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Accounting firm liable in underpayments claim

Submitted on Thursday, 11th May 2017

The Federal Circuit Court of Australia (the Court) has found an accounting firm (the Firm) to be an accessory in a significant underpayments claim against a Japanese fast food chain (Chain). The court declared the Firm was involved in contraventions of the Fair Work Act 2009 (the Act) when they failed to pay the modern award minimum rates, relevant penalties, loadings and allowances, and failed to advise on rest and meal breaks.

In 2014 the Fair Work Ombudsman (FWO) identified contraventions during a campaign which the Chain ‘sought assistance from its accountant to remedy’. Further contraventions were then discovered following a ‘request for assistance’ by a casual employed by the Chain. The Act penalises involvement in a contravention of a modern award clause ‘in the same way as actual contravention’. Should the Court find a business has been involved, they are then able to award a penalty against them.

Current case law authorities establish that, for the purposes of accessorial liability, the Firm would need to have been a ‘knowing participant’ by having knowledge of the facts constituting the contravention, by being knowingly concerned in the contravention, be an intentional participant in the contravention based on actual knowledge or wilful blindness, and they need not know the matters constituted a contravention. The FWO submitted the Firm knew the applicable Award conditions and the director should be held to have been ‘wilfully blind’ to this knowledge. The Firm continued to deny liability on the basis they were not an ‘intentional participant’ and they ‘did not have the knowledge of the essential elements of the contraventions’.

Despite hearing evidence from the director, his wife and the bookkeeper, the Court was left with a ‘clear impression’ the Firm knew the Chain had been underpaying its employees and that these underpayments were continuing. The Court found the evidence demonstrated a ‘designed or calculated ignorance’ of the underpayments. The FWO submitted for the Firm to be held as liable as an accessory for intentionally participating in the underpayment contraventions when performing payroll processing for the Chain. The Firm responded to these submissions by reiterating the director had ‘no knowledge’ of the employees pay rate and that until the FWO could establish evidence that the director knew the Award conditions, there could be ‘no finding of liability’.

The Court accepted the submissions of the FWO that the Firm had all the ‘necessary information’ ‘at their fingertips’ that confirmed their ‘failure to meet the Award obligations’. The director was found to be wilfully blind to the underpayments. A combination of ‘suspicious circumstances and a failure of make inquiries’ satisfied the Court to find the Firm had ‘engaged in a contrivance, a deliberate shutting of the eyes or calculated ignorance’. The Court was satisfied the FWO demonstrated the Firm was involved in the Chain’s contraventions and therefore declared them to be accessorially liable.

Understand your minimum obligations for the workplace relations regulations by attending our Know Your Award. The program will increase your knowledge of common clauses within modern awards, and assist in classifying your employees within the modern award system.


Fair Work Ombudsman v Blue Impression Pty Ltd & Ors [2017] FCCA 810 (28 April 2017)

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