Adverse Action In The Workplace: A Practical Guide For Australian Employers And Employees

Handling workplace issues is part and parcel of running a business or being part of a team. But when a decision affects someone because they exercised a legal right or engaged in lawful industrial activity, it may amount to “adverse action” under Australia’s Fair Work laws.

Whether you’re an employer making a tough call or an employee who’s raised a concern, understanding adverse action helps you avoid costly disputes and protect your rights. In this guide, we’ll unpack what adverse action is, how it differs from unfair dismissal, and the practical steps both employers and employees can take to stay on the right side of the law.

What Is Adverse Action Under Australian Law?

Adverse action is a set of legal protections in the Fair Work Act 2009 (Cth) called the “general protections.” It prohibits an employer (and other workplace participants) from taking action against someone because they have a workplace right, engaged in industrial activity, or on certain discriminatory grounds.

In plain English: you can’t punish a person for using their legal rights at work. You also can’t threaten to do so.

What Counts As “Adverse Action”?

Adverse action can include a wide range of decisions, such as:

• Dismissing an employee or refusing to hire a prospective employee.
• Injury in employment (for example, demotion, loss of shifts, or cutting pay).
• Altering a position to the employee’s prejudice (like relocating them unfairly or removing responsibilities).
• Discriminating between employees.
• Threats or organising action to take any of the above.

What Are “Workplace Rights”?

A workplace right includes things like:

• Being entitled to a benefit under a workplace law or instrument (e.g. awards, enterprise agreements, the National Employment Standards).
• Making a complaint or inquiry in relation to your employment (for example, raising concerns about pay, safety or hours).
• Starting or participating in proceedings under a workplace law.

Protection also extends to lawful industrial activity (e.g. joining a union, organising or participating in lawful union activities) and a range of protected attributes (such as race, sex, age, disability and others under anti-discrimination laws).

Common Scenarios And Protected Reasons

Most disputes arise when a legitimate management decision overlaps with a protected reason. The core question is often: why was the action taken?

Typical Scenarios

• An employee makes a safety complaint, then has their hours reduced.
• A worker takes personal leave, then is overlooked for a promotion.
• A candidate discloses union membership, then is not offered a role.
• Someone requests flexible work (a workplace right), then is moved to a less favourable roster.
• An employee lodges a wage underpayment inquiry, then receives a warning or is dismissed.

Protected Reasons To Watch For

Adverse action claims commonly involve allegations that the action was taken because of:

• Exercising a workplace right (e.g. making a complaint or taking leave).
• Lawful industrial activity (e.g. union membership or activities).
• Discriminatory grounds (e.g. sex, race, age, disability, pregnancy, family or carer’s responsibilities).
• Temporary absence due to illness or injury.
• Making a protected disclosure or complaint (internally or externally).

It’s crucial to separate the protected reason from your management decision. If a protected reason is a “substantial and operative” reason for your action, that creates significant risk for an employer.

The Reverse Onus Of Proof

In general protections cases, once a worker alleges adverse action because of a prohibited reason, the onus flips: the employer must prove the action was not taken for that reason. This “reverse onus” makes good documentation and clear decision-making essential.

Adverse Action Vs Unfair Dismissal: What’s The Difference?

These two regimes often get confused, but they are different claims with different tests and remedies.

Focus And Test

• Adverse Action: Focuses on the reason for the action. Was a prohibited reason (workplace right, industrial activity, discrimination) a substantial reason for the decision?
• Unfair Dismissal: Focuses on whether a dismissal was “harsh, unjust or unreasonable” based on factors like a valid reason, procedural fairness, and other criteria in the Fair Work Act. For a refresher on those factors, see section 387.

Who Can Apply?

• Adverse Action: Covers employees, prospective employees, independent contractors in some contexts, and others (broader scope).
• Unfair Dismissal: Generally limited to employees who meet eligibility criteria (e.g. minimum employment period and under the high-income threshold, unless covered by an award/enterprise agreement).

Remedies And Exposure

• Adverse Action: Compensation is uncapped and civil penalties can apply against companies and individuals. Injunctions and declarations are possible, and reinstatement in dismissal matters can also be ordered.
• Unfair Dismissal: Remedies include reinstatement and compensation but compensation is capped.

Timing

Both claims have strict time limits for dismissal-related applications (more on timing below). It’s common to consider both options strategically. Even during probation, general protections still apply, so employers should manage probation carefully, as outlined in this guide to terminating employment during probation.

Practical Steps For Employers To Stay Compliant

You can’t control every workplace issue, but you can control your processes. Strong foundations reduce the risk of an adverse action claim and put you in a better position to defend one if it arises.

1) Put The Right Documents In Place From Day One

• Employment Contract: Tailor terms to the role, define duties, set expectations, and capture key policies by reference.
• Workplace Policies: Clear rules for conduct, complaints, equal opportunity, bullying/harassment, leave, and performance management.
• Whistleblower Policy: A safe, lawful process to raise concerns reduces the risk of retaliation allegations.

Consistency between your contracts and policies is important. A mismatch invites confusion and claims.

2) Train Your Leaders

Managers often make the day-to-day decisions that can trigger risk. Provide regular training on:

• Workplace rights and protected attributes.
• Responding to complaints or inquiries lawfully.
• Fair performance and disciplinary processes.

Make sure leaders know that timing matters. If a worker has just exercised a workplace right, any negative action must be especially well-founded and well-documented.

