When is HR liable?


HR circles were abuzz in 2010 when a Sydney HR manager was held liable as an accessory to his company’s unlawful contracting activities and fined almost $4000.

The Fair Work Ombudsman also named the company’s sole director as a respondent in prosecuting it for sham contracting and underpayment of wages. The Federal Magistrates Court found that the company’s attempt to convert six employees into contractors was in breach of statutory prohibitions.

The HR manager was held liable because he was ‘knowingly concerned’ in the actions. He admitted he had prepared the consultancy agreement and attended the meetings at which the director asked the employees to sign it. But he said he hadn’t advised the company about the arrangements, didn’t know there could be legal consequences and had no control over the actions of the company or its director. He was simply following directions.

Accessory trend

Employment legislation has included accessory provisions for years, but they’ve never been so popular. Managers and fellow employees being named as respondents in general protection and discrimination claims is a growing trend.

Under the civil remedy provisions of the Fair Work Act 2009, a person can be liable as an accessory to a corporate breach if they are ‘involved’ in it. This includes procuring the breach or being knowingly concerned in any way in it, including indirectly.

To be knowingly concerned, a person must have had knowledge of the essential facts of the breach in that they knew what happened. It is no defence to have failed to realise that the facts amounted to a breach, or for the person to claim they were directed to participate.

HR professionals are particularly at risk of being named as an accessory because their role often requires them to be involved in business decisions that may prove unpopular with employees.

HR managers can also find themselves in the firing line in other ways. In a general protections claim before the Federal Circuit Court, a matter at issue is whether an HR manager with alleged anti-unionist tendencies influenced a company decision to dismiss an employee because he was regarded as a unionist troublemaker.

One of the issues at trial will be whether the HR manager was involved in the decision to dismiss or was merely asked to deliver it, suggesting he could be a key witness in the case.

AHRI professional members are covered by AHRI ProCover, a professional indemnity master policy. Find out more.

This article is an edited version. The full article was first published in the February 2015 issue of HRMonthly magazine as ‘Just following orders’. AHRI members receive HRMonthly 11 times per year as part of their membership. Find out more about AHRI membership here.

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When is HR liable?


HR circles were abuzz in 2010 when a Sydney HR manager was held liable as an accessory to his company’s unlawful contracting activities and fined almost $4000.

The Fair Work Ombudsman also named the company’s sole director as a respondent in prosecuting it for sham contracting and underpayment of wages. The Federal Magistrates Court found that the company’s attempt to convert six employees into contractors was in breach of statutory prohibitions.

The HR manager was held liable because he was ‘knowingly concerned’ in the actions. He admitted he had prepared the consultancy agreement and attended the meetings at which the director asked the employees to sign it. But he said he hadn’t advised the company about the arrangements, didn’t know there could be legal consequences and had no control over the actions of the company or its director. He was simply following directions.

Accessory trend

Employment legislation has included accessory provisions for years, but they’ve never been so popular. Managers and fellow employees being named as respondents in general protection and discrimination claims is a growing trend.

Under the civil remedy provisions of the Fair Work Act 2009, a person can be liable as an accessory to a corporate breach if they are ‘involved’ in it. This includes procuring the breach or being knowingly concerned in any way in it, including indirectly.

To be knowingly concerned, a person must have had knowledge of the essential facts of the breach in that they knew what happened. It is no defence to have failed to realise that the facts amounted to a breach, or for the person to claim they were directed to participate.

HR professionals are particularly at risk of being named as an accessory because their role often requires them to be involved in business decisions that may prove unpopular with employees.

HR managers can also find themselves in the firing line in other ways. In a general protections claim before the Federal Circuit Court, a matter at issue is whether an HR manager with alleged anti-unionist tendencies influenced a company decision to dismiss an employee because he was regarded as a unionist troublemaker.

One of the issues at trial will be whether the HR manager was involved in the decision to dismiss or was merely asked to deliver it, suggesting he could be a key witness in the case.

AHRI professional members are covered by AHRI ProCover, a professional indemnity master policy. Find out more.

This article is an edited version. The full article was first published in the February 2015 issue of HRMonthly magazine as ‘Just following orders’. AHRI members receive HRMonthly 11 times per year as part of their membership. Find out more about AHRI membership here.

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