An HR professional was found guilty of accessorial liability

accessorial liability
Aaron Goonrey
Sara Wescott

By and

written on February 6, 2018

An HR professional was found personally liable for illegal decisions the business made. This is how you can avoid the same fate.

Picture this scenario. A Human Resources manager – let’s call her Sarah – works for a restaurant business. Her duties include processing payroll and arranging for the payment of wages, arranging for the advertisement of staff positions, and responding to employee queries.

Sarah diligently follows the directions of her boss, including in relation to the employees’ rates of pay. In order to work out the employees’ weekly wages, Sarah plugs their hours into a spreadsheet where the wages data has already been pre-filled.

One day, Sarah realises that the wages being paid to the staff are below the award rates. Concerned, she speaks with her boss and tells him, “You need to pay the proper amount pursuant to the award. You are legally required to do so”.

Sarah’s boss rebuffs her advice, and says “I will talk no more about this. You will do the payroll as I have told you”.

Sarah is worried about the underpayments, but feels as though she has no power to do anything about it. She cannot pay the employees the correct rate of pay because she does not have the authority to change the rates of pay, or have access to the Company bank account. Sarah also thinks she could lose her job if she speaks up again. She asks herself, “What more can I do?

To resign or not to resign?

The above scenario is based on a recent case about a Human Resources manager, who according to the Federal Court, ultimately made the wrong call. Sarah decided that she couldn’t do anything further about the underpayments and let the issue slide. When the Fair Work Ombudsman came calling following an employee complaint, Sarah followed her boss’s directions to help create false pay records.    

When the matter ended up in Court, Sarah was found culpable as an accessory to breaches of the Fair Work Act, and personally fined $21,760.

The Court accepted that Sarah was in a different position to her boss and did not have the same level of control or culpability. However, the Court did not want to be seen as endorsing the course of action that Sarah took in raising contraventions, being rebuffed, and then continuing to participate in the wrongdoing for a considerable period of time (e.g. 18 months) before being detected by the regulator. The Court said:

“There is nothing wrong with sending the message that an employee should indeed resign if that is the only alternative to continuing to participate knowingly in illegal activity, ideally coupled with reporting the conduct, in a case such as this, to the FWO.”  

So how can HR managers avoid liability?

Regular workplace health checks

Knowing your legal obligations and taking positive, proactive steps to reduce your risk is a good strategy to protect your business, and avoid the firing line. Regular workplace “health checks” on minimum legislative and award/agreement requirements will help you to ensure that you’re meeting your obligations.

Act fast, keep a record, and seek advice

If you do suspect something is wrong, act fast and keep a record of the action you take. If the issue is complicated, seek advice. Among other things, consider whether legal professional privilege is a relevant consideration before taking further steps.

Escalate the matter — don’t let a breach continue once detected

Keep in mind that simply notifying a senior manager about a known or suspected breach may not be enough to avoid liability under the accessorial liability provisions of the Fair Work Act. If, after notifying a senior manager, breaches of the Fair Work Act or industrial agreements persist, consider escalating the matter internally, externally, and potentially resigning.

Report the Fair Work Ombudsman

Sarah’s case suggests that it is appropriate for HR managers (and other business advisers) to report persistent and ongoing breaches to the Fair Work Ombudsman in order to discharge their statutory duty to ensure that the Fair Work Act, awards, and industrial agreements are not contravened.

Enjoy the peace of mind that AHRI ProCover professional indemnity insurance brings, by becoming an AHRI member.

Aaron Goonrey is a Partner and Sara Wescott is a Lawyer in Lander & Rogers’ Workplace Relations & Safety practice. Aaron can be contacted at agoonrey@landers.com.au

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Comment

10 thoughts on “An HR professional was found guilty of accessorial liability

  1. Wow. I felt some sympathy up until I read “followed her boss’s directions to help create false pay records”. At that point I would have told him to shove the job and taken that information directly to FWA.

    Worried about losing your job and therefore saying nothing (though still wrong) is one thing, but falsifying records to cover wrong doing is a whole other level of wrong. And falsifying records going to a regulatory body as part of an investigation is akin to lying to the police in a criminal investigation… she has knowingly assisted in, and by assisting has effectively endorsed, the committing of significant fraud, and whilst I feel sorry for her in some respects because no one should be so worried about their job that the are afraid to speak up, I absolutely agree that she is culpable and should be held accountable for her actions.

    1. What the HR Manager did in bringing the matter to her boss’ attention was good.
      She should have escalated it further – to the CEO and the Board, if the manager was not prepared to listen.
      HR people are professional people and abide by a Code of Ethics.
      And they have their own personal values – one of them being people who keep the law and also to be rolemodels and voices of equity, balance and morality in the workplace.
      It also says something about the culture of that workplace – duplicity and falsification, pulling wool over workers’ and Regulators’ eyes, ‘immoral’ and illegal conduct. Wow.
      And this came back to bite her because she did not stop at underpaying workers but went on to falsifying records is a crime. I agree with Sharlene on this issue.
      Wanting to hang on to your job is one issue (we don’t know her personal circumstances) but losing your moral pivot is not worth it. Should have ‘blown the whistle’ to FWA and resigned/not resigned but been there when the Regulators came calling.

