Million dollar adverse action award – Hail Creek Coal

The Federal Court of Australia recently awarded an employee damages of $1,272,109 for past and future loss of wages: seeCFMEU v Hail Creek Coal Pty Ltd [2016] FCA 199 and [2016] FCA 1032. This award under the adverse action provisions of the Fair Work Act was made despite the District Court having previously awarded substantial common law damages for the employee’s work related injury.

Key takeaways

This decision is relevant for employers because it shows that:

• awards for compensation in general protections claims can be significant and may be made where employees have already been compensated for seemingly similar events;
• the evidence of the decision-maker is crucial to the defence of an adverse action claim; and
• managers should be trained about general protections risks and the importance of carefully documenting their decision-making process.

Background

Mr Haylett, an employee of the Hail Creek Coal Pty Ltd (HCC), sustained a work related back injury in 2009. He returned to work in a modified role and worked in that role for about 3 years.

On 15 November 2013, the District Court awarded Mr Haylett approximately $637,000 in common law damages for his injury. On 18 November 2013, Mr Haylett undertook a prearranged medical assessment under the Coal Mining Safety and Health Act 1999. He was assessed as unfit to undertake the duties of his unmodified role. Mr Priestly, HCC’s mine manager, decided to suspend Mr Haylett from employment when he received the results of the medical assessment. Despite Mr Haylett’s successful challenge of the validity of the medical assessment, Mr Haylett was not reinstated to his role.

The CFMEU, on behalf of Mr Haylett, brought a number of claims against HCC including that HCC had contravened section 340 of the Fair Work Act (FW Act) by failing to pay Mr Haylett wages because he had exercised a number of workplace rights, including by commencing the District Court proceedings for common law damages.

The finding

Justice Reeves found that the reasons that motivated Mr Priestly to stand down Mr Haylett included, as a substantial and operative reason, the fact that Mr Priestly had exercised a workplace right. Reeves J found that:

• Mr Priestly was not a satisfactory witness and he did not accept Mr Priestly’s evidence that the common law damages award had “no bearing” on his decision to stand Mr Haylett down;
• Mr Priestly did not have genuine concerns for HCC’s obligations under the relevant mining regulations and had a very rudimentary knowledge of the regulations on which he purported to rely to stand Mr Haylett down.

Reeves J awarded Mr Haylett damages of $1,272,109 for past and future loss of wages.

In making the award, Reeves J considered the interaction between the common law damages award and the award for breach of the FW Act. Reeves J held that those awards had different purposes as:

• the District Court award was an award of damages for loss of earning capacity assessed by reference to the effect his physical injury would have on his future earning capacity; and
• the current award was to compensate Mr Haylett for loss of wages and future income caused by contraventions of the FW Act.