Fair Work Ombudsman warns on 'accessorial liability'

The August newsletter from the Fair Work Ombudsman (FWO) draws attention to the issue of 'accessorial liability' under the Fair Work Act.

The FWO points out that they are prosecuting an increasing number of cases against parties who are alleged to have been 'involved' in a contravention of the act, even though they are not the employer.

The FWO draws attention to section 550 of the Fair Work Act which states:

Involvement in contravention treated in same way as actual contravention
(1) A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(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.

In explaining their view of what this means for individuals, the FWO states:

Anyone who is found to be involved in a contravention of the Act can be personally liable for compensating employees and paying penalties imposed by the court. We have used this provision to hold company directors personally accountable for the actions of their companies. This effectively means that liquidating a company is no guarantee of avoiding the consequences of non-compliance with the Act.
But section 550 can extend to anyone involved in a contravention. This can include human resources and payroll officers, line managers, accountants and advisors.

The FWO also points out that there are broad implications for business that use 'outsourcing, franchise arrangements or complex supply chains', stating that, 'companies cannot outsource their non-compliance. For example if one company contracts another company to supply cleaning staff; and those cleaners are underpaid: both companies may be held accountable by a court.'

The FWO concedes that the 'full scope of section 550 in these types of arrangements has not been settled by the courts', but it seems clear that the FWO is determined to take action where it believes that a third party is involved in a contravention of the Act.

The FWO advises individuals, such as management teams, consultants and other advisers to ensure that they are aware of the applicable rules and follow them. Any advice given should be consistent with the Fair Work Act.

For companies involved in outsourcing, the FWO provides some resources to assist in reviewing compliance, including:

Updated 'PayCheck Plus' tool helps calculate correct minimum wages, penalties and allowances

The Fair Work Ombudsman has updated its online pay calculator, PayCheck Plus, to take account of the end of transitional provisions in some awards. Other changes include improvements to the way that information on common penalty rates is displayed, and an expansion of the 'frequently asked questions' on the website.

PayCheck Plus is a useful tool for working out the correct rates of pay for employees covered by modern awards in the national workplace relations system. It can be used to calculate minimum wages, penalty rates and allowances.

The website also includes instructional videos explaining how to make the best use of the calculator.

 

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What benefits are included when working out if a worker earns more than the upper limit for an unfair dismissal claim?

IMAGE: TATSIANAMA / SHUTTERSTOCK

IMAGE: TATSIANAMA / SHUTTERSTOCK

Under Section 382 of the Fair Work Act, employees who earn more than a certain amount and are not covered by an award are unable to make an unfair dismissal claim in the Fair Work Commission. Currently the high-income threshold is $133,000 per year.

This amount can include non-monetary benefits as set out in Section 332 of the Fair Work Act, but disputes can arise in deciding what should be included.

A recent decision of the Full Bench of the Fair Work Commission ([2014] FWCFB 6735) considered whether an employee's mobile phone and data usage should be included in the employee's earnings. In this case, the employer said that the employee had private use of a laptop and mobile, while the employee said that the equipment was only provided for work use.

In making its decision, the Full Bench referred to a 1997 decision of the Full Bench of the Australian Industrial Relations Commission in Rofin Australia Pty Ltd v Newtown (1997) 78 IR 78:

“... a distinction ... has been made, in our view quite properly, between the provision of a motor vehicle as part of a salary package and the provision of a motor vehicle as a piece of equipment supplied by the employer to enable the employee to perform the job.

Where a motor vehicle is provided to an employee in lieu of salary that might otherwise have been paid, it is appropriate that the private benefit derived by the employee from the provision of the motor vehicle be counted as part of the employee’s remuneration. Where, however, the vehicle is provided for business purposes and the employee’s entitlement to private use is purely incidental, the provision of the motor vehicle should be treated no differently to the provision by the employer of any other tool or piece of equipment essential to the performance of the job.”

