Injured workers and adverse action – The risk for employers

April, 2015

As discussed in previous alerts, employers need to take extra care when deciding to discipline or terminate the employment of a worker, particularly when they have been injured.

In claims brought under Part 3-1 of the Fair Work Act, a reverse onus applies. This means that if an employer is accused of taking action against an employee for a prohibited reason (e.g. because the employee claimed workers’ compensation), the onus rests on the employer to disprove that this was the case.

In a recent decision of the Federal Court of Australia in Cai v Tiy Loy & Co Ltd, the employer was unable to discharge this onus and its former employee was substantially successful in his complaint.

The employee alleged that his employer took adverse action by dismissing him from his employment because he had exercised a workplace right.

The employer, since at least 1994, had provided a space for its members to socialise, enjoy a meal and play mah-jong.

The employee commenced his employment with the employer on a full time basis in 1994. In his role, the employee prepared meals, undertook general cleaning services and allowed members to enter the premises after 6:00pm.

In January 2012, the employee sustained a workplace injury to his ankle as a result of moving the employer’s rubbish bins.

The employee submitted a workers’ compensation claim which was accepted by the employer’s insurer. The insurer authorised the employer to pay weekly compensation and to develop an injury management plan for the employee.

Subsequently, the employer’s board resolved that the employee would no longer be employed full time, but rather on a part time basis on a daily rate of $115 with the remainder of his hours to be given to another employee.

The employer claimed that it simply “was short of money financially” as the reason for reducing the employee’s hours. The employee on the other hand, claimed that the employer’s board expected it to be exposed to increased costs if it continued to employ the employee full time and implement the required injury management plan. This latter proposition was accepted by the court.

The court held that the employer had failed to disprove that it had engaged in adverse action against the employee. Orders in relation to compensation and penalties are yet to be made.

Conclusion

This decision reinforces the view that employers need to have sound reasons to terminate an employee’s employment, in particular, where other issues such as the employee’s injury or workers’ compensation claim may be seen to have influenced their decision.

 

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