Underpayment Provokes Significant Personal Penalties
A recent decision Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown  FCA 1301 (10 November 2017) of the Federal Court of Australia has seen a significant change in direction where responsible managers are personally fined and held accountable in addition to the actual company for underpayments to employee.
In a further recent decision Fair Work Ombudsman v Blue Impression Pty Ltd & Ors (No.2)  FCCA 2797 (16 November 2017) the accessorial liability has extended to advisers such as accountants. Merv Saltmarsh examines this particular decision and the implications it has for THA members and Managers in those companies.
In May 2016, Fair Work Ombudsman (FWO) Natalie James spoke about the increasing focus on accessorial liability: “We are increasingly pursuing a broader range of accessories, including accountants and human resources managers.”
The decision Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown  FCA 1301 (10 November 2017) confirmed the approach taken by FWO to lift the corporate veil and hold officers personally accountable.
The facts were clearly established in this case where the HR Manager deliberately falsified records in an attempt to prevent the FWO uncovering substantial underpayments made to employees over a 16-month period.
The HR Manager was personally fined $21,760.00.
Justice Robert Bromwich of Federal Court gave minimal weight to the fact that the manager did not have formal qualifications or training in human resources and that she had a family connection with the company.
He observed that, in the first instance, it was “plain” that, despite claims the HR manager had no qualifications or formal training in HR management, “she had sufficient training or capacity to carry out the directions given to her in her role, including the creation of false records”.
He noted, before then, she had not taken any steps to ensure that the restaurant paid correct hourly rates, casual loading, weekend penalty rates, and public holiday penalty rates or overtime, contributing to staff being short-changed a total of $583,688.
Justice Bromwich rejected the defence of the Company that they were from a non-English background and culturally the HR Manager was not in a position to defy the instructions of the restaurant manager and he quoted “A distinction must be drawn between vulnerability to being exploited, which is a position of victimhood, and supposed vulnerability by way of reduced ability to resist participation in illegal activity, which is a position of participation.”
In other words the defence of ignorance of the law will not be valid particularly if the company has embarked on a course of illegal activity.
Merv advises that industrial regulation in Australia has become increasingly complex with the interaction between modern awards, enterprise agreements, contracts of employment and other elements of the Fair Work Act including the National Employment Standards.
Merv also recommends that it is prudent to conduct regular audits to ensure compliance in order to avoid potential liabilities of both Companies and Company officers.
THA has provided members communications throughout 2017 on the FW Audit check list and most recently as a reminder in small bytes to ensure compliance with relevant awards.
This audit check list will provide a proactive risk and exposure mitigation process for your business
The THA and Merv have sound knowledge and experience to facilitate such audits if necessary with professionalism and expeditiously or discuss the process in person or by phone.
The THA continue to promote the services available to potential members that are proactive rather than reactive and mitigate potential risks and exposures but importantly reduce legal costs associated with alternate legal advisors when a member of THA.
MEMORANDUM OF UNDERSTANDING BETWEEN OFFICE OF THE FAIR WORK OMBUDSMAN AND AUSTRALIAN HOTELS ASSOCIATION
The Tasmanian Hotels Association in alignment with the AHA as the national representative and governing body is pleased to announce the recent resigning of the Memorandum of Understanding (MoU) for three more years.
This MoU is significant for all our members as a strong and transparent working relationship with the industrial regulators and in summary is as follows:
- The Parties to the Memorandum of Understanding (MoU) are;
- The Office of the Fair Work Ombudsman (FWO) which promotes harmonious, productive and cooperative workplaces and compliance with Commonwealth workplace laws
- The Australian Hotels Association (AHA) and by association (THA) which provides advice ,assistance and representation to members in the hospitality sector, reflecting its membership in hotels, resorts, casinos, taverns, wine saloons, licenced retailers, and other hospitality businesses (the hospitality sector)
- The relationship between AHA and by association the THA and the Fair Work Ombudsman will be based on the principle of no surprises, constructive engagement, working collaboratively to create and maintain fair and productive workplaces and ensuring a level playing field for all businesses in the hospitality sector.
- The Parties to the Memorandum of Understanding (MoU) are;
- The purpose of the MoU is to provide a framework for both parties to enhance existing relationships and work together to improve compliance and Commonwealth workplace laws through the provision of accessible ,reliable and credible information to workplace participants
- Each Party will nominate senior representatives (state) to meet at least twice per annum.
- Collaboration will occur primarily through exchanges between AHA and by association THA and FWO representatives
Proactive and Solutions Focused Service
It’s a proactive and solutions focused initiative and “point of difference” from other similar organisations and a benefit for THA as the member representative body on behalf of our members.
Should members or potential members need to discuss this article or services provided to members contact Merv Saltmarsh on 03 6220 7305, his mobile at 0407 869 924 or email him at firstname.lastname@example.org