Adrianne Komiatis v Education Training and Employment Australia Pty Ltd

[2008] VMC 10

IN THE MAGISTRATES COURT OF VICTORIA

AT MELBOURNE

INDUSTRIAL DIVISION

Case No. W02752864

Adrianne Komiatis	Plaintiff
v
Education Training and Employment	Defendant
Australia Pty Ltd

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MAGISTRATE:	K Hawkins
WHERE HELD:	Melbourne
DATE OF HEARING:	5 & 6 August 2008
DATE OF DECISION:	18 September 2008
CASE MAY BE CITED AS:	Adrianne Komiatis v Education Training and Employment Australia Pty Ltd
REASONS FOR DECISION

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Catchwords: whether any penalty ought be imposed in respect of admitted contraventions of the Workplace Relations Act 1998 and the Health & Allied Services - Private Sector - Victoria Consolidated Award 1998.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms C Serpell
For the Defendant	Mr T Donagney
HER HONOUR:

1. In the complaint filed 5 October 2007 the plaintiff alleged that the defendant had breached the following clauses of the Health & Allied Services - Private Sector - Victoria Consolidated Award 1998 ("The Award") and sections of the Workplace Relations Act 1998 ("The WR Act"):

i.   Clause 13.2 of The Award and s.182 sub-s.(1) and/or 185 sub-s.(2) of The WR Act, by paying less than the hourly rate of pay (inclusive of casual loading) for work done on Mondays and Fridays;

ii.  Clause 13.2 of The Award, by paying less than the hourly rate of pay (inclusive of casual loading) for work done on Saturdays, Sundays and public holidays;

iii. Clause 31.1 of The Award, by failing to pay shift allowances for rostered hours of ordinary duty finishing between 6 p.m. and 8 a.m. or commencing between 6 p.m. and 6.30 a.m.;

iv. Clause 31.2 of The Award, by failing to pay a shift allowance for rostered hours of ordinary duty on the day after commencing duty or commencing after midnight and before 5 a.m.

2. On 23 November 2007 the defendant filed a defence in respect of this matter and on 12 May 2008 the parties filed an agreed statement of facts. The defendant has admitted the contraventions alleged. The only issue remains outstanding is what, if any, penalty ought be imposed in respect of those admitted contraventions.

Background

3.    The defendant ("ETEA") is a provider of training. It provides services, including training of persons in the health industry. Nurse Bank Pty Ltd is a related company, and provides labour hire services.

4.    ETEA is registered under the Victorian Training System and is authorised to provide training as a Registered Training Organisation and provide training in order to assess for the purposes of a nationally recognised qualification.

5.    In about mid 2005 ETEA embarked upon a scheme in which it: (a) developed a method of training overseas employees to Australian standards, in accordance with the Australian Qualifications Framework ("AQF"), which applies to competency training in Australia; and (b) introduced a program to train overseas nationals, particularly Chinese, in aged care.

6.    To set up the "Nurse Educator Program", ETEA liaised closely with the Department of Immigration and Multicultural and Indigenous Affairs ("DIMIA") or, as it is now known, the Department of Immigration and Citizenship ("DIAC") to determine the appropriate immigration status of persons to be brought to Australia.

7.    Evidence in this case was given by way of affidavit. The plaintiff relied on affidavits of Inspector Komiatis, Judith Forsythe, Shane Crowe, Inspector Steve Butler and Chris Colman. The defendants relied on affidavits prepared on behalf of their Global Operations Officer[1], “Ms Smith”, and affidavits of Janine Harris, Rhonda Davis and Robert Ironmonger.

[1] For unrelated security reasons, the identity of this witness was suppressed.

8.    In about 2003 ETEA decided to expand its training infrastructure internationally. In 2004 it conducted pilot programs in the Peoples Republic of China. The course chosen by interested partners was in aged care. ETEA then delivered pilot courses in China and evaluated the outcomes. From these outcomes ETEA sought to develop its pathways program in China with a nursing focus. A fundamental aim of the program was to have Chinese nurses trained in aged care to Australian standards by people qualified to conduct the training and assessment.

9.    ETEA decided that the most viable option was to bring a number of Chinese nationals to Australia to train them in both Australian aged care qualifications and in training and assessment. This was done with a view to offering those Chinese nationals positions as nurse educators in China, who could conduct the training and assessment of other Chinese nationals in Australian qualifications. ETEA recruited from the ranks of Chinese nationals who held nursing qualifications recognised in China but not in Australia. The defendant intended to ultimately train more nurses in Australian aged care qualifications in China.

10. The Nurse Educator Program consisted of programs of study belonging to a training package and accredited courses as well as on the job clinical work placements designed to include the practical element in the teaching of each student. Each training package consisted of levels including Certificate II; Certificate III and

Certificate IV. Each level consisted of competencies required to attain the award

and/or certificate.

11. In order to bring the selected Chinese nationals to Australia to complete its Nurse Educator Program ETEA decided to nominate the selected Chinese nationals under the Occupational Trainee Subclass 442 Visa Scheme. That scheme required the training to be provided to be approved by DIAC. Ms Smith was responsible on behalf of the defendant for finding out from DIAC what it needed to do to bring the Chinese nurses to Australia for the Program. She spoke with DIAC by telephone and via email.

12. In June or July 2005 Ms Smith travelled to China to reassess applicants for the program. She met with the applicants face to face in China for about half an hour and talked to them about the program. She approved 20 of the applicants as being suitable to undertake the program. She formed the view that each had adequate verbal English skills to complete the program and that they had a genuine intent to come to Australia for the purposes of completing the program.

13. Whilst in China Ms Smith met with Vice Consuls of the Australian Consulates General in Shanghai.

14. Following her return from China Ms Smith submitted the nominations of eight Chinese nurses for visas under Subclass 442.

