The recent case of EZY Accounting 123 Pty Ltd v Fair Work Ombudsman [2018] FCAFC 134 demonstrates the broad reach of the accessorial liability provisions under the Fair Work Act 2009 (Cth) (the Act). In this case the Full Federal Court (FFC) dismissed the appeal of an accounting firm which was found by the Federal Circuit Court (FCC) to have been “involved in” its client’s contraventions of the Act relating to underpayment of staff.
The Fair Work Ombudsman (FWO) had identified contraventions of the Act by Blue Impression Pty Ltd (Blue Impression), a Japanese fast food chain. These contraventions arose under s.45 of the Act and involved underpayments of minimum pay, loadings, penalty rates, clothing allowances and a failure to provide meal breaks under the Fast Food Industry Award 2010 (the Award). Blue Impression engaged EZY Accounting 123 Pty Ltd (EZY) to assist it in rectifying those contraventions. However, the contraventions continued even after EZY was engaged and an employee of Blue Impression, Mr Zheng, consequently sought assistance from the FWO.
The FWO commenced proceedings against both Blue Impression, for a contravention of s.45 of the Act, and EZY, for being “involved in” contraventions of s.45 of the Act on an accessorial basis under s.550 of the Act. Whilst Blue Impression admitted the contraventions, EZY denied any liability. Section 550 of the Act provides that a person who is “involved in” a contravention of a civil remedy provision of the Act is to be treated in the same was as a person who has actually contravened the Act.
EZY contended that it could not be liable under s.550 of the Act because it had no knowledge of the essential ingredients of the contravention. The director of EZY, Mr Lau, argued that he knew nothing about Mr Zheng’s employment particulars (e.g. the hours he worked or the specific Award provisions applicable to him) and only had a limited retainer from EZY which did not require EZY to advise Blue Impression about its obligations under the Award. Mr Lau also argued that EZY did not have instructions to amend the payroll data that Blue Impressions had provided.
The FCC found that EZY was liable under s.550(2) of the Act as it had actual knowledge of the Award and its requirements, and the facts which constituted an Award contravention. In particular, Mr Lau had received a letter from the FWO in 2014 which identified the relevant provisions of the Award and the underpayments which arose due to Blue Impression’s use of flat rates in calculating remuneration. Notwithstanding this and the fact that Mr Lau knew how to check the correct Award rates, EZY made no change in payroll data or the manner of calculating remuneration after 2014 which inevitably resulted in continued underpayments. EZY did not even make any enquiries with Blue Impression to check that the figures it provided to EZY were correct.
On appeal the FFC upheld the FCC decision which it considered to be “unsurprising”. The FFC stated that the evidence identified by the FCC sufficiently implicated Mr Lau in Blue Impression’s contraventions of s.45 of the Act irrespective of his lack of knowledge of the particulars of Mr Zheng’s employment. The FFC cited Katzmann J in Grouped Property Services [2016] FCA 1034 who stated that “where an alleged accessory is aware of a system producing certain outcomes, and those outcomes constitute contraventions of the Act, it is unnecessary to show that the alleged accessory knew the details of each particular instance of those outcomes in order to show the requisite knowledge”.
To some extent this case turns on its particular facts given that EZY was specifically engaged to assist the employer with rectifying contraventions of the Act already identified by the FWO and was provided with detailed information about the applicable Award provisions. However, the decision nevertheless has a broader application to third party service providers engaged to assist an employer with payroll and auditing. The decision demonstrates that it is not enough to simply rely on the information provided by a client. The provider needs to confirm instructions provided to it, make enquiries with its client regarding the source of the information and should check any applicable modern awards or agreements from which pay rates and allowances are derived.
