Accessorial Liability is not just limited to bookkeepers

Accessorial liability occurs when an individual or a company are involved in incorrectly applying or ignoring the law. There is much conversation about accessorial liability exposure for bookkeepers who offer payroll services and it is important to be aware of your obligations. It is also important to note that accessorial liability is not limited to those processing the payroll, it can be extended to other parties associated with the payroll – and they don’t even have to be always aware of the contravention.

Section 550 of the Fairwork act stipulates that any person who is ‘knowingly involved in a contravention’ is also involved in that contravention and is potentially exposed to penalties and other consequences falling out of the breach.

The findings of the Fairwork Ombudsmans’ enquiry into the procurement of cleaners in Tasmanian supermarkets stated that “accessories can also be other businesses in a position of power within the same supply chain as the employing entity, such as a head contractor or franchisor”. This means that if a lead contractor outsources work to other businesses, the lead contractor can also be held responsible for the payments made to sub-contractors or employees of those outsourced businesses. The same applies to franchisors in relation to their franchisee operations. The findings of the FWO enquiry concluded that the business (in this case Woolworths supermarket) engaging a principal contractor had an obligation to ensure that businesses in their supply chain are compliant with the law relating to their engagement of employees and other sub-contractors. This may involve audits of their contractor books, review of payroll and contractor payments etc.

Bookkeepers should be checking with their employer clients as to award application in the engagement of their employees, however, if a bookkeeper is aware of a contravention of the laws they should be prepared to walk away and avoid any claims of accessorial liability.

AAT recommends that bookkeepers providing payroll services would benefit greatly from a relationship with payroll and HR experts, such as AB Phillips . The expert and qualified team can provide comfort that a client’s payroll is correct, indemnifying the bookkeeper from any incorrect advice.