which he took in relation to Mr McDermott.

1. That challenge is advanced on the ground that his Honour’s findings are glaringly improbable, and that the conclusion that Mr McDermott’s earlier absences from work were not part of Mr Peace’s reasons was not open on the evidence before him.  Should this challenge succeed, the result would be that those earlier absences were again available to the appellant as reasons which had to be disproved by the respondent.  Absent success in her client’s challenge to the September 2010 decision to take adverse action, counsel for the appellant accepted that it would “almost certainly follow” that it would fail in its challenge to the April 2011 decision.  For my own part, I would regard this as an unduly fatalistic view of things, since the question arising in relation to the latter relates wholly to Mr Peace’s reasons, and the fact that Mr Young acted, in September 2010, for reasons which attracted themselves to him would go no distance towards establishing the respondent’s evidentiary case in relation to the events of April 2011.

2. The appellant’s case requires some reference to the evidence which was led in the proceeding below.  The primary Judge laid out that evidence witness-by-witness, as it were, without providing a flowing narrative of events as they unfolded as disclosed in the evidence of all relevant witnesses.  It was not always apparent which aspects of the evidence his Honour accepted, and which, if any, he rejected.  Subject to that cautionary note, I shall attempt to identify from his Honour’s reasons, and from such other sources as are now before the Full Court, the events which led to Mr Peace’s decision to take adverse action against Mr McDermott.

3. On about 18 March 2011, Mr Peace was advised by Wayne David, the Weekend Day Shift Engineer at the mine, that Mr McDermott had failed to attend work, and had not notified Mr David of his absence.  A few days later, Mr Peace became aware that Mr McDermott had previously requested, but had been denied, leave from 18 to 20 March 2011, and was also advised that, although Mr McDermott had said that the reason for his absence on 18 March 2011 was that he had been unwell, he had not provided a medical certificate.  Mr Peace was aware of Mr McDermott’s poor attendance record in the past.  He was aware of a number of occasions when Mr McDermott had failed to follow correct procedures with respect to the taking of leave by leaving work early, by failing to turn up to a shift without notice and by failing to provide a medical certificate to explain an absence.  This history of absenteeism contributed to the suspicion, which Mr Peace entertained, about the genuineness of Mr McDermott’s claim to have been unwell on 18 March 2011.

4. In late March 2011, Mr Peace met with James Stewart, the Manager Mining Engineering, and Ms Lyndal Bailey, the Human Resources Manager.  They discussed the fact that Mr McDermott had failed to comply with the agreement which he had signed in November 2010, and decided to utilise that fact to justify their decision to move him from the weekend roster to the Monday-Friday roster.  After this meeting, Mr Peace spoke to Heath Hannigan, the Mine Manager, recommending that Mr McDermott be removed from the weekend day shift roster, and seeking approval for that course. Mr Hannigan gave that approval.  At some point, it was agreed as between Messrs Peace and Stewart that Mr McDermott should also be given a final warning.

5. On 31 March 2011, Ms Bailey sent an email to Messrs Peace and Stewart, with a copy to Mr Hannigan.  There were four documents attached to this email, identified by Ms Bailey in the following terms:

   1.Record of Discussion Summary – past 3 years Attendance History and Discussion History.

   2.Record of Discussion form – to be completed as a record for tomorrow’s discussion.

   3.Written Warning – to be handed to Alan at end of discussion tomorrow, please review and ensure that your [sic] ok with what’s been recorded.  Also may need to include the information that Terry Troy provided regarding the AL being declined (if substantiated).

   4.Attendance Calendars from past 3 years.

   The second attachment, the “Record of Discussion form” was in evidence, and is before the Full Court.  It contained some details in typescript which were, it seems, part of what was sent by Ms Bailey, namely the date of the following day (1 April 2011), Mr McDermott’s name and employee number, the identification of the relevant “supervisor”, namely, Messrs Stewart and Peace, and the “Issue”, being “Breach in Attendance Management Plan”.  Beneath that, in a box headed “History”, the following appeared:

   5 periods of unplanned absence in 12 months, 1 period of Leave w/out Pay, 4 periods on Friday, 3 of these single day absences.  Failure to comply with Attendance Management Plan conditions with most recent absence on 18.03.11. 

   In the form as tendered, other items were in handwriting, and his Honour did not make any finding as to whether they were on the form when it was emailed by Ms Bailey.  It is, however, unlikely that they were, since they purported to set out what was a “Summary of Discussion”.  The form was signed by Mr Peace, and dated, in hand, 1 April 2011 (from which I think it may be inferred that the handwritten section was in Mr Peace’s hand).

6. On the following day, 1 April 2011, Mr Peace and Mr Stewart met with Mr McDermott, who was accompanied by Mr McLachlan. Mr Peace informed Mr McDermott that, from 4 April 2011, he was being moved to the weekday day shift because of his failure to follow the November 2010 agreement.  Mr McDermott was given the final written warning.  Mr McDermott said that he had tried, but failed, to see a doctor in connection with his absence on 18 March 2011.  In evidence which the primary Judge apparently accepted, Mr Peace said that he did not believe this.  It was his view that Mr McDermott had not “tried very hard” to see a doctor, and that someone could get to see a doctor in the Illawarra if they genuinely wanted to.  At the meeting on 1 April 2011, Mr McDermott also claimed that he had telephoned the mine on 18 March 2011 in relation to his absence that day, but there was, apparently, no log or other record of any such telephone call, and it is clear from the primary Judge’s recounting of Mr Peace’s evidence that Mr Peace was sceptical, to the say the least, about this claim.

7. In his evidence, Mr Peace said that he considered that Mr McDermott had “abused the system” by not providing a medical certificate to support his absence when taking leave on a day for which he had previously been denied leave, and that he doubted the genuineness of Mr McDermott’s claim to illness.  Mr Peace said that it was for these reasons that he moved Mr McDermott to the weekday shift.   The primary Judge noted that, at one point in cross-examination, Mr Peace said that the three-year history sent by Ms Bailey was part of the reason for moving Mr McDermott from his shift, but his Honour added that Mr Peace later said that Mr McDermott was taken from the weekend shift because he had failed to conform to the November 2010 agreement, and that another factor in his decision was that it would be easier to manage Mr McDermott’s absenteeism on weekdays, where he could be more closely monitored.

8. In the light of this evidence, was the finding of the primary Judge that Mr McDermott’s absences down to September 2010 were not part of Mr Peace’s reasons for the adverse action which he took in April 2011 glaringly improbable?  This question must be addressed, of course, in the light of the explanation given by French CJ and Crennan J in Barclay that “[i]t is a misunderstanding of, and contrary to, [General Motors Holden Pty Ltd v Bowling (1976) 12 ALR 605] to require that the establishment of the reason for adverse action must be entirely dissociated from” the protected circumstance upon which an applicant relies (248 CLR at 523 [62]). The pre-September absences were drawn to the attention of Mr Peace and, as the primary Judge held, he treated them as part of the background against which he made his decision. In the pre-printed section of the “Record of Discussion” (see para 44 above), these absences were referred to as “History”. But the “Summary of Discussion” section, written in hand by Mr Peace himself, referred only to Mr McDermott’s failure to conform to the agreement of 8 November 2010. Likewise, the final written warning, signed by Mr Peace, referred to the earlier absences in the context of “[previous]… disciplinary action taken with regard to this issue….” The actual conduct to which the warning related was Mr McDermott’s failure to comply with his attendance management plan.

