SECURITY
It makes sound business sense to ensure that you
understand how workers in your business and your
supply chain are engaged so you can minimise the risk
of non-compliance with workplace laws. By managing
your supply chain and only using contractors who do
the right thing and follow workplace relations laws,
you are protecting your organization from reputational
and brand damage. If your contractor or subcontractor
is found to be non-compliant with workplace laws you
may be held responsible.
Businesses may be held legally responsible when
their contractor (or subcontractor) is found to have
underpaid their staff. Under the accessorial liability
provisions of the Fair Work Act 2009 (Cth), it’s not
just direct employers who can be held liable for
contraventions such as underpayments - any person
knowingly involved in contraventions could be found
legally responsible. This could extend to directors,
managers, accountants or businesses involved in the
supply chain.
WHAT IS ACCESSORIAL LIABILITY?
Under Section 550 of the Fair Work Act 2009 (Cth), a
person who is involved in a contravention of the Act
is held responsible for that contravention. A person is
involved in a contravention if they:
• have aided, abetted, counselled or procured the
contravention; or
• have induced the contravention, whether by threats
or promises or otherwise; or
• have been in any way, by act or omission, directly
or indirectly, knowingly concerned in or party to the
contravention; or
• have conspired with others to effect the
contravention.
What does this mean for individuals?
Anyone who is found to be involved in a contravention
of the Act can be personally liable for compensating
employees and paying penalties imposed by the
court. This can include procurement managers,
human resources and payroll officers, line managers,
accountants and advisors.
What does this mean for companies?
If a company, as the employing entity, contravenes
the Act: that company is automatically responsible for
that contravention and may have penalties imposed by
a court. But under section 550 a company that is not
the employing entity, may be found to be involved in a
contravention and may also have penalties imposed by
a court.
This is important for companies to understand
especially in their supply-chain and procurement
processes. Effectively it means that companies cannot
outsource their non-compliance. For example if
one company contracts another company to supply
security staff; and those security staff are underpaid:
both companies may be held accountable by a court.
This also has broad implications for businesses that
use outsourcing, franchise arrangements or complex
supply-chains.
The Fair Work Ombudsman following input from industry
has just released a series of helpful resources to provide
guidance on labour contracting. The guides include:
•
•
•
•
Guide to Labour Contracting
Guide to Labour Contracting for Small Busines s
Guide to Monitoring your Labour Contracting
Guide to Self-Auditing Your Business
To access the guides and links to other helpful
information on contracting visit www.fairwork.gov.au/
supplychain or www.asial.com.au.
GOVLINK » ISSUE 2 2017
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