Accountancy Firm Liable as Accessory for Underpayment of Wages

25 May 2017

Justice O’Sullivan recently decided in the Federal Circuit Court that the accountancy firm Ezy Accounting 123 Pty Ltd was liable as an accessory for an employer’s underpayment of wages.[1] Ezy Accounting assisted in the payroll of its client, Blue Impression Pty Ltd, the employer and operator of a Japanese fast food chain of outlets in Victoria.

The Fair Work Ombudsman (FWO) submitted that the employer had paid the employee as little as $16.50 per hour, without penalty rates, loadings or allowances, and that Ezy Accounting had been involved in the occurrence of these underpayments. Ezy Accounting therefore contravened the Fair Work Act 2009 (Act) by being ‘involved’ in the contravention. Ezy Accounting sought to argue that it never obtained the requisite knowledge to be held liable as an accessory under the Act.

Relying upon recent authorities the court found that the Act required that Ezy Accounting have ‘actual knowledge’ of the underpayment contravention, and this meant that as a minimum it, as a corporate entity, must have knowledge of the ‘essential elements’ or facts of the contraventions in order to be found liable.

The court found that the director of Ezy Accounting, Eric Lau, had the relevant knowledge of the underpayments. Mr Lau was involved as an advisor to Blue Impression when it had been audited by the FWO in 2014 and had helped it rectify the earlier underpayment claims revealed by that audit. In so doing Mr Lau had knowledge of the correct award that applied to such employees; the award provided for penalty rates, loadings and allowances; and that the flat hourly wage which his firm used to calculate wages was incorrect. This was also apparent from the evidence that Mr Lau provided to Blue Impression being a spreadsheet of calculations which compared the current rate of pay, as set in his firm’s payroll software, with the award rate to determine the exact underpayments.

Given his knowledge of the earlier underpayments and that the rate set in his firm’s MYOB system was incorrect, it followed that unless this rate was changed there would be further underpayments. The court disregarded Mr Lau’s claim that after learning of the ‘distasteful’ fact that his client had underpaid their workers he refrained from making further enquiries as he did not wish to know any more about it. The court inferred from these facts that Ezy Accounting, had actual knowledge of the facts of the contravention by a combination of the suspicious circumstances and the further failure of Mr Lau to make inquiries. Ezy Accounting could not plead ignorance given that it had been ‘wilfully blind’.

Ezy Accounting also argued unsuccessfully that it owed no primary legal responsibility to the employee to ensure that he received his employee entitlements and that this remained the duty of the employer. It argued that it had no legal, human resources or industrial relations experience that would equip it to advise Blue Impression about employee entitlements.

It further unsuccessfully contended that it could not change the flat rate of pay in its software without instructions from Blue Impression, and that determining compliance with workplace entitlements was beyond the scope of what it had been retained to perform.

The court declared that Ezy Accounting had been involved in seven contraventions of the Act. Each contravention carries a penalty of up to $51,000, with the penalty hearing still to come.


The decision is part of a broader initiative by the FWO to push the boundaries of accessorial liability. It follows a string of cases in which the FWO has brought proceedings against those involved in employer’s underpayments. The FWO has signalled its preparedness to file proceedings against human resources staff, administration or day to day managers, recruiters or supervisors, and other companies or individuals involved in a supply chain or franchise network.[2]

Advisors involved in administering pay, accountants and other external legal advisors may be held responsible for any underpayments and should take an active role in ensuring employers comply with their employee obligations.

The full decision is available at:

[1] Fair Work Ombudsman v Blue Impression Pty Ltd & Ors [2017] FCCA 810.

[2] Fair Work Ombudsman Natalie James, ‘An adviser’s responsibility: the Fair Work Ombudsman’s approach to accessorial liability’, address to the Australian Human Resources Institute (AHRI) Employee Relations / Industrial Relations Network NSW, 27 July 2016.

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