The Federal Court of Australia has penalised a university for unlawfully threatening adverse action when it prepared secret plans to move senior teaching staff to a new employing entity.

Adverse action

The Fair Work Act 2009 (Cth) makes it unlawful for an employer to take adverse action against an employee because of his/her possession or exercise of a workplace right – which includes entitlements under an enterprise agreement applying to the employee.

Adverse action includes altering the position of an employee to his/her prejudice or injuring the employee in his/her employment.  Threatening to undertake such an action is also “adverse action”.

The employer bears the onus of proving that it did not take the action because of the possession/exercise of the right.

The circumstances

As part of its “pre-university program”, the university offered several courses through a college that was functionally a department of the institution.  Staff were employed to teach these courses and their employment was governed by an enterprise agreement which fixed rates of pay and benefits.

The university decided to transfer, over time, the functions and operations of the college to a new company owned by the university. Affected teaching staff would either have to move to the new company, or find employment elsewhere.

Confidential plans created at the time of the decision referred to the new company employing teaching staff “under conditions more suited to the nature of the entity’s operations”. The plans included a comparative salary scale which showed substantial reductions in pay for teaching employees compared to the rates of pay in the college’s enterprise agreement.

The union representing the teaching staff became aware of steps that were being taken to enable the new company to begin teaching the courses.  There followed a number of communications to the union and ultimately the staff,  in the course of which the university confirmed the transfer of courses to the new company and the possibility of college teaching staff moving to take up employment with the company.

The union brought proceedings for unlawful adverse action in the Federal Court – which led to the secret planning documents being produced for inspection.

At the time the Court came to consider the alleged contravention and any applicable penalty, the transfer of teaching programs from the college to the new company had not occurred, and the foreshadowed impacts on teaching staff did not occur.

The Proceedings

The union’s principal contentions were as follows:

  • The university’s conduct in making, and taking steps to implement, the decision to establish the new company and to transfer the operations of the college to the company, amounted to threatened adverse action.
  • The threat was that the security of employment of the teaching staff would be diminished because the courses which they were engaged to teach would be discontinued if the new company started to conduct those courses, resulting in termination of employment or non-renewal of their contracts.
  • The reasons for the threatened action included a substantial and operative reason that the staff were entitled to the benefit of their enterprise agreement.

Prior to the hearing of the matter the university admitted liability.

The hearing proceeded in order to assess the penalty to be imposed.  Ultimately a fine of $14,000 was ordered and the university agreed to pay $120,000 towards the union’s costs.

The judge commented that there was a need for “both specific and general deterrence” in setting the penalty in this case to emphasise the court’s disapproval of the university’s “conscious decision” to keep its plans confidential and the calculated nature of the contravention.

The judge commented that other employers “also need to be on notice that industrial and employment protections and commitments, even when they are perceived to ‘cost’ an employer more, or to make for a less ‘flexible’ workforce, are to be adhered to and respected, or appropriately re-negotiated.”