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Friday Workplace Briefing

When Are HR Managers Personally in the Gun?

HR Managers increasingly find themselves in positions where they know the leadership group are making legally wrong decisions, condoning instead of challenging those decisions is a pathway to personal liability.

In this week’s Friday Workplace Briefing, Andrew Douglas and Nina Hoang discuss when HR Managers are personally in the gun and their potential personal liability.

To view the full episode and catch up with the week’s latest news and developments please visit this link.

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About the Hosts

Managing Principal - Victoria

Senior Associate - Workplace Relations

Episode Transcript

Andrew Douglas: Alright, look, let’s go onto our main topic which is about when HR managers get into strife.

Nina Hoang: And OHS manager too.

Andrew Douglas: Yeah, and OHS manager. I want to just look at what is the legislation and where you can get into trouble. So if we’re can start at the beginning, Fair Work Act provides what’s called accessorial liability, that is somebody who participates in an action. And in this case it’s someone who is involved in the employer’s contravention. That’s what they-

Nina Hoang: Yeah or assisted in it.

Andrew Douglas: Yeah.

Nina Hoang: Yeah.

Andrew Douglas: The second one is Discrimination Law and obviously there is a direct liability for a person who does the wrong thing.

Nina Hoang: Yeah.

Andrew Douglas: Or supports a person doing the wrong thing.

Nina Hoang: Yeah.

Andrew Douglas: Because they’re independently liable under discrimination. It’s not accessorial, it’s direct liability.

Nina Hoang: Yeah.

Andrew Douglas: Under Safety Law, there’s a mixture. There is discrimination provisions around being notified, being an HSR, being notified about safety, a safety issue, and then being treated adversely.

Nina Hoang: Mm-mm.

Andrew Douglas: Okay. Very, very simple reverse onus, so very similar to adverse action. And that can be brought as a prosecution against an individual or a company but can also be brought against an individual who is an… Sorry, there is excess or a liability. But of course what we just saw with WorkSafe Victoria is, well, we can actually go after anybody who participates in a breach of safety under section 15, 25, 26 Reckless Endangerment. Okay? So we’ve got all these legal avenues which deal with HR managers and HR and OHS managers always felt that they’ll can’t be touched ’cause they’re-

Nina Hoang: Yeah.

Andrew Douglas: In advisory service. And I just want to go through a couple of cases that we needed to show that’s actually not right. And what we tried to say and have over the last few months is this is a changing world. The role of HR managers is much more intrusive than it used to be. It’s much more about grooming, developing, growing leadership, providing them skills, providing a source of evidence around what they should do.

Nina Hoang: Yep.

Andrew Douglas: And a higher level of reliance on their expertise in the decision making. Remember that because-

Nina Hoang: Yeah.

Andrew Douglas: That is the trigger that is leading to these prosecutions. So we start at the very beginning, probably the place to start is Centennial, which is an old case where an HR manager was reluctant to challenge, did challenge their manager once about the people they’d made independent contracts from employers saying don’t think it’s lawful. But the manager said they’re going to do it and therefore she went ahead. Not only did she support it, she went ahead and actually did it herself.

Nina Hoang: Yeah, she was in all the meetings.

Andrew Douglas: So she got into trouble.

Nina Hoang: Yeah ’cause she tried to say she didn’t know about it.

Andrew Douglas: Yeah, well she did lie as well-

Nina Hoang: It’s confronting.

Andrew Douglas: Which was never a bright thing to do. I think then you go in NSH which is a-

Nina Hoang: Yeah, that’s a really interesting one.

Andrew Douglas: Yeah, can you talk more about NSH?

Nina Hoang: I think, like the detailed facts are not as important. But I think the key thing is in this case the HR manager actually did try to stand up and say, “Hey, I think this is wrong. I don’t think we should be, you know, falsifying payslips,” was knocked back by the director. So she actually did try to reach out but then went ahead and did it anyway.

Andrew Douglas: Yep.

Nina Hoang: And there was a couple of other examples. You know, she questioned whether the pay rates were accurate cause they seemed low. They said just do it and then she did it anyway. When it came down to the evidence, she said, “Look, I thought I tried to raise it and I didn’t think I could go beyond that.” It’s a cultural thing. We can’t actually talk against our boss. So she raised what she thought will raise her ground.

Andrew Douglas: Can I just say? This is a really common thing.

