Tips for defending adverse action claims

Dismissing, demoting or issuing a disciplinary warning against an employee could result in a HR crisis under current employment law, according to Gareth Jolly, partner at law firm MinterEllison

The expanded definition of the Fair Work Act’s employment protection provisions means employees, prospective employees and contractors/prospective contractors have much greater scope to make claims against adverse action by the employer.

For example, an employee may be protected against adverse action claims such as a dismissal, demotion or disciplinary warning, if they are able to effectively argue that a reason for the dismissal or other action was the exercise of a “workplace right”.

Under the broad and powerful employee protection provisions in the Fair Work Act’s expanded definition, which protects workplace rights and freedom of association as well as providing protection from workplace discrimination, it is up to the employer to prove that they did not engage in adverse action against the employee.

Mr Jolly says in order to successfully defend an adverse action claim, the employer must prove its innocence.  

“This is because of reverse onus of proof. Practically, this means the decision maker (sometimes even CEOs or their direct reports) will need to be a witness in the defence.  In fact, they're often defendants in their own right as well, “Mr Jolly told an employment law master class in Sydney on December 15.

The responsibility then lies upon the employer to prove to a court that the reason for the dismissal was not due to the exercising of a workplace right.

For employers, Mr Jolly says actions such as issuing a warning, removing a benefit or requiring an employee to respond to allegations can all be interpreted as adverse actions, so HR professionals need to carefully navigate potential legal minefields to minimize risk.

“Adverse action claims can be a bit of a lottery.  On the one hand, they're not about fairness - but are dependent on the vagaries of what was in the decision maker's mind.  But, on the other hand, if they do succeed, then there could be significant damages – damages are uncapped and can be awarded for hurt and humiliation.”

He says it is imperative for employers to have fair, lawful, consistent policies and procedures that are well-defined and transparent.

Therefore Mr Jolly cautioned employers to keep accurate documentation of all decisions relating to employees that might fall under these provisions.

“Finally, it is very important that decision-makers are educated in advance about the adverse action provisions and understand what they can and cannot take into account.  It's a positive for a decision maker to know the law, not a negative,” he says.