A HR manager has been personally fined $1,020 for her involvement as an accessory to a company’s breaches of the notice of termination provisions of the Fair Work Act 2009 (Cth) (Act). In the same week, two managers and a director were found to be accessories to their company’s underpayment of staff and are currently waiting to find out how much their involvement will personally cost them.
The two decisions highlight the Courts’ preparedness to hold individuals liable for their involvement in breaches relating to minimum employment entitlements. Companies and staff alike need to understand the risks of the organisation and individuals being held accountable for breaches of the Act, and strictly adhere to the terms of any applicable industrial instrument and/or the provisions of the Act when dealing with employees.
In the first decision, a HR manager gave an employee 28 days’ notice of termination after being notified by the workers compensation authority that the company was no longer required to provide suitable alternate duties for the employee. The HR manager reviewed the employee’s contract and provided four weeks’ notice as per its terms. Unfortunately, due the employee’s age and length of service, the notice period was two days short of the employee’s statutory entitlements under the Act.
The company was fined over $20,000 for breaching the notice of termination provisions of the Act. The HR manager was personally fined $1,020 for her role in effecting the notice and termination. In setting these penalties, the Court stated that the penalties should act as a warning to employers of the need to comply with legislation to the letter. The decision highlights the expectations that Courts have of individuals and the need for HR managers to be adequately trained in understanding, and identifying key issues in, employee relations law.
The second decision involved two managers and a director who, among other things, failed to pay employees their correct entitlements under the applicable modern award (and, in fact, paid the employees less than 60% of their entitlements). The director, who was heavily involved in the financial aspects of the business, argued that when he purchased the business from previous owners, he had not been given sufficient information about the Australian employment law landscape.
The director and the two managers all claimed they were simply unaware that the modern award or Act set the relevant minimum wages or conferred other entitlements. However, the Court was not persuaded by their naivety explanation in circumstances where all three had at least a master’s degree (two in business), one had been a union member and none were found to be particularly credible.
Finding that ignorance was not bliss but amounted to wilful blindness, all three were found to be accessories to the company’s breaches. The Court’s decision on what penalties they will receive as a result of their involvement is not yet available.
Lessons for employers and individuals
While there has been an increase in the scope of how the accessorial liability provisions are used, there are a number of steps that companies can and should to take to educate management and HR teams on their obligations under the Act, applicable industrial instruments and general protections (including the risks to them personally). Gadens’ Employment and Safety team is experienced at advising employers on these obligations and strategies for ensuring compliance with minimum employment obligations.