Fairness in the Workplace: Accusations and Liability Part 2
As introduced in article one, the amendment, related to the simplistic approach to streamlining a law across all Australian jurisdictions. Providing two main provisions which provide a clear understanding for anyone to understand in applicable case. The largest hurdle the common person comes across in understanding the law through available Legislation is not only finding, but interpreting the law in regards to ones own application. Especially when it is segregated to Sections within a number of related Acts. For this reason is why the passing of the Director’s Liability Reform Act 2013.
The Act removes uncertainty of the application of director liability by retaining only two types of provisions. In doing this if a director is found to have breached any one of the two provisions as proven by the applicant, the director will then be found liable. In its theoretical application, the simple wording of the provisions provides a definition which can and should be understood by anyone in the corporate world due to its direct aim upon you.
The majority of director liability provisions will be Type 1 provisions due to its makeup which constitutes for most situations where a director is being held liable for their corporations actions. Here, an offence has been created if a director commits an offence against any executive liable provisions. Also a director who doesn’t take all ‘reasonable steps’ to ensure the corporation did not engage in any conduct resulting in the offence will be found liable. Explicitly stated in this section of the reading of the Act in court, is the fact there is no defences available for the defendant. Essentially drawing a line in the sands stating what is and is not an offence.
An important variable that was also stated in the reading of the Act is the fact the plaintiff only needs to prove such accusations beyond reasonable doubt to find the defendant liable. Again adding to this ‘black and white’ understanding of the law.
Unlike prior definitions of what is considered being a ‘reasonable step’ in this matter, the Act has continued to provide a streamlined definition across all Legislations. ‘Reasonable steps’ constitutes three simple impositions:
- Did the director know, or ought to have reasonable knowledge of the corporations conduct which has breached the stated liability provision
- Whether the director was in a position to influence the corporations conduct, and
- Any other matter.
Part three of this article will discuss the second and last liability provision stated in the Act; if you require any assistance please contact our commercial team at West End office for assistance.