Accessorial Liability and HR Advisers – Don’t Get Caught in the FWO’s Net

In a recent speech to the Australian Human Resources Institute, the Fair Work Ombudsman (FWO), Natalie James, warned people working in human resources management and recruitment that they could be at risk of accessorial liability for breaches of the Fair Work Act 2009 (the Act).

Section 550 of the Act extends the reach of liability for breaches of the Act beyond the employing entity to “a person who is involved in a contravention of a civil remedy provision.”

A person involved in a contravention is defined as a person who:

  1. has aided, abetted, counselled or procured the contravention; or
  2. has induced the contravention, whether by threats or promises or otherwise; or
  3. has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
  4. has conspired with others to effect the contravention.

The case authorities provide that in order for a person to have accessorial liability, he or she must be a knowing participant and:

  1. must have knowledge of the essential facts constituting the contravention;
  2. must be knowingly concerned in the contravention;
  3. must be an intentional participant in the contravention based on actual not constructive knowledge of the essential facts constituting the contravention; and
  4. need not know that the matters in question constituted a contravention.

The effect of section 550 of the Act is to deem that the person involved in the contravention is personally liable for the contravention of the FW Act. In a previous decision, a director was ordered to personally pay out an amount of $51 400.00 based on a finding of accessorial liability.

To date, the provisions in section 550 of the Act have mostly been used by employees, unions and the FWO against company directors when a corporate employer has gone into liquidation, but Ms James’ warning to human resource advisors was that their recommendations to employers should be that they, “stay on the right side of the law,” to reduce the risk of being found to be an accessory to a contravention of the Act.

The FWO also issued a reminder of the Turnbull Government’s recent election policy which commits to (i) strengthening FWO’s compliance and enforcement powers to compel employers and other witnesses to produce information or answer questions subject to certain checks and balances; and (ii) a ten-fold increase in maximum penalties for failure to keep proper employment records or deliberately and systematically underpaying employees.