9. In this setting, the primary Judge had to decide whether the earlier absences were a reason why the warning was given, and the shift change was made, on 1 April 2011.  The respondent carried the onus of proof in this area, but that did not require it entirely to dissociate the adverse action taken by Mr Peace from those earlier absences.  Put another way, the respondent might well have discharged the onus notwithstanding the existence of some connection between that action and those absences.  What this means is that the finding which the appellant must now establish was glaringly improbable is the finding that the earlier absences were not a reason for the adverse action of 1 April 2011, albeit that there may have been some connection between the two.  The appellant does not do this by drawing the Full Court’s attention to evidence which favoured, even strongly, some other finding.  A concession made by a witness in the course of lengthy cross-examination, such as that by Mr Peace (and acknowledged by his Honour) that the three-year history sent by Ms Bailey was part of the reason for moving Mr McDermott from his shift, is not self-evidently a knock-out blow for the appellant on appeal, as it need not have been at first instance.  Evidence of that character was, no doubt, of some forensic value to the appellant but, ultimately, it was for his Honour to measure that against the whole of the evidence of the relevant witness and the other (including documentary) evidence in the case.  In this regard his Honour had the advantage “that derive[d] from the obligation at trial to receive and consider the entirety of the evidence and the opportunity … to reflect upon that evidence and to draw conclusions from it, viewed as a whole”:  Fox v Percy (2003) 214 CLR 118, 126 [23].

10. In my view, the primary Judge’s finding now challenged by the appellant was open to his Honour on the evidence before him.  It could not be described as glaringly improbable.

11. It follows, in my view, that the appeal should be dismissed. 

I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.

Associate:

Dated:        3 June 2015

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
FAIR WORK DIVISION	NSD 2190 of 2013

ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA

BETWEEN:	CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION Appellant
AND:	ENDEAVOUR COAL PTY LTD (ABN 38 099 830 476) Respondent

JUDGES:	JESSUP, PERRAM AND BROMBERG JJ
DATE:	3 JUNE 2015
PLACE:	SYDNEY

REASONS FOR JUDGMENT

PERRAM J

I.   Introduction

1. This appeal raises two issues. The first is a question of general principle about the operation of the adverse action provisions in s 340 of the Fair Work Act 2009 (Cth) (‘the Act’). The second is whether the trial judge made an error of fact.

2. The question of general principle is whether the High Court’s decision in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2014) 314 ALR 1 (‘CFMEU v BHP’) applies to a factual circumstance in which the employer’s reason for taking adverse action is not that an employee exercised a workplace right but, instead, that the employee did something which, whilst not characterised by the employer as being the exercise of a workplace right, nevertheless resulted from the exercise of such a right.  In CFMEU v BHP, the question was whether the employer sacked the employee for taking part in a lawful protest (a protected workplace right) or for waving an offensive sign during that protest (not a protected workplace right).  The High Court thought the latter. 

3. In this case, an employee was transferred from one roster to a less favourable one because his attendance was thought to be unreliable.  Mostly, however, his uneven attendance record was a result of his taking of leave to which he was entitled.

4. The appellant (the ‘CFMEU’) submits that CFMEU v BHP does not apply where the circumstances from which management’s motivations have been formed inevitably result from the exercise of a workplace right even if the employer’s motives do not explicitly concern workplace rights.

5. The question of fact involves a challenge to the trial judge’s conclusion that management had, on one of the occasions involved, been motivated by its view that the employee had failed to produce a medical certificate.  There may be some doubt as to whether this argument was abandoned on the appeal – see T82 – but I propose to proceed on the basis that it was not.

6. Both arguments should be rejected and the appeal dismissed with costs.

   II.    Facts

7. Around 50 kms south of Sydney in the Illawarra there is a long-wall coal mine known as the West Cliff Colliery which is presently operated by Endeavour Coal Pty Ltd (‘Endeavour’), the respondent to the appeal.  Endeavour is a subsidiary of BHP Billiton, a large international mining concern. Much of the workforce at the mine is unionised and the predominant union at the mine is the CFMEU.  One of its members is Mr Alan McDermott.  This appeal concerns Mr McDermott’s industrial rights and Endeavour’s corresponding obligations.  The CFMEU’s role in the litigation has been as a representative of Mr McDermott.

8. Mr McDermott was, and is still, employed by Endeavour as a maintenance fitter, which is a role involving responsibility for the maintenance, overhaul and repair of machinery and equipment. The work at the colliery is conducted around the clock.  That work is conducted by means of various shifts and staff are placed on rosters which reflect these various shifts.  This case concerns the weekend day roster which ran from Friday to Sunday during the day and the weekday day roster which ran during the day from Monday to Friday.

9. Mr McDermott had, until the events of this case, been working on the weekend day roster.  This had a number of advantages for him.  Financially it had been advantageous to him, resulting in around $800 per week (before tax) more than he would earn if rostered on the weekday day roster.  It had resulted in superior leave entitlements, securing for him six weeks of annual leave rather than the five available for those rostered on the weekday day roster.  It has also had significant personal advantages to him, allowing him to look after his three children on Monday through to Thursday and, thereby, allowing his wife to attend to the customers of her business, which involves dog cleaning.

10. Industrial relations at the colliery are regulated by the West Cliff Colliery Workplace Agreement 2008 (‘the Workplace Agreement’).  Under the agreement Mr McDermott was entitled to accrue both sick leave and carer’s leave.  Sick leave requires no explanation.  Carer’s leave was defined in cl 16.1 of the Workplace Agreement to mean paid or unpaid leave taken to provide care or support to a member of an employee’s immediate family because of illness or injury or because of an unexpected emergency.  Both leave entitlements accrued on a weekly basis at specified rates.  Another clause, cl 16.7, entitled Endeavour to have proved to its satisfaction the existence of the conditions enlivening the right to take the leave which, in the case of sick leave, usually required the production of a doctor’s certificate.

11. In June 2010, the management of the mine became concerned about Mr McDermott’s attendance record.  This had involved the taking by him of leave in the preceding few years which it was not ultimately disputed he was entitled to take.  However, on 13 June 2010 Mr McDermott left work early without notifying anyone although there was still surface work to be done.  He had also apparently been failing to return to work after Mines Rescue Training.  Following another incident on 3 September 2010, Mr McDermott was summoned to a meeting with management (in the form of Mr Young and Mr Stewart).  At that meeting he was given a verbal warning and moved to the weekday shift.  That meeting occurred on 10 September 2010.  At a subsequent meeting held on 13 September 2010 he was told that the position would be reviewed prior to Christmas.

12. The trial judge recited much of the evidence which was given on this topic but did not make findings that are completely clear. The evidence suggests that Mr McDermott was placed on a program to improve absenteeism and that the steps involved in that program ultimately resulted in Mr McDermott being put on the weekday shift.  I have found it difficult to determine from the trial judge’s reasons whether this occurred at the meeting on 10 September 2010 or at a subsequent time when a warning was given to Mr McDermott.  In any event, it appears he was returned to the weekend shift sometime in November, upon the execution by him of an agreement relating to his attendance (‘the November 2010 Agreement’).

13. Clause 4 of the November 2010 Agreement provided:

    ‘I agree to arrange an alternate shift during the week when I have taken periods of unplanned absence, unless otherwise agreed by the Maintenance Manager.’

14. Mr McDermott had no further difficulties until 18 March 2011.  In advance of that day he sought annual leave for the period 18 to 20 March, but this was denied.  When 18 March 2011 came, Mr McDermott did not attend work.  Although he claimed to be sick and to have had severe stomach pains and to have been constipated, he did not produce a medical certificate.  The evidence showed that Mr McDermott drove his mother-in-law from Wollongong to the Gold Coast on Wednesday 16 March and Thursday 17 March 2011.  He did so to increase his private use of his leased vehicle.  He also travelled from Wollongong to Adelaide, Melbourne and then back to Wollongong between Monday 21 March 2011 and Friday 25 March 2011, most likely for the same reason.

15. Following this occurrence, which the trial judge found not to involve the taking of carer’s or sick leave under the November 2010 Agreement, Endeavour moved Mr McDermott back to the weekday shift.  This occurred on 1 April 2011.  Mr McDermott then took sick leave and annual leave.  He returned to work on 7 June 2011 when he once again commenced on the weekday shift.

16. The decision to move Mr McDermott to the weekday shift was made by Mr Peace in consultation with the production manager, Mr Stewart.  Mr Peace sought approval from Mr Hannigan.

17. So far as this appeal is concerned, two decisions are relevant for the CFMEU’s adverse action claim.  The first is the decision made in September 2010 to move Mr McDermott to the weekday shift.  The second is the decision made on 1 April 2011 to move him to the weekday shift.

