Australia: Senior employees and managers cry adverse action! at every turn

Employers shouldn't fear giving their executives lawful and reasonable directions at work, but at the rate senior employees are litigating, employers are right to feel uncertain about the operation of adverse action protections.

When executives or senior managers play up, employers are often left wondering how to proceed. There are plenty of things to consider, one of which is whether the employee has a workplace right, and if they do, how to make sure that right isn't infringed upon.

In this article we provide some examples of senior employees who unsuccessfully claimed they were subjected to adverse action, and consider how to make defensible decisions in the workplace.

What is "adverse action"?

"Adverse action" is the phrase used to describe anything done to an employee (or employer) to their detriment/ because they exercised a workplace right. In general terms, a workplace right is something an employee is entitled to at law.

For example, as we'll see below, the right to take leave as prescribed by the National Employment Standards in the Fair Work Act 2009 (Cth) is a workplace right (in certain circumstances).

What would be considered "adverse action"?

The courts will generally determine that adverse action has occurred if an employer, against an employee, threatens to, organises, or takes action by:

  • dismissing the employee;
  • injuring the employee in their employment;
  • altering the position of the employee to the employee's prejudice; or
  • discriminating between the employee and other employees of the employer.

These factors affect all employers, from Commonwealth Departments, to private companies, and even universities. Let's take a look at some recent examples.

"We're sending you on secondment." "You can't do that, that's adverse action!"

The Special Broadcasting Services Corporation has really improved its line-up in the past few years, but sometimes the juiciest drama is behind the camera, as was the case in McJannet v SBS [2016] FCCA 2937.

Enter stage-right, Ms McJannet. McJannet was the Presentation Coordinator Supervisor for SBS until she resigned on 14 March 2016. In 2014, SBS wanted to outsource some of its operations, and McJannet was to be one of the employees to move to the provider. When she pointed out that her superannuation payments would decrease if she moved, SBS offered to send her on secondment with the same entitlements (this was the lawful and reasonable direction).

The short of it is, McJannet didn't want to move, and so took leave and then resigned. SBS asked her to reconsider, but she refused. McJannet then cried "adverse action" when she claimed SBS withheld information about the secondment, and that she was denied redundancy payments because her job was moving.

The Federal Circuit Court didn't agree with McJannet on any count, on the grounds that:

  • McJannet resigned, she was not terminated;
  • McJannet was not discriminated against by SBS, as others were offered a secondment too; and
  • No aspect of the secondment (had she gone) amounted to an injury to her employment.

"Stop using your corporate credit card for unapproved travel." "You can't stop me, that's adverse action!"

Academia is an area of work unlike most in Australia, so when an unruly professor marches into the Federal Court it's bound to be a good read. Our next class is with Dr Salby of Macquarie University (Salby v Macquarie University [2017] FCA 67).

Dr Salby was hired to help foster innovative research on climate change, but not long after he started, it was clear that Dr Salby wasn't hitting his performance targets. Following a performance review, Dr Salby faced a 25% salary decrease and increased teaching duties.

Dr Salby failed to attend his first lecture, and an investigation was held into his behaviour. At the same time, Dr Salby asked to go overseas for conferences, and when this request was denied, he booked everything on his corporate credit card anyway. Naturally, the University directed him to stop, and he did not. Before his employment was terminated, he commenced proceedings in the Fair Work Commission for other matters relating to his performance review.

When he was eventually terminated for misconduct, Dr Salby claimed the University had taken adverse action against him because (amongst other things) he had other proceedings before the Commission. The Federal Court threw out Dr Salby's claim, saying he was terminated because he performed poorly at work, not because he was exercising a workplace right in the Commission.

"We won't be renewing your fixed-term contract." "You can't do that, that's adverse action!"

When Mr Klein tried to argue adverse action against his employer, Australian Baseball League Pty Ltd (ABL), his claim was far from a home-run (Klein v Australian Baseball League Pty Ltd [2016] FCCA 1722).

Employed as the General Manager of the Brisbane Bandits, Klein had a lot of work ahead of him. He emailed his superiors and employees many times about the difficulties facing the club, and how he felt under the pump with his workload.

Klein was working on a bridging visa at the time, and for reasons (that were later decided as) beyond the control of the parties, Klein wasn't paid by ABL until months after his commencement. This was partly due to the visa, and partly due to payroll being processed on a monthly basis.

When ABL decided not to renew Klein's employment at the end of the contract, as they were entitled to do, Klein argued this was because he complained about his work, and that the lack of payment also amounted to adverse action.

The Federal Circuit Court wasn't going to play ball with Klein. Judge Vasta held that Klein wasn't even dismissed (his contract simply expired) and that the non-payment was beyond ABL's control in this instance. Simply put, there is no way adverse action could be the blame for the circumstances.

What are the take-home messages?

While none of the claims above were successful for the executives that initiated them, there is still plenty to observe about how these employers behaved, and how their actions can be modelled to successfully defend a case.

  1. If a direction is lawful and reasonable, you at least have a defensible position. Ensure that any time you request something of an employee, executives included, there is no workplace right being infringed upon, and no other law being broken. Once you've jumped these hurdles, the employee must have a legitimate reason for non-compliance. As we saw with Ms McJannet, simply "not wanting to go on secondment" is not a legitimate reason.
  2. Follow due process. Once Macquarie University got wind of Dr Salby's misconduct, an investigation was held and Dr Salby was given an opportunity to respond. The courts will always look at the process of the employer during pre-termination, so if you follow the book and implement best practice, your decision to terminate is less likely to be questioned.
  3. Appoint confident decision makers. The CEO of ABL, as well as the Vice-Chancellor of Macquarie University, were steadfast in their decisions to terminate their employees, and were clear that the termination (or decision to not renew), was based on performance and business need, not on complaints made by the employee or other similar factors. If a decision-maker can appear before a court and calmly give evidence about their reasons for termination, claims of adverse action become more likely to wither.

Employers, be not afraid to make hard-line decisions in the workplace. With clear policies and by following due process, executives and senior managers may stop crying "Adverse action!", you're less likely to end up in court, and your wallet will be happier for it.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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