Husband and wife ordered to meet bankrupt company’s employment entitlements

Liquidating a company won’t necessarily avoid husbands and wives from back-paying employees out of their own pockets.

In FWO v Sinpek Pty Ltd (In Liquidation) & Ors [2020] FCCA 88, the national workplace regulator secured orders against a director and spouse to personally reimburse two underpaid workers $52,722.48.

The Fair Work Ombudsman proved various underpayment and other workplace contraventions occurring between 8 January 2015 and 10 August 2016, which included requirements for employees to re-pay their tax returns to the employer and meet the costs of stolen fuel.

Central to the FWO’s success was its reliance on third party liability provisions in the Fair Work Act 2009, which extend exposure to contraventions of ‘civil remedy provisions’ to any person that was ‘involved’ or ‘knowingly concerned’ in the contravention. To be knowingly concerned in a contravention, the person must have engaged in some act or conduct which ‘implicates or involves him or her’ in the contravention so that there be a ‘practical connection between’ the person and the contravention.

An analysis of historical FWO initiated cases demonstrates a consistent trend in it continuing to name individual persons as second, third or fourth respondents to legal proceedings (including accountants and HR managers, for example).

Third party liability doesn’t end with underpayment cases either. Any breach of a civil remedy provision contained in the Fair Work Act, including unlawful dismissals, entitles an applicant to explore whether an individual should also be held to account. Further, it’s unlikely you would be forgiven if you were only following your supervisor’s orders. For example, in FWBII v Baulderstone Pty Ltd [2014] FCCA 721, two HR managers were found to be co-liable after they complied with an employer’s instruction to terminate an employee’s salary contract because the employee resigned his membership with the CFMEU.

If in doubt, always seek advice from a qualified professional.

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