“Wilfully blind” accounting firm accessorily liable for underpayments of client

Published 16 May 2017

In a recent case, Fair Work Ombudsman v Blue Impression Pty Ltd & Ors , the Federal Circuit Court found an accounting firm accessorily liable for an employer’s failure to pay Award rates.

Ezy Accounting 123 Pty Ltd (Ezy) was an accounting firm employed by a Japanese restaurant (Blue Impression) to provide it payroll services.

Blue Impression was found to have contravened numerous sections of the Fair Work Act 2009 (Cth) by failing to pay minimum hourly rates of pay, evening loading, Saturday and Sunday loading, public holiday penalty rates, special clothing allowance and failure to provide rest and meal breaks.

The Fair Work Ombudsman claimed Ezy was accessorily liable for these contraventions because they had actual knowledge of the contraventions and intentionally participated or aided, abetted or was knowingly concerned in the contraventions.

Ezy denied liability and claimed they were not aware of the relevant Award for the employees, were not aware that an employee was not taking meal breaks or what the minimum level of pay was for the employees. Ezy maintained that their only role was to enter rates of pay provided by Blue Impression into a spreadsheet so underpaid amounts could be paid. They maintained they had no authority to change or question the pay rate.

Mr Lau, the director of Ezy, had on one occasion, emailed Employsure, a specialist employment law firm retained by Blue Impression, regarding the pay rates of Blue Impression’s employees. The email included the Award rates for weekday, Saturday and Sunday hours as well as the rates being paid by Blue Impression.

Employsure responded to this email and questioned whether one of the employees was still being paid the amount reported by Ezy, as it was below the minimum wage.


The decision in this case turned on the application of section 550 of the Fair Work Act. The Court found, as a general principle, that mere knowledge of a contravention will not necessarily make the person an accessory and that there had to be something more for accessorial liability to be established. The Court established actual knowledge of the contravention had to be proven, but that this could be proven through direct or indirect evidence. The Court also stated that there had to be ‘intentional involvement’ of the third party in the breach after the third party had acquired knowledge that the conduct was a breach of the Act.

Here, Ezy had knowledge of the employee affected by the underpayment; had knowledge of the rate of pay paid to the employee; was aware of the hours worked by the employee; was aware that the award applied to the employee; and, was aware that the amounts paid by Blue Impression were not sufficient to meet its obligations under the Award. Knowledge was clearly established.

The Court thereafter found Ezy to be accessorily liable for all contraventions made by Blue Impression except those that related to failing to provide meal breaks, because they “had at their fingertips all the necessary information” to demonstrate that Blue Impression was not meeting their obligations under the relevant Award. Despite this knowledge, Ezy continued to maintain Blue Impression’s “(payroll) system with the inevitable result that the Award breaches occurred.” The continued inputting of incorrect pay amounts, given the extent and breadth of Ezy’s knowledge, was enough for the Court to find that Ezy had been actively involved in the carrying on of the contravention.

The Court placed particular importance on the email exchange between Mr Lau and Employsure, which demonstrated knowledge of Blue Impression’s failure to pay employees correctly.

Further, Mr Lau, and by extension, Ezy, was wilfully blind of the essential matters that made up the contraventions. The Court found that based on Mr Lau’s “involvement with and on behalf of [Blue Impression] arising from the audit and the level of control he exercised over Ezy and those who performed work for it, … it [was] inherently improbable he did not see all the documentation that was relevant to the 2014 audit or the necessary increases to pay rates that were required to comply with the applicable award … or the material from the [Blue Impression] Ezy received to provide payroll services during the relevant period/s.”

Key Issues

This case demonstrates that companies that provide payroll services may be liable for contraventions of their client if they have actual notice at the time of the contraventions and fail to do something to rectify those contraventions.

The Fair Work Ombudsman has publicly stated that they are focusing now, more than ever, on prosecuting accessories; particularly where they cannot enforce judgment against a company because of insolvency. The Ombudsman has also stated that they are taking an adventurous approach towards determining the type of accessories to pursue. This case is perhaps the best example of this as it clearly illustrates that professional advisors may be treated as accessories for the purposes of the Act. This case suggests that professionals should start moving away from narrowly focusing on their clients’ desires and needs, and consider the moral and ethical ramifications of their clients’ actions.

Read the full decision here

This content is general in nature and provides a summary of the issues covered. It is not intended to be, nor should it be relied upon, as legal or professional advice for specific employment situations.

Olexo Workplace Law recommends that specialist legal advice should be sought about specific legal issues.