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The Legalities of Workplace Liability

October 22, 2016

The Fair Work Ombudsman has warned employers and those in management positions to be careful of their actions when it comes to workplace liability.  Accessorial liability provisions contained in the Fair Work Act now make it possible that with body corporate employers, proceedings may be brought not only against the principal corporate offender, but also against any natural person.  

Section 550 of the Fair Work Act states that any person who is involved in a contravention of a “civil remedy provision” of the Act for reasons of:

  • aiding, abetting, counselling or procuring the contravention; or
  • inducing the contravention, whether by threats or promises or otherwise; or
  • has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
  • has conspired with others to effect the contravention;

will be held responsible for that contravention.   A “civil remedy provision” of the Fair Work Act are those provisions of the Act which can attract monetary penalties where contravened, in some cases up to $54,000 for a corporation and $10,800 for an individual, and include breaches of the National Employment Standards, and breaches of Awards and Enterprise Agreements.

This puts advisors and those in management in a tough position when trying to achieve organisational objectives, managing risks and workplace liability.

What does this mean for individuals?

Essentially, the accessorial liability provisions in the Fair Work Act now means that individuals who are found to be involved in contravening the civil remedy provisions of the Act may now be held personally liable.  In the past this workplace liability has been used to hold company directors personally liable for actions made within the company.  Section 550 now potentially extends to anyone involved, this includes but is not exclusive to human resources, payroll, line managers, accountants, advisors and directors.

What to do:

To ensure employees avoid penalties, it is recommended to take effective steps to eliminate acts of contravention. These include:

  • do not engage in unscrupulous practices;
  • know employment law rules and follow them;
  • ensure your actions do not contravene the Act; and
  • make sure advice is consistent with the Act.

What does this mean for companies?

If a company is found to have contravened the civil remedy provisions of the Act, the company will be automatically responsible for the contravention and may be subject to monetary penalties imposed by a Court.  Further, the assessorial liability provisions may also be exercised against a company, and therefore held liable, for the contraventions of another company/person.

This emphasises the importance of meeting legislative requirements in any organisation’s supply chain and procurement processes, as companies cannot outsource their non-compliance.

What to do:

To ensure your company does not deliberately or inadvertently contravene the act you should:

  • know your obligations;
  • include clauses in all contracts to require suppliers and employees to adhere to the requirements of the Act;
  • ensure regular training of relevant staff;
  • perform regular workplace audits; and
  • undertake due diligence to ensure payments cover minimum entitlements of employees.

Hypothetical Case Study

Mary is the store manager of a retail store. She is responsible for managing the store duties and ensuring all employees adhere to workplace policies and procedures. This means she is expected to report to human resources if her staff are not complying.

Susie, a part-time sales assistant has confidentially told Mary that the assistant manager, John, has been physically abusing her when they are rostered on together and that he has threatened her not to report it or else he will ensure she is fired.

The company has an anti-bullying and harassment policy that requires management to report incidents for investigation. Mary and John have been friends for a long time and Mary does not want John to get into trouble so she does not report the incident. Instead, Mary terminates Susie’s employment to ‘get rid’ of the issue.

Susie lodges a general protections claim with the FWC as no action was taken about the bullying incident and she was terminated for expressing a workplace right. The FWC found the retail store to be liable for terminating Susie’s employment and not investigating the bullying matter. Mary was also found to be liable as she authorised the termination and did not report the incident. Both Mary and the Company may potentially be charged with monetary penalties of up to $54,000 for a corporation and $10,800 for an individual.

For more information about your workplace liability please call the National Retail Association Hotline and speak to one of our Workplace Advisors on 1800 RETAIL (738 245).


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