18. It was necessary for the trial judge to form a view about Endeavour’s reasons for taking each of these steps. As to the shift change in September 2010, the trial judge concluded as follows (at [172]):

    ‘Two potential reasons for the adverse action of September 2010 emerged from the evidence.  The first was that Mr McDermott was moved from the weekend day shift because, amongst other things, he took leave to which he was entitled and the second was than he was moved from that shift because he did not always attend when he was rostered to work.  I have concluded that Mr McDermott was moved from the weekend day shift for the latter reason.’

19. In relation to the shift change in April 2011, the trial judge concluded that Mr Peace was motivated by the events surrounding 18 March 2011 and not by Mr McDermott’s previous record.  His Honour  summarised his findings at [222] as follows:

    ‘Consequently, I accept Mr Peace’s evidence that the reason why he decided to move Mr McDermott from the weekend day shift was because the 18 March 2011 absence, coupled with its immediate circumstances, amounted to a breach of the November 2010 agreement which he was not willing to tolerate.  Put another way, Endeavour has displaced the presumption that the reasons or part of the reason for its decision to move Mr McDermott from the weekend day shift in April 2011 was the fact that in 2009, 2010 and 2011 he had exercised his workplace rights to take personal/carer’s leave, whether because of illness or because he had family responsibilities.’

1. Ultimately, the case was effectively dismissed.

   III.   The Appeal

2. Section 340 of the Fair Work Act 2009 (Cth) (‘the Act’) is as follows:

   340  Protection

   (1)       A person must not take adverse action against another person:

   (a)       because the other person:

   (i)has a workplace right; or

   (ii)has, or has not, exercised a workplace right; or

   (iii)proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or

   (b)       to prevent the exercise of a workplace right by the other person.

   Note:        This subsection is a civil remedy provision (see Part 4-1).

   (2)A person must not take adverse action against another person (the second person) because a third person has exercised, or proposes or has at any time proposed to exercise, a workplace right for the second person’s benefit, or for the benefit of a class of persons to which the second person belongs.

   Note:        This subsection is a civil remedy provision (see Part 4-1).

3. As will be apparent from the text of s 340(1), the question at trial was concerned with whether Endeavour had moved Mr McDermott to the weekday shift ‘because’ he had taken carer’s or sick leave.

4. Two arguments are raised on the appeal.  First, it is submitted that the trial judge’s conclusion that Mr McDermott had been moved to the weekday shift by Mr Young because he did not always attend, rather than because he took leave to which he was entitled, was a conclusion involving error.  The error was said to arise because the fact that he did not always attend was a consequence of his exercising the right to take leave.  It was said that his unreliable attendance was an unavoidable incident of taking the leave to which he was entitled.

5. The second argument focussed only on the events of 1 April 2011.  Here it was said that the trial judge had erred in fact in concluding that Mr McDermott’s attendance record had not been a factor in the decision to move him to the weekday roster.

6. The first argument is precluded by the High Court’s decision in CFMEU v BHP (2014) 314 ALR 1. The logic of that decision establishes that the question posed by s 340(1) concerns only the state of mind of the decision-maker: 3-4 [6], [7] and 18 [85]. The trial judge accepted the evidence of Mr Young that his reason for moving Mr McDermott to the weekday shift was because he did not always attend when rostered. There was material before the trial judge which would have justified a different conclusion about Mr Young’s motives but that was not the finding the trial judge made.

7. To outflank the application of CFMEU v BHP, the CFMEU submitted that it was distinguishable because it did not involve a situation where the permissible reason was constituted by the same facts as the forbidden reason. 

8. For myself, I would be disposed to see the force of that argument but it is precluded by CFMEU v BHP and Board of Bendigo Regional Institute of Technical and Further Education v Barclay (No 1) (2012) 248 CLR 500 at 11 [45] and 540-541 [121] respectively.  In the former case the employee was sacked for offensive behaviour and in the latter the employee was suspended for it.  In both cases the same behaviour also constituted protected industrial action.  That the conduct might be susceptible to multiple characterisations was irrelevant at the legal level.  The only issue was a factual one, viz. what were the actual motives of the decision-maker.  I cannot distinguish that analysis from the present situation.  Mr McDermott’s absences can bear two characterisations.  They can be seen as the exercise of lawful rights under the Workplace Agreement.  They can also be seen as an unreliable attendance record.  Which of these characterisations Mr Young put upon Mr McDermott’s actions is a purely factual inquiry which the trial judge resolved.  No error is shown in that conclusion.

9. The second argument involves a direct challenge to the trial judge’s fact finding.  When considering the events surrounding Endeavour’s decision to shift Mr McDermott to the weekday shift on 1 April 2011, there was no doubt that Mr Peace, the decision-maker, was aware of Mr McDermott’s prior attendance history.

10. The trial judge’s reasons for his conclusions about the events of 1 April 2011 were detailed and reflected the keen forensic tussle which had taken place before him on the issue.  The evidence, in various ways, pulled in different directions.  In favour of Mr McDermott’s position were several apparent matters:

    ·a file note prepared for Mr Peace and Mr Stewart in the lead up to the meeting held with Mr McDermott on 1 April 2011 showed that his attendance record was squarely in contemplation;

    ·the written warning given to Mr McDermott on 1 April 2011 referred to disciplinary action having been taken against him arising from his attendance record;

    ·the same document suggested that the decision to move Mr McDermott to the weekday day shift had been made before the meeting on 1 April 2011.  It was only at the meeting that Mr McDermott had been challenged to produce a medical certificate in relation to his absence on 18 March 2011.  Since this occurred after the time at which the decision appeared to have been made, it made it less likely that it was his unexplained absence on that day which had been the basis for the decision; and

    ·Mr Peace accepted under cross-examination that he had had regard to Mr McDermott’s attendance record.

11. The trial judge was aware of these arguments.  At [214] his Honour recorded them:

    ‘214.The CFMEU submitted that the consideration at the 1 April 2011 meeting of Mr McDermott’s attendance history over the previous three years indicated that the decision to remove him from the weekend day shift for a second time was not based purely on the events of 18 March 2011. It submitted that in addition to noting Mr McDermott’s absence on 18 March 2011, the file note prepared for Messrs Peace and Stewart to use in that meeting recorded that Mr McDermott had had five periods of unplanned absences in twelve months. The CFMEU further noted that the final written warning prepared in association with that meeting also referred to previous disciplinary action having been taken in relation to “[that] issue”. The CFMEU submitted that the documents prepared for the meeting showed that the decision to remove Mr McDermott from the weekend day shift had been made before the meeting on 1 April 2011 and was not the result of his absence on 18 March 2011 alone but of his history of absenteeism more generally. The CFMEU also referred to Mr Peace’s evidence that Mr McDermott’s history of absences was something which he considered to be relevant.’

12. He was also aware of Mr Peace’s testimony as [218] shows:

    ‘218.Mr Peace acknowledged that when making the decision to move Mr McDermott from the weekend day shift for a second time he was aware of and had some regard to the fact that Mr McDermott had previously had a poor attendance record. However, I have concluded that it was Mr McDermott’s breach of the November 2010 agreement which was the reason for Mr Peace’s decision and that, for the purposes of his decision, the record of earlier absences served only as background to the existence of that agreement.’

13. Despite these matters the trial judge rejected the CFMEU’s case.  His reasoning was as follows:

    ‘219.The decision to remove Mr McDermott from the weekend day shift was prompted by Mr McDermott’s absence from work on 18 March 2011 and by his related failure to report that absence in the manner prescribed by the November 2010 agreement together with his failure to substantiate its legitimacy by a doctor’s certificate. Also relevant to Mr Peace’s concerns was the fact that the absence coincided with a period of annual leave which Mr McDermott had unsuccessfully requested, in that the coincidence of dates cast some doubt on the genuineness of the absence. At least as far as Mr Peace was concerned, it is apparent that Mr McDermott’s absence, which was neither substantiated by a medical certificate nor, in Mr Peace’s understanding, notified in accordance with the November 2010 agreement, was unacceptable in light of the existence of that agreement.