Nina Hoang: Yeah.

Andrew Douglas: HR at the moment are increasingly being put under pressure to do things, to try and achieve financial outcomes which are someone’s cunning plan or idea.

Nina Hoang: Yeah.

Andrew Douglas: And when they challenge, look, you know, the hard look is given. So what happens is HR managers get bad information and they sit there and go, “Well, if nothing does happen, there’s no trouble.”

Nina Hoang: Yeah.

Andrew Douglas: Well, I’m just saying to you, there are unions and Fair Work Ombudsman and all sorts of people around that someone will eventually do that. Two things happen when that happens is one is you are prosecuted. Two, your brand’s destroyed for life.

Nina Hoang: Yeah.

Andrew Douglas: So you, you get sacked by the employer for not telling ’cause it’s the fundamental breach of your contract of employment with them. But after that your name has gone across the front page of the Herald Sun, you’re over.

Nina Hoang: And they can Google it too.

Andrew Douglas: Yeah, I know.

Nina Hoang: Yeah.

Andrew Douglas: So be aware of it. Before we get the case about today, let’s talk a little bit about Elliot and Nanda, which is the discrimination case.

Nina Hoang: Yeah, so this one was I believe a government agency who had indirect knowledge that this doctor that they were sending people to to get assessed was sexually harassing employees. So they’d heard it here and there, but the person in the role didn’t have that direct knowledge. And the court found that, “Look, that’s not enough. It’s enough that if the organisation knows about it, it could be imputed to the person making the agency knowledge.”

Andrew Douglas: And, look, can I just say when you look at the Kosaroff case, it is once again, you know, the high court case in Kosaroff only a year old. What happens when a case changes the world of law is that permeates down in every different direction and it takes a while for court cases to align on each jurisdiction. That’s what’s going to happen with Kosaroff, Kosaroff’s decision is a very simple decision that says when you are working in a high risk environment, your method of preventing hazards is not waiting to identify them. It is to intervene and prevent the hazard arising.

Nina Hoang: Yep.

Andrew Douglas: So in this case, if you look at what Kosaroff said, the common law claims are winner in this case by the way. But if you look at Kosaroff said, so what does it actually mean here? What it means is, there is no doubt, maybe not today or tomorrow, but soon a court is going to say, “Well, now that sexual harassment is prohibited.”

Nina Hoang: Yep.

Andrew Douglas: And it’s a positive duty that once you are seized in the knowledge of a risk with someone but you don’t know it, your obligation is to inquire.

Nina Hoang: Yeah.

Andrew Douglas: Your obligation is to find out about that environment and immediately stop sending people there, that’s your obligation.

Nina Hoang: Yeah.

Andrew Douglas: And this case doesn’t go that far but once again it shows-

Nina Hoang: Because it’s a lot older.

Andrew Douglas: Yeah.

Nina Hoang: Yeah.

Andrew Douglas: Once again, it shows though with HR managers the level of risk that exists. Why? Because most of the sensitive information in an organisation comes through you about people. That means you’ve got the heat map, you know what the risks are in the environment. But what this case says, and certainly what…

Nina Hoang: Kosrae.

Andrew Douglas: Kosrae says you have a duty to inquire

Nina Hoang: Beyond just the initial allegation as well.

Andrew Douglas: Yeah.

Nina Hoang: I think that’s where a lot of people fall down. They just look at, you know, “Where’s the allegation come from? We’ll resolve that.” That’s you know, hands done. But the new Respect at Work and all those obligations means that’s not enough and-

Andrew Douglas: And…

Nina Hoang: You’re going to…

Andrew Douglas: And that’s why we’re saying the Safety Regulatory getting involved ’cause they’re now got a good couple of benchmarks to say, “Well, you’re not allowed to do it.” You’ve got to show you’re not allowed to do it. You’ve got to have a governance structure that proves and you don’t, well you’re already liable. All it got to take is the next step to show you have knowledge and you’re gone.

Nina Hoang: Yeah.

Andrew Douglas: So that probably brings us to DTF which is one of the more extreme examples. And we’re not suggesting that any of our people out there do this. But DTF is an example of when a Fair Work Ombudsman starts the investigation.

Nina Hoang: Yeah.

Andrew Douglas: The HR managers told to fix the numbers so they don’t look so bad, underpaid.

