FWO targets advisers – accounting firm prosecuted for involvement in client’s underpayment of wages

The Fair Work Ombudsman has commenced proceedings in the Federal Circuit Court against accounting firm EZY Accounting 123 for its alleged involvement in its client’s underpayment of wages. This is the Fair Work Ombudsman’s first prosecution against an accounting firm for being involved in a client’s wrongdoing.

EZY Accounting 123 provided payroll services for its client, Blue Impressions Pty Ltd, which operated a fast food outlet in Melbourne. The Fair Work Ombudsman has alleged that two of Blue Impression’s casual employees were underpaid a total of $9,549. The employees were paid a flat hourly rate of $16.50 per hour, which was below the minimum base rate of pay. Further, the employees were not paid public holiday penalty rates or weekend, night or casual loadings that they were entitled to under the relevant award.

The Fair Work Ombudsman has alleged that EZY Accounting 123 knew that the rates of pay were well below the lawful minimum. EZY Accounting 123 faces penalties of up to $51,000 per contravention.

Under section 550 of the Fair Work Act 2009 (Cth) a third party (including an individual) can be subject to penalties if it is ‘involved in’ a contravention of the Act. Being ‘involved in’ a contravention means:

• aiding, abetting, counselling or procuring the contravention;
• inducing the contravention, whether by threats or promises or otherwise;
• being, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
• conspiring with others to effect the contravention.

In another first for the Fair Work Ombudsman, it recently obtained a garnishee order against an ex‑director of a company that was found to have underpaid its employees in the matter of Fair Work Ombudsman v Sona Peaks Pty Ltd [2015] FCCA 1. The director was ordered to pay approximately $28,000 in penalties and costs for his involvement in the underpayments. When the director failed to pay the penalties, the Court ordered the director’s new employer to re-direct a portion of the director’s wages towards payment of the penalties, until they are paid off in full.

The provisions in section 550 of the FWA are broad reaching and have increasingly been used by the Fair Work Ombudsman to prosecute third parties, including directors, HR managers and businesses that engage workers through labour suppliers.

The Fair Work Ombudsman has stated in a media release: ‘We have been concerned about the role of key advisors, such as accountants and HR professionals, in some serious and deliberate contraventions’.

Advisers and others that are involved in influencing the workplace conditions of a third party’s employees may be liable for any workplace contraventions that flow from their advice or influence. It is therefore important that third parties are fully aware of the minimum workplace entitlements of the employees they are advising about or have influence over. For this reason, expert legal employment advice is always recommended.

This article originally appeared in Cooper Grace Ward’s Workplace Relations & Safety Risk Management Adviser – April 2016. Click here to download the full newsletter