Publications / Employment

14 Jun 17
Accessorial liability of accountancy firms and payroll services


  • Accountancy firms, payroll services and financial advisers.


  • A recent decision by the Federal Circuit Court of Australia has found an accounting firm accessorily liable for having knowledge of Fair Work Act 2009 (Cth) contraventions by its client and failing to take appropriate action.


  • Understand your obligations and ensure you take steps to maintain compliance with the legislation.

The Federal Circuit Court of Australia decision in Fair Work Ombudsman v Blue Impression Pty Ltd & Ors [2017] FCCA 810 has highlighted the importance of advisers complying with the Fair Work Act 2009 (Cth) (Act).  The Court found a payroll and accountancy services firm accessorily liable for an employer’s underpayments of a Taiwanese employee.  

In 2014 the Fair Work Ombudsman (Ombudsman) identified contraventions of the Act by Blue Impression, a restaurant that had significantly underpaid employees.   The restaurant was audited following these contraventions and sought assistance from Ezy Accounting 123 Pty Ltd (Ezy) to ensure compliance with the relevant modern award and the Act. 

Further contraventions of the Act were identified by the Ombudsman when a Taiwanese backpacker made a request for assistance.  The Ombudsman alleged that Ezy was accessorily liable for these contraventions of the Act because the accountancy firm had intentionally participated in the contraventions, knew the modern award applied and was wilfully blind in the circumstances. 

The Act prohibits contraventions of terms of any modern award and provides that involvement in such a contravention will be treated no differently than the actual contravention itself.  Blue Impression underpaid the backpacker and the Ombudsman alleged that because Ezy was involved in the contraventions by the restaurant, a penalty should be awarded against Ezy by the Court.

As part of defending the allegations, Ezy denied that it provided payroll services to Blue Impression and claimed it was merely a bookkeeping service that entered data. Further, Ezy denied it was aware of the obligations under the relevant modern award, the hours worked by the employee or that it had knowledge about the modern award coverage of employees. 

The Court was satisfied that Ezy:

  • was aware that the employee worked for Blue Impression
  • knew about the modern award, given that there was an audit that raised the issue in 2014
  • knew of the hours worked by the employee, and
  • was advised by an employment legal service of at least one employee’s wage rate at Blue Impression being below the minimum rate of pay. 

The Court noted that the general rule was that more than mere knowledge needs to be established to find that a person is liable as an accessory under section 550 of the Act.  In the present circumstances, the Court accepted that Ezy had actual knowledge of the contraventions and was actively involved in Blue Impression’s contraventions.  The Court was satisfied that the contravention had been expressly identified in an email from the legal service and in the 2014 audit of Blue Impression by the Ombudsman.  The Court found that based on the knowledge held by its director, Mr Lau, Ezy was wilfully blind and ‘had at their fingertips all necessary information that confirmed the failure to meet the Award obligations’.  

This decision highlights potential liability for payroll and advisory services where they have actual knowledge of contraventions of the Act by clients and fail to take action to rectify them, or to cease acting as an adviser or service provider if those circumstances are not rectified. Doing nothing is not an option and will not provide a defence.

If you require assistance in understanding your obligations or managing compliance issues, it is important to seek advice early to ensure that risks are properly managed.  Our employment relations team can provide advice to assist in understanding these matters, including where there are any doubts about compliance and as to appropriate strategies for managing any rectification process that may be required.

Focus covers legal and technical issues in a general way.  It is not designed to express opinions on specific cases.  Focus is intended for information purposes only and should not be regarded as legal advice.  Further advice should be obtained before taking action on any issue dealt with in this publication.

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