Accountants, payroll providers and HR consultants liable for Client’s Wages Underpayment.
We found out last year that a HR manager was personally liable for unlawful employee salary deductions made by the company: see the link to the OzStaff case below.
This year, an accountant was found personally liable for its client’s underpayment of its employees. The client, a fast food restaurant, underpaid two workers nearly $10,000.00, paying the wrong hourly rate, no penalty rates and weekend and casual loadings.
The accountant was personally liable under s 550 of the Fair Work Act 2009 (Cth) (FWA) for being ‘involved’ in the employer’s contraventions because they processed wage payments for the two workers, knowing that the rates were below the minimum entitlements.
The elements of accessorial liability under s 550 FWA are being ‘involved in’ and ‘knowingly concerned’ in a contravention. In this case the FWO proved a practical connection between the advisor and the contravention, intention to participate and actual knowledge of the elements of the contravention.
The accountant denied responsibility, claiming that it was not their business to know whether or not the rates complied with the award. They just entered the data provided by the restaurant. However, this did not fly because during a separate Fair Work Ombudsman audit in 2014, the accountant had been told about the underpayments and the correct rates and award. After the audit, the accountant did not adjust the rates in their system and continued to use the incorrect rates submitted by the restaurant employer. Willful ignorance of the law is not an excuse.
What do we learn? What do we do?
If you provide services related to employment as an accountant, an HR advisor, a principal supervising sub-contractors or a franchisor, you should ensure that you are not involved in any contraventions of the FWA. You may not be able to defend a claim for personal accessorial liability, even if your contract with your client says you are not responsible for deciding the correct award entitlements.
Contact Peter McNamara for your workplace law advice today.