Paying for the cost of adverse action – large payments recently awarded in General Protections cases

Employers be warned – in two recent General Protections cases the courts have shown they are prepared to make orders requiring employers to pay substantial compensation amounts to employees who have been subjected to adverse action.

Case One: Leggett v Hawkesbury Race Club Limited (No 3) [2021] FCA 1658; Leggett v Hawkesbury Race Club Limited (No 4) [2022] FCA 622; Leggett v Hawkesbury Race Club Ltd NSD 1554/2019

The Facts

Ms Leggett worked for the Hawkesbury Race Club since January 1991 in a senior role as a marketing and sponsorship manager. In May 2016, a new CEO commenced with the Club.

After the CEO started, Ms Leggett claimed the CEO exercised an “overbearing management style”, told Ms Leggett that “she was earning too much money” and took away her authority to perform duties she ordinarily performed. Ms Leggett made complaints about the CEO’s behaviour, including with several of the Club’s directors and in an email directly to the CEO. Ms Leggett also asked the CEO to refer her complaint to the Club’s Board. In response to this, the CEO directed Ms Leggett to attend a meeting to discuss her work performance.

Following this, Ms Leggett sent a medical certificate to the CEO, stating she was unfit for work due to work stress. This email was then forwarded by the CEO to his father-in-law with the comment “Dropping like flies”, and the CEO also told a colleague that Ms Leggett had “pulled the “stress leave” certificate”.

Ms Leggett was subsequently diagnosed with a significant depressive disorder with anxiety, leaving her unemployable.

The Claim

Ms Leggett claimed that the Club:

• engaged in conduct amounting to repudiation of the employment contract;

• took unlawful adverse action against her because of her complaint, breaching the General Protections provisions of the Fair Work Act 2009 (Cth);

• breached its contractual obligations by withholding commissions and other entitlements payable to her;

• breached its duty to provide her with a safe system of work and to take reasonable care to avoid a reasonably foreseeable risk of her suffering a psychiatric injury.

The Decision

The Federal Court of Australia (FCA) found that the Club took unlawful adverse action against Ms Leggett in breach of the Fair Work Act 2009 (Cth), when the CEO required her to attend his office to discuss her work performance and by withholding payment of her legal entitlements, because she had exercised a workplace right by making complaints about the CEO’s conduct.

The FCA found it was clear the CEO tried to “force Ms Leggett out of her job”, and that the Board “shut its eyes completely to the problem” noting that “a reasonable person would have understood that description of [the CEO’s] conduct to suggest bullying” and the conduct “would have caused a reasonable person to consider that [Ms Leggett] was at risk of suffering a psychiatric injury”. The FCA was critical of the Club, stating that “the Club’s conduct, through [the CEO], effectively destroyed Ms Leggett’s life. She cannot work … and is permanently incapacitated from doing so because of [the CEO] and the Club’s conduct.”

The Orders

A significant sum was awarded to Ms Leggett, with the FCA ordering a sum of over $2 million to Ms Leggett, comprising of compensation in the amount of $1,770,510, $24,233 for breach of contract, $160,650 in penalties and $300,000 for costs. Importantly, the FCA also rejected the Club’s argument that the NSW workers compensation caps restricted the amounts that could be awarded by the FCA under the Fair Work Act 2009 (Cth), meaning that compensation caps under workers compensation legislation is unlikely to apply in General Protections cases.