Employers who pursue a ‘sign or else’ approach to AWAs can fall foul of the law – and unions are not immune. By PETER VITALE.
By Peter Vitale
Recent cases show that employers should be warned against putting any pressure on employees to sign workplace agreements. The consequences of a “sign or else” approach can include an invalid agreement and a large fine.
Similarly, unions who use their muscle to force employers to enter into collective agreements can also fall foul of the law.
Two Tasmanian employers in the hotel industry were recently punished by the Federal Magistrates’ Court for trying to impose Australian Workplace Agreements (AWAs) on their employees.
In one of the cases, the Court found that the owner of the Granada Tavern in Hobart had breached the Workplace Relations Act by imposing duress in trying to force casual waiting staff into signing an AWA.
The employee was a young student who had a regular pattern of casual shifts. The tavern altered and reduced her shifts after she refused to sign an AWA, which it wanted employees to sign because of concerns about a potential underpayment of wages claim. The employer’s director engaged in a number of lengthy discussions with the employee with the intent to force her to sign the AWA and told staff the hotel would have to be run like a “concentration camp” if the employees did not sign the AWAs.
The Federal Magistrate decided the conduct constituted duress because it amounted to an “illegitimate application of pressure to induce a party to enter into an AWA”. “Illegitimate pressure may include unlawful threats, unconscionable pressure, and, in relevant circumstances, lawful conduct.” The conduct must be “likely and intended to have the effect of denying the exercise of a person’s free will”.
Critically, as the facts and the Court’s decision illustrate, employers should note that specific conduct does not itself need to be illegal to constitute duress. The Court fined the employer company nearly $25,000 of a maximum $33,000 and the director almost $5000 personally of a maximum $6600, even though the employee never actually entered into an AWA or lost any wages.
In another case, the Mornington Inn was fined $170,000 for breaches of the act in relation to 10 separate employees. In that case the employer had reduced and changed the shifts of employees, substantially reducing their income. The employee included two women who were single mothers. The changes meant they couldn’t pick their children up from school. The employer shouted angrily at various employees who refused to sign an AWA.
In a case involving a trainee truck driver working at a Hunter Valley open cut coal mine, the employer reached an out-of-court settlement, paying compensation and legal costs to the employee. The employer made alleged threats in front of other staff to ensure that the employee would not work again in the Hunter Valley and, ultimately, terminated her employment.
Aside from the statutory remedies applying to workplace agreements, the common law also offers remedies to employees who have entered agreements under duress.
Consider circumstances where an employee who has just been terminated is pressured into signing a deed of release, saying he or she will not sue the company.
The circumstances may well provide grounds for a court to say that the employee’s consent to the release was not given freely, with the result that the employer could not rely on the agreement. The employee would then be entitled to proceed with legal action.
Employers should also be aware that unions have obligations to avoid applying duress. Earlier this year SmartCompany wrote about the penalty imposed on the Electrical Trades Union and the owner of the Loy Yang B power station in Victoria for trying to force a subcontractor into entering a collective agreement with the ETU before being allowed on site.
In that case, legal action was initiated by the Australian Consumer and Competition Commission for breaches of the Trade Practices Act. More recently, in a case initiated by the Building Industry Taskforce (the predecessor of the Australian Building and Construction Commission), the construction union CFMEU was found guilty by the Federal Court of unlawful conduct when, among other things, it threatened industrial action unless all contractors on a building site in Wollongong were signed to union agreements.
The lesson for employers:
- An employee’s signature is not necessarily the only thing you need to have an agreement.
- If you want to implement AWAs or other agreement in your workplace, applying pressure to employees, however it’s done, is not the way to do it.
- Illegal duress can arise out of conduct that might otherwise be completely lawful.
- Agreements entered under duress might be invalidated by a court.
- Substantial penalties apply under the Workplace Relations Act for unlawful duress or coercion.
Peter Vitale is the principal of CCI Victoria Legal .
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