Greg Rogers, Esq.
HHG Legal Group
West Perth, Australia
Under Australia’s Fair Work Act, all manner of third parties can be held liable for (and ordered to pay penalties in respect of) breaches by employers of the Fair Work Act (“FW Act”). Since 2010, the year in which the FW Act came into operation, Australian Courts have typically penalised such third parties as directors and senior management of employers for a range of breaches of the FW Act, including underpayments, failure to keep proper records and obstructing Fair Work investigations.
In November 2017, the Australian Federal Court, in the decisions of Fair Work Ombudsman v Blue Impression Pty Ltd (No 1) & (No 2) (“Blue Impression”), for the first time, ordered that a third party service provider, namely an accounting firm engaged by that employer, pay penalties in excess of $50,000 in respect of breaches of the FW Act by that employer.
In Blue Impression, the Federal Court found that a third party service provider, Ezy Accounting (“Ezy”), was liable as an accessory to the employer’s breaches of the FW Act on the basis that Ezy was engaged to coordinate (and in fact did coordinate) the employer’s payroll, and in doing so, ought to have been aware that the employer was paying a particular employee below the minimum Award rate.
The Federal Court held that it was no excuse that Ezy was acting on instruction from the employer, and that the words of the FW Act made it clear that any person involved in any breach could be penalised for the underpayment.
The Blue Impression decision is significant for employers with operations in Australia, whether or not the employers are headquartered in Australia or overseas; for at least three major reasons:
- The decision highlights the significant risks posed to any third party service provider, not just accountants, but to legal representatives, industrial advocates and human resources advisors as well, who advise or assist employers with regarding their employment law matters;
- It shows that the threshold for what amounts to “involvement” in a breach is quite low, and those service providers who have not done anything more than take instruction from an employer can be held to be liable;
- It reinforces the fact that the Courts are willing to impose very significant penalties on third party service providers.
International employers and investors must ensure strict adherence to this new law, notwithstanding that they may be managing employees from many miles away. In order to minimise the risk of breaching these news laws and, in doing so, exposing employers to liability, it is advised to have well-developed contractual terms, policies and procedures in place which focus on, amongst other things, compliance with the Fair Work Act. Sophisticated domestic and international employers should engage skilled employment lawyers to help them develop these terms, policies and procedures.
This is general information only, and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters please contact our office on 9841 2322.