27 October 2015
In June 2015, we reported on the potential for HR Managers to have personal penalties imposed on them for their involvement in breaches of the Fair Work Act 2009 (Cth) (the “FW Act”).
In a decision on the penalties, the Federal Circuit Court imposed a penalty of $1,020 on the HR manager for her involvement in the dismissal of an employee who was incorrectly given four weeks’ notice of termination rather than the five weeks’ he was entitled to under the National Employment Standards (the “NES”).
This decision sends a warning to all HR Managers, no matter their seniority, because it suggests that the Court is willing to impose a penalty on a HR manager, where:
- there is involvement (no matter the impact) in the contravention;
- there is an admission that the HR Manager is aware that the FW Act provides for minimum employment standards;
- it is within the HR Manager’s authority to decide on how the minimum employment standards are administered; and
- there is no satisfactory explanation of why, if a HR Manager is aware of these obligations, there has still been breach of the NES
Further, where the above knowledge is within a HR manager’s skill set, it will not be acceptable to assert that the error was “procedural and not a deliberate failure”. In addition, HR Managers cannot escape liability simply by arguing they were subject to the direction of the employer.
Importantly, Judge Simpson commented that “the penalty that I propose to make will be a warning to employers of the need to comply with the legislation to the letter” and imposed a penalty of $20,400 on the company. In relation to the HR Manager, the Court imposed a minimal penalty (which was 10% of the maximum penalty available) with Judge Simpson commenting that this was because the HR Manager’s conduct was significantly less serious than the conduct of the company itself and that she was not “heavily involved in the contravention”.
Tips for HR Managers
HR Managers must be aware of obligations under the FW Act and where an employer’s direction is inconsistent with these obligations, they should not turn a blind eye to the legal implications of the breach. Being aware that a contravention of the FW Act is happening or going to happen, in the absence of a satisfactory explanation as to why a breach still occurred, will likely be sufficient for a penalty to be imposed on the HR Manager despite not being actively involved in the decision making process.
To reduce the risk of a penalty being imposed personally, HR Managers should ensure that they have a sound understanding of the FW Act and the obligations arising under it. If a HR manager is subject to a direction by the employer that they feel is inconsistent with the FW Act, they should work together with their employer to ensure compliance and appropriately documented any reasons for decisions. Not only will HR managers be personally avoiding a penalty being imposed, they’ll be protecting the company.
 Cerin v ACI Operations Pty Ltd & Ors  FCCA 2762.
 Fair Work Ombudsman v Centennial Financial Services Pty Ltd(2010) 245 FLR 242.