Civil penalties for directors under the Fair Work Act

The Fair Work Act provides that:
A person who is involved in a contravention of certain provisions (called ‘civil remedy provisions’) of the FW Act is taken to have contravened that provision; and
A person is involved in a contravention if:
a. the person has aided, abetted, counselled or procured the contravention; or
b. the person has induced the contravention, whether by threats or promises or otherwise; or
c. the person has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
d. the person has conspired with others to effect the contravention.
There are a number of ‘civil remedy provisions’ in the Fair Work Act, including
 Contravening the National Employment Standards (which govern things such as minimum leave entitlements, notice of termination and redundancy pay);
 Contravening an applicable modern award or enterprise agreement;
 Failure to keep employee records; and
 Taking adverse action against an employee or a potential employee.
Civil penalties are punitive sanctions which are imposed otherwise than through the normal criminal process. Such provisions authorise the imposition of penal sanctions upon companies or persons who contravene the legislation notwithstanding that their liability need only be established on the civil standard of proof and in proceedings that employ the civil rules of practice and procedure. Civil penalties can in some circumstances be ordered to be paid to the victim of the breach of the aw.
In Australian Building and Construction Commissioner v Construction, Forestry, Mining & Energy Union (No 2) (2010) 199 IR 373 Barker J discussed the underlying purpose of imposing penalties. His honour’s analysis was upheld by the Full Court on an appeal matter in McDonald v Australian Building and Construction Commissioner [2011] FCAFC 29. Barker J stated (at [6]) that:
The purpose to be served by the imposition of penalties is at least threefold:
(1) punishment, which must be proportionate to the offence and in accordance ith prevailing standards;
(2) deterrence, both personal (assessing the risk of re-offending) and general (a deterrent to others who might be likely to offend); and
(3) rehabilitation.
There is a very helpful discussion of these elements concerning the imposition of penalties by Lander J in Ponzio v BP Caelli Constructions Pty Ltd (2007) 158 FCR 543.