Accountant Liable for Client’s Underpayments

Accountant Liable for Client’s Underpayments

In a recent Federal Circuit Court decision, an accountancy practice which provided bookkeeping services (including payroll processing) has been found liable for their client’s underpayment of staff.

The accountant is expected to be fined and a hearing to determine the amount of the fine will follow. The employer wished to pay its employees a flat rate of pay. Rather than looking into that rate, the accountant simply paid as the employer instructed.

Judge O’Sullivan found that the accountant had all the necessary information ‘at their fingertips’ to confirm the flat rate paid to employees was below the minimum hourly rate under the applicable award; but deliberately shut its eyes to the underpayments and made no further inquiries while maintaining a payroll system which would inevitably result in underpayments to staff.

This meant that the accountant was involved in its client’s contraventions of the:

  • Fair Work Act 2009; and
  • applicable modern award.

Penalties for the contraventions will be determined at a later hearing. The maximum fines for these types of contraventions are:

  • $54,000 for a company; and
  • $10,800 for an employee.

This decision, while it sets a precedent, comes as little surprise given other recent decisions and the Fair Work Ombudsman’s willingness to pursue third parties and individuals involved in an employer’s contravention of workplace laws.

This decision highlights the importance of careful review of the applicable awards, modelling the payments that are required and appropriate employment agreements in ensuring an employer is complying with its legal obligations.

Murdoch Lawyers regularly provide these services to employers. If this is something that keeps you up at night or you would like us to do for you, please contact us so we can assist you.

This publication has been carefully prepared, but it has been written in general terms and should be viewed as broad guidance only. It does not purport to be comprehensive or to render advice. No one should rely on the information contained in this publication without first obtaining professional advice relevant to their own specific situation.

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