Under section 550 of the Fair Work Act, a person who is involved in a contravention of the Act is held responsible for that contravention. A person is involved in a contravention if they:
Anyone who is found to be involved in a contravention of the Act can be personally liable for compensating employees and paying penalties imposed by the court. The Fair Work Ombudsman uses this provision to hold company directors personally accountable for the actions of their companies. This effectively means that liquidating a company is no guarantee of avoiding the consequences of non-compliance with the Act.
If a company, as the employing entity, contravenes the Act, then the company is automatically responsible for that contravention and may have penalties imposed by a court. But under section 550 a company that is not the employing entity may be found to be involved in contravention and may also have penalties imposed by a court.
The best way to safeguard yourself, your management teams, your advisers and your company from accessorial liability, is to take effective steps to make sure you have no part in any contravention. For individuals, make sure you know the rules and follow them. Don’t engage in unscrupulous practices and ensure that your actions don’t contravene the Act. For companies, make sure that you do not deliberately or inadvertently outsource non-compliant behaviours. Undertake due diligence to make sure that your contracted payments are reasonably able to cover the entitlements of the employees who will deliver you a contracted service.
Source: Fair Work Ombudsman
