Employer to pay over $450k for adverse action

The Federal Circuit Court has awarded an employee $415,698 in damages, as well as imposing $50,000 worth of civil penalties on an employer following a finding that the employer changed the status of the employee from full-time to part-time as a result of the employee making a workers’ compensation claim.

The Court accepted that for 7 years prior to his leg injury, the employee had worked 90 hours per week. Following the workers’ compensation claim, the employer sought to change the employee’s position to a part-time position, which the Court accepted was for reasons including to reduce the costs of the injury management plan put in place for the employee as part of his rehabilitation.

The Court found that by imposing the change to part-time employment, the employer had both fundamentally breached the employee’s employment contract and also the general protection provisions of the Fair Work Act 2009.

In addition to the substantial damages that were awarded, the Court imposed a $16,500 penalty on the employer for the adverse action. The Court noted that the employer was not aware that it could not reduce the employee’s employment status to part-time, but stated:

“The amount of the penalty should signal to the community that the unilateral and disadvantageous alteration of an employee’s position because the employee has exercised his or her rights is a serious matter….”

The Court also imposed a $25,000 penalty on the employer for its failure to comply with its award obligations in terms of wages, including failing to pay penalty rates and leave loadings, as well as failing to comply with start and finish time provisions. Further penalties were imposed for the failure to comply with record-keeping requirements.

Lessons for Employers

This case is an example of the serious consequences where an employer takes action against an employee in breach of the adverse action provisions in the Fair Work Act. The ability of the Court to award uncapped damages and impose civil penalties for each breach of the legislation or any applicable Modern Award can lead to deleterious outcomes for offending employers.