Accountant faces liability for client

In a case that could see the accessorial liability provisions of the Fair Work Act 2009 (Cth) (FW Act) extended further than ever before, the Fair Work Ombudsman (FWO) is prosecuting an accounting firm for its client’s alleged underpayment of employees.

The move by the workplace regulator reinforces the need for accounting professionals to be extremely careful when advising on employment law issues and pay rates which may be beyond their area of expertise. Otherwise, they could find their firms and even themselves personally joined in actions against employers.

Background

Under section 550 of the FW Act, if person has been ‘involved’ in a contravention of workplace laws by an employer they can be liable as an accessory, with fines of up to $51,000 per breach (for companies) and $10,200 (for individuals).

A person will be ‘involved’ in a contravention if they have ‘aided, abetted, counselled or procured’ the breach or were ‘in any way directly or indirectly knowingly concerned’ in it (emphasis added). Knowingly concerned includes intentional breaches as well as wilful blindness, and will generally capture persons involved in a breach or who were responsible for it.

For example, where a company has underpaid its workers, senior management knowingly involved in the underpayment can be personally liable for fines in addition to any fines imposed against the company. This also extends to third party consultants, where they are closely involved in advising about compliance with workplace laws.

The FWO’s prosecution is the first against an accountancy firm for alleged knowing involvement in an underpayment, but is similar to previous cases that have found accessorial liability by third parties.

In a statement issued by the FWO, it said it has “been looking closely at the involvement of third parties in contraventions of workplace laws” and had been “concerned about the role of key advisers, such as accountants and HR professionals, in some serious and deliberate contraventions” noting that:

Small business relies heavily on trusted advisers, and if they give incorrect or bad advice, or deliberately assist with the contravention, should they not be held accountable? In situations where we believe accountants or other professionals knowingly facilitate contraventions of workplace laws, we are prepared to hold them to account.

The case

The case (which is yet to be heard) relates to EZY Accounting 123 Pty Ltd (EZY Accounting 123) which provided payroll services for Blue Impression Pty Ltd (Blue Impression) the operator of a fast-food outlet covered by the Fast Food Industry Award 2010 (Fast Food Award). Two employees were allegedly paid flat rates below the minimum rates set out in the Fast Food Award and also failed to cover penalties and casual loadings.

The FWO is prosecuting Blue Impression for the alleged underpayment, as well as its operations manager and EZY Accounting 123 for alleged knowing involvement.

Both Blue Impression and EZY Accounting 123 had previously been involved in an FWO audit of the fast food outlet, in which the regulator notified the underpayment and sought voluntary rectification. However, breaches of the Fast Food Award allegedly continued. For this reason, senior management of Blue Impression and EZY Accounting 123 can be argued to have had knowing concern in the breach.

What does this mean for you?

If you are a third party consultant advising or assisting employers with workplace law compliance, it is essential that your advice is accurate.

Employment laws are often complex, so it is recommended that consultants seek legal advice on payment structures, especially for award-covered employees. Payments to award-covered employees can often be simplified under individual or collective agreements, which Meyer Vandenberg Lawyers can assist with.

Consultants must also ensure that, where they receive information or advice which suggests that the payments structures they advise upon may be non-compliant, they clearly convey that to clients. If, like EZY Accounting 123, they are also involved in processing payroll, they must also ensure that the information / advice is implemented.

For more information please contact the Employment, Workplace Relations and Safety Team:

William Ward — Special Counsel — Employment, Workplace Relations and Safety Team
(02) 6279 4366
william.ward@mvlawyers.com.au

John Nikolic — Associate — Employment, Workplace Relations and Safety Team
(02) 6279 4317
john.nikolic@mvlawyers.com.au