Underpayment of staff? ‘Don’t blame me – I am only the accountant’

Key Point
  • Regardless of whether a party is a business’ owner, internal HR staff or an external consultant, all persons knowingly concerned with underpaying employees can be subject to large fines.


Recently, EZY Accounting 123 Pty Ltd (Ezy Accounting) was fined $51,330 for being an accessory to Blue Impression Pty Ltd (Blue Impression) underpaying its staff. This decision makes unequivocally clear that any person or business involved with paying employee wages must execute their responsibilities in accordance with the law and relevant award. The Court will no longer accept that such an entity is doing what it has been directed to do.

This matter concerned a Japanese fast food company, Blue Impression, who were warned by the Fair Work Ombudsman (FWO) that they had been underpaying their staff. To rectify this issue, Blue Impression consulted Ezy Accounting. However, even with the assistance of Ezy Accounting, underpayment still occurred.  This underpayment ranged from failing to pay the minimum award rate, evening and weekend loadings and industry-specific allowances.

This conduct proved that Blue Impression contravened the relevant Employment Award, an offence under the Fair Work Act 2009 (Cth) s 45.  However, the Federal Circuit Court also held that Ezy Accounting was liable for being an accessory to this breach.  Ezy Accounting appealed this decision to the Full Court of the Federal Court (Full Court); however, the Full Court dismissed the appeal and affirmed the Federal Circuit Court’s decision.

It is valuable to consider the excuses used by Ezy Accounting when attempting to refute its involvement in underpaying staff. These excuses, and the Court’s respective responses, serve as a guide to what the Court will not accept when defending proceedings against charges of being an accessory to underpaying employees.

What excuses did Ezy Accounting offer?

In response to the FWO’s allegations that Ezy Accounting was “involved in” underpaying Blue Impression’s staff, Ezy Accounting submitted the following:

  • It did not have a professional obligation to know whether Blue Impression was underpaying its staff because that was not within the scope of its retainer with Blue Impression;
  • It was instructed by the client to pay staff the rate which the client directed it to, even though these rates would result in employee underpayment; and
  • The award is not a law and Ezy Accounting should not be deemed to have no knowledge of the award.

What was the Court’s Response to Ezy Accounting’s excuses?

Both the Federal Circuit Court and the Full Court decided against Ezy Accounting, determining that Ez Accounting was an ‘intentional participant’ in, underpaying Blue Impression’s staff. Both Courts’ responses to Ezy Accounting’s excuses were as follows:

  • Although Ezy Accounting was not contracted explicitly to determine and pay each employee the correct wage, it knew that paying employees this wage would result in underpayment.  Accordingly, even though the contract did not specify to pay employees above the minimum entitlements, Ezy Accounting was under an obligation not to actively participate in the crime;
  • The fact that Ezy Accounting was instructed to underpay staff was not a defence to being an accessory to underpaying staff.  This fact actually helped prove that Ezy Accounting was an ‘intentional participant’ in the crime because it took instructions from Blue Impression that it knew were illegal; and
  • The Court found that Ezy Accounting had actual knowledge of the Award, even though it asserted otherwise. 

However, it is also important to know that the Award is the law and everyone is deemed to have knowledge of the law, irrespective of whether they actually do. Similarly, the Federal Court, in ABCC v Parker [2017] FCA 564, decided that it is sufficient to prove that a person engaged in illegal conduct and unnecessary to prove that the person knew that their conduct was illegal.

For this reason, it is imperative for employers to familiarise themselves with employment law and their employees’ relevant award.

Who may be liable for underpaying staff?

This decision makes clear that although a business is primarily liable for underpaying staff; any person who is knowingly concerned with the underpayment can attract accessorial liability for the crime. This seems to complement the Court’s position that it will hold HR staff liable if they, intentionally or unintentionally, underpay staff.

In turn, whether you are in the business’ HR Department or an external accounting or consulting firm, if you participate in underpaying staff, you can be prosecuted.

Post by Warwick Ryan and Joshua Yan

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