Employers should be aware that operating through a company (including an incorporated association or corporate trustee) does not offer complete protection against personal liability.


Directors and officers of companies already have extensive duties and obligations under, for example, corporations law and workplace health and safety legislation and face significant penalties for their breach. However, did you realise that:

  1. Directors can be personally liable to pay PAYG tax and compulsory superannuation contributions to the ATO if their company fails to pay; and
  2. Directors and persons “involved” in contraventions can be personally liable for underpayments of wages and financial penalties under the Fair Work Act.



It is increasingly commonplace for the Fair Work Ombudsman to prosecute directors and claim personal payment where an employer company has gone into liquidation. The FWO is also active in both its random audits of business compliance and in prosecuting breaches for such simple things as not providing payslips. The FWO has also recently successfully prosecuted a human resources manager for his involvement in non payment of wages and sham contracting (as well as the company director). This has potentially significant consequences for persons involved in employee relations.


It is more important than ever to carefully consider arrangements with employees and contractors, ensure appropriate payments are made when they fall due, and to have a papertrail in place in order to reduce the risk of civil action or prosecution.