3) Use A Fair, Documented Process Before You Decide

If you’re considering warnings, demotion, changes to duties, or termination, follow a consistent process. This typically includes:

• Identifying the concerns and gathering evidence.
• Inviting the employee to respond (in writing) with enough detail and time to reply.
• Considering their response genuinely before deciding.
• Recording reasons, evidence and the final decision.

When issues are serious, a formal letter can help. Many employers use a show cause letter to put allegations to an employee and invite a response before taking action. It builds procedural fairness on the record.

4) Manage Investigations And Stand Downs Carefully

Serious allegations may require a workplace investigation. In some cases, a temporary stand down on pay or suspension on pay while investigating is appropriate, but it must be legally justified and proportionate to the risk.

Getting the details right here matters. See our guide on standing down an employee pending investigation for key do’s and don’ts.

5) Keep Clear Records Of Your Reasons

Because the onus shifts to the employer in general protections cases, good records are your best friend. Keep notes of:

• The problem you’re addressing (performance, misconduct, redundancy, operational change).
• Objective evidence (documents, data, witness statements).
• Why alternatives weren’t suitable (e.g. coaching tried, role redesign considered).
• Who made the decision and when.

Documenting your reasons - separate from any protected reason - helps show the action was for lawful, sound business reasons.

6) Redundancy And Other Change Programs

Restructures can also be contested under general protections if employees claim they were selected because they exercised a workplace right. Ensure your criteria are objective and business-based. For dismissal cases, unfair dismissal rules may also be relevant alongside general protections; for example, the rules on genuine redundancy under section 389.

Practical Steps For Employees To Protect Their Rights

If you believe action was taken against you for a prohibited reason, there are simple steps you can take to protect your position.

1) Write Things Down

Keep a timeline and copies of communications. Note what happened, who was involved, and when. Save emails, rosters, letters, and messages. This helps connect the dots between your workplace right (e.g. complaint or leave) and the adverse action.

2) Ask For Reasons In Writing

It’s reasonable to ask your employer to explain decisions that affect you. If you’re dismissed, you can request a written reason. This clarifies the employer’s position and may resolve misunderstandings early.

3) Use Internal Processes

Follow your workplace complaint process or raise the issue with HR or a manager you trust. Many businesses have a complaints or whistleblower policy for these situations. If you’re a union member, your union can provide support too.

4) Get Early Advice On Options And Time Limits

General protections claims involving dismissal have strict timelines (21 days in most cases). Don’t wait to get advice. Also consider whether unfair dismissal is relevant to your situation - each path has different tests and remedies linked to section 387 factors for unfair dismissal.

5) Stay Professional

Keep communications factual and respectful. Avoid social media posts or heated exchanges. Professional conduct supports your credibility if the matter escalates.

Remedies, Time Limits And Process

Understanding the pathway helps everyone make informed decisions and avoid missing deadlines.

Where Do General Protections Claims Go?

• Dismissal disputes: Usually start with an application to the Fair Work Commission (FWC) for conciliation or conference, followed by court proceedings if not resolved.
• Non-dismissal disputes: Often begin at the FWC for conference. If not resolved, parties may go to court.

Key Time Limits

• Dismissal-based general protections applications typically must be lodged with the FWC within 21 days of the dismissal taking effect (extensions are rare).
• Non-dismissal disputes do not have the 21-day cut-off, but moving promptly is wise.

Be aware: unfair dismissal claims also have a 21-day deadline. If you’re considering both paths, seek advice quickly to preserve your options. Employers should also move fast to prepare a considered response.

Available Remedies

• Compensation (uncapped): For loss suffered because of the adverse action.
• Penalties: Civil penalties can be ordered against companies and individuals.
• Reinstatement: In dismissal matters, reinstatement may be ordered with continuity of service.
• Injunctions and declarations: To stop threatened action or confirm rights.
• Other orders: Such as requiring the employer to take specified steps.

Because exposure can be significant, employers benefit from early risk assessment and strong processes. Employees benefit from swift, well-documented action and targeted advice.

How Process And Fairness Help

Even though adverse action is about the reason for the decision, a fair and consistent process helps show that the decision was made for lawful, business-based reasons. Many employers build these steps into their performance framework or workplace policies, including the use of show cause letters and, where appropriate, properly managed investigations or stand downs.

Probation, Performance And Capability

General protections apply from day one - even during probation. If you need to end employment early, ensure your reasons are unrelated to any workplace right and follow a consistent approach like the one discussed in our guide to terminating employment during probation. Good documentation remains critical.

Key Takeaways

• Adverse action is unlawful if it’s taken because of a workplace right, lawful industrial activity, or protected attributes; threats to take such action can also be unlawful.
• The employer carries the burden to prove the action was not taken for a prohibited reason, so clear reasons and records are essential.
• Adverse action is different from unfair dismissal; remedies can include uncapped compensation, penalties, reinstatement, and injunctions.
• Employers reduce risk by using tailored Employment Contracts, robust Workplace Policies, fair investigations, and documented decision-making.
• Employees who suspect adverse action should document events, ask for reasons, use internal processes, and seek advice quickly (especially given the 21-day deadline for dismissal disputes).
• When in doubt, a structured process - including a show cause letter and careful consideration of responses - helps demonstrate lawful, business-based reasons.

If you’d like a consultation about adverse action, general protections or a review of your workplace processes, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.