VCAT Considers Exemption under Equal Opportunity Act

BAE Systems Australia Ltd (Anti-Discrimination) [2008] VCAT 1799 (11 September 2008)

VCAT has granted a restricted exemption from employment-related provisions of the Equal Opportunity Act 1995 (Vic) to a defence-related contractor, allowing the contractor to discriminate against its employees on the basis of nationality.


BAE Systems Australia Ltd is part of a UK-owned group which designs, manufactures and provides support for advanced defence systems, including aircraft and ships, guided missiles and weapons, radar and other electronic communication systems.

BAE’s main customer is the Australian Defence Force, meaning that BAE has access to certain information classified as secret or sensitive by the Australian government.  Further, many of the contracts entered into by BAE with the ADF involve products, components, technology and technical data sourced from the US, which BAE obtains under contract with US-based suppliers.  BAE is therefore subject to a range of requirements in its defence-related work, including:

  • Commonwealth legislation and Australian government policy;
  • US legislation and US government policy; and
  • contractual requirements mandated by both Australian and US legislation and policy.

These requirements (collectively, ‘security requirements’) include obligations to obtain security clearances for BAE employees, to maintain a list of the nationalities of BAE employees, to notify the Australian Department of Defence of the nationality of certain BAE employees and to prevent the disclosure of specified information to non-Australian or non-US citizens.

BAE applied for an exemption under the Act to enable BAE to discriminate on the grounds of nationality against employees and contract workers in relation to defence-related projects, to the extent required by the security requirements.



The Tribunal held that, in deciding whether to grant an exemption under the Act, it must consider the nature of the freedom from prohibited discrimination conferred by the Act, the objectives of the Act and whether the interests served by the exemption are sufficient to justify the conduct sought to be exempted.  The Tribunal emphasised that the purpose served by an exemption must be powerful if it is to be used as a justification, and that any reasonably available non-discriminatory alternative to the proposed exemption would be relevant.  Further, the Tribunal stated that the decision to grant an exemption was not simply a question of whether the application of the prohibitions in the Act would produce an unreasonable result.

The Tribunal found that if BAE did not comply with the relevant security requirements, BAE would be subject to heavy penalties, that certain licences and approvals would be withdrawn and that BAE would lose the ADF as a customer.

The Tribunal held that the exemption was necessary to enable BAE to comply with its obligations under the security requirements, with two exceptions.  First, although BAE was entitled to implement a system of photographic passes which identified each employee’s nationality by means of colour-coding, the passes could not show the employee’s nationality in uncoded form.  While it was necessary for BAE’s security staff to know the nationality of the workforce, the Tribunal held that for all others, a person’s nationality could not be more than ‘a matter of idle curiosity’.  Secondly, the Tribunal refused to allow the exemption to extend to permitting termination of employment on the basis of the security requirements.  The Tribunal found that termination of employment would not be necessary for BAE to comply with the security requirements.

BAE was granted an exemption from certain employment-related provisions of the Act, on the following conditions:

  • it must take all steps reasonably available to avoid the necessity of engaging in the discriminatory conduct;
  • it must take all reasonable steps to avoid or limit harm or loss to employees affected by transfers due to the exemption;
  • information relating to security passes, security clearance levels or access to controlled information must be restricted to certain security staff, on a ‘need to know’ basis;
  • it must amend its employment policies to refer to the exemption and clarify that the purpose of requiring information regarding nationality is solely to enable compliance with the security requirements; and
  • it must report in writing to the Tribunal and the Victorian Equal Opportunity and Human Rights Commission every six months in respect of the operation of the exemption.


Relevance to the Victorian Charter

The Tribunal considered three issues under the Victorian Charter:

  • whether BAE was covered by the Charter, in light of the operation of the Charter’s transitional provisions;
  • the relevance of the obligation to interpret laws consistently with human rights under s 32(1); and
  • whether, as a public authority, BAE was acting incompatibly with human rights under the Charter.

The Tribunal held that BAE was not covered by the Charter, as its application for an exemption was made before 1 January 2008.  With respect, this is incorrect as s 49(2) makes it clear that the Charter may be relevant to proceedings from 1 January 2007.

In relation to s 32 of the Charter, which requires statutory provisions to be interpreted so far as is possible in a way compatible with human rights, the Tribunal held that it was not intended to apply to proceedings commenced before s 32 came into operation on 1 January 2008.  This is consistent with House of Lords jurisprudence on the same issue, which holds that the interpretative obligation may be given retroactive effect in certain cases: Wilson v First County Trust Ltd (No 2) [2004] 1 AC 816.

Finally, the Tribunal held that even if the Charter did apply, BAE would not be in breach of s 38, which makes it unlawful for public authorities to act incompatibly with human rights.  The Tribunal did not determine whether BAE was in fact a ‘public authority’.  However, the Tribunal held that BAE would nonetheless fall within the exception contained in s 38(2), as BAE ‘could not reasonably have acted differently’ as a result of a statutory provision.

Given the Tribunal’s approach to the Charter, the Tribunal did not consider the application of any substantive rights under the Charter to BAE’s conduct.  In particular, it would have been interesting to see how the right to equal and effective protection against discrimination (contained in s 8(3) of the Charter) would have affected the Tribunal’s exercise of its discretion to grant an exemption from the Equal Opportunity Act.  However, the Tribunal left open the possibility of considering the Charter in relation to any application by BAE to renew the exemption granted, in approximately three years’ time.

The decision is available at

Edwina Chin is a member of the Mallesons Stephen Jaques Human Rights Law Group