Contractors can also make adverse action claims against the Principal Employer

Under the Fair Work Act 2009, there’s the ability for a person to make a claim for ‘adverse action’. Generally speaking, adverse action is where an employer takes action against an employee because the employee has exercised a workplace right, or due to a discriminatory ground, etc and that action is to the detriment of the employee. Importantly, Fair Work Australia (‘FWA') recently confirmed in a decision that these general protection provisions also extend to contractors.

In this instance, an interpreter who was contracted to the Principal Employer through an agency, lodged an adverse action claim against the Principal Employer because it removed him from its register of interpreters after it received a client complaint that he used the client’s contact details from their database to contact the client at home.

Whilst FWA rejected his claim due to it being out of time, it confirmed that adverse action includes ‘a refusal by a Principal to make use of services offered by an independent contractor...’ and went on to find that a decision by a Principal to cease using the services of an employee of, or subcontractor to, a contractor was a ‘contravention involving dismissal’, falling within the adverse action provisions of the legislation.

The implications of this case are that contractors are also protected from adverse action. If a contractor can establish adverse action by the Principal Employer in that the Principal Employer refused to make use of, or terminated the services of a contractor because the contractor exercised a workplace right (e.g. union membership, temporary absence due to illness), engaged or refused to engage in a lawful industrial activity, or because of unlawful discrimination, then the contractor would be entitled to recourse under the legislation.

Key Points: Employers must ensure that their actions, with regard to employees and contractors, do not amount to discrimination or a sanction for the exercise of a legitimate workplace or industrial right. Maximum penalty is $33,000 for corporate employer. We recommend employers seek legal advice before terminating or suspending an employee or a contractor.