In a recent landmark decision the full Federal Court has applied penalties to a qualified accounting and payroll firm for its role in the underpayment of staff at a restaurant business it provided services to.

In the first case where penalties for accessorial responsibility were applied by the Fair Work Ombudsman two levels of appeals have upheld the decision to apply more than $53,000 in fines to the accounting and payroll firm for its role in the underpayment of staff.  The Judge finding that the accountant was knowingly involved in the employers illegal actions and was thus an accessory to them.

This case, occurring prior to the enactment of the Protecting Vulnerable Workers Act, show that connected businesses all have a responsibility to ensure compliance with all workplace laws, a responsibility which substantially increases since the adoption of the Protecting Vulnerable Workers Act which provides for increased penalties and a broadening capacity for associated businesses to be held responsible for compliance breaches.

In this case the accountancy and payroll firm was engaged after the Fair Work Ombudsman identified a series of underpayments and record keeping breaches at the restaurant business.  The accountancy and payroll firm was engaged to rectify the identified breaches, but they were found to have continued.

Throughout the case and appeals the accountancy and payroll firm argued that its role was simply to input the data provided to it by the restaurant business, however, the Judge accepted that the accountancy and payroll firm “had at their fingertips all of the necessary information that confirmed the failure to meet the award obligations by [the restaurant business] and nonetheless persisted with the maintenance of its (payroll) system with the inevitable result that the award breaches occurred”.

In discussing the case ACAPMA Executive Manager for Employment and Training Elisha Radwanowski explained “this is a very clear case of a professional service provider who had access to the information and skill to determine the correct rates, and did not utilise these resources.  A situation where the business and the provider clearly and knowingly acted together to underpay staff base rates and to avoid penalty rates and shift loading entirely.”

“What is important for all operators to understand from this case is the finding is even more significant given the fact that the breaches were identified under the Fair Work Act and not the Protecting Vulnerable Workers Act.  If a case like this happened now the penalties that would apply would be much higher” explained Mrs Radwanowski.

“It is incumbent on all businesses to seek the information and support needed to ensure that they are meeting their employment compliance requirements and that they are engaging, paying and managing their staff compliantly.  Ignorance is no excuse or defence.  Resources exist for businesses in all areas, from the Fair Work Ombudsman website, which includes an extensive list of resources, through to registered employer organisations: industry associations, whose primary function is to assist businesses in understanding their employment compliance requirements.  What this case highlights however, is that businesses cannot pass on responsibility.  Just because an accountant says it is ok, does not necessarily mean it is ok.  It is up to the business to verify that the advice they have received is correct – particularly on simple matters like which Award, which base rate, which penalty rates and which shift loading should be applied.” concluded Mrs Radwanowski.

What is clear is that all businesses are on notice to ensure that the practices utilised in their business, regardless of who has proposed or advised them, are compliant.