Reading time: 6 minutes

As an employer, you may face disputes with your employees. These disputes can be about employee misconduct, unsatisfactory performance, non-compliance with policies or breaches of contract. If a workplace dispute escalates, you may consider taking adverse action against an employee. Alternatively, an employee might take adverse action against you. If you are an employer, this article will explore some of the key considerations to think about before you take action against an employee.

What Is Adverse Action?

Adverse action is any action that is prohibited by the Fair Work Act 2009. Actions can adversely affect employees due to it occurring for particular reasons, such as discrimination. This includes actions such as dismissing an employee, refusing to employ a prospective employee, altering an employees position or refusing to engage in business relations with a contractor.

Commonly, adverse action occurs because of an underlying motive to discriminate through certain decisions. Discrimination occurs when an employer unfairly treats an employee due to specific attributes, such as:

  • race;
  • sex; 
  • sexual orientation; 
  • age; 
  • religion; 
  • political opinion; 
  • appearance; 
  • marital status; 
  • family or carer’s responsibilities; 
  • pregnancy; or 
  • disability. 

For example: 

George has been working at a construction company for three years. He decides to apply for a promotion to a management position. During the interview process, he mentions that his father is ill and will likely be needing extra carer’s assistance into the future. Therefore, George plans to make use of his carer’s leave entitlements. Despite being qualified for the job, George’s employer tells him that he has not received the promotion. George’s employer mentions they want someone who will be working as much as possible, not someone who plans to take carer’s leave days regularly. 

Here, George’s employer has taken action against him for reasons unrelated to his employment (his carer’s responsibilities). Consequently, adverse action has occurred, and his employer may be subject to penalties under the Fair Work Act 2009. 

Types of Adverse Action

Adverse action is not solely actions made by an employer against an employee. It can also occur between: 

  • employee to employer, such as an employee threatening to take industrial action against their employer because of their political opinion; 
  • prospective employer to prospective employee, such as an employer refusing to employ a prospective employee because of their carer’s responsibilities or an employer amending the terms and conditions of an employment offer due to the prospective employee’s plans for pregnancy; 
  • principal to contractor, such as a principal terminating a contractor’s contract because of their sexual orientation; 
  • principle to proposed contractor, such as a principal refusing to engage a contractor because of their age; and
  • contractor to principal, such as a contractor taking industrial action against, or ceasing to work, for a principal because of their race.

What Can an Employee Do if They Are Facing Adverse Action? 

If one of your employees is facing adverse action, they can file a General Protections Application with the Fair Work Commission (FWC). Alternatively, they can report the adverse conduct to the Fair Work Ombudsman. The bodies will then investigate the claim. If the bodies determine that adverse action has occurred, you can face penalties of up to $13,320 as an individual or $66,600 as a corporation. Where a court determines that you have contravened the general protections provisions of the Fair Work Act, the court may also order an injunction, reinstatement of your employee and compensation (which is uncapped).

Two types of applications can occur:

  • disputes not involving dismissal; or
  • a dispute which involves a dismissal. 

Dispute Not Involving Dismissal

A dispute not involving a dismissal occurs where your employee has not been dismissed. However, they claim that you have taken adverse action against them for some unlawful reason. For example:

Sally’s child is unwell, and she needs to take carer’s leave to care for her child at home. When Sally returns to work, her employer gives her a written warning. Sally suspects that the real reason for the written warning was a result of her exercising a workplace right to take carer’s leave. Thus, she can report this dispute to the FWO or file a general protection application with the FWC.

Dispute Involving Dismissal

A dispute involving a dismissal occurs where your employee is dismissed from work. For example: 

At a work event, Ben’s manager discovers his sexual orientation. The following week Ben is told that he can no longer work for the company. The reasons for dismissal seem suspiciously out of the blue and appear to be fabricated. If Ben suspects that this dismissal has underlying motives, he can report this to the Fair Work Ombudsman or file a general protections application with the FWC.

How You Can Avoid Adverse Action

As an employer, you have the right to take adverse action against your employees. Taking adverse action is commonly in response to matters such as:

  • misconduct; 
  • unsatisfactory performance; 
  • non-compliance with policies; or 
  • breaches of contract. 

However, the law provides that you cannot take adverse action against an employee based on matters protected under the general protections provisions of the FW Act. For example, based on an employee exercising a workplace right or discriminatory grounds.

Of course, there are strategies which you can use to mitigate the risk of such claims. Importantly, always ensure that actions taken against your employees are in good faith. This means you are taking action against your employees for work-related reasons, such as underperformance, not because of underlying discriminatory reasons.

If your actions are in good faith, ensure that you have evidence of the misconduct that caused you to take adverse action. In the case of an underperforming employee, this may include reports of their poor work quality or client complaints. You should also provide evidence that you have made the employee aware of these allegations and given them appropriate time to improve.

Key Takeaways

As an employer, you may face disputes which cause you to take action against an employee. Before doing so, it is important to consider whether that action has been taken because of a legitimate reason that relates to employment. If you are not cautious and engage in adverse action, you could be liable to pay hefty penalties of up to $66,600 as a corporation or $13,320 as an individual. 

If you have any questions about the right time to take adverse action, contact LegalVision’s employment dispute lawyers on 1300 544 755 or fill out the form on this page.

Webinars

Construction Contract Essentials

Thursday 12 August | 11:00 - 11:45am

Online
Understand how construction contracts are drafted and how to protect your construction business.
Register Now

Startup 101: Understanding Cap Tables and ESOPs

Thursday 19 August | 11:00 - 11:45am

Online
Cap tables and employee share option plans are essential for fast-growing startups. Learn more with this free webinar.
Register Now

Expanding to NZ: Structuring Your Business For Success

Thursday 26 August | 2:00 - 2:45pm

Online
Launching a business in New Zealand? Understand how to structure your business for success with this free webinar.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • 2020 Excellence in Technology & Innovation – Finalist – Australasian Law Awards 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice – Winner – Australasian Lawyer 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards 2021 Law Firm of the Year - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer