24 Aug 2010

Adverse action under the Fair Work Act - what should employers do?

by Dr Graham Smith, Jim Simmonds

Employers can be at risk of being found to have unlawfully taken adverse action against employees or prospective employees.

Although the Fair Work Act's provisions do not generally go beyond those in the old Workplace Relations Act, they do differ in some significant ways. Under the Fair Work Act, employers, and others, cannot take adverse action against persons because they have a workplace right, because they have or have not exercised the right, or because they propose or propose not to exercise such a right.

Additionally adverse action is also prohibited where a person engages (or refuses to engage) in lawful industrial activity or where an employer discriminates against an employee or prospective employee.

What are the main areas for concern for an employer?

First, an employee now has an apparently unfettered right to make a complaint or inquiry in relation to his or her employment without fear of adverse action. Previously this protection only arose in a situation where the complaint or inquiry was made to a person or body with the capacity to seek compliance (usually a statutory or quasi-statutory body).

It is a significant extension, because it means that any employee who has, and exercises, a right of complaint or inquiry under a grievance policy (or similar) established by the employer can claim remedies for breach of a workplace right if the employer has taken adverse action because the employee made the complaint or grievance.

Secondly, where an allegation is made that there has been unlawful adverse action there are two important issues:

1. Once the claimant establishes that adverse action has occurred, the onus falls on the respondent to prove that the reason for the adverse action was not because the claimant had a workplace right, engaged or refused to engage in a lawful industrial activity, or because of unlawful discrimination. This is, in effect, a reverse onus of proof for employers.

2. It does not matter that there are multiple reasons for the adverse action – if one of the reasons was a prohibited one, then the case will be made out. It does not have to be the sole or even the dominant reason for the action.

Finally, maximum penalties for an unlawful adverse action are $6,600 in the case of an individual and $33,000 in the case of a corporate entity.

Adverse action can occur in two situations: with employees, and with prospective employees.

What is adverse action against an employee?

Adverse action is taken by an employer against an employee if the employer:

  • dismisses the employee; or
  • injures the employee in his or her employment; or
  • alters the position of the employee to the employee's prejudice; or
  • discriminates between the employee and other employees of the employer.

What is adverse action against a prospective employee?

Adverse action is taken by a prospective employer against a prospective employee if the prospective employer:

  • refuses to employ the prospective employee; or
  • discriminates against the prospective employee in the terms or conditions on which the prospective employer offers to employ the prospective employee.

What is a workplace right?

A person has a workplace right if he or she:

  • is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or
  • is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; or
  • 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 a workplace instrument; or
    • if the person is an employee – in relation to his or her employment.

So what must an employer show when there's a complaint of unlawful adverse action?

Justice Tracey's decision in Barclay v The Board of Bendigo Regional Institute of Technical and Further Education [2010] FCA 284 gives some valuable guidance for employers facing an allegation of adverse action.

Barclay was active in his union. In his union capacity he forwarded an email to other union members indicating he was aware of reports of serious misconduct by unnamed persons at his workplace. He did not report these allegations to his managers before sending the email.

He was then required by his employer to show cause why he should not be disciplined for failing to report the misconduct. He was suspended on full pay, has his internet access suspended and was required not to attend work during his suspension (the adverse action).

Barclay claimed the adverse action was taken against him because of his union activities.

Justice Tracey found that in interpreting equivalent provisions of the predecessor Acts to the Fair Work Act the courts “proceeded on the basis that evidence of the employer's subjective reasons for taking the impugned action was relevant in deciding whether the employer had taken the action because of the existence of one or more of the circumstances in which such action was impermissible”.

Importantly, he found that “if the employer adduces evidence which persuades the court that it acted solely for a reason other than one or more of the impermissible reasons … it will have made good its defence.”. Normally to succeed in such a defence it would be necessary to have evidence from the decision-maker.

In this case, the employer was able to show that the adverse action was not taken for a prohibited reason.


Employers need to be aware that there are a wide variety of circumstances in which they are at risk of being found to have unlawfully taken adverse action against employees or prospective employees.

If an employee has lodged any kind of workplace grievance the employer should seek advice before terminating the employment or taking any other kind of action that disadvantages the employee in the workplace.


Related Knowledge

Get in Touch

Get in touch information is loading


Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.