HR professionals & personal liability: Know your obligations

HR managers can be personally liable for a range of workplace wrongdoing – even if they aren’t actively involved.

We spoke to Harriet Eager, Partner at international legal and consulting firm MinterEllison, about how to protect your professional reputation.

What is HR liable for?

HR managers have what is known as “accessorial liability” under a range of legislation, including anti-discrimination law, immigration law and the Fair Work Act (FWA).

This means HR professionals can be held personally accountable for an organisation breaking the law, regardless of whether they participated in the misconduct or, in some instances, were even aware of it.

Eager says most cases have to do with breaches to the FWA, and that following some recent high-profile allegations of worker exploitation involving companies such as Pizza Hut and 7-Eleven  (among others), the Fair Work Ombudsman (FWO) in particular is cracking down on accessories in an effort to stamp out unscrupulous workplace practices.

“If the FWO finds a company liable, they will then work to determine which individuals were knowingly involved in the issue through failure to identify it when they should have, or because they turned a blind eye or covered it up,” Eager warns. “Last financial year, individuals were prosecuted in 46 of their 50 claims.”

In fact, in 2016-17, the FWO’s use of enforcement outcomes increased by 12 per cent, and non-compliant businesses, directors and accessories were ordered to pay more than $4.8 million in financial penalties, a 66 per cent increase on total penalties from the previous year.

What happens if there’s a breach? 

If the FWO is made aware of a breach through a complaint or audit, Eager says they will contact the company to request any necessary information, documents or interviews needed to conduct an investigation into the matter.

As these case studies show, depending on the circumstances of the breach, a number of different enforcement outcomes may be the result of an audit, from formal cautions to litigation.

“[Penalties] can get up to $126,000 for individuals for a serious breach to the FWA,” Eager says.

“But it’s also the individual’s reputation that’s in jeopardy, because all HR people know other HR people, and once your name’s out there in a decision [relating to an FWA investigation or breach], it’d be pretty hard to come back from that.”

Ignorance isn’t necessarily a reliable defence, she warns, because as senior people within an organisation, the courts will expect HR managers to possess a certain level of knowledge regarding their organisation’s daily operations and legislative obligations.

And claiming you were simply following the boss’s orders won’t cut it either. This was demonstrated in one recent case where the HR manager of a restaurant was among those penalised almost $400,000 for systematically exploiting overseas workers.

Protecting your professional reputation

So what can you do to protect yourself from an unexpected blow to your reputation and a hefty fine?

Eager recommends taking the following preventative measures:

1. Conduct an audit of your employment arrangements: Get ahead of any potential issues by making sure your organisation is paying its people the right rates and superannuation, that you’re complying with the National Employment Standards and that your contractors aren’t really employees.
2. Gain a thorough understanding of the FWA: In the event that a Fair Work Ombudsman officer knocks on your door, it’s important to know your rights and obligations, or at least where to find that information.
3. Thoroughly vet businesses you’re acquiring: “Lots of these issues spread when organisations acquire other organisations but don’t do very thorough due diligence to identify underpayment issues in particular,” Eager says.
4. Investigate potential employers: “As an HR professional, if you’re moving organisations, I’d be absolutely asking questions – as part of that recruitment-interview process – about the organisation and their compliance and history, and what they do to make sure they’re in a good position.”

ABOUT HARRIET EAGER

Harriet Eager is a highly regarded and passionate employment lawyer who advises clients on the full spectrum of employment, industrial, and work health and safety issues, partnering with them to develop and implement their short and long term employment and industrial strategies.

She has particular experience in enterprise agreement negotiations and strategy, restructuring and outsourcing, strategic litigation (including unfair dismissals, adverse action, restraints and breach of contract), executive remuneration and work health and safety.