Australian Education Union v Yooralla (No.2)
[2020] FCCA 1659
•23 June 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| AUSTRALIAN EDUCATION UNION v YOORALLA (No.2) | [2020] FCCA 1659 |
| Catchwords: INDUSTRIAL LAW – Penalties – contraventions of the Fair Work Act 2009 established – whether the Court should impose pecuniary penalties against the Respondent – whether the breaches arose from a single course of conduct – double jeopardy provisions considered – analysis of sections 556 and 557 of the Fair Work Act 2009 – the need for deterrence – imposition of pecuniary penalties to be paid within 30 days. |
| Legislation: Fair Work Act 2009 (Cth), ss.3(b), 44, 45, 90(1), 99, 417, 421, 499, 305, 500, 546(1), 556, 557 |
| Cases cited: Australian Building and Construction Commissioner v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (Australian Paper Case) (No 2) [2017] FCA 367 Australian Education Union v Yooralla [2019] FCA 1511 Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 Kelly v Fitzpatrick [2007] FCA 1080 Mill v R (1988) 83 ALR 1 |
| Other: Disability Services Award (Victoria) 1999 Equal Remuneration Order, Rule 5.5 |
| Applicant: | AUSTRALIAN EDUCATION UNION |
| Respondent: | YOORALLA |
| File Number: | MLG 1391 of 2016 |
| Judgment of: | Judge Blake |
| Hearing date: | 23 April 2020 |
| Date of Last Submission: | 23 April 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 23 June 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms Knowles |
| Solicitors for the Applicant: | Australian Education Union |
| Counsel for the Respondent: | Mr Rinaldi |
| Solicitors for the Respondent: | DLA Piper Australia |
ORDERS
Pursuant to section 546(1) of the Fair Work Act 2009 (‘Act’), the Respondent pay a pecuniary penalty of $4,050 in respect of its contravention of section 305 of the Act as a result of failing to pay minimum hourly rates for ordinary hours worked in contravention of Rule 5.5 of the Equal Remuneration Order.
Pursuant to section 546(1) of the Act, the Respondent pay a pecuniary penalty of $4,050 in respect of its contravention of section 44 of the Act as a result of failing to pay minimum hourly rates for annual leave taken in contravention of section 90(1) of the Act.
Pursuant to section 546(1) of the Act, the Respondent pay a pecuniary penalty of $2,700 in respect of its contravention of section 45 of the Act as a result of failing to pay the minimum hourly rates for annual leave loading in contravention of Clause 31.3(a) of the Social, Community, Home Care and Disability Services Industry Award 2010.
Pursuant to section 546(1) of the Act, the Respondent pay a pecuniary penalty of $4,050 in respect of its contravention of section 44 of the Act as a result of failing to pay the minimum hourly rates of personal leave taken in contravention of section 99 of the Act.
The penalties ordered pursuant to section 546(1) of the Act in orders 1-4 herein be paid to the Australian Education Union within 30 days of the date of this order.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1391 of 2016
| AUSTRALIAN EDUCATION UNION |
Applicant
And
| YOORALLA |
Respondent
REASONS FOR JUDGMENT
Introduction
The issue for determination before the Court is whether pecuniary penalties should be imposed against the Respondent for contraventions of the Fair Work Act 2009 (‘Act’). If the Court is of the view that penalties ought to be imposed against the Respondent, the Court is asked to specify the penalties to be imposed.
For the reasons that follow, I have determined that penalties ought to be imposed against the Respondent for the following amounts:
a)$4,050 in respect of his contravention of section 305 of the Act for failing to pay minimum hourly rates for ordinary hours worked;
b)$4,050 in respect of its contravention of section 44 of the Act as a result of failing to pay minimum hourly rates for annual leave taken;
c)$2,700 in respect of its contravention of section 45 of the Act for failing to pay the minimum hourly rates for annual leave loading; and
d)$4,050 in respect of its contravention of section 44 of the Act for failing to pay the minimum hourly rates of personal leave taken.
Background
Erin Jane Stanios (nee Legg) was employed by the Respondent from
3 December 2013 until she resigned from her employment on or about 13 March 2018. She was at the relevant times a member of the Applicant.
The Applicant commenced proceedings in this Court in June 2016. The Applicant alleged, inter-alia, that Ms Stanios had been paid incorrect wages by the Respondent.
The matter was initially heard by Judge Wilson (as he then was) of this Court. On 26 September 2018, his Honour handed down judgment. He dismissed the Applicant’s claim.
