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Adverse action claims

By Aaron Goonrey senior assocociate and Andrew Farr partner, Lander & Rogers lawyers.

There is a developing trend that employees facing an investigation or disciplinary action will seek to stop the employer by claiming a breach of the general protections provisions in the Fair Work Act. In the recent Federal Magistrates Court decision, CFMEU v Leighton Contractors Pty Ltd [2012] FMCA 487, this issue was examined in practice.

Adverse action includes where an employer takes detrimental action against an employee because, or partly because, the employee has a workplace right, has (or has not) exercised a workplace right, or proposes to (or proposes not to) exercise a workplace right.

A workplace right includes that the employee enjoys a benefit under a workplace law or workplace instrument, is able to initiate or participate in a process under a workplace law or workplace instrument, or may make a complaint or inquiry about their employment. It is a two-stage process. There must be adverse action and the adverse action must be taken because, or partly because, of the employee’s workplace right.

Case study: Leighton Contractors

Leighton Contractors sought to take disciplinary action against an employee as a result of an investigation into fraud. The employee was in receipt of workers’ compensation (a workplace law) for a neck, back and whiplash injury. About a month after the employee was awarded compensation, Leighton received information that the employee was misrepresenting the extent of his injuries so he would continue to receive workers’ compensation benefits.

Surveillance footage and report confirmed Leighton’s suspicions, revealing that the employee had misrepresented the extent of his injuries, and had full and free neck movement. Leighton notified WorkCover Qld on the assumption that it had a statutory obligation to do so. It then convened a meeting with the employee to address their concerns and to provide the employee with an opportunity to respond to the allegations.

The employee was stood down on full pay pending the investigation. The CFMEU, representing the employee, brought proceedings in the Federal Magistrates Court arguing that Leighton took adverse action against the employee by:

  • Employing surveillance.
  • Providing the investigator with workers compensation documents.
  • Calling meetings and corresponding with the employee to make allegations about dishonesty, and threatening disciplinary action.
  • Ultimately suspending the employee The union subsequently sought an injunction to restrain Leighton from suspending or dismissing the employee.


Federal Magistrate Michael Burnett found Leighton’s actions amounted to adverse action. He found that Leighton’s conduct in calling the employee to show cause before standing him down and threatening dismissal was “adverse action” as it altered the employee’s position to his prejudice.

However, in relation to whether the adverse action was taken because, or partly because, the employee was exercising a workplace right, the magistrate found that conducting the investigation was not a breach of the general protections in the Fair Work Act. This was because the action was not taken because, or partly because, the employee was exercising a workplace right. Instead, the investigation and disciplinary action, and the reliance on the compensation documents, was proper and reasonable because of Leighton’s bona fide concerns about the employee’s integrity.


Where an employer has valid reason to suspect fraud or other misconduct on the part of an employee, including in respect to a workers’ compensation claim, the employer is entitled to investigate the matter and take valid disciplinary action.

However, this is contingent on the true motivation and operative reason behind the employer’s conduct not being the employee’s entitlement to exercise a workplace right. This case also affirms that an employee’s entitlement to make a workers’ compensation claim constitutes the exercise of a workplace right, in respect of which allegations of adverse action can be made.

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