What does ‘Reasonable management action carried out in a reasonable manner’ mean?

See Fair Work Act s.789FD(2)

Behaviour will not be considered bullying if it is reasonable management action carried out in a reasonable manner.[1] Section 789FD(2) is not so much an 'exclusion' but a qualification on the definition of when a worker is bullied at work.

This qualification is comprised of three elements:

• the behaviour must be management action
• it must be reasonable for the management action to be taken, and
• the management action must be carried out in a manner that is reasonable.

The following are examples of what may constitute management action:

• performance appraisals[2]
• ongoing meetings to address underperformance[3]
• counselling or disciplining a worker for misconduct[4]
• modifying a worker’s duties including by transferring or re-deploying the worker[5]
• investigating alleged misconduct[6]
• denying a worker a benefit in relation to their employment, or[7]
• refusing an employee permission to return to work due to a medical condition.[8]

An informal, spontaneous conversation between a manager and a worker may not be considered management action, even if issues such as those listed above are raised.[9]

The term ‘management action’ has been extensively considered in the context of workers’ compensation laws. Recent workers’ compensation cases suggest that, to be considered management action, the action must be more than simply day-to-day operational instructions that are part and parcel of the work performed.[10]

The words used in s.789FD(2) however are less qualified: they exclude ‘reasonable management action carried out in a reasonable manner’. Unlike some workers’ compensation exclusions they do not refer to prescribed actions taken ‘in respect of the employee’s employment’ etc. or prescribe any list of ‘management’ or ‘administrative’ action. The Explanatory Memorandum suggests that the term may be required to be given a wider meaning under s.789FD(2):

This suggests that the legislature intended everyday actions to ‘effectively direct and control the way work is carried out’ to be covered by the term 'management action'.[11]

NOT considered management action

Workers’ compensation – general operational action

Commonwealth Bank of Australia v Reeve [2012] FCAFC 21 (8 March 2012), [(2012) 217 IR 335].

Facts
A Commonwealth Bank manager sought workers’ compensation after developing a depressive illness. The Administrative Appeals Tribunal found that a number of circumstances contributed to the worker’s depression, including staffing changes affecting his branch in June 2008, and a number of events on the day of 18 July 2008. These included a telephone conference with fellow managers and his area manager in which the worker had to report poor results to colleagues and felt humiliated, an unsupportive visit from his area manager, his receipt of poor customer service results for the branch, and the anxiety he felt about reporting these results to his colleagues at an upcoming teleconference. The Bank sought judicial review of the AAT’s decision. It submitted that it was not liable to pay the worker’s compensation because the actions that contributed to his depression, such as the staffing changes and use of teleconferences, were ‘administrative action’ and excluded the Bank from liability.

Outcome
A Full Court of the Federal Court did not accept the Bank’s submission. It held that the exclusion applied to specific action taken in respect of an individual’s employment, such as disciplinary action, as opposed to action forming part of the everyday tasks and duties of that employment. This meant that the ordinary work routine, changes to routine and directions to perform work were not ‘reasonable administrative action taken in respect of the employee’s employment’. The worker’s claim for compensation was successful.

Relevance
In this case the appeal failed because the definition of ‘administrative action’ in s.5A of the Safety, Rehabilitation and Compensation Act 1988 (Cth) required that the action be taken ‘in respect of the employee’s employment’. Under the Fair Work Act the definition of ‘reasonable management action carried out in a reasonable manner’ does not have such an exclusion.

Persons conducting a business or undertaking have rights and obligations to take appropriate management action and make appropriate management decisions to respond to poor performance, direct and control the way work is carried out or, if necessary, take disciplinary action.

Workers’ compensation – regular meetings

National Australia Bank Limited v KRDV [2012] FCA 543 (28 May 2012), [(2012) 204 FCR 436].

Facts
A worker attended regular weekly meetings with other team leaders and her manager, which were used to assess workloads for planning purposes. She was criticised for poor work performance during one of these meetings. The worker claimed workers’ compensation, alleging injury after being ‘picked on and singled out’ by her manager, and subjected to personal criticism in front of other managers. The worker’s employer denied the claim, arguing her condition was a result of reasonable administrative action taken in a reasonable manner in respect of her employment.

Outcome
The Federal Court held that, because the meeting was not arranged for the purpose of discussing the workers’ performance, the behaviour did not fall within the ‘reasonable administrative action’ exclusion for a workers’ compensation claim.

