By Charles Power (Partner) and Helen Cankaya (Paralegal) of Holding Redlich.
The general protections scheme under Part 3-1 of the Fair Work Act 2009 (Cth) (FW Act) protects employees from adverse action taken against them by their employer because they have or exercise a workplace right. One of the protected ‘workplace rights’ is that in s 341(1)(c)(ii) – the ability of an employee to make a complaint in relation to their employment. This has founded a substantial proportion of general protections claims.
There is a divergence in judicial approaches to the scope of this protection. A broad view was taken by Bromberg J in Walsh v Greater Metropolitan Cemeteries Trust (No 2)  FCA 456 (Walsh) of the nexus required of a complaint made under s 341(1)(c)(ii). InWalsh, a report made by an employee about a linen supplier providing sub-quality service was held to be a complaint in relation to that employee’s employment because it raised “potential implications” about the employee’s employment.
This matter was canvassed recently by the Court in The Environmental Group Ltd v Bowd  FCA 951 (Bowd). The decision also examines the whistleblower protections afforded by Part 9.4AAA of the Corporations Act 2001 (Cth) (CA).
In Bowd the applicant was a CEO of a publicly listed company who claimed that he was subject to adverse action by the employer and its managing director because he exercised the following “workplace rights” under section 341 of the FW Act:
- making a CEO report to the Board regarding potential financial irregularities
- making complaints of contraventions of the CA by the employer and managing director to the Australian Securities and Investment Commission (ASIC)
- taking personal leave.
The adverse action that was claimed by the CEO included an investigation into his conduct, suspension and dismissal.
The CEO’s report
The applicant submitted that his report to Board regarding potential financial irregularities was a complaint made “in relation to his employment” for the purposes of section 341(1)(c)(ii) of the FW Act. It was argued that the complaint was “in relation to” his employment because it had potential implications of a reputational nature for his role as CEO: Hill v Compass Ten Pty Ltd (2012) 205 FCR 94 (Hill); Shea v TRUenergy Services Pty Ltd (No 6)  FCA 271; (2014) 242 IR 1 (Shea).
This argument was ultimately rejected by Steward J who held that the report referring to “a number of significant breaches of process in regards to expense claims by staff members” was not an expression of a grievance, but rather, disclosure of information to enable the board to carry out its functions. The CEO’s report to the Board that he was undertaking an ongoing audit into company expenses was held to be a communication of a historical fact.
Further, the report was held not to be “in relation to” the applicant’s employment as it did not satisfy the nexis requirement of having a “chameleon-like quality” in relation to his employment (Technical Products Pty Ltd v State Government Insurance Office (1989) 167 CLR 45 at 47; see also Commissioner of Taxation v Scully (2000) 201 CLR 148 at 182-183).
Narrow view of “complaint” adopted
Steward J considered the broad view, taken in Walsh and declined to follow it, noting:
“A test of “potential implications” may be too broad a statement of principle. At least with respect to a person with the functions and responsibilities of a CEO, almost anything communicated by such an officeholder would have “potential implications” for that person’s employment. In my view, in the case of a CEO, the complaint must be one directed at or concerned with that person’s employment in a substantive way. In that respect, observing that the required nexus may be direct or indirect, may not greatly assist. It must, as a matter of substance, be about that CEO’s employment.”
The CEO’s report pertained to the state of the employer’s group of companies and made as part of the employer’s processes of corporate governance. Although the allegations about company expenses was accepted as having “potential implications” for the CEO’s employment, those implications were held by Steward J to be too remote for the purposes of s 341(1)(c)(ii).
Steward J held that in making the report, the applicant was performing the obligations of his role, not exercising a workplace right.
In accordance with the court in Cigarette & Gift Warehouse Pty Ltd v Whelan FCAFC 16, his Honour held that “a complaint that an employee is able to make in relation to his or her employment is not at large, but must be founded on a source of entitlement, whether instrumental or otherwise”. The applicant held no “entitlement” or “right” to make the CEO report. Rather, consistently with the terms of his employment, it was his responsibility to report to the board from time to time.
The ASIC complaint
The applicant submitted that the making of the complaint to ASIC was an exercise of a “workplace right” for the purposes of either s 341(1)(a), (b) of the FW Act. It was argued that the CA was a “workplace law” because ss 182 and 183, as well as Pt 9.4AAA itself, imposed duties upon employees in the performance of their employment. This argument was ultimately rejected by Steward J.
Good faith requirement for a “complaint” under s 341(1)(c)(ii)
Steward J held that, but for one issue, he would have been satisfied that the making of the ASIC complaint was “in relation to” the applicant’s employment for the purposes of s 341(1)(c)(ii). The ASIC complaint was plainly a grievance, unlike the CEO report. It was sufficiently connected with the CEO’s employment as his reputation was plainly and directly in issue. However, it was not held to be a “complaint” under s 341(1)(c)(ii) as it was not made in good faith.
Steward J agreed with Dodds-Streeton J in Shea that section 341(1)(c)(ii) only applied to a grievance communicated for a proper statutory purpose or in good faith. The CEO was held to have made his complaint to ASIC with the intent of activating the whistleblower provisions as a means of preventing his dismissal for poor performance as CEO.
His Honour observed that while a complaint made for the purpose of preserving employment would not, in and of itself, be one that is necessarily made for an extraneous purpose or bad faith, in this case the complaint was not made in good faith for the purpose of section 341(1)(c)(ii) because: (a) the allegations contained in complaint were concocted, or at the very least, deliberately exaggerated; (b) there was no or no sufficient basis for their making; and (c) the complaint was used as a calculated device.
As such, the making of the ASIC complaint was not held to be an exercise of a “workplace right”.
Protection under Pt 9.4AAA of the CA
The applicant’s disclosure to ASIC was held by Steward J not to meet the eligibility criteria under s 1317AA due (a) not having “reasonable grounds to suspect” that the contraventions may have taken place and (b) not being in good faith. The applicant’s claims under the whistleblower provisions were dismissed.
It was accepted that the taking of personal leave by the CEO was a workplace right.
Steward J found it was not necessary to consider whether the investigation was adverse action. Having found that the taking of personal leave was the only exercise of a workplace right, his Honour was satisfied the evidence established the decision to commence an investigation into CEO’s conduct pre-dated the taking of the personal leave.
In relation to the suspension and termination of the CEO’s employment, his Honour was satisfied that the taking of personal leave was not a reason for the action.
Key takeaways from Bowd
The good faith requirement for protection under the whistleblower provisions has since been removed as a result of the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth).
This decision highlights that although the provisions in the CA cannot be categorised as a “workplace law”, a complaint made by an employee to ASIC may fall within the ambit of section 341 of the FW Act if made in good faith.
Bowd further clarifies the nexus requirement of making a workplace complaint. A workplace complaint made by a CEO resulting in “potential implications” for his employment was held not to meet the nexus requirement as “almost anything communicated by such an officeholder would have ‘potential implications’ for that person’s employment”. This position may differ for workplace complaints made by less senior employees. Further clarification on this point of law may ensue in future cases.
Holding Redlich disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources.
This article was originally published on the Holding Redlich website and has been reproduced with permission.