This is set against a challenging economic environment where companies can expect increased exposure to liability and fraud. Employees and the public are aware of their rights, have access to a disputes body and are becoming more litigious.
Unfair dismissal and other employment related claims are not only bad publicity, but they are expensive to defend in Court.
In Australia, there is a strict legislative environment with stringent regulatory requirements. Certain laws can impose personal liability on individual directors and officers for misconduct even where they may not have had any personal involvement in a breach.
New legislation is regularly being introduced, such as Work Health and Safety legislation, which has placed an increased responsibility on directors and officers to ensure that their company complies with health and safety obligations.
Failure to do so can result in substantial penalties against the company, with directors and/or senior managers also facing personal fines. Are private company directors and officers really exposed?
There are over 700 Commonwealth, State and Territory statutory provisions which expose private company directors and officers to liability when their company is deemed to have broken the law.
The Work, Health and Safety legislation is a prime example. The revised legislation provides that directors and officers must exercise due diligence to ensure the company complies with its obligations.
Failure to do so could mean a company is fined up to $500,000 and personal fines to Directors and Officers of up to $100,000. If death or serious injury occurs as the result of a breach, the fines increase up to $3 million for the company and $600,000 for the individual.