Australian Building and Construction Commissioner v Open Tiling Services

[2021] FCCA 2201

FEDERAL CIRCUIT COURT OF AUSTRALIA

Australian Building and Construction Commissioner v Open Tiling Services [2021] FCCA 2201

File number(s):	SYG 2121 of 2020
Judgment of:	JUDGE DRIVER
Date of judgment:	4 August 2021
Catchwords:	INDUSTRIAL LAW – FAIR WORK – Agreed facts – assessment of penalties for admitted breaches.
Legislation:	Fair Work Act 2009 (Cth), ss.44, 50, 90, 117, 323, 535, 536, 545, 546 Fair Work Regulations 2009 (Cth) Federal Circuit Court of Australia Act 1999 (Cth), s.16
Number of paragraphs:	5
Date of hearing:	4 August 2021
Place:	Sydney
Counsel for the Applicant:	Mr D Fuller
Solicitor for the Applicant:	Australian Building and Construction Commissioner
Counsel for the Respondents:	Mr P Berg
Solicitor for the Respondents:	Cambridge Lawyers Campsie

ORDERS

SYG 2121 of 2020

BETWEEN:

AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER

Applicant

AND:

OPEN TILING SERVICES PTY LTD ACN 139 841 802

First Respondent

JAE JUNG KIM

Second Respondent

ORDER MADE BY:	JUDGE DRIVER
DATE OF ORDER:	4 AUGUST 2021

THE COURT ORDERS THAT:

Declarations

1.Pursuant to section 16 of the Federal Circuit Court of Australia Act 1999 (Cth) (FCC Act), declare that the First Respondent, Open Tiling Services Pty Ltd (Open Tiling), contravened the following civil remedy provisions:

(a)section 535(1) of the Fair Work Act 2009 (Cth) (FW Act), by failing to make and keep for 7 years employee records in relation to its employee Minwuk Jang (Mr Jang) of the kinds specified in:

(i)regulation 3.32(c) to (e) of the Fair Work Regulations 2009 (Cth) (FW Regulations);

(ii)regulation 3.33(1) (before 5 March 2018) and 3.33(3) of the FW Regulations;

(iii)regulation 3.34 of the FW Regulations; and

(iv)regulation 3.36(1) of the FW Regulations;

(b)section 536(1) of the FW Act, by failing to give Mr Jang pay slips within one working day of paying an amount to Mr Jang in relation to the performance of work;

(c)section 50 of the FW Act, by:

(i)failing to give Mr Jang pay slips specifying his classification under the Open Tiling Services Pty Ltd / CFMEU Collective Agreement 2014 – 2017 (2014 EA) or the Open Tiling Services Pty Ltd / CFMEU Collective Agreement 2018 (2018 EA), pursuant to:

(A)clause 13 of the 2014 EA (from 15 September 2017 to 23 August 2018); and

(B)clause 14 of the 2018 EA (from 24 August 2018 to 6 May 2019);

(ii)failing to pay Mr Jang minimum wage rates, pursuant to:

(A)clause 11.1 of the 2014 EA (from 15 September 2017 to 23 August 2018); and

(B)clause 12.1 of the 2018 EA (from 24 August 2018 to 6 May 2019);

(iii)failing to pay Mr Jang in relation to public holidays and union picnic days before 5 March 2018, pursuant to clause 25.5a) and b) of the 2014 EA;

(iv)failing to pay Mr Jang overtime rates, pursuant to:

(A)clause 25.10 of the 2014 EA (from 15 September 2017 to 23 August 2018); and

(B)clauses 27.3c) and 27.4 of the 2018 EA (from 24 August 2018 to 6 May 2019);

(v)failing to pay Mr Jang productivity allowance, pursuant to:

(A)clause 11.2 of the 2014 EA (from 15 September 2017 to 23 August 2018); and

(B)clause 12.2 of the 2018 EA (from 24 August 2018 to 6 May 2019);

(vi)failing to pay Mr Jang fares allowance, pursuant to:

(A)clause 14 of the 2014 EA (from 15 September 2017 to 23 August 2018); and

(B)clause 15 of the 2018 EA (from 24 August 2018 to 6 May 2019);

(vii)failing to pay Mr Jang meal allowance, pursuant to:

(A)clause 20.2 of the Building Award as incorporated into the 2014 EA (from 15 September 2017 to 23 August 2018); and

(B)clause 20.2 of the Building Award as incorporated into the 2018 EA (from 24 August 2018 to 6 May 2019);

(viii)failing to pay Mr Jang in relation to untaken rostered days off, pursuant to:

(A)clauses 25.2ix.) and 25.8 of the 2014 EA (from 15 September 2017 to 23 August 2018); and

(B)clause 27.2(c)ix.) of the 2018 EA (from 24 August 2018 to 6 May 2019);

