In yet another attack at HR personnel that follow the orders of their bosses, the FWO has put out a press release “warning” all HR managers that they are in its sights.

 

The case in question is Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 and is a federal court decision which is over 100 pages long.

 

The case involved a Chinese restaurant chain that systematically underpaid its workers and falsified records. When the FWO became involved the company knowing that the “jig was up”,went on a deliberate mission to falsify its employment records. The company and four of its employees were found to have breached the various sections of the FWA by underpaying its 85 employees $583,688.68 during the period from 6 July 2013 to 20 November 2014.

 

Fines of almost $400,000 were imposed: the company was fined $301,920, the owner $54,672, the HR Manager $21,760 and the store manager $18,496. With the judge relying on case law, noting:

 

“It is sufficient to say that, accepting that the primary purpose of imposing a pecuniary penalty is to protect and deter, that purpose is achieved by imposing a punishment in the form of a pecuniary penalty”.

 

Overall, the pretty good day at the office for FWO. However, the FWO “went after” the HR Manager very harshly, seeking significant penalties against her.

 

Fundamentally, the HR Manager was a Chinese national (now an Australian citizen) and claimed to be doing what she was told. As the decision noted:

 

  • Her parents and Mr Chen’s (the owner) parents-in-law were friends, and that she had been offered the role of human resources manager due to that family connection.
  • The owner had offered and agreed for to take over the sponsorship of her 457 visa.
  • She was obedient to Mr Chen because he was her boss, and that defiance of the boss by a junior employee is not tolerated in the Chinese culture in which she was raised.
  • She suggested that it would bring shame on her family if she was disrespectful to Mr Chen.
  • She said that she was mindful that her residential visa status was dependent on her continuing employment with NSH Restaurant Pty Limited.

However, the Judge was having none of this, citing Fair Work Ombudsman v Wongtas Pty Ltd (No 2) [2012] FCA 30, and drawing from this decision stating:

 

“The cultural and related factors relied upon by Ms Sarah Zhu cut both ways. While they might be seen to reduce, to some limited extent, her moral culpability, they also indicate that the need for specific deterrence is heightened…Balancing those factors produces little advantage either way. As a matter of evidence, the cultural factors were less than compelling and did not properly explain the duration of the contraventions. As a matter of public policy, the cultural explanation for the contraventions can only be given limited weight.

 

The Judge further added:

 

“Before her role in the business of New Shanghai Charlestown, Ms Sarah Zhu completed a university degree and was employed by PricewaterhouseCoopers in China   Despite this, and despite being employed on a significant wage, she asserted that she had no qualifications or formal training in human resources management. It is plain, however, that she had sufficient training or capacity to carry out the directions given to her in her role, including the creation of false records.” [Emphasis added].

 

In my humble opinion, if you undertake HR duties, you should be “on notice” as the FWO argued and was confirmed by the Judge that

 

“There is nothing wrong with sending the message that an employee should indeed resign if that is the only alternative to continuing to participate knowingly in illegal activity, ideally coupled with reporting the conduct, in a case such as this, to the FWO. That would rob a primary offender such New Shanghai Charlestown and its guiding mind, Mr Chen, of the means of having such conduct continue except by, in this case, Mr Chen’s own hand.” [Emphasis added].

 

Commentary

 

Whilst there would appear little doubt that the company acted in an underhanded manner, motivated – no doubt – by greed, the position of HR Manager (whether qualified or not) is going to pay for the sins of their boss. In a job market where there are literally hundreds of applicants for each advertised HR position, and the economic realities of having to earn a living to survive, I am conflicted on the focus of the HR profession. (Having said this, I did resign from an unscrupulous employer some years ago).

Greg Reiffel Industrial Relations & Human Resources Consulting has been providing the following services to businesses for over 30 years:

 

  • General HR and IR advisory service.
  • Fair Work Commission representation (eg unfair dismissals, adverse actions, etc.).
  • Workplace investigations and mediations.
  • Policies and procedures.
  • Discipline & Termination.
  • People Audits (are you at risk of prosecution?).
  • Enterprise Agreements, Contracts of Employment, Individual Flexibility Agreements.
  • On-site HR services.

Contact Greg on 0438 906 050 or mailto: greg@gregreiffelconsulting.com.au.