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Directors of liquidated company ordered to repay wages

Friday, March 20, 2020

Directors of liquidated company ordered to repay wages


The Federal Circuit Court has ordered the director of a liquidated company and his wife (who was not a director) to personally reimburse employees of the company who were underpaid $52,722.48.


The Court accepted the Ombudsman’s evidence of numerous instances of underpayments and in one case, a requirement that the employees pay their tax refunds to the employer.


The Fair Work Ombudsman brought proceedings against the pair using the third party provisions in the Fair Work Act.


Third party liability can extend much further than simply in underpayment cases. Any breach of a civil remedy provision in the Fair Work Act, including unlawful dismissal, may allow a claimant to join individuals as defendants in proceedings if they can show a practical connection between that person and the contravention.


There is a growing trend for the Ombudsman to join a business’ HR manager, accountant or solicitor personally in contravention proceedings.


Underpayment of wages is a particular hazard area for businesses at the moment. If you are concerned about your exposure to such an issue, we recommend contacting us to discuss sooner rather than later.