    220.The fact that these events in March and April 2011 did not occur in a historical vacuum and that Mr Peace was aware of this does not mean, however, that the earlier absences were part of the reason for his decision to move Mr McDermott from his weekend day shift for a second time. I accept Mr Peace’s evidence that if Mr McDermott had substantiated the genuineness of the March 2011 absence as sick leave, he would have discussed that with him and would not have taken the action he took.

    221.The inference to be drawn from the fact that if a medical certificate had been supplied Mr Peace would have been willing to discuss Mr McDermott’s situation with him and would not have removed him from the weekend day shift is that Mr Peace was concerned with the legitimacy of Mr McDermott’s absence rather than with the fact that he had been absent. This attitude is somewhat different from that which Messrs Young and Hannigan expressed in relation to the absences preceding the September 2010 shift change but it nevertheless indicates that Mr Peace would not have taken action against Mr McDermott because he had exercised a workplace right but rather took the action because Mr McDermott had breached the November 2010 agreement. That inference is strengthened by Mr Peace’s evidence that a move to the weekday shift would have permitted Endeavour to better assist Mr McDermott to manage his absenteeism, echoing the burden of parts of the evidence of Messrs Young and Hannigan, that the nature of the leave sought or taken was not the reason for the decision to change Mr McDermott’s shifts. In those circumstances, I am not of the view that the character of many of Mr McDermott’s previous absences as exercises of a workplace right was of any particular significance to Mr Peace when he made his decision in March 2011.

    222.Consequently, I accept Mr Peace’s evidence that the reason why he decided to move Mr McDermott from the weekend day shift was because the 18 March 2011 absence, coupled with its immediate circumstances, amounted to a breach of the November 2010 agreement which he was not willing to tolerate. Put another way, Endeavour has displaced the presumption that the reason or part of the reason for its decision to move Mr McDermott from the weekend day shift in April 2011 was the fact that in 2009, 2010 and 2011 he had exercised his workplace rights to take personal/carer’s leave, whether because of illness or because he had family responsibilities.’

14. In this Court the submission is not made that the trial judge failed to attend to the evidence.  Rather, the CFMEU submits that his Honour’s conclusions were not open on the evidence.  This was a direct invocation of the principles explained in Fox v Percy (2003) 214 CLR 118 at 126-129 [25]-[31]. The standard may be variably expressed. It will be satisfied where the trial judge’s finding are contrary to incontrovertible facts or, perhaps rarely, glaringly improbable or contrary to compelling inferences: 128 [29].

15. I do not think that standard is achieved here.  The material is not as unequivocal as the CFMEU suggests.  The documents prepared before the meeting held on 1 April 2011 suggest, it is true, that the decision to move Mr McDermott had already been made and they do suggest that his history of attendance was under consideration.  But they show other things too.  To begin with, whilst they were supplied to the decision-maker, Mr Peace, the day beforehand they were not created by him.  They were created by Ms Bailey following an earlier meeting.  The views expressed in them are not inevitably linked to those of Mr Peace.

16. But in any event, the documents are also consistent with an expectation on Ms Bailey’s part (and therefore perhaps Mr Peace’s) that, at the meeting the following day, Mr McDermott would fail to justify his absence on 18 March 2011.  The documents consisted of an email dated 31 March 2011 which enclosed a draft final warning letter.  Whilst the draft certainly supports the view that a decision had already been made, it also suggests that the failure to provide a medical certificate was a matter in play.  The relevant portion read:

    ‘This final warning/suspension is given with regard to:

    ŸFailure to comply with the terms and conditions set out in Alan’s Attendance Management Plan Agreement between Alan McDermott and the Company as follows:

    o  Failure to notify the Shift Undermanager of his absence from work as directed in the Agreement.

    o  Failure to provide both a medical certificate and a sick leave form upon his first shift back to work.’

17. This is consistent with the medical certificate issue having formed part of the decision-making process before the meeting on 1 April 2011.  It is true, as the CFMEU’s submissions emphasised, that Mr McDermott was not challenged about whether he had been entitled to take a day’s leave on 18 March 2011 until the meeting held on 1 April 2011.  However, that is an incomplete statement because Mr Peace had given evidence in an affidavit that Mr McDermott had failed to provide a medical certificate in respect of his absence on 18 March 2011, and that it was because of that matter and the denied request for annual leave in respect of that day that he doubted the genuineness of the sick leave purportedly taken.  This exchange occurred at T182:

    ‘And that’s because you doubted the genuineness of his illness? --- I’m going to say it again.  He didn’t conform to the agreement.

    Mr Peace, I’m taking to you what you have said on oath here? --- Yes.

    You have said this was the reason why he moved to the weekday shift? --- It’s one of the reasons, yes.

    I see.  Because you doubted the genuineness of his claims to illness? --- Because there was no evidence to show of that illness.

    And you say that if Mr McDermott had been able to satisfy you that he had a genuine problem or illness, you would not have recommended the action taken? --- That’s correct.

    So even if he had contravened the agreement, it wouldn’t have mattered if you believed he had been genuinely ill? 000 We would take each circumstance as it arises.

    I see.  You say that he suspicion that the illness wasn’t genuine was one of the reasons that you relied on? --- Yes.

    And part of the reason you had that suspicion was because of Mr McDermott’s history of absenteeism, essentially, wasn’t it? --- It’s part of it.

    And you drew that information from, amongst other things, the records which Ms Bailey had given you of Mr McDermott’s absenteeism record?--- That’s part of it.’

18. Whilst it is true, therefore, that Mr McDermott was not challenged until the 1 April meeting about his absence, it is clear that the genuineness of the leave was very much in Mr Peace’s mind the day before.

19. The trial judge’s conclusion was that Mr Peace did not make the decision to move Mr McDermott because of his history of inconsistent attendance but because of the circumstances surrounding the events of 18 March 2011 and, more particularly, his failure to produce a medical certificate.  The trial judge was influenced by Mr Peace’s evidence, set out above, that if Mr McDermott had produced a medical certificate on 1 April 2011 he would not have moved him to the weekday day shift.  His Honour thought that this showed the significance of the failure to produce the medical certificate to Mr Peace’s decision-making process.

20. Elsewhere, however, the cross-examiner was successful in getting Mr Peace to agree that he was aware of Mr McDermott’s variable attendance record and, indeed, that it was involved in his decision-making process to an extent.  Perhaps the clearest example of this occurred at T164:

    ‘Are you saying to the court that you made no inquires whatsoever as to Mr McDermott’s record in the period prior to and leading up to March 2011? --- I was given information of his attendance record and the agreement that he was on, and from that I made a decision.

    From both of those things? --- And his previous history, as well.’

21. There is no dispute that the trial judge was cognisant of this material, as [220] (set out above) from his Honour’s reasons amply shows.  But his Honour’s conclusion that Mr Peace’s reason for moving Mr McDermott was his behaviour on 18 March 2011 is not rendered ‘glaringly improbable’ by Mr Peace’s evidence that the prior attendance record was taken into account.

22. This is because there is a factual distinction between factoring something into one’s consideration of a matter and making a decision about the matter itself.  To give an example: in reaching the conclusions I have reached on this appeal I have taken the CFMEU’s submissions into account and they have formed an important element in my decision-making processes.  However, as will be apparent, the fact that I have had regard to them does not entail that they may therefore be described as constituting a part of my subjective reasons for decision.  Of course, if by reason one means ‘cause’ then one gets a different result.  On that view of things, Mr McDermott’s prior record was causally connected to the decision to transfer him to a different shift.  That approach to the identification of the reason in question is prevented, however, by CFMEU v BHP. The inquiry thrown up by s 340 is not one concerned with causation but, rather, the subjective reasons for action of the decision-maker. Once that is appreciated, it is possible to accept that Mr Peace’s evidence about what he was aware of in relation to Mr McDermott’s prior attendance record is not inconsistent with a finding that it was not that record which he, himself, regarded as determinative.

23. The last point made was that Mr Peace’s superior, Mr Hannigan, had given evidence that his concern, so far as Mr McDermott was concerned, was not a single absence but a pattern of absences.  This Mr Hannigan said at T295, but it is clear he was being asked about the position in September 2010.  I do not read his answers as directed to the events of 1 April 2011.

