Board Beware - Board Be Fair

In a recent decision of the Federal Circuit Court of Australia, penalties were imposed on a company director for breaches of the Fair Work Act, including:

• failure to pay the minimum wage required under the relevant Award;
• failure to pay casual loading;
• failure to pay weekend penalty rates; and
• failure to pay overtime.

Section 550 of the Fair Work Act imposes liability on a person involved in a contravention in a similar way to accessorial liability in a criminal context. This means that liability for breaches of the Fair Work Act can extend beyond the legal employer to senior employees and even Board members. In recent cases, this section has also been applied to Human Resource Managers, given their direct and day-to-day involvement in employment matters and Fair Work Act compliance. In the present case, the director and the employer company were held jointly and severally liable for contraventions of the Fair Work Act totalling $22,779.72 in underpayments. In addition, the company was required to pay penalties of $257,000 for its contraventions, whilst the director was required to pay $51,400 in penalties.

"Board members should encourage Fair Work Act compliance within their organisation."

This case should not be a cause for immediate alarm as the Judge found that the director was aware of the requirements of the Award and calculatedly and deliberately disregarded the employees’ rights and entitlements by underpaying them. Liability under the Fair Work Act will only apply to Board members who are involved in a contravention. However, this case provides several helpful take-home points:

• Board members should encourage Fair Work Act compliance within their organisation;
• employers should be aware of any Awards applicable to their organisation and meet the entitlements under the Awards;
• the Fair Work Act does not allow Board members to hide behind the corporate shield; and
• Board members and employers can be held jointly and severally liable for breaches of the Fair Work Act.

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