Employers are often confronted with an allegation that they have acted inappropriately regarding some action taken in relation to a person, either at the time of a termination or relating to a person’s on-going or prospective employment.

Adverse action claims pose a substantial risk to employers, as they are not subject to the same restrictions as unfair dismissal applications. There is no requirement for a qualifying period of employment, higher income employees can use this avenue of redress, and the amount of compensation is not capped. Employment status is also not determinative; a claim may be made by a contractor, by a prospective employee, or by an employee association on behalf of its members.

What is the general coverage of the adverse action provisions?

Under the provisions of the Fair Work Act 2009 (Cth) (“FW Act”), a person is protected from adverse action taken because of:

• workplace rights;
• industrial activities;
• discrimination;
• temporary absence for illness; or
• coverage by particular instruments.

A claim alleging that the action was take for one of these reasons can be lodge with the Fair Work Commission (“FWC”), but if unresolved by conciliation, may see the employer defending an action in the federal court system.

What constitutes a ‘workplace right’?

Claims that the employer has breached an employee’s workplace rights are increasingly common, and may in some circumstances be pursued by an employee association on behalf of a person or group of workers. In particular, claims can be made where the employee has an entitlement:

• to the benefit of, or holds a role or responsibility under, a workplace instrument; and / or
• to participate in a process or proceedings arising under a workplace instrument; and / or
• to make a complaint or inquiry to an enforcement body seeking compliance with a workplace law or workplace instrument; and / or
• to make a complaint or inquiry to the employer in relation to their employment.

A considerable number of cases surrounding what constitutes a “workplace right” have been litigated recently. In one such case, the court found that where a employee had raised a complaint about unpaid commissions, her ability to seek legal advice on this issue was a “workplace right” for the purposes of the legislation, and that threatening to sack her after she indicated that she would be exercising this workplace right constituted adverse action.¹ In establishing the workplace right, the court was looking for a “statutory, regulatory or contractual provision or some applicable grievance procedure which makes provision for the making of a complaint or inquiry.”

On the other hand, an employee’s entitlement to raise in the media matters of concern regarding conditions at the workplace is less clear, with the court not necessarily convinced in recent interlocutory proceedings that there was any such workplace right.² But where an employer refused to approve carer’s leave and threatened the employee with termination if he did not attend for work on the day he requested carer’s leave to attend a medical appointment with his daughter, clearly fell foul of the provisions.³ Carer’s leave is a benefit under a workplace law being the FW Act and therefore is a “workplace right”.

How is an allegation negated?

Where such a claim is made it is unwise for an employer to simply wait and see whether the employee can substantiate the claim. Because of the operation of a reserve onus, a presumption applies that the action was taken for the alleged reason, unless the employer proves otherwise. Courts will have regard to the ‘actual reason or intention behind the action’ – although “mere declarations of an innocent reason or intent in taking adverse action may not satisfy the onus on an employer if contrary inferences are available on the facts”.⁴ Faced with such a claim, employers need to be mindful of the fact that they will need to produce evidence to satisfy the court that a prohibited reason was not the reason or part of the reason that the action was taken.

For example, if a claim is made that an employee was dismissed because they made a bullying complaint about their manager, the court may find a link between the action taken and the complaint made, unless the employer takes steps to refute this allegation. This would involve the employer tendering evidence to confirm that the employee was dismissed for performance reasons, substantiated by the termination letter and the documented history of performance warnings or improvement plans that had been issued to that employee prior to the termination. It might also involve affidavit or oral evidence from the decision-maker about how they came to the decision to terminate.

Should employers agree to consent arbitration at the commission?

Recent changes introduced to the FW Act now allow parties dealing with an adverse action claim to agree to have the matter arbitrated by the FWC where conciliation has failed to resolve the matter, instead of having the matter determined within the federal courts system. In some circumstances, an employer may prefer to wait and see whether the person will take the further step of commencing court proceedings, rather than agreeing to consent arbitration. It will depend on factors such as how likely it is that court action would be taken, the representation available to the person, and how quickly the employer would like the matter to be brought to an end.

Can you minimise the risk of a claim?

While you may not always be able to avoid a claim being brought against you, especially where the circumstances surrounding the action taken are intertwined with other issues, you can take steps to mitigate the risk to your organisation. A good starting point is adhering to a strict practice of always providing reasons to employees for decisions, ensuring that these reasons are founded on established policies and procedures, and that the reasons are transparent, sound, defensible and clearly communicated.

Consistency in decision making is also an important factor, as it reduces the chances that different individuals are assessed against different criteria. Otherwise, if the difference between individuals who have engaged in the same conduct is that one has exercised a workplace right while the other hasn’t, or if one individual is a member of an employee association while the other is not, an organisation is more exposed to the risk of a claim.

Being aware of the entire circumstances surrounding a potential termination, or other action taken that may result in an employee’s position being altered to their prejudice, allows the employer to make a fully informed decision taking all the circumstances into account, and will reduce the risk that the action taken will be linked to a prohibited reason. Even if a claim is ultimately brought, being fully cognizant of all the circumstances and having acted in accordance with established policies and procedures in a transparent manner will mean that your organisation is better prepared to defend the claim.

1. Murrihy v Betezy.com.au Pty Ltd & Anor [2013] FCA 908
2. United Voice v GEO Group Australia Pty Ltd [2014] FCA 928
3. Transport Workers’ Union of Australia v Atkins [2014] FCCA 1553
4. See the High Court’s decision in Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32.