written previously about the Fair Work Ombudsman's (FWO)
aggressive and innovative use of the accessorial liability
provisions in s550 of the Fair Work Act to seek penalties, and to
recoup employee underpayments, from not only the employer, but also
directors and managers who are knowingly involved in infringements
of the Act and awards.
Pursuing this one step further, the FWO is running proceedings
against an employer's accountant, Ezy Accounting 123 Pty Ltd.
The FWO alleges that Ezy Accounting provided payroll services to
Blue Impression Pty Ltd, a fast-food outlet operator in
Melbourne-CBD, which had underpaid two Taiwanese backpacker
employees on working holiday visas, to the tune of $9,549. Ezy
Accounting had processed pay for the two employees, and the FWO
alleged that it knew the rates paid were below minimum rates as it
had been involved in previous workplace audits which had identified
underpayments by Blue Impression. Blue Impression and its
operations manager, Sze Teng Wong, are also subject to FWO
Whether the FWO proves its case against Ezy remains to be seen,
but the mere fact of the prosecution does serve as a warning to
advisers to be wary.
So, what are the risk areas?
If, as a professional adviser, you are aware of a client who is
doing any of the following, you're in risky territory:
systematically paying below award rates;
engaging in sham contracting (engaging people as
"contractors" when they are in fact employees);
keeping inadequate payroll records (which has the effect of
covering up underpayments); or,
apparently complying but in fact "clawing back" money
from employees so that they are in effect underpaid.
If, for example, you advise a client to convert current
employees to contractors, or to engage unskilled workers to be
contractors, it's highly likely that you're participating
in sham contracting. Or if you know from your dealings with the
client that the pay records are shoddy or shonky, then you may be
implicated in underpayment claims (and liable for penalties and
possibly for the underpayments themselves) because you didn't
exercise a professional responsibility to advise the client on the
proper course of conduct.
Case law in this area has not yet defined what is expected of
advisers in fulfilling their responsibilities. Is it enough to
advise the employer on good practice and legal compliance, and
actions necessary to fix the problem? Do you need to refuse to do
any more work for your client, or is it sufficient for you to
dissociate yourself from the risky area, having given the advice?
At the very least you need to give the advice and keep a clear
record of having done so. There will be situations, particularly
those involving exploitation of vulnerable workers, where it would
be wise to get out altogether, if your client won't take
It is worth bearing in mind the old adage: he who sups with the
Devil should use a long spoon!
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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