As an HR Manager, failure to be aware of, or carry out,
workplace legal obligations, could put you at risk of being held
personally liable for breaches in workplace law.
A recent ruling by the Federal Circuit Court in Victoria
relating to unlawful deductions by an employer fully emphasises the
weight placed on the role of the HR Manager by the Court, in
running the human resources activities of an employer.
Furthermore, the case highlights the need for HR Managers to
know the precise nature of an employer's legal obligations, and
to act upon that knowledge, regardless of their employer's
The Federal Circuit Court held that a recruitment and labour
hire company had made unlawful deductions from the wages of
cleaners working in Melbourne's Federation Square and Crown
Casino, and then knowingly falsified employment records submitted
to the Fair Work Ombudsman after a targeted audit in January
The employer had deducted administration fees and meal
allowances from the wages of employees, which were in breach of
section 323 and section 324 of the Fair Work Act 2009
(Cth). Section 323 requires the employer to pay employee amounts
payable in relation to the performance of work in full. Section 324
permits various deductions, but only if a number of preconditions
are met, including that:
the deduction is authorised in writing by the employee;
is principally for the employee's benefit.
The HR Manager admitted that he knew about the practices and
processes for payment of wages to employees, including the
deduction of administration fees and meal deductions from
employees' wages. However, the HR Manager claimed that he did
not know that such deductions were contrary to the Fair Work
Section 550 of the Fair Work Act sets out the accessory
liability of HR Managers and provides that a person is involved in
a contravention of a civil penalty provision if, and only if, the
a) has aided, abetted, counselled or procured the
b) has induced the contravention, whether by threats or
promises or otherwise; or
c) has been in any way, by act or omission, directly or
indirectly, knowingly concerned in or party to the contravention;
d) has conspired with others to effect the
The Court's Findings
The Federal Circuit Court held that as the HR Manager had
knowledge of the constituent parts of the contravention, albeit
that he may not have known which section of the Fair Work Act had
been breached, this was sufficient to constitute involvement within
the meaning of section 550. This was because it could be said that
the HR Manager was "directly or indirectly, knowingly
concerned in or party to the contravention", and had taken no
steps to correct it.
The HR Manager was also personally liable for being concerned in
the provision of falsified employment records to the Fair Work
Ombudsman, which omitted any reference to the deductions.
There will be a penalty hearing later in the year. The maximum
penalty for an individual is $10,800 per offence.
Sage Advice for HR Managers
This decision makes it clear that if an HR Manager is running
the human resources activities of an employer, and is intimately
involved with Award matters, then it is likely that the HR Manager
will be deemed to have knowledge that unlawful deductions were
being made. This stands even if the HR Manager does not have actual
knowledge of the provisions of the Fair Work Act that are being
This case serves as a trite reminder that ignorance of the law
is no excuse for HR Managers.
Failure to be aware of the obligations imposed by the Fair Work
Act, Modern Award or other statutory requirements, creates a
personal exposure to liability for HR Managers in all sorts of
circumstances, including deductions from wages and the maintenance
of proper employee records.
HR Managers need to know the precise nature of the legal
obligations of an employer and then act upon that knowledge
irrespective of any contrary views of their superiors.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.Madgwicks is a member
of Meritas, one of the world's largest law firm
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An employee that refused a reasonable offer of settlement was ordered by the FWC to pay his ex-employer's legal costs.
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