One of our favourite guest bloggers, Kristin Ramsey from Hynes Legal, discusses accessorial liability and what it means for community service organisations.
Last year the Fair Work Ombudsman (FWO) ran an extensive audit campaign in the Health Care and Social Assistance Industry. Of the businesses audited, approximately 39% were found to be non-compliant.
According to the FWO some of the most common compliance issues arising in the sector relate to rostering and the engagement of part time and casual employees. In our experience, a number of community service organisations do not fully appreciate the rights and entitlements of part time or casual employees and this can lead to disputes and potential underpayments. Record keeping and payslip content also trip a number of organisations up.
Non-compliance with the Fair Work Act comes at a high cost as, in addition to being required to make good any underpayments, businesses (and other individuals “involved” in the breach) can be ordered to pay significant penalties (up to $63,000 per breach for companies and $12,600 per breach for individuals).
The personal risks to individuals should not be underestimated. The FWO is actively targeting individuals who are involved in breaches of the Fair Work Act.
To be found to be an “accessory” you don’t need to have known that the organisation was breaching the Fair Work Act. You do however need to be an “intentional participant” in the conduct giving rise to the breach and have some knowledge of what was (or wasn’t) going on.
(i) actively contributed to the contravention
(ii) knew that their organisation was doing the wrong thing and did nothing to fix it; or
(iii) turned a blind eye to whether or not the organisation was compliant with its obligations.
To date the majority of prosecutions have involved directors, senior executives and human resources and payroll staff, but there have been prosecutions against lower level managers and external service providers. We expect that the net will continue to widen over time.
It is important to realise that an individual doesn’t need to be in an especially senor position in order to be caught by the accessorial liability provisions of the Fair Work Act – anyone involved in decision making or who provides advice to the organisation could be found to be an accessory to a breach. In addition, liability can also fall on individuals who are external to the business (such as external consultants, advisers or service providers).
If found to be an accessory to a contravention an individual can be ordered to make good any underpayments, be subjected to fines and/or be subject to a range of other orders (such as asset freezing orders, wage garnishing orders, or orders to undergo additional training).
This all sounds pretty worrying doesn’t it? And it should!
The FWO’s active pursuit of individuals in recent years reflects an enforcement strategy which recognises that individuals are more likely to take steps to ensure that their organisation is compliant with industrial laws when they can be held personally accountable for breaches.
The best protection from accessorial liability is preventing breaches of the Fair Work Act. Where a compliance issue is discovered, immediate action needs to be taken to identify the extent of the non compliance and fix it.
The worst thing an individual can do is take no action when they become aware of a compliance issue.
Hynes Legal is a well-established commercial law firm with a leading national practice in the Aged Care, Retirement Village and Senior Living sectors.
They specialise in advice on Consumer Law compliance and risk management; particularly in respect of Home Care, NDIS and Community Services.