Those in business appreciate that having a company often limits an individual’s personal liability. However there are some situations where a director of a company will be personally liable. One such time is in the employment context and in particular where there has been an underpayment of wages.
In one recent case causal employees were paid a flat hourly rate that did not allow for casual loading, penalty rates, overtime or shift allowances. This resulted in an underpayment of almost $23,000.
The court found that the director was the controlling mind of the company and knew of the deliberate underpayment. The court imposed penalties on the company and its director. The director was personally ordered to pay $51,408 in penalties and was jointly and severally liable to pay the underpayment amount. In addition the company was ordered to pay $257,000 in penalties.
Directors of companies need to be aware that having a company will not always limit personal liability.