Managing effective Employee Relations and understanding Personal Managerial Liability

ARE YOU IN THE FIRING LINE?

By  Campbell  Fisher  Managing  Partner  &  Solicitor  Director  

Clear Strategy and vision

Create the environment for people to succeed through clarity of vison and

engagement with that vision.

Ask yourself – “how do you maximise the contribution that people make to your

organisation's success”?

Be a Courageous Leader

▶ Managing change is difficult.

▶  Face to Face communication is by far the most persuasive and therefore effective in changing behaviour.

▶  Sharing information improves engagement.

▶  People will resist what they don’t understand.

Recruit the ‘Right Fit’ first time

▶  Recruit attitude

▶  Train skills

▶  Reward behaviour

▶  Effective recruitment is a dark science

Properly define employment relationships

▶  Properly drafted contracts

▶ Detailed induction

▶  Role descriptions which reflect a modern organisation

High performance cultures

▶  Having difficult conversations well is the cornerstone to driving high performance cultures.

▶  Openness honesty and transparency are keys to success.

▶  Most managers defer these conversations.

▶  There are many risks in terminating employees, any prudent manager will seek advice.

Personal  Liability  

Discrimina:on  Legisla:on  

Corpora:ons  Act  

WHS  Legisla:on  

Fair  Work    Act  

What can happen when things go wrong

Director/Officer  

HR  Manager/  Advisor  

Line  Manager  

WHS Legislation

▶  The WHS Act imposes a specific duty on officers of corporations to exercise due diligence to ensure that the corporation meets its work health and safety obligations.

▶  “Due diligence” means: •  Keeping up-to-date with work health and safety matters; •  Understanding the nature of the business, including any hazards and risks

associated with the corporation’s operations; •  Ensuring there are appropriate resources and procedures in place to

eliminate or minimise risks; and •  Ensuring there are suitable established procedures for complying with

WHS obligations, such as training, consultation and reporting.

Who is an ‘Officer’?

▶  An officer under the WHS Act includes: •  A person who makes, or participates in making, decisions that affect the

whole or a substantial part of the business;

•  A director or secretary of the corporation;

•  A person who has the capacity to significantly affect the corporation’s financial standing; or

•  A person with whose instructions or wishes the directors are accustomed to acting.

Personal Liability under the WHS Legislation

▶  A person who is involved in a contravention of a WHS civil penalty provision is taken to have contravened that provision.

▶  “Involved in” means: •  Aiding, abetting, counselling or procuring the contravention; •  Inducing the contravention (whether by threats, promises or otherwise); •  Being knowingly concerned in the contravention (whether directly or

indirectly, by act or omission); •  Conspiring with others to effect the contravention.

Personal Liability under the WHS Legislation

▶  You may also attract criminal liability under the WHS legislation if you fall short in your health and safety duties.

▶  All that is needed for a criminal offence under the Act is for a person: •  To have a health and safety duty; and •  To fail to comply with that duty.

▶  Additional penalties apply in the case of reckless behaviour, or if a person to whom a duty was owed is exposed to the risk of death, serious illness or injury.

▶  The maximum penalty is a $600,000 fine and 5 years imprisonment.

▶  An employee was killed as a result of electric shock injuries sustained at work.

▶  The corporation and one of its officers were charged with criminal offences

under the WHS Act, for failing to discharge their health and safety duties,

and exposing an individual to a risk of death, or serious injury or illness.

▶  The court considered the meaning of “officer” for the purposes of personal

liability under WHS legislation: •  Examined the role of the individual in the corporation as a whole, rather than their role in respect to

a particular matter;

•  Considered how limited the individual is when making decisions; and

•  Questioned whether the individual had “control or responsibility” for the business or undertakings

of the corporation.

McKie v Munir Al-Hasani and Kenoss Contractors [2015]

Where are we going?

Fair  Work  Act  

Recent  Trends  

Tips  for  Managers  

Where does your personal risk arise from?

▶  Section 550(1) A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.

▶  Section 550(2)

A person is involved in a contravention of a civil remedy provision if, and only if, the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced the contravention, whether by threats or promises or

otherwise; or (c) has been in any way, by act or omission, directly or indirectly knowingly

concerned in or party to the contravention; or (d) has conspired with others to effect the contravention.

