The courts have fined a second accounting firm over involvement in a client’s breach of workplace laws.
The Federal Circuit Court has fined a Sydney accountant A$4608 for his role in a sushi store’s unlawful exploitation of young workers and delivered a scathing judgment of the conduct.
The Fair Work Ombudsman, which brought the action, has referred the accountant’s conduct to the Tax Practitioners’ Board and the Institute of Public Accountants.
It is the second time an accountant has been fined for involvement in workplace breaches by a client, with the Ezy Accounting case being appealed.
Accountants to be held liable for client workplace breaches
Ombudsman Natalie James says the court cases send a clear message that her agency will use accessorial liability laws to hold any party involved in the exploitation of vulnerable workers to account.
“This decision is also another reminder for professional advisers that they will be held responsible for their part in workplace contraventions – claiming you were just following a client’s orders is no excuse,” says James.
The court fined Kjoo Pty Ltd A$161,760 over an unlawful internship program at the Masaki sushi outlet at Stockland Shellharbour Shopping Centre, south of Wollongong.
Manager and part owner Hyo Jun “John” Kwon was fined A$32,352 and Kjoo’s accountant Ok Gyu Lim, director of accountancy firm Hanlim, was fined A$4608 for his involvement in preparing false records submitted to the FWO when it investigated the sushi business.
Workers exploited under false internship
Judge Philip Dowdy described Kwon as the “architect” of many of the contraventions, which led to three workers being underpaid a total A$51,025 between September 2014 and July 2015.
The women aged 20 and 21, who spoke little English, came to Australia from Korea on working holiday visas.
They had studied at a private Korean college and Kwon and his company entered into an agreement with the college. The three women were encouraged to travel to Australia for work experience, under what was described as an internship program.
They were paid flat rates of between A$12 and A$13.50 an hour in cash for an average work week of more than 38 hours. Unlawful wage deductions were also made for accommodation.
The internship agreement was not authorised under any Australian law and the work was not part of any college studies, so the women were properly classified as employees and entitled to be paid under the Fast Food Industry Award.
Professional Development Regional Workshops:
FBT in a Day. This workshop covers all 12 types of Fringe Benefits Tax including examples and step–by–step guides on how to apply FBT, hints and warnings to avoid common pitfalls and problem solving exercises to apply what you’ve learned. Learn more.
Accountant falsified documents
Judge Dowdy said that Kwon knew the workers were entitled to be paid according to the award.
After the FWO began investigating and issued a Notice to Produce Records, the accountant, Lim, created false pay records purporting to show the workers had been paid much higher wage rates than was the case.
“I regard the creation of this false documentation and its submission (to the FWO) as if they were true and correct as the highest level of dishonesty,” said Judge Dowdy.
Lim had breached the “fundamental obligations of those who practise a profession, namely in the words of Francis Bacon, ‘not to descend into any course that is corrupt or unworthy’.
His conduct … merits the most serious condemnation.”
Accountants and advisers reminded of obligations
Peter Docherty, general manager of public practice at CPA Australia, says the decision further reminds members that they may also be fined if their client does not meet the obligations under the Fair Work Act.
“Members asked to advise clients on their obligations under the Fair Work Act and under the various award arrangements should only take on the engagement if they know they have the depth of knowledge in this area to advise their client competently,” he says.
What can you do? Stay informed.
The FWO has a wealth of resources in this area.
Pay and Conditions Tool (PACT)
- Use Pay, Shift, Leave, Notice and Redundancy Calculators to work out what you need to pay your employees
- PACT includes the latest increase to minimum rates of pay
Sign up for My account to:
Subscribe to FWO email updates
- Make enquiries online for priority support
- Save your results from PACT and Find My Award
Click on the “subscribe to email updates” icon on the bottom right side of the page to get email updates about information relevant for you.
Fair Work InfoLine
13 13 94
Landmark decision holds accountancy firm liable for client’s underpayments