Director, HR manager liable for unlawful deductions: Court

The Federal Circuit Court has found a recruitment and labour hire company, its director and HR manager knowingly falsified employment records and made unlawful deductions from the wages of cleaners working in Melbourne's Federation Square and Crown Casino.

Judge Philip Burchardt ruled that OzStaff Career Services Pty Ltd deducted an administration fee from 102 employees, took meal allowances from another 44 employees and falsified employment records provided to the FWO after a targeted audit in January 2012.

The FWO argued that OzStaff's deduction of the administration fee and meal deduction infringed s323 of the Fair Work Act and were not permitted within the meaning of s324.

It alleged the deductions — of at least $25 a week from each employee — were unlawful because they didn't benefit the workers, nor were they authorised.

The FWO also claimed that the company breached Regulation 3.44(1) of the Fair Work Regulations because it failed to ensure employee records were not false or misleading.

Both OzStaff and its director admitted "in a slightly qualified way" that the administration fee and the meal deductions were unlawful and contravened the Act.

Court finds HR manager liable despite denials

The HR manager denied any involvement or knowledge, despite admitting he knew about the practices and processes for payment of wages to employees, which included administration fees and meal deductions.

He argued that constructive knowledge wasn't enough to prove he was aware the deductions contravened the law.

But Judge Burchardt found that the evidence established that it was "more probable than otherwise" that the HR manager was well aware of the administration fee and meal deductions contraventions by OzStaff and its director.

"[The HR manager] was aware that the deductions were being made. He had knowledge of this, as I find.

"He knew that the deductions were not lawful from his interrelationship with the Fair Work Inspectors he had met in 2012 and 2013.

"He thus had knowledge of the constituent parts of the contravention, albeit that he may not have known which section of the FW Act, if any, was capable of being contravened," he said.

The judge found the HR manager's knowledge sufficient to constitute involvement within the meaning of s550(2)(c).

He continued that it was clear OzStaff provided the FWO with a set of "false and misleading" records that omitted details of the administration fee and meal deductions.

Given OzStaff was "wholly the creature" of the director and there were no other directors, the judge rejected his claims he wasn't accessorily liable.

"[It] is clear in my view beyond doubt that the [director] was knowingly involved with the contravention in the provision of false and misleading pay records," the judge said.

The judge also said that his conclusions were "buttressed" by evidence that revealed there were a number of past complaints against OzStaff and its director.

"These go to suggest a familiarity with industrial practice inconsistent with the position for which the [director] now contends," Judge Burchardt said.

Judge Burchardt came to a similar view on the HR manager's accessorial liability.

"I simply do not accept that the person running the human resources activities of [OzStaff] and intimately involved, as he clearly was, with award matters was not aware not only that the deductions were being made but that the records which were forwarded to [the FWO] not showing those deductions were false and misleading. He was clearly involved within the meaning of s.550 of the FW Act," he said.

A penalty hearing is set down for August.

FWO v Oz Staff Career Services Pty Ltd & Ors [2016] FCCA 105 (12 February 2016)