Could your business be an accessory to a crime?

By Andrew Hobbs on December 6th, 2017
  1. Industrial Instruments
  2. Modern Awards


AN accounting firm copped a stiff penalty last month after doing the books for a company which paid its employees below the award rate, and the Fair Work Ombudsman (FWO) says there is more to come.

This was the first time a professional services firm has been penalised under the clause in the Fair Work Act 2009.

Victorian accounting firm Ezy Accounting 123 Pty Ltd was penalised $53,880 by the Federal Circuit Court in November after doing the work for Blue Impression Pty Ltd.

It came after the restaurant itself was penalised $115,706 after admitting it underpaid two workers by a total of $9,549 in 2014 and 2015.

Both workers, who were in Australia on 417 working holiday visas, were paid $16.50 per hour – below the Fast Food Industry Award and not enough to cover the penalty rates to which they were entitled.

Blue Impression, which runs a fast food outlet, had previously been found to have underpaid 12 employees in a 2014 audit – and Ezy was the company’s accountant at the time.

Judge John O’Sullivan found that Ezy had been “knowingly involved in conduct that constitutes illegality” despite not actively employing the workers.

“Ezy was involved in a relationship with (Blue Impression) where it provided payroll services. As such it must put compliance with the law ahead of business interests.”

More to be penalised under Fair Work Act

In recent months, following revelations of exploitation at the 7-11 convenience store chain, the FWO has become more willing to prosecute professionals who provide advice to store owners and franchisors.

Under Section 550 of the Act, any person who helps a group contravene civil remedy provisions can be penalised as if they had done it themselves – even if they are merely aware of it as a systematic pattern of behaviour.

This might affect franchisors, financial officers, payroll staff or external accountants and lawyers as well as HR workers, such as the HR manager of a NSW restaurant who was fined $21,760 in November for her part in exploiting low paid workers at the business.

Any individual who is found to have accessorial liability may have to pay a penalty of up to $126,000 under the Act.

Acting Fair Work Ombudsman Kristen Hannah said business advisers should explain the rules to their clients and make it clear when they are in danger of breaking them, instead of running the risk of breaking the law themselves.

“The accessorial liability laws extend not only to culpable in-house managers at businesses that exploit their employees, but also to external advisers who facilitate the underpayment of workers,” she said.

How do you know if you are liable?

The updated chapter A3 Modern Awards in the Employment Law Practical Handbook offers straightforward tips for what might constitute accessorial liability before the courts.

If a franchisee goes against an award, the franchise owner is responsible if they knew (or ought to have known) the contravention was occurring, or if they believed something similar was happening at the time.

The franchisor must also have a substantial connection with them – such as trademarks and advertising – and significant control over the franchisee’s financial, operational or corporate affairs.

The law does not apply to corporations based and operating outside of Australia, or to groups linked by distribution agreements or joint venture marketing.

With all of that said, the franchisor will not be liable if it has taken reasonable steps to prevent the kind of contraventions that occurred.

Further information about what constitutes these ‘reasonable steps’ and how you can take them, plus information about what conditions awards cover and how you can prevent them from applying can be found in the Chapter, one of more than 70 in the Employment Law Practical Handbook.

Click here to order your copy today.


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