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General Manager wilfully blind to contraventions

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Was blind but now I see

General Manager of a labour hire business was fined $43,000 for his involvement in contraventions of the Fair Work Act.

In the decisions of the Federal Circuit Court of Australia in Fair Work Ombudsman v Raying Holding Pty Ltd & Anor (No.2) [2017] FCCA 2148 and Fair Work Ombudsman v Raying Holding Pty Ltd & Anor (No.3) [2018] FCCA 668, the General Manager of a labour hire business was fined $43,000 for his involvement in contraventions of the Fair Work Act 2009 (Cth) (FW Act).

The Fair Work Ombudsman (FWO) initiated proceedings in 2015 against Raying Holding Pty Ltd (the Company), a labour hire business that provided labour services to an abattoir, and the General Manager as an accessory for breaches of the civil remedy provisions relating to two employees. These breaches included:

  • sham contracting;
  • failing to pay:
  • minimum rates of pay
  • overtime;
  • casual loading;
  • public holiday
  • under the relevant modern award; and
  • failing to comply with record keeping obligations.

The Company was deregistered shortly after declarations were made by the Court that it had breached the civil remedy provisions of the FW Act, meaning that penalties could not be imposed on the Company. However, the FWO maintained its prosecution of the General Manager as an accessory, arguing that he was the “hands and brains” of the Company and was known to the employees as “the boss”.

The General Manager agreed that he was principally responsible for the direction, management and supervision of the Company (including making decisions about the engagement and wages of employees) and had experience in both the labour hire industry and meat processing industry in Australia.

However, he denied or did not admit that he was aware that the Company had to comply with Australia’s workplace laws, that the Company was required to pay minimum entitlements to the employees and that the employees had not been paid their minimum entitlements.

The FWO submitted that because of the General Manager’s role at the Company, he had been aware of the payments made to employees and accordingly, was knowingly concerned in the underpayment contraventions. Alternatively, it was argued that the General Manager was “wilfully blind”, submitting that he “deliberately shut his eyes to the application of the Modern Award and minimum pay rates, a fundamental aspect of running a labour hire business.”

The Court rejected the General Manager’s submissions relating to his knowledge of the contraventions, finding that it was “unlikely” that the General Manager, who had lived in Australia for more than 20 years, would be unaware of industrial awards and how they worked. Further the Court concluded that given his duties and his work history, the General Manager’s ignorance was “the result of wilful blindness” and held that he “chose not to inform himself because the knowledge gained would be inconvenient.”

The Court also found that the General Manager had knowledge of the misrepresentations to employees about the basis of their engagements and knew about their terms and conditions of their engagements such that he was knowingly concerned in the contravention by the Company.

As the General Manager was found to have been “involved in” each of the contraventions, he was fined $43,000.

Lessons for employers
The Courts have made it clear that persons will be found to be “involved in” and personally liable for contraventions of the FW Act if they have:

(a) aided, abetted, counselled or procured the contravention; or

(b) induced the contravention; or

(c) in any way, by act or omission, directly or indirectly, been knowingly concerned in or party to the contravention; or

(d) conspired with others to effect the contravention.

In this matter, the General Manager’s claims that he had no knowledge about Australia’s industrial relations laws did not hold up in the Court, particularly given his overall management role in the Company and his industry experience. The matter highlights that individuals responsible for the management of an employer and employment-related decisions should be actively aware of and ensure compliance with the obligations under the FW Act and industrial instruments.

 

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

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