In what could be a big win for vulnerable workers who have been underpaid, a judge has ruled that a court can make compensation orders against directors of deregistered companies.
This means that dodgy directors who have wound up a business to avoid court-ordered back payments can be held liable for compensating underpaid workers under court orders.
The finding was made by Federal Circuit and Family Court Judge Jonathan Forbes on the threshold issue of whether, “under the small claims procedure, the court has jurisdiction to find that an officer of a deregistered company was involved in a contravention of the Fair Work Act by the company and, if so, whether the court has jurisdiction to make a compensatory order against the officer in respect of his accessorial liability”.
Judge Forbes said “The court’s power to make an order in relation to the contravention of a civil remedy provision is found in section 545,” of the Fair Work Act.
“Section 545(1) confers on the Federal Court and this court the power to ‘make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision‘.
“The power of this court to make an order in respect of contraventions of civil remedy provisions is very broad and includes, but is not limited to, the making of orders awarding compensation for any loss that a person has suffered because of the contravention.”
While s548(2) imposed a limit of $20,000, “it is not a jurisdictional constraint which prohibits the court’s power in any other respect”.
“Section 548 does not expressly prescribe against whom the court may make orders under the small claim procedure.
There was no reason why such an order cannot be made against a person who has been involved in an employer’s contravention “if the court considers it appropriate to do so”, said Judge Forbes.
The judge concluded that a court under s545 has power to make any order it considers appropriate, including a compensatory order in respect of unpaid wages, “if it is satisfied that a person has contravened a civil remedy provision, including by reason of that person being a deemed contravenor”.
“The applications shall remain listed for final hearing on 4-5 July 2022.”