Nina Hoang: So the director was investigated first, ran overseas. Fair Work Ombudsman starts investigating everything else. And then the HR manager takes charge, tells the payroll officer to fudge the numbers, have one record that’s accurate, one’s inaccurate, give that to Fair Work Ombudsman so that it makes it clear that people only work 38 hours and casuals only work normal hours. Gives false payslips to the employees as well but threatens them that if they’re not working extra hours-

Andrew Douglas: I didn’t say this was a good example.

Nina Hoang: Yeah. Threatens them that if they don’t work more hours that there might be issues with their visa, like just terrible. And then at the end he said, “Oh, I wasn’t involved with all of this.”

Andrew Douglas: I think you’ve probably realised from that Nina’s take of view, just saying, but look, we talked about DTF ’cause it is very current, okay?

Nina Hoang: Yeah.

Andrew Douglas: But it is the extreme end of it. I want you to go back to our earlier discussion which is when you are seized with any information that tells you there is a risk whether it’s a discrimination risk, a safety risk and underpayment risk. There is absolutely no doubt, the law now is as an HR or OHS manager, your duty is to investigate. Your duty is not to sit and go, “Well, no one’s complained.”

Nina Hoang: Yeah.

Andrew Douglas: You’re on liability at the moment you have that knowledge and that means in your systems as you collect evidence, I think you’ve heard me used the expression heat map a number of times. You’ve got to look at that heat map and say, “Actually, I do have a duty to go and do something.”

Nina Hoang: Yeah.

Andrew Douglas: And for sexual harassment, discrimination, it is absolutely clear. For psychological hazards, it is absolutely clear. And honestly that covers most of the level of risk we have with employers on a day-to-day basis. So this is not something any longer where we can go, “Don’t worry about evidence, impressions are okay.” You’ve got to have the evidence. And the second is the moment you become aware of risk whether it’s the profile of risk that sits somewhere or an actual factual risk, your obligation is to investigate. You don’t do it, you’ll be a name party and it could be a prosecution.

Nina Hoang: Yeah.

Andrew Douglas: All right. I reckon we’ve knocked over those cases though, I can feel it in my throat cause it’s much harder.

Nina Hoang: There was a lot of cases.

Andrew Douglas: Let’s, let’s head off to the case study. Let’s see if it goes up above our head today.

Nina Hoang: Oh, no.

Andrew Douglas: No, no, I’m sitting up straight. If I get down here, it’s much harder. Okay, sorry.

Nina Hoang: Jean was a Project Manager at G.D, Matchi’s Marketing (GDM). She headed high risk reputational problems like data breaches for their international client base. The culture was highly pressurised. You worked the hours that were required. Sometimes that could be 15 to 16 hours a day and weekend work. The team involved some Award based workers and some not under Awards.

The 2IC Campbell was a tough uncompromising character who was charismatic. He had several complaints of bullying, all investigated by HR who found his behaviour was culturally necessary for the work undertaken. Jean was close to Ken, the Head of HR. Ken had been in GDM since beginning. He knew what was needed.

Jean had a concern about Campbell and the young women in his team. She thought he was sleazy. She had seen him at after hours drink and thought that much of his conduct was unwelcome. She raised it with Ken who said no complaint had been made therefore there was no evidence of the conduct being unwelcome. He said Campbell is a key to your team’s success. Without him, you’ll never drive this group to the urgent success you need.

Following a campaign to manage a large Health Insurer’s data breach, when Jean’s team worked around the clock, drinks were provided in the Board room. Great solution to it, right? Both Ken and Jean saw Campbell working on a young girl and it was clear she was uncomfortable. He was plying her with drinks. No one intervened. The following day she resigned.

Wow, GDM sounds like the best place.

One of her work friends said she was sexually assaulted by Campbell to Jean, who raised it with Ken. They spoke with the Managing Director, realised it would be exceptionally damaging to their brand if it got out and agreed to speak privately to Campbell to tone down his behaviour.

Andrew Douglas: All right, so here we go with the questions. Well, I know you look at me like that but… Gee, I don’t reckon that’s too far from some of the cases we’ve had to come through the door. Anyway, would the young girl have a sexual harassment claim?

Nina Hoang: Yeah.

Andrew Douglas: Yes. Who would it would be against though?

Nina Hoang: Well, it could be against a whole bunch of people. So definitely against the Campbell…

Andrew Douglas: Campbell.

