On 16 November 2017, the Federal Circuit Court made orders against a professional advisory accounting firm, Ezy Accounting, for their involvement in the underpayments of employees by a Japanese restaurant chain.
An order which was the first of its kind under the accessorial liability provisions of the Fair Work Act 2009, sends a clear message – the Fair Work Ombudsman is prepared to take all necessary steps to ensure that someone is accountable for employees whose wages are underpaid.
To date, all of the prosecutions of accessories in the Courts by the Fair Work Ombudsman have been against directors of the corporate employers and HR Managers. With the prosecution of an accounting firm, this now opens the potential scope for other advisors and consultants to be held liable. It is to be noted that at the time of publishing, an appeal has been lodged by the accounting firm in relation to the decision. The contents of the discussion below is based solely on the Federal Circuit Court’s decision in respect to the liability hearing and hearing as to penalty.
In Fair Work Ombudsman v Blue Impression Pty Ltd & Ors  FCCA 810, the accounting firm Ezy Accounting was ordered to pay $53,880.00 in penalties and the employer, Blue Impression, $116,000.00.
Interestingly, the underpayments the subject of the litigation were just short of $10,000.00 which occurred between September 2014, October 2014 and December 2014. The contraventions resulted from employees being paid flat hourly rates, significantly below the Award and in circumstances where the employees were working weekends and public holidays and still being paid a flat rate of pay.
Ezy Accounting denied it provided payroll services and said it provided book-keeping services to the employer, Blue Impression. As part of that service, it also processed the payroll for Blue Impression. The director of Ezy Accounting was a practising accountant.
Ezy Accounting was joined as a Respondent under the accessorial liability provisions of the Fair Work Act 2009 (Cth) on the basis that it was alleged that the firm was involved by the provision of payroll services, in light of the admitted contraventions by the employer.
Ezy Accounting considered that it was not the employer of the employee and therefore “owed no primary legal responsibility to Mr Zheng (the employee) to ensure he received his minimum entitlements”.
Whist the director of Ezy Accounting asserted that he did not consider it was the accountant’s role to know whether the correct rates were being paid by the Employer and that the role of the accountant was merely to enter the data provided by the Employer, the Court found that the accounting firm clearly knew that the rates being paid were incorrect. The Firm’s director in submissions said that he “had some knowledge of the Award by reason of an earlier audit of Blue Impression’s sister restaurant…” Further in cross-examination the director agreed he had received a letter from the Fair Work Ombudsman in 2014 which identified ordinary hours, Saturday and Sunday rates. 
Further, the director agreed that as a result of the audit conducted by the FWO in early 2014 in relation to another business of the employer, Blue Impression, he knew how to check the correct Award rates and that if the rates were not altered in the MYOB system there would be underpayments and that Ezy did not alter the flat rates.
In this decision, the Court found that the accounting firm had “at their fingertips all the necessary information that confirmed the failure to meet the Award obligations by the first respondent and nonetheless persisted with the maintenance of its (payroll) system with the inevitable result that the Award breaches occurred”.
Further, the Court was satisfied on the evidence that the director and Ezy Accounting were “…engaged in a contrivance, a deliberate shutting of the eyes or calculated ignorance.”
In short, irrespective of the outcome of the appeal lodged by the accounting firm, the message to employers, internal and external payroll services, accountants, HR consultants and other advisors is clear – there is a need to exercise a considerable degree of caution when discharging your obligations to employees under an Award or industrial instrument.
If you need assistance with understanding your obligations, please get in contact with Peters Bosel Lawyers today.
 Fair Work Ombudsman v Blue Impression Pty Ltd (No.2)  FCCA 2797.
 Fair Work Ombudsman v Blue Impression Pty Ltd & Ors  FCCA 810 at  and .
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 Fair Work Ombudsman v Blue Impression Pty Ltd & Ors  FCCA 810 at .
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