In a precedent setting legal decision, an accounting business has been found liable as an accessory for its role in the underpayment of employees by its client.
The Federal Circuit Court ruled that Ezy Accounting 123 Pty Ltd was found to have “deliberately shut its eyes” to cases of employee underpayment by its client, Blue Impression Pty Ltd.
Ezy Accounting 123 Pty Ltd provided payroll services to Blue Impression Pty Ltd for workers at its Melbourne-based Hanaichi food outlets. However it failed to ensure its client correctly classified workers under the correct Modern Award which resulted in significant underpayment of workers.
The court found the accountant firm liable, despite claims by the bookkeeper in charge of Blue Impression’s accounts that they had “no knowledge” of minimum rates for employees in Australia.
“I did not know which award applied to employees of Blue Impression at Hanaichi QV. I did not know the name of any award which applied. I did not know the amount of any minimum rate set out in any relevant award,” the bookkeeper told the court.
“I did not know if the rates complied with the award. I did not think twice about it. It never crossed my mind. Only now, looking back, I believe it was not my business to know whether or not the rates complied with any award. That was a matter for the employer.”
In the judgment, Judge John O’Sullivan stated “As a result of what I’m satisfied was [the company director’s] wilful blindness Ezy should be found to be aware of the essential matters which go to make up the contraventions admitted by the first respondent,” O’Sullivan said.
The court will now make a determination on the penalties against Ezy Accounting 123. Corporations found to be in breach of the Fair Work Act face penalties of up to $54,000 per contravention.
This is wake up call for key advisors, such as HR managers, accountants and payroll managers, that they have a legal obligation under Section 500 of the Fair Work Act 2009 to ensure that their clients are compliant.