15. On 3 May 2005 ETEA submitted to DIAC a document entitled, "Nominators Declaration for Form 913, Nomination for occupations training". Relevantly it contained the training plan and proposed an allowance to be paid to each Chinese student of $150 per week. Within the declaration there was a summary structure of the training plan. It showed that the classroom based training would account for 32 per cent of the training to be provided and the remaining 68 per cent of training would be supervised clinical placement, work placement assessment. DIAC rejected this ratio and insisted upon a minimum of 70 per cent supervised clinical placement, workplace training as a requirement for the visa.

16. As part of the approval process the defendant was informed by Mr Coleman, assistant manager of DIAC that students were required to be employees of ETEA during their stay in Australia. ETEA had never directly employed any students in Australia or overseas.

17. ETEA decided to proceed with the nominations on the basis that they would become the employers of the students during their stay in Australia. It made a further proposal to DIAC that the students be paid an allowance of $225 per week.

18. On the morning of 21 June 2005, Mr Coleman of DIAC informed Ms Smith during a telephone conversation that the training allowance of $225 was not accepted by the Department of Employment and Workplace Relations, ("DEWR"). Mr Coleman

forwarded a copy of an email he had received from DEWR which discussed the
application of the National Training Wage Award.

19. Subsequently ETEA determined that they would pay the students a flat rate of $439 per week. They reconfigured their nomination application to DIMC on the basis that the students were to be paid under the National Training Wage Award.

20. Subsequently by correspondence dated 1 July 2005, the defendant advised the employees in China that their nomination under its Occupational Trainee Nurse Educator Program had been approved. The full text of the offer letter was as follows:

"Friday 1 July 2005.

Nomination letter

Dear

We are happy to advise you that your nomination under ETEA's Occupational contract and job description. Under successful completion of your program in Australia the attached agreement will be signed by ETEA and you will be appointed to our nurse/educator workforce in China.

Under the conditions of this nomination and ETEA's signed undertakings with

DIMIA it is our responsibility to advise you of the following:

(a) your nomination is conditional upon your continual employment in the said

specified position with ETEA.

(b) period of training in Australia is 12 (twelve) months.

(c) period of stay in Australia is 12 (twelve) months and two weeks.

(d) there are no dependents declared or approved.

(e) during your time in Australia you will be paid under the Australian National

Training Award (AW7900899CR/Wage Level A). Your training and work

assignments will be on a full time basis.

(f) you may not change employer or ETEA cannot change your position in

Australia without first obtaining the written approval of DIMIA.

(g) should you leave ETEA's employ during this period or breach any of the

above mentioned conditions this will result in your visa cancellation and/or

cause refusal of future visa applications. If your visa is cancelled you are

required to leave Australia within the specified time instructed by DIMIA.

ETEA's further conditions are:

(h) your salary is subject to Australian taxation requirements and payroll will

discuss administrative matters with you upon your arrival in Australia.

(i) during your employ with ETEA under this nomination you are required to

maintain adequate health insurance cover for the entire duration of your visa.

(j) the tuition fee for courses in first aid Cert III in aged care and Cert IV in

workplace assessment and a mentoring program during your stay is

RMB45,000 - and is payable in advance.

ETEA will assist you in settling in to Australia such as accommodation, bank accounts, taxation requirements, health insurance cover and provide you with general information about 'living in Australia'.

Please note that the approval of your sponsorship does not guarantee the approval of your visa. You are now required to lodge the relevant visa application (Form 147) with the relevant visa office in China. This office will issue your visa should they be satisfied that you meet all the requirements and conditions of the visa Subclass 442.

We wish you good luck with your application and we look forward to working with you in the coming 12 months.

Sincerely yours

'Ms Smith' National Operations Manager

Document received: ......... "

21. The employees each signed and returned a copy of the offer letter, paid the tuition fee, their visa applications to train and work in Australia were subsequently approved, and they arrived in Australia between 18 August 2005 and 28 August 2005.

22. The employees' training visas were valid until on or about 23 August 2006.

23. Shortly after arriving in Australia, the employees undertook a period of in-class training with the defendant. The length of initial in-class training varied between individual employees but generally extended to at least eight weeks. In-class training continued during the 50 week duration of the engagement by the defendant, from about August 2005 until July 2006.

24. From approximately late October 2005 and early November 2005 the defendant caused (by its arrangement with Nurse Bank) the employees to begin performing work for various health care operators, including but not limited to nursing homes and hospitals.

25. The health care operators for which the employees were performing work were clients of Nurse Bank.

26. Pursuant to the terms of the employment contracts the defendant engaged the employees to perform work outside of their in-class training hours as directed by the defendant to clients of Nurse Bank.

27. Under their employment contracts the employees were paid under the terms of the National Training Wage Award 2000 and paid approximately $439 gross per week before deductions were made from their pay. This amount was irrespective of the hours they worked each week.

28. At no stage during their employment did the Training Award actually apply to these employees' work. At no stage were the employees undertaking a "Traineeship" as defined by Clause 5 of the Training Award. As such they were not covered by the Training Award and were entitled to be paid under the terms of the relevant award.

29. The employees performed work designated by The Award as "Nursing attendants" and "Personal care assistants". Such work was performed for various businesses as directed by the defendant between 6 November 2005 and 11 July 2006.

30. The employees were sent to work at 15 aged care facilities.

31. The defendant pleads in its defence that the employees would receive practical training by means of a `clinical work placement’ in a health institution. It engaged Nurse Bank to outsource this `placement.’

32. Evidence given by Jude Forsyth, director of nursing at Emily Lenny, a residential aged care facility in Coburg was that she requested and understood she was being supplied with staff “capable of performing their duties, rather than as trainees”. She confirmed “no training of the employees of Nurse Bank” was undertaken at Emily Lenny as the employees were engaged on the basis that they were capable of performing their duties. She could not exclude the possibility that her administrative staff may have been told otherwise by Nurse Bank on specific occasions. In respect of two of the employees engaged at this facility, Nurse Bank charged $25.05 per hour, an amount greater than the relevant rate under the Health and Allied Award. Emily Lenny paid these amounts on the basis that they were capable of performing their duties.

33.

