Personal liability for adverse action
Moray & Agnew
The role of an HR Manager is crucial to the effective operation of an organisation in many respects – not least of which is in providing guidance in relation to employee rights and entitlements. A recent decision serves as an important reminder for HR professionals as to their role in ensuring compliance with the Fair Work Act 2009 (Cth) (Act) and, importantly, the extent to which individuals can be personally held to account if a breach occurs.
Director of the Fair Work Building Industry Inspectorate v Baulderstone Pty Ltd & Ors (No 2)  FCCA 2129 involved a construction worker, Mr Teariki, who resigned as a member of the Construction Forestry Mining and Energy Union. It subsequently came to the CFMEU’s attention that he was employed under a salaried arrangement rather than a classification in the company’s enterprise agreement, and the union made a complaint about this to the company.
In light of the union’s complaint, Baulderstone’s State Operations Manager made a decision to change Mr Teariki’s employment status so he would become covered by the enterprise agreement, and directed two HR Managers to meet with Mr Teariki and have him sign documents to this effect. During that meeting Mr Teariki expressed confusion over the arrangements and said he did not understand why he could no longer continue on the salaried contract. However, he signed the documents given to him by the HR Managers.
The Director of the Fair Work Building Industry Inspectorate brought proceedings against the company and the HR managers personally, alleging that:
• the company took adverse action against Mr Teariki by directing him to sign the documents, motivated by reasons related to union membership; and
• the HR managers also engaged in adverse action because they were involved in the company’s breach.
The Court agreed that the company was liable, despite the fact that Mr Teariki was immediately reengaged under the enterprise agreement following the termination of his salary contact and suffered no financial detriment.
It was also satisfied the two HR Managers were personally involved in the contravention because they were aware the decision to change Mr Teariki’s employment status was made for reasons which included him having ceased to be a member of the CFMEU. Crucially, they each “had a choice of not implementing the decision, but failed to exercise that choice.”
The Court found the HR Managers’ conduct “was deliberate” and that Mr Teariki was compelled to sign the documents with the HR Managers exploiting “the vulnerable situation in which [he] found himself.” The HR Managers were each fined $3,500, and the company was fined $25,000.
This case demonstrates the Court takes breaches of the legislation very seriously, and may impose penalties on HR professionals who are involved in a company’s contravention of the Act.
Employers and HR professionals should both exercise caution when making decisions which impact on an individual’s employment status, and ensure any such decisions maintain employee rights and entitlements. Importantly, this case shows the Court expects HR managers personally to make the choice not to be involved in actions which amount to a breach.