Adverse Action Claims

When an employer unlawfully takes harmful actions (or threatens to take harmful action) against an employee, this is known as taking ‘adverse action’. Dismissing an employee, for instance, is an adverse action. In most cases, an employer is permitted to take adverse action against an employee, but they must not take the action for a prohibited reason. In Australia, employees can make adverse action claims through the Fair Work Commission (FWC) if their employer violates a general protection law or discrimination law. This article explores the circumstances where taking adverse action is prohibited by law.

What is adverse action?

Adverse action is anything that adversely affects an employee. It can be a plan, threat or action that “injures” someone by:

• dismissing them;
• refusing to hire them;
• giving them a disciplinary warning;
• detrimentally changing their employment position (for example, cutting hours or shifts);
• offering a job candidate different and unfair terms and conditions compared to other workers; or
• refusing to engage them if they are a contractor.

What are general protections?

An employer is not permitted to take adverse rights because a worker engages in any protected actions. Under the Fair Work Act 2009and the National Employment Standards (NES), workers have general protections, including the right to:

• receive correct wages, leave and entitlements;
• participate in union activity (or choose not to do so);
• take leave if they are injured or sick;
• work without discrimination according to federal and state anti-discrimination laws;
• make a comment or complaint about workplace conditions; and
• benefit from an industrial law or instrument (such as a safety law, enterprise agreement or award).

An employer also cannot take adverse action against an employee (or prospective employee) for reasons that breach discrimination laws. This means that an employer cannot treat an employee, or prospective employee, differently because of their age, race, colour, sex, sexual orientation, pregnancy, marital status, family or carer’s responsibility, mental or physical disability, religion, political opinion, nationality or social origin.

The scope of adverse action claims is broad. Those who can make adverse action claims include full-time, part-time and casual employees, apprentices, trainees and probationary employees, contractors and prospective employees. In most cases, it is the employer who takes the adverse action against their employer, but the offender can also be another employee, a contractor, or an industrial association.

Onus of proof

Under the Fair Work Act, any adverse action is considered illegitimate unless the employer can prove otherwise. This is vital to provide fairness to workers who may struggle to make a case against more powerful employers. The onus is placed on the employer to establish that the action was not related to the employee exercising their workplace rights or for a discriminatory reason.

When is it not adverse action?

Sometimes an employee feels harshly or unfairly treated, but the conduct of the employer is in fact, not an adverse action. For example, an employer can treat employees differently based on poor performance. Actions that are not prohibited as adverse action include:

• reasonable management action that is undertaken in a reasonable way;
• acts allowed under State or Territory anti-discrimination laws;
• acts that relate to the inherent requirements of the position; and
• acts taken in good faith against an employee at a religious institution to avoid harm to those religious beliefs.

Remedies for adverse action

There is a broad range of remedies for adverse action, depending on the particular circumstances of the case. In the case of dismissal, the remedy might be reinstatement or compensation. There is currently no cap on the amount of compensation that a tribunal can order, it depends on the severity of the action.

Case study

The Federal Court recently fined the University of Melbourne $74,590 for taking adverse action against two casual employees because they exercised their workplace right to make inquiries or complaints at work. In this case, the University threatened the two casual academics working in the Melbourne Graduate School of Education with not being reemployed. The academics had complained about the requirement to work hours beyond the contractual ‘anticipated hours’ without payment. In his judgment, Justice Craig Dowling found the casual employees were entitled to complain without fear of consequence about their inability to perform the expected work in the anticipated hours. The University’s threat that they would not receive future work if they claimed additional hours was a contravention of the Act. This was a particular cause for concern as the University employs a significant number of casual and fixed-term employees, who are vulnerable to these forms of adverse action as they depend on the renewal of their contracts.

Our employment law specialists have the experience to guide you through complex workplace issues, including adverse action claims. If you have a workplace dispute or employment issue, contact our team on 1300 636 846.