What is adverse action in workplace law?

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The extent to which an employee must be disadvantaged by an employer’s actions to constitute adverse action for the purposes of the general protections of the Fair Work Act is evident in the following passage from a recent judgment of the Federal Circuit Court of Australia.

“In my opinion, in determining whether an action or conduct amounts to an alteration in an employee’s position to his or her prejudice, the Court is obliged to take into account the whole of the circumstances arising from the alteration of the employee’s position. I do not accept that an alteration which disadvantages an employee in some way will on its own, have the consequence of amounting to an alteration to that employee’s prejudice as contemplated by item 1 of s.342(1) of the Act.

The Applicant relies on an extract from a decision of Justice Gordon in Klein v Metropolitan Fire and Emergency Services Board [2012] FCA 1402 (“Klein”), in which her Honour stated (at [84]):

It was common ground that:

  1. the phrase “injures the employee in his or her employment” in Item 1(b) of s.342(1) of the FW Act extends to injury of any compensable kind, a legal injury, or an adverse effect on an existing legal right: Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3)(1998) 195 CLR 1 at [4]; Australian and International Pilots Association v Qantas Airways Ltd(2006) 160 IR 1 at [13]-[14]and Unsworth v Tristar Steering and Suspension Australia Limited (2008) 175 IR 320 at [25];
  2. the phrase “alters the position of the employee to the employee’s prejudice”, in Item 1(c) of s.342(1)of the FW Act, is a broad additional category of adverse action which covers not only legal injury but any adverse affection of, or deterioration in, the advantages enjoyed by the employee before the conduct in question; and
  3. a prejudicial alteration to the position of an employee for the purposes of Item 1(c) of s.342(1)of the FW Act, may occur even though the employee suffers no loss or infringement of a legal right; it will occur if the alteration in the employee’s position is real and substantial rather than merely possible or hypothetical:  Patrick Stevedoresat [4]; Australian and International Pilots Association v Qantas Airways Ltd at [15] and Qantas Airways Ltd v Australian Licensed Aircraft Engineers Association (2012) 202 FCR 244 at [30]-[32].

Her Honour also went on state that, as a matter of statutory construction (Klein at [86]):

  1. …s.342(1) of the FW Act does require that:
  2. the position is to be examined in the light of the circumstances of an individual employee (or group of similarly treated employees):  Community and Public Sector Union v Telstra Corporation Limited at [17]-[21];
  3. an employee’s position is to be taken at the time the conduct occurred and is to be assessed by reference to the employee’s then existing entitlements under the relevant industrial instrument:  Burnie Port Corporation Pty Ltd v Maritime Union of Australia(2000) 104 FCR 440 at [23]and Australian Liquor, Hospitality & Miscellaneous Workers Union v Liquorland (Aust) Pty Ltd (2002) 114 IR 165 at [25]; and
  4. the employee, individually speaking, must be in a worse situation after the relevant conduct than before it and the deterioration must have been caused by the employer’s conduct:  BHP Iron Ore Pty Ltd v Australian Workers’ Union(2000) 102 FCR 97 at [35]-[37] and [45]-[48]; Australian Workers Union v BHP Iron-Ore Pty Ltd (2001) 106 FCR 482 at [52]-[54]; Community and Public Sector Union v Telstra Corporation Limited at [17]-[21] and Finance Sector Union of Australia v Commonwealth Bank of Australia Ltd (2005) 147 FCR 158 at [23]-[30];
  5. if the deterioration occurs by operation of the law or an industrial instrument the employer will not have altered the position of the employees individually speaking; the change in the position of the employees individually speaking occurs by operation of the relevant legislation rather than the conduct of the employer in making the enterprise agreement:  Australian Liquor, Hospitality & Miscellaneous Workers Union v Liquorland (Aust) Pty Ltd(2002) 114 IR 165 at [24]-[26], [30]and [37].

Respectfully, I concur with the observations of his Honour FM Cameron (as his Honour then was) in Hodkinson v Commonwealth [2011] FMCA 171. Cameron FM stated that for prejudicial alteration to occur (at [163]):

  1. … it must be possible to say of an employee that he or she is, individually speaking, in a worse situation after the employer’s acts than before them…

His Honour Judge Vasta described the approach to be adopted to the term “employee’s prejudice” by this Court as one that must be looked at “holistically”: Barnes v Hatch Associates Pty Ltd [2015] FCCA 3375 at [139]-[140]. If “holistically” is intended to be a reference to having regard to the whole of the circumstances arising from the alteration of the employee’s position, I respectfully agree with his Honour.”

Dipa v Michael Hill Jeweller (Aus) Pty Ltd (2018) FCCA 233 delivered 7 February 2018 per Jones J