Adverse action is a cornerstone of Australian employment law, governed by the Fair Work Act 2009 (Cth) (Fair Work Act). The laws against adverse action protects employees from discrimination, coercion, and unfair treatment in the workplace.
For employers, understanding adverse action is critical to ensuring compliance and avoiding costly litigation. By understanding adverse action and its implications, both employees and employers can foster fair and compliant workplace practices in Australia.
This guide, prepared by our local employment solicitors, explores the concept of adverse action, its legal implications, and practical steps for both employees and employers to navigate this complex area of law.
Key Takeaways
- Adverse action refers to unlawful actions taken against an employee or prospective employee due to workplace rights
- The Fair Work Act provides robust protections for employees against adverse action
- Employers must ensure compliance with the law to avoid litigation and penalties
- Case law highlights the importance of intent and evidence in adverse action claims
- Employees have 21 days to lodge a general protections claim following dismissal due to adverse action
What is Adverse Action under Australian employment law?
Adverse action occurs when an employer, prospective employer, or principal takes unlawful action against a prospective employee, employee, or independent contractor.
Section 340 prohibits adverse action if it is taken because an employee:
- has a workplace right
- exercises or proposes to exercise a workplace right
- makes a complaint or inquiry regarding their employment
Further, section 342 of the Fair Work Act further defines adverse action as conduct that negatively impacts an employee’s employment status or working conditions. Examples of adverse action in the workplace include:
- dismissing an employee because the employee exercised a workplace right
- injuring an employee, such as demoting an employee without a valid reason
- altering an employee’s position to their detriment due to discriminatory reasons or retaliation
- bullying or harassment in response to an employee exercising workplace rights
- discriminating against an employee or prospective employee, for instance discrimination based on parental responsibilities
- refusing to employ a prospective employee for discriminatory reasons such as their age, gender, or union affiliation
Cases Where Adverse Action Was Not Proven
Turley v James Frizelles Automotive Group [2018] FCCA 2989
The employee claimed his employer took adverse action by dismissing him after he raised complaints about workplace bullying and refused to implement a new warranty program. The employer argued the warranty program was a minor change within his role, while the employee saw it as a significant change requiring consultation from his employer.
The court found that while placing the employee on a PIP and terminating his employment were adverse actions, the employer proved the dismissal was due to his refusal to implement the warranty program, not his complaints or stress leave. The employee’s claim was unsuccessful.
The Environmental Group Ltd v Bowd [2019] FCA 951
The employee, a CEO, claimed his suspension and dismissal were adverse actions after he made a whistle-blower complaint and reported financial irregularities to the Board and ASIC. He argued these reports were protected under the Fair Work Act and whistleblower laws.
The court found the employee’s report to the Board was part of his role, not a protected complaint, and his ASIC report lacked good faith. The employer proved his dismissal was due to performance concerns, not retaliation, leading to the rejection of the employee’s claims.
Compliance Tips for Employers to avoid Adverse Action
Employers must take proactive steps to avoid adverse action claims:
- Maintain detailed records of decisions related to employment actions, including:
- performance reviews and improvement plans
- redundancy processes and criteria used for selection
- complaints and inquiries made by employees and how they were addressed
- Provide clear, documented reasons for performance management or redundancies
- Ensure HR policies comply with anti-discrimination laws
- Train managers on workplace rights and obligations
In adverse action claims, the burden of proof lies with the employer or respondent. The above steps can help demonstrate that the action was not taken for unlawful reasons.
Frequently Asked Questions
What is the time limit for lodging an adverse action claim?
Employees must lodge a general protections claim within 21 days of dismissal.
Many employees delay seeking advice, thinking they have more time. Unfortunately, missing the deadline can mean losing your right to claim. Even if you’re unsure whether you have a case, act immediately and seek legal advice. If the deadline is close, urgent action may be needed to file your claim on time.
Can adverse action occur during recruitment?
Yes, adverse action can occur if a prospective employer discriminates against a candidate based on protected attributes such as age, gender, or union affiliation.
If you suspect discrimination, keep records of job advertisements, interview correspondence, and any feedback received.
What is the role of intent in adverse action claims?
Intent is crucial in determining whether adverse action occurred. Employers must prove that their actions were not motivated by unlawful reasons.
If you believe you’ve been targeted for exercising your workplace rights (e.g. raising safety concerns, requesting leave, or joining a union), document all interactions and decisions made by your employer.
How can employers defend against adverse action claims?
Employers can defend claims by providing evidence of legitimate reasons for their actions, such as performance issues or business restructuring.
Simply claiming a “business decision” is not enough. Employers must prove their reasoning with documentation, such as performance reviews or financial reports. Employers should ensure all HR decisions are well-documented. Regular performance reviews, objective selection criteria, and proper communication can help defend against claims.
What are the penalties for adverse action?
Penalties include fines, compensation for damages, and reinstatement of employees in some cases.
Many employers underestimate the financial and reputational risks. If you’re an employer, seek legal advice early to prevent costly mistakes. If you’re an employee, knowing your rights can help you claim the compensation you deserve.
What is the difference between adverse action and unfair dismissal?
Adverse action involves unlawful conduct related to workplace rights, while unfair dismissal focuses on whether a termination was harsh, unjust, or unreasonable.
You might have an adverse action claim rather than an unfair dismissal claim if your dismissal was linked to exercising your workplace rights (e.g, requesting sick leave or raising safety issues). If you’re unsure which claim applies, get legal advice to maximise your chances of success.
Can independent contractors claim adverse action under Australian law?
Yes, independent contractors are protected under the Fair Work Act if adverse action is taken against them due to workplace rights.
Many contractors assume they have no legal protection because they’re not employees. Keep records of contracts, emails, and payment disputes. If a client suddenly ends your contract after you raise concerns, it may be worth seeking legal advice.
