$181 payout shortfall leads to $1,020 penalty against HR Manager!
Posted on December 03, 2015
The matter of Cerin v ACI Operations Pty Ltd & Ors [2015] FCCA 1654 involved a claim by an employee that his employer had breached the National Employment Standards (NES) contained in the Fair Work Act 2009 (FW Act). Specifically, the employee was provided with only 4 weeks and 3 days’ notice upon termination, however he was actually entitled to 5 weeks’ notice in accordance with the NES.
Notice is dealt with in section 117 of the FW Act and is based on an employee’s period of continuous service. In this case, the employee had worked for the Respondent for more than 5 years and so was entitled to 4 weeks’ notice. Due to the employee being over 45 years of age with more than 2 years of continuous service, he was also entitled to an additional 1 weeks’ notice. By paying him only 4 weeks and 3 days’ notice, this amounted to a shortfall of $181.66.
Section 44 of the FW Act states that a contravention of the NES is a “civil remedy provision”. Such provisions are punishable by a monetary penalty, with the maximum penalties set at $54,000 for corporations and $10,800 for individuals (currently).
Regardless of the miniscule amount of the shortfall, Judge Simpson of the Federal Circuit Court considered that “it is important that the penalties in relation to the First Respondent’s contravention are substantial enough to act as a general deterrent to other employers who would seek to unlawfully avoid their obligation to provide notice of termination.” It followed that Judge Simpson ordered the employer to pay a penalty of $20,400.
The FW Act also provides that a person “involved in” a contravention of a civil remedy provision is also taken to have contravened that provision. In the present matter, the employer’s HR Manager, Nicola Powell, was the Second Respondent to the proceedings because she issued the termination letter to the employee and authorised payment of the incorrect notice monies.
Judge Simpson described Ms Powell’s contravention as follows:
… Ms Powell admitted in cross-examination that she was aware of the FW Act and that it provided for minimum employment standards known as the National Employment Standards. She said that she was aware that those standards applied to all the employees of the First Respondent. She also admitted that she was aware that as part of the standards, there are requirements as to the amount of notice that is to be given on termination and that the amount of notice varies depending on the length of service of the employee concerned. She also said that it was within her authority to decide whether an employee on termination is entitled to four or five weeks’ notice, or pay in lieu thereof. She gave no explanation of why, if she was aware of all of these provisions in the Act, that she gave the Applicant only four weeks’ notice, rather than the required five. No satisfactory explanation has been provided.
While Judge Simpson considered that Ms Powell’s offending was less serious than the employer’s breach, His Honour still issued Ms Powell with a personal penalty of $1,020.
This decision should serve as notice to employers – and particularly those within an employer’s organisation who oversee employees and their entitlements – that the Court will not shy away from the personal liability provisions of the FW Act. This is so even where the cost of the breach may seem minor – it pays to get it right!
Please contact a member of Lynch Meyer’s Workplace Relations team if you have a query about employee entitlements.