Services at Austin Health. He stated that two of the employees were supplied by

Nurse Bank to Austin Health to perform duties as “patient observers”. No training

Similarly, evidence was given by Shane Crowe, Director of Ambulatory and Nurse $24.54 per hour and $34.37 per hour for weekends, night shifts and penalty rates.

Deductions

34. During the relevant period the defendant caused deductions to be made from the employee's gross wage of $439 per week for PAYG tax, health insurance, commission and a security bond.

35. The deductions made for health insurance, commission and a security bond could not be treated as wages paid pursuant to The Award.

Moneys paid to the employees during their employment

36. During their employment, the employees received the following gross amounts, after deductions ("Actual gross amount"), for all hours worked:

(a) $15,700 gross for a total of 1260.24 hours worked in the case of Carol.

(b) $15,882 for a total of 1348.18 hours worked in the case of Elaine.

(c) $15,860 gross for a total of 1255.83 hours worked in the case of Jane.

(d) $15,073.40 gross for a total of 870.5 hours worked in the case of May.

(e) $15,150 gross for a total of 877.9 hours worked in the case of Michelle.

(f) $15,874.30 gross for a total of 1290.78 hours worked in the case of Polly.

(g) $14,997.30 gross for a total of 1013.5 hours worked in the case of Ruby.

(h) $15,860 gross for a total of 1226.72 hours worked in the case of Yan.

37. On or about 13 July 2006 the employment of the employees came to an end. By letter dated 26 July 2006 a director of the defendant, Mr Hickling, advised the employees that the defendant would be making further payments to them. The amounts ranged between $313.32 net in the case of May to $6147.30 net in the case of Carol.

38. Taking into account the payment of the amounts referred to above, the employees received in total the following gross amounts after deductions for all hours worked, ("Adjusted gross amounts").

(a) $22,770.37 gross for a total of 1260.24 hours worked in the case of Carol.

(b) $24,476.21 gross for a total of 1348.18 hours worked in the case of Elaine.

(c) $22,570.55 gross for a total of 1255.83 hours worked in the case of Jane.

(d) $15,591.32 gross for a total of 870.5 hours worked in the case of May.

(e) $15,111.79 gross for a total of 877.09 hours worked in the case of Michelle.

(f) $23,090.09 gross for a total of 1290.78 hours worked in the case of Polly.

(g) $18,306.15 gross for a total of 1013.5 hours worked in the case of Ruby

(h) $23,250.34 gross for a total of 1226.72 hours worked in the case of Yan.

Minimum entitlements of award

39. During the relevant period, under the pre-reform Act the defendant was obliged to pay the employees a minimum rate of pay and, under both the pre- reform Act and post-reform Act penalties for weekend work and shift loadings for certain shifts for each hour or shift worked by the employees in that:-

(a) the defendant was bound to observe the terms of the Award in respect of its

employees;

(b) the employees performed work that fell within the following classifications in

the Award:

(i) orderly or, in the alternative, a nursing attendant;

(ii) personal care worker Grade 1

(c) at the direction of the defendant the employees were engaged to work for

clients of Nurse Bank outside of their in-class training on a casual basis. (The

employees worked more than 38 hours per week, worked irregular and

unpredictable hours which varied on a weekly basis and did not receive payment

for sick or annual leave on a pro rata basis or at all).

Australian fair pay and conditions standard ("afpcs")

40. During the relevant period, from the commencement of the post reform Act the defendant was obliged to pay the employees a basic periodic rate of pay, and the casual loading for each hour worked in that the defendant was bound to observe the terms of the AFPCS.

Relevant rates or amounts under the award

41. The employees were entitled to be paid the following rates or amounts for the work they performed under The Award.

(a) for ordinary hours Monday to Friday up until the commencement of the post

reform Act (inclusive of casual loading):

(i) an hourly rate of $17.70 for work as an orderly or nursing attendant and (ii) an hourly rate of $18.55 for work as a personal care worker (Grade 1).

(b) for hours worked between midnight Friday and midnight Sunday and all work

done on public holidays:

(i) an hourly rate of $24.78 for work as an orderly or nursing attendant.

(ii) an hourly rate of $25.97 for work as a personal care worker Grade 1.

(c) for rostered hours of ordinary duty finishing between 6 p.m. and 8 a.m. or

commencing between 6 p.m. and 6.30 a.m:

(i) an additional amount of $14.53 per rostered period of duty as an orderly or

nursing attendant;

(ii) an additional amount of $14.53 per rostered period of duty for a personal

care worker (Grade 1).

(d) for rostered hours of ordinary duty beginning before 12 a.m. and finishing after

12 a.m. (on the next day) or commencing between 12 a.m. and 5 a.m:

(i) an additional amount of $23.25 per rostered period of duty as an orderly or

nursing attendant;

(ii) an additional amount of $23.25 per rostered period of duty as a personal

care worker (Grade 1).

Relevant rates under the afpcs

42. The employees were entitled to be paid the following rates or amounts for the work they performed under the AFPCS:

(a) for ordinary hours from Monday to Friday from the commencement of the post-

reform Act (inclusive of the casual loading):

(i) an hourly rate of $17.70 for work as an orderly or nursing attendant and;

(ii) an hourly rate of $18.55 for work as a personal care worker (Grade 1).

Employee entitlements based on hours worked

43. During the relevant period the employees were entitled to be paid a total of $194,192.81 gross for all hours worked as follows;

(a) $26,835.65 gross for a total of 1260.24 hours worked in the case of Carol.

(b) $29,152.75 gross for a total of 1348.18 hours worked in the case of Elaine.

(c) $26,503.88 gross for a total of 1255.83 hours worked in the case of Jane.

(d) $18,101.04 gross for at total of 870.5 hours worked in the case of May.

(e) $18,164.21 gross for a total of 877.9 hours worked in the case of Michelle.

(f) $27,169.88 gross for a total of 1290.78 hours worked in the case of Polly.

(g) $21,629.16 gross for a total of 1013.05 hours worked in the case of Ruby.