24. In those circumstances, I do not accept that it has been shown that the trial judge’s conclusions on the facts are erroneous.

    IV.    Result

25. The appeal should be dismissed.

I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.

Associate:

Dated:        3 June 2015

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
FAIR WORK DIVISION	NSD 2190 of 2013

ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA

BETWEEN:	CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION Appellant
AND:	ENDEAVOUR COAL PTY LTD (ABN 38 099 830 476) Respondent

JUDGES:	JESSUP, PERRAM AND BROMBERG JJ
DATE:	3 JUNE 2015
PLACE:	SYDNEY

REASONS FOR JUDGMENT

BROMBERG J

1. Section 340(1) of the Fair Work Act 2009 (Cth) (FW Act) prohibits a person taking adverse action against another person including because the latter has exercised a workplace right.  The substantive question in this proceedings is whether or not adverse action taken by the respondent (Endeavour) against Mr Alan McDermott, a maintenance fitter Endeavour employed at its West Cliff Colliery, was in contravention of s 340(1).

2. McDermott was a member of the Construction, Forestry, Mining and Energy Union (CFMEU), a registered organisation under the Fair Work (Registered Organisations) Act 2009 (Cth). The CFMEU was the applicant in the proceedings below, and is now the appellant.

3. Until September 2010, McDermott worked on the weekend day roster (weekend shift).  At various times in the period 2008-2010, McDermott was absent from work.  Most, but not all, absences were as a result of McDermott taking sick leave or carer’s leave (personal/carer’s leave) to which he was entitled under a workplace agreement which covered his employment.

1. We were not referred to, and my research has not revealed, any judgment which has directly considered the construction issue here raised.  There is, however, considerable jurisprudence concerning legislative prohibitions upon adverse action taken by an employer against an employee because the employee is entitled to the benefit of an award or industrial agreement.  That jurisprudence is instructive in a number of respects.

2. First, as might have been expected, the cases reveal that commonly it is the effect upon an employer of an employee gaining an entitlement or having an entitlement to the benefit of an award or industrial agreement that is the reason for an employer taking adverse action against the employee.  Federal industrial jurisprudence has not applied the approach of the former New South Wales Court of Arbitration, that adverse action taken to address the detrimental financial or managerial effect of an employee’s entitlement to the benefit of an award or agreement was not action taken by reason of the fact that the employee was entitled to the benefit of the award or agreement.  The rationale for that approach, taken early last century in New South Wales, was that the protections conferred “were not intended to take away from the employer the right to reorganise and reduce his staff when an award increases his expenses.”  At the federal level, an effect upon an employer driven by the entitlement of its employees to the benefit of an industrial instrument has been regarded as capable of constituting a prohibited reason.  It has been recognised, however, that where the employer is unable to pay, or its business is not capable of operating at a profit by reason of the entitlement, it is unlikely that the prohibition will have been contravened. 

3. Each of the relevant decisions of the New South Wales Court of Arbitration dealt with s 52 of the Industrial Arbitration Act 1912 (NSW) (NSW Act).  The first was Connington v Council of Municipality of Kogarah [1913] AR (NSW) 40. At that time, s 52 of the NSW Act provided:

   If an employer dismisses from his employment any employee by reason of the fact that the employee is a member of … a trade union, … or is entitled to the benefit of an award or of an industrial agreement, the court may order such employer to pay a penalty not exceeding twenty pounds for each employee so dismissed.

4. In Connington, an employee of a council was dismissed.  The council’s evidence was that the employee had not been dismissed because he was entitled to the benefit of an award but because he made an unwarranted claim for wages.  Heydon J concluded that the employee was dismissed for making the claim for additional wages.  The employee’s claim for those wages was said to be arguable but legally wrong.  His Honour rejected the claim that the dismissal was by reason of the fact that the employee was entitled to the benefit of an award.  In an obiter observation Heydon J said:

   It is particularly difficult, I think, to get a really clear case under this particular part of section 52, because it seems to me evident that the section was not intended to take away from the employer the right to reorganise and reduce his staff when an award increases his expenses. Yet, in a way, that is dismissing men because they are entitled to the benefit of an award.

5. In 1926, the terms of s 52 of the NSW Act were amended by the Industrial Arbitration (Amendment) Act 1926 (NSW). Section 52 then provided that:

   If an employer dismisses an employee ... by reason of the fact that the employee is [a] ... member of a trade ... union ... or claims some benefit of an ... award to which he is entitled ... the court or industrial magistrate may order him to pay a penalty not exceeding fifty pounds.

6. That provision was considered by Street J in Grayndler v Broun [1928] AR (NSW) 46. The facts of that case were that two employees working on the defendant’s farm became members of a union and thereby became entitled to the full benefit of an award. Subsequently, they were dismissed. It was alleged that the defendant had dismissed the two employees by reason of the fact that they were members of the union. When the defendant became aware that the employees had joined the union and were demanding the “union rate” under the award, the defendant said “I cannot afford to pay it. I will have to let the sheep starve.” Evidence that the defendant had said that the employees were being dismissed because they were members of the union was not accepted. Street J posed the relevant question as follows:

   Were these men dismissed because they were unionists, or were they dismissed because the defendant Broun could not afford to pay them?

7. His Honour accepted that the defendant was not prejudiced against unionists.  He concluded (at 49) that it was not because of the mere fact that the employees were unionists that they were dismissed, but instead that they were dismissed because they had lawfully entitled themselves to very much higher wages.  Street J referred to and adopted the observations made by Heydon J in Connington that the section was never intended to take away from the employer the right to reorganise the employer’s business and reduce staff when an award increases his expenses. Applying that construction, Street J reasoned that the section was not intended to prevent an employer from dismissing an employee in order to relieve the employer from the additional burden imposed upon the employer by the employee joining the union and becoming entitled to higher wages. Street J regarded “the real object” of s 52 as being “to prevent victimisation – to prevent the capricious use of an employer’s power to discharge employees simply because he dislikes the fact of their having joined a union.” Street J took the same approach in Hunt v Railway Commissioners for New South Wales; Ex parte Brown-Smith [1928] AR (NSW) 151.

8. The legislative predecessors to ss 340(1) and 341(1)(a) can be traced back to the enactment of s 9(1) of the Commonwealth Conciliation and Arbitration Act 1904 (Cth) (C&A Act). When enacted in 1904, s 9(1) was in the following terms:

   No employer shall dismiss any employee from his employment by reason merely of the fact that the employee is an officer or member of an organization or is entitled to the benefit of an industrial agreement or award.
   Penalty: Twenty pounds

9. Since that time, legislative protection against adverse action taken against employees by reason of an entitlement to the benefit of an industrial instrument has been a constant feature of federal industrial legislation.

10. The first of the relevant cases to have considered s 9 of the C&A Act was Eaton v McKenzie (1916) 12 TASLR 94. At the time that that case came to be considered, s 9(1) provided as follows:

    An employer shall not dismiss an employee, or injure him in his employment, or alter his position to his prejudice, by reason of the circumstance that the employee -

    (a)is an officer or member of an organization, or of an association that has applied to be registered as an organization; or

    (b)       is entitled to the benefit of an industrial agreement or an award; or

    (c) has appeared as a witness, or has given any evidence, in a proceeding under this Act.

    Penalty: Fifty pounds.

11. Eaton was concerned with an alleged contravention of s 9(1)(b). The appellants employed builders’ labourers and paid them wages calculated in accordance with the award. The award was varied so as to increase the rate of wages payable. The appellants dismissed their builders’ labourers and were convicted of contraventions of s 9(1)(b). The Full Court unanimously affirmed the conviction. At 95-96, Nicholls CJ said:

    To me it seems quite plain that the appellant dismissed the respondent for the reason that the respondent was one of those entitled to the benefit of an award which would, next day, cause his wages to be increased. The appellant gave no evidence of inability to pay, of dismissal by reason of reduction of hands in the course of regulation of the work, or of any other cause besides the award. He said, “If the award had not been varied, I should have carried on as usual.” It seems to be the fact that he can carry on, despite the variation.

