When is an individual liable for a company's breach?

May 11, 2023

Acting under a manager’s instruction is no defence to a claim that an individual is liable as an accessory to their employer’s breach, the Court found in Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 3) [2023] FCA 201. Rather, where an employee is “knowingly concerned” in the breaches, they may also be liable as accessories to their employer’s contravention.

Key takeaways

An individual involved in contraventions committed by their employer can also be held liable for those contraventions.
The fact that the individual is acting on their employer’s instruction won’t be enough to absolve them of liability as an accessory to the contraventions.
Where the employee is “knowingly concerned” with the contraventions, this may be sufficient to give rise to accessorial liability, in addition to the liability of their company employer.

Background

The Fair Work Ombudsman (FWO) was pursuing Din Tai Fung (DTF) for penalties for various breaches of the Fair Work Act (the FW Act), along with orders to compensate the workers it had underpaid.

Under the payroll system in operation at DTF, employees “clocked in” and “clocked out” at the start and finish of their shift, but those recorded hours were not used for the purposes of calculating their pay. In addition, there were also alleged contraventions concerning record keeping and payslips.

As well as pursuing DTF, the FWO also sought orders against DTF’s General Manager and its HR Manager for their role in DTF’s contraventions under the accessorial liability provisions of the FW Act.

Decision

The Court found that in addition to DTF being liable for the various breaches, the General Manager and HR Manager were also liable as accessories.

In reaching its conclusion, the Court made findings including:

In respect of the HR Manager: the HR Manager was “knowingly concerned” in the contraventions, given that she instructed the payroll manager to enter false records regarding the hours worked and rates of pay for both permanent and casual employees, despite the existence of the clock-in records which showed their actual hours worked. Further, the Court found she was aware that the hours the employees had worked should have triggered higher rates of pay (accounting for overtime and penalties) which the Court found it “inconceivable” that, as an HR Manager, she would not have been aware of.
In respect of the General Manager: the General Manager directed the HR Manager’s day-to-day activities, and in the absence of evidence to the contrary, this included the General Manager supervising the maintenance of a system of false record keeping for the purposes of operating the payroll system.

The fact the HR manager and the General Manager answered to a Director and “participated in a system he may have established” did not mean that they were either a “mere onlooker” or “a cog in the wheel”. To the extent that they were complicit in the continuing operation of the payroll system, they assisted in bringing about the contraventions and/or were knowingly concerned in or party to those contraventions.

How we can help

Ai Group Workplace Lawyers can assist you in ensuring that you are paying employees correctly under relevant awards, contracts of employment and/or enterprise agreements. This can include advice about:

which industrial instrument(s) apply;
an assessment of whether employees have been paid accurately;
award classifications; and
the methodology for calculating proper payments.

You can contact us at info@aigroupworkplacelawyers.com.au or 1300 554 581.