HR Managers are being personally targeted for underpayments made by their companies and imposition of penalties in a new crackdown by the Fair Work Ombudsman.
Fair Work Ombudsman, Natalie James, issued a very clear warning to employers at the Australian Human Resources Institute recently, letting them know that not only will companies be the focus of investigations involving underpayments of workers but also the relevant individuals within those companies. This means that managers or directors (as accessories) and those working in Human Resources, accountants and supply chain companies, may be asked to personally cough up back pay for workers that they know, or should have known, have been underpaid.
This is no small risk. In the 2015-26 financial year, the Fair Work Ombudsman sought orders against accessories in 92% of cases filed.
A recent example is that of trolley collecting contractors engaged by Coles. Two individuals, a director and a manager, were fined $94,050 each for underpayments of their employees. Usually the company would be on the hook for these amounts, but the Federal Court of Australia looked past the corporate veil to hold these two people responsible because it found that they were knowingly involved in the underpayments, and therefore should pay these amounts directly.
A HR Manager who knowingly falsified employment records and made unlawful deductions from the wages of cleaners working in Melbourne's Federation Square and Crown Casino has also been found to be personally liable for repayments to those workers. Whilst the actual amounts aren't known yet, the HR Manager is facing fines of $10,800 per breach.
In another case, the Federal Circuit Court found that a HR Manager was involved in a contravention when she gave a dismissed employee two days less than the statutory notice of termination period required.
The recent high profile investigation into underpayments at 7-Eleven also included looking at the accessorial liability provisions. The Fair Work Ombudsman stated that they will investigate and bring claims against people within the organisation who have been involved in underpayments, which may include human resources officers or professional advisors. The evidence gathered so far doesn't explicitly show that any personnel at 7-Eleven knew of these underpayments (which is required to prove accessorial liability) but several franchisees are still under investigation, and the Fair Work Ombudsman is still watching the company very closely due to a long history of non-compliance and underpayments.
In light of these decisions and this new approach taken by the Fair Work Ombudsman and the Courts where accessories are concerned, HR Managers in particular need to be vigilant about the practices within their workplaces. Not only will HR Managers and other individuals be in the firing line if they were aware of deliberate underpayments but also if they 'turned a blind eye' to the underpayments. This means that if HR Managers see or suspect any wrongdoing in their workplace and they don't speak up, they may be left holding the bill. Therefore, if there is any uncertainty about whether employees are receiving their rightful entitlements, you should seek independent advice to avoid the risk of being personally involved in a contravention.