The Accounting Department Blog

Landmark Case Highlights Importance of Outsourcing to Experts

In a landmark case that will be of interest to business owners, accountants and payroll companies throughout the country, an accounting company has been held liable for their client’s breaches of the Fair Work Act.

Employees of a Melbourne fast food restaurant chain were paid as little as $16.50 an hour, considerably less than the minimum wage of $19.44 an hour before loadings. They were not paid penalty rates or allowances and were also not provided with adequate meal and rest breaks as stipulated by the Fast Food Industry Award 2010.

In the Federal Circuit Court earlier this month, Judge John O’Sullivan found that the employer’s outsourced accounting company had deliberately turned a blind eye to the underpayment of its client’s employees, having previously been put on notice and provided with the correct Award rates during an audit by the Fair Work Ombudsman just seven months prior to when the underpayments began. The accounting company failed to update the payroll system with the correct pay rates, arguing that they did not have the authority to do so.

Judge O’Sullivan made the following comments during his judgment:

“I am satisfied the evidence demonstrates [the accounting company] deliberately shut its eyes to what was going on in a manner that amounted to connivance in the contraventions by [the restaurant chain].

“I accept the FWO’s submissions that [the accounting company] had at [its] fingertips all the necessary information that confirmed the failure to meet the Award obligations by [the restaurant] and nonetheless persisted with the maintenance of its (payroll) system with the inevitable result that the Award breaches occurred.”

 The judgment can be read in full here.

Of course, the vast majority of business owners want to do the right thing by their employees. As an employer, nothing is more important than ensuring that your employees are paid correctly.

With so many different Awards and rules payroll can be complicated, and it takes time away from your core business activities. This case should not be a deterrent to business owners who are thinking of outsourcing their payroll and/or accounting to a third-party provider. Instead, this case highlights the importance of ensuring that your payroll is taken care of by a reputable payroll expert who takes an active interest in your business and looking after your employees. Someone who will stop at nothing to ensure that your employees are paid correctly and on time. Someone who cares about getting things right.

Making the right decision about who to outsource your payroll to can make or break a company, and as this case demonstrates, not all accounting/payroll companies are the same.

At The Accounting Department, we are proud to be a member of The Australian Payroll Association. We are also a supporting member of each of the two major recruitment industry associations - the RCSA and APSCo.

With many years of payroll experience in numerous industries, cases like this one simply wouldn’t occur if we were managing your payroll. When we take on a new client we spend the time required to get a full understanding of your business and the industries in which you operate. We don’t take things at face value. We proactively investigate to make sure your people are paid correctly, and during our onboarding process, we have often uncovered and rectified payroll mistakes made by previous providers.

Our enterprise level systems are second to none. We thoroughly reviewed and investigated in detail over 15 different payroll systems before selecting the one we have in place. We are continuously improving and streamlining our processes, ensuring that we have appropriate checks and balances in place and that everything runs with finesse.

Most of all, our entire team takes pride in our work, and responsibility for it – it is tragic that there are cases where employees pay the price for mistakes made by the people entrusted with looking after them. It wouldn’t happen on our watch, and it shouldn’t happen on anyone else’s.

 

David Payne is a Chartered Accountant with over 20 years of accounting, payroll and finance experience, including roles as CFO of four companies specialising in the recruitment on-hire and health industries.

 

 

Posted By: 
David Payne