By Sining Wang

23 August 2017

With several popular restaurants recently making headlines for allegedly underpaying employees, it is a good time for employers – and also their accountants and bookkeepers – to consider their potential exposure to a Fair Work claim.

In a recent decision of the Federal Circuit Court in Fair Work Ombudsman v Blue Impression Pty Ltd & Ors [2017] FCCA 810, the Fair Work Ombudsman (FWO) prosecuted the owner of a Melbourne fast food restaurant for alleged contraventions of the Fair Work Act 2009 – including contraventions for failing to pay the minimum hourly rate and failing to pay weekend and penalty rates.

However, the FWO also went after the third party accounting firm who provided payroll services for the restaurant. The FWO argued that the accounting firm was an “accessory” to the restaurant owner’s contraventions pursuant to section 550 of the Fair Work Act, on the basis that the accounting firm “aided, abetted, counselled or procured the relevant contraventions”.

The accounting firm argued that its scope of work was merely a “data entry” job to process the payroll – it was not involved in the hiring process, it had no authority to decide what the employees were paid, and it did not have any legal expertise to give any advice about minimum wage requirements under the relevant Award.

Nevertheless, the Federal Circuit Court rejected the accounting firm’s arguments and found that the accountant clearly knew the employees were likely being underpaid, but chose to be “wilfully blind” to his client’s Fair Work Act contraventions.

As an accessory to a Fair Work Act contravention, the accounting firm became subject to the same penalties as the restaurant owner – up to 60 penalty units (currently $12,600) per contravention. In the Blue Impression case, the FWO alleged the accounting firm had been involved in seven contraventions for this single client of the firm.

The decision in the Blue Impression case is the first time that the FWO has successfully prosecuted a third party advisor as an accessory to a Fair Work Act contravention. This has set the precedent for the FWO to potentially link an accountant or payroll manager to almost any Fair Work Act contravention proceeding – and we are certainly seeing the FWO do so in some recent cases.

Furthermore, employers, accountants and payroll managers should be particularly mindful of the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017, which has been proposed as part of the current government’s election promise to “protect vulnerable workers”. The bill is presently being debated in parliament, and if it is passed, the maximum penalties for each Fair Work Act contravention is expected to increase tenfold from up to 60 penalty units ($12,600) per contravention to up to 600 penalty units ($126,000) per contravention.

For further information and advice on employment law matters, please contact our Employment Law team.

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