Compliance Drive

▶  Fair Work Ombudsman Litigation Policy ▶  ‘holding individuals accountable for contraventions in which they are

involved in is an appropriate compliance tool. Accordingly, in each and every matter considered for litigation action the FWO will look to determine if s550 proceedings can also be commenced’.

▶  Research bodies are recommending that the FWO use its powers more often

to prosecute HR Managers under the accessorial liability provisions of the Fair Work Act, to strengthen corporate compliance with workplace laws.

GENERAL TREND TOWARDS UTILIZING S550

When does your personal risk arise? ▶  Aiding, abetting, counselling or procuring

-  Requires intentional participation

-  Knowledge of the essential matters

▶  Inducing

-  persuade, convince, encourage

▶  Knowingly concerned

-  Engaged in some act or conduct which “implicates or involves him or her” in the contravention so that there be a “practical connection between” the person and the contravention.

▶  Conspiring

-  scheme, plan, collude

What are the civil remedy provisions?

▶  National Employment Standards ▶  Modern Awards ▶  Enterprise Agreements ▶  Minimum Wages ▶  General Protections / Adverse Action ▶  Industrial Action ▶  Right of Entry ▶  Employee Records / Pay Slips

What are the consequences?

▶  Penalty - The maximum civil penalty that can be awarded against an individual for accessorial liability is $10,800 per breach

▶  No Prison - Not criminal law

▶  Compensation?

Personal liability to pay

▶  Court may order personal responsibility for payment ▶  “The power to impose a penalty on an “individual” includes a power to

ensure that the penalty is in fact paid personally by the “individual” and that he is not reimbursed – either directly or indirectly – by any union of which he is a member or by any associated entity.

Recent Trends – Who has been caught?

▶  “Provisions in relation to accessorial liability are designed to ensure that persons involved in contravening conduct, often directors or very senior employees of corporations, are held liable for their conduct insofar as it resulted in a contravention of the relevant legislation.”

▶  Director of the franchisor was ‘intimately’ involved in the decision to dismiss an employee of a franchisee.

DEVONSHIRE V MAGELLAN POWERTRONICS PTY LTD & ORS [2013] FMCA 207

UNITED VOICE V MDBR123 PTY LTD AND DENIS HINTON [2014] FCA 1344

Recent Trends – Defence

POTTER V FAIR WORK OMBUDSMAN [2014] FCA 187 (7 MARCH 2014)

▶  Company Director partially successful in appealing against a finding that she was an accessory to the Company’s underpayment of wages to employees

▶  Knowledge that a particular award applied to the employees is not the same as knowledge that a failure to pay the employees in accordance with that award constitutes a breach of a civil remedy provision.

WARNINGS ▶  Ignorance is not a defence, especially not for Companies ▶  May be found to be willfully or recklessly ignorant

Termination Process

Pre-­‐termina:on  procedures  

Carrying  out  the  

termina:on  

Post  termina:on  

Personal Liability

Termina1on  Decisions  

• CFMEU  v  Port  Kembla  Coal  Terminal  Ltd  (No  2)  [2015]  

• Substan:al  and  opera:ve  decision  to  terminate  was  due  to  employees  role  in  union  ac:vi:es.  

• Knowingly  concerned  in  the  contraven:on.  

Termina1on  Mee1ngs  

• Baulderstone  Pty  Ltd  &  Ors  [2014]  

• Former  HR  Managers,  ac:ng  on  direc:on  from  Opera:ons  Managers.  

• Poor  management  of  termina:on  process.  

Post  Termina1on  Events    

• Cerin  v  ACI  Opera1ons  Pty  Ltd  [2015]  • Failing  to  provide  no:ce  of  termina:on  in  accordance  with  the  NES.  

• HR  Manager  found  to  have  breached  s550.  

• HR  Manager  fined  $1,020.  

• Company  fined  $20,400.  

What the Future May Bring… ▶  Federal Opposition leader, Bill Shorten, announced this month that if

elected, he would introduce significant increases in penalties for people involved in underpayments of their employees: •  Increase current penalty of $10,800 to $216,000 (or three times the

amount of the underpayment, whichever is greater); and •  Implement a criminal offence for employers who intentionally or

recklessly engage in underpayments.

▶  This is an policy issue which will likely gain traction considering the number of prominent businesses which have recently been revealed to have been underpaying their employees.

▶  With the election coming up this year, we anticipate significant changes concerning the personal liability of employers, directors and managers in the workplace relations sphere.

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