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External payroll provider fined for facilitating underpayment of staff

October 2, 2018

The Full Federal Court has upheld a decision of the Federal Circuit Court to hold an accounting firm liable as an accessory to a client’s underpayment of staff (EZY Accounting 123 Pty Ltd v Fair Work Ombudsman [2018] FCAFC 134).

The court was satisfied that the firm, which provided payroll services to the client, had actual knowledge of the factual matrix of the contraventions and was an 'intentional participant' in those contraventions.

 

The firm was aware that the relevant award provided for a base rate of pay for ordinary hours and additional penalty rates and allowances, and that the rates in the client’s payroll system were not sufficient to allow the client to comply with the obligations imposed on it by the award.

 

As a matter of inference, the firm also knew that the client was underpaying its workers.

 

That knowledge and involvement was sufficient to implicate the firm in the client’s contravention irrespective of the fact that it did not know about the underpaid worker, or the particular hours that he worked or the provisions in the award which required the company to pay penalty rates.

 

This decision demonstrates the Fair Work Ombudsman’s increasing willingness to use the accessorial liability provisions in the Fair Work Act 2009 (Cth) to prosecute third parties who are involved in breaches of the Act.

 

It puts external advisers on notice that they cannot turn a blind eye to their clients’ breaches of workplace laws.

 

Read the full text of the court’s decision here: EZY Accounting 123 Pty Ltd v Fair Work Ombudsman [2018] FCAFC 134.

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