Directors take note, harsher penalties for breaches of your duties and responsibilities could leave you with your tail between your legs!
If you are a director of a company with employees, you can be held personally liable for any unpaid employee wages and entitlements.
The Fair Work Act 2009 (Cth) (Act) sets out the minimum pay rates and entitlements for employees that are determined by their qualifications and the industry which they work in. In the event that a company director fails to comply with the minimum rates of pay and entitlements outlined in the applicable Modern Award and the National Employment Standards, they will be found to have breached the Act.
Fair Work Australia (FWA) has the power to undertake an audit of your company to ensure your compliance with the Act. It also has the power to enter your business premises, inspect any business related records and interview your staff. If FWA finds that you have contravened the Act, they may require your company to compensate the incorrectly paid employees with interest as well as impose monetary penalties of up to $666,000 for each contravention by a company and $133,200 for each contravention by an individual.
Recently, the Fair Work Ombudsman (FWO) has cracked down on employers and directors wilfully or accidentally breaching their obligations. In 2019 the FWO released their findings after a lengthy investigation into MasterChef prodigy, George Calombaris and his company ‘MADE Establishment Pty Ltd’ following a self-disclosure of underpayments. Upon completion of the investigation, the FWO found that the company underpaid wages and superannuation entitlements, resulting in an order for the company to back-pay former and current employees in the amount of $7.8 million. George Calombaris was required to pay a $200,000 contrition payment to the government as well as engage external auditors to ensure compliance across the company until 2022.
Being a TV personality or household name does not make directors of companies immune to consequences of breaching their duties and avoiding employee entitlements.
If you are a director of a company that has contravened the Act, don’t think you can hide behind the corporate veil. Section 550 of the Act provides a mechanism for directors to become personally liable in the event that companies and/or related bodies corporate are found to be in breach of the Fair Work Act.
When was the last time you checked your employment compliance?
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