Fair Work Act Exposes HR and Senior Leaders to Personal Liability

Employers have always been the first to take accountability for any workplace breaches of compliance. However, in the last few years, Fair Work decisions have established that HR practitioners (and other senior personnel) can be held personally liable under section 550 of the Fair Work Act 2009 (CTH).

HR practitioners should understand that involvement in contraventions—even unintentional ones— can result in prosecution and significant financial penalties.

Consider the 2016 case of Oz Staff Career Services Pty Ltd & Ors [2016] FCCA 105, which demonstrated that HR managers cannot simply use their employer as a shield when it comes to compliance with the FW Act.

According to the case details, the Court found the CEO to be involved in serious contraventions including determining underpayment of employees, making unlawful deductions, and failing to produce correct employee records. The HR Manager acknowledged awareness of poor wage payment practices, but denied involvement in pay slip issuance.

Nevertheless, the Court found the HR Manager’s explanation to be unsatisfactory and stated:

“I simply do not accept that the person running the Human Resources activities of the Company and intimately involved, as he clearly was, with Award matters was not aware not only that the deductions were being made but that the records which were forwarded to the [FWO] not showing those deductions were false and misleading.”

As a result, the HR Manager was also held personally liable for taking no corrective action, despite being aware of the payroll and other industrial instrument violations.

This case highlighted a critical concept in employment law—accessorial liability—which extends responsibility beyond the primary person primarily responsible to those who are ‘knowingly concerned’ in breaches of workplace laws.

Understanding Accessorial Liability

Let’s review  another significant Fair Work decision from April 2024, involving DTF World Square Pty Ltd. The Fair Work Ombudsman (FWO) highlighted this as the second-highest penalty secured in history due to the severity of the offences.

In this case, knowledge of systematic serious contraventions, including falsification of records and deliberate underpayments, resulted in substantial personal penalties: $92,232 against the General Manager and $105,084 against the HR Coordinator.

This case further illustrates the concept of accessorial liability in Australian workplace law. Accessorial liability occurs when a person or company involved in the contravention of workplace law is treated in a similar manner as the primary employer responsible.

According to Fair Work, being involved in a serious contravention means:

• assisted, recommended or caused the contravention
• influenced the contravention (for example, by making threats or promises)
• was knowingly concerned in or was a party to the contravention,
• conspired with others, which resulted in the contravention.

Our Principal IR Consultant emphasises that HR practitioners’ personal liability extends well beyond wage theft, and applies to numerous other legislative provisions, including the recently introduced Right to Disconnect.

How Can HR Avoid Personal Liability?

Getting individually penalised can be a very confronting reality for HR practitioners, particularly since failure to uphold responsibilities can result in personal liability and significant financial penalties.

It’s essential, now more than ever, for HR professionals to keep abreast of the Fair Work Act and avoid the misconception that they are protected if they have not indulged in criminal or intentional misconduct. The cases clearly demonstrate that HR cannot hide under the protection of their employer, nor assume that the workplace compliance lies solely with the employer.

HR professionals are equally accountable for addressing misconduct and potential breaches within their organisation.

The accessorial liability provisions allow the Fair Work Ombudsman to hold anyone involved in a contravention accountable—from Company Directors, Payroll Officers, Accountants to HR Managers. Considering the significant risks involved for HR, it’s important to ensure the advice provided and company practices implemented fully support and comply with all protections established in the FW Act.

Understand Your Knowledge Limitations

It’s important to recognise what you know and what you don’t know regarding your Fair Work Act obligations (and other workplace legislation). This is a good place to start to understand both legislative requirements and your organisation’s compliance status. Personal liability provides significant motivation to also refuse participation in non-compliant activities that the organisation may undertake.

Engage External Experts to Address Non-Compliant Elements

While involving external assistance has a cost impact, these are substantially lower than the personal liability and employer penalties for non-compliance.

When internal expertise or bandwidth is limited, bringing in external specialists to review policies, procedures, contracts, and management processes against Fair Work Act requirements can significantly reduce legal and financial risks.

Some HR practitioners may struggle to get their management on board when proposing external compliance reviews. However, knowing that HR and senior leaders can be personally liable provides a compelling justification to engage experts who understand the complexities and nuances of the Fair Work Act to prevent breaches within the organisation.

Our experts note that HR practitioners now have stronger leverage when advocating for compliance with management and to avoid involvement in practices that fail to properly protect their employees.

Simply turning a blind eye to breaches of workplace laws is no longer a viable option, given the serious personal consequences which are currently being established through Fair Work decisions.

Where to from here?

Understanding accessorial liability is essential for businesses, employers, and HR professionals alike. By prioritising compliance, implementing robust workplace relations frameworks, and seeking expert guidance when needed, you can create a workplace that thrives within legal boundaries.

Our team is readily available to provide relevant support, resources, and expertise to navigate these complex requirements with confidence.