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What You Need to Know About Adverse Action by an Employer

What You Need to Know About Adverse Action by an Employer

By Employment

In Australia an employee is protected from ‘adverse action’ by an employer under the Fair Work Act 2009 (‘the Act’). This means that an employer cannot take certain actions against a worker because:

  • the employee exercises a workplace right – such as expressing an entitlement, benefit, role or responsibility that is provided by a workplace law or instrument, or an order made by an industrial body; initiating or participating in a process/proceeding under a workplace law or instrument; or making a complaint or inquiry to an industrial body or person under law or in relation to employment;
  • the employee partakes in industrial action against the employer;
  • of a protected characteristic of the employee, such as their race, gender, sexuality, pregnancy, age, disability, etc.

A worker who believes they have been the subject of adverse action by their employer may bring a general protections application in the Fair Work Commission for compensation for both economic and non-economic loss. In this article, we’ll provide more detail on what constitutes adverse action and the process for making a compensation claim.

It should be noted that an employee may also take adverse action against an employer if the worker threatens or takes action by:

  • ceasing work in the service of the employer, or;
  • taking industrial action against the employer.

Examples of adverse action by an employer

Section 342 of the Act provides examples of adverse action, including where an employer:

  • Dismisses an employee;
  • Injures the employee in their employment (injury meaning an action or behaviour which can harm a person, such as demoting them or treating them differently);
  • Alter the position of the employee to their prejudice, or;
  • Discriminate between the employee and other employees.

These actions may also include an employer’s decision not to hire someone, or where a potential employee is offered different (unfair) terms and conditions compared to other employees, or where an employer ends or refuses to enter into, or alters, a contract with an independent contractor.

Deciphering the language of the Act with examples, employers must be cautious about taking action against an employee who takes leave to care for a sick relative, or who raised a health and safety concern about the workplace.

Conversely, not all actions by an employer will fit the adverse definition. Offering a worker a lower salary because they lack experience, or refusing to employ a job applicant because they do not meet all the criteria for the position (such as possessing a driver’s licence, for instance), or a supportable decision to make a person’s role redundant, are examples of management decisions that may not be described as adverse action.

Other protections in the Act guard against coercion, undue influence or pressure, misrepresentation or inducement in a range of matters, including a person’s characteristics. The only exception to these protections is where the action is permitted by discrimination legislation or is taken because of the inherent requirements of the position.

What is the process of an adverse action claim?

In a ‘general protections’ complaint, an employee claims adverse action against them based on their expression of a workplace right, involvement in an industrial activity, or on grounds of discrimination. If the employee was dismissed, their application may be for unfair dismissal.

The onus is on the employer to show that the reason for their action against the employer was lawful and not in breach of the general protections. To this end they will generally need to prepare a formal response setting out their defence to the claim. Mediation will then ensue to see if employer and employee can negotiate a resolution to the dispute but if not, will proceed to the Federal Circuit Court, the Federal Court or in some cases, a formal arbitration in the Fair Work Commission.

Remedies for a person who brings an adverse action claim include compensation for non-economic loss and the financial impact of the employer’s action. The Federal Court has unlimited jurisdiction to award damages.

Case example

The High Court of Australia provided guidance on adverse action claims in Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32. In this case, Mr Barclay, a TAFE team leader who was also a union official, sent an email to union members at his workplace warning of producing ‘false and fraudulent documents’ as part of the Institute’s process of applying for re-accreditation. He was subsequently suspended from his role and brought an adverse action claim.

The trial judge found Mr Barclay was not suspended because of his email but because he had not reported the allegation of fraud to the CEO. The full federal Court overturned this decision on appeal, finding the decision was based on Mr Barclay’s role as a union official. In restoring the trial judge’s verdict, the High Court found among a number of reasons that:

  • The fact a person claims a protected attribute, such as union membership or activism, does not make them immune from adverse action;
  • An employer’s reasons need to be ‘substantial’ and ‘operative’ in the decision-making process;
  • The employer’s reasons for the action need to considered against all the facts and circumstances, including the evidence of the decision making.

The High Court’s decision confirmed that the subjective reasons of the employer are significant and important in working out whether adverse action was taken for a prohibited reason. In conjunction with the decision in Construction Forestry Mining and Energy Union v Endeavour Coal Pty Ltd [2015] FCAFC 76, the High Court has confirmed that a distinction exists between the impact and the exercise of a workplace right by an employee.

Contact our expert employment law professionals

If you’re an employee who believes your employer has taken an adverse action against you, or an employer who has this type of claim brought against you, set up a meeting with one of our employment law experts at Felicio Law Firm. An adverse action claim can be complex, is subject to time limits and require strong supporting evidence to succeed. Our professional team will explain the issues we’ve raised in this article in greater depth to help assess your case.

The Impact of COVID-19 for Employers

The Impact of COVID-19 for Employers

By Employment

Workplaces around Australia are currently facing an unprecedented circumstance as the COVID-19 pandemic takes hold across the world. In a fluid situation, Federal and state governments have announced a rolling set of measures to try and prevent the spread of the virus as well as offset its terrible economic effects.

Employers have been placed in an extremely difficult situation for which many of them will be completely unprepared. Many businesses around the country have already temporarily closed or gone into ‘suspension’ as their workforces, their activities and their revenues are severely impacted by the pandemic.

