FWO Targets Third Party Service Providers in Prosecution

Posted by Malcolm Campbell on 19 May 2016
FWO Targets Third Party Service Providers in Prosecution

In a salutary warning for Accountants and Business Advisors, the Fair Work Ombudsman (FWO), have recently commenced proceedings against an accounting firm who provided third party payroll services to one of it’s clients. 

The FWO allege EZY Accounting 123 knowingly underpaid wages to two employees of their client, Blue Impressions Pty Ltd.  They allege two employees were not only underpaid in their base hourly rate, but were also not paid the correct entitlements for weekends, public holidays, night shifts or casual hours.

Under section 550 of the Fair Work Act 2009 (Cth), a third party, whether it be an individual or company, can be subject to penalties if it is involved in a contravention of a civil remedy provision of the Act. Being “involved” includes:

  • aiding, abetting, counselling or procuring the contravention; or
  • inducing the contravention, whether by threats or promises or otherwise; or
  • being, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
  • conspiring with others to effect the contravention.

The FWO released the following media statement recently, “We have been concerned about the role of key advisors, such as accountants and HR professionals, in some serious and deliberate contraventions”.

This is an important reminder to Accounting firms and other advisors and service providers involved in the day to day activities of their client’s business.  Section 550 of the Fair Work Act 2009 (Cth) affords the FWO broad powers to pursue and prosecute both individuals and companies should they become aware a wrong doing is knowingly occurring and the provider does not take immediate steps to remedy it or cease their involvement in the contravention. The penalties that can be imposed for breaches of the Act are up to $10,800 (individuals) and $54,000 (corporation) per breach.      

In the case of an a business providing payroll services to their clients, understanding the relevant awards and statutory entitlements applicable to your client’s employees and their responsibilities as employers, is critical to ensure the legal obligations of their clients are met and the risk of legal action brought against the service provider is mitigated.  

With full knowledge of the instruments, entitlements and obligations, the supplier should immediately advise their client if they become aware of an error in the payment of wages.  As a third party supplier, you should also ensure that you are covered by a sufficient level of professional indemnity insurance to cover prosecutions of this nature.

Obtaining expert legal advice prior to commencement of a contract to supply services to your client is important to ensure you are fully aware of the legal obligations and limitations of your role within another business and the legal obligations and limitations of the business you are undertaking work on behalf of. Having a well crafted contract or set of terms & conditions can also help mitigate your risk and limit your liability. Further, if you find yourself being asked to do something which may be questionable you need to act early and decisively to protect yourself from prosecution.

We work closely with many accountants and other professionals to provide clients with a holistic, and commercially astute advice and assistance for their businesses. We specialise in providing clarity and confidence to business operators in their legal relationships – contact us today to discuss your legal needs or that of your clients.