A Tide Change For Employee Claims

By Anthony Ralph and Patricia Ralph.

Following the transfer of state industrial relations power to the Commonwealth, the Fair Work Act 2009 (the Act) now applies to more employment situations.

In particular, the Act contains provisions dealing with unfair dismissal claims, including remedies available where the employment relationship either breaks down or comes to an end. However, changes to the provisions providing these remedies still present challenges to some employees.

For instance, many are unaware that while they may not be eligible to access the more traditional unfair dismissal provisions, they may still be able to seek redress in other ways.

The Fair Work Act 2009 provides that for an employee to successfully secure a remedy against an employer for unfair or unlawful dismissal, the employee must demonstrate to Fair Work Australia (FWA) or the Federal Court that:

• he or she was dismissed

• the dismissal was harsh, unjust or unreasonable

• the dismissal was not a case of genuine redundancy


The Act also requires an employee to establish grounds to lodge an unfair dismissal claim with Fair Work Australia.

These grounds include demonstrating to Fair Work Australia that both the employee and employer come within the scope of the national unfair dismissal provisions and that the employee is eligible to make an application for relief.

If employed by a small business, the employee must also show that hisor her dismissal was not consistent with the Small Business Fair Dismissal Code.

The employee must also have completed a minimum employment period of at least six months with the employer against whom the claim is made, or one year in the case of a small business employee.

The employee must file the claim within 14 days of the date of dismissal. If this date is disputed, as it often is in the case of a ‘constructive’ dismissal, then an application must be made to Fair Work Australia for a variation to this deadline.

Claims have been made in what is termed to be an ‘out of date’ matter but these have been defeated on various grounds, including where an employee’s representative failed to ensure the claim was filed within the prescribed period.

However, employees have been known to win extensions of time to file so it is truly a case-by-case matter.

Although the recent changes have made it harder for some employees to mount challenges under more traditional areas such as unlawful dismissal, a desire to seek new avenues for redress has exposed businesses to attack on other fronts.

Importantly, for the protection of both the employer and employee, the Fair Work Act 2009 contains provisions to safeguard workplace rights.

The Act also protects employees right to freedom of association and protects them from workplace discrimination. ‘Adverse action’ provisions further protect an employee from an employer disgruntled by an employee who chooses to exercise a workplace right.

A breach of a workplace right is now actionable under Section 340 of the Act which provides that:

(1) A person must not take adverse action against another person

(a) because the other person:

(i) has a workplace right; or

(ii) has, or has not, exercised a workplace right; or

(iii) proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or

(b) to prevent the exercise of a workplace right by the other person.

(2) A person must not take adverse action against another person (the second person) because a third person has exercised, or proposes or has at any time proposed to exercise, a workplace right for the second person’s benefit, or for the benefit of a class of persons to which the second person belongs.


Adverse action, as defined in the Act, refers to where the employer dismisses the employee; or injures the employee in his or her employment; or alters the position of the employee to the employee’s prejudice; or discriminates between the employee and other employees of the employer.

Hence it is important to observe that a remedy is able to be sought against an employer in circumstances where the employee is not dismissed.

In circumstances where an employee seeks a remedy for unlawful dismissal in lieu of reinstatement, in deciding what is an appropriate order, Fair Work Australia must take into account the following factors:

1. The effect of the order on the viability of the employer’s enterprise

2. The length of the employee’s service with the employer

3. The remuneration that the employee would have received, or would have been likely to receive, if he or she had not been dismissed

4. The efforts of the employer to mitigate the loss suffered by the employee because of the dismissal

5. The amount of any remuneration earned by the employee during the period between dismissal and the making of any order for compensation

6. The amount of any income likely to be earned by the employee during the period between any compensation order and the actual receipt of compensation

7. Any other matters that FWA consider relevant

The amount ordered by FWA to be paid to a person must not exceed the compensation cap which is the lesser of six months’ pay or half of the high income threshold ($118,100 in 2011-2012 = $59,050).

In small businesses, such as many privately owned security operations, an employee may be confronted with difficulty in securing a remedy should he or she be dismissed by an employer for being unable to complete rostered shifts.

Even if the employee was able to overcome the burden associated with the unlawful dismissal protections for small businesses, the maximum benefit payable through Fair Work Australia is, as stated above, a payment of six months’ wages.

With regard to Section 340 of the Act which deals with adverse action, if an employee is successful in bringing a claim under this heading, possible remedies could include:

• Uncapped compensation – noting this could include a compensation component for shock, distress or humiliation, or other analogous hurt, caused to the employee by the manner of the adverse action

• Fines against the employer of up to $33,000

• Injunctions preventing the employer from engaging in the adverse action

• Reinstatement of the person (if the adverse action resulted in dismissal of the employee)

• Any other order the court sees fit


What can be of further concern to an employer is when the dismissal of the employee is as a result of the employee being unable to attend for duty due to a temporary illness or injury. It is then submitted that any retribution by an employer in the circumstances amounts to discrimination on account of that temporary illness or injury.

Such conduct is unlawful under the provisions of legislation such as the Disability Discrimination Act 1992 where a disability can include a temporary impairment as it is an impairment that exists at the time of the alleged discrimination.

Why would an employee seek to go down this path for a remedy? There are many reasons, including that the parties are compulsorily brought together, there are no small business hurdles to overcome as in the Fair Work Act, and there is no cap on what can be claimed against the employer.

Most importantly, once an employee lodges an adverse action claim against an employer, the onus of proof then shifts to the employer to prove that it had not acted unlawfully.

An employee can also seek interlocutory relief, such as an injunction, against an employer to halt certain actions. The test is often based on the ‘balance of convenience’ in the granting of this relief.


How Can Your Company Protect Itself?  

By working proactively and risk-managing all exposures, a business can work towards preventing workplace claims against it. This entails the implementation of a number of strategies, such as:

• Obtaining appropriate advice about any decisions that affect employees in its workplace and documenting the reasons given for those decisions

• Ensuring that any employment-related action is for a lawful, proper reason and not a prohibited one

• Reviewing all current policies to remove any possible prohibitive material

• Seeking competent advice when there is doubt.

During meetings with employees, always have a company support person present and make a written record of the discussions.
A copy of this record should be provided to the employee, not just to provide him or her with an opportunity to rebut what is recorded, but also to answer any claim that procedural fairness was denied.

Should an employer find itself in the situation of defending an adverse action claim, the court will be seeking an answer as to why the employer has allegedly behaved in an unlawful manner, with the onus on the employer to prove otherwise.

If an employer can prove, by means of evidence and documentation, that the action taken was for a lawful reason, that evidence will provide a strong base from which it can defend this type of claim.

If in doubt, seek assistance.


Anthony Ralph is a barrister-at-law and Patricia Ralph is a lawyer