ACCESSORIAL LIABILITY FOR BREACHES OF THE FAIR WORK ACT 2009 (CTH)
Date: May 4, 2017
A recent decision of the Federal Circuit Court has highlighted the broad reach of the provisions in the Fair Work Act which enable a Court to impose civil penalties against individuals, companies and other bodies for being involved in a contravention of the legislation.
ISSUE
The accessorial liability provisions contained in the Fair Work Act 2009 (Cth) (FW Act) are derived from the law relating to the liability of an accessory under the criminal law. Following its earlier existence under the common law, this concept was first codified in the context of the criminal law in the Accessories and Abettors Act 1861 (UK) as follows:
“Whosoever shall aid, abet, counsel, or procure the commission of any indictable offence, whether the same be an offence at common law or by virtue of any Act passed, or to be passed, shall be liable to be tried, indicted and punished as a principal offender”.
Fast forward to the current day and the same concept is being enthusiastically and regularly used to ensure compliance with civil laws, including the FW Act. Whilst a breach of the FW Act does not constitute an indicatable offence, but rather a breach of a civil remedy provision, the fundamental concept of accessorial liability is the same.
Section 550 of the FW Act provides that a person who is involved in a contravention of a civil remedy provision under the FW Act is taken to have contravened that provision. A person is “involved in a contravention” if they have: “(1) aided, abetted, counselled or procured the contravention; (2) induced the contravention, whether by threats or promises or otherwise; (3) been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or (4) conspired with others to effect the contravention”. A court must find there has been a primary breach of the FW Act by the employer before the accessorial liability provisions can be applied to others.
In Fair Work Ombudsman v Blue Impression Pty Ltd & Ors [2017] FCCA 810 (Blue Impression Case) an accountancy practice was found to have been involved in a contravention of the FW Act for failing to take action to ensure its client’s employees were properly paid in accordance with the minimum requirements as specified in the relevant award.
The Blue Impression case follows a string of cases in which all manner of persons have been found to have been involved in contraventions of the FW Act. Ensuring that those involved in, or overseeing, compliance with employment laws are responsible for compliance with those laws is a very effective tool being used by the Fair Work Ombudsman. The cases show that individuals such as HR managers, payroll managers, directors, senior managers and administrators, can all be personally liable. Corporate entities other than the employer itself can also be unlawfully involved in a contravention of the legislation, as can a trade union, for example.
In the Blue Impression case, it was clear that the accountancy practice had knowledge of earlier breaches of the award and consequently the FW Act. However, it argued that it should not be liable as an accessory for breaches of the FW Act because it only provided book keeping services, that it had no advisory role as to minimum obligations under the award and that its key director did “not have any legal or human resources or industrial relations expertise, which would equip [him] to advise Blue Impression as to its obligations under any award or under the [FW Act]” (at para 35). The accountancy practice also argued that it hadn’t been asked to provide advice on pay rates and therefore should not be liable.
OUTCOME
The Court found that the accountancy practice was liable as an accessory for being involved in Blue Impression’s contravention of the FW Act. The Court was satisfied on the evidence that the accountancy practice must have known that the employer was underpaying its employees because it knew the rates in the payroll system were not sufficient to allow the employer to comply with its obligations in the award.
The Judge said “I am satisfied the evidence demonstrates [the accountancy practice through its key director] deliberately shut its eyes to what was going on in a manner that amounted to connivance in the contraventions by [the employer]” (at para 102) and that “I accept…that [the accountancy practice and its key director] had at their fingertips all the necessary information that confirmed the failure to meet the Award obligations by [the employer] and nonetheless persisted with the maintenance of its (payroll) system with the inevitable result that the Award breaches occurred” (at para 108).Civil penalties will now be determined by the Court against the accountancy practice.
IMPACT
The decision provides a useful reminder about shared obligations to ensure an employer’s compliance with the FW Act. Those persons aware of information (or who should be aware of it) which could potentially give rise to a breach of the legislation should pay careful attention to compliance with employment law and ensure that an employer takes prompt corrective action where non-compliance is discovered.
In addition to this recent case against an accountancy practice, so far, the cases have shown that HR managers, payroll managers, directors and senior managers (amongst others) can be personally liable for their involvement in an employer’s breach of the law.
CONTACT
Whitehall Workplace Law
Level 14, 330 Collins Street, Melbourne, VIC 3000
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