Nina Hoang: Who engaged in behaviour, but vicarious liability as well. She could bring it against the company and she’d actually bring it against individuals that they…

Andrew Douglas: Yeah, cause they-

Nina Hoang: Yeah, definitely Ken.

Andrew Douglas: Definitely Ken. And I’m afraid for Jean, ’cause Jean knew the issue and failed to do anything about it.

Nina Hoang: Yeah.

Andrew Douglas: She may not be a party at the beginning but she’d certainly become a party as soon as the first bit of evidence came out. So Jean, you are in, okay?

Nina Hoang: Yeah.

Andrew Douglas: Can I just talk about what the damages are? So I just think it’s worth, you know, sexual assault is a touch base sexual harassment. So it’s over 100,000 of general damages.

Nina Hoang: Surely more by now.

Andrew Douglas: Oh, no, it’s in the 200,000. Yeah, but it’s certainly over 150. But the, the tariff at the moment for touch base is 200 to 300 based on the severity of it.

Nina Hoang: We’re talking about general damages cause there base things like…

Andrew Douglas: You never come back to work…

Nina Hoang: Economic loss, sort of that.

Andrew Douglas: Loss. Aggravated damages…

Nina Hoang: Yep.

Andrew Douglas: By the nature of the combat.

Nina Hoang: Yeah.

Andrew Douglas: I think if this is a woman who just saves a 100,000 dollars a year, unable to work for another couple of years. With aggravated damages, you’re probably looking half a million dollars. Okay? Right… Is there a potential safety prosecution against who and what charges? Can I say this is a sneaky question? Because the fact is that Jean had already raised a discrimination-based argument under Safe Now. Jean was treated badly. There’s a safety argument, Jean wasn’t treated badly. So we don’t get to the discrimination provisions under Safety Law.

Nina Hoang: But couldn’t we do it under sexual harassment? Just breach, just like the work safe one?

Andrew Douglas: Yeah, we can do it quickly, but we do it under the primary duty, right?

Nina Hoang: Yeah.

Andrew Douglas: Which is where it’d end up. And now that we’ve had this first case in Victoria given the nature of the conduct in this but…

Nina Hoang: Could be a reckless conduct, yes.

Andrew Douglas: I think this could be a reckless charge and it could be a reckless against company, Campbell, Jean and Ken.

Nina Hoang: Ken.

Andrew Douglas: Because this was a known risk.

Nina Hoang: Yeah. So the fact that Jean raised it was not enough because she allowed it to continue happening, especially at the end.

Andrew Douglas: And can I just say that it goes to the heart of recklessness. So the fact is, when, when you have a… So recklessness is about to undergo a change in number jurisdictions and it’s going to adapt the gross negligence test that came out of Western Australia throughout the rest of Australia. Victoria hasn’t agreed to adapt it, I might add.

Andrew Douglas: But…

Nina Hoang: Go.

Andrew Douglas: At the moment recklessness means that there’s a risk of serious injury or home. That person knew of that and was indifferent to it in the decision making. They didn’t know indifference doesn’t mean they don’t do something, indifference means a sort of carelessness. So it can be, “Look, I’ve raised that but I’ve done nothing more about it.” Now when you know someone is a sexual predator and the best you do is you agree to getting a chat for him to tone it down, it’s way beneath the mark. I reckon Jean would escape recklessness. I think Ken wouldn’t, the managing director wouldn’t and the company wouldn’t and Campbell wouldn’t. Okay?

Nina Hoang: You think Jean would escape it?

Andrew Douglas: I think Jean, because she’s the person who raised it. The regulator would go, “Okay, you’ve done… there’s no more action you could have taken. You should have been more of an advocate for it.” But she raised it.

Nina Hoang: But that last time she didn’t intervene. That’s what she could have done.

Andrew Douglas: Sure, sure.

Nina Hoang: So she could have stepped in and be like, even if it will say she thought it was dangerous, she could’ve just been like, “Oh, do you want to come grab something?”

Andrew Douglas: Sure, sure.

Nina Hoang: So I feel like that would come out.

Andrew Douglas: Well, there’s a chance, but I’m telling you that’s where the regulator… All right, so we’re going to disagree.

Nina Hoang: That’s terrible.

Andrew Douglas: Yeah, no, but it is where the regulator would apply at the end of the day. Is there an underpayment issue and could Jean and Ken be liable?

