Accessorial liability: we’re all in this together
Following from statements made by the Fair Work Ombudsman (FWO), Natalie James, on 27 May 2016 has seen businesses and individuals fall foul of the accessorial liability provisions contained in the Fair Work Act. Ms James stated;
“We are pushing the boundaries of the accessorial liability provisions contained in the FW Act. This is how Coles ended up in court. So far this financial year nearly every matter we have filed in court— 94% in fact—has also roped in an accessory. We are increasingly pursuing a broader range of accessories, including accountants and human resources managers.”
What is Accessorial Liability?
Under s.550 of the Fair Work Act, a person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision. The key being the bolded ‘involved’ which has its meaning as person being involved in the contravention if:
- They have aided, abetted, counselled or procured the contravention; or
- They have induced the contravention, whether by threats or promises or otherwise; or
- They have in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
- They have conspired with others to effect the contravention.
The breadth of this section of the Act is now resulting in more than simply sole businesses being fined for any contraventions they may be involved in. Perhaps the most important takeaway from this though is you don’t even have to be aware of the actions equating to a contravention occurring to be considered “involved”.
CASE STUDY – Multiple parties found liable
A recent 2016 successful prosecution of the Yogurberry Group by the FWO, which resulted in $146,000 of penalties, should alert businesses that they already can and will be legally liable for the actions of franchisors, Contract Management Services (CMS) & other third parties.
The Yogurberry outlet in Sydney’s World Square Shopping Centre was found to have underpaid four Korean former workers a total of $17,827 between July 2014 and May 2015 along with deliberately failing to keep accurate employee records. The store was fined $75,000 for its breaches.
The Master franchisor YBF Australia Pty Ltd was fined $25,000 for its direct involvement in establishing pay rates for employees and deliberately refusing to disclose information about its financial status to the FWO.
The payroll company used by Yogurberry, CL Group Pty Ltd was fined $35,000.
The director and part owner of all the corporate respondents were personally fined $11,000 for her involvement.
The Court factored the close relationship between each entity and in particular the part owners role in each of them when determining the penalties. Each of the respondents admitted to their involvement in the breaches.
To learn more, download our accessorial liability eBook here