The Fair Work Act applied: adverse action


The Fair Work Act applied: adverse action

The concept of ‘adverse action’ is new in the Fair Work Act. Recent cases show that employers need to take time to understand the reasons tribunals have given for their decisions.


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The concept of ‘adverse action’ is new in the Fair Work Act 2009. Recent cases show that employers need to take time to understand the reasons tribunals have given for their decisions.
Enough time has passed for cases to have been decided by courts and tribunals to test out some important interpretations of the Fair Work Act. Lawyers at Gadens gave an update at an AHRI conference in Sydney last week.
Adverse action litigation received particular attention.
Adverse action
Stephanie Nicol from Gadens discussed adverse action. She said it is a new form of claim that employees can make against their employer, both during employment and if they are dismissed. It is a simple process for the employee to initiate, requiring only an application to the Federal Magistrates Court or Federal Court if the matter is not settled by Fair Work Australia. There is a presumption that the employee has an employment right that is protected under the Act.
See: Fair Work Act s342.
A shield during employment
Employees who initiate a claim for adverse action may use it as a shield against actions taken by their employer. In one case (Barclay v Bendigo TAFE), an employee who was a union representative sent an email to union members claiming that TAFE documents had been falsified to assist the TAFE in an upcoming audit. The CEO learned of the email and commenced an investigation as to whether the employee had breached the code of conduct. The employee was suspended on full pay.
The employee responded by making a claim of adverse action, claiming he had been targeted as a union representative. The court upheld the employer’s action. It accepted the employer’s argument that the accusation about falsifying documents was serious and its investigation was an appropriate action, and not linked to the employee’s union membership. The suspension was lifted in interlocutory proceedings.
Protected employment rights
In another case (LMHU v Arnotts), three employees in a factory had failed to carry out a certain safety procedure. An internal investigation concluded that the lapse warranted summary dismissal of all three. However, the company decided to offer a less extreme measure — they were offered the alternative of leave without pay for one month. This option could only be adopted with the employees’ consent, and they agreed.
However, the three employees lodged a claim for adverse action. The employment right they claimed was a right to attend work, as per the enterprise agreement. In this case, the tribunal found that the dismissal threat was adverse action, but that it was not made to prevent the employees from exercising a protected right.
See also a recent case reported on WorkplaceInfo on the entitlement of independent contractors to bring an adverse action claim. 
Investigation is not adverse action
A third case discussed by Nicol was about a CEO who was the employer’s bargaining agent in negotiations for a new enterprise agreement. There were complaints from employees that the CEO had bullied them in the bargaining process. The employer commenced an investigation into these claims against the CEO. The CEO then lodged a claim of adverse action, arguing that her reputation had been damaged. In this case, the tribunal held that the employer’s investigation did not constitute adverse action. The employer was responding to a genuine concern that employees had been mistreated.
Nicol summarised what employers should do to protect themselves against claims of adverse action. They should know the risk of such claims, and know what employment rights are protected under the Act. They should be vigilant in following proper and fair processes in dealing with any such claims, or likely claims. In managing performance and making decisions, they should examine whether their reasons for acting would be seen by a tribunal as adverse action against a protected right. Finally, employers should document their actions and reasons adequately.
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