Relevance
When determining if actions are ‘management action’, it is necessary to examine the original intention of the actions. An informal, spontaneous conversation between a manager and a worker may not be considered management action, even if management issues are raised.

Determining whether management action is reasonable requires an objective assessment of the action in the context of the circumstances and knowledge of those involved at the time, including:

• the circumstances that led to and created the need for the management action to be taken
• the circumstances while the management action was being taken, and
• the consequences that flowed from the management action.[12]

This covers the specific ‘attributes and circumstances’[13] of the situation including the emotional state and psychological health of the worker involved.[14]

The test is whether the management action was reasonable, not whether it could have been undertaken in a manner that was ‘more reasonable’ or ‘more acceptable’.[15] In general:

• management actions do not need to be perfect or ideal to be considered reasonable
• a course of action may still be ‘reasonable action’ even if particular steps are not[16]
• any ‘unreasonableness’ must arise from the actual management action in question, rather than the worker’s perception of it[17], and
• consideration may be given as to whether the management action involved a significant departure from established policies or procedures and, if so, whether the departure was reasonable in the circumstances.[18]

At the very least, to be considered reasonable, the action must be lawful[19] and must not be ‘irrational, absurd or ridiculous’.[20]

Any unreasonableness must arise from the actual management action in question rather than the worker’s perception of it.[21]

For the exemption in s.789FD(2) to apply, the management action must be carried out in a ‘reasonable manner’.

As above, what is ‘reasonable’ is a question of fact and the test is an objective one.[22]

Whether the management action was taken in a reasonable manner will depend on the action, the facts and circumstances giving rise to the requirement for action, the way in which the action impacts upon the worker and the circumstances in which the action was implemented and any other relevant matters.[23]

This may include consideration of, for example:

• the particular circumstances of the individual involved
• whether anything should have prompted a simple inquiry to uncover further circumstances[24]
• whether established policies or procedures were followed,[25] and
• whether any investigations were carried out in a timely manner.[26]

However the impact on the employee cannot by itself establish whether or not the management action was carried out in a reasonable manner, and some degree of humiliation may often be the consequence of a manager exercising his or her legitimate authority at work.[27]

An employee must be able to demonstrate that the decision to take management action lacked any evident and intelligible justification such that it would be considered by a reasonable person to be unreasonable in all the circumstances.[28]

Reasonable management action – carried out in a reasonable manner

Discussions

Application by E.K. [2017] FWC 3907 (Simpson C, 21 August 2017).

Facts
The applicant alleged that the behaviour engaged in by her manager and supervisor was repeated, unreasonable behaviour and did not constitute reasonable management action conducted in a reasonable manner.

On a number of occasions the applicant’s supervisor had cause to address certain issues with the applicant. The applicant alleged that in each of these occurrences her supervisor commenced a discussion by raising their voice at the applicant.

Outcome
The Commissioner, in considering the case advanced by the applicant and the version of events from the perspective of the persons named, found that, whilst the applicant held a strong perception that she was the subject of bullying, it was not borne out by the evidence.

In dismissing the application the Commissioner considered that there was a pattern of the applicant making specific allegations about having been bullied when the evidence suggested that it was in fact her own behaviour that was inappropriate.

Relevance
When determining if the conduct of person(s) named is reasonable management action taken in a reasonable manner, it is necessary to examine the facts and circumstances of the matter. In this case the evidence demonstrated that the conduct of both the manager and supervisor of the applicant was at all times reasonable management action carried out in a reasonable manner.

Promotion

Devasahayam and Comcare [2010] AATA 785 (14 October 2010).

Facts
A public servant claimed she suffered psychological injuries during the course of her work, due in part to a number of issues relating to her performance appraisals, failure to be promoted and being ‘humiliated’ in front of others. Her compensation claim was refused on the basis her condition was a result of ‘reasonable administrative action undertaken in a reasonable manner’.

Outcome
The Administrative Appeals Tribunal upheld this decision, finding that all applicable guidelines had been followed.

Relevance
What is reasonable is assessed objectively and relates to the specific conduct involved in light of the process overall. Reasonableness must be assessed against what is known at the time without the benefit of hindsight, taking into account the attributes and circumstances, including the emotional state, of the employee concerned.

Performance appraisal

Re Mr Sun [2014] FWC 3839 (Cloghan C, 16 June 2014).

