Australian Manufacturing Workers' Union v United Lift Services Pty Ltd (No 2)
[2023] FedCFamC2G 614
•14 July 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Australian Manufacturing Workers’ Union v United Lift Services Pty Ltd (No 2) [2023] FedCFamC2G 614
File number(s): SYG 2017 of 2021
SYG 521 of 2022Judgment of: JUDGE D HUMPHREYS Date of judgment: 14 July 2023 Catchwords: INDUSTRIAL LAW – Fair Work – Penalty and compensation – economic and non-economic loss – moderately serious contraventions. Legislation: Fair Work Act 2009 (Cth) ss 50, 240, 340, 346, 365, 545, 556, 557 Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333
Australian Manufacturing Workers’ Union v United Lift Services Pty Ltd [2023] FedCFamC2G 275
Australian Ophthalmic Supplies Pty Ltd v McAlary‑Smith (2008) 165 FCR 560
Canturi v Sita Coaches Pty Ltd (2002) FCA 349
Fair Work Ombudsman v Nobrace Centre Pty Ltd (in Liquidation) [2019] FCCA 2970
Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301
Heraud v Roy Morgan Research Pry Ltd (No 2) [2016] FCCA 1797
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383
RailPro Services Pty Ltd v Flavel [2015] FCA 504
Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union of Australia (2001) 110 IR 372
Termination, Change and Redundancy Case (1984) 3 IR 34
Division: Division 2 General Federal Law Number of paragraphs: 94 Date of last submission/s: 3 July 2023 Date of hearing: In Chambers Place: Parramatta Counsel for the Applicant: Ms Doust Solicitor for the Applicant: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union Of Australia Counsel for the Respondent: Mr Duc Solicitor for the Respondent: Mcevoy Legal
Table of Corrections 18 July 2023 At [91] change s 340 of the Act to s 50 of the Act. 3 August 2023 In order 1 and [50] change $23,933.55 to $40,435.71. ORDERS
SYG 2017 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: AUSTRALIAN MANUFACTURING WORKERS’ UNION
Applicant
AND: UNITED LIFT SERVICES PTY LTD ACN 082 447 658
Respondent
order made by:
JUDGE D HUMPHREYS
DATE OF ORDER:
14 July 2023
THE COURT ORDERS THAT:
1.Pursuant to s 545(2)(b) of the Fair Work Act 2009 (Cth) (“the Act”) the Respondent pay compensation in the amount of $40,435.71 to Mr Burton to be paid within 21 days of the day of these orders.
2.Pursuant to s 546 of the Act, the Respondent pay a pecuniary penalty of $60.000.00 to the Applicant for the contraventions declared in order 1. of the orders of 17 April 2023 to be paid within 42 days of the day of these order.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
ORDERS
SYG 521 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR DAVID NESBIT
Applicant
AND: UNITED LIFT SERVICES PTY LTD ACN 082 447 658
Respondent
order made by:
JUDGE D HUMPHREYS
DATE OF ORDER:
14 July 2023
THE COURT ORDERS THAT:
1.Pursuant to s 545(2)(b) of the Fair Work Act 2009 (Cth) (“the Act”) the Respondent pay compensation in the amount of $67,057.69 to the Applicant to be paid within 21 days of the day of these orders.
2.Pursuant to s 546 of the Fair Work Act 2009 (Cth), the Respondent pay a pecuniary penalty of $60,000.00 to the Applicant for the contraventions declared in order 1. of the orders of 17 April 2023 to be paid within 42 days of the day of this order.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE D HUMPHREYS
INTRODUCTION
This judgement concerns the amount of compensation to be awarded and pecuniary penalties to be imposed following findings made in Australian Manufacturing Workers’ Union v United Lift Services Pty Ltd [2023] FedCFamC2G 275. In that judgement, the Court found that the respondent, United Lift Services Pty Ltd (“United”), had contravened ss 50, 340 and 365 of the Fair Work Act 2009 (Cth) (“the Act”) in relation to six matters, including dismissing Mr Burton and Mr Nesbitt following a redundancy process that failed to comply with the relevant enterprise bargain. The Court will deal with the issues of compensation first before dealing with the issue of pecuniary penalties.
