Did you know that third party service providers can be found liable under the accessory provisions of the Fair Work Act 2009 (Cth) (FW Act) arising from a client's contraventions?
In April this year, Ezy Accounting 123 Pty Ltd (Ezy) (a tax and accounting business) was found accessorily liable for the underpayment of modern award rates and other entitlements by its client, Blue Impression Pty Ltd (Blue).
Ezy denied liability, claiming its role as service provider was limited to bookkeeping work and processing Blue's payroll. It submitted that Blue provided hourly rates in respect of each employee and that it was not aware the applicant employee was covered by the Fast Food Industry Award 2010 (the "Award") and not receiving his correct entitlements.
Under section 45 of the FW Act a "person must not contravene a term of a modern award" and under section 550(1) of the FW Act, "a person who is involved in a contravention of a civil remedy provision is treated as having contravened that provision".
Evidence submitted by the Fair Work Ombudsman (FWO) showed that Ezy's principal, Mr Lau, was put on notice by the FWO in April 2014 when he received a letter detailing Blue's contraventions of the Award. Following the FWO's letter, Ezy sought advice from a workplace relations specialist regarding the correct rates under the Award in order to properly assist its client.
Judge O'Sullivan accepted that Ezy had all the "necessary information" which would confirm Blue was in contravention of the Award but had turned a blind eye by not rectifying the contravention in its payroll system.
As Ezy was responsible for producing payroll records and payslips for Blue's employees, the Federal Circuit Court judge found that "even the most basic query would have revealed that employees were not receiving their correct entitlements".
In his capacity as director of Ezy, Mr Lau exercised overriding control of its activities, including its dealings with Blue. Mr Lau admitted he knew of the applicable award and that it provided minimum rates. Due to his "wilful blindness", Ezy was found to be aware of and involved in the contraventions alleged by the FWO against its client. The penalties to be imposed on Ezy are still to be determined by the Court.
Fair Work Ombudsman v Blue Impression Pty Ltd & Ors  FCCA 810 (28 April 2017)