Payroll provider an accessory in client’s breach of the Fair Work Act

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This article was written by Daniel Delimihalis

The Federal Circuit Court of Australia, in what appears to be a first, has found that an accountant and payroll service provider, Ezy Accounting 123 Pty Ltd (Ezy), was "involved in" the underpayment of an employee of Ezy's client, Blue Impressions Pty Ltd (Company). This was because Ezy knew the payroll instructions from the Company would lead to underpayment but deliberately shut its eyes to what was going on, and failed to make basic enquiries with the Company about their payroll instructions. 

The Company and its manager had already admitted liability for the contraventions; the only question was whether Ezy was liable as an accessory.

Ultimately, the Court found that Ezy "engaged in a contrivance, a deliberate shutting of eyes or calculated ignorance" in relation to Ezy's processing of the Company's payroll, and in doing so breached the accessorial liability provisions of the Fair Work Act 2009 (FW Act).

Implications for service providers and advisors

Service providers and advisors should consider querying their clients' practices when red flags are raised which indicate a potential contravention of the FW Act by their clients (or where they know there has or will be a contravention). This is particularly the case where the service provider plays a role in the provision of employee entitlements (for example, as a payroll provider).






The Company operated a fast food chain in Victoria. The Company admitted to contraventions relating to the underpayment of an employee by failing to pay the correct minimum rates of pay, penalty rates, provide meal breaks and a uniform allowance to one of its employees for a period between September and December 2014.

The Fair Work Ombudsman (FWO) alleged that as the Company's payroll service provider, Ezy (through its principal and sole director) was aware of the contents of the relevant modern award and the employee's hours and conditions (including lack of payment for meal breaks, weekend work and other allowances and loadings).  Accordingly, the FWO alleged that Ezy had actual knowledge of the Company's contravention, was directly or indirectly involved in, or was knowingly concerned in the Company's contravention.

Ezy denied any involvement in the contravention and claimed that as a payroll service provider, it was provided with payroll instructions from the Company which included the hourly rate of pay of the employee. Ezy did not otherwise independently assess whether those instructions were correct.  Ezy otherwise denied that it had knowledge of the hours the employee worked and the industrial entitlements that the employee was entitled to under the relevant modern award.  


Judge O'Sullivan found that Ezy was involved in the Company's contravention of the FW Act.

His Honour found that:

  • Ezy knew that the rates of pay that it was instructed to use were wrong, because (critically) the principal and sole director of Ezy (Eric Lau) had knowledge of an earlier FWO audit in 2014 into the Company's payment practices, which had identified underpayments and correct rates of pay;

  • Ezy's payroll systems contained the hours worked by the employee, and a basic query from Ezy would have revealed that the employee was not being paid the correct loadings, penalty rates, and allowances; and

  • Mr Lau, as the controlling mind of Ezy, was wilfully blind to the essential matters that comprised the Company's contravention of the FW Act and sought to remain ignorant of the Company's contraventions by deliberately refraining from asking questions or seeking further information from the Company.


Judge O'Sullivan ultimately found it was possible to infer actual knowledge on the part of Mr Lau from a combination of suspicious circumstances and a failure to make inquiries, and accordingly found Ezy was accessorily liable for the Company's contraventions.

Fair Work Ombudsman v Blue Impression Pty Ltd & Ors [2017] FCCA 810

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