Accountants and professional advisors: are you liable for the wrongdoing of your client?

A recent case found accounting firm Ezy Accounting 123 Pty Ltd (Ezy) liable for the failure of their client, Blue Impression Pty Ltd (Blue Impression), to pay employees in accordance with the Fast Food Industry Award 2010 (Award).¹

Blue Impression operated several Japanese fast food restaurants in Melbourne. The Fair Work Ombudsman (Ombudsman) commenced proceedings against Blue Impression in 2016, accusing them of underpaying employees by almost $10,000 between September 2014 and April 2015 by paying them a flat rate of $16.50 per hour.  This rate was below the minimum wage required by the Award, but also meant there was no payment for evening loadings, Saturday and Sunday loadings, public holiday penalty rates, rest and meal breaks, or special clothing allowance.

The Ombudsman joined Ezy to the proceedings as an accessory to Blue Impression’s contraventions.  The Ombudsman said “[i]n situations where we believe accountants or other professionals knowingly facilitate contraventions of workplace laws, we are prepared to hold them to account."²

Ezy provided payroll services for Blue Impression.  As a part of these services, Ezy took Excel spreadsheets prepared by Blue Impression and entered them into MYOB for processing the payroll and producing employee pay advices. 

Mr Lau, the director of Ezy, argued that Ezy had no knowledge of Blue Impression’s breaches of the Award.  He also contended that neither he nor his staff had the requisite experience to know that the employees were being underpaid.  He argued that Ezy had no authority to adjust the data provided by Blue Impression, and was simply responsible for entering the data they were given by their client into MYOB. 

The Ombudsman produced evidence that Mr Lau was aware that Blue Impression was not paying their employees in accordance with the Award.  The Ombudsman had conducted a workplace audit of Blue Impression in 2014, and from this audit Mr Lau was made aware that:

• Blue Impression’s employees were covered by the Award;
• the Award stipulated a minimum wage and provided for additional payments for penalty rates and allowances; and
• Blue Impression had been underpaying their staff.

The decision – you cannot turn a blind eye to your client’s wrongdoing

The Court held that Ezy had all the relevant information available to them to conclude that Blue Impression was breaching their obligations under the Award, but had deliberately turned a blind eye to what was going on.  As a result, Ezy was found liable for being involved in Blue Impression’s breach of the Act.  

The Court is yet to rule on Ezy’s penalties.

Lavan Comment

This case is an important reminder of accountants’ and other professional advisors’ responsibilities and liabilities under the Act.  Due diligence should be conducted at all times in the course of professional work in order to avoid being an accessory to a breach.

If you are an accountant or advisor who is aware or suspicious that one of your clients is breaching their obligations under the Act, make sure you work with your client to remedy the situation.

If you require assistance in establishing whether an employer may be breaching their obligations under the Act, contact our Employment and Safety Team.