Accountants providing clients with payroll, accounting and book-keeping advice and services run the risk of being held accessorily liable for the underpayment of wages by their clients. This could expose you or your firm to potential fines and legal charges simply by your involvement in another person’s contravention of the Fair Work Act 2009 (Cth).
Section 550 of the Fair Work Act 2009 (Cth) allows the Fair Work Commission to hold third parties accountable for their involvement in a contravention of the Fair Work Act. As of 2023, the maximum penalties for contraventions of the Fair Work Act have risen to $93,900 per breach for companies and $18,780 per breach for individuals. For serious contraventions the maximum penalties go as far as $939,000 per breach for companies and $187,800 per breach for individuals. These maximum penalties apply with equal weight to any companies and individuals who are involved in their client’s workplace contraventions.
When can you be found liable?
There are two main ways that you can be found liable even if you did not commit the contravention directly (i.e. accessorial liability) – if you have intentionally participated in a contravention, or if you have acted with wilful blindness.
To determine whether an external advisor has participated in a contravention of the Fair Work Act, the Fair Work Commission considers whether you intentionally participated in the contravention. If you had actual knowledge of the essential matters of the contravention when it occurred, you will be found to have intentionally participated in the contravention. So, while you won’t be caught out by contraventions predating your engagement with the client, from the moment they engage with your firm, you have a responsibility to understand their obligations as they relate to the Fair Work Act.
You will also be found liable where you have acted with wilful blindness. To be wilfully blind to a contravention involves deliberating ignoring the suspicious circumstances of your client’s actions and failing to make the appropriate enquiries when there may be a potential breach of the Fair Work Act.
So, what does this mean for you and your firm?
Essentially, it is no excuse that you are not an employment law specialist. If you are going to advise and assist your clients with payroll, then you have an obligation to be aware of the applicable awards, pay entitlements, penalty rates, leave provisions, weekend loading rates and award categories for your client’s employees.
How do you minimise the risk?
If you suspect or are concerned about a client’s potential breach of their workplace obligations, you must not turn a blind eye to these dealings. It is important to escalate these matters where relevant.
If you do not know or understand the relevant awards for your client’s industry or are unsure of their application to their particular employees, then the onus is on you, as the accountant, to investigate further and provide accurate advice to your client.
JFMAndreyev can help you and your clients to meet your obligations under the Fair Work Act by advising on awards, employment agreements and employee entitlements. We can help you to put risk minimisation strategies in place and can help you defend your actions if you are charged with accessorial liability.
To minimise your personal risk and exposure to breaches of the Fair work Act speak to our expert solicitors who specialise in dealing with employment law obligations, reporting and classifications.Call us now on 02 9199 8597 or email us to discuss the next steps.
The information contained in this post is current at the date of editing – 1 December 2023.
