Adverse action has been a recent hot search topic...but what is it exactly?
Adverse action in employment usually refers to specific actions taken by an employer against an employee that negatively impacts the employee. The Fair Work Act 2009 (FW Act) prohibits a person from taking adverse action against another person because that person:
- has a workplace right
- has or has not used a workplace right
- proposes to, or proposes not to, use a workplace right
- does or does not belong to a trade union
- engages or does not engage in industrial activity (as set out previously).
This concept is a cornerstone of the FW Act which seeks to maintain fair and equitable treatment in the workplace. Understanding the nuances of adverse action is critical for both employers and employees to ensure compliance with the law and to protect their rights.
What types of scenarios constitute adverse action?
The FW Act specifically outlines scenarios that constitute adverse action in the workplace. Some of these scenarios might include:
- Dismissal: Section 342 of the FW Act explicitly states that adverse action is taken by an employer against an employee when the employer dismisses the employee.
- Detrimental Changes to Employment: Altering an employee’s position to their detriment, such as demotion, reduction in salary, or change in job responsibilities, falls under adverse action.
- Discrimination: Treating employees differently, particularly for discriminatory reasons, is a form of adverse action. This could include favouring one employee over another without a legitimate basis.
Protections Under the FW Act
The FW Act does not prohibit employers taking adverse action against employees unless the adverse action is linked to a protected reason or workplace right as outlined in the FW Act. The FW Act plays a pivotal role in protecting workplace rights and ensuring freedom from unlawful discrimination. Importantly, it is designed to safeguard employees from being mistreated for exercising their workplace rights, such as the:
- Right to Make Complaints or Inquiries: Employees have the right to make complaints or inquiries regarding their employment without fear of retribution or adverse action. The FW Act prohibits employers from taking adverse action against an employee because they exercised or intended to exercise this right.
- Right to Engage in Industrial Activities: The FW Act also protects the rights of employees to engage in industrial activities. This aspect is vital in maintaining a balance of power between employers and employees.
In summary, the concept of adverse action under Australian law is multifaceted and it ensures that adverse actions such as dismissal, detrimental alterations in employment, or discriminatory practices, are addressed and regulated. Both employers and employees must be aware of these regulations to foster a fair and equitable working environment.
The Ibarra Case
So, what happens then when an employee is claiming adverse action when there was none taken?
In Ibarra Campoverde v Regional Health Care Group Pty Ltd [2017] FCCA 1502 (Ibarra), the ex-employee (Mr Ibarra) alleged that he had informally complained to his manager that a colleague had bullied and harassed him at work. The complaint was promptly investigated by the company.
However, the investigation showed the complainant (Mr Ibarra) had been the one engaging in misconduct. Based on the investigation’s outcome, management decided to dismiss Mr Ibarra for misconduct. Consequently, Mr Ibarra brought a claim alleging his dismissal constituted unlawful ‘adverse action.’ Mr Ibarra generally relied upon the following arguments:
1. Basic ‘adverse action’ allegation – Mr Ibarra argued that he had been dismissed because he made a complaint (based on the proximity of his complaint to when he was dismissed); and
2. Allegation of a collective decision involving witnesses – as an alternative to the above, Mr Ibarra claimed he was dismissed by a decision-making process that occurred during the investigation, so involved witnesses which had been motivated to want him dismissed due to his earlier complaint.
The employer in this case defeated the ‘adverse action’ claim by demonstrating:
1. The termination letter and management’s verbal evidence confirmed the decision to terminate was made because of Mr Ibarra’s misconduct, not the mere fact he made a complaint;
2. The investigation witnesses were not involved in the decision to dismiss Mr Ibarra, because:
- The witnesses were interviewed and provided evidence Mr Ibarra had engaged in misconduct; and
- Management did not make a decision until following the investigation when all necessary evidence was available.
How does Ibarra help employers?
The decision in Ibarra highlights that employers will be able to successfully defend an ‘adverse action’ claim if the employer can prove that a prohibited reason (such as the fact an employee made a bullying complaint) was not operating on the mind of the decision-maker (i.e. the manager) when he/she made the decision to dismiss the employee.
Furthermore, Ibarra highlights the significant weight courts will place upon:
1. Verbal evidence from the decision-maker as to their reasoning and thought process; and
2. Documents created when management made the decision to dismiss the employee.
How can I defeat a rogue employee’s attempt to hide behind a bullying complaint?
As a general guide we recommend managers take the following precautions:
- Ensure there is a clear distinction between the end of an investigative process and the decision-making process where a manager will decide what disciplinary action is required;
- Always give an employee an opportunity to ‘show cause’ why they should not be dismissed and ensure you consider their responses prior to finalising a dismissal letter;
- Ensure your dismissal letters are specific enough to allow the company to rely upon them at the FWC (Fair Work Commission) and Federal Circuit Court; and
- During an investigation, avoid asking witnesses how they think a matter should be resolved. This is a question for the investigator and decision-makers once the investigation is complete. It is important that any decision to discipline an employee is not made until after the investigation is finalised.
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