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September 2019

Failure to comply with a compliance notice results in personal liability

Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor (2018)

The Case

In 2017, the Fair Work Ombudsman (FWO) audited the dental practice of Nobrace Centre Pty Ltd (Nobrace). The FWO alleged Nobrace had breached the Health Professionals and Support Services Award 2010 (the Award) and the National Employment Standards (NES) by failing to pay the minimum entitlements owed to an employee.

In February 2018, the FWO issued a compliance notice setting out the details of the breaches requiring that the underpayments be rectified.

When the compliance notice was not complied with, the FWO commenced proceedings in the Federal Circuit Court (FCC) against both Nobrace and its director, alleging the director was involved in the contraventions.

The Verdict

Nobrace admitted it had failed to comply with the compliance notice.

However, the director denied he had been involved in the failure to comply. The director argued that to comply with the notice, he would have had to personally contribute money to Nobrace, which he was not obliged to do.

The FCC held the director was involved in the contraventions by Nobrace on the basis that the director:

  • had received the compliance notice on behalf of Nobrace;
  • was aware of the contents of the compliance notice; and
  • was the controlling mind of Nobrace and the person who had decided that Nobrace would not comply with notice.

The FCC ordered:

  • the director pay a penalty of $5,355; and
  • as Nobrace was in liquidation, the director personally pay the amount of $32,889.98 plus interest to the employee with respect to the underpayments.

The Lessons

If the FWO issues a compliance notice, it is important that prompt attention be given to it. If you do not agree with the notice, approach the FWO to discuss or seek legal advice. Ignoring a compliance notice can cost your business a lot of money.

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