Liability for Incorrect Client Wages

Accountant held Responsible for Client’s Unpaid Wages

As business owners should know, you must not contravene a term of a modern award, such as underpaying wages. What is probably less well known is that a person who is “involved” in a contravention of employment legislation is deemed to have contravened the law and that can include the external Accountant of a business.

Accountants are often provided detailed financial information in relation to their client’s businesses which may present them with information about employee rates of pay.

The question is: “What is the extent of knowledge required of an Accountant to be regarded as being knowingly concerned in a contravention?” In a recent Federal Court decision (EZY Accounting 123 Pty Ltd v Fair Work Ombudsman [2018] FCAFC 134), that was the issue for consideration.

The Accountant in this case gave evidence that there was a limited scope to his retainer and that it was not part of his retainer to review the hours worked, or the times at which hours were worked, or to check rates paid against award rates.

An audit of the company’s books found that 12 employees had been underpaid. The Accountant accepted that unless the rates in MYOB were updated they were going to continue to be underpaid. The evidence of the Accountant is that he did not ask the business whether they would agree to update the rates.

The employees continued to be underpaid and ultimately a court decided to hand the Accountant a penalty of $51,330.00.

Key take-away

The key take-away is that if an Accountant is aware a client is underpaying its employees (or is otherwise in breach of an Award), the Accountant will need to take positive steps to recommend that the businesses change the rates they pay their employees so that they comply with the Award.