The Full Bench decided that in the current case, there had been no agreement between the parties that the employee could use the mobile broadband service for private use. The Full Bench stated:

'...where a person has received a benefit that was not in accordance with an agreement between that person and his or her employer, the Commission’s power under reg 3.05(6) will not be enlivened.' (Regulation 3.05(6) allows the Commission to estimate a monetary value of a benefit where the parties do not agree on the value).

As it turned out, the value of the mobile broadband usage was decisive in working out whether the employee earned less than the high-income threshold and the employee was able to press on with their unfair dismissal claim.

In this case, there seems to have been a pivotal disagreement between the parties as to whether there was any private use allowed of the employer-provided service. This could perhaps be avoided by stating clearly in the employment contract whether private use of business equipment and services is included as part of the salary package, as well as giving thought to whether the value of such private use can be agreed between the parties or is otherwise able to be verified.

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This guide might help if an employee sues you for unpaid entitlements

The Fair Work Act provides a small claims mechanism for employees to pursue unpaid entitlements with a value of up to $20,000. This small claims process is quicker and more informal than regular court proceedings and also cheaper, given that the parties do not have to engage a lawyer. Indeed, permission is required to be represented by a lawyer in such a matter.

The court's approach in dealing with small claims aims for a quick and simple process with minimal expense to the parties. Matters are usually resolved with a single hearing.

While I always encourage clients to seek professional advice when matters are particularly complex or risky, most employers would be able to navigate the process successfully once they are aware of how things work and the court's requirements in terms of procedures and documentation.

The Fair Work Ombudsman has developed a Small Caims Guide, which provides the required information in a straightforward way. As well as the printed guide, the FWO has created a series of videos to explain the procedure.

Fortunately, most disputes are able to be resolved without going to court. But if you are confronted with a small claims matter, the FWO Guide should prove to be a useful resource.

 

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Legal requirements for pay slips

Employers are obliged by law to give pay slips to employees, and there are quite detailed requirements about what needs to be included on the pay slip. As a minimum, the pay slip (which can be in electronic or printed form) must show the following:

  • employer’s and employee’s name
  • employer’s Australian Business Number (if applicable)
  • pay period
  • date of payment
  • gross and net pay
  • if the employee is paid an hourly rate:
    • the ordinary hourly rate
    • the number of hours worked at that rate
    • the total dollar amount of pay at that rate
    • any loadings, allowances, bonuses, incentive-based payments, penalty rates or other paid entitlements that can be separated out from an employee’s ordinary hourly rate
    • the pay rate that applied on the last day of employment
    • any deductions from the employee's pay, including:
      • the amount and details of each deduction
      • the name, or name and number of the fund / account the deduction was paid into
      • any superannuation contributions paid for the employee’s benefit, including:
        • the amount of contributions made during the pay period (or the amount of contributions that need to be made)
        • the name and / or number of the superannuation fund the contributions were made to.

It is not mandatory to show leave balances on the pay slip, but it's useful to do so, and many accounting packages will automatically include this information.

If you use popular accounting software such as MYOB or Quickbooks you will probably have no difficulty in complying with the requirements for pay slips -- although you should check your setup to make sure all the required information is correctly reported.

If you need to create your own pay slips, the Fair Work Ombudsman has this useful template.

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Are you paying the right amounts for work done on a public holiday?

Public holidays vary from state to state, and the employee entitlements for work done on a public holiday also depend on whether the employee is covered by an award, and which award applies.

it's important to be aware of the dates for public holidays, and the entitlements that apply. The following links from the Workplace Ombudsman will be helpful:

To complicate matters, some states have different holidays for metropolitan and regional areas and you might need to check with the relevant state agency to confirm. In Western Australia, for example, the Queen's Birthday holiday is on 29 September 2014 in Perth and other parts of the state, but some regions observe the holiday on different dates. The WA Department of Commerce has a list of the regional variations here.