Ask HR: Adverse Action vs. Unfair Dismissal

Adverse Action
Adverse action occurs when an employer takes harmful actions against an employee because they exercised a workplace right—such as raising a concern, taking leave, or refusing after-hours contact.

Examples of Adverse Action

• Dismissing or demoting an employee
• Reducing pay or benefits
• Discriminating between employees
• Not hiring someone because they exercised their rights

Adverse action doesn’t require dismissal—it covers any unfavourable treatment related to an employee’s lawful actions.

Unfair Dismissal
Unfair dismissal happens when an employee is terminated in a harsh, unjust, or unreasonable manner. To lodge a claim, the employee must:

• Be employed for at least 6 months (or 12 months for small businesses).
• Be earning below the income threshold or be covered by an award/agreement.

Key Differences

• Adverse Action: Includes a broad range of negative treatment, not just dismissal.
• Unfair Dismissal: Focuses only on termination.

Legal Remedies

• Adverse Action: May lead to reinstatement, compensation, or penalties for the employer.
• Unfair Dismissal: Typically results in reinstatement or compensation for lost income.

Section 361 of the Fair Work Act shifts the burden of proof in adverse action cases. Employers must prove their actions were lawful if an employee claims adverse action. Even if the unlawful reason wasn’t the primary driver, if it played a part, the employer could be penalised.

What Employers Should Do

• Ensure all actions are free from discriminatory motives.
• Keep thorough records to support your decisions if challenged.