(h) $26,636.24 gross for a total of 1226.72 hours worked in the case of Yan.

44. Until an adjustment was made after the termination of their employment, the actual gross amounts paid to the employees was less than the minimum gross amounts required to be paid under The Award and the AFPCS by a total of $69,795.81 gross in total.

45. For the relevant period the adjusted gross amounts paid to the employees was less than the minimum gross amounts required to be paid under The Award and the AFPCS by a total of $29,025.17 gross as follows:

(a) $4065.28 gross in the case of Carol.

(b) $4676.54 gross in the case of Elaine.

(c) $3933.33 gross in the case of Jane.

(d) $2509.72 gross in the case of May.

(e) $3052.42 gross in the case of Michelle.

(f) $4078.99 gross in the case of Polly.

(g) $3323.01 gross in the case of Ruby.

(h) $3385.90 gross in the case of Yan.

46. On 24 September 2007 the defendant paid the outstanding entitlement of $29,025.17 gross in full by a cheque paid to the Workplace Ombudsman.

47. During the course of proceedings the Court was informed that underpayments were also owing to a second tranche of Chinese employees engaged by the defendant. Those employees were not part of these proceedings. The Court was however informed that all outstanding underpayments had been remedied by way of cheque paid to the Workplace Ombudsman on the day of commencement of this hearing.

Investigation and institution of proceedings

48. This matter was referred to the Office of Workplace Services (as it was then known) by DIMIA on or about 20 July 2006.

49. Investigations commenced on or about 7 August 2006 when Inspector Komiatis attended a meeting with the Global Operations Manager of the defendant at its offices. At the conclusion of this meeting a notice to produce was issued to the defendant requiring the production of all records of current and former employees of

the defendant holding occupational trainee visas. In reply to the notice the defendant
provided time and wage records along with details of some back payments and
deductions that had been made for employees who had contacted DIMIA.

50. Further meetings were held on the 14th and 23 August 2006. The defendant assisted the investigation of this matter by forwarding requested material including Excel spreadsheets showing the hours of work of each employee and calculating their award entitlements and the underpayment of wages.

51. On 23 October 2006 the OWS completed its initial investigation. Inspector Komiatis emailed the defendant her first breach notice on 23 October 2006 attaching a spreadsheet used to derive the calculations. This first breach notice advised the defendant that an underpayment of $61,092.98 had been assessed as owing to the employees.

52. Extensions were requested until 30 November 2006 to provide a substantive reply. Further meetings were held with the defendant.

53. Subsequently, the plaintiff identified errors in their calculations in the first breach notice. It revised its calculations and issued a second breach notice on 2 May 2007. For a five month period prior to the issue of the second breach notice the plaintiff attempted to meet and conduct a formal interview with Mr Hickling, a director of the defendant. He refused to participate in a taped record of interview. It is apparent that the defendant has substantially failed to comply with “notices to produce” sent by the plaintiff.

Legislative provisions relating to penalty

54. Section 178(1) of the pre-reform WR Act enables this court to impose a penalty in respect of a breach of a term of an award or order of the Australian Industrial Relations Commission. Section 178(2) provided that where two or more breaches of a term of an award or order are committed by the same person, and the breaches arose out of a course of conduct by the person, the breaches shall, for the purposes of s.178, be taken to constitute a single breach of the term.

55. Section 719(1) of the WR Act enables this Court to impose a penalty in respect of a breach of an applicable provision by a person bound by the provision. "Applicable provision" is defined in s.717 to include a term of an award and a term of the AFPCS.

56. Section 719 (2) provides that where two or more breaches of an applicable provision are committed by the same person, and the breaches arose out of the course of conduct by the person, the breaches shall, for the purpose of s.719, be taken to constitute a single breach of the term.

57. Section 719(4)(a) describes the maximum penalty that may be imposed by this court to be in the case of a body corporate, 300 penalty units. The maximum penalty per breach is therefore $33,000.

The court's approach to determine penalty

58. The Court accepts the plaintiff's submission in regard to the appropriate approach to adopt in determining what penalty to impose in this case.

59. Firstly the Court must identify the separate contraventions involved. Each breach of each separate obligation found in The Award and the Act in relation to the employees is a separate contravention of a term of an applicable provision for the purposes of s.719.

60. However, clearly it must be kept in mind that s.719 (2) provides that multiple breaches involved in a course of conduct should be treated as a single breach.

61. Secondly, to the extent that two or more contraventions have common elements, this is to be taken in to account in considering what in all the circumstances is an appropriate penalty for each contravention. The defendant should not be penalised more than once for the same conduct. The penalties imposed by the court should be an appropriate response to the defendant's conduct.

62. Thirdly, the Court should consider an appropriate penalty to impose in respect of each course of conduct, having regard to all the circumstances of the case.

63. Fourthly and finally, having fixed an appropriate penalty for each group of contraventions or course of conduct the Court should give final consideration to the aggregate penalty to determine whether it is an appropriate response to the conduct which has led to the breaches. The Court should then apply an "instinctive synthesis" in making this assessment.[2]

[2] Australian Ophthalmic Supplies Pty Ltd v. McAlary-Smith [2009]FCAFC8.

Grouping of contraventions

64. I accept as appropriate the following grouping of the defendant's breaches. Each of these categories is properly considered separate and distinct and the conduct does not arise out of an overlapping single course of conduct:

* Failure to pay the hourly rate of pay (inclusive of casual loading) for work done on Mondays to Fridays pursuant to Clause 13.2 of The Award and s.182.(1) of the WR Act;

* Failure to pay the hourly rate of pay (inclusive of casual loading) for work done on
Saturdays, Sundays and public holidays pursuant to Clause 13.2 of The Award;

* Failure to pay shift allowances as provided for in Clauses 31.1 and 31.2 of The
Award;

* Failure to pay casual loading in accordance with s.185(2) of the WR Act.

65. The total maximum penalty to be considered by the Court is $132,000.

66. I note that the contraventions of clause 13.2 and s.182(1) are particularly significant in that this clause provides for a number of obligations that are usually provided for in awards by separate clauses and attracting individual penalties.

