Adverse Action

Adverse action has been receiving increasing attention in the media lately and it could prove to be a legal tripwire in your business.  But what is adverse action and how can your business avoid being a casualty?

Adverse action was introduced by the Fair Work Act 2009 and can provide general protection for employees who would otherwise be ineligible to bring a claim against their employer.

“Basically, adverse action can sometimes be seen as the catch‐all fallback provision for employees who don’t meet the criteria for unfair dismissal or other workplace claims,” said Trish Bell, Director of Head2Head HR.

For example, an employee who has been dismissed for under‐performing within a qualifying period and not able to claim unfair dismissal or a senior manager who believes she has been  unfairly treated but earns in excess of the high income limit of $108,300 may still be able to bring a claim of adverse action against their employer.  And employers beware ‐ according to Fair Work Australia, in the second half of 2010 claims for adverse action more than doubled when compared to the previous year.

“In a recent case uncovered by A Current Affair a pregnant employee, still within her qualifying period and not able to bring an unfair dismissal claim, was allegedly sacked via SMS for performance issues” said Bell.

“Her employer claimed he had tried repeatedly to contact her and had been unable to, and that she was unreliable and not committed to her position.  She was encouraged to make a claim against her employer for adverse action under the general protection provisions of the Fair Work Act.”

Simply put, an employer can be accused of adverse action for any action perceived as ‘adverse’ taken against an individual who has a workplace right.  Actions perceived as ‘adverse’ may include dismissal, discrimination, injury, demotion or altering of a position, discipline for engaging in lawful industrial action or any similar acts against a person who has a workplace right. But what is a workplace right? By definition, a person has a workplace right if the person:

  • Is entitled to a benefit or has a role or responsibility under a workplace law, instrument or order made by an industrial body;
  • Is able to initiate or participate in a process or proceedings under a workplace law or instrument;
  • Is able to make a complaint or inquiry to a person or body having the capacity under a workplace law to seek compliance with that law or in relation to an employee’s employment.

This not only includes permanent employees but also includes sub contractors (and their employees) and prospective employees.  The difficulty of the Fair Work Act for employers is the reverse onus of proof.  If employers have not effectively managed their actions they may be faced with compensation bills for thousands of dollars.  Remedies for claims of adverse action include uncapped compensation, the reinstatement of the person (if dismissed) and fines of up to $33,000.

An adverse action claim doesn’t only impact your business financially.  Conflict in the workplace causes loss of productivity, low morale and frustration at all levels unless adequately and effectively resolved.  So how can businesses protect themselves against claims of adverse action?  It is important to ensure that:

  • workplace policies are in place to comply with the Fair Work Act;
  • all employees receive training to ensure they understand their obligations as an employee;
  • all discussions and performance meetings are documented and on file; and
  • all employees are treated equally.

Businesses that take the time to ensure they adhere to workplace laws and document their employment decisions will find it easier to provide the onus of proof required to defend themselves against adverse action claims.