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  • Lawyers need to maintain strong security measures in the new digital spaces in which we practice, not just our physical places of work.
  • Cyber security is a significant issue for lawyers because law firms are attractive targets for cyber attacks and face substantial risks from inadequate security measures.
  • To manage risk properly within a law firm, cyber security needs to be the responsibility of all team members, not just IT staff.

Consider this scenario:  Mr Smith comes to you for advice. He is a business manager for Widget Co, which has just outsourced a significant aspect of its operations. Mr Smith led the tender and negotiation process for Widget Co and had driven a particularly hard bargain.

The successful tenderer, X Co, had complained to Mr Smith on a number of occasions that the amount which it was paid under the contract was not enough for it to meet its obligations to employees under the award which applied to them.

Mr Smith had responded that it was their problem and they had to manage their operations more efficiently.

X Co is now faced with significant underpayment of wages claims from its employees and is being prosecuted by the Fair Work Ombudsman (‘FWO’) for contravening the Fair Work Act 2009 (Cth) (‘the Act’).

The FWO is also prosecuting Widget Co and your client under section 550 of the Fair Work Act on the basis that by being ‘involved’ in X Co’s contraventions of the Act (ie the underpayment), Widget Co and Mr Smith have also contravened the Act.

Section 550 is commonly known as the ‘accessorial liability’ provision of the Act. Mr Smith wants your advice on whether he may be held to have contravened
the Act.

In last month’s Law Society Journal, the FWO discussed the potential personal liability for accessories, such as directors, to back-pay underpaid employees their workplace entitlements (Webster J & Winterburn A, ‘Accessories Personally Liable for Unpaid Employee Entitlements’, (September 2016) 26 Law Society Journal, 82)).

But what does it take for a person who is a third party to the employment relationship (someone who is not the employer or an officer or employee of the employer) to be found to have accessorial liability?

Can Widget Co and Mr Smith be liable for the actions of third parties such as X Co?

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