The Case

Blue Impression operated a Japanese fast food restaurant. Mr Zheng was an employee and he made a complaint to the Fair Work Ombudsman (FWO) alleging he had been underpaid. The FWO investigated and found that Blue Impression had breached the Fast Food Industry Award 2010 and the Fair Work Act 2009 (Cth) (FW Act) by paying Mr Zheng a flat hourly rate even on days that attracted penalty rates. Blue Impression admitted the breaches.

Ezy Accounting undertook book work for Blue Impression and its director Mr Lau. Ezy Accounting knew that its client was underpaying Mr Zheng because of an earlier audit. However, Ezy Accounting and Mr Lau took no action to rectify this. As such, the FWO also sought to hold Ezy Accounting accessorily liable for Blue Impression’s breaches.

Ezy Accounting argued that it did not provide employment advice and it was simply retained to enter data given to it by Blue Impression. Mr Lau and Ezy Accounting argued they had no authority to adjust any figures provided to it by Blue Impression.

Verdict

The Federal Circuit Court found that Mr Lau, and hence Ezy Accounting, was aware of Blue Impression’s breaches as a result of an earlier FWO audit and it should have taken action to alter the rates of pay on MYOB to ensure that Blue Impression’s employees would not continue to be underpaid. The Court said Mr Lau was not permitted to continue to input data into MYOB in what the Judge described as ‘designed or calculated ignorance’.

The Court held Ezy Accounting was accessorily liable for some of Blue Impression’s contraventions. The Court held that Ezy Accounting could not ‘deliberately shut its eyes’ and be ‘wilfully blind’ to the contraventions of Blue Impression.

The Court is yet to hand down the penalties to be imposed in this matter.

Lessons for you

Accessory liability under the FW Act occurs when a person or entity is found to have been involved in the contraventions committed by another. This is to ensure those who are intimately involved in the culpability are also penalised.

This case shows that advisers to businesses are expected to take a proactive approach to ensuring contraventions do not occur and cannot rely on wilful ignorance or lack of authority to escape liability. This may mean that if a client will not accept advice and instruct the adviser to rectify a breach, the business may need to cease to act for the client.

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.