12. Crisp J said (at 97):

    Many motives may influence employers in dismissing their employees; they may not be able to pay the wages, they may decline to pay them in any event, they may dismiss for purely political reasons, but if the magistrate in the particular case before him sees that the real basic reason for the dismissal was the award, then his duty is to convict. If an employer finds that he cannot pay the wages fixed by the award, there is nothing in the Act to compel him to do so, or to punish him if he decides to go out of business. In my opinion an employer who is satisfied that to pay the wages awarded means ruin to himself, and who, in consequence, dismisses his men or any of them, has not dismissed them because of the award but because he could not pay. It may be said that the award is at the root of his decision in any event, but while that is so I still think there may be a material distinction between the case of the employer who says, “I cannot pay,” and that of him who says, “I will not pay.” In this case, on a review of the evidence, I think the magistrate could not help finding that the real reason for the dismissal was the award.

13. Section 9 of the C&A Act next came to be relevantly considered by Evatt J in Grayndler v Cunich (1939) 62 CLR 573. The High Court determined Grayndler on a procedural issue with only Evatt J addressing the proper interpretation of s 9. Cunich was prosecuted in relation to the dismissal of two employees. After a lengthy hearing, a magistrate dismissed each of the four informations. Whilst the magistrate was satisfied that the two employees were dismissed because they had become entitled to the benefit of the award, the magistrate had thought, following the decision in Grayndler v Broun, that if as a result of an employee having joined a union and so entitling himself to the higher wage standard provided for in the award an additional financial burden was cast upon the employer, and the employer dismissed his employees for that reason, the employer should not be convicted.

14. At 588, Evatt J observed that the case was not one of an employer:

    … who was closing down his business or merely decreasing his staff, but a case where, requiring a certain amount of labour power to pick the fruit from his orchard, the employer in the first place systematically excluded members of the Australian Workers’ Union from employment, then dismissed each and every one of his employees so soon as they joined the union and became entitled to the benefits of the award.

15. At 594, Evatt J said:

    What judgment should be pronounced?  In my opinion, the magistrate erred in following and applying the case of Grayndler v. Broun. It must be remembered that sec. 9 of the Commonwealth Conciliation and Arbitration Act is one of the key sections of the Act. If any employee can be dismissed or prejudiced because, by joining a union, he becomes entitled to better conditions contained in an award of the Federal court, the whole system of industrial arbitration would be threatened with destruction.

16. At 596–7 his Honour said:

    In my opinion, the case of Grayndler v. Broun was wrongly decided so far as it laid down that an employer is entitled to dismiss an employee entitled to an award merely because his reason for doing so is that he does not wish to be saddled with the heavier burden of the award rates. If this general principle were accepted, a vital provision would be completely excised from the statutory scheme. In the Federal sphere, moreover, it is for the Arbitration Court to settle any inter-State dispute between the union and the employers, and to settle it on just terms having regard to all the circumstances of the case. If an employer, who, ex hypothesi, is a party to the industrial dispute and is bound by the award, could set the award at nought not merely by differentiating between unionists and non-unionists, but by dismissing unionists in his employ so soon as they became entitled to better conditions under the award, one of the great purposes of the industrial-arbitration system would be defeated. It is true that the Commonwealth Arbitration Court might see fit to counter such evasions by prescribing preference of employment to the unionists, but Parliament itself has seen fit to intervene and to require that, if a worker is in employment, his being or becoming entitled to award benefits should not cause his dismissal or prejudice in his employment, without the employer being subjected to penalty.

    Upon the findings of the magistrate which are borne out by the evidence, and which I accept and indorse, he erred in holding that because the employer desired to save himself the expense involved in paying the higher award rate, he could not be guilty of contravening the section. I hold that, on the contrary, this desire is merely corroborative of the undoubted fact that the employer was quite ready and willing to retain Fitzgerald in his service so long as he remained disentitled to the award benefits and the employer did not have to pay them. A plain and very bold and daring contravention of sec. 9 has taken place, and this court should itself impose a penalty or remit the matter of penalty to the magistrate.

    (emphasis added)

17. There can be no doubt that Evatt J regarded an employer’s desire to avoid being saddled with the burden of an award entitlement (i.e., its practical effect) as being capable of constituting a reason for an employee being injured or dismissed “by reason of the circumstance” that the employee was entitled to the benefit of an award within the meaning of s 9 of the C&A Act.

18. In Klanjscek v Silver (1961) 4 FLR 182, a Full Court of the Commonwealth Industrial Court (Spicer CJ, Joske and Eggleston JJ) considered Grayndler v Broun and Evatt J’s criticism of that case in Cunich.  In Klanjscek, an employer who carried on a business as a shirt manufacturer proposed to its employees, at a time of business turndown, that their wages should be reduced. The employees refused to consent to such a reduction and most were dismissed. The employees had been paid a rate prescribed by the relevant award together with an additional flat rate. The employer had sought that the flat rate be eliminated and that a lower wage (which was still above the minimum wage specified in the award) be paid. Under the award it was necessary for the employees to consent to the reduction that the employer sought. By this time, s 9(1)(b) of the C&A Act was renumbered s 5(1)(b) but was relevantly in the same terms. The Full Court dismissed a charge of contravention of s 5 of the C&A Act, holding that the dismissals were not by reason of the fact that the employees were entitled to the benefit of the award but because the business operations had become unprofitable.

19. At 187 the Full Court said:

    It was decided under the New South Wales section that the section was not intended to take away from the employer the right to re-organize and reduce his staff when an award increases his expenses (see Grayndler v. Broun following Connington v. Kogarah) and although some criticism of this decision was voiced by Evatt J. (Grayndler v. Cunich) we think that, at least, the section should not be considered as intending to penalize an employer who closes down his operations because his operations have become unprofitable, even though the minimum rate prescribed by the award is one of the factors in this result. A fortiori, where the employer is willing to continue to operate in accordance with the award, provided only that his employees will consent to reduce the existing piece-work rates to a lower rate which is still above the minimum, the employer commits no offence. In such a case he is not actuated by the reason that the employees are entitled to the benefit of the award, but by the reason that his operations have become unprofitable.

    (footnotes omitted)

20. The predecessor act to the FW Act was the Workplace Relations Act 1996 (Cth) (WR Act). Section 298L of the WR Act identified various items of conduct that constituted a “prohibited reason” for the purposes of s 298K which proscribed action taken for a prohibited reason or for reasons that included a prohibited reason. One of the prohibited reasons specified by s 298L(1)(h) was that the employee “is entitled to the benefit of an industrial instrument or an order of an industrial body.”

21. Section 298L(1)(h) of the WR Act came to be considered by a Full Court of this Court in Greater Dandenong. The appellant council employed “in-house” employees who provided home and community care services. The council was bound by an award and a certified agreement which specified the terms and conditions of employment of the in-house employees. The council considered whether it should contract out its provision of home and community care services. For that purpose it set up a competitive tendering process in which it sought tenders from the in-house employees and also from a contractor. Both the in-house employees and the contractor provided bids. The only material difference between the bids was price. In considering whether to contract out the services, the council took into account that the price differential between the two bids arose because of the wage and penalty rates payable to the in-house employees under the award and certified agreement, which were higher than those binding upon the contractor in respect of its employees. The council accepted the contractor’s bid and the in-house employees were dismissed on the grounds of redundancy. The in-house employees alleged that the council had contravened s 298K(1) of the WR Act as it had dismissed them including because they were entitled to the benefit of the award and certified agreement.

22. At first instance, Madgwick J rejected the council’s construction that s 298L(1)(h) only prohibited conduct motivated by the very fact that an employee had an entitlement to the benefit of an industrial instrument and not by the nature of that entitlement. Madgwick J held at [71] that the section proscribed conduct “if motivated by the level, degree or extent of the entitlement” (see also at [66]). Madgwick J accepted that the price differential between the two bids was a reason for the council’s acceptance of the contractor’s bid. As the only significant factor going to establish that price differential was the employees’ higher entitlements under the award and agreement, Madgwick J inferred that the decision of the councillors which led to the dismissals occurred, in part, because the employees were entitled to their entitlements under the award and agreement. His Honour also inferred that the councillors held the view that the employees had been unreasonable in declining to agree to a diminution of their entitlements and only had themselves to blame for not matching or undercutting the contractor’s bid. On that basis, Madgwick J drew a positive inference that the council was motivated by the entitlements and determined that the council had failed to negate the prohibited reason in s 298L(1)(h).