This article attempts to provide some general guidance on some of things employers need to be aware of in dealing with this terrible event. Advice is basic in nature as the responses of our governments are ever-changing, reflecting the situation both here and overseas.

A reminder that it will always be helpful before you take any action to discuss your situation with legal professionals who have experience in employment law issues, such as Felicio Law Firm.

Key things to remember

Employers need to consider both a proactive and reactive approach to the impacts of COVID-19 on their workplace.

A proactive response involves developing reputable sources of information on the progress of the pandemic, beginning with the Commonwealth Department of Health at Employers then need to urgently develop a plan for communicating with their workforce around the clock to inform them of health issues, employment matters and the continuity of the business. Whether they are ‘essential’ workers still attending the workplace, or employees working remotely from home, employers should keep them informed of the recommended standards of hygiene, the importance of social distancing, the signs to look out for of COVID-19 infection and what to do if an employee believes they are sick.

Perhaps the most important aspect of the employer-employee relationship at the moment, therefore, is open communication. The consequences of large-scale shutdowns across the economy and society is that many people will either have to work from home, take paid (or unpaid) annual leave or long service leave, be stood down until work can resume, or in the worst scenario, made redundant from the business.

Employers owe both their employees and third parties such as contractors and clients a duty of care in regards to their health and safety, including during the COVID-19 pandemic. This means employers need to carefully consider the legal framework in which they operate, including the terms in contracts of employment, workplace legislation, any internal policies and procedures, as well as relevant awards and enterprise agreements.

Telling workers they must attend the workplace, for example, or suggesting disciplinary action will be used if an employee doesn’t attend work could amount to a serious breach of the employer’s duty of care as well applicable health and safety legislation in each state. This would particularly be the case if an employee subsequently contracted the virus during the course of their work, exposing the employer to a potential workers’ compensation claim.

Should an employee be confirmed to have the virus, the employer must take immediate steps to advise and protect all other employees and third parties who may have had contact with the employee. This may also involve undertaking a deep cleaning of the workplace. But in notifying other parties about possible contact with a COVID-19-positive worker, employers need to carefully consider the employee’s right to privacy.

Employers should also be aware that if a visitor or other third party contracts the virus as a result of contact with one of your employees, your business may be the subject of a public liability claim by that person seeking damages for the injury.

Other important considerations

For the reasons discussed above, it is vitally important that employers keep a clear and organised paper trail of all decisions made at this time. This is imperative if later claims against you arise.

Employers also need to ensure they are on solid legal footing before making permanent employees redundant at this difficult time. Standing down employees is preferable to redundancy as businesses can ‘reanimate’ their workforce once the danger posed by COVID-19 has passed. The announcement of the Job Keeper package by the Federal government on March 30 (see below regarding eligibility) will also help employers avoid the difficult issue of redundancy.

Nevertheless, employers need to remain cognisant of the provisions of the Fair Work Act (FWA), where standing down workers without pay where the employee can’t be usefully employed is only valid under very limited circumstances. It’s unclear as yet as to whether a pandemic event which is beyond the employer’s control satisfies these provisions of the FWA so proceed with caution and seek legal advice.

Employers need to be aware that the statutory entitlements of employees remain protected despite being stood down or made redundant. Redundancy must still qualify as a genuine redundancy otherwise employers may be subject to a later adverse action claim by the employee.

Creative solutions around employees taking leave entitlements or even leave without pay in order to retain them as part of the workforce will be required of employers.

Job Keeper announcement

The Federal government’s announcement of a $1,500-a-fortnight Job Keeper subsidy on March 30 will certainly help many employers avoid the fraught issues around redundancy and staff stand-downs caused by the COVID-19 pandemic.

The package, designed to help employers keep staff ‘on the books’ for the duration of this event, requires certain eligibility criteria detailed below.

Eligible employers are businesses (including companies, partnerships, trusts and sole traders), not-for-profits and charities:

  • With a turnover of less than $1bn that have lost 30% or more of their revenue compared to a comparable period a year ago;
  • with a turnover of $1bn or more and with at least a 50% reduction in revenue compared to a comparable period a year ago.

Eligible employees are those:

  • Employed by an eligible employer at 1 March 2020;
  • who are sole traders, full-time, part-time, or long-term casuals employed on a regular basis for longer than 12 months as at 1 March 2020;
  • who are at least 16 years of age.
  • who are Australian citizens, holder of a permanent visa, a protected special category visa, a non-protected special category visa who has been residing continually in Australia for 10 years or more, or a New Zealander on a special category (subclass 444) visa.

In conclusion

The phrase “uncharted territory” has been used a lot to describe the COVID-19 pandemic. A necessary mass shut-down of the economy is clearly a crippling event for thousands upon thousands of businesses. But as a rule-of-law country, our legal structures and rules remain in effect and it’s incumbent on employers – while making fast decisions under pressure – to maintain a legal and ethical approach to what are essentially emergency procedures in order to avoid liability once the pandemic is over.

Felicio Law Firm is across the pressing employment issues involved in responses to COVID-19. We have broad experience advising NSW and Queensland firms on all matters of employment law so contact us today to assess your situation if you have urgent issues relating to the pandemic and its effect on your business and workforce. (02) 4365 4249 or