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Clearing The Murk On Adverse Action

Published June 3, 2016 (last updated on May 8, 2024) | Adam Wyatt - Content Writer


What Is Adverse Action?

Adverse action is a term which all employers would have heard at some point. Yet, how many actually know what is considered adverse action and how do you minimise your chances of facing a claim?

Adverse action is an action taken by an employer which is considered unlawful under the Fair Work Act 2009. These actions can include, but are not limited to:

  • discrimination against an employee or prospective employee

  • demoting an employee or altering their position to their detriment

  • dismissal or action taken against an employee for exercising a workplace right

  • injuring a worker or contractor

  • refusing to supply goods or services to a contractor

  • in some cases, issuing an employee with a disciplinary warning

Adverse action is especially tricky as it is so open for interpretation. To put it simple we use the following example: if a manager brought four coffees for his team, yet had five members of staff, this could be considered adverse action as the fifth member of the team experienced a loss.

For employers adverse action claims are highly significant as they:

  • are widely open to interpretation

  • can be claimed by contractors, probationers, prospective employees and employees who are above the high income threshold

  • damages for adverse action are uncapped

  • the time limit for lodging a claim is extended

  • the scope of what is considered adverse action is very broad

Avoiding Adverse Action

In order to minimise the risk of adverse action claims, employers must be very open and clear regarding the reasoning for why they are taking action against the worker. The reason needs to be related to the worker’s conduct or performance, with the employer being able to adequately prove this conduct actually occurred.

Employers should ensure they keep clear documentation of the reason for and why the action was taken. This way if an adverse action claim is made, employers can prove the action was taken for the right reasons and not due to an employee exercising a workplace right.

Every workplace should have fair and consistent policies and procedures in place which is communicated to all employees when they commence their employment. These should also be included in your employee handbook stipulating when and why an action may be taken against an employee.

Employsure can answer any questions you may have regarding adverse action and ways to minimise your chances of facing a claim. Contact our team of specialists today on 1300 651 415.

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