New IR threat for bosses as adverse action claims start to rise

A legal expert has warned of a spike in the number of employees taking legal action against employers under the general protection provisions of the Labor Government’s Fair Work Act and says everyday matters such as performance management, employee complaints or even pay enquiries can trigger a court fight.

The general protection provisions of the Fair Work Act state that an employer must not take any “adverse action” against an employee because the employee has exercised or proposes to exercise a “workplace right”.

Both terms are defined very broadly. A “workplace right” includes a large range of matters, including union rights, the right to request flexible work arrangements, the right to make complaints about their employment, the right to make enquiries about pay and the right to request information about further disciplinary action.

An adverse action is basically anything that affects an employee adversely. According to Shana Schreier-Joffe, partner at Harmers Workplace Lawyers, commonplace employer actions such as informing an employee their role may be made redundant, instituting a disciplinary enquiry, investigating complaints against the employee or issuing a ‘show cause’ letter, may constitute adverse actions under the Fair Work Act, if the employee can claim that this action was a result of them exercising their workplace rights.

The onus of proof lies with the employer, who must then prove that the adverse action was not a result of the employee attempting to exercise their workplace rights.

Adverse action claims are often triggered as part of a termination incident, where an employee might be told they are being dismissed for inappropriate behaviour or performance issues, but the employee believes the termination is related to the exercising of a workplace right – say, for example, a complaint the employee made.

“But it doesn’t always need to be a termination and there have been a number of circumstances were terminations haven’t been involved, which I think is a bit more scary,” Schreier-Joffe says.

She points to a recent case, Jones v Queensland Tertiary Admissions Centre (29 April 2010), which she says shows how employees can effectively prevent or delay an employer’s legitimate disciplinary action, even when an employee has only alleged a breach of the general provision has occurred.

Prior to a hearing by Fair Work, the employee applied directly to the Federal Court for an interlocutory injunction, asserting a breach of the general protection provisions.

“As a result the court granted an interim injunction to prevent any further action against Ms Jones prior to a final hearing of the matter, though later all claims made by the employee were rejected by the court,” Schreier-Joffe says.

However, another recent case shows that employers can get it wrong. In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Phillips Engineering Aus (15 June 2010), an employee applied to the Federal Court to reverse a termination decision after claiming the termination had breached the general protections provision because it was related to the employee’s union activities.

“In this case the court determined the evidence strongly supported a finding that the employer had terminated the worker’s employment because of union activities, and that its statement that there was not enough work for the employee was made to mask its real intent.”

Schreier-Joffe says employers must be aware of the breadth of the general protections provision and the willingness of the courts to uphold these rights.

“They are broad and they are allowing employees, in appropriate circumstances, to bring claims that they could not bring before.”

She says employers need to ensure all managers understand the general protection provisions and the basic workplace rights under Fair Work Act.

More importantly, managers must be able to justify and document their reasons for the actions against employees, particularly in performance management situations.

Employers and employees must be able to separate performance issues from other issues that an employee may bring up.

“Train your managers to know appropriate behaviour. Performance management means managing on performance, not on other issues.”

She also says the cases highlight the need for flawless record keeping, particularly as the onus of proof lies with employers.