A recent decision heard in the Federal Court of Australia has reinforced the depth of scope of the “accessorial liability” provisions in the Fair Work Act 2009 (Cth) (Fair Work Act).
The Fair Work Ombudsman (the Applicant) (FWO) commenced proceedings for breaches of employment law obligations as per the Fair Work Act. The respondent, a company that owns and operates a restaurant in New South Wales, trading as New Shanghai Charlestown, had purportedly failed to pay or afford employees their due entitlements under the Fair Work Act and in doing so, processed underpayments of approximately $600,000 to 85 Chinese restaurant staff over a period of 16 months. Further allegations suggested that falsified records had been created and provided on behalf of New Shanghai Charlestown by way of response to a FWO notice to produce. Liability was not merely limited to New Shanghai Charlestown and instead, extended to the HR manager of the company, its sole director and the restaurant’s manager, with the court imposing civil penalty orders on all of the respondents.
Under section 45 of the Fair Work Act, which states, “a person must not contravene a term of a modern award”, providing payments less than a modern award will constitute a breach of the Fair Work Act. Section 550 of the Fair Work Act provides that a person involved in a contravention of the same Act is liable to the equivalent extent as a person who actually contravened the Act.
The Federal Court offered little clemency to the respondents. Finding in favour of the FWO, Justice Bromwich imposed fines on all four respondents for numerous contraventions of the Fair Work Act, principally in relation to sections 45 and 550.
The Court found that in September 2014, after the FWO requested employee records, the company director instructed the HR manager to create a range of documents, including time and wage records and payslips for 28 employees. Enlisted by the company director, the restaurant’s manager assisted in the construction of these records; namely, through providing any relevant information to the HR manager. These falsified documents were subsequently provided to the FWO.
With the Court discarding arguments that cultural factors, family connections and an absence of formal qualifications mitigated her liability, the HR Manager was fined $21,760, a sum constituting part of a total of $525,057 in fines imposed on New Shanghai Charlestown.
Responding to claims that the HR manager had no formal qualifications or training in HR management, Justice Bromwich found that “she had sufficient training or capacity to carry out the directions given to her in her role, including the creation of false records.” Additionally, the HR manager brought to light her Chinese heritage, suggesting, firstly, that her culture condemned defiance of a boss within the workplace and secondly, that her residential visa status was contingent upon her continued employment with New Shanghai Charlestown. Nevertheless, the HR manager’s claims of vulnerability fell on deaf ears, with Justice Bromwich finding that her vulnerability was not one which gave rise to vulnerability and a position of victimhood, instead characterising her vulnerability as one which simply hindered her ability to oppose participation in illicit activity. Clearly, the HR manager’s claims could not refute the evidence – she had neglected to take the necessary steps in ensuring that the restaurant paid the correct rates to its employees, namely, hourly casual loading, weekend penalty rates or overtime, which deprived staff members of a total of $583,688.
Justice Bromwich imposed further penalties of $54,672 on the company director, and $18,496 on the restaurant manager.
This case is indicative of the fact that liability for breach has a depth of scope that extends beyond personnel directly responsible for the employment of workers. Accordingly, as a result of section 550 of Fair Work Act, HR personnel, managers and other relevant individuals may be found liable, having civil penalties imposed against them.