First Ever Penalty for Advisors Involved in Underpayment

A court has secured its first ever fines against an accounting firm for their involvement in a client’s workplace breaches.

Last week, EZY Accounting was fined $53,880 for facilitating underpayments on behalf of its client, fast food operator, Blue Impressions. The accounting firm had managed the payroll system for the fast food operator and were aware the rates they were paying were significantly below the minimums in the Fast Food Industry Award. Ultimately, this resulted in a massive underpayment of $9000.

The accounting firm’s argument that they did not underpay their own employees held no weight when the court handed down its penalty. The firm had a connection with Blue Impressions by providing payroll services. As such, the court held they had a responsibility to ensure compliance with the Fair Work Act.

Why was an external advisor fined?

This is an unprecedented court ruling to impose heavy fines on external advisors. So why was an accounting firm roped into the underpayments of their client?

The accessorial liability provisions under the Fair Work Act are drafted to target individuals and external advisors who facilitate or are knowingly involved with a breach of workplace laws.

By providing payroll to Blue Impressions, EZY Accounting was knowingly involved in the underpayment of employees. This decision has cemented the Ombudsman’s position that third party advisors will be held liable for workplace contraventions and will be heavily penalised under the accessorial liability provisions.

These laws not only extend to third parties but also to in-house managers and payroll officers that exploit their employees and breach workplace laws. In November we also saw an HR Manager fined $21,760 for facilitating the underpayment of 85 restaurant staff. This sends a clear message the Ombudsman will use accessorial liability laws to hold any party involved in contraventions of workplace laws to account.

How to manage risk and protect you and your business:

Over the past year, we have seen accessorial liability at the forefront of the Fair Work Ombudsman’s agenda. With maximum penalties of $63 000 for corporations and $12 600 for individuals per breach, turning a blind eye can be a costly mistake.

At a minimum, external advisors must:

  • Keep up-to-date with respect to changes in workplace laws;
  • Ensure clients are operating compliantly with workplace laws;
  • Alert clients to possible breaches;
  • Ensure concerns that processes might be uncompliant are directly raised with the business in writing; and
  • When in doubt, get advice!

The $53,880 penalty imposed on EZY Accounting was only 15% of the maximum they could have faced! With the Ombudsman’s determination to utilise the accessorial liability provisions against advisors, now is the time to be proactive. Don’t turn a blind eye! Ignorance is not an excuse.

As industry leaders in workplace relations, HR Assured can provide your business with the tools necessary to ensure compliance within your framework. Contact us today for an informal chat to protect you from the penalties and reputational damage from findings of assessorial liability.