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What is Adverse Action?

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Adverse action is unlawful and discriminatory action taken by an employer against an employee because the employee exercised a workplace right.

It is important for both employers and employees to understand what adverse action is. For employees, understanding what adverse action means can help employees to understand if they have been discriminated against in the workplace.

For employers, an understanding of what adverse action is can assist to reduce the possibility of legal claims against an employer and the risk of fines or payment of damages.

Adverse action includes doing, threatening or organising to dismiss an employee or injure an employee in their employment. altering an employee’s position to their detriment or discriminating against a prospective employee through the offer of employment.

adverse action

Author: Farrah Motley, Director of Prosper Law and a workplace lawyer.

How Does the Fair Work Act Define Adverse Action?

The Fair Work Act 2009 (Cth) protects employees against adverse action, by making it unlawful. Section 340 states:

340 Protection

(1) A person must not take adverse action against another person:

(a) because the other person:

(i) has a workplace right; or

(ii) has, or has not, exercised a workplace right; or

(iii) proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or

(b) to prevent the exercise of a workplace right by the other person.

Note: This subsection is a civil remedy provision (see Part 4‑1).

(2) A person must not take adverse action against another person (the second person) because a third person has exercised, or proposes or has at any time proposed to exercise, a workplace right for the second person’s benefit, or for the benefit of a class of persons to which the second person belongs.

Now let’s break down the concepts of “workplace right” and “adverse action”.

What is a Workplace Right?

Employees are only protected from adverse action based on certain protected traits (or ‘workplace rights’) covered by the Fair Work Act 2009 (Cth). For detailed guidance on what a workplace right is, it is important to talk to a workplace lawyer.

A workplace right includes where an employee:

  • has a benefit, role or responsibility under a workplace law or industrial instrument;
  • can take part in a process or proceeding under a workplace law or industrial instrument,

including for example:

  • a court proceeding;
  • a conference before the Fair Work Commission;
  • terminating an individual flexibility arrangement; or
  • has the capacity under a workplace law to make a complaint or inquiry:
  • to a person or body to seek compliance with that workplace law or workplace instrument
  • if the person is an employee, in relation to their employment.

Now let’s break down the concept of a ‘workplace right’ even further.

Benefit, role or responsibility under a workplace law or industrial instrument

A benefit, role or responsibility under a workplace law or industrial instrument may include:

  1. the role of a bargaining representative under a workplace law (refer to Jones v Queensland Tertiary Admissions Centre Ltd (No 2) (2010) 186 FCR 22)
  2. an obligation to ensure workplace safety as a Health and Safety Officer (refer to Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Visy Packaging Pty Ltd (No 2) (2011) 213 IR 48)

Take part in a process or proceeding under a workplace law or industrial instrument

Section 341(2) of the Fair Work Act 2009 (Cth) sets out the circumstances in which an employee will be taking part in a process or proceeding.

These circumstances are:

  • a conference conducted or hearing held by the FWC;
  • court proceedings under a workplace law or workplace instrument;
  • protected industrial action;
  • a protected action ballot;
  • making, varying or terminating an enterprise agreement;
  • appointing, or terminating the appointment of, a bargaining representative;
  • making or terminating an individual flexibility arrangement under a modern award or enterprise agreement;
  • agreeing to cash out paid annual leave or paid personal/carer’s leave;
  • making a request under Division 4 of Part 2-2 (which deals with requests for flexible working arrangements);
  • dispute settlement for which provision is made by, or under, a workplace law or workplace instrument; and
  • any other process or proceedings under a workplace law or workplace instrument.

Has the capacity under a workplace law to make a complaint or inquiry

Taking part in a process or proceeding under a workplace law or industrial instrument can include:

  1. where an employee makes an inquiry or complaint to his or her employer (refer to Hodkinson v The Commonwealth [2011] FMCA 171)
  2. seeking legal advice in relation to a person’s employment (refer to Murrihy v Betezy.com.au Pty Ltd [2013] FCA 908)

What is Action that is Adverse?

An employer will have treated a person adversely if the person exercises (or does not exercise) a workplace right and, consequently, the employer:

  • dismisses the employee;
  • demotes the employee;
  • alters the position of the employee to the employee’s prejudice; and/or
  • discriminates between the employee and other employees.

The list above sets out some examples. For further information regarding steps taken by an employer that may be adverse, talk to a workplace lawyer.

Adverse action taken by a person includes doing, threatening, or organising any of the following:

  • an employer dismissing an employee, injuring them in their employment, altering their position to their detriment, or discriminating between them and other employees
  • an employer refusing to employ a prospective employee or discriminating against them in the terms and conditions the employer offers
  • a principal terminating a contract with an independent contractor, injuring them or altering their position to their detriment, refusing to e their services or to supply goods and services to them, or discriminating against them in the terms and conditions the principal offers to engage them on
  • an employee or independent contractor taking industrial action against their employer or principal
  • an industrial association, or an officer or member of an industrial association, organising or taking industrial action against a person, or taking action that is detrimental to an employee or independent contractor
  • an industrial association imposing a penalty of any kind on a member.
adverse action

Examples of adverse action for different employment relationships

Adverse action – employer versus employee

An employer takes adverse action against an employee if the employer threatens to or takes action by:

