Service providers liable in Award breach proceedings


Posted By on 4/05/17 at 9:26 AM

The Fair Work Ombudsman has been threatening for a while that advisors will be in the line of fire.  Well, the time has arrived!

A recent decision in the Federal Circuit Court of Australia (Fair Work Ombudsman v Blue Impression Pty Ltd & Ors [2017] FCCA 810]) provides a warning to payroll service providers that they may be accessorily liable for contraventions of the Fair Work Act 2009 (Cth) by their clients (ie businesses to whom they provide payroll services).

An accounting firm which provided payroll services was found to be liable (as an accessory) for its involvement in contraventions of the Fair Work Act by its business client. There was a failure by the business to comply with Award requirements in respect of wage rates and other employee entitlements.  The accounting firm, despite its knowledge that payments were not in accordance with the Award, continued to calculate and make payments to employees at the incorrect lesser rate.

Full payroll service providers may be subject to accessorial liability and financial penalties under the Fair Work Act in circumstances where employees are not paid the correct wages, allowances and penalties under Award entitlements.  These providers could also conceivably face a claim by clients for damages for the amount of underpayments and penalties imposed on the business, particularly in circumstances where the service provider provides assurance to its clients of payments at the applicable Award rates.

You can read the full text of the decision here.

A penalty hearing will take place at a later date, and we’ll let you know the outcome.

This article was written by Gina Capasso (Principal Solicitor).

Chris Gianatti

Chris Gianatti Director

Chris worked for a number of years with Corrs before moving in-house to Telstra as HR Legal Counsel for the “Factory” (covering Telstra’s back of house operations including the field... Read More