The Federal Circuit Court of Australia imposed a fine on an accountancy firm, Ezy Accounting 123 Pty Ltd, on the basis that it was involved in and accessorially liable for several contraventions of the Fair Work Act 2009 (Cth) by the operator of a Japanese fast food restaurant which failed to pay an employee the correct rates under the relevant Award.

In Issue

  • Whether an accountant was accessorily liable for contraventions of the Fair Work Act 2009 (Cth) by an employer client.

The Background

In 2014 the Fair Work Ombudsman identified contraventions of the Fair Work Act 2009 (Cth) (the FW Act) by Blue Impression Pty Ltd (Blue Impression), the operator of a Japanese fast food chain. The relevant contraventions related to an employee, Mr Zheng, who was employed on a casual basis under the Fast Food Industry Award 2010. Blue Impression’s accountant at relevant times was Ezy Accounting 123 Pty Ltd (Ezy).

The Ombudsman alleged that pursuant to s550 of the Act Ezy was involved in, and therefore should be treated as having itself also contravened, the relevant provisions of the FW Act. The specific contraventions included a failure to pay the minimum hourly rate of pay, the evening loading, the Saturday and Sunday loadings and the public holiday penalty rate.

The Ombudsman submitted that the director of Ezy, Mr Lau, did not need to have specific knowledge of the employee to have knowledge of the essential facts constituting the contraventions. It was enough for Mr Lau to know of the systematic problems and of the wrong rates contained in the payroll software, thereby leading to underpayments and other contraventions of the Award.

In response Ezy submitted that Mr Lau had no knowledge of Mr Zheng’s personal pay rate, what he was doing, or anything of that detail, and that Mr Lau therefore did not have the requisite knowledge necessary for the Court to make a finding of accessorial liability.

The Decision at Trial

Having considered the evidence the Court rejected Ezy’s submission that Mr Lau, and Ezy, did not have the requisite knowledge necessary for the Court to make a finding of accessorial liability. The Court instead accepted the Ombudsman’s submission that, although Ezy and Mr Lau had at their fingertips all the necessary information that confirmed the failure to meet the Award obligations by Blue Impression, they nonetheless persisted with the maintenance of the payroll system with the inevitable result that the Award breaches occurred. In these circumstances the Court held that Ezy was accessorily liable.

Accordingly, in the subsequent judgment of Fair Work Ombudsman v Blue Impression Pty Ltd (No.2) [2017] FCCA 2797, the Court imposed penalties of $53,880 on Ezy and $115,706.25 on Blue Impression.

Implications for you

This decision is a timely reminder to accountants and other advisors that they may face accessorial liability under the FW Act if they acquire knowledge of facts which give rise to contraventions, and that they cannot simply “close their eyes” to such matters.

Fair Work Ombudsman v Blue Impression Pty Ltd & Ors [2017] FCCA 810