Could you face an adverse action claim for sacking someone for "poor cultural fit"? Can an employee claim adverse action after being made redundant? What adverse action risks arise during the recruitment process? Kemp Strang employment lawyers Lisa Berton and Nick Noonan answered these questions and more in our recent webinar.
In their presentation last week for HR Daily subscribers, Berton and Noonan gave a thorough overview of adverse action risks under the Fair Work Act and detailed the key lessons for employers from rulings to date on this subject.
Below we have transcribed a selection of the questions they answered after the presentation.
Q: In the probation period, if you're terminating an employee for not being a good cultural fit, does an adverse action risk exist?
NN: That "not good cultural fit" [reason for termination] does have a bit of risk attached to it, because really it's open for an employee... to infer that the reason they're not a good cultural fit might be, for example, that they are the only woman in the organisation, or they are of a particular age. So there is a bit of potential for a discrimination risk.
If you've got someone in their probationary period and you dismiss them, yes, they've got no unfair dismissal rights, but it's better to link it to performance, if that is genuinely the case, because you do have a real reason, and a reason that is not a prohibited reason.
But the "cultural fit" reason for termination that has been used, and is still used, does definitely involve some risk. I think more and more we're seeing employees terminated - in situations where you have long-term employees, maybe older employees - where the real reason for the termination might simply be that there's a personality clash with a manager, or they're not the right fit for the organisation anymore. Those are the sorts of scenarios that are often being resolved by way of an agreed settlement; perhaps a deed of release on termination.
LB: Using the language "cultural fit" is a bit vague, and it exposes you to gender, age, etc discriminatory grounds. You'll need to demonstrate - if you talk about cultural fit and the values, beliefs and behaviours in your culture - that they are not actually providing a discriminatory basis [for termination].
Values and beliefs can fall back into discriminatory-type grounds. So you do need to be very careful about using that sort of language.
NN: "Cultural fit" can obviously give rise to an inference that [a termination] was on discriminatory grounds. If it's based on behaviours and relationships, and performance, then that should be communicated. Contemporaneous notes should be made, and you should have a witness there.
(Noonan recommends that HR practitioners read the Stevenson v Airservices Australia case, as an example of a termination based on behavioural grounds that was upheld as not being adverse action.)
Q: What options do employees have for adverse action claims when they're made redundant?
LB: An employee who is made redundant can bring an adverse action claim. There's no exclusion on the basis of genuine redundancy, like there is for unfair dismissal. So if an employee who is made redundant has exercised a workplace right, and they see that as a contributing factor as to why they've been selected for redundancy, you can expect they will make a claim.
NN: As Lisa said, if it's a genuine redundancy, they don't have unfair dismissal rights (and there's certain requirements for genuine redundancy). But apart from that, we're often seeing the selection criteria [arise as a factor in adverse action claims].
So if there's two or three employees that are to be made redundant, and one particular employee is made redundant, they are entitled to argue that the selection criteria that was applied, in determining to make them redundant, may be discriminatory... They could argue that because of their age, they were selected for redundancy.
Q: What adverse action risks arise during the recruitment process?
LB: In the recruitment process, often what we see is claims that could either be brought under the discrimination provisions or the general protections/adverse action provisions. So one example would be where someone is not selected for a role on a discriminatory basis - they may not have been selected for the role because of age, because of sex, or because of race, for example.
Another example is where somebody has some material up on their Facebook page, and their prospective employer checks Facebook as part of their recruitment processes, and they don't hire the person because of what's on the page, and what is up there may constitute a discriminatory basis. For example, they might have a picture of a pregnant person on the Facebook page; she applies for a job, or it may be someone with children, or it may be a racial issue.
You have to be very careful in the recruitment process that if you're using something like a social media website, for example, to check candidates, that you don't not offer them the job on discriminatory grounds. It's the same as if you were doing other checks for them.
We're also seeing it with criminal records... There's really a whole array of areas where these claims have been arising. So usually the person will say, "I didn't get the job because you relied on this particular basis" - generally it's some sort of discriminatory basis - "and therefore I've got both a discrimination claim and an adverse action claim". And they'll elect which one they want to bring.
NN: There is less risk in the recruitment space for an adverse action claim, simply because the employment relationship hasn't been established. So lots of the other workplace rights that would otherwise exist, if there was an employment relationship formed, don't necessarily exist. I think you really are looking primarily at that discrimination space.
Q: Does a deed of release protect a company from adverse action?
LB: Yes, depending on the wording of the deed... Certainly you would try and obtain a full release from the employee, from all claims.
Generally, the only thing you won't be able to contract out of will be workers' compensation.
Q: Is it possible for a company to take action against a person from a union, without risking an adverse action claim?
But that doesn't mean that union members are a protected species. If it's a disciplinary issue that relates to the employee's work performance, then certainly they can be treated in the exact same way as all other employees.
It's just looking at the capacity in which they are acting that gives rise to the action the employer is taking... Tread very carefully.