Not as Ezy as 1,2,3 – Accountant found to have breached the Fair Work Act
If you're an accountant or professional adviser, take note. The recent decision in Fair Work Ombudsman v Blue Impression Pty Ltd & Ors [2017] FCCA 810 has put accountants and professional advisers on notice that they too can be found liable for their clients' breaches of the Fair Work Act 2009 (Cth) (FW Act).
In a case described by the Fair Work Ombudsman as "the first time the agency has initiated proceedings against an accountant for allegedly knowingly being involved in contraventions of workplace law," Judge John O'Sullivan found Melbourne accounting firm EZY Accounting 123 Pty Limited (EZY Accounting) liable as an accessory for the underpayment of award-related entitlements of certain employees at a business to which it provided payroll services - Blue Impression Pty Limited (Blue Impression). In other words, the Federal Circuit Court found that EZY Accounting, together with its client, had contravened the relevant modern award.
EZY Accounting argued that it was not liable for Blue Impression's breaches, including because:
EZY Accounting had no knowledge of the underpayments;
EZY Accounting had no knowledge of the terms of the relevant modern award;
EZY Accounting's role as a service provider was limited to certain bookkeeping services and data entry; and
Blue Impression's compliance with the law was otherwise outside EZY Accounting's professional expertise and the scope of EZY Accounting's engagement.
Despite the arguments put forward by EZY Accounting, the Court found that:
EZY Accounting was well aware of the minimum payment obligations of Blue Impression and that EZY Accounting's MYOB payroll system was underpaying Blue Impression employees, including because of a separate Fair Work Ombudsman audit of Blue Impression in 2014; and
by failing to make inquiries and by persisting with the MYOB payroll system that had provided for incorrect award rates of pay, EZY Accounting had engaged in "willful blindness" and had "deliberately shut its eyes" to the issue of underpaying employees.
The Court is yet to make a determination on the penalties to be handed down. EZY Accounting could face fines of up to $54,000 per contravention, while individuals within EZY Accounting could face fines of up to $10,800 per contravention.
Key Takeaways
This case is one of a number of cases evidencing the Fair Work Ombudsman's recent crackdown on third party accessories, such as professional advisers, who may be involved in the underpayment of their clients' employees.
Professional advisers must ensure they remain up-to-date with changes in workplace law, including to the FW Act and the modern award.
Professional advisers can no longer put their head in the sand and argue that workplace law is outside their expertise and that they only perform data entry roles.
How we can help
If you're an accountant or professional adviser, we can provide you and your clients with advice in relation to compliance with the FW Act and any relevant modern award.
The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.
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Peter Wright
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Dean Schubert
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