The following three (3) scenarios where the details have been redacted provide examples of how the impact of vicarious liability and its implied use under the NVR Act is clear and plain for all parties. The Regulator is unambiguous in its approach to the liability of the officers, agents and particularly of CEOs of RTOs irrespective of the proof or otherwise of liability by other actors within the business.
In this scenario, the Provider operated in the Trades Sector. The college was a very successful national provider and offered over 20 funded and unfunded VET courses. During the time that the Provider was operating, it had trained nearly 15,000 people in various qualifications. Graduates of the college were running very successful businesses within their chosen vocational profession and they spoke strongly in favour of the practices of the Provider.
The problems began when some students began complaining that a few of the trainers of the Provider were not delivering correctly. In some cases, students transferred during their course to either TAFE or to other Providers and their training and assessment was not fully recognised by the new Provider for RPL. The main Provider, and importantly, its CEO, were well resourced and had the correct Training and Assessment Strategy (TAS), training and assessment materials, resources, trainers and assessors and also prided itself on maintaining compliance at all costs. The issues stemmed from poor training practices of individual trainers.
There was never any indication until well into the matter before the Tribunal, that the CEO of the Provider that has been referred to, was anything other than diligent in their approach to the compliance of the business. Unfortunately, what occurred was a significant problem because a cancellation decision was made by ASQA.
The Tribunal initially rejected the legitimate evidence of the Provider which said that it was ‘not poor practices but unsanctioned and inappropriate training by individual (rogue) trainers which caused the critical non-compliances’. This did not prevent the cancellation taking place. It also did not prevent the CEO being held personally liable in various debt recovery matters of disgruntled students seeking to recover their fees.
SCENARIO 2 – CRICOS
The CRICOS scenario is what many of my clients call ‘the horror circumstance’. Often in VET, one is dealing with individual students who sometimes do not have their qualifications recognised appropriately in their mind. However, for CRICOS colleges, the ESOS Act is unambiguous on the obligations of the Provider and the subsequent obligations of the High Managerial Agents, and in particular, the CEO/PEO of the Provider with respect to the status of students and their visas.
In this scenario, the Provider's student agencies were recruiting students and making certain promises with respect to Australian visas. Effectively, the students were being offered work-related visas in Australia if they commenced courses with this Provider. Not only was that fundamentally incorrect, but it was something that was entirely unsanctioned and unknown by the RTO. The RTO was cancelled as a result of non-compliance and in the appeal, a swathe of student complaints emerged and the beginnings of a debt recovery claim. There were claims in some cases, that students had been misled into coming to Australia on the promises that at the conclusion of their studies, they would be able to seek Australian permanent residency. Irrespective that the claims were made by agents of the RTO without the knowledge of the business, it was held that the RTO and more importantly the CEO, were liable and responsible for the impact of those statements.
SCENARIO 3 – WIND UP
What happens when an RTO is wound up? Not cancelled, but suspended or sanctioned by ASQA but actually liquidated? There are specific elements within the NVR Act that deal with this, but the appointment of a liquidator constitutes an event of default and effectively an immediate cancellation kicks in. In this scenario, the Provider had two business partners. One business partner (the Director but not the CEO), issued Confirmations of Enrolment (CoEs) for students while ‘the business’ was aware that it was going to close. The business was liquidated as a result of non-viability and the Provider was faced with a huge outstanding debt to students. In certain circumstances, students sued the Provider, sued the CEO and sued the two Directors. It was found that both Directors were liable. This is irrespective of the fact that one of the Directors was completely unaware of the further enrolments until after the liquidation. It was found that the innocent Director knew, or ought to have known, of these enrolments and in any event, stood to benefit from it. Students affected in this way would be in a different category to students affected by the regular enrolment or otherwise of students of an RTO that believes it’s going to continue operating.
For this reason, the question of vicarious liability in the context of registered providers is one that requires very specific attention. The RTO business is a business that is granted through its licence issued by ASQA’s significant powers. The private training, assessment, certification, and qualification of students effectively acts as a giant billboard to the world that this person is trained according to certain standards and to a certain level of quality. The Executive Officers, and most importantly the CEO of the RTO business, are unable to fall back on Australian corporate principles to try to protect themselves in the event that something goes wrong. Responsibility (and liability) rests on them.
It is for this reason that it is strongly recommended that RTOs have adequate Directors and Officers Liability Insurance and/or Management Liability Insurance, as well as a good governance framework in place such as having a Board structure which meets regularly to try and address these questions. It is imperative that these matters are dealt with on a day-to-day basis in a way that is acceptable and that is recorded and known by all members of the business.
Good and open communication with ASQA is also vitally important for this purpose. The future of VET colleges in Australia will put even more onus on the CEOs, executive officers and high managerial agents. It is also likely that further reforms will extend the vicarious liability on those agents in a bid to close a long-practiced tradition of outsourcing the role of CEO to a shadow or interim foreman option. The CEO of a Registered Training Organisation is a position defined under the NVR Act and is one of trust, both in the student/college relationship as well as in the relationship between the college and its regulator; for this reason, it should be taken very seriously.
