Adverse action claims are the Fair Work Act's "sleeping giant": Lawyers
28 April 2010 8:47am
Employers should be aware of the potential for "back door" discrimination and other claims under the Fair Work Act's adverse action provisions, say employment lawyers Lisa Berton and Nick Noonan.
With only one adverse action claim reaching judgment stage since the provisions came into effect in July last year, the area remains largely untested.
Lawyers say they are aware of numerous claims being launched by workers, but employers - for the most part - are keen to settle them out of court rather than risk an uncapped damages order.
According to Noonan, a senior associate at Kemp Strang, the adverse action provisions are much broader than in predecessor legislation and essentially "a brand new type of claim", available to all types of legal "person", including individuals, corporations, independent contractors and unions, who fall under the jurisdiction of the Fair Work Act.
He notes that there is no exemption for high earners, unlike with unfair dismissal claims.
At a basic level, he says, the provisions prohibit a person taking adverse action - which can include anything from dismissal, to denying a pay rise, promotion, or leave request, or changing a roster and so on - against a person who has exercised or proposed to exercise a workplace right.
Noonan adds that "workplace right" is drafted very broadly in the Act to include "where a person is entitled to the benefit of, is able to participate in proceedings under, or is able to make a complaint or enquiry in relation to a workplace law, or a workplace instrument". This includes the Fair Work Act and all other state and federal statutes that apply to employers and employees, including OHS, workers' compensation and discrimination laws and the federal Independent Contractors Act.
It also extends to workplace instruments, which might include items like "employment contracts, industrial awards, enterprise agreements, and some of the new instruments that are available under the Act, like flexible work arrangements and individual flexibility arrangements".
A simple example of how a claim might arise, Noonan says, could be a worker who makes a complaint about under-payment, or about a workplace safety issue, and is later dismissed.
For the claim to succeed they would have to establish that their complaint was the reason - or one reason - for their dismissal.
"You don't have to establish that it was the sole or the dominant reason," Noonan says, "which was the test used by a lot of the predecessor provisions".
Onus of proof
In these cases, says Berton, a partner at Kemp Strang, the onus of proof lies with the employer. "So the employer will need to establish that the reason for taking the action was not because of the workplace right.
"The practical effect of this is that if there is a challenge, an employer will need to put on evidence before the court of the reasons it took the action, and the decision maker may be required to give evidence in the proceedings to explain what actuated the decision to act to the employee's detriment.
"That can be difficult because basically their credibility is going to be assessed by the court. And so if the court decides that they really think that they made the decision because the person exercised the workplace right, and there were no other factors involved, or that they don't think that the person's particularly credible, then they might not establish that it wasn't the reason for making the decision."
Back door claims
As employees' awareness of the provisions grows, organisations are facing an increasing number of adverse action claims, Berton says. "Often it's in a discrimination area, where [the employee] might say... 'well I made a complaint about someone's treatment of me and now you're taking this action against me'".
She adds that the timeframe for lodging an adverse action claim is six years, compared to 60 days for unfair dismissal, "so if you miss out on your unfair dismissal claim you might be able to trump up an adverse action".
And because of the breadth of the legislation and the remedies available (there is no cap on the compensation that can be awarded in adverse action claims, as opposed to the cap of six months' pay with an unfair dismissal claim) barring a change to the legislation the tide is only likely to become stronger.
"Employees are able to essentially bring a 'back door' unfair dismissal claim by bringing an adverse action claim instead," Noonan says. "Most circumstances that previously would have supported an unfair dismissal claim can now be categorised, if you know how to plead it properly, as an adverse action claim."
Minimise your exposure
Berton says the two key things employers can do to minimise their exposure to adverse action claims are:
train managers - "People who are dealing with employees and managing employees on a daily basis need to be aware of the adverse action provisions so that they don't take adverse action against employees who are exercising workplace rights, or who have the potential to do that. They need to be trained in a process."
Managers also need to be aware of all the new industrial instruments, such as modern awards and the entitlements they contain, says Noonan; and
document all decisions - "[Managers] really need to document their processes, because they'll be quizzed at trial about what their decision was... and if they've got some documents supporting why they made that decision, and there's a whole lot of other factors, then it may not be too hard to establish [that the action wasn't taken for proscribed reasons]."
"You can't completely eliminate the risk," she says, "but you can take proactive measures to try and establish a good defence if someone does decide to bring a claim".
HR Daily has previously hosted a webinar on adverse action. Click here to watch it (HRD Plus Gold subscription required).