A recent Western Australian case has punished an employer that took adverse action against an employee following the employee’s diagnosis with cancer.

Adverse action

The case involved John Bill who was employed by a Western Australian panel beating and spray-painting business Hi-Lite Automotive Body Repairs. In late 2010 Bill was diagnosed with blood cancer. He immediately informed his employer, who then pressured him to resign his employment, telling him that he would be paid all his entitlements even if he resigned. The employer’s managing director verbally harassed Bill and accused him of feigning his condition. Bill refused to resign and continued to apply for sick leave and provide medical certificates to his employer whilst receiving treatment. The employer refused to make any payments from this time. Throughout that period Bill also applied for a disabilities pension from Centrelink and asked his employer to provide documentation for that application, which lead to an argument in early 2012.

It was upon this argument that much of the case depended. Bill alleged that he was dismissed at the conclusion of the argument, but the employer alleged that he resigned.

In a decision in May 2013 the Court found that Bill had in fact been dismissed and had not, as a matter of law, resigned. The question of whether Bill resigned or was dismissed was crucial to deciding whether Bill had access to legal remedies. This is because the “adverse action” that Bill alleged was dismissal. Therefore, as in an unfair dismissal case, Bill first needed to prove that he was indeed dismissed. Whether or not he was dismissed depended on whether the employment relationship was terminated because of an act taken by the employer. The employer wanted to characterise the termination of the employment as a dismissal in order to avoid paying Bill his 500 hours of accrued sick leave entitlements, but the Federal Court found that what happened during the argument was instead a dismissal. This “adverse action” was taken for a prohibited reason, namely because Bill proposed to exercise his “workplace right” to sick leave entitlements. Thus, Bill was awarded $15,000 in compensation.

The recent ruling of February 2014 dealt with the issue of whether the employer and its director should receive a penalty. The Court found that both the employer and the managing director should be penalised. A key factor was that steps were taken to deliberately deny Bill his fundamental entitlements. This was aggravated by Bill’s vulnerability and need for financial stability. Whilst undergoing chemotherapy, instead of being paid several months of sick leave, Bill was paid nothing. Thus, a fine of $41,500 was issued, split between the employer and its managing director. The Court ordered that the fine be paid to the consolidated revenue fund.

The decision is important in the continuing development of the law around adverse action for a number o reasons. It demonstrates once again that employees, when they feel pressured to resign should do so carefully and as a last resort.  While mental health often demands that individuals leave a workplace, legal rights are generally far more difficult to enforce for an employee who has resigned and needs to allege constructive dismissal, than for a person who was clearly terminated.

The case is also important as it again shows the seriousness Courts view such contraventions, including as to the willingness of Courts to impose penalties personally onto directors and officers of employers.