Undue influence or pressure

An employer must not exert undue influence or undue pressure on an employee in relation to a decision by the employee to:

1. make, or not make, an agreement or arrangement under the National Employment Standards; or
2. make, or not make, an agreement or arrangement under a term of a modern award or enterprise agreement that is permitted to be included in the award or agreement under subsection 55(2); or
3. agree to, or terminate, an individual flexibility arrangement; or
4. accept a guarantee of annual earnings; or
5. agree, or not agree, to a deduction from amounts payable to the employee in relation to the performance of work.

An employer must not exert undue influence or undue pressure on an employee in relation to the employee’s terms and conditions of employment.

Example

An employer must not pressure an employee to agree to an individual flexibility arrangement.

There are no exceptions.

These provisions do not require coercion, but there must be some conduct which nevertheless amounts to the exercise of some influence or some pressure in order to make an employee act in a particular way. The provisions set a lower threshold than coercion.[1]

The prohibition applies in circumstances where an employer makes an agreement with an individual employee (not employees acting collectively) and where the employer should be expected to take care not to exert significant and inappropriate pressure on an employee to make the agreement.[2]

‘Undue’ conduct is conduct that is ‘unwarranted; excessive; too great’ or ‘not proper, fitting or right; unjustified.’[3]

To ‘influence’ is ‘to move or impel to, or to do, something’.[4]

The word ‘pressure’ refers to harassment or oppression.[5]

An illustrative example

is provided in the Explanatory Memorandum:[6]

David is 18 years old and is employed by Sparkles Pty Ltd (Sparkles). The manager of Sparkles has approached David about the possibility of cashing out his annual leave entitlement saying that, because Sparkles is a small business, if David took leave the business would have to close temporarily to cover David’s absence. In the circumstances, David feels obliged to agree to the manager’s request.

Depending on the exact way in which this issue was raised with David, the manager’s request may amount to undue influence or pressure and would be prohibited. Of course, if the manager made it clear to David that he was in no way obliged to cash out his leave and that the manager was merely exploring all possible business options, the manager’s request is unlikely to amount to undue influence or pressure.

Conduct amounted to undue influence or pressure

Pressure to sign an individual flexibility arrangement

Fair Work Ombudsman v Australian Shooting Academy Pty Ltd [2011] FCA 1064

The respondent was found to have exerted undue influence and undue pressure on an employee in relation to his decision on whether or not to agree to an individual flexibility arrangement. It did this by threatening to dismiss the employee if he did not sign the employer’s proposed individual flexibility arrangement.

Penalty ordered
The respondent was ordered to pay the Commonwealth $25,000 as a pecuniary penalty.

The managing director and company secretary of the respondent was ordered to pay the Commonwealth $5,000 as a pecuniary penalty

Compensation ordered
The respondent was ordered to pay the applicant $7,146 for loss suffered.

Conduct did NOT amount to undue influence or pressure

Request to sign a termination letter

Wintle v RUC Cementation Mining Contractors Pty Ltd (No. 3) [2013] FCCA 694

The applicant claimed that at a meeting in which he was asked to sign a letter of termination, the respondent exercised undue influence or pressure on him to agree, or not agree, to a deduction from amounts payable in relation to the performance of work.

The Court listened to the recording of the meeting and found that the meeting was conducted plainly. The tone of the meeting was unremarkable with no evidence, either in the recording or from the witnesses, of any raised voices, agitation, or body language or movements which could be interpreted as an attempt to exercise undue pressure or to exercise undue influence with respect to any matter. There was a request, and nothing more than that, for the applicant to sign the Termination Letter, and there was nothing in the terms of anything said or read to the applicant, or the Termination Letter itself, which constituted undue influence or undue pressure.