$50,000 fine for duress: HR given ‘wake up’ call

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$50,000 fine for duress: HR given ‘wake up’ call

In a long running prosecution by the Fair Work Ombudsman, the Federal Circuit Court has fined Toyota Material Handling $49,550 for deliberately applying duress to three employees to get them to sign workplace agreements.

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In a long running prosecution by the Fair Work Ombudsman, the Federal Circuit Court has fined Toyota Material Handling $49,550 for deliberately applying duress to three employees to get them to sign workplace agreements.
 
Judge Kenneth Raphael found the company breached the duress provisions of workplace laws when it applied pressure to three service technicians it employed at an aluminium smelter at Kurri Kurri, just west of Newcastle in the NSW Hunter Valley.
 
According to the FW Ombudsman, Toyota Material Handling employed the workers under Australian Workplace Agreements (AWAs) on a permanent rotating shift basis at the site after it secured a contract to provide all servicing and repair activity of plant and equipment at the site.
 
In 2009, the company commenced replacing the AWAs with more site specific Individual Transitional Employment Agreements (ITEAs).
 
Judge Raphael found the company pressured the employees to sign the ITEAs by telling them they would be rostered off their continuous shift work positions if they did not sign.
 
Judge Raphael found the consequence of being rotated off shift work would include a ‘substantial loss of earnings’ of between $500 and $600 a week.
 
The three workers signed the ITEAs, with Judge Raphael noting that ‘all three employees deposed to concerns about the effect of not signing upon their families’.
 
Judge Raphael found the effect of Toyota Material Handling’s conduct was to leave the three employees with ‘no real choice’.
 
‘This was the intention of Toyota Material Handling; and the conduct was unconscionable or illegitimate,’ Judge Raphael said.
 
Employees did not receive agreements beforehand
 
Judge Raphael also found the company breached laws relating to required procedures for executing workplace agreements, including allowing employees seven days to consider agreements and providing information statements.
 
The company also breached workplace laws in 2006 when it made a false or misleading declaration to the Office of the Employment Advocate that an employee had received an information statement before signing a workplace agreement and that the employee had received the agreement 14 days before signing it.
 
HR department should have been aware of obligations
 
Judge Raphael said that in determining penalty he took into account that Toyota Material Handling had a ‘human resources team and a lawyer with dedicated responsibility for compliance’.
 
‘A company with a human resources department and lawyers on staff should be well aware of its obligations,’ Judge Raphael said.
 
‘And non-compliance with those obligations, whilst possibly not deliberate, is certainly negligent.’
 
No contrition
 
Judge Raphael also said that Toyota Material Handling had ‘not accepted responsibility for its conduct or shown contrition’.
 
‘Given the large number of employees on the payroll of TMH it is important that the company understand its obligations and that it appreciates that if it contravenes the relevant workplace laws, it will be subjected to penalties for doing so,’ Judge Raphael said.
 
Judge Raphael said the penalties should ‘provide a wake-up call to the company and ensure that the management, including HR, understands and implements the industrial laws governing the workplace’.
 
‘In regard to general deterrence it should be seen that a large company such as this should not be immune from penalty, or have one imposed with such a light touch that others be encouraged to view contraventions as a reasonable cost of doing business,’ Judge Raphael said.
 
Negotiation must be free of duress
 
Fair Work Ombudsman Natalie James said the decision sent a clear message to employers to negotiate lawfully with employees in an environment free of duress and illegitimate pressure.
 
‘The breaches in this case were very serious because they involve employees being denied the opportunity to properly consider proposals relating to their employment and make a decision that is their own best interest,’ Ms James said.
 
 
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