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Accountants and business advisors in Ombudsman's sights

Accountants and business advisors in Ombudsman's sights

David Bates
23 February 2016

By David Bates

I fully understand and appreciate that many readers of this column have far better things to do than read the Fair Work Act 2009. However, if you do have a spare two minutes, section 550 is well worth a read.

That section – entitled “Involvement in contravention treated in same way as actual contravention” – makes it clear that a third party which is ‘involved’ in a breach of the Fair Work Act will be held just as responsible as the employer him or herself.

There are three key points to make about this quite remarkable provision:

1. It applies to an extremely wide range of people. Virtually anyone who provides advice to businesses may find themselves ‘involved’ in a breach of the world’s most hopelessly complex employment laws. 

Nonetheless, those most likely to find themselves up the creek without a paddle appear to be accountants, bookkeepers, and HR advisors. 

2. You can be prosecuted for not doing something. The wording of section of 550 is exceptionally worrying. For example, paragraph (c) states that a person can be found liable for a breach if they have:

”… been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention”.

Yes, you read that correctly: an advisor who ‘indirectly does nothing’ may find themselves being held just as responsible for a breach as their client.

3. The Fair Work Ombudsman (FWO) hasn’t prosecuted anyone under this section of the Act, until now. In the very first case of its kind, the FWO is now taking a Victorian accounting firm – EZY Accounting 123 – to court for being ‘involved’ in the underpayment of two of their  client’s employees.

Specifically, EZY Accounting 123 is accused by the FWO of processing wage payments which were well-below the legally-required minimum rates.

It seems this isn’t going to be an isolated prosecution either. In a press release published by the FWO on 19 February, the Ombudsman, Natalie James, says

“In situations where we believe accountants or other professionals knowingly facilitate contraventions of workplace laws, we are prepared to hold them to account.”  

Unsurprisingly, many accountants, bookkeepers, and other advisors are now genuinely concerned about their exposure. There are, however, two simple things they can do to protect themselves.

Firstly, they should ensure the advice they provide is always within their area of professional expertise. 

And secondly, they should partner with Fair Work experts to ensure the advice ultimately provided to their clients is spot-on every time.

 

 

 

 

 

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