The Court notes that the parties have agreed and confirmed that the determination of compensation and penalties can occur on the papers without the need for a substantive hearing.
THE FORM OF THE DECLARATIONS
On behalf of the applicants it was contended that the declarations made by the Court should be amended to read as follows:
In respect of SYG2017/2021
a. The respondent contravened s 340 of the FW Act by dismissing Mr Nesbitt because he exercised a workplace right by making complaints in relation to his employment.
b. The respondent contravened s 346 of the FW Act by dismissing Mr Nesbitt because he was a delegate of an industrial association, namely the CEPU.
c. The respondent contravened s 50 of the FW Act by contravening clause 15 of the United Lift Services Pty Ltd Installation and Service Division Enterprise Agreement 2021 (“the Agreement”) by failing to make arrangements for Rostered Days Off (“RDOs”) as required by clause 15 of the Agreement in respect of Mr Nesbitt.
d. The respondent contravened s 50 of the FW Act by contravening clause 7 of the Agreement by failing to consult with employees about the decision to make employees redundant.
In respect of SYG521/2022
a. The respondent contravened s 340 of the FW Act by dismissing Mr Burton because he exercised a workplace right by making complaints in relation to his employment.
b. The respondent contravened s 346 of the FW Act by dismissing Mr Burton because he was a delegate of an industrial association, namely the AMWU.
c. The respondent contravened s 50 of the FW Act by contravening clause 15 of the Agreement by failing to make arrangements for Rostered Days Off (RDOs) as required by clause 15 of the Agreement in respect of Mr Burton.
d. The respondent contravened s 50 of the FW Act by contravening clause 7 of the Agreement by failing to consult with employees about the decision to make employees redundant.
e. The respondent contravened s 50 of the FW Act by contravening the Agreement by failing to pay Mr Burton the rate of $44.59 per hour under Schedule 1 of the Agreement and instead paying him at the rate of $44.00 per hour.
f. The respondent contravened s 50 of the FW Act by contravening the Agreement by failing to pay the amount of $79.00 per week into the PROTECT fund as required by clause 18 of the Agreement.
No objection is taken by the respondent and the Court proposes to alter the declarations in the terms sought.
THE APPROACH TO AWARDING COMPENSATION
On behalf of the applicants, it was submitted that the power to award compensation is enlivened under s 545 of the Act, which includes the power to make any orders considered appropriate. The power to award compensation conferred by s 545(1) of the Act is limited to making appropriate preventative remedial and compensatory orders: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3 at [110]. The power under s 545(2) of the Act may also be exercised to award compensation for non-economic loss for ‘hurt and humiliation’: Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333 at [441]. However, something more than the usual distress accompanying most terminations must be shown, with there being a requirement to show ‘something more than the usual element of distress’: Pro Rail Services v Flavell (2015) 242 FCR 424 at [176].
On behalf of the respondent, it was submitted that the Court should not accept the Applicant’s claims as to the loss suffered and whether they had adequately mitigated their losses.
The Court was urged to adopt the approach to compensation identified in Haines v Bendall [1991] HCA 15 (“Haines v Bendall”), which involves:
a. Having regard to the totality of the evidence;
b. An assessment of how long the employee would have remained in that employment; and
c. The determination of the likely income stream;
d. Followed by a discount for contingencies and the vicissitudes of life;
e. The discounted income stream is then reduced by the employees mitigated loss (his or her actual earnings since dismissal);
f. The Court may consider whether the employee has taken appropriate steps to mitigate his or her loss. However, it is for the employer to establish the facts going to the employee’s alleged failure to mitigate his or her loss.