Nina Hoang: An underpayment issue?

Andrew Douglas: Yeah, people were working 15 to 16 hours. Okay. So professional services businesses are the most at risk. If we look at the hours that that we work, fortunately we pay remarkable wages. But my point is for that mid-level professional services businesses where it’s hugely pressurised and where people work extraordinary hours and marketing businesses, accounting businesses, legal business, there’s a whole range of IT businesses do that. Something around large projects. if the FSU gets up against NAB, it will provide a present that could tear apart our industrial system.

Nina Hoang: Yeah, but I disagree with you, Andrew. I don’t think it’s just about the money. I think the biggest question is about whether it’s reasonable.

Andrew Douglas: Reasonable, I totally agree with you.

Nina Hoang: Because just like that case we had with the meat industry, it’s dependent on the individual. That’s how you’re supposed to do it. So you can’t just assume because the industry is high pressured, that everyone’s expected to do that. And if it’s not, and they get up on that, then that’s going to send a ripple effect and then you think about money.

Andrew Douglas: Yeah.

Nina Hoang: Like money’s a secondary thing. But if it means that white-collared businesses cannot just do this blank, you’re going to work whatever hours are necessary which is in all contracts.

Andrew Douglas: Yep.

Nina Hoang: Then you know, there’s a lot of businesses that are in trouble.

Andrew Douglas: Oh no, but look, whichever way you come from Nina or mine the bottom line is if the FSU succeed against the NAB for that mid-management group, it’s not a ripple effect, it’s a tidal effect-

Nina Hoang: Yeah.

Andrew Douglas: That’ll come out of it because it’ll affect every professional service and project-driven business.

Nina Hoang: Yeah.

Andrew Douglas: Like we we’re dealing in engineering business today during large projects.

Nina Hoang: Yeah.

Andrew Douglas: They work incredible hours to deliver the project. And can I just say as an employer somewhere in the middle of this, there has to be a voice of sanity somewhere. Someone has to go actually, “Business doesn’t work 38 hours a week.” Business works like this based on the level of demand. And you’ve got to be able to meet that level of demand to be success ’cause the world’s changed.

Nina Hoang: There is no way they’re going to amend that in the Fair Work Act.

Andrew Douglas: Okay.

Nina Hoang: They would. The people would be up in arms.

Andrew Douglas: Do I look like a dinosaur? I just thought I’d ask that stuff. So you guys… So I come to the jungle, I think.

Nina Hoang: Are you the new face of the unions or you should take her place.

Andrew Douglas: Well no, I mean, the fact is what we…

Nina Hoang: Oh, I know the opposite.

Andrew Douglas: Look at that crazy argument that was run by that woman who acted for the Teal.

Nina Hoang: Oh, Monique Ryan.

Andrew Douglas: Yeah, no, I forgot what the name of the woman was, who worked for her.

Nina Hoang: Oh, the employee, yeah.

Andrew Douglas: Yeah, who ran this absolute bullshit argument and the court just sort of looked at her and went, “Sorry, just to get this right, you are working for a parliamentarian standing for election.” You are what? And you were saying eight-hour a day are some unreasonable hours. I think what’s going to happen is there’s going to be some, some clever work done about what a reasonable hour is based on the nature of the work you’re doing.

Nina Hoang: I think it’s going to have because it plays into psychological hazard and everything.

Andrew Douglas: It does.

Nina Hoang: But we’re running out of time, so…

Andrew Douglas: I just want to say this, when you’re doing exciting work, you’re progressing your career and you’re delivering something important. Do you really want someone saying, “Well, it’s 40 hours, that’s two hours extra. Sorry, I’ve got to lay down the gloves.” Is that what you want? Gee, I’m possibly am a dinosaur, aren’t I? On that note we’re probably talking about dinosaurs a lot next week. Show us a thumbs up.

Nina Hoang: Yeah.

Andrew Douglas: Or a full bucket if that’s what it takes. And thanks for watching.

Nina Hoang: Bye, thank you.

Andrew Douglas: See you later, guys.

Check this next

Andrew Douglas and Kim McLagan dive into the truth about the Reasonable Management Defence to workers’ compensation psychological claims. They will discuss why, just because the worker is wrong, this doesn’t mean their psychological injury claim won’t be accepted. To view the full episode and catch up with the week’s latest news and developments please…