WARNING: Personal Liability

People such as directors, executives and managers must be aware that they could be exposed to personal liability for their involvement in breaches of the Fair Work Act and other industrial instruments.

As time goes by we are seeing an increase in the number of prosecutions by the Fair Work Ombudsman (FWO).

Involvement

Specifically a person who is “involved” in an employer’s contravention of a civil remedy provision (such as a breach of the Fair Work Act or a breach of a Modern Award/enterprise agreement), is also taken to have contravened that provision.

The word “involved” includes both active involvement with actual knowledge, through to involvement where the individual does not know or appreciate that the conduct is unlawful.

Where a person is named as a respondent to contravention proceedings, they are also personally exposed to penalty and compensation orders.

Case Illustration

In the recent decision of Fair Work Ombudsman v Step Ahead Security Services Pty Ltd & Anor [2016] FCCA 1482, the court ordered:

• the employer and the sole director be jointly and severally liable for the underpayment of $22,779 to employees

• $257,000 fine for the employer

• $51,400 fine for the director

The penalties were very high in this case because the director was a repeat-offender (and therefore knew his obligations), he showed no contrition, the underpayments were deliberate and no steps were taken to rectify the underpayment for the employees.

Implications

The orders in this case (and in similar cases) clearly demonstrate:

• people involved in a contravention cannot hide behind their company

• people involved in a contravention may be prosecuted

• people can be held liable to make payment of underpayments

• people can receive heavy fines

• people can still be liable even if their company enters into administration/liquidation

Questions/Assistance

If you have any questions or would like any assistance, please feel free to speak with or email a member of our Matthews Folbigg Workplace Solutions team on (02) 9635 7966 or info@matthewsfolbigg.com.au

DISCLAIMER: This article is provided to clients and readers for their general information and on a complimentary basis. It contains a brief summary only and should not be relied upon or used as definitive or complete statement of the relevant law.