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 Who can be held responsible for wage underpayments?

Accessorial Liability and the Fair Work Act

Employer Has Underpaid – Who else can be held responsible?

Can the following be held liable for wage underpayments?

  • Directors
  • Franchisors
  • Principal Contractors
  • HR Managers
  • Lawyers, accountants and other external advisers

Can they be penalised?

Can they be required to pay compensation?

Assessorial Liability – What is it?

A person is liable if they are (Culpably) involved in the contravention by another of a civil penalty or criminal provision.

  • Fair Work Act, s 550
  • Corporations Act, s 79
  • Competition and Consumer Act, , s 75B

Involved In

A person is involved in a contravention of a civil penalty provision if, and only of, the person:

(a) has aided, abetted, counselled or procured the contravention; or

(b) has induced the contravention, whether by threats or promises or otherwise; or

(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or part to the contravention; or

(d) has conspired with other to effect the contravention.

Liability Under the Fair Work Act

  • Primary liability falls on the employer for underpayments
  • For the employer it is strict liability – there is no need to prove intent or knowledge
  • That is in contracts s 550 (accessorial liability): to find an accessory liable you must also show  knowing involvement
  • Harder to prove but can be done

What must the accessory be shown to have known?

  • The accessory needs to be an ‘intentional participant’
  • The accessory must have actual knowledge of the payments being made, or at least the system of payments
  • Plus know (one of these, the law is unsettled
    • That a particular Award existed and that the payments were below level set by that Award
    • There was a minimum standard, without knowing the award name, and that the payments were lower than the minimum standard
    • That particular payments were made, which as a matter of fact were below the award, without knowing they were less than any minimum standard

Courts have expressed different view

  • On the one hand – ignorance of the law is no defence: no need to prove the person knew the level of payment contravened the Act
  • On the other hand – do need to prove that the person knew that the employer’s conduct was not an innocent act

Does the Accessory need to know about the award provisions?

  • Different views by single Federal Court Judges

What should the test be?

  • On the one hand – ignorance of the law should be no defence: no need to prove the person knew the level of payment contravened the Act
  • On the other hand – do need to prove that the person knew the facts that rendered the employer’s conduct unlawful
  • Should be enough to prove a person:

Knew there was a minimum standard (not knowing the exact standard) and made no inquiries to establish the exact standard

Knew what payments were being made, and

Knew the payments were less than the minimum standard


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