  2. I agree that the HR Manager was in the wrong in this instance but I do feel it is somewhat flippant to say you should ‘just resign.’ What if you are the main income earner for the family? What if your income is essential to assist in the care of parents or children? What if you work in an area where it is unlikely you’ll pick up another HR job or even any job?

    I don’t see that there is any other professional or moral option but to report the incident, but for the HR Manager to always be expected to essentially step away, well in some cases that could be more costly to them than the fine! Again, I’m not saying it would be right to not report it as that is condoning and essentially assisting the behaviour, but to be expected to walk away rather than being protected by a whistle blowing type legislation is a difficult prospect.

    1. It’s this lack of moral courage and self interest shown by HR managers that is undermining trust in the profession. So what if you are the main income earner for the family? So what if your income is essential to assist in the care of parents or children? So what if you work in an area where it is unlikely you’ll pick up another HR job or even any job? Find another job that doesn’t have professional standards because your employees can’t rely on you to protect them and your employer can’t rely on you to prevent them breaking the law. (Reporting) more costly than the fine! What price do you put on professional integrity and doing your job! Yes I’d expect you to both report the criminal behaviour and walk away, regardless of whistle-blowing legislation. It’s not easy being a HR leader just like it’s not easy being a victim of dishonest employer.

      1. Agreed Errol.

        I could not in good conscience have continued to knowingly underpay, and definitely would not have falsified records (I know this as fact because I was asked to do this once and refused to do so, and that was for something insignificant compared to this situation). This has nothing to do with anything but my personal moral standards on myself.

        Our job as HR is to be the moral police for a company and therefore if you are knowingly allowing them to break the law in their payment of staff, and then helping cover this up when the authorities come knocking, then quite honestly, you should not be in a job that requires you to have such a high ethical standard.

        Moreover, since HR should stand as the moral/ethical bridge between staff and management, we should not even been seen to be sending the message that this situation is ever acceptable – it only serves to undermine faith/trust in HR as a whole.

        I’m sorry but, no matter what your personal situations are, your job is to ensure the company is doing the right thing under law, not helping them break the law. If you can’t do that job, then you need to find a different one that does not require you hold such a high legal/ethical standard.

  3. While I can understand both sides as expressed above, there is one fundamental issue that is isn’t addressed.

    What protections are there for the HR Professional who does the right thing, goes up the chain of responsibility right through to the Board or CEO with the same outcome. Where are the protections for the HR Professional who reports breaches of law to Fair Work and as a result lose their job and are unable to secure another one? There is Liability but no protection.

    We as HR Professionals have no authority to enforce the law, that is the job of Fair Work and the Courts. Our role is to report breaches of the law to our managers and advise them on how to correct the breach and any actions that need to be taken to mitigate them down as far as possible. We also have a duty to report breaches should our managers ignore our advice to Fair Work. It is at this point it gets really difficult.

    In this case the HRM Reported the breach, there was no one else further up the line to report to. There is also another factor to this in that they were also on a 457 skilled migrant visa. So what was at risk wasn’t just salary or not being able to secure a new role, ultimately it would mean having to leave the country.

    Please note I am not defending this particular HRM in the slightest as continuing to facilitate the breaking of the law and complicity in trying to cover up the same. With regards to the falsification of records, on that point alone they deserve the fine, I personally would have gone further and jailed them, but that might be seen as extreme.

    Doing the right thing can become extremely expensive as well as career ending. There are lots of factors to be considered and I ask those who have talked about morals and professional integrity to really think hard about this issue. Doing the right thing both morally and with professional integrity isn’t as easy as we might think there are a lot of factors to be considered it certainly isn’t as black and white as some may think.

    We need to as HR Professionals along with our professional body need to look at ways we can better help, support and protect all of us because there is a chance that we will all come across a situation similar to this.

    Errol, you say that it is not easy being a HR Leader, just like it’s not easy being a victim of a dishonest employer. You are right it’s not and isn’t meant to be, but in this particular case the HR Manager is also the victim of a dishonest, bullying employer. How do we as a profession address that?

    You go on to say.

    “It’s this lack of moral courage and self interest shown by HR managers that is undermining trust in the profession. So what if you are the main income earner for the family? So what if your income is essential to assist in the care of parents or children? So what if you work in an area where it is unlikely you’ll pick up another HR job or even any job?”

    I have to disagree with your statement and it’s sentiment. This statement shows no understanding of human behaviour(s) Your suggestion that a HR Professional should put ensuring the rights of other employees ahead of their own family’s needs is illogical. The first duty of any parent is to put the needs of their children first and foremost, the same goes for any dependant.

    I will ask you a question. “Would you take in next doors children and raise them as your own while putting your own children into the care system and consign them to poverty, lack of opportunity, probable abuse etc?”

    My own view is that HR Professionals when faced with a management which will not accept the advice and guidance given and continues to break the law is as a MINIMUM;

    Refuse as far as reasonably practical to take any active part in breaking the law.

    Look for another role with a different employer and anonymously report the matter to Fair Work.

    Current Whistleblowing law is not sufficient to protect HR Professionals. If we are to be held liable for illegal actions beyond our direct control then there have to be better protections put in place, for without them we are damned if we do and damned if we don’t.

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