Personal liability provisions under the Fair Work Act are so broad that it’s not just employers who can be held accountable for breaches of the legislation – it seems that staff, including HR, can be too.
According to a recent blog by Edward Mallett from EmploySure, the relevant and “startling” liability provision is tucked away towards the end of the Act and has not been well publicised. It provides that a person “involved in” the contravention of certain sections of the Act has personally contravened the legislation, he wrote. “The definition of what amounts to being ‘involved in’ a contravention is then so broad that any person who has offered their opinion on how to comply with the Act is then personally liable.”
Mallett said one example of this could be if an HR pro was asked by an employee what their leave entitlement under the National Employment Standards was and the HR pro responded incorrectly, they could then be held personally liable for that error.
That sort of exposure is not hypothetical – in a recent case an HR manager was found personally liable for a sham contracting arrangement at work, he added. “This is amazing when you think about it. It completely circumvents the contractual relationship between an employer and employee, meaning that the buck does not stop with the employer when something goes wrong.”
In a recent presentation to the 2012 Workplace Law Fundamentals conference, employment lawyer Alice De Boos from Middletons issued a similar warning to Mallett. The Fair Work Ombudsman was “fond of personal liability cases” and some court and tribunal decisions had been critical of the competency of the HR practitioners involved, she said. “The damage caused to their reputations is arguably more serious than the actual breaches of legislation that occurred.”
De Boos believed this occurred because the Ombudsman was keen to encourage behavioural change by management at workplaces, and making examples of individuals sent a strong message to others. “Unions also have a record of showing interest in pursuing personal liability cases,” she added.
However, Hedy Cray from Clayton Utz said that while several decisions [under the Act] which were scathing of the role and action taken by HR pros had been handed down, she didn't think the Act necessarily increased their personal liability per se, outside of vicarious liability and what ordinary principles in each case need to be considered.
“While they may become involved in adverse action cases and named as key to decisions, the major issue we are seeing is how HR practitioners balance the tricky issues of helping a business, when the business may not want to do what is necessarily right legally and how they protect themselves and the business at the same time," she said.
Key HR takeaway:
To avoid being held personally liable for breaches of the relevant provisions in the Act, De Boos said an HR manager should (as a minimum):
Demonstrate awareness of the employer’s legal obligations and consciously attempt to provide advice to the employer.
Suggest in writing that the employer seeks legal advice.
Make proactive and reasonable attempts to ascertain the employer’s obligations and report them to the employer.
If their advice is unwanted, and is either ignored or rejected, they should document the advice given and also point out, in writing, the risks of ignoring that advice.
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