FWO secures penalties against accounting firm for failing to produce a client's employee records and documents

The Fair Work Ombudsman (FWO) has secured a total of $137,435.00 in fines against La La Bar Group (La La Bar) and their former accounting firm, Nicholas Accounting Management Services Pty Ltd (Nicholas Accounting) for failing to comply with record-keeping requirements in the Fair Work Act 2009 (the Act).

The FWO commenced legal action in the Federal Circuit Court against the former director and former General Manager of six La La Bar Group companies (which has since been liquidated and deregistered), Nicholas Accounting and its director after the parties failed to comply with a Notice to Produce records.

In response to allegations of non-compliance, a surprise audit was conducted by Fair Work Inspectors in 2019. During the investigation, Notices to Produce were issued to La La Bar and Nicholas Accounting that were not complied with.

As a result of its investigation, the FWO discovered La La Bar had not kept records of the hours worked by casual or irregular part-time employees worked. The FWO alleged that La La Bar breached section 535 of the Act by failing to make and keep proper employee records.

Section 712(1) of the Act provides that a Fair Work Inspector may require a person to produce a record or document by serving a Notice to Produce. A person served with a Notice to Produce must not fail to comply with the notice in accordance with section 712(3) of the Act.

During proceedings, Nicholas Accounting admitted to contravening section 712(3) of the Act by failing to comply with the Notice to Produce In determining the appropriate penalty, Nicholas Accounting argued that there was no loss or damage arising from its failure to comply as the documents sought to be produced did not exist. It also argued that it was not authorised to provide the documents. These arguments were rejected by the Court given the FWO's surprise audit resulted in the seizure of documents that should have been provided in response to the Notice to Produce.

The FWO submitted that Nicholas Accounting and La La Bar's conduct was a deliberate attempt to undermine the FWO's ability to investigate breaches of the Act, such as the record-keeping contraventions, and referred to the "considerable public resources" expended by the FWO in preparing the matter for hearing.

The Court held that there was a need to specifically deter the parties from similar future conduct, noting their apparent lack of remorse and failure to take any corrective action and imposed penalties of:

  • $41,368.00 against Keri Taiaroa, a former director and shareholder of six La La Bar Group companies;
  • $26,893.00 against Matthew Sanger, former general manager of six La La Bar Group companies;
  • $34,020.00 against Nicholas Accounting; and
  • $35,154.00 against Nicholas Accounting director Nicholas Nicolaou.

In a statement delivered to the court, FWO Anna Booth said that employers "need to be aware that breaching record-keeping laws and failing to comply with lawful requests like Notices to Produce, which were found to be deliberate in this matter, will not be tolerated and risk significant penalties".

This case emphasises the FWO's willingness to take enforcement action against professional services firms where it is believed they have been involved in breaches of workplace laws or where they fail to comply with the FWO during an investigation.

You can read the court's decision in its entirety at this link.

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