In addition to implementing a solid governance system which includes a Board, another way to mitigate the potential risks of vicarious liability for CEOs should be to compel CEOs and Executive Officers to undertake certain training courses so that they properly understand their responsibility and their liability. These should be part of any future reforms going forward.
This is 'general advice' however, readers are encouraged to see their RTO Lawyer as soon as possible. If you would like to be referred to an RTO legal specialist, please contact me for a discreet referral.
RTO Doctor assists VET & international education providers around the country to ensure their compliance with their regulatory requirements; a critical issue for RTOs around the nation currently experiencing a very hostile and punitive regulatory environment. Raelene Bartlett, Founding Director of RTO Doctor published the book CRICOS CPR: Top 5 Tips to Rescue Your RTO as a way of supporting providers in navigating this minefield. She has also published the number 1 international bestseller in 3 categories "National Vocational Education and Training Regulator Act 2011 (Cth): An Investigation Into Merits Review" and 'The Human Toll: Is The Nature of Regulation Under The Australia Skills Quality Authority Destructive?'
If you think as an RTO this issue is not relevant to you, you might be surprised to learn that you are. Many RTOs and trainers and assessors think that to comply, all they need to do is hold a valid and current Working With Children card or similar at a bare minimum - so much more than this is required though. If you're in Victoria, the VRQA has just released today (5 May 2022) an email to subscribers regarding the commencement of the new Child Safe Standards coming into effect on 1 July 2022. The following extract on the VRQA website is particularly relevant:
"From 1 July 2022, new VRQA Guidelines for VET Providers come into effect. They add an additional key area to the 5 in the current guidelines:
RTOs that deliver, or intend to deliver, services to persons under 18 years of age are required to comply with the Child Safe Standards.To download the new guidelines, see: New VRQA Guidelines for VET Providers (docx - 2.24mb)"
Not yet sure what this means for you? Watch the short video from the Commission for Children and Young People below.
Raelene Bartlett is a legend in the education space. Her knowledge of the applicable law, The Standards and her experience in acting for many hundreds of providers is without parallel. Her dedication to her clients and her stubborn adherence to her vision of a broader, fairer and more open education space for providers sets her apart from other players in the space.
There is no ‘near enough is good enough’. Perfection is the only option. Her loyal following from her clients and has earned the fearful respect of the regulator."
“As an experienced lawyer working extensively with RTOs in their dealings with ASQA and in applications to the AAT, I have worked with Raelene helping many RTOs over many years. With Raelene, you know she’s in your corner, but at the same time she brings much-needed objectivity and a clear-sighted approach in advising RTOs. Her comprehensive knowledge of the VET sector, including the legislation and Standards which regulate it and the policy and approach adopted by ASQA in overseeing it, are invaluable to RTOs but also to me in formulating and implementing the right legal strategy for each client. Raelene is an excellent ally in ensuring success.”
“We approached Raelene when we got the cancellation notice from ASQA as we wanted someone who could combine the legal mind with compliance knowledge and help us with not only rectification but develop an overarching strategy to fight what was very obviously a wrong and out of proportion decision by ASQA. She also stuck with us as a client till the very end ,ensuring a positive outcome unlike some in the industry who tend to bail out when things get to the hairy end. Raelene remains one of very few people I have known with a zero error approach and capacity to do so.
We remain grateful to her for what she brought on the table for us and gave us not only hope but led the strategy and execution, freeing us to focus on ensuring that the wolves did not circle the RTO when under stress."
“Raelene changed the paradigm of how we deal with regulators. She forces them to play by the rules rather than letting them throw their weight around unchallenged. As a result, even after multiple attempts to sanction or cancel us they have never been successful. Also, Raelene has worked with our RTO to become as compliant and bullet-proof as possible.
Now regulatory interaction is an occasional annoyance, not an existential threat.”
“I’ve worked with Raelene over several years and seen first-hand her invaluable assistance in reforming RTOs to prepare for proceedings in the Administrative Appeals Tribunal, and helping me to prepare for hearings. Her knowledge, diligence and attention to detail are first-rate, and I would happily recommend her to any RTO.”
With our RTO facing a cancellation decision by ASQA at Tribunal and having already engaged and worked with 4 different compliance consultants, it was with great fortune we were referred to Raelene Bartlett Founding Director of RTO Doctor to assist us with our fight with ASQA.
Raelene has been instrumental in winning our case after 2 years with ASQA and we have no hesitation in recommending her and RTO Doctor .
I have worked with a number of consultants over the years but RTO Doctor has been by far the best. In my view the knowledge that she brings to the audit process is first class.
I just wanted to take this opportunity to thank you so much for all of your loving support & guidance over the last week. Closing an RTO is one of the most stressful experiences I have been through in my ten years as a successful small business owner.
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