2019 saw many legislative and jurisprudential developments in employment law which should be top of mind for employers moving forward in 2020.  In this article, we summarise the main issues to watch in 2020.

The underpayment crisis – “wage theft”

The recent spate of very public self-reported wage underpayments by businesses has resulted in increased…

Section 96 of the Fair Work Act 2009 (Cth) (the Act) provides that “for each year of service with his or her employer, an employee [excluding casual employees] is entitled to 10 days of paid personal/carer’s leave”.  This entitlement accrues progressively during a year of service according to the employee’s ordinary hours of work …

The Corporations Amendment (Strengthening Protections for Employee Entitlements) Act 2019 (Act) received Royal Assent on 5 April 2019.[1]  The Act amends Part 5.8A of the Corporations Act 2001 (Cth) (Corporations Act) to discourage the use of “sharp corporate practices” used by employers to avoid paying employee entitlements when their business enters winding up, including improper phoenix activity.[2]

Under section 596AB of the Corporations Act, it was already an offence if a person entered into an agreement with the intention of, or with an intention that includes: (i) preventing the recovery of entitlements of employees of the company; or (ii) significantly reducing the amount of entitlements of employees of a company that can be recovered.  Now, a person may also commit an offence if a person is reckless as to whether the relevant agreement will prevent or significantly reduce the recovery of employee entitlements.

Individuals charged and convicted under Part 5.8A of the Corporations Act, can be liable for imprisonment for 10 years or a fine of up to: (i) 4,500 penalty units (today $945,000); and/or (ii) three times the value of the benefits attributable to the offence.  The maximum fine for a body corporate is the greater of: (i) 45,000 penalty units (today up to $9,450,000); (ii) three times the value of the benefits obtained by the offence; or (iii) 10% of the body corporate’s annual turnover in the year leading up to the commission of the offence.[3]

What is BEAR?

The Banking Executive Accountability Regime (BEAR) is set out in Part IIAA of the Banking Act 1959 and took effect in February 2018.

BEAR establishes accountability obligations for authorised deposit-taking institutions (ADIs) and their senior executives and directors. The regime also establishes deferred remuneration, key personnel and notification obligations for ADIs.

An ADI is a financial institution which is authorised by the Australian Prudential Regulation Authority (APRA) to accept deposits from the public.

A party affected by a breach of fiduciary duty may elect to claim equitable compensation, or to pursue an account of the profit or benefit derived by the party committing the breach and any party who knowingly assisted the breach.

Pursuing an account of profits is often more attractive because it spares the innocent party from having to prove the loss it has suffered from the breach. Such loss may be difficult to prove – for example, clients who have been snatched away by an employee in breach of his/her fiduciary obligations are unlikely to agree to give evidence about the affair.

Moreover, the value of the provable loss may be modest and compare unfavourably with the legal costs involved in obtaining the relief. The results of an account of profits can be much more substantial.

This is illustrated by a recent decision of the High Court of Australia (Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd [2018] HCA 43) in which it was held that an account of profits can include the total net capital value of a business that was established by reason of the breach, including future net profits.