The Applicant filed an appeal in the Federal Court of Australia. On 17 September 2019, Justice Steward handed down the appeal judgment. Justice Steward ultimately allowed the appeal in part. Justice Steward also made declarations that the Respondent had contravened sections 305, 44 (twice) and 45 of the Act. The matter was then remitted to this Court on the question of penalty.
The parties each filed an outline of submissions in the lead up to this hearing. In respect of the present matter, the Applicant relies on the affidavits of Ms Stanios affirmed on 11 October 2017, 16 October 2017 and 18 February 2020, the affidavits of Michael McIver sworn 19 February 2020 and 18 March 2020 as well as the transcript of proceedings from the hearing before Judge Wilson. The Respondent relies on the affidavit of Peter O’Donoghue affirmed 20 November 2017 and the affidavit of Elaine Krassas sworn 12 March 2020.
Relevant principles
The parties agreed that the relevant principles the Court is to have regard to are those set out by the Federal Court of Australia in Kelly v Fitzpatrick [2007] FCA 1080 (‘Kelly’). In Kelly the Federal Court set out a list of non-exhaustive factors relevant to the imposition of penalties under the Act.
In respect of the factors that the Court is required to take account of, the parties agreed that:
a)senior management of the Respondent was involved in the contravention; and
b)the Respondent has not previously been found to have contravened the Act.
I take the above matters into account. I now turn to deal with the remaining factors identified in Kelly.
The nature and extent of the breaches
The relevant breaches of the industrial instruments resulted in Ms Stanios being paid, inter alia, amounts that were less than what she was entitled to. The Applicant contended that Ms Stanios was an ‘instructor’ under the Disability Services Award (Victoria) 1999 for the purposes of determining Ms Stanios’ Transitional Minimum Wage, and that she was properly to be regarded as a ‘Level 3’ employee for the purposes of the applicable modern award – the Social, Community, Home Care and Disability Services Industry Award 2010 (‘Modern Award’).
The Respondent contended that Ms Stanios had agreed to serve as a ‘Disability Support Worker’ and to be paid as a Grade 2, attendant carer under the Attendant Care – Victoria Award 2004. This award was said to determine Ms Stanios’ Transitional Minimum Wage. It was subsequently submitted by the Respondent that Ms Stanios was classified as a ‘Level 2’ employee under the Modern Award.
The issues in dispute were therefore as follows. First, what was the appropriate award for determining Ms Stanios’ Transitional Minimum Wage. Second, whether Ms Stanios’ classification was ‘Level 2’ or ‘Level 3’ under the Modern Award.
At first instance, the primary judge dismissed the Applicant’s application. On appeal in respect of the first issue, Steward J accepted the Applicant’s submissions that the award to determine Ms Stanios’ Transitional Minimum Wage was the Disability Services Award (Victoria) 1999. Steward J then agreed with the Respondent that Ms Stanios should be categorised as a ‘Level 2’ employee for the purposes of the Modern Award.
The determination of the above issues rested primarily on an assessment of the work performed by Ms Stanios and whether those tasks were properly to be regarded as the work of an attendant carer, or whether Ms Stanios was participating in programs of teaching or instruction. Steward J found Ms Stanios engaged in teaching or instruction.
In reaching the findings that he did, Steward J acknowledged that the case was not clear-cut. At paragraph [45] of his decision, in discussing the issues to do with Ms Stanios’ Transitional Minimum Wage, Steward J stated:
‘I agree with Mr Rinaldi that the matter is finely balanced. It also appears to me that there is potential for overlap between the Carer Award and the Disability Award. Both awards, at least in part, are directed at individuals providing services to people with a disability. How the two awards are to be read together remained unclear. The context in which each was made also remained uncertain.’
Similarly, in discussing whether Ms Stanios was properly to be classified at Level 2 or Level 3 under the Modern Award, His Honour acknowledged that this was a ‘somewhat complex case’ (at [51]).
That the issues in the case involved some complexity stemming from the awards is also evident from the following. First, the primary judge had one view, however, Steward J had another. Second, the Respondent obtained legal advice once the proceedings commenced from industrial lawyers. That advice confirmed that the Respondent’s approach was to be preferred.
