Accessorial Liability – To resign or not to resign: that is the question, if you know you are involved in breaches of the Fair Work Act

The Federal Court recently suggested that an employee should resign, and report its employer to the Fair Work Ombudsman, if that is the only alternative to participating in breaches of the Fair Work Act.  What does this decision mean for HR professionals and senior managers?  Sara Wescott and Sophie Brown of Lander & Rogers analyse the decision.

To resign or not to resign: that is the question, if you know you are involved in breaches of the Fair Work Act

“There is nothing wrong with sending the message that an employee should indeed resign if that is the only alternative to continuing to participate knowingly in illegal activity, ideally coupled with reporting the conduct … to the Fair Work Ombudsman”.

This was the message from the Court when it fined a HR Manager over $21,000 for her role in underpaying employees $580,000 and faking employment records.

It is also a feather in the cap for the Fair Work Ombudsman, in its continued campaign to hold business advisers, such as HR professionals, directors and officers, and accountants, to account if they are involved in breaches of the Fair Work Act and industrial awards and enterprise agreements.

HR Manager and others fined for role in underpaying employees

In this case the HR Manager sought lenience from the Court as she informed her boss that the business was applying the wrong rate of pay but he “rebuffed her”. Her boss also directed her to falsify time and wage records for the Ombudsman. As the HR Manager and her boss were Chinese, she argued that defying her boss would go against cultural expectations and bring shame on her family. She was also a first-time contravener and on an employer-sponsored work visa. The Court did not doubt her evidence, but it acknowledged the significant financial harm to the employees and refused to reduce her penalty.

In addition to fining the HR Manager over $21,000, the Court fined the company that operated the restaurant and employed the staff $301,920, imposed a penalty of $54,672 on the company’s sole director/shareholder, and fined the restaurant manager $18,496 for her part in the breaches.

What you need to know about managing breaches of the Fair Work Act

To avoid finding yourself, or the senior staff you advise, in a similar situation, consider following these steps if you discover or suspect breaches of the Fair Work Act, Awards or enterprise agreements.

• Act fast and keep a record of the action you take. If you can, fix the problem. If it’s a complicated issue, get advice.
• If you notify a senior manager and nothing changes, consider asking more questions internally, notifying external bodies such as the Fair Work Ombudsman and potentially resigning

High standards for influential managers

In some workplaces, it may be a challenge to report and remedy breaches. But the Courts and the Ombudsman expect senior business managers and advisors to uphold high standards when it comes to meeting legal obligations, regardless of company and cultural norms. This no doubt reflects the significant levels of responsibility and accountability for employment related issues that HR and other senior managers are required to navigate every day.

About the authors
Sara Wescott and Sophie Brown are Workplace Relations & Safety Lawyers at Lander & Rogers, a leading independent Australian law firm. Lander & Rogers is a principal advisor to many publicly listed and private Australian companies, Australian subsidiaries of global companies, as well as all levels of government.