Australian Labor Law Update: Payroll Manager Held Liable for Underpayment

It is not just the boss who needs to be fearful of the powers of the Fair Work Ombudsman anymore! Australian businesses have settled back into their routine following Christmas and New Year breaks, but 2017 is definitely not the year to become complacent and think that the buck literally stops with your employer. Now is the prime time to start reviewing your workplace’s employment documents and ensure that all employees are being paid the correct rate of pay. While in the past people employed to perform human resources, finance or payroll functions in a business may have considered this to be the ultimate responsibility of the owner of the business or the executive team, the Fair Work Ombudsman has made it clear that they will pursue anyone who is involved in breaching workplace laws. 

In a recent case pursued by the Fair Work Ombudsman, the Federal Circuit Court imposed penalties of AUD116,250 on a Queensland restaurant for underpaying its workers. That we all expected, but, in addition, the Court imposed a penalty of AUD20,000 on the director and part-owner of the business and AUD7,000 on the former payroll and account manager for their involvement in underpaying the employees. 

While this is not the first occasion where the Fair Work Ombudsman has sought to include human resources and payroll managers when pursuing underpayment claims, this is the first time penalties have been imposed by the Court and it is unlikely to be the last time. We think that this will become a common path for the Fair Work Ombudsman to take. The Fair Work Ombudsman has recently commenced legal action against a migration agency for allegedly underpaying its employees and the human resources manager in that case is also facing legal action. The Fair Work Ombudsman, Natalie James, has been vocal about holding people accountable for underpaying workers, tweeting “@fairwork_gov_au will take action against personnel who facilitate deliberate breaches of workplace laws”.

While it may seem harsh to penalize an employee for their involvement in such a contravention when they do not own the business and usually do not have the “last say”, it is clear that the Fair Work Ombudsman will continue to pursue any person knowingly involved in facilitating the underpayment of employees regardless of their ability to influence the direction of the business. As such, it is important that all people involved in recruiting, managing and paying employees are aware of their obligations and are taking steps to ensure that all employees are receiving their correct rate of pay, including penalty rates, overtime, allowances and leave loading. 

Our Employment, IR & Workplace Safety Team at our Australian affiliate law firm, are able to assist in conducting an audit of your employee payments to ensure that they are receiving the correct rates of pay. This is particularly important where you are paying employees an all-inclusive rate as while you think that you have developed an “all-inclusive rate” because it exceeds the minimum wage, when all penalty rates and unique award entitlements are considered, you actually may not be complying with the law. It is surprising how often employers are not getting this right. 

By Peta Tumpey, Partner, & Keely Horan, Associate, TressCox Lawyers, Australia, a Transatlantic Law International affiliated firm. 

For further information or for any assistance regarding Australian labor law please contact Peta Tumpey at australialabor@transatlanticlaw.com.

Disclaimer: Transatlantic Law International Limited is a UK registered limited liability company providing international business and legal solutions through its own resources and the expertise of over 95 affiliated independent law firms worldwide. This article is for background information only and provided in the context of the applicable law when published and does not constitute legal advice and cannot be relied on as such for any matter. Legal advice may be provided subject to the retention of Transatlantic Law International Limited’s services and its governing terms and conditions of service. Transatlantic Law International Limited, based at 42 Brook Street, London W1K 5DB, United Kingdom, is registered with Companies House, Reg Nr. 361484, with its registered address at 83 Cambridge Street, London SW1V 4PS, United Kingdom.