The Fair Work Ombudsman continues to personally pursue
directors and HR advisers under the accessorial liability
provisions in the Fair Work Act 2009 (Cth)
To recap, as outlined in our April 2016 Risk Management Adviser,
section 550 of the FWA provides that a third party (including an
individual) can be subject to penalties if 'involved in' a
contravention of the FWA. Being 'involved in' a
aiding, abetting, counselling or procuring the
inducing the contravention, whether by threats or promises or
being, by act or omission, directly or indirectly, knowingly
concerned in or party to the contravention; or
conspiring with others to effect the contravention.
The decision of Fair Work Ombudsman v Step Ahead Security
Services Pty Ltd  FCCA 1482, is a further indication of
the Fair Work Ombudsman's willingness to pursue individuals who
are knowingly concerned in contraventions of the FWA.
In this case, the Federal Circuit Court held a director
personally liable to pay compensation as well as imposing
significant penalties for his deliberate involvement in
underpayment of employees' award entitlements.
Mr Jennings was the sole director of Step Ahead Security
Services Pty Ltd, which employed eight casual security guards.
Step Ahead Security Services paid its employees a flat hourly
rate for all hours worked and failed to pay employees overtime or
weekend and public holiday penalty rates prescribed under the
Security Services Industry Award 2010. As a result, the employees
suffered a cumulative wage deficit of $22,779.79 over a three month
Mr Jennings had also been a sole director of previous security
companies that had been investigated by the Fair Work Ombudsman for
complaints associated with underpayments of wages and that were
subsequently placed into liquidation.
Despite Mr Jennings' familiarity with the Award minimum
entitlements and irrespective of numerous warnings and
contravention letters issued to him and to Step Ahead Security
Services by the Fair Work Ombudsman, Mr Jennings failed to remedy
any of the underpayments to casual security guards.
The Fair Work Ombudsman commenced proceedings against Step Ahead
Security Services and Mr Jennings for nine breaches of the Award in
contravention of section 45 of the FWA, which provides that a
person must not contravene a term of a modern award.
The Fair Work Ombudsman relied on section 550 of the FWA to
establish Mr Jennings' personal liability for Step Ahead
Security Services' contraventions, on the basis that Mr
Jennings was the 'controlling mind' of Step Ahead Security
Ultimately, Step Ahead Security Services and Mr Jennings
admitted to the contraventions and were held jointly and severally
liable to pay compensation to the employees, being the outstanding
wage entitlements, along with penalties of $257,000 for Step Ahead
Security Services and $51,400 for Mr Jennings.
The Federal Circuit Court also exercised its discretion under
section 545(1) of the FWA to make Mr Jennings, as an accessory,
jointly and severally liable for the compensation awarded to the
casual security guards as there was evidence that Step Ahead
Security Services was in the process of being wound up.
To provide further deterrence against future underpayments, the
Federal Circuit Court ordered that 25% of Mr Jennings' penalty
be suspended and made payable if he contravened the FWA again
within a 5 year period.
The penalties ordered against Step Ahead Security Services and
Mr Jennings are some of the largest amounts imposed by the Fair
Work Ombudsman in Queensland for contraventions of the FWA. The
Federal Circuit Court was willing to impose these penalties because
Mr Jennings and Step Ahead Security Services demonstrated
calculated and deliberate conduct amounting to a blatant disregard
of Australian workplace laws and employee entitlements.
This decision demonstrates the Court's willingness to make
individuals prosecuted under section 550 of the FWA personally
liable to pay compensation in cases of underpayment of wages.
Directors and HR advisers need to be aware of the importance of
employers complying with the FWA.
Winner – EOWA Employer of Choice for Women Citation 2009,
2010, 2011 and 2012
Winner – ALB Gold Employer of Choice 2011 and 2012
Finalist – ALB Australasian Law Awards 2008, 2010, 2011 and
2012 (Best Brisbane Firm)
Winner – BRW Client Choice Awards 2009 and 2010 - Best
Australian Law Firm (revenue less than $50m)
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.
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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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