Federal Court ups damages for age discrimination

The Federal Court recently allowed an appeal to increase damages awarded to a then 68-year-old accountant on the basis that he was subjected to age discrimination after 25 years of service. Justice Burley’s decision in Gutierrez v MUR Shipping Australia Pty Ltd [2023] FCA 399 (4 May 2023) highlights the willingness of the courts to compensate workers subjected to age discrimination, and is a timely reminder for employers not to make assumptions about retirement of their employees.

The Facts

Mr Alex Gutierrez commenced as a Chief Accountant with MUR Shipping Australia Pty Ltd (MUR) in 2004. In February 2018, Mr Getty of MUR informed Mr Gutierrez that the company had a retirement age of 65 and asked when he would retire. Mr Gutierrez told Mr Getty that forcing him to retire based on his age was unlawful and that he would give MUR 3 months’ notice of his retirement.

In March 2018, MUR arranged a meeting with Mr Gutierrez, Ms Fernandes from MUR’s Dubai office, Mr Getty, and Mr Smith. At that meeting, he was requested to explain to Ms Fernandes what duties he performed in his role. Later that month, Mr Gutierrez was informed that Ms Fernandes would take over his role, notwithstanding that he had not given any firm date of his retirement. When Mr Gutierrez queried why MUR was arranging his replacement, Mr Getty said ‘I know you have a retirement unit in Manila’. Mr Gutierrez felt compelled to give a retirement date, which he gave as July 2019. In April 2018, he was informed that Ms Fernandes would start that month.

On 19 July 2018, Mr Gutierrez was informed that the Board intended to end his employment at the end of 2018, commence him on a fixed term contract from 1 January 2019, and required him to train Ms Fernandes to be his replacement. Mr Gutierrez’s health rapidly deteriorated due to stress and he was diagnosed with adjustment disorder. On 1 August 2018, he resigned from his position.

The original decision – Gutierrez v MUR Shipping Australia Pty Ltd [2021] FedCFamC2G 56 (1 December 2021)

Mr Gutierrez claimed under the Disability Discrimination Act 1992 (Cth) that he had been discriminated against on the basis of his age, had been constructively dismissed, and had suffered a psychiatric injury on the basis of that discrimination. The Federal Circuit and Family Court of Australia found in Mr Gutierrez’s favour in 2021. In its decision, it noted amongst other things that:
– “MUR Shipping did unlawfully discriminate against Mr Gutierrez on account of his age, inasmuch as it treated Mr Gutierrez disrespectfully and less favourably than his intended replacement (Ms Fernandes)”;
– “Mr Gutierrez [had] not suffered any economic loss caused by that discrimination because he chose to resign his employment when there was no need to do so”;
– Mr Gutierrez suffered from a “mild adjustment disorder” as a result of his treatment;
– “an appropriate award of damages for non-economic loss [was] $20,000… [plus] interest”; and
– “Mr Gutierrez should also receive an apology, which is “likely to be at least as valuable to Mr Gutierrez as the payment of damages”.

The appeal

Mr Gutierrez appealed the decision in relation to the assessment of damages to the Federal Court of Australia. He was successful on two grounds.

1- Incorrect assessment of harm

Justice Burley held that Judge Driver incorrectly characterised Mr Gutierrez’s condition as ‘mild adjustment disorder’, which was inconsistent with his doctor’s diagnosis of ‘adjustment disorder’ and his wife’s evidence of the personal impact the discrimination had on him, including that he was previously a “vibrant, social and happy man” but no longer socialised, played golf or enjoyed watching basketball. Judge Driver also failed to consider the doctor’s evidence that Mr Gutierrez would be unable to work until the disorder was resolved, and that his condition arose entirely from MUR’s discriminatory conduct.

2- Damages were available for economic loss

Contrary to the original decision, the Federal Court found that Mr Gutierrez was entitled to an award of damages for economic loss. Justice Burley held that Judge Driver (primary judge) incorrectly concluded that, because the court found that Mr Gutierrez resigned and was not constructively dismissed, it was unable to award damages for economic loss. Instead, Justice Burley clarified that the correct basis of an award of damages for economic loss was the assessment of the causal link between the conduct and the consequence. The court found that there was a causal link between the unlawful discriminatory conduct and Mr Gutierrez being unable to work (due to suffering from adjustment disorder).

Increased damages awarded

Justice Burley increased the general damages awarded to Mr Gutierrez from $20,000 to $90,000. He also awarded damages for economic loss, which Mr Gutierrez claimed was approximately $142,000. The final award of damages for economic loss is yet to be determined following further submissions from the parties.

Key takeaways

The decision aligns with an upward trend in the award of damages in age discrimination cases over recent years. The decision highlights that:
– Employers should avoid making assumptions about the intention of older employees to retire.
– Employers can only bring an employee’s employment to an end by following lawful processes regarding conduct, capacity, performance or organisational restructuring.
– Conversations regarding retirement should be approached respectfully and carefully.
– Courts are increasingly willing to recognise the significant harm caused by discrimination, including through health impacts, with significant awards of compensation for hurt, humiliation, pain and suffering.

How we can help

Our Workplace Relations team are experts in discrimination matters and are passionate about guiding employers to act consistently with their anti-discrimination obligations. Please contact Skye Rose or Amanda Junkeer for further advice or information.

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