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Director and HR manager liable for poor powers of deduction

February 25, 2016

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The Federal Circuit Court has found a labour hire company, its director and HR manager all liable for falsifying employment records and making unlawful deductions from the wages of cleaners based in Melbourne’s Crown Casino and Federation Square.

The court accepted evidence that the company deducted an administration fee from 102 employees and meal allowances from another 44 employees, whilst providing the Fair Work Ombudsman (FWO) with falsified employment records.

The FWO alleged that these deductions were not permitted deductions under the Fair Work Act 2009, and also claimed that the company breached its record keeping obligations under the Act by providing misleading and false employee records.

Despite the HR manager denying any involvement or knowledge, the court found that that it was “more probable than otherwise” that the HR manager was well aware of the administration fee and meal deductions contraventions by the company and its director.

The judge found the HR manager’s knowledge sufficient to constitute involvement in breaching the Act, commenting that “I simply do not accept that the person running the human resources activities and intimately involved, as he clearly was, with award matters was not aware not only that the deductions were being made but that the records were false and misleading”.

As the company was said to be “wholly the creature” of the director, he was also held personally liable for the breaches.

Am I at risk as a business owner or HR manager?

Both HR Managers and business owners are regularly called upon to implement a range of business decisions likely to impact employees. From recruitment to termination, performance management to workplace health and safety, final decision making authority is often passed ‘down the line’ from a business owner to a HR Manager to action.

You must be mindful that regardless if a business owner or HR professional knows that a decision will contravene the Fair Work Act or any other workplace laws, both face personal risk and liability.
It’s imperative for you and your business to take care when making and implementing any decision that results, knowingly or unknowingly, in a contravention of the Act. This area of law has the potential to expose business owners and HR professionals to personal liability for penalties of up to $10,200 per offence.

You should always seek further independent advice if you are unsure about the effects of the decision you are about to implement.

If you are concerned about your personal liability when handing down important decisions, you should contact the HR Assured team. If you’d like more information about the benefits of becoming an HR Assured client contact us today for an informal chat.