The applicant submitted that redundancy payments are not primarily designed to assist the employee engage in a search for work or tide the employee over during a period of unemployment. Rather, the payment is compensation for non-transferrable credits such as accrued entitlement and continuous service and the inconvenience and hardship associated with retrenchment: Termination, Change and Redundancy Case (1984) 3 IR 34 at 73. Thus, any redundancy payment should not be offset from any amount found to be payable by the Court for economic loss.
It was submitted by the respondent that any redundancy payment should be offset against any economic loss as awarded by the Court: Heraud v Roy Morgan Research Pry Ltd (No 2) [2016] FCCA 1797 (“Heraud”).
The Court prefers and follows the view of the Court in Heraud. It does so as a matter of comity and on the basis that this is the preferable approach. Having said that, any entitlement that was owing as at the date of termination, such as accrued annual leave, should be excluded from any mitigation calculation.
Further, the Court may consider the effect of accrued entitlements, such as service towards long service leave which had not yet crystallised and, thus, did not form part of the redundancy payment, given that the accrual of service towards that entitlement will be lost as a result of the unlawful termination.
COMPENSATION WITH RESPECT TO MR NESBITT
Mr Nesbitt relied upon two Affidavits affirmed 16 May 2022 and 29 June 2023. Firstly, Mr Nesbitt does not press the Court to order his reinstatement.
Mr Nesbitt notes he was employed by
the respondentUnited from 23 March 2020 until his termination on 28 July 2021, a period of approximately 16 months. For the pay period 17 July 2021 to 1 August 2021, he received $14,304.73 gross. He deposes that he presumes that amount included payments for holiday pay, leave loading and an amount described as ETP Tax free in the amount of $7,021.24. The Court accepts the amount of $7,021.24 constitutes a redundancy payment.Mr Nesbitt goes on to state that although he was unhappy with the respondent’s work practices, he had no intention of resigning. He was unemployed for the period of 28 July 2021 to 22 November 2021, until being employed as a lift installer with Schindler Lifts located in Canberra. Although renumerated slightly higher than with the respondent, the applicant was forced to move his family from the Central Coast of NSW to Canberra. Relocation costs amounted to $6,250.50. The move has separated the applicant from his extended family friends and his support network in his previous home area.
The applicant deposes that his termination affected his mental health and wellbeing. He sought the assistance of his General Practitioner and has been managing anxiety and a lack of self-belief. He claims that he has put off having another child with his wife until after they are settled in Canberra and have stability again.
In his second Affidavit, Mr Nesbitt rejects the respondent’s claim that he failed to truly mitigate his loss by seeking work outside the lift industry. He states that he concentrated his job search on jobs he thought he was more likely to attain given his qualifications and work experience. He did apply for jobs outside the lift industry.
Economic Loss
Adopting the approach in Haines v Bendal. The Court is satisfied that, but for the termination, Mr Nesbitt would have remained employed at United for a period of not less than 12 months. This finding is based on the evidence that Mr Nesbitt was a ‘good worker’ in all respects and who had raised various safety issues with management at United. This 12 month period includes a discount for the contingencies and vicissitudes of life. The Court notes this 12 month period is more than the period of loss claimed by Mr Nesbitt.
The Court does not accept that Mr Nesbitt failed to mitigate his loss. It was reasonable that he would seek work in the industry that he was qualified to work in and had relevant experience. His period of unemployment was not extensive The Court is satisfied, based on his evidence, that he actively sought work and was unable to obtain a comparative job except by moving to Canberra.
Based on the Enterprise Agreement, together with his payslips from 24 May 2021 until his termination, Mr Nesbitt averaged 47.5 hours per week with United, including 9.5 hours of overtime. The Court is satisfied his average weekly pay is as follows:
Hours Rate Amount Ordinary Hours 36 $50.79 $1,828.44 Hours 37 and 38 (1.5x) 2 $76.185 $152.37 Overtime (1.5x) 5.83 $76.185 $444.16
Overtime (2x) 3.67 $101.58 $372.80 Site Allowance $98.98 Travel Allowance $223.89 Total $3,120.64 Notation: The above table was provided by the Applicant in their submissions and the figure in row four, column four and the total has been changed to be mathematically correct.
