The Federal Court of Australia has held that the decision of an employer to subcontract a particular type of work, rather than have it performed by an employee, did not constitute unlawful adverse action.

The decision applies the relatively restrictive approach to the question of causality adopted in two earlier decisions of the High Court of Australia (the Barclay case and BHP case).


The respondent employer conducted a bus and coach business.

One of the employees, Mr Cole, drove regular bus routes.  He had been sounded out about taking on charter trips, which he was keen to do.

Mr Cole was also a delegate of the Transport Workers Union (the Union).  The Union was looking to negotiate a new collective labour agreement with the employer.  Mr Cole circulated amongst the workforce a document in order to collect details of the employees who were members of the Union. This was done so as to facilitate the taking of protected industrial action in support of the Union’s demands in relation to the collective agreement.

Not long after Mr Cole circulated the document, the employer decided that the charter work would be subcontracted to other companies and would not be given to Mr Cole to perform.  The employer explained this by reference to a need to ensure that it had sufficient drivers to cover its regular routes.

The Union brought proceedings on Mr Cole’s behalf claiming that the employer had committed unlawful adverse action.

Adverse Action

The Fair Work Act 2009 (Cth) (FW Act) makes it unlawful for an employer to take adverse action against an employee because of the employee’s industrial activities.

Adverse action is defined to include anything which disadvantages an employee in relation to his/her employment.

Industrial activities are defined so as to include anything done by an employee in the course of being a union delegate.

The employer bears the onus of proving that the industrial activities were not a substantial and operative reason for the action that was taken.

An employer who is guilty of unlawful adverse action can be ordered to restore an employee to his/her original position and pay monetary compensation. The employer may also be liable for a civil penalty.


The proceedings came to trial before the Federal Circuit Court of Australia.

The Union argued that the decision by the employer not to give the charter work to Mr Cole disadvantaged him in his employment and so it amounted to adverse action.

The trial judge found that the removal of Mr Cole from the charter work was not adverse action because it was no more than “the cancellation of a preliminary arrangement involving possible future action, with no alteration of position or role, or variation of the award or contract of employment”.

On that basis the Union’s case was lost, but for completeness the trial judge considered whether the action of the employer was taken because of Mr Cole’s industrial activities.

On this issue the trial judge found that the Court could not be satisfied that the reason the charter work was not given to Mr Cole was dissociated from, and did not include, Mr Cole’s participation in an industrial activity.

The Union appealed the outcome to the Federal Court of Australia.

The Appeal

The appeal judge (Perry J) concluded that the trial judge had been wrong on both issues, with the result that the Union’s claim still failed.

Contrary to the views of the trial judge, Perry J considered that the failure to fulfil the expectation that Mr Cole would undertake the charter work altered his position to his prejudice given that Mr Cole (in common with other drivers) found that work more attractive and pleasant than usual route work, and charter work provided the chance to earn additional income.

Although this meant that the employer had taken adverse action, the action was not unlawful because it was not taken because of Mr Cole’s industrial activities. The trial judge’s conclusion to the contrary was affected by legal error.

The employer does not have to prove that the reason for its action was dissociated from the employee’s industrial activities. The decisions of the High Court of Australia in the Barclay case and the BHP case establish that the enquiry is not concerned with causation but rather the subjective reasons for the action of the decision maker.

On the evidence, the operative reason for the employer’s decision to subcontract the charter work was the shortage of available drivers and the need to ensure that the employer could cover its regular routes.