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10 February 2015

HR managers and other senior personnel may be liable as an accessory if their employer breaches the Fair Work Act

It is important that HR professionals and others involved in decisions concerning the workplace are aware of the full extent of obligations for employers.

Accessorial liability under section 550 of the Fair Work Act 2009 (Cth) (FW Act) provides that a person involved in contravening a civil remedy provision under the FW Act is taken to have contravened that provision.

The cases considering section 550 of the FW Act suggest that in order to be involved in a contravention for the purposes of the section, the legislation does not require that the person knew that they were contravening a provision of the legislation. It is sufficient that they knowingly participated in the activity that constituted the contravention.

In a practical sense this means that proceedings can be instituted not only against the employer who actually contravened the civil remedy provisions of the FW Act, but against anyone else who was involved in the contravention within any of the terms of section 550.

In terms of the role of HR advisers and managers, in FWO v Centennial Financial Services Ltd & Ors [2011] FMCA 459 the then Federal Magistrates Court held that a specialised adviser or professional (in this case an HR manager) should have been aware of and should at least have attempted to give advice on the employer’s obligations under the FW Act. This was in a case where the employer engaged in sham contracting arrangements changing the employment arrangements of sales staff from employees to independent contractors.

In Director of the Fair Work Building Industry Inspectorate v Baulderstone Pty Ltd & Ors [2014] FCCA 721 the Court held that an employee relations manager and human resources manager had knowledge that the reason why the employee’s employment was altered was because the employee had resigned his membership from the CFMEU. The Court found them liable under section 550 for the employer’s adverse action against the employee. Although the ER and HR managers did not make the decision to vary the employee’s employment they knew the CFMEU delegate had complained about the employee resigning his membership from the union, advised the operations manager about the variation and made arrangements for the employee’s employment to be varied.

In United Voice v MDBR123 Pty Ltd [2014] FCA 1344 the Federal Court found that a franchisor who was intimately involved in the dismissal of an employee from a franchisee child care centre was liable under section 550 for the employer’s adverse action. The Court held that, while the directors of the particular child care centre made the decision to dismiss the employee, they sought counsel and were advised by the franchisor, who drafted the termination letter and conducted the termination meeting.

To date, liability under section 550 has not extended to orders to pay compensation and has been limited to orders to pay penalties for breaching the relevant part of the FW Act. However, there is a possibility that a person liable under section 550 could be ordered to pay compensation.

It is important that HR professionals and others involved in decisions concerning the workplace are aware of the full extent of obligations for employers and principals under the FW Act.



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