News & Insights

It’s a bumpy ride ahead for employers following the High Court’s recognition that employees will have a claim for adverse action where any decision pertaining to employment matters is infected with reasoning aimed at denying employees an opportunity to exercise workplace rights in the future.

Qantas was found to have contravened section 340(1)(b) of the Fair Work Act 2009 (Cth) (adverse action) upon terminating employees to pre-emptively prevent the employees from exercising their workplace rights.

In this case, the business had a nominal expiry date approaching for an enterprise bargaining agreement that would, entitle its employees to engage in enterprise bargaining, protection action ballots and industrial action. The decision was found to have been substantively made because of this consideration at hearing, on the evidence.

The legislative backdrop to the case underscores how the regime operates. In a nutshell, the General Protections provisions provide that where an employee can outline circumstances of adverse action – which includes termination for a prohibited reason – the onus then moves to the employer to prove a negative. is the employer must prove that the decision leading to the alleged adverse action was not made for substantive reasons that include the exercise or possible exercise of workplace rights.

Employers should ‘air’ on the side of caution

The Qantas case confirms that employers need to be increasingly careful in the decisions made when dealing with employees, especially in the contentious areas of termination and disciplinary action.

Set out below are a series of examples of when businesses might be in jeopardy of flying off course, applying the rationale of the Qantas decision.

1. The business has a plan to make 10 employees redundant in 6 months’ time. Upon review, the business realises that an employee will be entitled to pro-rata long service leave in 2 months’ time. A decision is made to make this specific employee redundant earlier to avoid the entitlement to long service leave.
2. The business suspects that an employee is pregnant during their probation period. They decide to terminate the employee during probation to avoid the employee accessing or triggering a future entitlement to parental leave.
3. The business sees a poor-performing employee who has been poorly managed is about to pass the qualifying period and have access to unfair dismissal protections. In a bid to avoid the employee accessing such legal rights, a decision is made to terminate immediately because of this concern.

Practical steps to avoid landing in rough waters

1. Be mindful that the test for adverse action is because of a workplace right the adverse action was taken. The decision must be substantively driven by or infected by the consideration of a workplace right.
2. Be wary of rushing to make termination decisions designed “to beat” the ending of the qualifying period.
3. Take careful consideration when making termination or hiring decisions, and identify which person is ultimately responsible for the decision and seek to minimise that circle.
4. Ensure that the substantive reasons for any decisions impacting employees are lawful and reasonable.
5. Employers should ensure they are across the meaning of ‘workplace rights’ and ‘adverse action’. They should consider carefully documenting the decision-making process demonstrating lawful substantive and operative reasons for decisions and that the reasons do not include the risk of an employee exercising a workplace right.

Touching down on key takeaways

1. Employment decisions motivated by the prevention of employees exercising future workplace rights could expose the business to legal liability.
2. Clear processes should be implemented to ensure that lawful and substantive operative reasons are documented for decisions surrounding termination with careful consideration that these reasons are not unlawful.
3. Businesses should keep their seatbelts fastened and seek legal advice prior to the termination of an employee to ensure the decision is lawful.

The Employment team at Macpherson Kelley can lend their assistance before workplace issues take flight. Contact our team to receive advice today.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.