Our Employment, Industrial Relations and Safety expert Murray Procter presented the first #CKBusinessBites seminar for 2018 on managerial liability.

1. Managerial Liability
Responsibilities and exposure to personal liability
Murray Procter, Partner | 9 March 2018

2. Agenda
o Liability for managers under Fair Work Act 2009 (Cth)
• How far does the risk extend?
• Recent FW Act changes
o Liability for managers under WHS law
• Who is an “officer”
• What does the “due diligence” duty for officers encompass?
o What about indemnities?
o Stress claims and bullying
o Your decisions as evidence - essential tips

3. Liability for managers under
FW Act
“Accessorial liability”
o Section 550 of the Act
provides that a person
who is “involved in” a
contravention is taken
to have contravened
the provision
o Used to bring
proceedings against
persons other than the
employer
o Also used to continue
action if employer is
put into liquidation

4. “Accessorial liability” under
FW Act
What amounts to an accessory?
Under the Act, a person is “involved in” a
contravention if, and only if, they have:
o aided, abetted, counselled or procured the
contravention; or
o induced the contravention, whether by threats or
promises or otherwise; or
o been in any way, by act or omission, directly or
indirectly, knowingly concerned in or party to the
contravention; or
o conspired with others to effect the contravention

5. “Accessorial liability” under
FW Act
An accessory:
o Must have knowledge of the essential facts constituting the contravention
o Must be knowingly concerned in the contravention;
o Must be an intentional participant in the contravention based on actual not
constructive knowledge of the essential facts constituting the contravention —
although constructive knowledge may be sufficient in cases of wilful blindness;
and
o Need not know that the matters in question constituted a contravention

6. “Accessorial liability” under
FW Act
In the case of accessorial liability for Award contraventions, the
following needs to be proved:
o The person has knowledge of the relevant Award (although it is not necessary to
know the precise name) and that it applied to the employer and employees and
set minimum conditions;
o The person has knowledge the employees performed work of a particular kind
which entitled them to receipt of certain entitlements; and
o The employer did not meet those minimum entitlements

7. “Accessorial liability”
under FW Act
Accessories may be:
o Directors
o Managers
o Human resources staff
o Other companies
A person who is aware of a contravention and
takes no action to correct it may be liable as
an accessory

8. “Accessorial liability” under
FW Act
Individuals recently captured under Section 550 include:
o HR Manager and Restaurant Manager (Fair Work Ombudsman v NSH North Pty
Ltd trading as New Shanghai Charlestown [2017] FCA 1301)
o OHS and HR Co-ordinator (Fair Work Ombudsman v Oz Staff Career Services Pty
Ltd
& Ors [2016] FCCA 105)
o Book Keeper (Fair Work Ombudsman v WY Pty Ltd & Ors [2016] FCCA 3432)
o Hotel Manager (Fair Work Ombudsman v Yenida Pty Ltd & Anor [2017] FCCA
2299)
o Directors (Fair Work Ombudsman v Priority Matters Pty Ltd [2017] FCA 833)

9. Recent changes to FW Act
Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017
o Commenced 27 October 2017
o Affects all employers (and those managers or advisors involved in workplace law
compliance of a business) but additional liability for:
• Holding companies of subsidiaries that are employers
• Franchisors (which includes certain licensors) of franchisees who are employers (note
the definition of a 'franchise' here is wider than under the Franchising Code)
o Tenfold increase in maximum penalties for individuals involved in “serious
contraventions”

10. Liability for managers under
WHS law
Who is an ‘officer’?
o For PCBUs in private sector, Work
Health and Safety Act 2011 (Qld)
adopts definition of ‘officer’ found in
Corporations Act 2001 (Cth)
o For public authorities, an ‘officer’ is
defined at section 252 of the WHS Act
o ‘Officer of a public authority’
encompasses any person who makes,
or participates in making, decisions
that affect the whole, or a substantial
part, of the authority’s operations.

11. Who is an officer?
Case example
Brett McKie v Munir Al-Hassani and Kenoss Contractors Pty Ltd (In
Liq) [2015] ACTIC 1
o Project Manager an officer? His duties:
• management meetings
• liaising with clients
• monitoring of WHS, environment and project management plans
• managing subcontractors and suppliers
• no control over the projects Kenoss elected to tender for and was not permitted to
sign off on tender documents
o Operational v organisational control

12. Who is an ‘officer’?
o When identifying which positions within a PCBU
may fall within the scope of an ‘officer’ for the
purpose of the due diligence duty, the PCBU
should consider whether the employee:
• has authority to incur significant expenditure on
behalf of PCBU;
• has substantive influence on the strategic direction of
PCBU;
• makes decisions that directly impact upon PCBU’s
WHS management systems;
• reports directly to PCBU’s Board of Directors or a less
senior line manager;
• leads the largest team/component of PCBU’s
operation.

