Accountants in the Fair Work Ombudsman’s firing line
We have reported previously on the Fair Work Ombudsman’s (FWO) case against Ezy Accounting for complicity in underpayment of wages by its client. Ezy did accounting work, including managing weekly payroll, for Blue Impression, a Japanese fast food chain. The conduct in question occurred after Blue Impression and Ezy had already received compliance notices from the FWO.
The conduct giving rise to the offences related to two young Taiwanese working holiday visa-holders, a cook and a cashier/waitress, who were underpaid $9,549 over eight months in 2014 - 2015.
The offences included:
- paying under the minimum hourly rate;
- not paying casual, or evening, or weekend, or public holiday loadings;
- failing to provide rest or meal breaks;
- not paying clothing allowance;
- failing to provide payslips or complete payslips; and,
- failing to keep proper records.
Ezy was implicated in underpayments of $750 in two fortnights which Blue Illusion rectified.
In the penalty decision in this case (FWO v Blue Impression (Fed Circuit Ct 10 November 2017)), Blue Illusion was fined $115,706 for its offences while Ezy was fined $53,880 (15% of the possible maximum).
Why such a large penalty for a relatively small underpayment involving Ezy? The Court’s findings on Ezy’s liability as an accessory (FWO v Blue Impression (Fed Circuit Ct 28 April 2017) included:
||Ezy's position was that it provided "book keeping services" which "included the processing of [Blue Impressions's] payroll."
||Ezy admitted that:
- “For each pay period, [Blue Impressions] provided [Ezy] with payroll instructions contained in an excel spreadsheet which identified the name of each employee, the number of hours worked by each employee and the total amount of pay to be paid to each employee for the relevant pay period.
- [Ezy] inputted the payroll information into its MYOB accounting software in order to confirm the amount of pay to be paid to each employee and to produce payroll records for [Blue Impressions].
- [Ezy’s] MYOB contained the hourly rates for each employee. These hourly rates were inputted into MYOB by [Ezy] in accordance with the instructions provided by [Blue Impressions] with respect to the hourly rate for each employee.”
||Ezy’s answer to the allegations that they were involved in the first respondent’s contraventions appears to be best summarised in the following extraordinary answer (for the owner of any business, especially one run by someone who has tertiary qualifications and extensive business interests): “...we don’t question the pay rate...we don’t raise questions. We just process what we are given.”
||Even the most basic query would have revealed to Ezy that the employee was not receiving the relevant minimum hourly rate [and other entitlements].
||I am satisfied the evidence demonstrates Ezy (through Mr Lau) deliberately shut its eyes to what was going on in a manner that amounted to connivance in the contraventions by the [Blue Impressions
Because, as a professional practice, Ezy had a greater degree of independence than an employee would have had, and was not compelled to do as directed, their liability was greater. Professional advisers are required to exercise professional responsibility not to be involved in illegal conduct: Ezy should have put compliance with workplace law above its commercial interests. The liability also potentially attaches to the individuals involved in the conduct, such as Ezy’s owner, Mr Lau, and professional staff involved in doing Blue Impression’s work.
As pointed out in our previous article on this case, professional responsibility can present difficult choices, but not dealing properly with those choices presents serious risks. As Ezy and Mr Lau found, turning a blind eye isn’t an option.
If you have clients facing underpayment issues, the best course is voluntary and timely engagement with the issue, and prompt and voluntary correction of the underpayments, which often requires professional assistance if it is to be done thoroughly.
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