Company administrators and unfair dismissal

THE Western Australian Industrial Relations Commission ruled on July 29 that an employee cannot bring an unfair dismissal claim against a company administrator personally. The decision is the first legal ruling on this issue.

This means an administrator is not liable personally in respect of an unfair dismissal claim, as the correct respondent to such a claim is the company under administration.

However, administrators should be aware that notwithstanding this decision, they are liable personally for employment benefits such as wages and accrued entitlements arising during the administration.

The case involved a claim by an employee against the administrators (and later liquidators) of a company.

The employee had been employed by the company prior to the administration and was then engaged by the administrators, as agents of the company, to assist them in trading the company’s business during the administration.

The company then went into liquidation and the administrators of the company and, after a period, the employee’s services were no longer required.

The employee then brought an unfair dismissal and a contractual benefits claim in the WAIRC claiming not to have been given a proper reason for termination and alleging to have been underpaid.

The employee later abandoned his contractual benefits claim as that claim exceed the commission’s jurisdiction.

The commission found that both on the evidence and by reason of the provisions of Section 437B of the Corporations Act that the administrators were acting as agents for the company when offering employment to the employee. The company was therefor the employer and the correct respondent to the action.

The commission refused to attach personal liability for unfair dismissal to the administrators by virtue of section 443 of the Corporations Act.

Kathy Reid, HR &IR

9429 7695

Julian Atkinson, Insolvency

9429 7557

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