How are you dealing with issues around accessorial liability and chain of responsibility?
ELM: Accessorial liability was a hot topic throughout 2016 Karl, can you comment on why you think it became a hot button issue, and what impact it’s had in Australia’s employment law?
KARL: The Fair Work Ombudsman has over the course of the last few years incrementally tested its ability to prosecute accessories to contraventions of workplace laws. It started with directors of corporations some years ago. Around two years ago, the FWO focus moved to the responsibility of large corporates who engage those in their supply chain who contravene the law, for example, Coles and its trolley collectors. The 7 Eleven case also had a significant impact, particularly in relation to the responsibilities of franchisors.
As a result of the above and the consequent damage caused to some of Australia’s leading brands, large corporations are increasingly examining their supply chain arrangements or franchise arrangements and asking what can be done to protect their reputations.
ELM: Is there a specific case that you’d refer employers to on the subject of accessorial liability, and if so, why this case?
KARL: There are a number of cases that discuss the application of the accessorial liability provisions to individuals such as directors, or other officers of an employer involved in contraventions. The cases on accessorial liability in so far as they relate franchisors or prosecutions further up the supply chain, however, need to be treated with caution. In the Yogurberry case, a franchisor was successfully prosecuted, but the case was not defended. In the Al Hilfi case, the FWO obtained findings against those further up the supply chain, but those prosecutions were not actively defended. There has not yet been a robust test of the extent to which the accessory liability provisions of the Fair Work Act 2009 may capture franchisors or others up the supply chain.
ELM: There is still a lot of attention on cases involving chain of responsibility within Australia; what is your advice to employers on this subject, based on cases you’ve read about?
KARL: Employers need to understand that the scope of the current accessorial liability provisions in the Fair Work Act 2009 are not as broad as the FWO sometimes makes out. As a result, the Ombudsman’s approach seems to be to launch an inquiry, generate publicity, and then seek to negotiate enforceable undertakings with those who are not the direct employer. This process does two things. It causes damages to the brand. It also opens up the prospect of proceedings being brought against those who are not the direct employer if there is a breach of the undertaking. The key issue for those seeking to ensure compliance down the supply chain is this: how do I ensure compliance, but do so in a way that does not expose my employer to any additional legal risk that it might be found to be an accessory to the contravention.
ELM: From your experience in dealing with clients at Minter Ellison Karl, do you see any key trends that will challenge employers in 2017?
KARL: There will be a continued focus on the responsibility of franchisors and others up the supply chain to ensure those in their networks meet their workplace obligations. The Government has flagged toughening up the law to make franchisors responsible for the obligations of franchisees. In the construction industry, the operation of the new Building Code will need to be carefully navigated by employers. We should also expect some changes to the making of enterprise agreements, particularly relaxing some of the strict procedural requirements.
About Karl Blake:
Karl is a leading practitioner in the area of industrial relations and employment law and Partner at Minter Ellison.
Karl meets regularly with his clients and partners with them to solve problems. Clients benefit from access to immediate considered advice, tailored to support the broader commercial objectives of the business. Moreover, the planned and calm approach Karl brings to his work means that clients are fully prepared and informed about all aspects of a matter, including business opportunities, legal risk and costs.
Karl is a recognised leader in the field of employment law. He is recognised as one of only a few leading individuals in Australia in the area of Employment by Legal 500 Asia Pacific. He has also received multiple recognitions in the areas of Labour and Employment by Best Lawyers in Australia, been consistently recognised as Leading Lawyer in Doyle’s Guide and been recommended for his work in Outsourcing.
Karl will be presenting at the Melbourne edition of the HR Law Masterclass on 21 March.