13. Due diligence duty
o Section 27: an ‘officer’ of a PCBU must exercise ‘due diligence’ to ensure that the PCBU
complies with its WHS duties.
o In order to discharge the duty, an ‘officer’ must take steps to:
• Acquire and keep up-to-date knowledge of WHS matters;
• Maintain an understanding of the unique hazards and risks arising from PCBU’s operations;
• Ensure adequate resources are allocated to eliminating or minimising WHS risks within the PCBU’s
operations;
• Ensure appropriate processes are in place for gathering and responding to information about
WHS incidents, issues and risks within PCBU;
• Ensure appropriate processes are in place to enable PCBU to comply with its WHS duties; and
• Monitor the effectiveness of these arrangements.

14. Industrial manslaughter
o A ‘senior officer’ of a PCBU
commits the offence of industrial
manslaughter where:
• a worker dies, either whilst carrying out
work for the PCBU, or after sustaining
an injury whilst performing work for
the PCBU; and
• the senior officer’s conduct causes the
worker’s death; and
• the senior officer is negligent about
causing the death of the worker by the
conduct.
o Definition of what constitutes a
‘senior officer’ of a body
corporate for purposes of
industrial manslaughter charge is
broader in scope than definition
of an ‘officer’ for the due
diligence duty.

15. Industrial manslaughter
o Harsher penalties for industrial manslaughter
offence:
• $10 million for PCBUs; and
• up to 20 years imprisonment for ‘senior officers’.
o Industrial manslaughter excluded from current
limitation periods on prosecution under the
WHS Act.

16. Other ‘executive officer’ offences
in QLD legislation
o Coal Mining Safety and Health Act 1999 (Qld)
o Environmental Protection Act 1994 (Qld)
o Food Act 2006 (Qld)
o Mining and Quarrying Safety and Health Act
1999 (Qld)
o Nature Conservation Act 1992 (Qld)
o Petroleum and Gas (Production and Safety)
Act 2004 (Qld)
o Planning Act 2016 (Qld)
o Vegetation Management Act 1999 (Qld)

17. What about indemnities?
o Subject to some sensible limitations, a company may indemnify an officer of the
company for acts done by the officer
o Insurance is also available to indemnify them for wrongs committed by them in
the course of their duties
o However, indemnities and insurance policies cannot cover:
• Personal payment orders
• Jail time
o Recent High Court decision – 14 February 2018
• Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union
& Anor [2018] HCA 3

18. Stress claims and bullying
o Reasonable management action as a defence
• “reasonable management action carried
out in a reasonable manner”
o Stop bullying orders
• Section 789FD of FW Act
o Workers’ compensation
• Section 32 of Workers’ Compensation and
Rehabilitation Act 2003 (Qld)
o Whether the management action was
reasonable, not whether it could have been
undertaken in a manner that was “more
reasonable” or “more acceptable”
o Course of action may still be “reasonable action”
even if particular steps are not taken

19. Reasonable management action
What to avoid What to adopt
Abusive, insulting or offensive language
Counselling for unsatisfactory work performance in
an honest, fair and constructive way
Belittling or humiliating comments Setting realistic and achievable KPIs
Unjustified criticism or complaints Transferring a worker on operational grounds
Deliberate exclusion from work related activities Implementing organisational change
Withholding information vital for work performance
Taking fair and appropriate disciplinary action
Setting unreasonable deadlines
Spreading misinformation or rumours

20. 0 1 0 2
0 3 0 4
Your decisions as evidence
Written records Witnesses
Decision maker Reasonable steps
Always maintain contemporaneous
written records for disciplinary
decisions, performance discussions
and workplace incidents
Arrange witnesses for
difficult/contentious conversations
Who is the decision maker? What
are their reasons?
Take reasonable steps to bring
suspected unlawful conduct to light

21. Take away messages
o Personal liability not confined to directors, CEOs, CFOs etc.
o Stay up to date on changes to legislation, modern awards, codes of practice etc.
o Seek external training, support or advice where necessary
o Always take contemporaneous notes of important meetings, incidents and
decisions
o Keep in mind the reasonable management action defence

22. Murray P ro c te r
Pa r t n e r
P hone: (07) 3001 9225
04 02 967 1 71
Emai l : M.Proct er@Cla rkeKa nn.com.a u