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How Can My Business Defend Itself From an Adverse Action Claim?

How Can My Business Defend Itself From an Adverse Action Claim

In a recent post, we shared the basics about adverse action claims. Specifically, we discussed what they are, when an employee can make one and how they can do so. We also considered a 2018 case in which the judge upheld an adverse action claim. In this article we’ll talk about how your business can defend itself against an adverse action claim.

What is an adverse action?

First of all, let’s review the definition of an adverse action. As you may recall, this is most simply defined as any negative action that an employer takes against an employee. As such, it breaches the provisions of the Fair Work Act if it is done without proper cause. Often (but not always) claims arise because an action is allegedly taken after an employee exercises his or her workplace right to make a complaint or raise a concern. It can also involve some type of actions, such as:

  • termination;
  • pay cuts;
  • deliberately creating job redundancy (thereby eliminating the need for continuation of employment);
  • refusing to grant an overseas work assignment (when requested);
  • written warnings;
  • suspension;
  • demotion;
  • discrimination.

General protection provisions

In a previous article, we discussed the general protections afforded to employees under the Fair Work Act.

These are legal provisions designed to prevent employers from discriminating against or treating an employee unfairly or unlawfully. Specifically, they protect an employee from such actions when he or she had a workplace right, or was exercising (or was not exercising) a workplace right.

Put another way, an employer is prohibited from taking adverse action against an employee when he or she has:

  • the right to a benefit under a modern award or business agreement;
  • the right to a benefit in accordance with a law that regulates the employment relationship (such as family leave);
  • a role or duty assigned under a workplace law or business agreement;
  • union member/officer status (or does not have such status).

An employer is also prohibited from taking any such action when an employee exercises his or her workplace rights by:

  • asking for flexible working arrangements;
  • making a work-related complaint or inquiry;
  • organising, promoting, encouraging or participating in lawful union activity.

Meeting the burden of proof

Whenever an employee brings an adverse action claim, the employer must prove that it had a valid reason for taking the action in question.

Among other things, this means that everyone involved in the decision to take such an action may be called upon to show that the action was not wrongfully administered. The decision-makers should also be able to provide credible proof that there was a legitimate cause for the administration of any such action.

If the employer cannot point to evidence which proves otherwise (by presenting his/her own witnesses, or by pointing to proper work procedures and providing documentation to substantiate those decisions) the adverse action will be upheld.

Failure to meet the burden of proof

There are also several circumstances in which a court will find that an employer has not met the burden of proof. Many of these are set out in CFMEU v Bengalla Mining Company Pty Ltd. In this case, the Federal Circuit Court determined that an employer does not meet the burden of proof in an adverse action claim when:

  • the managers’ evidence is successfully discredited in cross-examination;
  • the managers’ evidence is inherently unbelievable;
  • objective facts contradict the managers’ evidence;
  • the managers’ evidence is not supported by concomitant documents;
  • other evidence is presented indicating the managers had a problem with the employee and administered the adverse action accordingly.

Minimising the risk for adverse action claims

So, how do you lessen the chances that your business will face an adverse action claim? One of the single most effective strategies is open and honest communication. If you’ve got to take an action against an employee for a bona fide reason, it is incumbent on you to let them know exactly why you are doing so.

You should also ensure that all supervisory personnel and everyone in your Human Resources department are properly trained on workplace rights and the risks of adverse action. This will require ongoing training to ensure everyone is familiar with the latest developments in the law. After all, ignorance of the law is not an acceptable defence.

Of course, the implementation of these strategies does not guarantee that an employee won’t bring an adverse action claim. As an employer, you should be prepared to defend one by ensuring that you have done the following whenever you take an adverse action against an employee:

  • developed, updated and complied with appropriate business policies, procedures and practices;
  • removed the person that administered the action against the  employee from the dispute resolution process to ensure procedural fairness;
  • verified the reasons for the action and communicated them to the employee;
  • gathered accurate documentation of all decisions related to the employee;
  • ensured that the decision-maker has a suitable explanation for taking the action.

The bottom line

In summary, you as an employer have the right to make decisions and take certain actions in relation to any employee as long as it is for a valid reason. If the employee brings an adverse action claim against you, you must be able to prove that the manager(s) did not take the action for the reason alleged. Because there are several circumstances in which a court will rule that you haven’t met the burden of proof, it is essential that you take certain precautions whenever you make a decision, or take an action in relation to an employee or their rights as a whole which may be construed as being adverse.

At South Geldard Lawyers on Rockhampton, we have diverse experience and expertise in modern employment law. To learn more about how we can help if an employee has made an adverse action claim against your business, contact us today on (07) 4936 9100.

It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.