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Liability of Accountants for being “Wilfully Blind” to Underpayment of Wages by their Client

4 minutes read time

The Federal Circuit Court has held an accountancy firm that processed payroll information for a restaurant accessorily liable for the underpayment of restaurant staff.

In a judgement delivered on 28 April 2017 in the case of Fair Work Ombudsman v Blue Impression Pty Ltd & Ors [2017] FCCA 810, an accounting firm has been found accessorily liable for their client’s underpayment of its staff.

Blue Impression Pty Ltd operated two Japanese fast food restaurant outlets in Melbourne.  Mr Jian Hong Zheng was a casual employee of Blue Impression and a Taiwanese national on a subclass 417 working holiday visa.  Mr Zheng requested assistance from the Fair Work Ombudsman (‘FWO’) regarding issues with his pay.

Blue Impression admitted it had contravened the Fair Work Act by underpaying Mr Zheng.  The FWO also alleged that Blue Impression’s accountant, Ezy Accounting 123 Pty Ltd (‘Ezy’), was accessorily liable pursuant to s550 of the Fair Work Act.  Ezy denied these claims.

Establishing accessorial liability

His Honour Judge O’Sullivan held that the following factors should be considered in determining whether a person had accessorial liability ie; whether they were a ‘knowing participant’ in the breach:

  1. Must have knowledge of the essential facts constituting the contravention;
  2. Must be knowingly involved in the contravention;
  3. Must be an intentional participant in the contravention based on actual not constructive knowledge of the essential facts (although constructive knowledge could be satisfactory in cases of wilful blindness);
  4. Need not know that the matters in question constituted a contravention.

Ezy’s Arguments

Ezy argued that it was not liable for the underpayment for a number of reasons:

  • Ezy simply processed the rates that were provided by Blue Impression.  They were merely a “data input” service.
  • Mr Lau (the Director of Ezy) did not process the payroll.  Instead Ms He (an employee of Ezy) performed all of Blue Impression’s bookkeeping work.
  • All three employees of Ezy – Mr Lau, Mrs Hii (Mr Lau’s wife) and Ms He – indicated that whilst they were aware that employment in Australia was governed by Awards they had no knowledge of the specific rates, were not aware that evening loadings or public holiday allowances applied, and were unaware of any special clothing allowances.
  • Providing advice on Awards was outside of the scope of their expertise.
  • Neither Mr Lau not Mrs Hii had any knowledge the worker, Mr Zheng.


Evidence indicated that the FWO had previously audited Blue Impression in 2014.  The audit found that Blue Impression was underpaying its staff.  Mr Lau agreed in cross examination that he had received the letter and had calculated the amount of underpayment for the purpose of this audit.

There was evidence that Ezy had engaged Employsure (an organisation that described itself as an expert in the field of workplace relations) to provide information regarding the proper rates of pay for Blue Impression.

There was also evidence that a number of emails had been exchanged amongst Blue Impression, Employsure, and Ezy regarding concerns of underpayment following queries raised by another employee, Mr Youn.

Mr Lau agreed that following the audit he knew how to check the Award rates and that it was inevitable that if the rates were not altered in MYOB there would be underpayments.  He also was found to be aware that Ezy did not alter the flat rates.


His Honour found that given the 2014 audit of Blue Impression, Mr Lau knew that there were concerns regarding the restaurant’s compliance with its Award obligations and the flat rate that was being paid was not consistent with the Award.  He was satisfied that actual knowledge on the part of Mr Lau could be inferred from a “combination of suspicious circumstances and a failure to make enquires”.

His Honour further found that Ezy had control over the MYOB system and omitted to take action to prevent the contraventions of the Award from occurring.

This case is a reminder to service providers who have concerns about their client’s compliance with obligations under the Fair Work Act to raise these concerns with their client and ensure that there are no breaches of the Act.  Failure to do so could result in a civil penalty being imposed on the service provider.

This Alert is intended as an alert only. It does not purport to be comprehensive advice. Readers should seek professional advice before acting in relation to these matters.