23. On appeal, having considered the legislative history and each of the cases to which I have referred, Wilcox, Merkel and Finkelstein JJ agreed with the construction applied by Madgwick J (see the references given at [92] above).

24. The appellants also challenged the finding made by Madgwick J that a substantial and operative reason for the employees’ dismissals was their entitlements under the award and agreement. Wilcox J considered that this challenge had not been properly raised on the appeal (at [93]) and did not directly deal with it. Merkel J concluded that the primary judge erred in drawing the positive inference that the entitlements of the employees was an operative reason for the council’s acceptance of the contractor’s bid (at [167]). However, Merkel J concluded that the council had failed to discharge the presumption cast by s 298V of the WR Act (the predecessor of s 361 of the FW Act) (at [180]). Finkelstein J (in dissent) considered that the primary judge erred in drawing the inferences he drew as to motive, and that the primary judge was also wrong to rely upon the s 298V presumption in circumstances where he had made a positive finding that the conduct had been engaged in for a prohibited reason (at [218]-[219]).

1. The approach of Merkel and Finkelstein JJ to the question of whether the entitlements were an operative reason was based upon a distinction being drawn between the operative (or “immediate”) reason for the council’s conduct and the cause (or “proximate” reason) for that conduct (at [167]-[209]).

2. That distinction has been variously followed and criticised.  For current purposes, however, the capacity for an effect driven by employee entitlements to provide a substantial and operative reason for adverse action was considered by Merkel J by reference to each of the cases to which I have already referred. At [160]-[162], Merkel J said:

   [160]The determination of the operative reason or reasons for conduct alleged to be in breach of s 298K(1) will always be a question of fact. However, the cases discussed above offer useful assistance in relation to the operation of s 298L(1)(h).

   [161]An employer will have breached ss 298K(1) and 298L(1)(h) where the dismissal or other prejudicial conduct is for the reason that the employer is not prepared to pay the award entitlement of the employee. As an employer is obliged to pay award rates, the employer is expected to be capable of organising its business so as to be able to meet its award obligations. The mere fact that an award increase cannot be passed on or is inconvenient does not relieve the employer of the constraints of ss 298K(1) and 298L(1)(h). Thus, the section can extend to prejudicial conduct which is carried out for the reason that the award rates have made the employer's business less profitable. However, profitability in this context can involve questions of degree. Thus, where the reason for the prejudicial conduct is that the employer is unable to pay the award entitlement or the employer's business is not capable of operating at a profit by reason of the entitlement, it is likely that the section will not have been breached. Although I have referred to award entitlements, obviously the same observations apply to other industrial instruments, including certified agreements and Australian Workplace Agreements.

   [162]Klanjscek also demonstrates that where an employer, to avoid dismissing the employees because of inability to pay, has made an offer to employees to agree to reduce their entitlement in the manner provided for by the award, the employer's endeavour to operate within the award can be a relevant factor in discharging the onus of establishing the dismissal was because of the employer's inability to pay and not because of the employees' award entitlements.

   (emphasis added)

3. The history of the operation of s 298L(1)(h) and its predecessors shows that an effect upon an employer which is driven by the existence of employee entitlements is capable of constituting a prohibited reason for adverse action and, at least since Bowling, does provide such a reason if the effect was a substantial and operative reason for the taking of action against the holder of the entitlement. Whether or not an effect is, in fact, such a reason will always be a question of fact. Circumstances such as an employer’s incapacity to pay or to operate profitably are likely to impact upon the significance of the effect of employee entitlements and may render them inoperative as a reason for dismissal or other adverse action. That historical position supports the construction of s 340(1)(a)(ii) that I prefer.

4. The ultimate finding of fact made by the primary judge, that Young was not motivated by McDermott’s exercise of his right to take personal/carer’s leave, was a finding based on the process of reasoning or inference from facts earlier found, namely that Young was motivated by McDermott’s absences and the impact upon Endeavour’s operation.  Where, as here, the conclusion of the primary judge depended upon reasoning or inferences drawn from facts found, and where the process of reasoning and of drawing inferences can equally be conducted by the appellate court without relevant disadvantage, an appellate court should give respect and weight to the conclusion of the trial judge but not shrink from giving effect to its own conclusion: Fox v Percy (2003) 214 CLR 118 at [23], [25], [28]–[29] (Gleeson CJ, Gummow and Kirby JJ) and CSR Limited v Della Maddalena (2006) 224 ALR 1 at [21]–[22] (Kirby J).

5. To summarise what I have said above:  first, the primary judge made a finding of primary fact that Young was motivated by absences that he knew to be personal/carer’s leave absences.  Second, the primary judge considered that only if Young was motivated by the character of the absences as being in the exercise of a workplace right was there a prohibited reason.  Third, the primary judge made a finding of ultimate fact that Young’s reason did not include a prohibited reason.  The second and third steps are challenged by the CFMEU.  I, unlike the primary judge, consider that motivation by the practical effect of the exercise of a workplace right, in the knowledge that the effect is created by the exercise of a workplace right, is also capable of constituting a prohibited reason.  That motivation was not negated by Young’s evidence.  To the contrary, on the finding made by the primary judge, it was affirmed.  Accordingly, I differ from the primary judge on the third step.

6. For those reasons I disagree with the primary judge’s ultimate conclusion that Endeavour established that the September 2010 adverse action was not taken because of reasons including the reason that McDermott exercised his workplace right to take personal/carer’s leave.  I would therefore allow the appeal in so far as it relates to the September 2010 adverse action.

7. The CFMEU’S third ground of appeal also challenged the primary judge’s findings as to the September 2010 adverse action.  The rationale of the primary judge at [173] was said to be flawed.  It is not necessary that I address that challenge, including because even if it had merit, on its own, the flawed rationale would not have been sufficient to impugn the finding which it was used to support, namely, that Young was not concerned with why McDermott was absent but only concerned with the fact that he was absent.

   The April 2011 adverse action

8. At [222] the primary judge concluded that Endeavour had displaced the presumption that the reason or part of the reason for the April 2011 adverse action was the fact that McDermott had previously exercised his workplace rights to personal/carer’s leave.  The conclusion that the alleged prohibited reason had been negated was based on findings made at [218]-[221] as to what had motivated Peace to decide in March 2011 to move McDermott back to the weekday shift.  The issue seems to be summed up by the following finding at the foot of [221]:

   In those circumstances, I am not of the view that the character of many of Mr McDermott’s previous absences as exercises of a workplace right was of any particular significance to Mr Peace when he made his decision in March 2011.
   (emphasis added)

9. That finding reveals the same reasoning as was deployed by the primary judge in relation to the September 2010 adverse action, which reasoning I have already said I consider to be erroneous.  The proper question was whether the adverse action was taken because of McDermott’s exercise of his workplace rights including by reference to the substance, content, or effect of that exercise and not merely by reference to its character as an exercise of a workplace right. 

10. The finding made at the foot of [221] suggests that the primary judge’s focus was on whether the character of the absences rather than the previous personal/carer’s absences themselves were negated as a reason.  Whether the primary judge found that the absences themselves were negated is less clear.  One observation (at [218]) that McDermott’s “record of earlier absences served only as background” suggests such a finding.  The reference to “earlier absences” at [220] is arguably to the same effect.  The CFMEU’s submissions proceeded upon an acceptance that the prior personal/carer’s absences themselves were found to have been negated as a reason, but that the finding was glaringly improbable and should be reversed.  Despite harbouring some doubt as to whether a finding of that kind was made, in the circumstances, I think I should proceed on that basis.

