The Federal Court rejected a senior manager’s General Protections claim but awarded him $176,000 for breach of his employment contract.

One Minute Summary

• A senior manager was made redundant by Toll Transport. The company claimed it was in financial distress and was heading in a new direction.
• The manager lodged a Fair Work General Protections Adverse Action claim indicating the real reason for this termination were his complaints of bullying by the previous EGM.
• The employer, which carries the onus of proof to prove his claim was unfounded, was able to produce sufficient evidence to allow the Court to dismiss his application.
• In parallel the manager lodged a Breach of Contract action claiming his three months’ notice of termination was insufficient. The Court implies a term of 12 months’ notice of termination.

The Federal Circuit and Family Court of Australia (the ‘Federal Court’) has rejected a terminated General Manager’s Adverse Action claim but has awarded the senior manager 12 months’ notice for the same termination.

Mr Lord, a senior manager working for Toll Transport in Queensland, was made redundant in March 2021 after 34 years with the company. Toll stated the reason for termination was that the company was heading in a new direction under new leadership.

While the dismissal occurred in 2021 the decision was handed down several months ago after hearings in September and November last year.

Mr Lord rejected Toll’s reason for termination and filed a General Protections claim against the company stating that the real reason for his termination was that he had complained about being bullied by the then Executive General Manager between 2018 and 2020. He stated the termination constituted adverse action under the Fair Work Act 2009.

Adverse action occurs when an employee exercises a workplace right or makes a complaint and the employer then takes an action that adversely affects the employee which may occur during employment or may be the termination of employment. The result is an adverse impact on the employee.

Once the adverse impact is shown the employer carries the ‘onus of proof’. This means they must disprove the employee’s claim. This requires substantive evidence from the employer.

During proceedings Toll denied that Mr Lord had been made redundant due his bullying complaint and provided evidence that his employment was terminated because the business was headed in a new direction and needed new leadership. Toll produced financial information that the Group had suffered a loss of $685m in the year prior to the termination.  Evidence also showed that a number of senior managers had been made redundant at around the same time as Mr Lord.

Toll also showed that Mr Lord had complained about the Executive General Manager’s conduct to the Human Resources Manager in an off the record manner but had never stated he had been bullied by him. No formal complaint had been lodged. Evidence from the new Executive Manager, who had made the decision to make Mr Lord redundant, indicated he was indifferent to the fact the previous EGM had bullied him but was purely focussed on turning the business around.

In respect the Adverse Actions claim the Court dismissed the application and made the following finding:

‘The Court finds that Lord failed to establish that the termination of his employment was because of the making of any complaints by him about Talevski’s behaviour toward him. The evidence adduced on behalf of the respondents (Toll) was clear, concise and plausible. The applicant’s (Mr Lord) evidence was based on conjecture unsupported by any prohibitive oral or documentary evidence.’

However, in conjunction with his General Protections claim, Mr Lord had lodged a Breach of Contract claim.

In relation to breach of contract Mr Lord claimed the 3 months notice paid to him had not been sufficient for his seniority and his length of service.

In respect to notice of termination, Mr Lord’s employment contract had stated: ‘Either you or Toll may terminate your employment at any time by giving months’ written notice.’  No actual time duration was included. It is uncle ar why this is the case.

Where no written notice period is specified in the employment contract in relation to the employee’s termination, the Court will imply a term into the contract that a reasonable notice period be given.

The Court examined Mr Lord’s employment history and his age and made the following observations:

• He held a senior management position.
• Was employed for 34 years.
• He was 59 years of age and would find it difficult to obtain employment at a senior level.
• There was no evidence Mr Lord had committed any act of misconduct, gross negligence or insubordination.
• He had a clean employment record and was well liked and loyal.
• The Court also noted that it considered respect for Mr Lord’s long service an important factor in setting the notice period.

He was awarded 12 months notice – as an implied term of the contract. The 12 months, less the 3 months already paid to him, amounted to a difference of $176,250 – plus interest.

Commentary 

The decision states Mr Lord’s General Protections claim was unfounded. It is interesting that the Court found he had not made a formal complaint. A ‘formal’ complaint is not required under the Fair Work Act. Decisions have accepted much less than formal complaint as a ‘complaint’ for the purposes of the Act. I have dealt with a Adverse Action matter where a new employee calling the payroll office and asking why he had not been paid (because he had provided the wrong account number) was considered by Fair Work to be a complaint allowing the matter to proceed to the Federal Court.  

The employer was able to produce sufficient evidence to prove the real reason for termination was not related to his accusations of bullying. The decision to make Mr Lord redundant was made by the new EGM – not the EGM who Mr Lord had stated bullied him.

The real learning in this case came from the Breach of Contract action which was claimed in parallel – bit of a double-barrelled approach to a Federal Court action. 

There were clear deficiencies in the employment contract drafting which did not provide a stated notice period. What can easily happen is that a person gets employed on a handshake without a written contract. Or they are with the company long enough where their initial contract is superseded and had not been replaced with a contract for the current more senior position. The person was simply promoted in a semi formal manner. 

It should be noted that Breach of Contract actions can be taken for a range of reasons in relation to an existing contract – not just in relation to termination notice for senior managers.

Contracts are often neglected – even for employees covered by an Award. However, they suddenly become very important when something goes wrong in the employment relationship. 

Employers should ensure they have comprehensive employment contracts including all the necessary protection clause such as confidentiality and restraints.  

Kind Regards

Michael Schmidt

M 0438 129 728

[email protected]

www.hunteremployeerelations.com.au

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