The AEU contended before me that the issues regarding the application of the awards or classifications were not complex when one has regard to the work performed by Ms Stanios. I do not accept that submission. When all of these matters are considered, it becomes abundantly clear that the issues before the Court were not straightforward. Both issues involved a degree of complexity and, in the case of determining the appropriate Transitional Minimum Wage (which is what the contraventions were ultimately founded on), the matter was ‘finely balanced’. Given the complexity, it is understandable that the Respondent may have made an error when it applied the applicable award to the work performed by Ms Stanios. This does not in any way excuse the error or the seriousness of it. However, when the circumstances are considered, this is a case that is far removed from cases where an employer has deliberately underpaid an employee, or has been reckless as to the correct rate of pay, or has conducted or adopted a business model which produces an outcome where there is a strong prospect that employees will be underpaid.
The orders of Steward J provided that Ms Stanios was to be paid a total amount of $11,758.50 plus interest. The Applicant contends that Ms Stanios was a low paid employee earning around $781.98 per week. It also contended, that the amounts by which she was underpaid represent approximately 10% of her wages during the relevant period. It was further submitted that that amount is significant for Ms Stanios and that the failure to pay on time caused Ms Stanios to suffer in the various respects. I accept the above evidence and take it into account.
There are then Ms Stanios’ attempts to resolve the matter without coming to Court. Without traversing all of the correspondence, those attempts either directly or through the Applicant were extensive, commencing in 2014 and continuing until the commencement of the proceedings in 2016.
There are two competing aspects to this history. First, it appears that the Respondent sought advice in relation to its position. That displays a degree of diligence on the part of the Respondent in taking the complaints seriously. It also demonstrates a desire to reach the correct position, which I accept and take into account. The second aspect, however, is that the steps taken by the Respondent to clarify its position proceeded on the basis of an incorrect appreciation of the actual tasks performed by Ms Stanios. I was taken by the Applicant to excerpts from the transcript of the trial before Judge Wilson where an employee of the Respondent agreed that he had not observed the work being performed by Ms Stanios nor visited the place of her work. Those matters, which I take into account, suggest there was an insufficiently rigorous approach taken by the Respondent in determining whether Ms Stanios was being paid correctly in the face of serious allegations made by her.
Whether the breaches were distinct and arose from the same course of conduct
The Federal Court identified the contraventions of civil penalty provisions in the Act set out in its orders.
The Applicant accepts that section 557 of the Act applies to this matter. That is, that two or more contraventions of the same civil remedy provision are to be treated as a single contravention where that contravention was committed by the same person, and arose from the same course of conduct.
The construction and approach to section 557 of the Act was considered by a Full Court of the Federal Court of Australia in Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62. In that decision, the Full Court recognised (at [13]) that section 557(2) is a form of definitions provision and its purpose is to indicate that when a civil remedy provision is identified, it is the substance of the provision found elsewhere in the Act which is the civil penalty provision. That is, section 557 operates on contraventions which relevantly occur when a term of an award or a provision of the NES is contravened. This has the effect, among other things, that underpayment of different entitlements arising from different terms of an industrial instrument or the Act are not to be treated as a single course of conduct.
In this case, the operation of section 557 of the Act has the following effect. The Respondent is not to be punished for each occasion where, for example, it failed to pay the minimum rate of pay for ordinary hours worked to Ms Stanios. Rather, each and every occasion when the Respondent failed to pay minimum rates of pay for ordinary hours of work may be treated as a single contravention because it arose, among other things, out of a course of conduct. For similar reasons, a single penalty is also to be imposed for the Respondent’s failure to pay annual leave loading, failure to pay the correct rate of annual leave pay and failure to pay the correct rate of personal leave.
Double Jeopardy
The Respondent submits that section 556 of the Act is engaged in the present matter. Section 556 relevantly provides that if a person is ordered to pay a pecuniary penalty under a civil remedy provision in relation to particular conduct, the person is not liable to be ordered to pay a pecuniary penalty under some other provision of a law of the Commonwealth in relation to that conduct.
The Respondent says that section 556 of the Act is engaged because the conduct leading to the contraventions was the same: the Respondent applied the incorrect award to Ms Stanios. Alternatively, the decision to apply the wrong award was conduct that was a constituent part of the overall conduct that led to Ms Stanios being paid less than what she was entitled to. The Respondent therefore submits that if penalised, it should suffer the imposition of a single penalty only for all of its contravening conduct.
The Applicant submits that the Respondent does not have the benefit of section 556 of the Act. It says that the relevant question is what the Respondent did and that relevantly, it was found to have done four things: paid the incorrect minimum hourly rate of pay for hours worked, annual leave, annual leave loading and personal leave.