(ix)failing to make the required superannuation contributions in relation to Mr Jang, pursuant to:

(A)clause 11.4 of the 2014 EA (from 15 September 2017 to 23 August 2018); and

(B)clause 12.5 of the 2018 EA (from 24 August 2018 to 6 May 2019);

(x)failing to pay Mr Jang in advance for his ordinary hours during periods of annual leave taken, pursuant to:

(A)clause 16.7.1 of the 2014 EA (from 15 September 2017 to 23 August 2018); and

(B)clause 18.10(a) of the 2018 EA (from 24 August 2018 to 6 May 2019); and

(xi)failing to pay Mr Jang annual leave loading in relation to annual leave taken, pursuant to:

(A)clause 16.7.2 of the 2014 EA (from 15 September 2017 to 23 August 2018); and

(B)clause 18.10(b) of the 2018 EA (from 24 August 2018 to 6 May 2019);

(d)section 44(1) of the FW Act, by:

(i)failing to pay Mr Jang at his base rate of pay for his ordinary hours of work in period of annual leave taken, pursuant to section 90(1) of the FW Act;

(ii)failing to pay Mr Jang in relation to his untaken paid annual leave, pursuant to section 90(2) of the FW Act; and

(iii)failing to provide the minimum period of notice on termination or payment in lieu of notice, pursuant to section 117(2) of the FW Act; and

(e)section 323(1) of the FW Act, by failing to pay Mr Jang the amounts payable to him in relation to his performance of work in full, in money by one of the methods specified in section 323(2) and at least monthly.

2.Pursuant to section 16 of the Federal Circuit Court of Australia Act 1999 (Cth) (FCC Act), declare that the Second Respondent, Jae Jung Kim (Mr Kim):

(a)was involved in each of Open Tiling’s contraventions set out in order 1; and

(b)by reason of that involvement, contravened each of the civil remedy provisions set out in order 1.

Rectification of underpayments and superannuation contributions

3.Pursuant to section 545(1) or (2)(b) of the FW Act, order that Open Tiling and Mr Kim, jointly and severally, pay compensation to Mr Jang in the amount of $88,949.04, being the total outstanding amount Mr Jang was underpaid because of the contraventions set out in orders 1 and 2.

4.An order that the amounts referred to in order 3 be paid to Mr Jang, in 52 weekly instalments, payable directly to Mr Jang by electronic funds transfer, in accordance with the timetable set out in Schedule 1 to these orders.

Pecuniary penalties

5.An order pursuant to section 546(1) of the FW Act that Open Tiling pay penalties for committing the contraventions set out in order 1 in the sum of $69,300, as set out in Schedule 2 to these orders within a period of 3 calendar months from the date of these orders.

6.An order pursuant to section 546(1) of the FW Act that Mr Kim pay penalties for committing the contraventions set out in order 2 in the sum of $13,860, as set out in Schedule 2 to these orders within a period of 3 calendar months from the date of these orders.

7.An order pursuant to section 546(3)(a) of the FW Act requiring Open Tiling and Mr Kim to pay their respective penalties to the Consolidated Revenue Fund of the Commonwealth.

Other orders

8.An order that the Commissioner have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.

SCHEDULE 1

Date payment is due	Amount
12/08/2021	$1,710.56
19/08/2021	$1,710.56
26/08/2021	$1,710.56
2/09/2021	$1,710.56
9/09/2021	$1,710.56
16/09/2021	$1,710.56
23/09/2021	$1,710.56
30/09/2021	$1,710.56
7/10/2021	$1,710.56
14/10/2021	$1,710.56
21/10/2021	$1,710.56
28/10/2021	$1,710.56
4/11/2021	$1,710.56
11/11/2021	$1,710.56
18/11/2021	$1,710.56
25/11/2021	$1,710.56
2/12/2021	$1,710.56
9/12/2021	$1,710.56
16/12/2021	$1,710.56
23/12/2021	$1,710.56
30/12/2021	$1,710.56
6/01/2022	$1,710.56
13/01/2022	$1,710.56
20/01/2022	$1,710.56
27/01/2022	$1,710.56
3/02/2022	$1,710.56
10/02/2022	$1,710.56
17/02/2022	$1,710.56
24/02/2022	$1,710.56
3/03/2022	$1,710.56
10/03/2022	$1,710.56
17/03/2022	$1,710.56
24/03/2022	$1,710.56
31/03/2022	$1,710.56
7/04/2022	$1,710.56
14/04/2022	$1,710.56
21/04/2022	$1,710.56
28/04/2022	$1,710.56
5/05/2022	$1,710.56
12/05/2022	$1,710.56
19/05/2022	$1,710.56
26/05/2022	$1,710.56
2/06/2022	$1,710.56
9/06/2022	$1,710.56
16/06/2022	$1,710.56
23/06/2022	$1,710.56
30/06/2022	$1,710.56
7/07/2022	$1,710.56
14/07/2022	$1,710.56
21/07/2022	$1,710.56
28/07/2022	$1,710.56
4/08/2022	$1,710.48
TOTAL	$88,949.04