Factors relative to penalty

67. The factors relevant to the imposition of penalty under the WR Act have been approved by, and adopted by, Tracey J in Kelly v. Fitzpatrick[3]. I accept that whilst this summary is a convenient check list it is not exhaustive and there may be other matters which ought be taken in to account by the Court in the exercise of its discretion.[4]

[3] (2007) 166 IR 14

[4] Sharpe v. Dogma Enterprises Pty Ltd [2007] FCA 1550.

Nature and extent of the conduct

68. The employees in this matter were paid at a flat rate of $439 per week less deductions irrespective of the number of hours of work performed and the time at which the work was undertaken. The underpayments did not arise simply as a result of the employer incorrectly applying the National Training Wage Award. The Training Award provides only for the base rate of pay in respect of certain employees. Employees subject to the Training Award are still entitled to casual loadings, penalty rates and allowances provided for under the applicable industry awards. They are also entitled to be paid for all hours they work. Moreover, the unlawful deductions made in this case do not arise as an incorrect application of the Training Award by the defendant.

69. The conduct occurred in respect of the eight employees over a period of approximately ten and a half months. It arose by consequence of the failure by the defendant to apply the correct base rate of pay to their employment, the failure to observe penalty rates applying for work conducted on days other than Monday to Friday and on public holidays, failure by the defendant to pay allowances in respect of shift work and the unlawful deduction of money from wages of employees by the defendant.

70. I accept that it was the intervention of the Workplace Ombudsman in this matter that caused the conduct to cease.

Circumstances in which the conduct took place

The circumstances of the defendant

71. The defendant company was a registered training organisation. Its related company Nurse Bank Australia Pty Ltd is a well known nurse placement agency. It was through Nurse Bank that the defendant provided employment to the employees. Nurse Bank and the defendant company share a common director, Mr Hickling. The core business of Nurse Bank is to sell nursing labour. As this is its core business I infer that those in senior positions at Nurse Bank have a specialised knowledge in Industrial Relations, particularly insofar as it relates to work performed in the nursing sector.

72. I note that Mr Hickling did not ultimately agree to take part in a recorded record of interview nor did he give evidence in these proceedings. He did not attend at the hearing of this matter and instead left an employee, Ms Smith, the Global

Operations Manager, to give all evidence in relation to the conduct of the defendant.

73. I accept that ETEA had never previously employed staff directly. Its focus was on training. Ms Smith presented as a savvy and experienced professional in business development. She demonstrated sufficient confidence and expertise to negotiate the employment of foreign nationals and to navigate her way through complex immigration requirements for the Nurse Educator Program.

74. During the training year 2005/06 the defendant company trained over 3000 persons. Their business activities included international travel to China and it employed a Chinese representative located there after 1 October 2005.

75. The defendant was invited to give evidence about its size and financial viability. It expressly chose not to put such evidence before the Court. The Court can therefore only infer that the organisation is a relatively sophisticated, medium size business.

76. I accept that the defendant had the capacity at all times to access specialised industrial relations and legal advice. They did so on occasions, seeking advice from VECCI from at least March 2007 in respect of the Workplace Ombudsman's investigation. They later engaged specialised lawyers to provide advice.

77. I also infer that because of the relationship of the defendant with Nurse Bank (they shared common directors and premises), that at all relevant times the defendant had access to Nurse Banks expertise and knowledge.

78. While I accept that Ms Smith personally may not have held industrial relations qualifications and that she may not have had detailed experience dealing with such matters, it is clear that she was competent to ask for and obtain appropriate advice in relation to this area.

The circumstances of the employees

79. The employees were Chinese nationals in Australia on Occupational Trainee visas. Ultimately they became, "competent" in English communication in the workplace. There was clearly need for them to improve their English skills prior to commencing the work in question. Some of them took additional ESL classes before and after commencing paid work. Some did so on their own time. A significant portion of the English lessons they took commenced in the second half of their stay. They needed assistance adjusting to their stay in Australia and were unable to change employer or their position in Australia without the prior approval of DIMIA and the defendant.

80. The employees were told by the defendant they were required to work as requested by Nurse Bank as part of the process through which they would earn the qualifications for which they were studying (and paying for).

81. For these reasons I accept that the employees were in a significantly inferior bargaining position to the defendant and their capacity to know and assert their rights in the workplace were significantly impaired by their circumstances and status in Australia.

82. It was in these circumstances the defendant informed the employees by its letter of offer dated 1 July 2005 that they were to be paid in accordance with the National Training Award - an award which had no application to the work which was to be conducted by them.

83. Furthermore the employees were told by the defendant that they were required to work as requested in order to obtain their qualifications.

The work performed

84. The employees performed duties of personal care assistants and nursing attendants or orderlies during the course of their employment. The amount of supervised workplace based training was two weeks. For all other hours of work they were hired out to various nursing facilities by Nurse Bank. Nurse Bank did not treat the students as a separate category of employee from those that were not students. The employees were supervised by a registered nurse but they did not receive workplace based training whilst working with the nursing facilities to which Nurse Bank hired them.

85. The employees worked in excess of the hours required by the Nurse Educator Program they were undertaking with the defendant. In some cases they worked up to 68 hours per week. By the time they left Australia each had worked well in excess of the hours provided for in that program's timetable. Two of the employees had worked more than twice the number of hours it provided. Regardless of the number of hours worked the employees were paid the same amount by the defendant.

86. Their hours of work were intermittent and involved shift work and work on public holidays. They were not paid for all of the hours worked, nor were they paid penalties for working days other than Monday to Friday, shift allowances or casual loading. They were paid at the base hourly rate much lower than the rate that they were entitled to.

The income being derived by nurse bank for the work conducted

87. The defendant claimed that Nurse Bank charged its clients less than the amount under the H&AS Award, and that it had therefore made a loss for the work done by the students. Mr Butler, a Workplace Inspector, conducted a random analysis of the invoices discovered by the defendant and demonstrated that this assertion is incorrect. On average it appears that Nurse Bank received an amount in the order of $6 per hour for work performed, plus a commission fee. Nurse Bank has profited from the placement of these employees even after the underpayments have been rectified.