The Court was taken to a number of authorities that have examined the operation of section 556 of the Act. Both parties, for instance, relied on the relatively recent decision of the Full Court of the Federal Court of Australia in Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) v Australian Building and Construction Commissioner [2019] FCAFC 201 at [16] (‘Hassett’) in support for their submissions.
Hassett concerned the conduct of an employee of the CFMMEU, Mr Hassett. Mr Hassett, while at a construction site on 5 June 2017, did three things.
a)He climbed on a crane whilst it was in operation.
b)He refused a reasonable request of the occupier of the site to get off the crane because it was unsafe.
c)He used insulting language and engaged in abusive behaviour.
At first instance, the trial judge found that Mr Hassett:
a)had contravened section 499 of the Act because of his conduct referred to in subparagraph 31(b) above;
b)had contravened section 500 of the Act because of his conduct referred to in paragraphs 31(a) – (c) above.
The CFMMEU appealed the decision. It contended that because Mr Hassett’s conduct in refusing to get off the crane had founded the contravention of section 499 of the Act, and that conduct was also an element of the contravention of section 500 of the Act, only one penalty should be imposed.
The Full Court made a number of observations in relation to the construction of section 556 of the Act and the conduct it is intended to capture. At paragraph [14], the Full Court stated:
‘… Commonly and as is the fact in this case in relation to the contraventions of s 500, contravention of a civil remedy provision may be constituted by a range of conduct made up by a number of different acts or omissions. When a pecuniary penalty is imposed for a contravention, each of those acts or omissions involved in the contravention will be the subject of the pecuniary penalty if a pecuniary penalty is imposed. So much is recognised by the phrase “in relation to” in s 556. The purpose of that phrase is to make it clear that the provision is addressing “particular conduct” that is the subject of the penalty imposed, and not necessarily all of or the whole of the conduct for which the penalty was imposed. Where that particular conduct is the subject of a pecuniary penalty, s 556 requires that that particular conduct not be the subject of a further pecuniary penalty.’
Further, at paragraph [16], the Full Court stated:
‘Hassett’s refusal to get off the crane was relevantly the “particular conduct” for s 556 purposes. That particular conduct was part of and was subsumed by, the whole of the conduct the subject of the contravention of s 500. Where that particular conduct was the subject of penalty in relation to a contravention of s 500, s 556 precluded that particular conduct being the subject of a penalty in relation to the contravention of s 499 of the FW Act.’
Finally, at paragraph [26] the Full Court stated:
‘We respectfully adopt the construction of s 556 applied in The Australian Paper Case. Contrary to the submission advanced on behalf of the respondent and with respect to Jessup J, that construction is not plainly wrong, and in our view it is correct. It accords with the plain meaning of the words by which the section is expressed and also the underlying policy considerations to which we have referred. The “particular conduct” to which s 556 refers is the constituent act or omissions that a wrongdoer has committed — that is, what he or she (or it) actually did.’
It can be seen from the above that the Full Court adopted the construction of section 556 of the Act applied in Australian Building and Construction Commissioner v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (Australian Paper Case) (No 2) [2017] FCA 367 (‘The Australian Paper Case’) by Jessup J. In The Australian Paper Case, Jessup J dealt with a situation where industrial action had been organised and taken on 27, 28 and 31 March 2014. The industrial action had resulted in contraventions of, inter alia, section 417(1) and section 421(1) of the Act. Jessup J imposed penalties in respect of the contraventions of section 417(1) of the Act. He was then required to consider the contraventions of section 421(1) of the Act and the operation of section 556 of the Act to the circumstances before him.
Jessup J’s approach and reasons are set out below:
‘[38] The problem has two dimensions. The first arises in what I shall describe as the simple case of two or more provisions having been contravened by the same conduct. That looks as though it ought to attract the operation of s 556, but counsel for the applicant submitted that the section operates only where the constituent elements of each contravention are the same. For example, in the matter which is presently under consideration — industrial action taken in contravention of ss 417(1) and 421(1) — the elements were not the same. Under s 417(1), but not under s 421(1), it was an element that the relevant enterprise agreement be within term. Under s 421(1), but not under s 417(1), it was an element that an order by the Commission proscribing the industrial action have been made. It was submitted that, in this sense, it could not be said that the penalty for which the FW Act provided related to the same “particular conduct” in each case.