SCHEDULE 2

FW Act civil penalty provision	NES / EA clause(s)	Description	Statement of claim paras	Maximum penalty for each contravention	Proposed penalty (after reduction for totality)
Record-keeping and pay slip contraventions
1. 2. 3. 4.	535(1)	N/A	Failure to make and keep prescribed employee records pursuant to: ·     reg 3.32(c) – (e); ·     reg 3.33(1) (before 5 March 2018) and 3.33(3); ·     reg 3.34; and · reg 3.36(1) of the FW Regulations.	[44] – [46]	$63,000 (Open Tiling) $12,600 (Mr Kim)	$6,300 – $12,600 (Open Tiling) $1,260 – $2,520 (Mr Kim)
5.	536(1)	N/A	Failure to give Mr Jang pay slips within one working day of paying an amount to him in relation to the performance of work.	[47] – [51]	$63,000 (Open Tiling) $12,600 (Mr Kim)	$6,300 – $12,600 (Open Tiling) $1,260 – $2,520 (Mr Kim)
6. 7.	50	2014 EA, cl 13 2018 EA, cl 14	Failure to give Mr Jang pay slips that specified his classification under the EAs.	[47] – [51]	$63,000 (Open Tiling) $12,600 (Mr Kim)	Grouped with 5. $0 (Open Tiling) $0 (Mr Kim)
Failure to provide EA entitlements
8. 9.	50	2014 EA, cl 11.1 2018 EA, cl 12.1	Failure to pay minimum wage rates for ordinary hours that were not ‘banked’ as RDOs (7.6 hours per day, Monday to Friday up to 23 August 2018; 7.2 hours per day, Monday to Friday after 23 August 2018).	[54] – [60]	$63,000 (Open Tiling) $12,600 (Mr Kim)	$6,300 – $12,600 (Open Tiling) $1,260 – $2,520 (Mr Kim)
10.	50	2014 EA, cl 25.5	Failure to pay for public holidays and union picnic days at the applicable minimum wage rate (before 5 March 2018).	[61] – [63]	$63,000 (Open Tiling) $12,600 (Mr Kim)	$6,300 – $12,600 (Open Tiling) $1,260 – $2,520 (Mr Kim)
11. 12.	50	2014 EA, cl 25 2018 EA, cl 27	Failure to pay overtime (one hour per day, Monday to Friday; five hours per Saturday).	[64] – [69]	$63,000 (Open Tiling) $12,600 (Mr Kim)	$6,300 – $12,600 (Open Tiling) $1,260 – $2,520 (Mr Kim)
13. 14.	50	2014 EA, cl 11.2 2018 EA, cl 12.2	Failure to pay productivity allowance ($3.50 per hour for all ordinary hours worked).	[70] – [73]	$63,000 (Open Tiling) $12,600 (Mr Kim)	$6,300 – $12,600 (Open Tiling) $1,260 – $2,520 (Mr Kim)
15. 16.	50	2014 EA, cl 14 2018 EA, cl 15	Failure to pay fares allowance ($40 per day worked).	[74] – [78]	$63,000 (Open Tiling) $12,600 (Mr Kim)	Grouped with 13 and 14. $0 (Open Tiling) $0 (Mr Kim)
17. 18.	50	2014 EA, cl 4 and Building Award, cl 20.2 2018 EA, cl 4 and Building Award, cl 20.2;	Failure to pay meal allowance (each day on which at least 1.5 hours’ overtime worked, being each Saturday worked by Mr Jang).	[80] – [86]	$63,000 (Open Tiling) $12,600 (Mr Kim)	Grouped with 13 and 14. $0 (Open Tiling) $0 (Mr Kim)
19. 20.	50	2014 EA, cl 25.2 2018 EA, cl 27.2	Failure to pay for accrued RDOs.	[87] – [91]	$63,000 (Open Tiling) $12,600 (Mr Kim)	$6,300 – $12,600 (Open Tiling) $1,260 – $2,520 (Mr Kim)
21. 22.	50	2014 EA, cl 11.4 2018 EA, cl 12.5	Failure to make required superannuation contributions (9.5% of ordinary time earnings).	[92] – [96]	$63,000 (Open Tiling) $12,600 (Mr Kim)	$6,300 – $12,600 (Open Tiling) $1,260 – $2,520 (Mr Kim)
Annual leave contraventions
23.	44(1)	NES, s 90(1)	Failure to pay for taken annual leave, in advance, the amount that would have been payable for Mr Jang’s ordinary hours of work during the leave period.	[102] – [103]	$63,000 (Open Tiling) $12,600 (Mr Kim)	$6,300 – $12,600 (Open Tiling) $1,260 – $2,520 (Mr Kim)
24. 25.	50	2014 EA, cl 16.7.1 2018 EA, cl 18.10(a)	Failure to pay the amounts set out above in advance.	[102] – [103]	$63,000 (Open Tiling) $12,600 (Mr Kim)	Grouped with 23. $0 (Open Tiling) $0 (Mr Kim)
26. 27.	50	2014 EA, cl 16.7.2 2018 EA, cl 18.10(b)	Failure to pay annual leave loading (17.5% of the applicable minimum wage rate plus fares allowance).	[102] – [103]	$63,000 (Open Tiling) $12,600 (Mr Kim)	Grouped with 23. $0 (Open Tiling) $0 (Mr Kim)
28.	44(1)	NES, s 90(2)	Failure to pay out accrued and untaken annual leave.	[104] – [105]	$63,000 (Open Tiling) $12,600 (Mr Kim)	$6,300 – $12,600 (Open Tiling) $1,260 – $2,520 (Mr Kim)
Other FW Act contraventions
29.	323(1)	As above.	Failure to pay amounts payable to Mr Jang in relation to the performance of his work in full at least monthly.	[106] – [108]	$63,000 (Open Tiling) $12,600 (Mr Kim)	Grouped with above contraventions.
30.	44(1)	NES, s 117(2)	Failure to make payment in lieu of notice of termination (two weeks at Mr Jang’s the full rate of pay).	[109] – [115]	$63,000 (Open Tiling) $12,600 (Mr Kim)	$6,300 – $12,600 (Open Tiling) $1,260 – $2,520 (Mr Kim)