Facts
The applicant was employed as an Application Developer. Later Mr A was appointed as General Manager, Information Systems. As a part of the performance appraisal process the applicant had to self-rate his performance. His direct manager queried some of the ratings; however the applicant received a rating of ‘Meets Requirements’ for each objective in the completed performance appraisal. On the day the applicant received notification of his annual discretionary bonus (which was less than he expected) he accessed Mr A’s electronic diary and saw an email between Mr A and his direct manager regarding his performance.

The applicant collapsed at work and was taken to hospital. At a meeting to discuss his return to work he alleged the collapse was work related and that an unnamed person changed the weightings on his performance appraisal (the First Complaint). The employer advised him that it would formally investigate the complaint in accordance with policy. The investigation found that his allegation was not substantiated.

Upon his return to work the applicant had a meeting with his manager and Mr A to discuss his role and how he carried it out. Mr A informed the applicant that he could allocate employees to undertake tasks irrespective of whether they were within the employee’s skills or position description, and that he was authorised to make such decisions and monitor those tasks and his expectations. This resulted in a situation where the applicant was critical of Mr A for requiring him to do a task which he considered was beyond his skills and capabilities, and consequently he accused Mr A of bullying (the Second Complaint).

Outcome
The Commission was satisfied that the applicant reasonably believed he was being bullied at work. However, with respect to the First Complaint, the alleged management action simply did not occur. Meanwhile, the Second Complaint involved management action by Mr A, which, when applying an objective test, was not bullying or unreasonable; it was reasonable and carried out in a reasonable manner.

Relevance
The Commission stated that caution should be exercised when considering whether payment of a discretionary bonus could be considered workplace bullying. The applicant’s belief that he should have been paid more did not constitute workplace bullying unless payment of the discretionary bonus was applied in a punitive manner. Of concern was that the applicant accessed Mr A’s email without permission; an employee does not have immunity from observing policies and practices expected in the workplace and employment relationship because they feel they are being bullied.

Performance review

Amie Mac v Bank of Queensland Limited and Others [2015] FWC 774 (Hatcher VP, 13 February 2015).

Facts
Amie Mac filed an application for orders to stop bullying at work. The application alleged that bullying occurred in the course of Ms Mac’s employment as a lawyer with the Bank of Queensland Limited (BOQ), and identified five persons employed by BOQ as the perpetrators of that bullying (jointly the respondents).

All staff undergo yearly Performance Development Assessments (PDAs). In her 2013 half-yearly PDA Ms Mac’s supervisor raised a number of areas where she needed to improve, and made a number of suggestions concerning how she might improve, her work performance. Shortly after Ms Mac went through the full-year PDA process she was put on a performance improvement plan (PIP). By about mid-February management had formed the view that Ms Mac was not meeting the objectives of the PIP and had therefore ‘breached’ it. In March 2014, Ms Mac’s solicitors sent a letter to BOQ advising that Ms Mac was on sick leave due to ‘acute stress’ caused by the PIP process and its surrounding circumstances.

Outcome
The Commission found that the decision to place Ms Mac on a PIP, and the manner in which the PIP process was implemented, were not unreasonable. Prior to the decision to place Ms Mac on a PIP being made, shortcomings in her performance had been identified by Ms Mac’s managers over a considerable period of time. Those shortcomings were brought to Ms Mac’s attention primarily through the documented PDA process, which was the established mechanism by which employees received feedback about their performance and were placed on notice if improvements were required. Although Ms Mac was rated as ‘Competent’ in her 2012 full-year PDA, significant shortcomings in her performance were identified. By the time of the 2013 full-year PDA, most of those shortcomings remained. The outcome of the 2013 PDA was an assessment of ‘Needs development’. In that context, BOQ was clearly entitled to take some form of action to achieve an improvement in Ms Mac’s performance.

The PIP process was the standard means by which this was done within BOQ. It was unsatisfactory that BOQ’s Performance Management Policy made no reference to the PIP process, with the result that the process was not fully transparent to all employees. Nonetheless, performance plans which clearly identify targets for improvement, require achievement of those targets within identified timeframes, and which provide support and feedback to employees to assist them to achieve such targets, are a legitimate and commonly used means to improve employee performance. In that context, the use of the PIP process by BOQ in relation to Ms Mac was reasonable.

Relevance
Where an applicant wishes to allege that the decision to implement a PIP amounted to bullying, such applicants must demonstrate that the decision to introduce the PIP lacked any evident and intelligible justification such that it would be considered by a reasonable person to be unreasonable in all the circumstances.

Perceived bullying and harassment

Ferguson and Commonwealth Bank of Australia [2012] AATA 718 (17 October 2012).

