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What You Need to Know About Adverse Action by an Employer

By 7 June 2023June 26th, 2023Employment
What You Need to Know About Adverse Action by an Employer

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.