Directors and managers are not immune from the Fair Work Ombudsman

Directors and managers are not immune from the Fair Work Ombudsman

Fair Work Ombudsman initiated proceedings:
Directors and managers are not immune from the Fair Work Ombudsman

The Fair Work Ombudsman is a statutory office established under the Fair Work Act. It has a number of functions, including:

  • Promoting harmonious, productive and cooperative workplace relations and compliance with Commonwealth workplace laws and instruments;
  • Helping parties attempt to resolve disputes regarding alleged non-compliance with Commonwealth workplace laws through assisted dispute resolution;
  • Monitoring compliance with Commonwealth workplace laws, making enquiries and carrying out investigations and commencing proceedings in a court, or the Fair Work Commission to enforce Fair Work legislation and safety net contractual entitlements;
  • Representing employees or outworkers who are, or may become, a party to proceedings in a court, or a party to a matter before the Fair Work Commission, under Fair Work Act or a Fair Work instrument.

If the Fair Work Ombudsman identifies a contravention, then it may engage in enforcement measures against an Employer by issuing them with a Compliance Notice, compelling them to enter into an Enforceable Undertaking, or commencing legal proceedings against them.

If the contravention involves a breach of Fair Work Legislation involving criminal liability, then the matter may be referred to the Commonwealth Director of Public Prosecutions for persecution.

Being involved in a contravention

Section 550(1) of the Fair Work Act provides that:

“A person who is involved in a contravention of a civil remedy provision is treated as having contravened that provision.”

The definition of “involved in” requires that a person has aided, abetted, counselled or procured the contravention, or induced the contravention (e.g., by threats or promises), that they have been directly or indirectly knowingly concerned in or party to the contravention, or that they have conspired with others to effect the contravention.

Who can be involved in a contravention?

A person “involved in” a contravention may include company directors, sole director / shareholders who have passed their authority to others, HR Managers or other managers, and advisors to the business.

Fair Work Ombudsman litigation policy

Under Fair Work Ombudsman litigation policy, each matter considered for litigation against an employer is also examined to determine if proceedings can also be commenced against a person for being “involved in” a contravention. However, any decision to commence proceedings must satisfy the Fair Work Ombudsman’s two-stage test that requires firstly, that there is sufficient evidence to prosecute the case, and secondly, that it must be evident from the facts of the case and surrounding circumstances that commencing proceedings would be in the public interest.

A recent case

In the case of Fair Work Ombudsman v Gaura Nitai Pty Ltd & Anor, the Fair Work Ombudsman filed proceedings against in the Federal Circuit Court on behalf of Mr Gibin Mathew (“the Employee”) against the company operating the licensed cafe called “The Coffee Club Nundah” at the Nundah Village Shopping Centre in Brisbane (“the Employer”), and Mr Chokhani, who was a director, shareholder and manager of the Employer.

The Fair Work Ombudsman sought declarations that the Employer had engaged in various contraventions of the Fair Work Act 2009 and the Fair Work Regulations 2009, a declaration that Mr Chokhani was “involved in” those contraventions and thereby contravened the Act himself, and the imposition of pecuniary penalties on both the Employer and Mr Chokhani for the contraventions alleged against them.

Judge Jarrett delivered his decision on 13 June 2017. He found that:

  • The employer had underpaid the Employee’s casual entitlements and his safety net contractual entitlements by $23,546.18, in contravention of sections 44 and 45 of the Fair Work Act;
  • A threat made by Mr Chokhani to the Employee (that if the Employee did not repay $18,000 of the arrears of his wages back to Mr Chokhani, he would organise to cancel the Employee’s visa) was in contravention of section 325(1) of the Fair Work Act, which prohibited employers requiring an employee to spend part of the amount payable to the employee for the employees work.
  • Employer had committed other breaches by failing to record the hours of overtime worked, failing to record annual leave taken and the balance of the Employee’s annual leave, making use of false and misleading records, and failing to provide the Employee with a pay slip within one working day of paying an amount to his in relation to the performance of work.

Judge Jarrett also declared that Mr Chokhani was involved in each of the above contraventions by the Employer.

The Court ordered the Employer to pay a pecuniary penalty of $150,900, and Mr Chokhani to pay a pecuniary penalty of $30,000, as well as a requiring number of measures to be put in place to ensure future compliance.

How Boss Lawyers can help you

The Fair Work Ombudsman has a number of functions, which include taking enforcement action against employers in certain circumstances. An employee can make a complaint to the Fair Work Ombudsman at no cost, making it an easy avenue for employees to seek to gain powerful assistance in a relevant dispute against their employer.

Given the serious consequences that can follow being found to be in contravention of Fair Work legislation not only for the Employer involved, but also any person accused of being “involved in” a contravention, if you think that you are being investigated by the Fair Work Ombudsman, you should always obtain competent independent legal advice regarding your particular circumstances, and the options that may be available to you.

For practical legal advice, support and assistance regarding your particular circumstances, call Boss Lawyers. We are ready to step in and assist you to assert your rights and protect your interests.

Mark Harley
Mark Harley | Partner
David Grant
David Grant | Lawyer