[39] I think it unlikely that the draftsman had such a limited operation in mind when s 556 was on the drawing board. I doubt that he or she would have contemplated that there were, either in the FW Act as such or in that Act and in another law of the Commonwealth, two or more provisions which defined contravening conduct in terms that involved precisely matching elements. I am not aware of any such situation, and counsel for the applicant drew my attention to none. It is hard to imagine why the legislature would double up with identical legislation in the way that would be required to provide a setting for the viability of this submission on behalf of the applicant.
[40] The better view is that the reference to “particular conduct” in s 556 is to what the person actually did, with all of its attributes and in its whole context. If that conduct gives rise to liability to penalty under two or more provisions, the section is, in my view, engaged. In the present case, the conduct of the workers who took the industrial action attracted liability under s 417(1) and under s 421(1). It is true that, additionally to that conduct, there were adjectival elements the presence of which were necessary ingredients of the provisions respectively, and that these elements differed as between the two (the in-term agreement under s 417(1) and the Commission’s order under s 421(1)), but, as it happened, both were in fact present on 31 March 2014 and both gave legal consequences to what the workers actually did. In my view, s 556 would stand in the way of penalties being imposed on the workers themselves under both sections, and the same applies where others, such as the organisers, were deemed to have contravened because of their involvement in that very conduct.
[41] But I must now consider the second dimension of the problem. This arises in the context of the present case because the contraventions of s 417(1) in which the organisers were involved were not discrete ones which occurred on each of 27, 28 and 31 March 2014. They were “course of conduct” contraventions, the result of the operation of s 557 of the FW Act. The “particular conduct” which gave rise to those contraventions was spread over the three days. The question arises whether, at the point of considering the imposition of penalties for contraventions of s 421(1) on 31 March 2014, the “particular conduct” to which those contraventions related had already been subject to penalty under s 417(1).
[42] In my view, this question must be answered in the affirmative. The conduct of the workers on 31 March 2014, and the organisers’ involvement in that conduct, have already been subjected to penalty under s 417(1) — as part of a course of conduct, by all means, but as conduct in relation to which a penalty was imposed. That is all that is required by s 556.
[43] It follows that the imposition of penalties for the respondents’ contraventions of s 421(1) of the FW Act is prevented by s 556. I shall, however, make appropriate declarations.’
It can be seen from the above that both decisions direct attention to the identification of the ‘particular conduct’ that is said to give rise to the contravention. The parties agree and I accept that the question the Court needs to determine for the purposes of ascertaining the application of section 556 of the Act to the present matter is this: what is the particular conduct of the Respondent in respect of each of the contraventions found? Or, to put the matter succinctly, what is it that the Respondent did?
The submission of the Respondent, at one level, is understandable. The Respondent is unlikely to have committed the contraventions complained of had it applied the appropriate award in the first place. While I can accept the Respondent’s position in this respect, ultimately I have come to the conclusion that the decision to apply a certain award is not ‘particular conduct’ for the purposes of assessing the operation of section 556 of the Act.
In my view, a starting point when considering this issue in the present matter is to examine the Declarations made by the Federal Court. The Court declared relevantly that the Respondent:
a)failed to pay Ms Stanios minimum hourly rates for ordinary hours worked;
b)failed to pay minimum hourly rates for annual leave taken;
c)failed to pay minimum hourly rates for annual leave loading; and
d)failed to pay minimum hourly rates for personal leave taken.
The Declarations made by the Federal Court are based, relevantly, on findings of fact made by the Court, or on facts as agreed by the parties, or a combination both. It is those facts or conduct that ground the contraventions set out above.
The ‘particular conduct’ giving rise to the contraventions is the conduct of the Respondent in failing to pay to Ms Stanios the entitlements which she was owed on the occasions that she was owed those entitlements. So, for example, in respect of the contravention of section 305, the ‘particular conduct’ for the purposes of section 556 of the Act was the failure to pay the minimum hourly rate of pay for ordinary hours worked. The ‘particular conduct’ in respect of the contraventions of section 44 of the Act was, respectively, the failure to pay the minimum hourly rates for annual leave at the time such annual leave was taken, and the failure to pay minimum hourly rates for personal leave at the time personal leave was taken. The ‘particular conduct’ for the purposes of the contravention of section 45 of the Act was the failure to pay annual leave loading at the time leave was taken, and the loading became due and payable. It is the substance of the actual conduct at the time leading to the contraventions which is the ‘particular conduct’ with which section 556 is concerned. There would not have been conduct causing a contravention had the actions I have described above not occurred.
