Accountants held liable for their client's underpayment of wages
Back in August 2016, we released a legal alert warning HR Advisers, Managers, Accountant and Recruiters of the risk of being held liable for breaches of the Fair Work Act.
The recent decision of Fair Work Ombudsman v Blue Impression Pty Ltd & Ors serves as an important reminder of this risk because, as accountants, you too could be held liable for breaches of the Fair Work Act.
Ezy Accounting 123 Pty Ltd (Ezy Accounting) was recently found to be accessorially liable for an employer's underpayment of wages when the Federal Circuit Court held that they failed to maintain current award rates of pay in their MYOB payroll system.
While Ezy Accounting tried to argue that they were not liable for the underpayments because they “had no authority to make any adjustment to the data” and their role as a service provider “was limited to certain bookkeeping work: data entry work and the uploading of MYOB files to Blue Impression's bank", damaging evidence showed that the firm was in fact aware that their client, Blue Impressions, was not paying their employees in accordance with the Modern Award.
Evidence presented to the Court demonstrated that Ezy Accounting's principal had been aware of its client’s non-compliance with the Modern Award when he emailed IR advisor, Employsure, in 2014 regarding a Taiwanese subclass 417 working holiday visa holder who he suspected was being underpaid.
In fact, in one email the Principal compared the "MYOB rate" of pay with the "Fair Work rate" and referred to the award rate and the "actual rate" and therefore the Fair Work Ombudsman argued that Ezy Accounting "must have known" that Blue Impression were underpaying their workers because Ezy Accounting knew the rates in its MYOB payroll system were less than those stipulated in the Modern Award.
It was held that Ezy Accounting:
"had at their fingertips all the necessary information that confirmed the failure to meet the award obligations by [Blue Impression] and nonetheless persisted with the maintenance of its (payroll) system with the inevitable result that the award breaches occurred",
...and therefore Ezy Accounting was held to be accessorially liable for Blue Impressions’ breaches of the Fair Work Act (with the exception of a breach relating to meal breaks).
Although the Principal of Ezy Accounting attempted to confine his involvement to mere 'data entry', the fact remained that, by calculating the deficiencies with the hourly rates paid to employees, he was aware that the rates that were being paid to Blue Impressions’ employees were incorrect and that his client was therefore in breach of the Fair Work Act and the Modern Award.
The court will now make a determination on the penalties to be paid by Ezy Accounting and they face penalties of up to $54,000 per contravention as a corporation.
As you can no doubt appreciate, the above case serves as a stark reminder to service providers that you too need to remain up to date and ensure that both your advice, and your clients, are complying with the terms of the Modern Awards and the Fair Work Act.
If you are ever in doubt about wage payments or need specialist workplace advice please contact a member of the Clifford Gouldson Lawyers Workplace team