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The Fair Work Act 2009 (Cth) (FW Act) requires employers to keep certain employee records for a period of 7 years. These records are necessary to ensure that employees have been paid their minimum entitlements should an underpayment claim be made.

In Fair Work Ombudsman v J.D. Chapel Nominees Pty Ltd (in liq) [2024] FedCFamC2G 85 the Federal Circuit and Family Court of Australia (the Court) recently made orders requiring the Director and the General Manager of several hospitality venues to pay penalties for not keeping employee records.

The accounting firm who provided bookkeeping services and its principal were also ordered to pay penalties for not complying with a notice to produce served by the Fair Work Ombudsman (FWO).

In or about 2019, the FWO initiated an investigation against a group of eight companies (the Group) for the underpayment of its employees. Each of the companies went into liquidation before litigation commenced, however, utilising the accessorial liability provisions under the FW Act, the FWO commenced proceedings and sought penalties against:

• the owner (or part owner) and director of six entities in the Group; and
• the General Manager who was responsible for the day to day management of six entities,

for being involved in contraventions of failing to make and/or keep records for seven years which set out the hours worked by casual or part-time employees and the entitlements to loadings, allowances or penalty rates as required by the Fair Work Regulations 2009 (Cth) (FW Regulations).

During the investigation, the FWO served notices to produce requiring the accounting firm to provide specified records and documents in relation to the Group’s entities. The accounting firm did not comply with the notice of produce claiming that they had no authority to do so with the approval and consent of the Director of the Group. The FWO subsequently seized documents which answered the notice to produce in an unannounced visit. The FWO then prosecuted the accounting firm and its principal for failing to comply with the notices to produce.

As the contraventions were admitted, the Court had to determine the appropriate penalties to be imposed. In relation to:

• the Director of the Group, the Court considered the record keeping failures to be deliberate given the Director was aware that he had responsibility to ensure that the records were not kept and did not do so and that there was a need for deterrence. The Court ordered the Director to pay a total penalty of $41,368.
• the General Manager, the Court also considered that the breaches to be deliberate and that he did not display genuine contrition and ordered a total penalty of $26,893.

In relation to the accounting firm and its principal, the Court considered that the contravention was deliberate, noting that documents which answered the notice to produce did exist and its action had impacted on the FWO’s function to investigate workplace conduct. The Court also noted that as an accounting firm, it should have had the basic professional competence to comply with the legal requirements of the FWO. The Court imposed a penalty of $34,020 on the accounting firm and a separate penalty of $35,154 on the principal.

Lessons for employers

The prosecution of individuals for contraventions of the FW Act and penalties imposed highlight the importance for employers and those with management responsibilities to ensure compliance with the FW Act. Non-compliance with recording keeping obligations is treated seriously as it makes it impossible to determine if employee entitlements were paid correctly.

The decision should also serve as a reminder to third parties which provide accounting or bookkeeping services to comply that they may also be prosecuted for not complying with the FW Act.  

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