  • dismissing or injuring the employee
  • altering the position of the employee (in a way that is detrimental to the employee)
  • discriminating between that employee and other employees

Adverse action – prospective employer versus prospective employee

A prospective employer takes adverse action against a prospective employee if the prospective employer threatens to or takes action by:

  • refusing to employ that person
  • discriminating against the person in the terms on which the employer offers to employ the person

Adverse action – principal versus independent contractor

A principal takes adverse action against an independent contractor if the principal threatens to or takes action by:

  • terminating the relevant contract
  • using the terms and conditions of the contract to, or altering the position of the contractor, and causing detriment to the independent contractor as a result
  • refusing to make use of, or agree to make use of, services offered by the independent contractor
  • refusing to supply, or agree to supply, goods or services to the independent contractor

Case law examples of adverse action

Adverse action can commonly arise during the course of the employment relationship.

However, there are many other scenarios where claims for adverse action can come about. Below, our workplace lawyer takes a look at some case law. These cases show how adverse action can be relevant to different relationships and in different contexts.

Case law examples where the court found that adverse action had occurred

In these cases, the Court found that a claim for the adverse action was substantiated:

  1. Cancelling scheduled training opportunities due to employee’s perceived lack of commitment and poor attitude – Australian Rail, Tram and Bus Industry Union v Australian Western Railroad Pty Ltd [2017] FCCA 1954
  2. Bringing forward the date of genuine redundancy for employee due to commence paid parental leave unlawful adverse action, Power v BOC Ltd & Ors [2017] FCCA 1868
  3. The employer dismissed a manager after a lengthy performance improvement process and a subsequent bullying claim brought against the employee’s manager. Because the goalposts of the performance improvement appeared to change and because of the bullying complaint made, the Court considered that the employee was set up to fail. The employee was awarded 12 months’ wages, amounting to $205,000, Pezzimenti v Rotary International [2019] FCCA 1854
  4. A senior manager was terminated after making workplace complaints to management about an HR Manager, which the senior manager supervised. The manager was reinstated and awarded back-pay of $1.1 million, Keenan v Cummins South Pacific Pty Ltd [2018] FCCA 2600

ABCC v Corestaff WA Pty Ltd

A 70-year-old male employee who was not recommended to a contractor as a suitable candidate by a labour-hire company solely due to his age was found to have suffered adverse action as he was refused employment on the basis of his age. The Federal Court imposed a fine of $20,000 on the labour-hire form and $9,000 on the contractor.

The onus of proof in adverse action cases rests upon the respondent. In other words, where an application is made alleging a person took action for a particular reason or with a particular intent, the courts will presume that the person has taken action for the alleged reason or with the alleged intent unless the person proves otherwise.

M v ERA Pacific Pty Ltd

A male employee who was dismissed for refusing to carry out work that he believed was unsafe succeeded in his claim. Justice Tonkin accepted that he had a workplace right under safety legislation to cease or refuse to carry out work if he (genuinely) believed it to be unsafe. He was awarded $23,000 in adverse action damages, with the former employer also required to pay $5,500 to the Commonwealth.

CFMEU v Bengalla Mining Pty Ltd

An employee who was the office holder of the union was warned and threatened with dismissal for attending a union board of management meeting.

The evidence supported the employer’s argument that there was no issue with the employee attending the meeting or acting in his voluntary role within the union but that a written warning was issued for the employee’s breach of the company’s leave policy. The Court determined the adverse action onus was rebutted.

Case law examples where the court found that adverse action was not proven

In these cases, the Court found that a claim for the adverse action was not substantiated:

  1. Placing an employee on a performance improvement plan and dismissing the employee due to the employee’s refusal to implement a warranty program, Turley v James Frizelles Automotive Group [2018] FCCA 2989.
  2. A CEO was dismissed due to performance concerns and issues regarding his treatment of staff, despite contemporaneously making a ‘whistle-blower’ complaint, The Environmental Group Ltd v Bowd [2019] FCA 951.
  3. Termination of an employee who failed to undergo medical examination following medical advice to cease communications with employer, Laviano v Fair Work Ombudsman [2017] FCCA 197
  4. Termination of complainant in a workplace investigation, Ibarra Campoverde v Regional Health Care Group Pty Ltd [2017] FCCA 1502

Limitations to Lodging an Adverse Action Claim

An application for general protection claim must be lodged within 21 days from the date of dismissal. This is the same time limit that applies to claims for unfair dismissal.

How can Prosper Law help?

Prosper Law’s legal services are provided by Farrah Motley, an Australian workplace lawyer that provides workplace legal advice to both employers and employees.

Contact the team at Prosper Law today to discuss how we can provide you with workplace legal advice for a fixed fee.

Want to read more? Check out this article that explains how to terminate the employment of an employee.

Author: Farrah Motley | Director

PROSPER LAW – Australia’s Online Law Firm

M: 1300 003 077

E: farrah@prosperlaw.com.au

W: www.prosperlaw.com.au

A: Suite 99, Level 54, One One One Eagle Street, Brisbane, Queensland, Australia

adverse action

About the Author

Farrah Motley
Director of Prosper Law. Farrah founded Prosper online law firm in 2021. She wanted to create a better way of doing legal work and a better experience for customers of legal services.

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