88. Nurse Bank invoiced the nursing facilities worked at by the employees at significantly higher rates than they were paid. This appears to be an amount determined by reference to The Award plus a profit component on top of this amount. Nurse Bank invoiced each of the facilities for allowances including uniform and shift allowance but failed to pass these on to the employees.

Profit

89. The fact that Nurse Bank made a profit upon placing these employees is a neutral factor in the determination of penalty. What does weigh in determining penalty is however the assertion initially made by the defendant that it lost money by rectifying

the underpayment. This is clearly a fallacy.

The clinical work placements

90. The employees clearly gained work experience by virtue of the work that they were directed to perform. This was integral to the process of assessment of competency which is a cornerstone of the process of training. They were not however given

properly supervised workplace training. They failed to reach the level of competency
required in order for them to gain certain qualifications which they had paid to
receive. They paid to receive the Certificate IV in workplace in aged care. This
suggests that they did not receive the training that they required in order to obtain
this qualification.

Nature and extent of loss or damage

91. Shortly after the termination of employment part payment of wages and entitlements reduced the underpayment for these eight workers from $70,000 to $30,000. This balance however remained outstanding for more than 12 months.

92. The underpayment to the employees was most significant, ultimately amounting to a total of $29,025.17. The amounts ranged from $2500 to $4676 for each of the employees concerned. The employees were back paid approximately one year after the last day worked by them. They have not been paid any interest in respect of the underpayment.

“Unfortunately the answer isn't quite as simply as you would expect. The following workforce. The trainees are entitled to the trainee rates for all hours in the workplace and at any formal training. The figure proposed of some $225 per week would not appear to be appropriate.

Similar previous conduct

93. There is no evidence alleged of any similar previous conduct by the defendant. Note was made however of subsequent conduct in respect of a second tranche of the employees. This underpayment has now been rectified.

Deliberateness of the breaches

94. The defendant places reliance upon information provided by Federal Government agencies to explain the breaches. However, a close examination of the correspondence referred to by the defendant establishes that the advice provided by those departments was not in the terms alleged by the defendant.

95. The affidavit prepared by Ms Smith discusses her state of mind when liaising with DIAC regarding the nominated declaration in order to obtain the necessary visa approval for the students. Ms Smith refers to a telephone conversation with Mr Coleman of DIAC on the morning of 21 June 2005. She deposes that Mr Coleman informed her that the training allowance of $225 was not accepted by the Department of Employment and Workplace Relations ("DEWR") and that they were suggesting the National Training Wage Award might apply. He agreed to forward a copy of an email he had received from DEWR and suggested she take a look at that. Ms Smith deposes:

"Mr Coleman did not mention on the phone to me that the National Training Wage

Award rates might not apply in some circumstances".

96. The email sent to Ms Smith on 21 June 2005 forwarded by Mr Coleman from Rod Doyle of DEWR states as follows:

"Domenica how that works but subject to that you will need to rejig.

Chris Coleman

Assistant Manager

Melbourne Business Centre”

(…)

[from Rod Doyle-dewr.gov.au]

..... “Chris,

I received the following back from OWES, it would seem the proposed figure of

$225 would not appear to be appropriate” ...

(…)

information applies if the students are signed up to a full time traineeship, in

accordance with their Vocational Employment training legislation. If they are not

signed up with OTTE (in Victoria) then they would be entitled to receive full award

rates of pay - which would be significantly higher.

A trainee undertaking Certificate III in aged care would be entitled to the following wage rates, depending on the highest year of schooling they have completed and the number of years since this schooling was completed.

If the trainee is from overseas, they would need to get their level of education accredited by the Department of Education or VCAT the Board of Studies. This accreditation would determine whether their level of schooling is equivalent to Year 10, Year 11 or Year 12 in Australia.

The trainee will be entitled to receive the relevant rate for all hours worked, this

rate would not be reduced by the number of months the trainee will work in

Australia.

Please note the wage rates below are for trainee engaged on a full time basis. If engaged on a part time basis different rates will apply.”

Wage Level A

“Where the accredited training course and work performed are for the purpose of

generating skills which have been defined for work at wage Level A' ( ...)"

97. Ms Smith then deposes that she understood the reference to "Rejig" to mean that: "I needed to change the rate that ETEA had proposed in its nomination in line with the rates in the email from Doyle. As Chris had mentioned the levels of rates at the

start of his phone conversation to me, I then looked straight to that part of the email to him from Rod Doyle, which had the different levels of wage rates. I do not recall specifically reading the earlier part of the email from Doyle" .... "I know that my earlier

understanding of ETEA's obligation remains that conveyed to me in the earlier
conversation with Mr Coleman, that the allowance to be paid by ETEA should be in
line with the National Training Wage Award rates."

98.

"At the time I believed that the email was confirming the earlier verbal advice given to

me that ETEA should pay National Training Award rates. I was of the impression

Ms Smith further deposes that: upon which I could rely. Because of this I did in fact rely upon what Coleman said to me in that he did not mention any conditions for the National Training Wage Award to apply."

99.

She explains her oversight by stating: time that there was any need for me to give it such close attention. I now know that my understanding of the situation was erroneous. I say this because I did not know whether it was possible for Chinese nationals to be 'Trainees' under the Training Award. I did not analyse that question at the time, because in all my previous experience I have used 'Trainees' in the respect of Australian citizens. Prior to dealing with students from China, I had never had to consider whether foreign nationals were able to be dealt with in this way. I say that I made an honest mistake in relying upon what I had been told verbally."

100. June 2005 in which the defendant was informed:

Furthermore I accept that correspondence was sent from DIMIA to Ms Smith on 23 ("DEWR") suggests that in the majority of cases there exists a legal requirement for nominators to provide occupational trainees with suitable remuneration over the period of their placement. For further information regarding this issues, please refer to the DEWR fact sheet on unpaid work; work experience and trial work to which can be found at [internet address].

