How to Avoid Adverse Action Employment Claims

There are various actions that a disgruntled employee may take against an employer. The employee needs to consider the available remedies prior to deciding on the type of claim to be made.

On the other hand, employers need to be aware of the risks of taking certain action which may affect the employee, not only concerning termination of employment, but also discrimination, decisions affecting the employee’s entitlements, work activities or attributes. Certainly, employers need to sufficiently minimise the risk associated with potential adverse action applications.

What follows is an overview on adverse action employment claims and what you can do to avoid them.

The Fair Work Act 2009 (Cth)

Unfair dismissal claims are made to the Fair Work Commission (FWC) under the Fair Work Act 2009 (Cth) (FWA). These claims are limited in remedy to six months earnings (up to a maximum of $69,450). Unfair dismissal claims for “harsh, unjust or unreasonable” dismissal are quite common, however the FWA 2009 provisions do not protect all employees.

Who Does the FWA Apply to?

The following groups of people are not protected by FWA:

  1. Employees who have worked less than the statutory period of 6 months for larger firms, or less than 12 months for companies which employ less than 15 people;
  2. Employees who have an annual earning greater than the current high income threshold (note FWC announced from 1 July 2016 that the annual high income threshold is $138,900); and
  3. Employees who are not under an award or covered by an enterprise agreement.

For the above employees, general protection or adverse action claims are possible. These claims are not limited to cases of termination of employment, they also apply to situations where an employee seeks to protect an attribute of their employment or enforce an entitlement, or where the employee is discriminated against unreasonably.

An employee, may wish to exercise a workplace right, such as to make a complaint or an enquiry in relation to their employment; to initiate or participate in proceedings under a workplace law or instrument; or to enforce a workplace entitlement, such as sick or maternity leave. Prohibited adverse action comprises any action taken which injures or alters the position of the employee or discriminated against the employee because they have exercised or propose to exercise a workplace right.

Adverse Action Claims

Adverse action claims comprise of not only cases of “harsh, unjust or unreasonable” dismissal, they also include situations of demotion or where the employer is overlooking promotion. Employers have been prosecuted by the Fair Work Ombudsman for discrimination against employees returning from parental leave. Adverse action claims for employment termination due to employee’s absence due to illness or injury, or for victimisation for exercising a workplace right (as mentioned above) have resulted in the imposition of enforceable undertakings, payment of compensation and/or significant fines.

In comparison to unfair dismissal, a person pursuing an adverse action application usually has a wider jurisdiction, they are not subject to a minimum time period of employment before they are eligible to claim, and they are availed of additional remedies, such as injunction and specific performance.

In addition, the claims for damages for adverse action are not capped at the 6 months pay level, as they are for unfair dismissal FWC application.

Importantly, and as opposed to other employee related claims, in adverse action there is a reverse onus on the employer to prove by way or evidence, they did not take adverse action due to the employee’s exercise of a workplace right.

In CFMEU v Hail Creek Coal Pty Ltd (2016) FCA 1032, the Federal Court awarded a drilling operator $1.3m plus interest after the coal mine manager’s adverse action in standing him down soon after he was awarded damages for a back injury. The court found the mine had failed to discharge the reverse onus of proof and had taken prohibited adverse action against the drill operator. The decision to stand him down was made in haste, the manager could not point out any provision in the relevant regulations that required him to act in the manner he did. As there is no cap on compensation for unlawful adverse action the employee was awarded compensation for past and future loss of wages. In addition a penalty was imposed in the amount of $50,000. This case underscores the importance for workplace decision makers to have evidence for the justification of any adverse treatment of employees.

In Heraund v Roy Morgan Research Ltd (2016) FCCA 185 an employer implemented significant restructure of positions including that of an employee, who was on maternity leave. HR proposed that the employee be made redundant and that the temp, who had been taking her place, remain on permanently. The employee succeeded in an adverse action claim for discrimination after exercising the workplace right of taking maternity leave.

How to Protect Yourself from Adverse Action Employment Claims

Employers need to ensure management and HR staff fully understand the extent and ramifications of adverse action provisions and what are workplace rights and when do they apply. They should always take care there is adequate documented evidence of the decision maker’s reasons for any dismissals, demotions, suspensions, reduction of employee’s benefits, in order to ensure they will be able to discharge the reverse onus. This will minimise the risk of the firm’s exposure to potentially substantive employment related damages claims.

Sydney Employment Lawyers at Pavuk Legal can advise and assist you if you believe that you have been subject to an adverse action during your employment, or if you are an employer and an adverse action employment claim has been made against you.

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