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June 2020

Broad interpretation of the general protections provisions confirmed

Broad interpretation of the general protections provisions confirmed

The Case

PIA Mortgage Services Pty Ltd v King (No 2) (2020)

Between 25 August 2016 and 21 April 2017, PIA Mortgage Services Pty Ltd (PIA) employed Mr King as Chief Executive Officer. Mr King also performed work for PIA’s mortgage brokering service, Zenik Finance Solution Pty Ltd (Zenik).

Prior to commencing employment, Mr King assisted Zenik to relieve itself of a number of suspensions imposed on its brokers for lodging questionable finance applications. At the time Mr King commenced employment, Zenik was suspension free. However, soon after commencing employment, Mr King received a large number of complaints about Zenik’s brokering practices, which ultimately led to a refusal by the banks to receive mortgage applications from PIA.

In April 2017, PIA offered to terminate Mr King’s employment amicably upon the payment of 4 months’ salary. Mr King refused, saying it did not compensate him adequately for his 5-year fixed-term contract and that he had been misled by PIA, which had represented to him it had a profitable business.

After receiving correspondence from Mr King’s lawyers, PIA summarily dismissed Mr King, saying that as Mr King had been absent for 10 days without authorisation, he had repudiated his employment contract.

Mr King commenced proceedings against PIA, alleging that it had taken adverse action against him by terminating his employment, because he exercised a workplace right to make a complaint or enquiry in relation to his employment. Those complaints or enquiries were that PIA:

  • did not intend to honour the 5-year fixed term employment contract or pay him a sum in lieu; and
  • misled him about the potential profitability of the mortgage brokering business.

The Verdict

The Federal Court held that PIA had engaged in adverse action in terminating Mr King’s employment because he exercised a workplace right to make a complaint or enquiry in relation to his employment. This finding was based on the fact PIA had not discharged its onus of proving the reason for termination did not include Mr King’s workplace complaint. PIA did not call any evidence from its decision-maker, Mr Wang. Instead, it relied on the termination letter issued to Mr King to support its position that the reason for termination was Mr King’s alleged repudiation of the employment contract by not attending work.

The Court ordered PIA to pay Mr King $100,000 in compensation. PIA appealed the decision to the Full Court of the Federal Court. The Full Court dismissed the appeal, agreeing that the onus of proof had not been discharged by PIA, because Mr Wang had not given evidence.

The majority of the Full Court also confirmed that the general protection afforded under the Fair Work Act 2009 (Cth) for an employee to make a complaint or enquiry in relation to their employment should be interpreted broadly. This means that an employee is able to make a complaint or enquiry under a general law including under the Australian Consumer Law. It found the protection is not limited to a complaint or enquiry made out in a contract, award, other industrial instrument, or some workplace policy or procedure.

The Lessons

The Full Court has indicated that an employee’s right to make a complaint or enquiry should be read broadly. It is not limited to only those complaints or enquiries that arise out of the employee’s contract, award, industrial instruments, or the employer’s policies and procedures.

The decision also emphasises the importance of the decision-maker giving evidence in general protection proceedings. An absence of this evidence means an employer might not discharge its onus of proof.

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