Adverse Action: Too Many Cooks Spoil the Broth
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Adverse Action: Too Many Cooks Spoil the Broth

Overview of General Protections – Adverse Action

Adverse action claims are not nearly as common as unfair dismissal claims, and in many ways they are more complex.

The Fair Work Act 2009 (Cth) sets out a number of General Protections which include:

(i)            the capacity to exercise or have a workplace right,

(ii)           engaging (or not) in industrial activity and

(iii)          belonging (or not) to a trade union.

A person cannot be treated adversely for these things. Adverse treatment includes termination, demotion, discrimination or other action that treats someone less advantageously than another person because of a prohibited reason.

The onus rests on the Applicant to make out the elements of a General Protections claim. However once the claim is made out the Respondent has to then demonstrate that the action or decision was not taken for a prohibited reason.

There are a number of differences between adverse action and unfair dismissal claims:

-       Different eligibility criteria

Only certain employees are eligible to lodge an Unfair Dismissal application. General protections apply to a wider group of people including prospective employees and contractors, and may be invoked before or after termination.

 

-       Different remedies

Compensation for an unfair dismissal matter is capped at six months pay but is uncapped for adverse action.

 

-       Different processes and therefore different costs in pursuing and defending the matter.

In summary, different situations enliven different claims depending on the facts and what has happened or is happening at that time. It is important to consider the options and decide which one is most appropriate and is most likely to achieve the desired outcome.

Recent Case

A recent adverse action case has highlighted the potential pitfalls for employers implementing a redundancy process when multiple parties are involved in the decision-making process and the potential for a successful adverse action claim if there is reason to believe the termination may have involved a prohibited reason.

In CFMEU v Clermont Coal Pty Limited [2015] FCA 1014 the employee successfully made out his adverse action claim in relation to Clermont Coal’s handling of his redundancy. It was held by the Federal Court that the employee, also a union organiser, was dismissed at least in part because of his role as a union organiser. There were a large number of people involved in the redundancy process and the reasons of each of those involved were analysed to determine if they included a prohibited reason. At least one of the people involved was found to have their reasoning tainted or affected by the difficult interactions they had had with the employee as a union organiser. It was held that this had a material effect on the decision to make the employee’s role redundant.

Lessons for Employers

Decision-makers need to be aware of what constitutes a prohibited reason and ensure that their decisions are made on an objective basis. This applies to all decision-makers and it can be complex to manage a situation if there are multiple decision-makers involved each of whom may later be scrutinised. A prohibited reason cannot comprise even a part of the reasoning. This means that even if a decision was not taken solely because of a prohibited reason, if it played a significant enough role in the eventual decision it may still be impugned.

Redundancies are an unfortunate business reality but to avoid an already difficult situation becoming costly and hostile it is important to pay close attention to the process and ensure that if it is analysed after the fact that it will withstand the scrutiny. If there is likely to be a bias or even just a perceived bias on behalf of the decision maker it may be prudent to have another person step in to manage the situation.

 

Sarah Waterhouse

Solicitor

BlandsLaw

 

 

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