Employer has underpaid – who else can be held responsible?
1. The Fair Work Act 2009 (Cth) imposes on national system employers [1] various obligations, including in most circumstances to pay its employees at least the minimum amounts required by a relevant modern award (s45) or an applicable enterprise agreement (s50).
2. A proven failure to make such a payment provides the basis for a Court [2] to impose a civil penalty on the employer: see Part 4-1. It is a strict liability provision: the applicant for such an order[3] does not need to prove the employer intended to underpay the employee. The Court can also order that the employer back-pay the amount owing plus interest: ss545, 547.
3. The legislature has determined as a matter of public policy that there ought to be a capacity to also penalise persons who were involved in the same contravention: s550.
4. This provision is increasingly utilised. The regulator, the Fair Work Ombudsman (FWO), has reported that it sought penalties against accessories in 72% of cases in 2014/15 and 94% of cases in 2015/16.
5. This paper examines the nature of the accessorial liability provision in the Fair Work Act and the orders that can be made under it. In particular it examines whether the following can be held to be liable as an accessory to the employer:
a. Directors;
b. Principal contractors;
c. Franchisors;
d. HR managers; and
e. Lawyers, accountants and other external advisers.
[1] In practice employers of all employees in Australia except State Government employees in NSW, Queensland, WA, SA and Tasmania, Local Government employees in NSW, Queensland and SA, and employees of non-constitutional corporations in WA.
[2] The Federal Court, Federal Circuit Court or “an eligible State or Territory Court” as defined in s12.
[3] Such proceedings can be brought by the regulator, the Fair Work Ombudsman, or by the employee affected or by an employee association: s539(2), item 2.
