Accessorial liability of human resources and other management

Out of Sight, Out of Mind?

We all know when we get that feeling that something is wrong, we are usually right! Accessories are no longer a fashion trend, so it seems…

Recently, a HR Manager was found to be personally liable for penalties under section 550 of the Fair Work Act 2009 (Cth) (“the FW Act”), for providing the Fair Work Commission (“FWC”) with false time and wage records. This behaviour – known as accessorial liability – was a bid to cover up her boss’s underpayment of over 80 restaurant staff. The 40 floor staff, 40 kitchen staff and 5 cooks were owed a combined amount of almost $600,000 from their employer. The HR Manager attempted to excuse her behaviour by saying that she was afraid she would lose her job if she defied her boss, however, the Court emphasised that following instructions from a boss is no excuse for knowingly breaking the law.

What is Accessorial Liability?

Section 550 of the FW Act makes it clear that if an individual is “involved” in a contravention this behaviour will be treated the same way as actual contravention. This means that if senior management are taking part in illegal activity, such as underpayment of wages, and HR or other management have assisted them in such behaviour, whether directly or indirectly, those assisting will be treated the same as the main wrongdoer/overall company.

This legislation was designed to hold company directors accountable for their actions so they cannot avoid consequences for things like underpaying employees. As illustrated by the FW Act and the above case, this accountability also extends to HR, Pay Roll Officers, Frontline Managers, Accountants and Advisors. Serious contraventions of the FW Act (as defined by s 557A) can attract penalties as high as $126,000 for individuals and $630,000 for companies.

The above case provides a firm reminder to managers, employees or even those in administration like payroll or wage record keeping, that if your business practices do not comply with FW Act’s stringent requirements, you can personally risk facing significant monetary penalties, not to mention reputational damage.

What can I do to ensure compliance?

If you are a HR manager, payroll officer, business owner, etc. and do not feel like your practices and procedures are ‘up to scratch’ they are probably not. We know how difficult and time consuming it can be to work out exactly what each individual employee is entitled to. Some things that employers may need to consider are:

• Prescribed minimum award rates of pay;
• Casual loadings;
• Weekend and public holiday penalty rates;
• Overtime rates; and
• Superannuation contributions.

It can be challenging to work out which legislation is relevant to your situation, let along to navigate and apply it to your business. If you require assistance with this, contact Workplace Wizards on 0458 6444 69 for specialist advice in this complex area. We can help you ensure your business complies, meaning you can avoid being held personally liable for any potential discrepancies.