Update on Accounting firm’s accessorial liability

After being prosecuted at the initiative of the Fair Work Ombudsman last year, Ezy Accounting 123 were fined $53,880 when the Federal Court determined the firm had facilitated underpayments to several employees of a client. Ezy Accounting 123 provided payroll services and processed wages for a client, despite knowing the rates workers were being paid were below lawful Award minimums.

Ezy Accounting 123 appealed that decision, arguing there was no basis for the original finding that it had contravened the Fair Work Act. However, a full bench of the Federal Court disagreed with such a claim and found that the principal of the accounting firm had enough knowledge of the relevant Award, including that it required the payment of a base rate and penalty rates. Further, this was exacerbated by 'unreliable' witness evidence given by the principal at the original hearing.

The Court upheld the original decision, finding that the outcome was unsurprising given the acceptance by the accounting firm that the amounts paid to workers were less than the base rate of pay which lead to inevitable underpayments. The only concession the appellant received was a reduction in the overall penalty to $51,330 after the Court found the original decision did not provide adequate clarity as to the reason for the contraventions in relation to rest and meal breaks.

To avoid big fines and penalties, expensive back-pay orders, and damaging employee claims, employers must pay employees correctly in accordance with Australian employment laws, such as the Fair Work Act 2009, and applicably relevant Awards. Further, if you are an advisor to a business on related issues, and you have concerns, clearly articulate those concerns and be prepared to walk away from your client to avoid possible accessorial liability.

Published: 18 September 2018

Author: Charles Watson - GM, Human Resouces

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