THE CASE LAW
13 Section 298K(1) of the Act is one of a number of measures adopted by the legislature in order to protect the principle of freedom of association. It does so by enjoining employers from taking action (directly or indirectly) against employees because, inter alia, they have asserted or obtained benefits in their employment as a result of their participation in collective bargaining processes. The conduct proscribed by s 298K(1) is the performance by an employer of one of the acts listed in the various paragraphs of the sub section or the issuing of a threat to do so. Relevantly, the proscribed acts are the injury of an employee in his or her employment or the altering of the employee's position to his or her prejudice: see s 298K(1)(b) and (c). In Patrick Stevedores (No. 2) (1998) 195 CLR 1 at 18 the High Court made the following observations about the relevant paragraphs:
'Paragraph (a) covers termination of employment; par (b) covers injury of any compensable kind; par (c) is a broad additional category which covers not only legal injury but any adverse affection of, or deterioration in, the advantages enjoyed by the employee before the conduct in question'.
14 In Maritime Union of Australia v Geraldton Port Authority (1999) 93 FCR 34 at 69-71 Nicholson J reviewed the authorities which had dealt with the predecessors of s 298K(1)(b) and (c). He noted with apparent approval decisions in which it was held that the precursors of para (b) were narrower in their reach than those of para (c). In particular he referred to the dictum of Smithers J in Childs v Metropolitan Transport Trust (1981) IAS Current Review 946 at 948 that:
'I cannot help thinking that "injury" refers to deprivation of one of the more immediate practical incidents of his employment, such as loss of pay or reduction in rank.'
Reference was also made to the decision of Evatt J in Blair v Australian Motor Industries Ltd (1982) 61 FLR 283 at 290-292 in which His Honour agreed with Smithers J in Childs and added (at 290) that:
'It is clear in my view that the words ['or alter his position to his prejudice'] were added to the section to overcome a situation in which an employer did something short of dismissing an employee but which was something which could be said to be harmful to him in his employment.'
More recently, in Community and Public Sector Union v Telstra Corporation Ltd (2000) 99 IR 238 at 244 Finkelstein J said that:
'Injury is concerned with actual adverse effect, usually by the loss or alteration of a legal right, in the position of a employee, in his capacity as an employee.'
15 The concept of prejudicial alteration is, as the High Court held in Patrick Stevedores, apt to comprehend prejudice extending beyond legal injury. Examples of the prejudicial alteration of employee's positions which extend beyond legal injury include reneging by an employer on an assurance (Childs; Kimpton v Minister for Education of Victoria (1996) 65 ALR 317 at 319), corporate restructuring which reduces the solvency of the employer (Patrick Stevedores) and discriminatory allocation of less congenial shifts or rosters (Independent Education Union of Australia v Canonical Administrators (1998) 87 FCR 49 at 68.)
16 An employer's conduct may directly alter an employee's position to his or her prejudice as where a promise of promotion is withdrawn. Section 298K(1)(c) of the Act can also apply to conduct which has an indirect impact on employees such as the corporate restructuring effected in Patrick Stevedores. Not all decisions by employers which have an indirect or consequential impact on the position of employees will constitute prejudicial alteration. In Community and Public Sector Union v Telstra Corporation Ltd (2001) 107 FCR 93 at 100 the Full Court said:
'The question is whether … Telstra had altered the position of any of its employees to the employees prejudice within the meaning of s 298K(1)(c). In Patrick Stevedores at 18 the majority of the High Court held that the subsection "not only legal injury but any adverse affection of, or deterioration in, the advantages enjoyed by the employee before the conduct in question." The majority also observed (at 20) that the reorganisation of companies within the Patrick Group had resulted in the security of employer companies businesses being "extremely tenuous" with the "security of the employee's employment [being] consequentially altered to their prejudice." The reorganisation did not directly affect or alter any legal rights or obligations of the employees but it had left their future employment less secure. Although this issue was not in dispute, the majority appears to have had no difficulty in accepting reduced security of future employment as falling within s 298K(1)(c) because it brought about an adverse affection of, or a deterioration in, the advantages enjoyed by the employees before the reorganisation.'
17 Where the alteration of position is alleged to be indirect or consequential, as in Patrick Stevedores and in the present case, it will often be more difficult to determine whether a prejudicial alteration of position has in fact occurred. Questions of degree will arise. It is sufficient for present purposes to say that if the prejudicial alteration is real and substantial, rather than merely possible or hypothetical, it will be covered by s 298K(1)(c). In Telstra the union had complained that the company had contravened s 298K(1)(c) when a senior executive had sent an e-mail which was construed as instructing managers that, in choosing employees who were involuntarily to be made redundant, preference should be given to those employees who were covered by awards or certified agreements, rather than those who had signed individual agreements. The Full Court found that the issuing of this instruction altered the position of employees in a real and substantial way. The Court said (at 100-101) that:
'Before the sending of the email Telstra's employees employed under awards and certified agreements enjoyed the benefit of being subject to redundancy only in accordance with the process which rated their eligibility for redundancy on the basis of merit, which was to be determined by application of the five principal criteria stipulated for the resource rebalancing process. There was an adverse affection of, or deterioration in, that benefit after the sending of the email as a result of the additional detrimental criterion applicable to employees employed under awards or certified agreements. The detrimental criterion was real and substantial for the employees whom it affected.