11. Peace’s evidence in chief was that he was advised on or around 18 March 2011 that McDermott had failed to attend for work on 18 March and had done so without prior notification.  At that point, Peace considered that McDermott had breached the November 2010 agreement.  He was also concerned about the legitimacy of McDermott’s claim that the absence was due to illness in circumstances where McDermott had applied for, but had been denied, annual leave for 18 March 2011.  Peace then met with McDermott to discuss his absence on 18 March 2011.  Peace deposed as to the discussion at that meeting and then as to his reason for moving McDermott back to the weekday shift.  He said:

    I consider that Mr McDermott abused the system by not providing a medical certificate to support his absence when taking leave on a day when a prior request for annual leave had been denied.  Because of this I doubted the genuineness of his claims of illness.  This was the reason why he was moved to the weekday shift.  If Mr McDermott had been able to satisfy me that he had a genuine problem or illness I would not have recommended the action taken.
    (emphasis added)

12. In his evidence in chief Peace did not expressly deny that McDermott’s prior absences, including his personal/carer’s leave absences, actuated his decision to move McDermott from the weekend shift.  However, by identifying a single reason for his decision, in the passage just quoted, Peace may be taken to have impliedly excluded any other actuating reason. 

13. However, in cross examination Peace conceded a number of other reasons for his decision.  When asked to confirm that the “drastic step” of removing McDermott from his shift would not have been taken if McDermott had not had a three year history of absences, Peace said “That’s part of – of the reason, yes.”  He said that whether an employee would be moved off the weekend shift after a single absence was dependent upon whether there had been “a common thread or a history of – of poor attendance … or if we believe that we can assist them and monitor them.”

14. Peace went on to say that his decision was made on the basis of “information of [McDermott’s] attendance record and the agreement that he was on … [a]nd his previous history, as well.”  He said “What I can say is that previously there had been poor attendance and [McDermott] was on an agreement, so he had another unexplained absence so I invoked the agreement.” 

15. Peace later confirmed that he had been aware that, prior to 18 March 2011, McDermott had not taken sick leave since 3–5 September 2010 but said “he has also had a lot of sick leave before that,” and that was something that he regarded as “relevant.”

16. Peace was challenged about having made the decision to move McDermott prior to trying to verify McDermott’s claim that he had notified Endeavour of his impending absence on 18 March 2011.  It was put to Peace that he had done that because he had regarded the 18 March 2011 absence as just the final instalment in a long history of poor attendance.  Peace did not reject that suggestion.  Initially he said “certainly, there has been attendance issues” and when asked again he said “that may have crossed my mind.”  Pressed further, Peace provided another reason for his decision to move McDermott to the weekday shift.  He said that he was trying to assist McDermott to “manage his absenteeism” because Endeavour would be “able to monitor him much more closely on the weekend shift.”  Peace confirmed that matter as “one of the reasons” why he made the decision.

17. Peace was then taken to his evidence in chief where he had deposed that his doubt as to the genuineness of McDermott’s claim that he was ill on 18 March 2011 “was the reason why [McDermott] was moved to weekday shift.”  To the suggestion that he had described that as “the reason” he said “[i]t’s one of the reasons, yes.”

18. It was apparent, then, that there were multiple reasons in Peace’s mind for moving McDermott to the weekday shift.  First, McDermott’s suspected dishonesty;  second, McDermott’s breach of the November 2010 agreement;  third, his prior absences, the vast majority of which were known to be personal/carer’s leave absences;  and, fourth, the better management of that absenteeism.  While the first and second reasons were at various times described as “the reason,” each of the third and fourth reasons I have identified was acknowledged in cross-examination to be a reason.  The third reason had a direct relationship to McDermott’s exercise of his right to take personal/carer’s leave and the fourth reason had an indirect relationship to that matter.  Despite the concession that McDermott’s prior absences were a reason, no attempt was made to establish that that reason was not a substantial and operative reason: cf Lewis Construction Co Pty Ltd v Martin (1986) 17 IR 122, at 129 (Gray J, with whom Woodward and Jenkinson JJ agreed). Neither the third nor fourth reasons was expressly negated nor suggested by Peace to be mere background. For Peace to have described them as “a reason” or “part of the reason” suggests that he regarded them as operative factors which actuated his decision.

19. In those circumstances, I consider the finding that McDermott’s prior absences on personal/carer’s leave formed no part of Peace’s decision to be glaringly improbable.  Putting it at its starkest, I do not consider that Peace’s express concession that the three-year history of absences was “part of … the reason” for moving McDermott from his shift can be reconciled with the primary judge’s statement at [220] that Peace’s awareness of earlier absences did not mean that those absences were part of the reason for moving McDermott from his shift.

20. The conclusion reached by the primary judge suggests to me, for the reasons earlier expressed, that it was the character of the prior absences as personal/carer’s leave absences, rather than the absences themselves, that the primary judge was satisfied had been negated as an actuating reason. If that was the finding I would agree that it is not glaringly improbable. But, an ultimate finding that the s 361 presumption had been displaced, predicated upon such a primary finding, would be erroneous for the reasons given in relation to the September 2010 adverse action, namely that it would be founded upon the flawed premise that only the character of a protected activity, and not its content or effect, is capable of constituting a prohibited reason.  Alternatively, if the finding was that the absences themselves were negated as a reason for the adverse action then, for the reasons given, that finding is not sustainable.

21. For those reasons I disagree with the primary judge’s ultimate conclusion that Endeavour established that the April 2011 adverse action was not taken because of reasons including the reason that McDermott exercised his workplace right to take personal/carer’s leave.  I would therefore allow the appeal in so far as it relates to the April 2011 adverse action.

    The final warning adverse action

22. The primary judge regarded the final warning adverse action to have been part of the process associated with the decision to remove McDermott from the weekend shift in April 2011.  The judge considered there to be no reason to doubt that the same considerations motivated both steps.  For the reasons given in relation to the decision to move McDermott, the primary judge found that Endeavour had displaced the presumption that it had issued the final warning because McDermott had exercised his right to take personal/carer’s leave.

23. The primary judge’s approach is based on the unexpressed presumption that Peace was the decision-maker or at least that those that decided to issue the warning acted for the same reason or reasons as those expressed by Peace in relation to the April 2011 adverse action.  It follows, therefore, that the CFMEU’s challenge to the finding made in relation to the final warning adverse action should be allowed for the same reasons as given in relation to the April 2011 adverse action.

24. There is an additional matter that fortifies that conclusion.  The evidence did not establish who it was that decided to issue the final warning.  The evidence suggested that Peace, Stewart, and Bailey had involvement but, ultimately, Peace said he could not recall who made the decision.  Neither Stewart nor Bailey were called.  It is therefore doubtful that all of the decision makers gave evidence. As French CJ and Crennan J said in Barclay (at [45]), it will generally be extremely difficult to displace the statutory presumption in s 361, if no direct testimony is given by the decision-maker.

    CONCLUSION

25. For the reasons given, the primary judge erroneously determined in relation to each of the September 2010, the April 2011 and the final warning adverse actions, that Endeavour had displaced the presumption created by s 361 of the FW Act. The primary judge should have held, in each case, that Endeavour had failed to displace the presumption, and therefore that Endeavour had contravened s 340(1)(a)(ii) of the FW Act.

26. It follows that order 3 of the orders made by the primary judge on 3 October 2013, which had the effect of dismissing, inter alia, the CFMEU’s application made pursuant to s 340(1)(a)(ii), should be set aside insofar as that order relates to that aspect of the CFMEU’s application. It also follows that a declaration should be made that Endeavour contravened s 340(1)(a)(ii) of the FW Act by:

    (i)removing McDermott from the weekend day shift in September 2011 because or including because he had exercised a workplace right by taking leave to which he was entitled;

    (ii)removing McDermott from the weekend day shift on and from about 1 April 2011 because or including because he had exercised a workplace right by taking leave to which he was entitled; and

    (iii)issuing McDermott with a final written warning on or about 1 April 2011 because or including because he had exercised a workplace right by taking leave to which he was entitled.

27. Given the lapse of time since the adverse action was taken and consistently with the submission made by the CFMEU, I would make a further order remitting the matter to the Federal Circuit Court of Australia for further hearing to allow the questions of remedies to be determined in light of the declarations specified above.

I certify that the preceding one hundred and forty-eight (148) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromberg.

Associate: 

Dated:        3 June 2015