Another way to consider the issue is to consider the act of an employer deciding that a particular award applies to the particular employee or group of employees. The decision to apply a particular award to an employee without more does not give rise to any conduct which leads to a contravention of an industrial instrument or the Act. It is only when some other action is taken, for example, a failure to pay or extend an entitlement under the award, that is mandated by the award, that the conduct giving rise to the contravention occurs.
There are three other matters that I consider support the conclusion that I have reached. They are as follows.
The application of section 556 of the Act as contended for by the Respondent would render meaningless the operation of section 557 of the Act to this case. There would be no need for the Court to consider whether contraventions arose out of a course of conduct by the Respondent in a case such as the present if a respondent could simply point to section 556 of the Act, rely on it, and have all penalties (whether part of the course of conduct or not) reduced to a single penalty simply because a respondent had applied the wrong award at the outset.
It is important to remember that the contraventions in this matter were directed to an affected employee. There are many cases, however, where an employer’s failure to pay the correct entitlements may affect hundreds and sometimes thousands of employees. The contention advanced by the Respondent would produce a result that where those contraventions arose from a misapplication of an award, only a single penalty could be imposed no matter how extensive, or prolonged, the contravening conduct extended for. An employer facing the number and extent of contraventions I have described above would face the same maximum penalty as an employer who has contravened an award on a single occasion in respect of one employee.
The contention advanced by the Respondent is also one that, I consider, to not be consistent with the objects of the Act. Section 3(b) of the Act places an emphasis on ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions. The ability to enforce minimum terms and conditions through a compliance regime would be undermined, and the deterrent effect of the civil penalty regime in the Act significantly reduced, if I were to accept the Respondent’s preferred construction.
None of what I have stated above should be taken to mean that the Court ought to disregard the circumstances leading to the particular conduct that gave rise to the contraventions. The decision to apply the wrong award in this matter does not appear to be one that was taken flippantly. It is a relevant background fact or circumstance, and it provides an explanation for the conduct the subject of the contravention. The decision to apply the wrong award was not, however, ‘particular conduct’ for the purposes of section 556 of the Act in this case.
In my view, the appropriate place to have regard to the circumstances or explanation that the Respondent applied the wrong award, is when the Court comes to consider the application of the totality principle to the level of penalties to be imposed.
Size of the business
The Respondent operates in the not-for-profit sector. At the time of the relevant contravening conduct, it employed 1,963 employees and served 26,000 customers.
It is accepted that the Respondent’s operations are substantial in the sector in which it operates.
There is not any evidence before me to indicate that the Respondent would be unable to bear the imposition of a financial penalty.
Contrition and Corrective Action
The Respondent has remedied the underpayments to Ms Stanios as ordered by the Federal Court. It has also made further payments to her in respect of the entire period of her employment, including that period not covered by a claim. The Applicant says that no apology has been received and I accept this. The Respondent says that its actions detailed here and in the paragraphs that follow speak louder than words.
The making of payments to a person in Ms Stanios’ position pursuant to a Court Order is not conduct that I would regard as contrition. Nor do I place a significant amount of weight on the fact that the Respondent has also rectified underpayments to Ms Stanios for the duration of her employment, notwithstanding it extends beyond claim period in the Court documents. That is simply rectifying what should have been the case had the Respondent paid Ms Stanios correctly in the first place.
There are other employees not the subject of these proceedings that may have been affected by the findings of the Court. The Respondent’s evidence is that it is in the process of undertaking an audit for the last six years and that it has engaged independent third-party accountants to undertake the audit to verify the results. There is not any evidence before the Court as to when the audit is likely to be completed or the likely results, but I was informed from the Bar table that the audit was to be completed in the second week of May.
I accept the evidence that the Respondent is undertaking an audit in order to make good any errors. I also accept that given the period of time to be covered by the audit (six years) that it is understandable that the audit has not yet been completed. The actions of the Respondent in undertaking the audit are appropriate and I take them into account in assessing the appropriate penalty.
Co-operation with enforcing authorities
The Applicant has, in effect, stood in the shoes of any enforcing authority.
A review of the matter indicates that the Respondent provided some cooperation by entering into an agreed Statement of Facts with the Applicant in relation to limited factual matters. The Respondent otherwise contested the trial, the appeal and the present penalty hearing.