Thus, while the refined or amended criterion had not been acted upon, and therefore may not have caused any injury to an employee, the employment of the employees on awards or certified agreements had become less secure in a real and substantial manner, than it had been previously. In those circumstances the position of the relevant employees had been altered to their prejudice within the meaning of s 298K(1)(c). It follows that while we consider that the primary judge was correct in concluding that, as the e-mail had not been acted upon, it did not injure any employee, we do not agree with His Honour's conclusion that the email had not altered the position of any of the employees to their prejudice.'
18 The decision in Telstra can usefully be contrasted with that of another Full Court in BHP Iron Ore Pty Ltd v Australian Workers' Union (2000) 102 FCR 97. In that case the employer had determined to give all award employees the option of entering into individual agreements. If they did not do so their future wages and conditions were to be determined by collective bargaining. The Court held that s 298K(1)(c) had not been contravened. It said (at 109) that:
'In the present case, the only undisputed intentional act of BHP IO has been to offer to each employee improved remuneration and conditions to be embodied in an individual Workplace Agreement. That, of itself, did not change, in either absolute or relative terms, the remuneration or any of the conditions of employment of the employee to whom the offer was made. A change in absolute terms only occurred upon acceptance of the offer and the consequent coming into existence of new contract of employment. It is true that, after some offers have been accepted by individual employees, a change can be discerned in the remuneration and conditions of employment of those employees, viewed in relation to the remuneration and conditions of employment of those employees who have not accepted the offer. However, the position of each of the latter employees has not been changed to his or her detriment by an intentional act of the employer. The relative change which we have just identified is brought about by the acceptance of some employees and the rejection by others, of an offer made indiscriminately to all employees.'
The Court also emphasised the need for a comparison to be made between the position of employees before the impugned conduct and their position thereafter in order to determine whether their position had been altered to their detriment. In this regard it said (at 112) that:
'It is apprehended by the applicants that employees who elect not to sign individual workplace agreements will, in the future, be excluded from consideration for promotions or changes of shifts to which they are as well qualified by experience or training as employees who have accepted the offer. On the evidence, this has not happened and, until it does, it is not open to find that BHP IO had injured in their employment, or has altered to their prejudice the position of those employees who remain regulated by the award. It is also true that a continuing award employee who receives a promotion or some other beneficial change in his or employment may not achieve the same increase of remuneration as a similar employee on an individual workplace agreement. However, for the reasons outlined above, that will be a consequence of an election between different contractual regimes for the regulation of employment of the two groups of employees. It will not have been brought about by the active, intentional conduct of the employer which is struck att by s 298K."
19 One of the issues raised by the respondent in its strike out application is the extent to which it is necessary to identify the employee or employees whom it is alleged will suffer injury or have their position altered to their detriment by the employer's conduct. In dealing with this issue in BHP Iron Ore the Full Court observed (at 108) that:
'It has to be borne in mind in construing s 298K, that it proscribes conduct by "an employer" directed to "an employee" or "other person" …. That use of the singular suggests that the alleged injury or alteration of position has to be examined in the light of the circumstances of each individual employee. (It is not to the point that in the interpretation of statues, the singular ordinarily includes the plural; here we are concerned with the indications of legislative intention to be discerned from the actual language used.) It is also significant that the conduct struck out by each paragraph of s 298K is expressed by an active verb: "dismissed", "injure", "alter the position", "refuse to employ", and "discriminate". That implies that the proscription is essentially against an intentional act of the employer directed to an individual employee or prospective employee.'
In Telstra, the company argued that it had not contravened s 298K(1)(c) of the Act because the e-mailed instruction was not directed against any particular employee or employees. The Full Court rejected this argument holding that it was sufficient that the relevant employees were ascertainable. The Court said (at 101) that:
'Telstra also relied on the observation by a Full Court of this Court in BHP Iron Ore … that the proscription in s 298K(1) "is essentially against an intentional act of the employer directed to an individual employee or prospective employee".
Telstra contended that the email was not an intentional act directed at any individual employee. However, the observation of the Full Court also holds true where the act is intentionally directed at a number of identified employees. The email and its terms discriminated against each employee of Telstra who was employed under an award or a certified agreement. Accordingly, liability arises where the conduct is directed at a number of ascertainable employees as well as against a particular employee.'
