Australia: Landmark Fair Work Ombudsman prosecution - When the EZY road turns out to be risky


A landmark decision handed down in the Federal Circuit Court in Fair Work Ombudsman v Blue Impression Pty Ltd & Ors [2017] FCCA 810 has seen an accounting firm prosecuted by the Fair Work Ombudsman (FWO) for being "involved in" breaches of the Fair Work Act 2009 (Act). This decision has significant implications for organisations and professionals who provide advice to employers about their payroll obligations, including lawyers, accountants, tax advisors, IT or systems advisors and HR service providers, as well as payroll services and in-house HR.


In Fair Work Ombudsman v Blue Impression, the FWO joined Ms Wong (Blue Impression's Manager) and Ezy Accounting 123 Pty Ltd (ACN 105 317 691) to its prosecution of Blue Impression on the alleged basis both were involved in, and accessorily liable for Blue Impression's contraventions of the Act.

The Court found the accounting firm had intentionally ignored breaches of the Act, which were obvious on their instructions, and that they were therefore liable under the Act for being involved in the breaches.


While the circumstances of this case are somewhat unique, in that the advisors were aware of previous contraventions of the Act committed by its client and that it continued to assist its client to perpetuate the same breaches, it provides useful guidance about the FWO's powers and the risk which professional advisors face.

It is clear from the decision that the courts expect advisors to provide accurate advice about employee payroll and entitlement obligations, even when that advice may not be explicitly sought. The decision goes some way towards implying a "compliance" obligation on advisors. The decision provides clear guidance to advisors about seeking detailed instructions and information about the context in which their services and advice is being provided, so as to avoid the risk of being found complicit in employment law breaches.

What remains unclear is what the FWO would do with an advisor who observed breaches and informed their client of them, but who were nonetheless instructed to "ignore" the breaches.


In 2014, the FWO identified contraventions of the Act by a Japanese fast food chain Hanaichi QV operating in Melbourne. The business involved outsourced its payroll and after being made aware of certain contraventions, sought assistance from the payroll operator, and a notable industrial relations entity (Employsure) to remedy those issues. Ezy and Employsure both liaised with Hanaichi to ensure that the restaurant was no longer underpaying its employees. Unfortunately, the changes implemented by Ezy to Hanaichi QV's payroll weren't implemented across the rest of the business, and a year later the FWO alleged additional contraventions of the Act by a "sister" restaurant operated by Hanaichi at a different location.


FWO alleged that Ezy knew, or should have known, that Hanaichi was breaching the Act when Hanaichi instructed it to make a flat rate payment of $16.50 to an employee regardless of the time or day the employee worked. Essentially, the FWO alleged Ezy had actual knowledge of the facts admitted by Hanaichi which gave rise to different rates of pay. As such it was alleged that Ms Wong and Ezy were intentional participants in those contraventions, and either/or aided, abetted or (by acts or omissions) directly or indirectly became knowingly concerned in or a party to, those contraventions.

According to the FWO, Ezy was involved in, and therefore should be treated as having itself contravened those provisions pursuant to section 550 of the Act.


Ezy argued it was simply processing payroll information provided to it and was not aware of the broader details relating to the breaches, such as the time or date the employee worked. Ezy argued it did not provide workplace industrial assessments and was not aware which award applied or the operation of award allowances. Ezy argued it had no involvement in the hiring or payment of Hanaichi's staff and had no advisory role in terms of award obligations and its role was limited to that of data entry. Mr Lau (Ezy's sole director) stated under cross examination that "... we don't question the pay rate ... we don't raise questions. We just process what we are given..." (at [37]).

Ezy additionally contended that as a company, it should not be liable for the actions of its employees who had responsibility for the processing of Hanaichi's payroll.


O'Sullivan J summarised (at [25]) that:

...The authorities establish that, in order for a person to have accessorial liability, he or she must be a knowing participant or, in other words:
  • have knowledge of the essential facts constituting the contravention;
  • must be knowingly concerned in the contravention;
  • must be an intentional participant in the contravention based on actual not constructive knowledge of the essential facts constituting the contravention – although constructive knowledge may be sufficient under s.550(2)(c) of the Act in cases of wilful blindness; and
  • need not know that the matters in question constituted a contravention.

The Court found that Ezy's director (Mr Lau) "engaged in a transparent (and unsuccessful) attempt to understate the nature of the relationship between himself (as director of Ezy or otherwise) with the first respondent." (At [38].) The Court found that Mr Lau's evidence was blasé, unreliable and deliberately obtuse. In particular, the Court noted that Mr Lau's evidence that as the payroll operator he didn't question the pay rates nor ask questions of the employer, was extraordinary, and the Court found that Mr Lau was intentionally trying to understate the relationship between Ezy and Blue Impressions. The Court also found that Mr Lau knew the employees were being underpaid.

The Court examined the evidence of Ezy's other employees and determined that Ezy's employees had given evidence artificially designed to minimise their and Ezy's culpability and liability. In short, their evidence was not accepted.


The Court determined that Mr Lau was involved in and knowledgeable of the contraventions for the purposes of Ezy's corporate liability under the Act despite its insistence that Ezy should not be liable for its bookkeeper's actions or failings.

The Court found that Ezy (through Mr Lau) knew, or would have known had he not "shut his eyes" (at [98]), that the rates in its payroll system were not sufficient to allow Blue Impression (the first respondent) to comply with the obligations imposed on it by the award, by reason of the result of the earlier FWO audit.

The Court found that the evidence demonstrated that Ezy (through Mr Lau) had deliberately ignored the contraventions in a manner that amounted to a connivance in the contraventions by Hanaichi. Interestingly, the Court agreed with the FWO that Ezy, as a payroll operator, had a "key role in determining the first respondent's obligations to its employees" (at [104]).

For these reasons the Court declared that Ezy was accessorily liable (through direct knowledge or wilful blindness) and therefore involved in Hanaichi's contraventions of the award and liable for pecuniary penalties under the Act.

The matter has been adjourned for a penalty hearing.


This decision has attracted much attention and commentary in the corporate advisory sector.

This case provides a clear example of why advisors and professionals need to understand the context in which they provide advice or services. If advice or services are provided without the necessary context, corporate advisors (whether they be tax, accounting, legal, HR, IT, payroll or related services) could find themselves liable for not providing the right advice and for aiding/abetting in breaches of employment legislation.

Where corporate advisors act as agents for their clients, and in doing so effect breaches of employment legislation, an "I didn't know" defence will not absolve them of liability.

Based on this decision, advisors should consider the scope of the advice or service which they provide, whether they can safely do so without full and detailed instructions or understanding the context in which their advice and services will be used. In some circumstances, carefully drafted retainer disclaimers may be effective.

In the employment and industrial area this means:

  • understanding what industrial instrument applies to a client
  • understanding what the terms of the contract and applicable policies might be
  • knowing what the relevant legislation (both state and federal) requires of employers
  • receiving instructions about how employees actually work for a client

Furthermore, advisors and professionals should ensure that they maintain adequate professional indemnity insurance—particularly with statutory liability cover—to ensure that they are not "caught out" with these sorts of actions and joinders by the FWO.

Megan Kavanagh Cathryn Prowse
Workplace relations
Colin Biggers & Paisley

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions