24 August 2015

HR Managers beware: personal exposure for following the company line

In late June, we reported on a decision (Cerin v Aci Operations Pty Ltd & Ors [2015] FCCA 1654) in which the Federal Circuit Court (the “Court”) held that a human resources manager may have a penalty imposed on her personally for her role in dismissing an employee in breach of the National Employment Standards.

While a decision on penalties in that case has not yet been handed down, another decision of the Court earlier this month has again highlighted the real and personal threat human resources managers face if they are involved in breaches of the Fair Work Act 2009 (Cth).

The decision

In Director of the Fair Work Building Industry Inspectorate v Baulderstone Pty Ltd & Ors (No 2) [2015] FCCA 2129, the Court fined two human resources managers $3,500 each for their role in coercing an employee off his salaried contract of employment and onto an enterprise agreement under which he would be paid wages in breach of the FW Act’s general protections regime. 

The employee was told by his HR managers that his “role as a Safety Officer and being on a salary [didn’t] work” when, in fact, the central reason for the employer’s decision was a complaint made by a union delegate following the employee’s resignation from the union. The Court found that in taking adverse action against the employee, the employer exploited the “vulnerable situation in which [the employee] found himself’, gave him “no choice in the matter” and made him feel“compelled to sign the documents”.

Following company line no excuse

Interestingly, the Court rejected an argument that the human resources managers should not be personally fined because they were following their employer’s direction. The Court held that the human resources mangers “had a choice of not implementing the decision, but failed to implement that choice”. 

Determining the penalty

  • While the employee was not awarded compensation because he had suffered no financial loss, inpenalising the human resources managers, the Court held that it was important to take into account the need for “general deterrence to deter persons in subordinate positions from complying with directions from superiors to engage in conduct that may involve contraventions of the FW Act”. 
  • Additionally, the employer was fined $25,000 for its “deliberate and concerted” contravention of the general protections regime.
Posted in Legal Advice & Consulting.
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