I do not place any weight one way or the other on the decision of the Respondent to contest the trial nor on the Applicant to appeal the trial decision. The question of which instrument governed Ms Stanios’ employment was not a straightforward one, as I have noted earlier. The question of whether a penalty should be imposed, and the extent of any penalty, ought not be influenced because the parties exercised their rights to contest matters that the Appeal Court characterised as ‘finely balanced’.
Deterrence
The primary purpose of imposing civil penalties is to promote the public interest in compliance by putting a price on contraventions that is sufficiently high to act as a deterrent both to the contravenor and to others: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at [55], citing Trade Practices Commission v CSR Ltd [1990] FCA 521
The Applicant submitted that this was a case in which the penalties need to be imposed, and also set at a sufficiently high level, to act as a deterrent to the Respondent and to others, particularly in the disability sector.
The Respondent submitted that deterrence is of no importance and further, if a penalty was to be imposed, no extra penalty should be imposed in respect of deterrence considerations. In this respect, the Respondent pointed to, among other things, the non-deliberate nature of the contraventions and the Respondent not having any prior history of contravening.
I consider that there is a need to ensure that any penalty takes into account considerations relating to deterrence. I accept that there is a need to send a message to the public at large that the underpayment of wages to any employee, but particularly low income employees, is completely unacceptable in the modern age. The public at large, and indeed legislators, have grown tired of employers who fail to ensure employees are accurately paid. Recent underpayment scandals have revealed widespread problems. The public is entitled to know that Courts take underpayments seriously.
Should a penalty be imposed
Having regard to the matters above, I am of the view that this is a matter in which it is appropriate to impose pecuniary penalties. The Applicant submitted that the proposed penalties should be in the range of 60%-70% of the maximum. The Respondent submitted that no penalty should be imposed, or alternatively, a single penalty in the very low range of 5%-10% of the maximum.
When all of the factors above are considered, I consider that penalties in the range contended for by the Applicant would be excessive in the circumstances of this case. Equally, I am of the view that what is contended for by the Respondent is too low
I am of the view that a penalty should be imposed, prior to applying the totality principle, at the low end of the scale for each contravention, though not as low as contended for by the Respondent. Three of the penalties are to be set at a level of 15% of the maximum, with the further contravention being set at the level of 10% of the maximum.
Totality and Proportionality
Finally, it is necessary to consider the totality principle to the imposition of penalties. That principle was described by the High Court of Australia in Mill v R (1988) 83 ALR 1 at [62] - [63], and has been applied in this jurisdiction: Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70. The application of the principle does not necessarily require a discount.
As I have indicated above, the relevant breaches arose because the Respondent applied the wrong award. That act explains how the Respondent came to find itself in breach of its obligations towards Ms Stanios. The Respondent sought professional advice on the issue. It is a matter that warrants an adjustment to the ultimate penalties to be imposed. I am of the view that the adjustment in the circumstances of this matter should be in the order of a 50% reduction on the total penalties payable.
The penalties I impose for each of the contraventions are therefore as follows:
| Provision | Contravention | Maximum Penalty | Penalties (pre totality principle) | Penalties payable (totality principle applied) | ||
| 1. | Section 305 of the Act | Failing to pay minimum hourly rates for ordinary hours worked in contravention of Clause 5.5 of the ERO. | $54,000 | 15% of maximum | $8,100 | $4,050 |
| 2. | Section 44 of the Act | Failure to pay minimum hourly rates for annual leave taken in contravention of s. 90(1) of the Act. | $54,000 | 15% of maximum | $8,100 | $4,050 |
| 3. | Section 45 of the Act | Failing to pay the minimum hourly rates for annual leave loading in contravention of Clause 31.3(a) of the Award. | $54,000 | 10% of maximum | $5,400 | $2,700 |
| 4. | Section 44 of the Act | Failure to pay the minimum hourly rates of personal leave taken in contravention of s. 99 of the Act. | $54,000 | 15% of maximum | $8,100 | $4,050 |
| TOTAL PAYABLE | $14,850 | |||||
I am satisfied given the facts of this matter, and consistent with the Full Court’s observations in Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4, that this is a matter in which the pecuniary penalties ought to be paid to the Applicant. I will so order that the amounts be paid within 30 days.
I certify that the preceding seventy-one (71) paragraphs are a true copy of the reasons for judgment of Judge Blake
Associate:
Date: 23 June 2020
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