The Full Court kept some findings and set others aside - all over one evidence rule
An appeal court has partly overturned a director's personal liability for his company's Fair Work breaches, after finding his trial was procedurally unfair.
On July 21, 2026, the Full Federal Court partly allowed an appeal by the former sole director of a therapeutic massage business and set aside part of his personal liability for the company's breaches of the Fair Work Act. The court dismissed a cross-appeal brought by the Fair Work Ombudsman.
The underlying case concerned seven massage therapists recruited from the Philippines. In earlier judgments, the primary judge found that the company had underpaid them - the court's declarations recorded underpayments totalling $971,092.27 - and had committed a range of other contraventions. These included failing to pay minimum rates, public holiday pay, overtime and annual leave; making unauthorized deductions from wages; keeping records that were false or misleading; threatening the workers; and taking adverse action against them because of their race and national extraction. According to the court's declaration, the threats included threatening to send the workers back to the Philippines and to have their families there killed if they complained. The company did not appeal, and those findings against it were not disturbed.
The appeal concerned the director's own position. Under the accessorial liability provisions of the Fair Work Act (section 550), a person who is "knowingly concerned" in a company's contravention is treated as having contravened the provision themselves. The primary judge had found the director was knowingly concerned in almost all of the company's contraventions.
The director represented himself for much of the trial. On appeal, he argued he had been denied procedural fairness because the trial judge did not explain the rule in Jones v Dunkel - a principle that lets a court infer that an absent witness's evidence would not have helped the party who could have called them. The director had not called a co-respondent, a supervisor, to give evidence, and the trial judge drew that inference against him.
By majority, the Full Court agreed the trial judge should have explained the rule to a self-represented litigant, and that the failure to do so affected the findings that depended on that inference. On that basis, the court set aside the director's personal liability for those findings - among them the threats and the discrimination - while leaving his personal liability for the underpayment of wages and related breaches in place. The set-aside turned on how the trial was run, not on any finding that the conduct did not occur.
For HR and payroll teams, the decision is a reminder that accessorial liability can reach individuals - directors, managers and others involved in a company's decisions - who may be found personally liable for the organization’s Fair Work breaches. It also shows that findings can be reopened on appeal where the trial process falls short, particularly for parties without legal representation.
The Ombudsman's cross-appeal, which concerned how the workers should have been classified under the relevant award, was dismissed. The court indicated it would hear the parties on whether to vary the compensation and penalty orders made against the director - which had included a personal penalty of $150,140 - and on whether any claims should be sent back for a retrial.
This was an appellate decision. The Full Court allowed the appeal in part and dismissed the Ombudsman's cross-appeal. Final orders on the director's compensation and penalties have not yet been made, and the court has left open the possibility that some claims may be reheard.
