Imagine being forced to reinstate a senior employee you sacked three years ago, pay them $1.1 million in back pay, and not have the ability to take any action against them once they are back in the office.
This has become a reality for the power solutions company, Cummins Group, following a recent Federal Circuit Court decision where Judge Wilson warned that any inappropriate behaviour following the decision may have serious consequences.
This decision serves as a timely reminder for employers that taking unlawful action has significant consequences, with the court taking the very firm position that reinstatement is not impossible just because:
- someone else has taken the employee’s position;
- it is “embarrassing” for the company to reinstate the employee; or
- there are “difficult relationships” that would need to be managed.
The reinstated employee (Keenan) was a senior leader in the Cummins Group, with 34 years of service and earning a significant salary. During the course of his employment, Keenan made a number of complaints about the human resources leader, Ms Baldota. By way of example, one of the complaints was that Keenan was facing difficulties with Baldota as a consequence of her quality of work and her interaction with and attitude towards other employees. It is safe to say they had an untenable working relationship and Keenan got stuck in office politics.
As a result of the complaints, Keenan:
- was placed on a Performance Improvement Plan (the PIP);
- had an “ethics case” brought against him (the Ethics Case); and
- was asked to show cause why his employment shouldn’t be terminated.
Inevitably, Keenan was terminated for “performance issues”, which resulted in him becoming an Uber driver for a mere $15,000 per annum.
The court found that the PIP, the Ethics Case and the termination of employment all constituted adverse action – and were unlawful pursuant to the Fair Work Act 2009 (Cth).
Penalties and remedies
Following the first case, there was a second case about penalties and remedies to be awarded to Keenan. The Cummins Group strongly argued against having Keenan reinstated (which is the primary remedy for an adverse action claim). In doing so, it argued, among other things, that:
- subsequent to Keenan’s departure, someone else had taken over the role that he previously occupied and it would be unfair to require the Cummins Group to dismiss that other person;
- no other vacancies existed within the Cummins Group for Kennan to be put into;
- it would cause the Cummins Group disruption given that Keenan would likely retire in 4 years;
- it would be “inappropriate and embarrassing” to reinstate Keenan to a leadership role because of unfavourable evidence in the trial on liability and because he has been out of leadership roles for three years; and
- while there may have been limited publicity of the trial to date, the Court should be realistic about the prospect that, if Keenan is reinstated, the facts found in the judgment will come out.
All of these arguments were rejected. The court held that “it must not be overlooked that Mr Keenan’s loss of employment was the consequence of the respondent’s unlawful conduct. It ill behoves the respondent to mount an array of arguments to the effect that the respondent’s own internal organisation of its own staff is such as to prevent the court from reinstating Mr Keenan to the position he would still occupy had the respondent not engaged in the prohibited conduct”.
The protected species
Employers must be aware of the dangers of terminating an employee unlawfully, particularly given that the employee may be reinstated into their position should it be held that they suffered adverse action (just as Keenan did in this case). His Honour made it clear that, after Keenan is reinstated, “If she [being, HR] behaves inappropriately hereafter she may well expose herself to the consequences set out in the Fair Work Act”.
Practically speaking, Keenan is now untouchable – should any negative or adverse decision be made in relation to his employment, you can only imagine the avenues he may pursue.
This is why employers need to be aware of such consequences, and remember that a court can, and if necessary, will, order an employee to be reinstated following termination, among other things.
How to avoid this
To avoid getting stuck in a similar situation after trying to manage the office politics at work, we recommend:
- dealing with grievances when they arise. A failure to do so will inevitably lead to a much bigger problem;
- be aware of any bias you may have when addressing inquiries or complaints;
- ensure you have a transparent and reasoned procedure for dealing with unsatisfactory or unreasonable performance; and
- the performance being managed can objectively be determined to be unsatisfactory or unreasonable.