Making Sense of the Compensation Remedy in Cases of Accessorial Liability under the Fair Work Act
Anderson, Helen, Howe, John, Melbourne University Law Review
[The Fair Work Act 2009 (Cth) substantially reorganised and altered the law relating to civil penalty provisions as it existed in the Workplace Relations Act 1996 (Cth). However, there is uncertainty as to the availability of the compensation remedy against persons involved as accessories in a civil remedy breach by a corporate employer. Clarification of the availability of this remedy is important for employees seeking recovery of unpaid wages, reducing reliance on the taxpayer-funded safety net scheme. It should also act as an effective deterrent against directors 'phoenixing' companies deliberately to escape payment of accrued entitlements. Existing penalties, even if paid to the employees, are generally smaller than the amount of unpaid entitlements and therefore less effective either as deterrents or as compensation.]
CONTENTS I Introduction II Justifications for an Award of Compensation III The Development of Remedy Provisions under Federal Labour Legislation IV Specific Actions under the Workplace Relations Act A Breaches of Awards and Agreements B Unlawful Termination C Freedom of Association V Compensation and Accessorial Liability under the Fair Work Act VI Commentary VII Conclusion
This article seeks to make sense of the rights of applicants to seek compensation from corporate employers (1) and other parties, usually company directors, named in actions for breaches of the Fair Work Act 2009 (Cth) ('FW Act'). The FW Act provides that courts with jurisdiction have the power to 'make any order the court considers appropriate' in relation to the breach of a civil remedy provision under the Act, (2) including orders 'awarding compensation for loss that a person has suffered' because of that breach. (3) We argue that where there is a sufficient degree of involvement, directors can be considered accessories to their company's breach of the Act and ought therefore to be liable to pay compensation to the company's employees.
Given that many contraventions of working conditions are breaches of civil remedy provisions, including breaches of awards, enterprise agreements and a national minimum wage order, the FW Act provisions significantly broaden the availability of compensation when compared to previous federal labour legislation. For example, the legislation that the FW Act replaced, the Workplace Relations Act 1996 (Cth) ('WR Act'), contained no provision that allowed recovery of damages or compensation for breach of an award or collective enterprise agreement, although in practice it was possible to seek recovery of wage underpayments. While the WR Act did allow for compensation to be sought in relation to other types of contravention, such as breaches of provisions protecting freedom of association and prohibiting unlawful termination, these remedy provisions were scattered throughout the legislation in an ad hoc manner. The FW Act has maintained the availability of compensation as a remedy in relation to these breaches, and extended it to a range of other contraventions where loss has been suffered as a result of the breach in question. This extension is the basis of our argument that directors, as accessories, are now within the reach of a compensation order.
The FW Act provides that the parties against whom compensation may be sought include, in the case of corporate employers, the employer company's directors or officers where they are found to be 'a person who is involved' in civil remedy breaches of the Act by the company, (4) as well as others who may be required by particular provisions to remedy the breach. The right to pursue a party other than the employer company under this provision for accessorial liability is particularly important in the insolvency context because proceedings against a company in liquidation are stayed, (5) and in the absence of another party to sue, no penalty or remedy will be forthcoming. …