Toyota Material Handling has been fined nearly $50,000 for applying duress to three employees to sign new workplace agreements changing their working conditions.
The company was taken to the Federal Circuit Court in Sydney by the Fair Work Ombudsman after it was found to have pressured three service technicians to change from an Australian Workplace Agreements contract to Individual Transitional Employment Agreements.
The three workers were based at an aluminium smelter at Kurri Kurri, west of Newcastle in the NSW Hunter Valley.
Judge Kenneth Raphael found that the company breached the duress provisions of workplace laws, pressuring the three staff to sign the ITEAs by telling them they would be rostered off their continuous shift work positions if they did not sign.
The consequence of being rotated off shift work would include a “substantial loss of earnings” of between $500 and $600 a week.
All three signed the individual agreements, and it was found that “all three employees deposed to concerns about the effect of not signing upon their families”.
He found that the way it was handled by Toyota Material Handling left the employees with “no choice”.
“This was the intention of Toyota Material Handling; and the conduct was unconscionable or illegitimate,” the judge said.
It was also found that the company breached laws relating to required procedures for executing workplace agreements, including allowing employees seven days to consider agreements and providing information statements.
When determining the penalty of $49,550, the judge said 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,” he said.
The judge said the penalties should “provide a wake-up call to the company” to ensure its human resources matters are handled in compliance with the law.
Fair Work Ombudsman Natalie James said the decision shows employers they must 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,” she said.
Swaab Attorneys employment and workplace relations partner Warwick Ryan told SmartCompany that the new Fair Work Act clearly outlines that staff should not be misled, or coerced into signing any agreements.
“Any signing of agreements should be voluntary on behalf of the employee,” he says.
“The idea is that any independent agreement offered should be better than the Award…it could have benefits in terms of annual leave loading or overtime pay.”
Ryan says that companies can offer independent contracts but they should be properly negotiated with the employee, and should be designed to mutually benefit the company and the employee, not steer in favour of the company.
He says it is vital not to misrepresent the terms of the contract, and not to give an “ultimatum to sign”, such as saying you cannot afford to employ them if they don’t accept the new terms.
In cases where the company is genuinely in financial trouble and it could be necessary to reduce staff wages or hours in order to keep them all on the team, he says to tread carefully and transparently in negotiations.
“You would have to be transparent with financials, say here are the other steps we are taking to cut costs, and here is the proposal,” he says.
Any such action should be done with appropriate legal advice for the company, and staff members should have a union representative assisting them or a lawyer, Ryan advises.
He says the most important thing to remember is not to give ultimatums – but “allow the employee to make a choice”.
Melinda is a business writer and editor and helps companies to bring their brand stories to life through her small business, Oliver Content. Melinda was previously the content manager for KPMG Australia, an editor of SmartCompany, and spent many years as a journalist.
