Businesses could be legally responsible for all employee actions

1 September 2020
| By Chris Dastoor |
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The Law Council of Australia has warned the Australian Law Reform Commission’s (ALRC’s) review of the nation’s corporate criminal responsibility regime could make a corporate entity guilty if any level of employee of the corporation committed an offense while acting within the scope of their role.

Under the recommendations, the person would not need to hold office as a director or “high managerial agent”, whose responsibilities may be fairly assumed to represent the body corporate’s policy as was currently required.

Unless the corporation could prove that it took reasonable precautions to prevent the individual from committing the crime, it would be guilty.

The recommended amendments would not only impact large corporations, but also small businesses and charities, many of which operate as corporations.

Although the Law Council welcomed the Government’s tabling of the ALRC review, it urged parliament to take a cautious approach when considering fundamental principles of criminal law.

Pauline Wright, Law Council of Australia president said, policymakers needed to approach this with caution as criminal convictions carry serious consequences for corporations and people working in them.

"The ALRC’s recommendations in this area are not consistent with the general criminal law principles applicable to the most serious offences, including that an intention to commit the crime must be proven,” Wright said.

“The Law Council urges caution in fundamental changes to general principles of criminal responsibility governing corporate attribution.

“If these recommendations were accepted by parliament it could lead to corporations attracting criminal convictions for the misdeeds of relatively junior employees, which could have severe, unintended, and unnecessary consequences for many innocent parties.”

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