Dealing with workplace disputes can feel overwhelming, especially when the employer company goes into liquidation or administration. Many employees worry that if a business shuts its doors or enters external administration, all chances of recovering unpaid entitlements, wages, or compensation vanish entirely.
Fortunately, the law provides mechanisms to protect workers. A recent matter handled by our team highlights how legal avenues can still be pursued against individuals involved in a company’s breaches, ensuring that corporate insolvency does not automatically become a shield for personal responsibility.
When an employer company enters liquidation or voluntary administration, specific sections of the Corporations Act 2001 (such as sections 440D and 500(2)) generally act to “stay” or freeze civil proceedings against the company itself. This moratorium exists to give administrators or liquidators breathing space to manage property and draft orderly resolutions without the distraction of ongoing litigation.
However, a company entering liquidation does not mean that individuals who actively participated in workplace contraventions are let off the hook.
Under Section 550 of the Fair Work Act 2009, anyone who is “involved in” a contravention of a civil remedy provision is treated as having contravened that provision themselves.
Case law consistently demonstrates that accessorial liability applies to company directors, managers, or guiding minds who:
1. Intentionally participate in the conduct.
-
2. Have actual knowledge of the essential facts making up the breach.
-
3. Act as the driving force behind workplace non-compliance.
As various courts have repeatedly affirmed, employers cannot use corporate insolvency or personal bankruptcy as a refuge to escape statutory obligations. Even if primary claims against the company are paused due to liquidation, proceedings can typically continue against involved individuals to seek compensation, penalties, and declarations.
Navigating corporate insolvency, employment rights, and accessorial liability requires careful legal strategy. Whether you are facing complex workplace disputes or require dedicated guidance through family law and general litigation matters, having an experienced legal team by your side makes all the difference.
At Sterling Law, we pride ourselves on delivering clear, practical, and approachable legal advocacy tailored to your unique circumstances. We strive to make the legal process as stress-free and transparent as possible, ensuring you feel supported every step of the way.
Are you currently navigating a challenging workplace dispute or corporate recovery issue, and wondering what your options are? Contact our team today to discuss how we can assist you.
Author adminPosted on Categories Industrial relations