Adverse action provisions require "more cautious" decisions: Lawyer

24 July 2009 8:32am

The "adverse action" provisions under the new industrial relations legislation will compel employers to be more cautious when making decisions that affect employees, according to workplace lawyer Alex Manos.

The concept - new to the industrial relations scene - essentially prohibits taking adverse action against someone (including an employee, prospective employee, independent contractor, union or employer) because they have exercised or are entitled to exercise a workplace right.

The apparent purpose of these laws, says Manos, who is a senior associate at DLA Phillips Fox, is to ensure that actions are taken on their own merits and not because of any rights that someone may have via their employment, agreement or the law.

The provisions have significant implications for employers, he says, because under the Fair Work Act the "very broad" definition of a workplace right includes where an employee:

has an entitlement, role or responsibility under a court order or workplace law or industrial instrument; or

is able to be involved in a process or proceeding under a workplace law or instrument; or

is capable of making, or has made, an enquiry or complaint about their employment.

Examples employers could potentially face include where:

an employee has previously lodged a grievance about a manager and subsequently has their employment terminated. "If the employee thinks or believes that the action taken against them... was because of the complaint they made earlier, all they'd need to do is demonstrate that the complaint... was a reason for the action taken against them and they'll be able to seek remedies under the adverse action provisions."

an employee is nominated as a health and safety representative under a State OHS Act, and then misses out on a wage increase after their next performance review. "If the employee can persuade the court that a reason for the adverse action - not receiving a wage increase - was because of their position as a health and safety representative, then the court could order the employer to pay compensation, and a civil penalty."

an employee has not been receiving payslips and raises the issue with the Workplace Ombudsman. Soon after, the employee's hours are reduced. "If the employee can show that the adverse action which was taken against them - the reduction in hours - was because of the complaint they'd made to the Workplace Ombudsman, then they'll be able to access the remedies under the Act."

The remedies under the Act are also broad, Manos says, "so for instance the employee can seek an interim injunction from the Federal Court or Federal Magistrate's Court; they can seek uncapped compensation; and where an employer is found to have breached provisions they will face a penalty of up to $33,000 per contravention."

Reverse onus of proof

According to Manos: "A claim under this section will succeed where it can be demonstrated that the workplace right was just a reason for the action - not the 'sole or dominant' reason test - and the onus is on the person defending the action, so it's a reverse onus of proof."

If a matter proceeds to a hearing, an employee will be required to prove their case on the balance of probabilities, he says. But because of the reverse onus of proof, if the employer is unable to refute the allegations and produce enough evidence to persuade the court that its action wasn't for the prohibited reason, the employee's claim will succeed.

"That's not dissimilar to the freedom of association provisions," Manos points out. But he adds that a recent case in the Federal Court, brought under the Workplace Relations Act 1996, has "lowered the bar" for interim injunction claims. (In CEPU v Blue Star Pacific, the Court held that when assessing a claimant's likelihood of success at full hearing, it is necessary to take into account whether a reverse onus of proof will apply.)

The case will have an impact under the Fair Work Act because it has similar provisions, Manos says, and means that employers will need to produce evidence, at interim injunction applications, to demonstrate that their motivation for a particular decision was not a prohibited one, "even though the onus is theoretically on the applicant to prove that there is a serious issue to be tried".

More caution needed with decisions

Manos says the adverse action provisions will necessitate that employers apply more caution when making any decision that could cause an "injury" or detriment to workers.

Employers need to "think about the potential for adverse action claims to be brought when they are taking any action against employees which falls under the broad definition of an adverse action, bearing in mind that it is broader than just disciplining employees," he says.

He recommends that employers consider documenting and creating a paper trail setting out the rationale for any decision or action that might result in an adverse action claim, before a firm decision is made.

Once a decision has been made, employers should ensure they explain it to affected employees, and provide details in writing, he says.

"It's also useful for employers to engage in an educational program with their supervisors and managers, to help them become acquainted with the operation of the adverse action laws."

Provisions cover planned action

Manos points out that employees can take action against employers not only after they believe an adverse action has been taken, but in fact if the employer is "merely organising or threatening to take the action".

"The organising of an adverse action because of a workplace right may give rise to a claim, even if the adverse action is not yet implemented."

Employers can use adverse action provisions against employees

The protection also applies to employers, Manos says, who can initiate a claim alleging that an adverse action has been taken - and seek remedies under the Act - if, for instance, employees have either ceased work in breach of their contract or taken unprotected industrial action as a result of a workplace right which the employer holds.

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