This article was written by Claire Toner.

The Fair Work Ombudsman (FWO) has succeeded in its prosecution of an accounting firm for its involvement in the underpayment of staff employed by its client, a Japanese restaurant chain.

The decision is part of the FWO’s public efforts to increase reliance on the accessorial liability provisions of the Fair Work Act 2009 (FW Act) to prosecute individuals and corporations for their involvement in FW Act breaches.


The employer (the first respondent in the prosecution) operates a Japanese fast food restaurant with outlets in various Victorian locations.

The prosecution arose from the FWO’s audit of the employer’s business, following a complaint made by an employee as to his entitlements under the Fast Food Industry Award 2010 (Award). The second respondent, Ms Wong, was responsible for the day to day operation of the site where the employee who made the complaint was employed to work. The third respondent was the employer’s accounting firm, Ezy Accounting 123 Pty Ltd (EZY). Following the admissions of the first and second respondents of their contraventions of the FW Act, the FWO alleged that Ezy was involved in and accessorially liable for several of the first respondent’s contraventions of the FW Act in relation to the employee.

Section 550 of the FW Act provides that:

Involvement in contravention treated in same way as actual contravention

  1. A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
  2. A person is involved in a contravention of a civil remedy provision if, and only if, the person:
    • has aided, abetted, counselled or procured the contravention; or
    • has induced the contravention, whether by threats or promises or otherwise; or
    • has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
    • has conspired with others to effect the contravention

The FWO argued that Ezy was the payroll provider of the employer. It alleged that Ezy had actual knowledge of the facts underlying the contraventions admitted by the first respondent, was an intentional participant in those and either aided, abetted or by its acts or omissions directly or indirectly was knowingly concerned in or a party to those contraventions. Specifically, the FWO said that Ezy was aware the employer was paying wages under the Award and that, by continuing to process the employer’s payroll witth this knowledge, it was involved in, and therefore should be treated as having itself also contravened the law.

In its defence, Ezy denied that it provided payroll services to the first respondent, arguing it merely provided “book keeping services” which “included the processing of the [f]irst respondent’s payroll”. In maintaining this position, Ezy sought to minimise the degree of its knowledge of the lawfulness, or otherwise, of the employer’s payroll practices. It argued that it merely inputted the payroll information supplied by the employer into MYOB accounting software, which then confirmed the amounts payable to the employees and created payroll records. Whilst Ezy’s software contained the applicable rates on which employee wages were calculated, it asserted the hourly rates were entered into the software in accordance with the instructions of the employer. Ezy denied knowledge of the duties or hours of work of the complainant employee, saying it relied wholly on the MYOB software to calculate the correct pay in accordance with the hourly rate stipulated by the employer.


Judge O’Sullivan summarised the authorities concerning accessorial liability, as requiring the person to:

  1. have knowledge of the essential facts constituting the contravention;
  2. be knowingly concerned in the contravention; and
  3. be an intentional participant in the contravention based on actual not constructive knowledge of the essential facts constituting the contravention – although His Honour noted that constructive knowledge may be sufficient under section 550(2)(c) of the FW Act in cases of wilful blindness.

As His Honour observed, the person need not know that the matters in question constitute a contravention. His Honour quoted the decision of Qantas Airways Ltd v Transports Workers’ Union of Australia [2011] FCA 470 at [324]:

… In order to be knowingly concerned in, or party to, a contravention, a person must have engaged in some conduct which “implicates or involves” him or her in the contravention, so that there is a “practical connection” between the person and the contravention.

As the contraventions in question related to breaches of an Award, the Court traversed a number of the cases concerning accessorial liability for award breaches. In Potter v Fair Work Ombudsman [2014] FCA 187 at [81], Justice Cowdroy held that it was necessary that an alleged accessory have actual knowledge of the existence of the relevant award and of its application to the employees in question. This was cited in the Fair Work Ombudsman v Al Hilfi [2012] FCA 1166 at [44], in which Justice Besanko expressed support for the proposition that it was necessary to establish that the alleged accessory had actual knowledge, amongst other things, that the applicable award applied to the particular employees, that the work of each of the employees gave rise to the specific entitlements, and that they were not paid those entitlements. Doubt was cast on the high bar established by these authorities in the decision of Justice Katzmann in Fair Work Ombudsman v Grouped Property Services Pty Ltd [2016] FCA 1034 at 1019, in which Her Honour expressed the view in obiter that an accessory does not have to appreciate that the conduct involved is unlawful.

Ezy sought to establish that it did not have the knowledge of the essential elements of the contraventions in relation to the employee and was not an intentional participant in them. In reply, the FWO submitted the evidence demonstrated that Ezy intentionally participated in the underpayment contraventions by performing the payroll processing for the first respondent where the personnel processing the payroll knew the award applied, and that the employer was only paying a flat hourly rate. Further, it was submitted that Ezy knew that the FWO audit had uncovered that the employer was paying rates below the award minimum. As Ezy continued to process the employer’s wages without updating the MYOB software, it was inevitable that the employee would continue to be underpaid. On this basis, the underpayment contraventions were enabled by Ezy’s omissions in failing to update the software.

Judge O'Sullivan accepted the submissions of the FWO that its 2014 audit put the Ezy "on notice that the rates were incorrect". His Honour agreed with the FWO’s contention that “Although [the director of Ezy] frames his involvement as mere 'data entry', the fact remains that in calculating the underpayment amounts, he was aware that the rates that were being paid were incorrect.”