Out-dated policies pose liability risks for HR

25 June 2012 7:19am

HR professionals can be held personally liable for failing to implement procedures they may not have known existed, an employment lawyer has warned an HR Daily webinar.

"Knowledge" is an HR professional's best defence against liability for an adverse action or other civil remedy claim, Kemp Strang senior associate Nick Noonan says.

His presentation with partner Lisa Berton - Adverse action: Know your risks - warns that there is "a real increasing trend now, in various proceedings commenced under the Fair Work Act, to not only bring the adverse action claim against the organisation, but also against individuals that are alleged to be involved in the contravention".

"So that's not limited to company directors, but can extend to managers and HR personnel and other individuals involved in the relevant adverse action."

Discrimination, coercion, misrepresentation, and undue influence are among the potential adverse actions that HR can be required to defend, under s550 of the Fair Work Act, Noonan says.

The provision has been applied in a number of court cases, most notably in Fair Work Ombudsman v Centennial Financial Services, which is "the most concerning [ruling] from an organisation point of view".

In that case, a director and an HR manager had arranged for certain employees to be put on "sham" independent contracting arrangements.

"The relevant director was held to be the driving force, in the words of the court, behind the contravention, and the HR manager was merely following instructions. It was accepted that he did not understand the legal effect of the changes, nor did he have any control over the actions of the company," Noonan says.

Federal Magistrate Robert Cameron described the HR manager as "little more than [the director's] typist", and not a decision-maker, but nonetheless found he had "accessorial liability" and fined him $3,750 (the director was fined $13,200).

What the case shows, Noonan says, "is that it's not necessarily relevant that the person in question doesn't understand that it's a contravention".

"As long as there's some involvement in the facts that give rise to the contravention, there is some potential for personal liability."

Keep your knowledge up to date

HR professionals must ensure they are aware of relevant laws when it comes to making potentially adverse decisions affecting employees, Noonan says.

"Make sure you're educated and knowledgeable in your area, and that you're not stepping into an area that you're not either trained in or comfortable being involved in without full resources and knowledge of the matter.

"That means preparing in advance for serious discussions with employees... knowing your rights - what you can and can't do... and knowing which modern awards apply."

It also means making sure your organisation's employment contracts and policies are up to date, Noonan says.

"It's often in those provisions that might have been prepared many years before you came to the organisation, that you find what may be grievance procedures, performance management procedures, and procedures that are arguably contractual in nature, or at least need to be complied with by the organisation.

"Often you see these cases arising out of situations where an employee was entitled to be afforded some sort of procedure, and that procedure wasn't followed. So be aware of the law and your organisation's procedures."

Does it smell right?

HR professionals should always ask themselves, "Why am I making this decision?" Noonan told the webinar.

"Unless in answer to that question there's a sound business reason or a lawful reason, a decision maker does need to consider whether that decision may expose the organisation to liability."

Workplace laws are "by and large reasonably practicable and pragmatic - it's a bit of a 'smell test'", he says.

"If it doesn't smell all right it probably isn't. So stop before you make a decision and get some advice."

The full presentation (including Q&A session), is available to watch on demand on HRD Plus. Click here to watch it (HRD Plus Gold subscription required).

Praise for "Adverse Action - Know your risks"

I really appreciated the practical approach taken on the subject of AA and now have stronger understanding of not just the actions that may be subject to an AA claim but practices that can be reinforced to best protect the organisation and defend such a claim. Michele Woodhouse

Best webinar I have ever done ... also the most scary! Robyn Rundle

I really enjoyed the webinar and found it to be very informative and well presented. Jessica MacIntosh

Comments closed

premium content

Webcast: Adverse Action - Know your risks
Webcast: Performance management in the Fair Work era
Webcast: A (practical) dismissal checklist

Novel director prosecution sends warning
"Following instructions" no defence for HR manager
Employers can minimise, but not prevent, adverse action risks: Lawyers
Adverse action rulings just "the tip of the iceberg"

Latest headlines

Advanced search

search for	from date

	to date