Allens Arthur Robinson partner and head of the firm's workplace relations group, Adam Lunn, said and adverse action clause in the new Fair Work Act meant interaction on websites such as Facebook and Twitter between employers and employees could have wider implications.

What may be meant as an innocent comment via social media by an employer to an employee may lead to bosses facing lawsuits for unlimited damages for harassment, bullying or discrimination.

"Employers need to think very carefully before they allow employees to become friends on their social networking sites," Lunn said.

"Allowing employees to openly access your Facebook or MySpace account opens you to defamatory material being placed on there or just the perception your engagement with some employees is more favourable to them than to other employees.

"You could be seen to be discriminating against an employee that you don't befriend. It is important to remember that the employer-employee relationship doesn't stop at the office door."

Under the Fair Work Act's adverse action clause, workers can sue for unlimited damages over actions that adversely affect their job, injures or discriminates, or threatens such actions.

Lunn said businesses should look to develop a social media policy or review their existing technology and human resources policies to outline precisely what is acceptable and unacceptable in regards to the use of social media both during business hours and after hours.