101. The fact sheet referred specifically to:

- “that the information given is general and businesses should seek their own legal

advice”

- “that persons undertaking productive work or generally create an employment

relationship and payment of wages would be required”;

- “that failure to observe workplace laws carries with it the risk of prosecution."

102. Ms Smith denies having seen this fact sheet or having received this advice.

103. Furthermore on 24 May 2006 Mr Rod Doyle of the then DEWR told Ms Smith that the Health and Allied Services - Private Sector - Award applied to the work of the employee.

104. On 25 May 2006 in correspondence with Ms Smith Mr Doyle stated:

"However, as you would be well aware, there have been significant reforms to the Departments response was sent to you from DIMIA, the paragraph relating to the Australian Government's new apprentice scheme is in fact correct. Therefore

your company would be required to pay any occupational trainees a salary based on the relevant workplace relations instrument for the occupation in which they are employed." (emphasis added)

Whilst earlier in this letter the author makes the statement

"The wages your company was paying the previous trainees would not appear

to be in breach of the Industrial Relations Legislation"

105. The Court was not referred to the document sent to DEWR upon which this conclusion was based. What is clear, however, is the correspondence clearly directs the defendant to consider the question of which industrial instrument applies to its employees.

106. The defendant has sought to justify its substantial underpayment of these employees by excusing its behaviour of having failed to read the correspondence sent to it. There can be no excuse for a defendant to avoid its lawful obligations by such wilful ignorance of lawful entitlement. This is no `mere oversight’.

107. The defendant has lawfully disregarded its legal obligations in respect of these employees. It was beholden upon the defendant as an employer to take the necessary steps to determine its correct legal obligations. Rather than being misled by relevant Government departments, the converse is true. Had they bothered to read in entirety the information sent to them, the defendant would have realised that their assumption that they could pay these employees pursuant to a training wage was misguided. A prudent employer would have at the outset of such a program engaged qualified specialised advisers to assist in the determination of the relevant instrument. Alerted to such a possibility that the Training Award would not apply, a prudent employer would have at that stage taken steps to ascertain the correct lawful obligations. Such wilful blindness to the true state of the lawful obligations is inexcusable.

Involvement of senior management

108. Senior management of the defendant was involved in the contraventions through "Ms Smith", who at all relevant times held the position of Global Operations Officer with the defendant.

109. The defendant asks the Court to have sympathy for Ms Smith. It is said she is not someone who is comfortable with Award terms. She has experience in business management, client relations, transport and logistics but has no identifiable Industrial

Relations qualifications or experience. The defendant further submits that ETEA is not usually the employer in respect of these ventures. The entire Nurse Educator Program is new ground breaking territory in the Australian training industry and Ms Smith necessarily had dealings with the Department of Immigration during which she was confronted with the issue of what wages to pay and was given specific verbal and written information. The defendant submits that the information given to Ms Smith was based upon a false premise and not one detected by her. They submit that the reason for not detecting this premise arose from the particular circumstances in which the communication was made and what Ms Smith described as her "oversight" in not reading part of the email communication she received.

110. I do not accept the submission of the defendant that the Court ought be satisfied that Ms Smith believed that the email from Mr Coleman confirmed earlier verbal advice and she settled on a highest rate of pay under the National Training Award. The defendant submits her mistake was in not reading the balance of the Coleman email and not turning her mind to the issue any further at the time or seeking professional Industrial Relations or legal advice.

111. The parties made much of Ms Smith's knowledge or lack thereof of Industrial Relations. Ultimately, I do not accept that a great deal turns on this point. She was not an expert and as such her obligation as an employer was to ensure that she got appropriate and correct advice as to what her obligations as an employer were. She clearly failed to do this.

112. The Court requested the parties make submissions in respect of the appropriate weight to be placed in cases where there had been wilful disregard or oversight of lawful obligations. The court was referred to the cases of Sharpe v. Dogma Enterprises Pty Ltd [2007] FCA155O; Cotis v. McPherson [2007] FMCA206O; Dennington v. Pee Cee Pty Ltd [2008] FMCA 79; Flattery v. Zeffirellie's Pizza Restaurant [2007] FMCA 9; Jarvis v. Imposete Pty Ltd [208] FMCA 101 and Durnford v. Allen Taylor & Co Ltd 5 September 1990 (unreported).

113. Clearly this is a matter to be taken in to account in determining penalty. There are no hard and fast rules however arising from this series of cases. Ultimately each case turns on its facts and the degree of wilful disregard will be relevant in determining penalty.

114. The parties also made a great deal of the significance of the relative English language skills of the employees. The defendant urged the Court to reject the prosecutor's submission that these employees were at a significant disadvantage by virtue of their poor English language skills. Whether or not they had superior English language skills, these employees were foreign nationals without a working knowledge of the Australian Industrial Relations System. They needed help in settling in to life in Melbourne. This included being taken to the Queen Victoria Market as part of their cultural integration. The employees were clearly not on a "level playing field" with other Australian employees. Whether or not they had a competent command of the English language is really secondary to this point. They were vulnerable due to their cultural background and less than perfect English skills.

Contrition, corrective action and cooperation with the authorities

115. The defendant has rectified the underpayments, although it did not do so until more than four months after the final breach notice was issued by the Workplace Ombudsman and almost 12 months after the final date of employment of the employees. The defendant substantially failed to comply with “notices to produce” sent by the plaintiff.

116. The defendant had many opportunities to voluntarily remedy its breaches prior to the point at which it did so. It was only after numerous extensions of time and the threat of litigation looming large that compliance was finally achieved.

117. The defendant has assisted the conduct of this case. They have provided hours and wages spreadsheets to the Investigators and have also cooperated to agree an extensive statement of facts relied upon in these proceedings.