Facts
An employee claimed she developed a major depressive disorder as a result of bullying and harassment at work. The employer appointed a new manager to an under-performing branch. The new manager had a number of one-on-one meetings with the employee relating to her performance and minimum standards. The employee claimed that the manager’s manner was rude and belittling.

Outcome
The employer accepted that events at work had contributed to a significant degree to the employee’s mental health condition, but her compensation claim was refused because it was the result of reasonable administrative action taken in a reasonable manner in respect of her employment. The Administrative Appeals Tribunal affirmed the decision.

Relevance
The mere fact that management action might have been conducted differently or in a more reasonable manner does not automatically render the management action unreasonable.

Reasonable management action – NOT carried out in a reasonable manner

Adherence to established internal policies

Yu and Comcare [2010] AATA 960 ((1 December 2010), [(2010) 121 ALD 583].

Facts
A high school teacher claimed she suffered a psychological injury which was significantly contributed to by her employment, including the implementation of a performance management process. Her compensation claim was refused on the basis that her condition was a result of ‘reasonable administrative action undertaken in a reasonable manner’.

Outcome
The Administrative Appeals Tribunal overturned this decision on appeal, finding that the employer failed to comply with the applicable employment instruments and policy provisions. This went well beyond ‘… a matter of legal or technical nicety’.

The Tribunal held that the management action in question was not within the meaning of ‘reasonable administrative action’ and that it was not undertaken in a reasonable manner. The worker for example had been denied procedural fairness and no documentation was produced setting out the evidence concerning the worker’s alleged underperformance.

The Tribunal noted that the employer’s inadequate record keeping may have adversely affected its case.

Relevance
It is important to keep records when dealing with performance or behaviour issues in the workplace. In this case it was in part the lack of evidence that the employer had complied with their own procedures and policies that saw the initial decision overturned.

Performance monitoring and mentoring

Krygsman-Yeates v State of Victoria [2011] VMC 57 (4 November 2011).

Facts
An experienced teacher alleged that she sustained an adjustment disorder with mixed anxiety and depressed mood as a result of having her performance as a teacher subjected to monitoring and mentoring, and being bullied and harassed by the school principal. Her compensation claim was refused on the basis that her condition was a result of ‘management action taken on reasonable grounds and in a reasonable manner…’.

Outcome
The Court found that the action taken was ‘management action’ based on reasonable grounds. The teacher’s employer had a legal duty and responsibility to respond to and take action in relation to complaints it had received about the teacher’s performance. However the management action was not taken in a reasonable manner because:

• a three-page letter detailing performance-related issues was provided to the worker on her first day after returning from long service leave
• guidelines on monitoring and mentoring weren’t followed
• feedback was not provided to the worker during the monitoring and mentoring processes, and
• insensitive and unreasonable action was taken by continuing to provide comment by the delivery of letters, given the worker’s ‘eccentricities and her previous emotional response and reaction to receiving [such] letters’.

Relevance
The failure of the employer in this matter to comply with their own procedures and policies saw that whilst the management action was taken on reasonable grounds, it was not taken in a reasonable manner.

Excessive emails

Application by Ms A [2018] FWC 4147 (Asbury DP, 13 July 2018).

Facts
The applicant, together with her husband, are directors of a company engaged to provide management services to a residential complex which is a community titles scheme (the Complex). The respondent is the Chairman of the Body Corporate Committee for the Complex.

The applicant complained of bullying conduct consisting largely of excessive emails sent continuously. The respondent argued his conduct was reasonable management action underpinned by the applicant’s failure to comply with her managerial responsibilities. The applicant sought an order to stop the respondent from a range of behaviours.

Outcome
The Commission considered the evidence and found that the applicant’s performance in providing management services was not ideal. However whilst many issues raised by the respondent were reasonable their manner, in frequency they were not. The Commission was satisfied that the respondent’s behaviour was unreasonable and repeated, and it was likely to continue. The Commission found that this behaviour was negatively affecting the applicant’s health.

The Commission issued an order dealing with the timing, subject matter and content of future emails by the respondent. The orders also required the respondent to attempt to contact the applicant by telephone before sending an email in relation to a particular issue.

Relevance
The bullying conduct involved the respondent sending emails to the applicant about matters which were not urgent, at times which were not reasonable. The bullying conduct also involved the inclusion in the emails of sarcastic and derogatory language in relation to the applicant and was exacerbated by the fact that the emails were disseminated to other members of the committee of management of the body corporate.