Real estate Principals should beware of personal liability

Real estate Principals should beware of personal liability

Section 550(2) of the Fair Work Act 2009 which covers accessorial liability, can hold you personally liable for workplace breaches, which include errors in payroll and HR.  This means if your administration team member makes an error with payroll or an employment agreement, the authorities can hold you personally liable for civil penalties.

It is becoming common for employees and their legal representatives to initiate claims personally against real estate directors and office administrators, who they feel were involved in an alleged contravention of the Fair Work Act 2009 and the Real Estate Industry Award 2020. The laws are written in a way that includes not just blatant breaches, but also inadvertent oversights, which means even pay calculations, clerical errors by the Payroll Officer, HR Administrator can result in personal liability for the director.

A Principal cannot avoid personal liability for relying on what you were told by your staff.

In one case involving the dismissal of an employee, prohibited adverse actions under the FWA were noted. The directors and the HR representative (who also attended the meeting) were found personally liable as an accessory after they participated in the meetings during which an employee was forced to resign unfairly.

In the decision of Fair Work Ombudsman v Priority Matters Pty Ltd & Ors, the Court found that two directors were liable for breaches of the Fair Work Act 2009 (Cth) (FW Act) by being “involved” in underpaying 43 employees.

Personal liability was made in this case despite the Court acknowledging that the directors were ‘hardworking and honest people caught up in adverse events beyond their control’ and that “the directors had taken all reasonable steps to try to make payment of the employee entitlements”.

This case should be a lesson for Principals and Office Managers, especially when the civil penalty for breaches are $63,000 for a company and $12,600 for the individual involved in the contravention and real estate payroll and HR laws are complex.