04 Oct Accessorial Liability: Fair Work Act
Accessorial liability is a common element of the Fair Work Act 2009 (Cth) (FWAct) that employers and employees should understand.
A common problem encountered by employees who have not been paid their minimum legal entitlements is discovering that the company which employed them has been left with no money. It is not uncommon for the person/s controlling the company to resurface shortly afterwards and recommence operating through a new company.
A Judgment from the Federal Circuit Court in Fair Work Ombudsman v Step Ahead Security Services Pty Ltd & Anor [2016] FCCA 1482 has highlighted the existence of another tool for those seeking to help employees recover money in these circumstances.
In Step Ahead, Judge Jarrett ordered that the employing company and its sole director be jointly and severally liable to compensate affected employees for underpayments. This allows the employees to recover the money owed from either the company or the director – hence the personal assets of the director can be accessed if the company has no money. Judge Jarrett found section 545(1) of the FWAct permits this type of order where an individual is involved in the contravention as defined in section 550.
Following this Judgment, it is worth giving serious consideration to seeking orders that a director, company secretary or other persons who were actively involved in the contravention be held jointly and severally liable in an underpayment case particularly if there are concerns that the employing entity will have insufficient funds to satisfy the orders.
Other recent examples of the Federal Circuit Court applying the accessorial liability provision in section 550 of the FWAct include:
- Fair Work Ombudsman v Blue Impression Pty Ltd & Ors [2017] FCCA 810: an accounting firm was found to have been involved in the contraventions of a client because they continued to maintain its payroll system despite having all the necessary details to confirm underpayments were occurring; and
- Australian Building and Construction Commissioner v Moses & Ors [2017] FCCA 738: a union delegate was found to have been involved in contraventions arising from the conduct of a union organiser because the delegate did not correct false representations made to employees by the organiser.
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