FWO succeeds in prosecuting an accounting firm for a client’s underpayment of wages

22 May 2017 Topics: Workplace relations and safety

In the much awaited decision of Fair Work Ombudsman v Blue Impression Pty Ltd [2017] FCCA 810, the Fair Work Ombudsman (FWO) has successfully prosecuted an accounting firm for its involvement in a client’s breaches of the Fair Work Act 2009 (Cth).


Blue Impressions Pty Ltd was a client of EZY Accounting 123 Pty Ltd (EZY). The FWO successfully argued that EZY was liable as an accessory for seven breaches of section 550 of the Act by Blue Impressions.

Section 550(2) of the Act provides that a person is involved in a contravention of a civil remedy provision if, and only if, the person:

(a) has aided, abetted, counselled or procured the contravention;

(b) has induced the contravention, whether by threats or promises or otherwise;

(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or

(d) has conspired with others to effect the contravention.

The Court reviewed prior authorities to establish that, in order for a person to have accessorial liability, they must be a ‘knowing participant’, or:

(a) have knowledge of the essential facts constituting the contravention;

(b) must be knowingly concerned in the contravention;

(c) must be an intentional participant in the contravention based on actual not constructive knowledge of the essential facts constituting the contravention, or constructive knowledge under section 550(2)(c) in cases of wilful blindness; and

(d) need not know that the matters in question constituted a contravention.

EZY argued that it did not possess the actual knowledge of essential elements that made up Blue Impressions’ contravention of the Act. It emphasised that it was unaware of the minimum rate under the relevant award and had no knowledge of the employees’ pay rates.


The Court found EZY demonstrated wilful blindness and fell within the ambit of being knowingly involved in the contravention pursuant to section 550(2)(c) of the Act.

The Court held that Mr Lau, the principal and director of EZY, had ‘engaged in a transparent attempt to understate the nature of the relationship’ between him and Blue Impressions and ‘had at their fingertips all the necessary information that confirmed the failure to meet the award obligations’.

The Court’s decision was informed by EZY’s failure to update its MYOB system, which contained the hourly rates of pay and produced payroll records and pay slips for employees of Blue Impressions. The Court found that even the most basic inquiry would have revealed substantial minimum allowances that were not afforded to the employees of Blue Impressions.

The Court further held that Mr Lau was aware of the applicable award and its minimum rates of pay. In doing so, the Court referred to an email chain spanning from June to August 2014 between EZY and Employsure that was indicative of an ‘award rate’ and the ‘actual rate’ and that highlighted the actual rate recorded was lower than that of the award.

Mr Lau’s attempts at suggesting EZY had no obligations to monitor compliance with relevant awards were met with a determination that EZY had ‘deliberately shut its eyes to what was going on in a manner that amounted to connivance in the contraventions’.

Ultimately, the Court accepted the FWO’s submission that a 2014 audit conducted by the FWO had placed Mr Lau on notice of the underpayments and EZY’s continued maintenance of the payroll system resulted in the requisite breaches.


This is the FWO’s first prosecution against a third party adviser under the accessorial liability provisions of the Act.

It is therefore essential for third party advisers to either be confident in their advice, particularly in calculating employee entitlements, or to refer their clients to an expert adviser.



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