RULING on the Fair Work Ombudsman’s first age discrimination prosecution, the Federal Circuit Court has awarded a former hospitality employee $10,000 in compensation after he was dismissed for reaching the retirement age of 65.

The man’s employment contract was terminated shortly after returning from long service leave, earned after 15 years working for a Queensland Thai restaurant.

At a meeting with managers, the worker raised several concerns, including a proposed change to working arrangements from full-time to a part-time position, and the alleged underpayment of nearly $60,000 in entitlements.

In the first instance, the employee was led to believe that his working arrangements had been cut to part-time due to his refusal to undertake additional management training.

However, in a letter forwarded to the employee shortly after the meeting, he was advised that ‘it is a policy of the company that we do no employ any staff that attains the retirement age which in your case is 65 years’.

Judge Michael Burnett of the Federal Circuit Court pointed out that identifying age as a reason for termination ‘is not a technical contravention of the law’, but a ‘very straightforward, serious and fundamental breach’.

“As the applicant contended, the contraventions do, and did, have an inherently serious impact upon the complainant, who it contends should be regarded as a vulnerable worker due to his age and linguistic circumstances,” Judge Burnett said.

“The purpose of the Fair Work Act is to provide a protection from workplace discrimination, and to provide effective relief for persons who have been discriminated against, victimised, or otherwise adversely affected as a result of the contravention of the general protection provisions.

“It was submitted that in this context the nature of the respondents’ contraventions were serious.”
Judge Burnett also commented that the retirement age was a common source of misconception in the business community.

“[This case] reflects a general misunderstanding within the community about retirement and the retirement age. This misunderstanding has been evident ever since self-funded superannuation retirement has permitted retirement to commence at 55, and the ongoing discussion about elevation of the pensionable age from 65 to 67 and beyond,” he said.

“That, of course, does not excuse the respondents’ conduct, and while I accept that in this instance there has been a profound lack of understanding of the respondents’ statutory obligations, I do not think that that error is entirely free of misunderstanding in the broader community.

“I consider it to be the case that the community still does not understand that retirement ages are not compulsory and that workers may elect to work beyond them. The law protects that right.”

Judge Burnett subsequently ordered the employer to pay compensation of $10,000 to the employee for losses suffered, and $20,790 in other penalties. The directors of the restaurant were also ordered to pay penalties of $4180 each.

Click here to read the decision in full.

Implications for Employers

For employers, this case is an important example of the consequences associated with discriminatory conduct, including dismissal based on age, gender, race or other discriminatory factors.

As a matter of interest, the employer in this case received legal advice from a public accountant, who suggested the worker was not entitled to seek relief for underpayment of wages as he had accepted his wage previously without complaint.

Likewise, the accountant also advised the employer that reaching the age of retirement was valid grounds to dismiss the employee.

While Judge Burnett acknowledged the dependence on small businesses on financial advisers for advice on all matters, he also indicated that regardless of the oversight of the accountant, the employer still acted unreasonably in dismissing the worker.

AREEA members are well-positioned to ensure they can receive the correct advice by contacting their local AREEA office and speaking to one of AREEA’s experienced employee relations consultants.

As well as clearly identifying company policies for the benefit of employees and the protection of the business, they can also provide advice and information about managing conflict and dismissals in the workplace.