As and from 15 October 2021 this would have increased to $3,176.36 as follows:
Hours Rate Amount Ordinary Hours 36 $51.80 $1,864.80 Hours 37 and 38 (1.5x) 2 $77.70 $155.40 Overtime (1.5x) 5.83 $77.70 $452.99 Overtime (2x) 3.67 $103.60 $380.21 Site Allowance $98.98 Travel Allowance $223.89 Total $3,175.37 Notation: The above table was provided by the Applicant in their submissions and the total has been changed.
Noting that Mr Nesbitt was out of work from 28 July 2021 until 22 November 2021, the Court is satisfied his economic loss is $52,433.22, comprised as follows:
a. 12.74 x $3,120.64 = $39,756.95 (up until 25 October 2021);
b. 4 x $3,176.36 $3,175.37 = $12,705.44 $12,701.48 (between 25 October to 19 November 2021).
The Court is of the view that any redundancy payment should be deducted from the amount claimed. The ETP Tax free redundancy payment (excluding any notice period or travel payment) was $7,021.24.
Subtracting this amount from the amounts calculated above leaves a net economic loss of $45,437.19.
Non-Economic Loss
On behalf of Mr Nesbitt, it was submitted that the termination caused more than the usual hurt associated with termination. This is evidenced by his need to seek medical advice to cope with anxiety and stress. He has found a new job but was forced to relocate from the Central Coast to Canberra, away from family and friends. The termination impacted on his relationship with his wife, who expressed concerns as to his sleeplessness.
It was submitted that an amount of $20,000.00 should be awarded in keeping with Heraud at [62].
The respondent submits that this head of damages should not be awarded by the Court. It was submitted that both Mr Burton and Mr Nesbitt did not suffer any greater hurt or humiliation than others who have been terminated: RailPro Services Pty Ltd v Flavel [2015] FCA 504. If damages for non-economic loss are to be awarded, they should be restricted to $3,000.00.
In the primary decision, the Court found at [201] that there was no evidence of any dissatisfaction with the work of Mr Nesbitt, rather, he and Mr Burton were targeted for redundancy due to them making protected complaints.
The Court is satisfied that the termination has caused Mr Nesbitt some medical issues and that, in order to find comparable work, he has been forced to relocate away from his support network of family and friends. The termination has impacted negatively upon his family, who have been forced to relocate with him. In all of the circumstances, the Court is satisfied that an amount of $15,000.00 should be awarded for non-economic loss.
The Court is further satisfied that United should pay the direct cost of the forced relocation of Mr Nesbitt to Canberra to enable him to work. But for these costs, Mr Nesbitt would not have obtained employment. The Court accepts these amount to $6,620.50.
Given the lack of any medical report, the Court declines to order an additional amount of $30.90 Mr Nesbitt claims to be out of pocket for a medical consultation.
Thus, the total compensation payable to Mr Nesbitt for economic and non-economic loss, plus moving costs, is $67,057.69.
COMPENSATION MR BURTON
Mr Burton relies upon an Affidavit affirmed 16 May 2023. He agrees payments as required were paid into his PROTECT fund. He does not seek any compensation in relation to this contravention.
As a result of being made redundant, Mr Burton claims he was unable to claim any COVID-19 disaster payment or other Commonwealth welfare payments.
Following being made redundant, Mr Burton was out of work for two months before taking a job as a maintenance manager at Kaczanowski & Co, a small goods manufacturer. His initial salary was $80,000p/a however, this increases to $86,000p/a as and from 2 April 2022, and $90,000p/a from 5 November 2022. He claims he has suffered ongoing economic loss in the amount of $59,529.31 as a result of accepting lower paid employment. Further, he claims, as a direct result of being dismissed, he suffered an economic loss $8,519.69 during the period he was unemployed.
Due to his partner being pregnant at the time of his dismissal, he prioritised finding any job to enable him to support his family, albeit at a lower rate of remuneration than he was paid at United.
