Adverse action – A lesson in what not to do

17 March 2017

Hail Creek Coal, a Rio Tinto subsidiary, has recently learned the hard way just how painful an adverse action can be.

Only four days after an injured worker received an award in common law damages for his back injury, Hail Creek Coal made the decision to stand him down. As a result, the CFMEU brought proceedings against Hail Creek Coal on behalf of the injured worker, claiming that in standing him down Hail Creek Coal had taken prohibited adverse action.

It is worth noting here, however, that under the Fair Work Act there are some very specific circumstances in which an employer may be able to legitimately stand a worker down. These include where there is:

• an industrial action not organised by an employer;
• a breakdown of machinery or equipment when an employer cannot be reasonably held responsible for the breakdown; or
• a work stoppage in which an employer cannot be reasonably held responsible.

Unfortunately for Hail Creek Coal, none of these conditions were present and the injured worker’s recent award for compensation did little but fan the flames. In a record-breaking order, Justice Reeves of the Federal Court ordered Hail Creek Coal to pay the injured worker a phenomenal $1.27m for past and future loss of wages, plus an additional $26,000 in accrued interest.

Naturally, the take away from this case is that employers should be keenly aware of their ability to stand-down or otherwise put workers ‘on ice’, particularly in the wake of a recent injury or award for compensation. As always with adverse action, context is key.

Timothy Ashton of Hentys Lawyers has over 25 years of experience in workers compensation and industrial relations, and has worked with a number of multi-national companies and household names. Please contact Timothy for advice by sending an email to hjk@hentys.com.au.