Australia: Service Provider Blues: Service provider liable as accessory to breaches of Fair Work Act

Under the 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, 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 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 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 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 at least 3 major reasons.

First, it 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.

Second, 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.

Third, it reinforces the fact that the Courts are willing to impose very significant penalties on third party service providers.

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