118. The defendant has however sought to minimise its wrongdoing in this matter in the context of these penalty proceedings. They have filed voluminous evidence and have placed heavy reliance upon advice received by other Federal agencies in asserting their defence. Close consideration of the documents referred to does not on an objective analysis lead to the conclusion which the defendant has drawn.

119. The defendant asserted initially by way of affidavit of Ms Smith that Nurse Bank had "suffered a loss of $29,025.17" as the result of charging nursing homes for employees services as a Training Award rate rather than the applicable award rate. However, analysis of the relevant invoices indicates that this is incorrect. Ms Smith amended her statement at the time of giving evidence, changing the word "Loss" to, "Under budgeted".

120. While the defendant admits it made an error in its interpretation of some of the advice it was given, at no time does it admit error in failing to obtain advice from Industrial Relations professionals or lawyers at the outset in respect of its obligations.

121. I do however give the defendant credit for rectifying the underpayment of wages prior to the commencement of these proceedings. This weighs significantly to their credit in the determination of penalty.

122. Ms Smith indicated remorse in the witness box under cross-examination. This remorse however has not been conveyed to the Chinese employees.

Ensuring compliance with minimum standards

123. One of the principle objects of the WR Act is the maintenance of an effective safety net, and effective enforcement mechanisms to ensure this. The importance of the maintenance of this safety net is reflected not only in the magnitude of the maximum penalties available in respect of any breach of an applicable provision but also the increase in those maximum penalties from August 2004. This matter involves contraventions of safety net terms and conditions of employment.

124. The enforcement of these standards is all the more important in this case due to the vulnerability of the foreign students. They lacked the supports of locally based workers, presumably did not have knowledge of local laws and employment standards, had only a very basic command of English, and were reliant upon the defendant to stay in Australia.

Specific and general deterrence

125. It is well established that "the need for specific and general deterrence" is a factor that is relevant to the imposition of penalty under the WR Act. The plaintiff has conceded it is unlikely that the defendant will breach its obligations in respect of Commonwealth workplace relations laws again in the near future. Accordingly it submits that the need for specific deterrence in this matter is not particularly high. The plaintiff submits that there remains a strong need for general deterrence particularly in respect of employers who sponsor employees from overseas on temporary visas.

126. The need for general deterrence is seen in this matter of particular importance in respect of employers who are sponsoring employees on temporary visas. Employees who are subject to temporary visas whereby they cannot change employer without the permission of DIMIA are at a distinct bargaining disadvantage.

127. Such employees when agreeing to their terms before coming to this country clearly are at further disadvantage by their relative lack of English language skills. It is important that the Court demonstrate that the community will not tolerate the exploitation of employees such as these who are most in the need of protection of the safety net and other Workplace Relations laws.

Conclusion

128. The plaintiff in this case calls for a penalty in the mid to high range be imposed.

129. The defendant urges that the circumstances of this case militate away from a penalty at the higher end of the scale as:

(a) the breaches were not wilful or deliberate,

(b) the breaches are in the nature of an oversight,

(c) there is evidence of unexpected financial cost to the defendant, the cost of

which must necessarily include the cost of this proceeding and

(d) there is evidence of a further tranche of Chinese trainees who have been

paid under Health and Allied Award.

130. Ultimately the defendant urges the court that all of the facts require that no penalty be imposed.

131. I do not accept that this is an appropriate characterisation of the behaviour of the defendant in this case. The breach was extremely serious, not a mere oversight.

132.

By consent the following declarations were made by this Court on 7 August 2008: breached clause 13.2 of the Health and Allied Services -- Private Sector -- Victoria Consolidated Award 1998 ("Award") and section 182 (1) and/or 185(2) of the Workplace Relations Act 1996 ("W.R. Act") in respect of payment for work done on Mondays to Fridays to:

(a)	Xiaoni Yan (“Carol”);
(b)	Juanli Su (“Elaine”);
(c)	Haiyan Yu (“Jane”);
(d)	Wenjing Chen (“May”);
(e)	Meijin Wang (“Michelle”);
(f)	Xiaohong He (“Polly”);
(g)	Yunxiang Wang (“Ruby”);
(h)	Yan Han (“Yan”).

2. By a course of conduct between 22 October 2005 and 11 July 2006 the defendant

breached clause 13.2 of the award in respect of payment for work done on

Saturdays, Sundays and public holidays to Carol, Elaine, Jane, May, Michelle, Polly,

Ruby and Yan.

3. By a course of conduct between 22 October 2005 and 11 July 2006 the defendant

breached clause 31.1 of the award in respect of Carol, Elaine, Jane, May, Michelle,

Polly, Ruby and Yan.

4. By a course of conduct between 22 October 2005 and 11 July 2006 the defendant

breached clause 31.2 of the award in respect of Carol, Elaine, Jane, May, Michelle,

Polly, Ruby and Yan.

133. I find the four award breaches proven. The seriousness of each breach is identical. Each ought then to attract the same level of penalty. The defendant will receive a discount of 25% of the maximum for its admissions of guilt and cooperation with the investigators. A further 25% will be discounted for lack of relevant priors, payment of all outstanding entitlements prior to trial and the mitigating factors discussed above. Having regard to all of the matters outlined above, I consider that a penalty of 50% of the maximum in respect of each of these breaches is appropriate i.e. $16,500 per breach for a total of $66,000.

134. Having fixed an appropriate penalty for each course of conduct, the Court must take a final look at the aggregate penalty to determine whether it is an appropriate response to the conduct which led to the breaches and that the penalty is not harsh or oppressive. This has been described as the `instinctive synthesis test’[5]. This is a task of guess work as the defendant chose not to supply any financial material upon which the effect of the penalty could be assessed. From what I am aware of the nature of the defendant’s business the total penalty does seem rather high. Accordingly I propose to reduce it to $40,000.

[5] I have regard to the considerations discussed by the Full Court of the Federal Court in Australian Ophthalmic

ORDERS:

135. I direct that the defendant pay to the plaintiff a total penalty of $40,000 within one

Supplies Pty Ltd v McAlary-Smith [2008]FCAFC 8