Human Resources Managers, Business Managers, Financial Controllers and CFOs... be on alert.

On Friday, 27 May 2016, the Fair Work Ombudsman Natalie James delivered a speech to the Australian Labour and Employment Relations Association National Conference. During her speech, Ms James spoke about the FWO's increasing focus on accessorial liability.

She stated:

"We are pushing the boundaries of the accessorial liability provisions contained in the FW Act. This is how Coles ended up in court. So far this financial year nearly every matter we have filed in court— 94% in fact—has also roped in an accessory.
We are increasingly pursuing a broader range of accessories, including accountants and human resources managers."

The previous day, the FWO issued a media release which identified that the FWO and the Australian Securities and Investment Commission would jointly audit 50 businesses in Brisbane by a randomly selected spot check, with the FWO Inspectors focusing, in particular, on correct payment of wages, penalty rates, allowances, loadings, provision of appropriate meal breaks and compliance with record-keeping and payslip obligations.

Other areas problem areas for compliance we have come across include:

  • Using unpaid interns to do productive work
  • Failure to pay leave loading on termination payments

What are the consequences of an accessorial liability claim?

There are a number of monetary and non-monetary consequences for individuals, including:

  • reputational damage – if a claim if brought against you, you will be a named respondent to the litigation
  • monetary penalty – the Fair Work Act provides for personal monetary penalties of up to $10,800 per breach for individuals (and these are set to increase significantly post-election).

Ms James also noted in her speech that the FWO is pursuing a broader range of orders from the courts, against persons involved in a contravention of workplace laws, including:

"Orders that accessories personally repay wages to workers
Freezing orders to prevent businesses and accessories transferring assets, and
Injunctions to prevent a person from contravening the FW Act in the future, exposing them to contempt of court if they fail to comply."

Over the last few years, we have seen a wide range in the monetary penalties imposed against non-director accessories:

  • a Business Manager was ordered to pay a penalty of $5,940 for underpayment breaches relating to minimum wages, allowances etc (where sham contracting arrangements had been used by the business)
  • an Employee Development Manager was ordered to pay a penalty of $1,020 for underpayment of notice of termination (by 2 days!)
  • a payroll officer was ordered to pay a total penalty of $14,652 for underpayment of monetary entitlements under a modern award (where the business had been paying employees a flat rate)
  • an OHS Manager was ordered to pay penalties totalling $3,750 for impermissible changes to employees contracts (from permanent employment to commission-only contractors)

What can you do to protect yourself, and your business?

Pro-active monitoring to ensure your business is compliant with its current obligations under the Fair Work Act is a must, and should include:

  • an employment contract review – are there any pre-Fair Work Act contracts or policies floating around your business?
  • a compliance audit – do you know which award applies to your employees, and whether you are meeting all the obligations in that award?
  • a random spot check – if you use a flat rate wage in your business, have you undertaken annual spot checks to ensure the employee is receiving at least their minimum monetary entitlements under any relevant award or enterprise agreement?

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.