There has never been a better time for advisers to ensure that they are giving sound and holistic advice to their organisation on its compliance with workplace laws. This was the message from Fair Work Ombudsman, Natalie James, at an AHRI ER/IR Network Forum hosted by Lander & Rogers yesterday.
Ms James was speaking to HR professionals about the risks and responsibilities faced by those who are advisers in the context the Fair Work Ombudsman’s "active and evolving" approach to accessorial liability.
Lander & Rogers Partner Neil Napper said, "For some years now, the FWO has been using the accessorial liability provisions in the Fair Work Act to build a culture of compliance across Australian workplaces. HR professionals and other advisers may be surprised to know that during the last financial year, 92% of matters filed by the FWO in court sought orders against accessories.
"Accessorial liability extends responsibility for breaches of workplaces laws beyond employers to others who have knowingly played a part in the breach, including directors, officers, human resources managers, external advisers like accountants and lawyers as well as businesses at all levels of labour supply chains."
Ms James said that previously, most of the accessories in the FWO's proceedings were directors of the corporate employer, but that in the past couple of years the FWO had extended its use of accessorial liability to include others involved in the contraventions, such as "human resources staff, administration or day-to-day managers, staff engaged to assist with recruitment and supervision, and other companies or individuals involved through a supply chain or franchise network."
Partner Daniel Proietto, who leads the firm's Retail & Supply Chain sector team, said that the point around supply chain was particularly important for businesses which operate a franchise model or otherwise outsource parts of their business to third parties. "The FWO has made it clear that it is looking to build a culture of compliance right across the entire supply chain and, as such, will be seeking a broader range of court orders against accessories in the chain, not necessarily just the contravening organisation.
"We have also seen that many of the cases in which the FWO has become involved recently have concerned businesses in the retail and supply chain sector. Companies in this sector need to ensure that they are meeting their minimum statutory obligations to their employees, but also that their arrangements with franchisees and/or third party contractors are adequate to ensure that those parties can and do meet their obligations."
In terms of what steps employers and their advisers can take to mitigate their risk of falling foul of the FWO, Mr Napper said that, "Given the FWO's activist approach to accessorial liability and readiness to use the media to publicise its activities, businesses and their advisers must be even more vigilant than ever before towards labour law compliance.
"It is not just the risk of litigation that that must be considered, but the potential reputational and brand damage that may result from adverse publicity—even in the absence of legal convictions—is relevant. Beneficiaries of labour, like those at the top of the labour supply chain, franchisors, users of labour hire and their advisers need to get expert advice on their obligations and put mechanisms in place, such as random audits for example, to ensure those obligations continue to be met."
Ms James advised employers and their advisers that, "Those involved in the decision making around the strategy for and compliance with workplace laws are on notice. You can find yourselves personally liable for the actions or inactions you help the company take. We are hopeful that employers will accept that it is ultimately their responsibility under the law to do the right thing."
"So, in light of the actions of the Fair Work Ombudsman and the intentions of the Government, it’s fair to say that employers and advisers who set out to do the wrong thing have cause for concern.
"And that is good news for the rest of us. Because bit by bit, my agency is doing what it can to ensure a level playing field, so that compliant businesses that are doing the right thing and seeking the right advice are not at a competitive disadvantage."