EX TEMPORE REASONS FOR JUDGMENT
(Revised from Transcript)

JUDGE DRIVER:

1. I have before me a proceeding instituted by the Australian Building and Construction Commissioner (ABCC) against Opening Tiling Services Pty Ltd (Open Tiling), arising out of identified underpayment of employment entitlements in respect of one employee.  The facts relating to this matter are agreed, and the respondents have cooperated with the ABCC by admitting liability and, also, agreeing the relevant facts.  The originating process and pleadings bearing upon this matter have been identified in submissions.  Apart from the agreed facts, I received, for the purposes of considering the only issue not resolved between the parties, namely, the question of penalty, the affidavit of the second respondent, Jae Jung Kim, made on 22 July 2021, save that I did not receive [25] and annexure C referred to in that paragraph.

2. The general principles to be applied in assessing penalty are relatively well known and addressed comprehensively in the ABCC’s submissions in chief, which I respectfully adopt.  The underpayment in this case extended over a significant period of time, and was substantial, at least for the purposes of the employee affected.  While the seriousness of non-compliance with employer requirements might seem relatively modest by reference to other cases where large numbers of employees are involved, the present matter is, in my view, a relatively significant one, given the impact on the employee.  On the other hand, it goes to the credit of the respondents that they have agreed to compensate the employee and a schedule of payments has been agreed between the parties in order to bring that about over time.

3. The business is, effectively, run by Mr Kim, who deposes as to his ignorance of the relevant employee entitlements.  It appears that Mr Kim relied upon informal advice, which was wrong.  It is trite that ignorance of the law is no excuse.  However, on having the underpayment drawn to his attention by the CFMMEU,[1] Mr Kim has acted with reasonable diligence in seeking to rectify the situation.  The circumstances of the business are a matter of some interest.  Although Mr Kim draws attention to financial difficulties encountered in the business, it does appear that it is at least a going concern and has been reasonably profitable, although it must be accepted that, in present circumstances, the impact of COVID-19 has adversely affected many business and, perhaps for the first time during the current lockdown, construction businesses.  I take that into account.

   [1] Construction Forestry Maritime Mining and Energy Union

4. I also take into account the cooperation shown by Mr Kim and the broad range of agreement reached between the parties, except on the issue of penalty.  The ABCC seeks penalties in a reasonably broad range, which might be described generally as at the lower end of the scale.  The respondents seek penalties at an even lesser amount.  In my view, having regard to all the considerations dealt with in the ABCC’s submissions, and the material put forward on behalf of the respondents, penalties below the range sought by the ABCC would not deal adequately with the issue of either general or specific deterrents.  However, I do accept, from the respondents’ submissions and material, that penalty at the bottom end of the range sought by the ABCC is the appropriate penalty, and that a reasonable time should be afforded the respondents to make the necessary payment.

5. The orders made reflect all of the above considerations.  The penalties payable are those identified in bold in Schedule 2.

I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Judge Driver.

Associate:

Dated:       15 February 2022