Under the general protection provisions of the Fair Work Act 2009 (Cth) (FW Act), an employer cannot take adverse action against an employee because they propose to make an inquiry in relation to their employment.

This will apply if, after you ask your employee to enter into a new employment contract, they indicate they want to seek legal advice before doing so. You must take care to respect their wishes and not subject them to any adverse action because of their wish to seek advice.

A recent decision highlighting the risks for employers

In Kodari Securities Pty Ltd v Tran (2020), an employer was found to have contravened the FW Act general protections when it dismissed an employee because he exercised, or proposed to exercise, a workplace right, namely his right to seek legal advice before signing a new contract.

The Court also found that by telling the employee that “if you don’t sign it now, you will not be working here”, the employer made an unconscionable threat to take action against the employee with intent to coerce them into signing the new contract. This contravened another general protection provision in the FW Act, which prohibits a person from taking action against another person with intent to coerce them not to exercise a workplace right.

The Court noted that individual employees, without the benefit of union representation, will often need to seek their own advice and representation in relation to employment contracts.

The Court awarded the applicant $75,000 gross as compensation on the basis that, if his employment had not been terminated, the employee would have been employed for a further period of about 6 months.

Must you allow employees time to seek advice?

While you cannot take adverse action against an employee because of their wish to seek legal advice, this does not mean you have to give an employee time to seek that advice.

For example, you could say to an employee earning $80,000 per annum that because of a downturn in business you cannot continue to employ them at that salary.

You could offer the employee two options:

• sign a contract now providing for continuing employment in the same role on the same conditions but with an annual salary of $70,000; or
• be dismissed immediately with payment in lieu of notice and redundancy pay.

If the employee asks for 24 hours to obtain legal advice, you can refuse and insist they choose between the two options.