Adverse action and award compliance – the cost of getting it wrong

The director of a Melbourne brothel has been ordered to pay a former receptionist compensation and penalties totalling $175,000 after subjecting a former receptionist to unlawful adverse action and failing to pay award entitlements.

In the case of Rosa v Daily Planet Australia Pty Ltd, the Federal Circuit Court accepted that the brothel’s sole director was knowingly involved in breaches and ordered that he was liable for the compensation awarded as well as personally responsible for part of the penalty.

The applicant Ms Rosa worked as a receptionist and had worked for the brothel from July 2008 until December 2011.  Ms Rosa was a single mother and had negotiated particular shifts.  Ms Rosa was paid a flat rate of pay, worked four days per week for 10.5 hours per day.  She was not paid sick leave, annual leave or other benefits beyond her hourly rate.  Further, it was noted she did not take her breaks nor was she paid applicable overtime rates.

After 3 years of employment, Ms Rosa was directed to sign an employment contract which provided that she was a casual employee.  When she challenged the proposed contract terms, her shifts were changed and she was subsequently told there was no more work for her because she didn’t have a manager’s licence that is was claimed was a requirement under the relevant legislation that the business be supervised by an approved manager at all times and Ms Rosa was only a few months away from being eligible to obtain a licence.

In the judgment, the Court noted that Ms Rosa had been employed for a significant period of time without a manager’s licence, yet when there was only two months before she could obtain a manager’s licence she was terminated for this reason.

The Court did not accept the Respondents defence who argued that the provisions of the Sex Work Act 1994 (Vic) that mandated that a brothel must at all times have an “approved manager” on site, and that the reason the Applicant was dismissed was because she did not hold a manager’s licence due to a drug offence

The Court agreed with Ms Rosa’s submissions that the termination occurred as a result of her refusal to sign the employment agreement. This agreement would have converted her employment to casual employment and she risked losing shifts she had specifically negotiated with the Respondent.

The Court found that the Respondent took adverse action in threatening to alter her employment arrangements and threatening to dismiss Ms Rosa and then subsequently dismissing her.

The Daily Planet Case should serve as a reminder to employers that they cannot terminate, threaten termination or detrimentally alter the position of the employee (such as changing an employee’s shifts) on the basis that they chose to exercise a workplace right.

It also reminds employers that the Courts will look to the “motivation” of the employer in its decision to take adverse action against another employee.

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The author Phil O’Brien is a highly experienced and skilled workplace investigator and trainer who can take the stress out of conducting workplace investigations into bullying, harassment, sexual harassment, discrimination and other forms of misconduct.

You can contact me on 002 9674 4279 or

This is general information only. It does not replace advice from a qualified workplace investigator in your state or territory.  It is recommended that should you encounter complaints in the workplace that you seek advice from suitability qualified and experienced workplace investigators.




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