A recent case demonstrates that managers may face personal exposure to financial penalties for breaches of the Fair Work Act (FW Act), under the accessorial liability provisions.
Mr Teariki commenced employment with Baulderstone Pty Ltd in May 2008 as a construction worker on the EBB project. At the commencement of his employment, Mr Teariki was covered by the Baulderstone Hornibrook Building Australian Capital Territory Enterprise Agreement 2006-2008. In January 2009, while working on the EBB project, Mr Teariki and Baulderstone entered into a contract of employment under which Mr Teariki would be paid a salary.
By February 2010, Mr Teariki was working full time on another project in the position of “Safety Officer”. Around this time, Mr Teariki resigned from the CFMEU and a delegate raised Mr Teariki’s resignation with the site manager.
Shortly afterwards, Razz Razlog (Employee Relations Manager at Baulderstone) and Nicole Kidman (Human Resources Manager for NSW and the ACT) reviewed Mr Teariki’s role and determined that he could not perform his role on the new project whilst being a salaried employee.
At the direction of Mr Stavrinos, Baulderstone’s Operations Manager in NSW and the ACT, Mr Razlog and Ms Kidman required Mr Teariki to sign documents giving effect to Mr Teariki’s resignation from being a salaried Safety Officer and that he agreed to be employed under the terms of the applicable Baulderstone Enterprise Agreement. Mr Teariki signed the documents.
The first decision - adverse action
The Federal Circuit Court found that by requiring Mr Teariki to sign the documents and resign from his salaried employment, Baulderstone took adverse action against him for, among other things, his ceasing to be a member of the CFMEU.1
In respect of the claim that Ms Kidman and Mr Razlog were “involved” in Baulderstone’s adverse action against Mr Teariki, the Court found that both Ms Kidman and Mr Razlog knew that the adverse action they were directed to take was, for reasons that included as a substantial and operative factor, Mr Teariki’s having ceased to be a member of the CFMEU. Accordingly, it was found that both were liable under the accessorial liability provisions of the Fair Work Act.2
The second decision - financial penalties
In the second decision handed down more than a year later in August 2015, the Court considered whether a financial penalty should be imposed on Baulderstone, Mr Razlog and Ms Kidman.
The Court imposed a pecuniary penalty of $25,000 on Baulderstone and $3,500 each on Ms Kidman and Mr Razlog.
In determining the penalties, the Court noted that:
- the contravening conduct was deliberate and concerted;
- Ms Kidman and Mr Razlog concealed the true reasons for their conduct by representing to Mr Teariki that the reason he was required to sign the documents was because his “role as a Safety Officer and being on a salary doesn’t work out”;
- Mr Teariki did not sign the documents in the exercise of his free choice. He signed them because Mr Razlog and Ms Kidman made it clear that he was required to sign them;
- Mr Razlog and Ms Kidman insisted that Mr Teariki sign the documents even though Mr Teariki did not understand why he was going back to wages; and
- Mr Razlog and Ms Kidman undertook the contravening conduct in complete disregard of Mr Teariki’s rights under the salary contract.
The Court found that, although Mr Teariki did not suffer any financial loss, the contravening conduct constituted the repudiation of Mr Teariki’s contract of employment and that this was the loss of a valuable right. The contract reflected what Mr Teariki considered to be best for his interests, however Judge Manousaridis pointed out that: “Baulderstone’s trampling of a contract that encapsulated what Mr Teariki considered to be best for his interests did not result in a compensable injury does not mean that no injury was done to Mr Teariki, or that the injury that was done was not significant.”
This case demonstrates that managers should not blindly follow directions. If you are concerned about a course of conduct, raise your concern with your own manager or director before acting in order to limit your exposure to liability.