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The Fair Work Ombudsman has put all company directors on notice that they may be held personally responsible for the actions of those  they trust to effectively manage compliance with the new Fair Work laws.

In a recent case, DZ Imports was found to have underpaid two employees by a total of approximately $21,000 and a considerable corporate penalty of $148,000 was imposed on the company by the Fair Work Ombudsman. However, the Ombudsman also imposed a personal fine on the company’s director, Mr Zhu, of $29,700. That’s over $8000 more than the underpayment originally identified by the Ombudsman.

When it comes to compliance with the Fair Work Act 2009 and Modern Awards, you simply can’t assume that your managers have everything under control. The new laws and Modern Awards are proving to be extremely challenging and there are no easy shortcuts. Directors must be proactive in managing compliance risk rather than reacting to issues as they arise.

As a director, you need to exercise due diligence and ensure your business has up-to-date, written employment contracts in place for all employees that reference the correct Modern Award. You must also make sure that your company is fully compliant with the 10 new National Employment Standards that commenced operation on 1 January 2010.

Unfortunately, the Fair Work Ombudsman does not provide legally binding advice to employers in relation to obligations under the Fair Work Act 2009 or Modern Awards.  We therefore recommend you always check any advice you receive with an employment relations expert like Better HR.

Corporate penalties and personal fines

The Fair Work Ombudsman has made it quite clear that lack of awareness will not be accepted as a defence if an employer is found to be in breach of their legal obligations. As the DZ Imports case shows, compensating an employee is one thing…..being personally fined is something else entirely.

As part of its on-going ‘educational campaign’ to ‘assist’ employers to understand their legal obligations under the Fair Work Act 2009 and Modern Awards, the Fair Work Ombudsman is now actively ‘visiting’ thousands of businesses – small and large – across Australia. During these ‘visits’, Fair Work Inspectors conduct audits and can impose on-the-spot penalties.

If ever there was a time for company directors to ensure compliance with the Fair Work laws and Modern Awards, it’s now.