Fair Work Compliance for Directors

Workforce Guardian

As an accountant and trusted advisor I thought you should be aware that the Fair Work Ombudsman has put all Directors on notice that they may be held personally responsible for the actions of those in whom they trust to effectively - and legally - manage their business.

In a recent case, DZ Imports was found to have underpaid two employees by a total of approximately $21,000 and a considerable corporate penalty of $148,000 was imposed on the company. Furthermore, in addition to the corporate penalty, the courts also fined the Director, Mr Zhu, personally for $29,700. That's over $8000 more than the underpayment originally identified by the Ombudsman.

Don't assume your HR people have got it covered

With Fair Work compliance, Directors can't assume that their human resources people have got it covered. The rules and regulations are highly complex and there's no easy workaround.  As a Director they need to perform due diligence and see evidence of written, up-to-date employment contracts and that the correct Modern Awards are being applied to the right employees. They need to make sure their company complies with the 10 minimum employee entitlements of the National Employment Standards that have applied since 1 January 2010.

In your role, it's also important to know that the Fair Work Ombudsman does not provide legally binding advice to employers or Directors in relation to their obligations under the Fair Work Act and Modern Awards.  So don't send your clients to the Fair Work Infoline if they want peace of mind.

Corporate penalties and personal fines

More than a handful of businesses have found out the hard way.  Even with advice in writing from the Fair Work Infoline which the companies had diligently followed, a subsequent inspection from the Fair Work Ombudsman found these companies were in breach of particular Modern Awards and were penalised severely.

What this means is that any advice provided by the Fair Work Ombudsman's office needs to be counterchecked by ER experts.  As it alone does not provide any defence in future Fair Work Inspections or allow you to hide from personal fines and penalties.

As the DZ Imports case highlights, being ordered to recompense an underpayment is one thing.  Being subject to corporate penalties and personal fines is quite another.

As part of an 'educational campaign' to assist employers to understand their legal obligations under the Fair Work Act 2009 and Modern Awards, the Fair Work Ombudsman is now actively 'visiting' thousands of businesses - small and large - across Australia.

If ever there was a time for Director's to ensure compliance with the Fair Work laws and Modern Awards, it's now.

As specialists in the Fair Work Act, Workforce Guardian provides small and medium-sized businesses with assurance that their everyday employment relations' decisions are both legal and compliant. Workforce Guardian customers are given access to a dedicated team of Employment Relations specialists who routinely research Award coverage and provide customers with expert advice.

If you haven't done so already, put Workforce Guardian to work for your practice and your clients.

Disclaimer

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice may be necessary in particular transactions or on matters of interest arising from this article. Workforce Guardian Pty Ltd (www.workforceguardian.com.au) is not responsible for the results of any actions taken on the basis of information in this article, nor for any error or omission in this article.