Federal Court recognises hurt and humiliation as loss

We’ve noticed a change recently. The Federal Court is firming up its position on awarding employees compensation for hurt and humiliation in adverse action claims.

The most recent case that sparked our attention on this issue was Fair Work Ombudsman v Maritime Union of Australia (No 2) [2015] FCA 814 where five employees were awarded damages for successfully arguing that the “loss” referred to in s545(2)(b) of the Fair Work Act (under which the Federal Court can award damages) includes loss other than economic loss, such as loss resulting from emotional harm and distress. 

        Photography / Jason Ilagan

       Photography / Jason Ilagan

The five employees were named in MUA scab posters following a period of industrial action at a number of Western Australian ports. Four of the five employees exercised their workplace right not to be involved in the industrial action; whilst the fifth member of the group did strike, he was targeted by the MUA for briefly fraternizing with employees who worked during the strike.  In their arguments, the employees identified their loss as the loss of quiet enjoyment of their working environment due to marginalisation and apprehension and fear of violence, the loss of quiet enjoyment of their after work environment due to fear of violence, and the infringement of their right to dignity.

Together, the employees were awarded a total of $120,000.00.

This decision comes on the back of a significant decision in 2011, Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333; (2011) 193 FCR 526 (ALAEA) where an employee was likewise awarded compensation for loss other than economic loss. 

In that decision Barker J found that the power to award compensation under s 545(2) of the Fair Work Act includes the power to award compensation in respect of non-economic loss for distress, hurt or humiliation. None of the parties contended otherwise. The employee who was awarded damages claimed non-economic loss on the grounds that his employer’s contraventions of the Fair Work Act, including events surrounding his dismissal and subsequent forced departure from Australia, caused him hurt and humiliation that manifested in headaches, stress and vomiting. In addition to other damages, the employee was award $7,500.00 for non-economic loss.

Together, these decisions demonstrate a move by the court towards accepting hurt and humiliation as genuine, quantifiable forms of loss. Section 545(2) of the Fair Work Act does not explicitly allow claims for compensation resulting from hurt and humiliation, but nor does it exclude them as does the unfair dismissal provisions of the Fair Work Act. Accordingly, it has been reasoned that compensatory claims for hurt and humiliation, or the like, should not be excluded.

These decisions mean that employers or unions who take adverse action against employees may find themselves liable for much more than lost wages or other forms of economic loss. Non-economic loss is well and truly an established kind of loss and may amount to a considerable sum.