Australia: Well meaning decisions by employers may offend the law

Workplace Solutions Quarterly Newsletter – September 2015
Last Updated: 30 September 2015
Article by Nicole Dunn and Edward Schalit

It is essential that when making decisions that affect employees, employers take into account provisions of the Fair Work Act 2009 (Cth) (the "Act"). Employers need to be aware that some decisions which may seem reasonable to them, and in the best interests of an employee, may offend the law.

The Federal Circuit Court in Sagona v. R & C Piccoli Investments Pty Ltd & Ors [2014] FCCA 875 (30 April 2014) found that a photography business had constructively dismissed an employee. The Court accepted the employee's evidence that she felt she had no choice but to resign.

In this case, Ms Sagona informed her employer that she was pregnant and that she would be taking a period of parental leave. Upon receiving the notice that Ms Sagona was pregnant, the employer sought to alter her duties because:

  1. it was their belief that "it was not a good look" for customers to see a pregnant woman working in the business and, it would make the employer look like it was a "slave driver";
  2. it was their belief that Ms Sagona would appear "desperate" if she worked while she was noticeably pregnant; and
  3. one of the directors of the employer was particularly concerned about Ms Sagona losing the baby if she continued to undertaken her normal duties as that director had lost a baby in the past.

It is apparent that the decisions made by the directors of the employer were influenced by their own life experiences. The decision made and the manner in which the employer sought to alter Ms Sagona's duties, no matter how well meaning, was in breach of the law.

The Court held that in this case the employer had taken adverse action against Ms Sagona and awarded her compensation in the sum of $235,097.00.

Employee Protections – Exercise a workplace right

Section 340 – 341 of the Act protects an employee from adverse treatment (for example dismissal or a demotion) where the reason, or one of the reasons, for the employer's action include that the employee has exercised a "workplace right".

A workplace right includes the following:

  • an employee making a complaint or enquiry in relation to his or her employment;
  • an employee taking sick leave, annual leave, parental leave or carer's leave;
  • an employee being a member of a union;
  • an employee taking protected industrial action;
  • an employee undergoing proceedings either in Court or at the Fair Work Commission under Workplace Law or a Workplace Instrument.

The actual adverse action taken against the employee may, for example, be dismissal, issuing a written warning, reducing or responsibility of the employee, suspension from duties or pressuring an employee to sign an individual flexibility arrangement.

Examples of cases in which adverse action was found to be taken by employers for a reason prohibited under the Act include:

  1. In Owens v Allied Express Transport Pty Ltd [2011] FWAFB 2929 (10 June 2011) an employer proposed a change in working conditions to accommodate an employee's pregnancy. The employer and employee agreed that the employee would work in a less difficult role as the employee was pregnant. However, when the employer informed the employee that there would be a significant reduction in salary for the new role, the employee refused to agree and regarded herself as having been dismissed. This was found to constitute a termination of employment at the initiative of the employer.
  2. In Silver v Rogers & Rogers (2012) 224 IR 439, the Applicant became unwell with pneumonia and golden staph and was subsequently off work for a significant period of time. His employment was terminated due to economic circumstances and health-related issues. The Court found that the Applicant's physical disability and health issues were an operative reason for his dismissal.
  3. In Pavolvich v Atlantic Contractors Pty Ltd [2012] FMCA 1080 (26 October 2012), the Applicant was terminated because he was "always sick". The Court found that the Applicant had been terminated due to his sickness which was held to be a disability.


Even where a decision seems to an employer to be reasonable and in some circumstances in the best interests of the employee, it may be in breach of the Act. Employers should be very careful to ensure decisions made to alter an employee's position, status, responsibility or other term of employment are not influenced by reasons prohibited under the Act.

If an employer is unsure about whether or not a decision is in breach of the Act, they should seek legal advice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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