Adverse Action claims are uncapped for damages, leading to expensive claims

Public news

In a significant general protections ruling, the Federal Court has today ordered an ASX-listed enterprise software company to pay more than $5.2 million in compensation, damages and penalties to a senior employee sacked after he made bullying complaints.

Justice Duncan Kerr, in a judgment of about 300 pages, found that the employee had established that by dismissing him, the company took adverse action against him because he exercised a workplace right when he complained multiple times about bullying.

He ordered the company to pay the former employee $2,825,000.00 for his future economic loss, $756,410 to compensate his forgone share options, $1,590,000 in damages for breach of contract, $10,000 in general damages and $47,000 in penalties.

Harmers Workplace Lawyers, which represented the employee, said it believes the payout is a record for such a case in the Fair Work division of the Federal Court.

In setting penalties, which included $7000 against the company's executive chair/chief executive, Justice Kerr said he "twice rejected professional HR advice" that it would be unfair the employee "on the basis of mere allegations".

"In the end, [the chief executive's] choice was to stand with the bullies rather than the bullied.

"To achieve effective deterrence, CEOs in like positions need to know that such temptations as he faced are to be resisted: and that there will be a not insubstantial price for failing to do so".

He found the executive chair accessorily liable.

In recent times, the WR team have experienced members who are facing or will potentially face an adverse action claim from employees. An adverse action claim arises where action adverse to the employee, such as termination of their employment, arises from the exercise of a workplace right, such as making a bullying complaint, or from discrimination.

These cases are becoming far more common in the Fair Work Commission, and unlike in an unfair dismissal claim, where the total compensation is capped to six months, and there is a salary cap on who may bring a claim, there are no similar caps on adverse action claims, potentially leading to very high orders as seen above.

If you have received an adverse action claim, or need assistance to avoid one, contact the WR team at the MTA on 8291 2000 and wr@mtasant.com.au.