Adverse action claims can be highly nuanced, complex and contextual. An employment lawyer shares some foundational information that all HR practitioners need to know.

Over the past few months, there’s been a succession of high-profile cases with former senior executives and managers taking their organisations to court for workplace harassment, bullying and their allegedly unfair terminations.

Many of these ongoing proceedings involve the ‘general protections’ jurisdiction, also known as adverse action claims. 

“Claims of this nature are a real risk for most organisations with employees who are being involuntarily exited out of a business,” says Aaron Goonrey, Partner at Pinsent Masons.

Below, HRM has created a legal refresher for employers and HR practitioners, with tips on how to minimise the risk of adverse action claims.

This guide should also help HR navigate difficult processes, such as redundancies, misconduct or underperformance, with fairness for everyone involved.

What is an adverse action claim? 

Under the Fair Work Act 2009, the general protections provisions prohibit people from being subject to ‘adverse’ actions based on a protected attribute or for exercising a workplace right. 

While adverse action claims are commonly filed following an employee’s dismissal, they can also arise during situations that detrimentally affect someone’s employment, such as:

• Not making someone genuinely redundant
• Harming an employee by reducing shifts or hours
• Discriminating between employees or unlawfully discriminating against an employee
• Offering a potential employee unfair terms compared to other employees.

“Adverse action can take place without being dismissed. That’s the other nuance of this jurisdiction. It’s open to both current and former employees,” says Goonrey.

Protected attributes include but are not limited to a person’s race, gender identity, sexual orientation, religion, age and disability, as well as breastfeeding status, family responsibilities and political opinion.

A workplace right includes the right to ask about your salary, join a union or make a complaint at work, to name a few. 

Adverse actions can also relate to actions an employer did not take, says Goonrey, such as in the case of workplace harassment and bullying, where ineffective handling of a complaint could potentially breach an individual’s right to a safe working environment.

“It’s a broad church in terms of the claims that can be made, and the remedies include uncapped compensation. Reinstatement can also be awarded.” 

What’s different about adverse action claims?

An adverse action claim has a number of advantages for employees due to its wide jurisdiction, says Goonrey.

For instance, for an unfair dismissal claim, applicants must be earning less than the high income threshold ($175,000 per annum at the time of writing), and/or be covered by an award or enterprise agreement, and have been employed for a minimum of 6 months (12 months for small businesses). 

Comparatively, general protections laws apply to most employers, employees, prospective employees and independent contractors, even during probation periods. 

Additionally, there’s a reverse onus of proof for employers to prove they hadn’t taken adverse action, while in unfair dismissal cases, employees need to prove their dismissal was harsh, unjust and unreasonable.

How to minimise the risk of adverse action claims

Having robust procedures and being prepared for all outcomes in your risk management and strategic workplace planning is pivotal to reducing the chances that a current or former employee will pursue an adverse action claim, says Goonrey. 

While the specific steps might differ for each circumstance, it generally involves determining that any decision that may be interpreted as negatively impacting an employee is in line with the business’ policies and organisational strategy, and, most importantly, follows a fair and reasonable process. 

Clearly communicating with employees the reasoning behind certain decisions is critical to ensure an aligned understanding across the board. 

At this point, also consider whether you need to meet any consultation obligations within an applicable award, agreement or law, such as work health and safety legislation. 

“A redundancy will be vastly different to serious misconduct, or a case involving termination because of consistent underperformance. But the process tends to be the same,” says Goonrey. 

“There is always a line of inquiry that’s made, and [you need to give] the employee an opportunity to respond, whether it be a day or weeks – depending on the circumstances of each case.

“Even if you’re dealing with a case of serious misconduct, you still want to be able to point to a process you followed that adheres to the principles of natural justice, where you have followed an objectively reasonable process in the circumstances that are before you.  

“Getting the fundamentals right in the first place saves a lot of headaches later on, when it comes time to potentially defend a claim.”

Read more on how to manage a redundancy process.

Throughout, maintain up-to-date documentation about each person that has been exited from the business, the reasons for the final outcome and the process followed.

Another key aspect is involving an independent decision-maker who hasn’t been involved in the day-to-day management of the employee, says Goonrey. 

“You should consider how the information is presented to the decision-maker to ensure their views about the action to be taken, whether it be disciplinary action or a redundancy, is not perceived to be biased by a potential [protected] attribute, or a workplace complaint or right.” 

This not only leaves the organisation in a better position to defend a claim should it come to the tribunal or court, but also encourages impartial and ethical decision-making. 

“You should always think the worst and hope for the best. So for [an organisation] that has been hit with a claim, they can go, ‘Okay, we thought that this would happen, though we hoped it wouldn’t. But we have all the material here to justify the action that we took in these circumstances.’” 

How can HR navigate a claim from a current employee?

Responding to adverse action claims by former employees may be challenging, but it can be even more so when the person is still employed at the organisation. 

During this process, it’s critical that HR and line managers don’t take further action against the applicant that may be construed as ‘adverse’ (even if they may not have taken it previously), says Goonrey. 

“The first rule is you would be treating them no differently. It’s a balancing act to make sure that they are in a safe and healthy work environment, while also minimising the fallout of potential further claims. 

“If the employee is not turning up for duties or underperforming, I would try to engage with them or their representative about their performance or returning to work. If they are turning up for work, I would also be reviewing who the person’s manager is, how they’re being managed, and whether or not adjustments are necessary.”

It’s also worth considering if the employment relationship can be maintained after an adverse action claim has been made, subject to the nature of the allegations in the claim, adds Goonrey. 

Though, don’t make assumptions about whether or not the employee still wants to be there. 

Instead, Goonrey says organisations may consider engaging with the employee in a ‘without prejudice’ discussion to explore future options, and highlights the mediation processes available with the Fair Work Commission and Federal Circuit and Family Court, should a neutral third party be more effective. 

Many adverse action cases are resolved before they progress to court, says Goonrey, and many organisations are already doing the right thing – engaging with their employees, using best-practice processes to navigate complex situations and supporting employees in putting their best foot forward.

All information, content and materials available on this site are for general informational purposes only. The contents of this article do not constitute legal advice and should not be relied upon as such.

Deepen your knowledge of the general protections provisions and other key pieces of legislation with AHRI’s Introduction to HR Law short course, and strengthen your foundational skills to identify and address any compliance issues in your organisation.