20 A further issue which arises on the case as pleaded by the applicant is whether the announcement of the decision constituted a threat for the purposes of s 298K(1) of the Act. At first instance in Community and Public Sector Union v Telstra Corporation Ltd (2000) 99 IR 238 Finkelstein J dismissed the union's contention that the announcement of downsizing, with preference to be given, in the case of involuntary redundancies, to employees engaged under individual agreements, constituted a threat to those employees. His Honour was prepared to accept that the e-mail, about which complaint was made, could be construed as an announcement of proscribed action at some time in the future. Nonetheless he rejected the contention that it could constitute a threat. He said (at 243-4):
'To succeed it is necessary for the applicant to show that there has in fact been an injury to, or an alteration in the position of, employees engaged under awards or certified agreements or that there has been a threat to that effect. I can immediately dispose of the allegation that there has been a relevant threat. In the context of this legislation, there will not be a threat of proscribed conduct unless the employer communicates to his employee that proscribed action will be taken. One meaning of the word "threatened" is to menace or warn beforehand of an intention to inflict harm. That is the meaning that should be given to the word in s 298K. … It is the meaning that accords with one of the objects of s 298K which is to prevent employers bullying employees by reason of matters connected with their terms and conditions of employment or the performance of their work."
Before His Honour's order dismissing the proceeding had been passed and entered, the applicant requested that he recall the order and hear further argument of the proper construction of the word 'threaten'. His Honour refused to recall the order. He said that:
'In my reasons for decision I said that one of the objects of s 298K was to prevent employers bullying employees by reason of matters connected with their terms and conditions of employment. I had in mind that the word "threaten" should be taken to mean a communicated intent to inflict harm. I accept that the communication need not be directly to the person threatened but could be just as effectively made if it is communicated to a person in circumstances where it is intended to or is likely to find its way to the person threatened. I was then and still am of the view that it is the essence of a threat that it is made for the purpose of intimidating a person ...
I did not then, and I do not now, believe that there can be a relevant threat whenever an employer states an intention to contravene s 298K, regardless of the circumstances. Take but one example. Assume that a director of a "one man company" tells his secretary that he intends to take action against the company's employees for a prohibited reason, intending the communication to remain secret between them. Is that a threat? I do not believe that it is.'
See Community and Public Sector Union v Telstra Corporation Ltd (2000) 101 FCR 45 at 48-49. Finkelstein J's decision was followed by Weinberg J in National Union of Workers v Quenos Pty Ltd (2001) 108 FCR 90. In that case an employer announced plant closures and advised the union that a 'spill and fill' process, under which employees would have to reapply for their positions, would be followed when selecting those employees who would be retrenched. Weinberg J rejected the submission that this announcement constituted a threat. His Honour said (at 118) that:
'There are other legal difficulties associated with this claim. I am not persuaded that the contravening conduct alleged is capable of being characterised as a "threat" of dismissal. All that had occurred when the applicant instituted this proceeding was that the respondent had communicated to its employees that there would be a spill and fill, and that [certain] employees would be included. To adopt the language of Finkelstein J in Community and Public Sector Union v Telstra Corporation Ltd such conduct is hardly a warning "of an intention to inflict harm". The mere indication that a selection process would be followed, without more, seems to me to fall well short of a threat, still less a threat which is directed to an individual employee.'
When dismissing the applications before them both Finkelstein and Weinberg JJ relied, in part, on the fact that the direction to managers and the announcement of downsizing with redundancies respectively did not involve action directed by an employer to an individual employee or prospective employee. In doing so they regarded themselves as bound by what the Full Court in BHP Iron Ore had said in the passage quoted at [19] above. On appeal from Finkelstein J, another Full Court adopted the wider 'ascertainable employees' construction of s 298K of the Act. For this reason that Full Court upheld the union's contention that the position of relevant employees had been altered to their prejudice under s 298K(1)(c) of the Act. The union's second ground of appeal was that Finkelstein J had erred in his construction of the word 'threaten'. Apart from acknowledging that this ground had been raised, the Full Court said nothing more about it. Accordingly the construction placed upon this word by Finkelstein and Weinberg JJ remains undisturbed.
21 In Geraldton Port Authority the union alleged that the announcement of the prospect of redeployment of employees as a consequence of a business restructuring constituted a threat for the purposes of s 298K(1) of the Act. In dealing with this contention Nicholson J said (at 78):
'In my opinion it follows that the prospect of redeployment cannot in itself necessarily constitute a threat to injure or a threat to alter the position of employee to the prejudice of that employee. Until the facts of the redeployment fall out it is not known whether they will be injurious or prejudicial. It remains open …that redeployment could take place either without injury or prejudice or with enhancement. The second applicants cannot therefore now establish a threat to injure in employment or a threat to alter their position in this respect. … In the circumstances of this matter s298K(1)(b) cannot operate in respect of a threat to redeploy and would only operate where there was evidence arising from a particular proposed redeployment. Even then, the fact that provision for redeployment formed part of the conditions of employment would require close consideration.' (Emphasis added)
22 The respondent's application also raises the question of when a cause of action under s 298K crystallises. Contravention of s 298K(1) occurs 'once and for all' at the time at which the proscribed conduct occurs for a proscribed reason and the conduct injures or prejudicially changes the position of the employee: cf Roberts v General Motors Holden's Employees Canteen Society Inc (1975) 25 FLR 415 at 418.