22 September 2021
A recent decision by the Federal Circuit and Family Court of Australia (Court) has made it clear that inaction, or the act of not doing something, can still give rise to adverse action.
This interpretation may confuse some employers. On a first read, adverse action under the Fair Work Act 2009 (Cth) (FW Act) is described by reference to positive acts. For example, dismissing someone, demoting someone or bullying someone. Therefore, employers may think that they may reduce the risk of enlivening the FW Act’s general projections regime by refraining from action.
However, the Court’s interpretation of the relevant provisions in the FW Act in Farac v Pendal Group Limited  FedCFamC2G 25 (Farac) focused on the “consequence suffered by the particular employee” as constituting the adverse action and held that the action or inaction can bring about this consequence. In this way, a positive adverse action can be the product of inaction.
Mr Farac (Applicant) alleged his employer Pendal and Pendal’s CEO (Respondents) took adverse action against him by not investigating a complaint regarding bullying and inappropriate treatment during his employment because he exercised his workplace right to make this complaint.
Before the substantive hearing, the Respondents filed an interlocutory application to strike out sections of the Applicant’s pleadings on the basis it was “nonsensical” and “impossible” to undertake inaction. Additionally, the Respondents claimed section 340 of the FW Act, being one of the operative adverse action provisions, did not comprehend inaction.
The pleading in question stated:
“Pendal undertook the Failure to Investigate because of the First Bullying Complaint and Further Complaints, in contravention of section 340 of the FW Act.”
The Court recognised that sections 340 and 342 of the FW Act, being the operative adverse action provisions, explicitly refer to positive acts in that:
The Court referred to a previous determination by the Federal Court in which an employer’s act of maintaining the status quo did not equate to the employer doing anything to injure an employee. That said, the Court also referred to a line of reasoning that recognises that there can be circumstances where “inaction” does gives rise to a proscribed adverse action.
Specifically, in Rowland v Allied Health  FCA 2, the Federal Court determined that an employer had taken adverse action against an employee by inaction in failing to rehire the employee after completing an internal restructure. The Federal Court in Rowland also gave the example of an employee being denied a promotion as another example of inaction constituting adverse action.
On this basis, the Court declined to strike out the pleading and the allegation based on inaction was allowed to be maintained in the proceedings.
This decision is an important reminder that in certain circumstances, inaction by an employer can lead to an allegation of adverse action. The critical inquiry focuses on the consequence suffered by the employee and then assesses whether it came about “because of” a prohibited reason.
This means that in relevant circumstances employers must ask themselves the following:
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Authors: Stephen Trew & Declan Johnston
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