The Court does not accept that Mr Burton has failed to mitigate his loss as claimed by the respondent. His evidence is clear that he made active attempts to seek work, including work outside his normal field in the lift industry.
In terms of the period he would have remained employed with United, the Court notes that his relationship with his supervisors could be best described as tense. He had already been issued with two formal warnings. The Court also noted that a diary he was keeping was destroyed by an unknown person.
The Court is satisfied however, Mr Burton would have done everything he could have done to maintain his employment with United due to his partner’s pregnancy.
Taking into account the contingencies and vicissitudes of life, the Court is satisfied that a period of six months is reasonable, in terms of this continued employment with United.
Economic Loss
The Court is satisfied that Mr Burton worked on average the normal 38 hours per week, plus an average of 7.72 hours of overtime. Thus, he should have been paid as follows:
Hours Rate Amount Ordinary Hours 36 $44.59 $1,605.24 Hours 37 and 38 (1.5x) 2 $66.885 $133.77 Overtime (1.5x) 3.44 $66.885 $230.08 Overtime (2x) 2.27 $101.58 $230.59 Site Allowance $58.47 Travel Allowance $129.89 Total $2,388.03
Notation: The above table was provided by the Applicant in their submissions and the figures in row one column four, row five column four, and the total has been changed to be mathematically correct.
Thus, Mr Burton’s lost income was for a period of nine weeks and four working days, or 9.8 x $2,360.22 or $23,130.16. From this, the ETP Tax free redundancy payment should be deducted, being $6,688.00, making a total loss for that period $16,442.16.
The Court accepts that Mr Burton has continued to suffer economic loss after he was terminated and found new employment due to the salary difference between his job at United and his new employment. This amount, however, is limited to a period of six months from the date of his redundancy, or 16 weeks and 1 working day.
This amount lost is calculated as follows:
Period Difference Weeks Total 15/10/2021 – 24/10/2021 $827.16 2 $1,654.32 25/10/2021 – 25/01/2022 $868.96 14.2 $12,339.23 TOTAL $13,993.55 Notation: The above table was provided by the Applicant in their submissions and the figures in row two column four and the total has been changed to be mathematically correct.
Non-Economic Loss
On behalf of Mr Burton, it was submitted that he also suffered more than the usual hurt and humiliation from being terminated. At the time, he had just found out that he and his partner were about to become parents. It is claimed that he was unable to access payments that might have otherwise been available to him during the pandemic.
Mr Burton’s partner is a child care worker who is on low wages. As a result, they were caused considerable financial stress as they were forced to survive on a wage of $1,352.92 per week gross. It was submitted the Court should make an award of damages of $15,000.00.
The respondent submitted that no damages for non-economic loss should be awarded, but if such damages were to be awarded it should be restricted to $3,000.00.
As compared to Mr Nesbitt, Mr Burton was out of work for a lesser period, however, he took a position where he earns less than he received at United.
The Court notes no specific evidence has been put forward as to medical issues suffered by Mr Burton. There is evidence of the issue of the pregnancy of his partner and the stress that, with a baby on the way, their financial situation was difficult. The Court accepts this would have been a very difficult time.
In all of the circumstances the Court is of the view that compensation for non-economic loss should be set at $10,000.00.
Thus, the total compensation payable to Mr Burton for economic and non-economic loss is $40,435.71.
ASSESSMENT OF THE APPROPRIATE PENALTIES FOR THE CONTRAVENTIONS FOUND
The Law in relation to Penalties under the Act
The Court has a broad discretion as to penalty. In Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 at [71], it was stated that the Court should fix a penalty “it considers fairly and reasonably to be appropriate to protect the public interest from future contraventions of the Act”. Further, at [10], the High Court stated that the penalty must not exceed what is “reasonably necessary to achieve the purpose of section 546: the deterrence of future contraventions of a like kind by the contravener and others”.
In Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301, Bromwich J summarised how the discretion is to be approached at [36], as follows:
1) Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
2) Consider whether each separate contraventions should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
3) Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
4) Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
5) Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23]. [71] and [102].
The purpose of a civil penalty is primarily, if not wholly, promoting the public interest in compliance with the laws that have been contravened, and it does not engage principles of retribution or rehabilitation: Fair Work Ombudsman v Nobrace Centre Pty Ltd (in Liquidation) [2019] FCCA 2970 (“Nobrace”) per Kelly J at [65]. As these principles of retribution or rehabilitation are not involved in the determination of a civil penalty, this intensifies the focus of a civil penalty determination on issues of specific and general deterrence: Nobrace at [66].
The Act does not set out any mandatory criteria, inclusive or exclusive, that the Court must consider when determining whether to impose a penalty or the amount of any penalty: Canturi v Sita Coaches Pty Ltd (2002) FCA 349 at [88]. The choice of penalty must be guided by the “individual circumstances of a case, not by a line-by-line comparison with another case”: Australian Ophthalmic Supplies Pty Ltd v McAlary‑Smith (2008) 165 FCR 560 at [12]. The process is an intuitive one by the Court and not an application of a scientific process: Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [60]‑[63].
In Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 (“”Mason v Harrington”), Mowbray FCM set out what is a now well accepted set of factors relevant in assessing a pecuniary penalty. They are as follows:
a) the nature and extent of the conduct which led to the breaches;
b) the circumstances in which the conduct took place;
c) the nature and extent of any loss sustained as a result of the breaches;
d) whether there has been similar previous conduct by the Respondents;
e) whether the breaches were properly distinct or arose out of one course of conduct;
f) the size of the business enterprise involved;
g) whether or not the breaches were deliberate;
h) whether senior management was involved in the breaches;
i) whether the party committing the breach had exhibited contrition;
j) whether the party committing the breach had taken corrective action;
k) whether the party committing the breach had cooperated with enforcement authorities;
l) the need to ensure compliance with minimum standards by provision of an effective means for the investigation and enforcement of employee entitlements; and
m) the need for specific and general deterrence.
Merkel J in Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union of Australia (2001) 110 IR 372 set out some guiding considerations for the Court at 374:
Matters to be taken into account in determining the appropriate penalty include the cost of the contravention, deterrence, the flagrancy and deliberateness of the breach, the offender’s past record of behaviour and any contrition displayed by the offender.
Consideration of the factors in Mason v Harrington
Nature and Extent of the Contravening Conduct
On behalf of the applicant, it was submitted the contraventions of s 340 and 346 of the Act involved the termination of employment of two employees. Whilst it was carried out over a relatively confined period, it occurred during a time when there was considerable economic and social uncertainty due to COVID-19. By its nature, the conduct was likely to diminish the freedom of association of other employees and likely to impact on the Unions ability to operate in the workplace. The Court would readily appreciate how the termination of two union delegates, where the respondent sought to undermine the 36 hour per week enterprise bargain, was a serious matter.
In relation to the consultation contravention, whilst not resulting in any direct economic loss, it involved a denial of the employees’ opportunity to attempt to avert their terminations by having input into the employer’s decision-making process. The communications on the evening of Friday, 23 July 2021 were of the nature to suggest that there was no plan or consideration of forced redundancies.
It was conceded the RDO contravention did not result in any direct economic loss, but it was a blatant denial of employees’ rights to access a more family friendly work pattern. That the respondent attempted to dissuade employees from accessing that entitlement, with Mr Ellis advising that he would have one-on-one meetings with employees regarding the issue and required them to speak to Mr Hermus if they wish to access their entitlements.
Mr Burton has conceded that each of the wages and PROTECT underpayments have now been corrected. They were limited in time. The wage underpayment was aggravated by the fact that it was brought to the respondent’s attention on several occasions, however nothing was done. Indeed, the evidence of Ms Nguyen was as follows: “I am aware of that, but I am paying you what I have been told to pay you”. It was submitted the Court could find that the approach to Mr Burton’s the remuneration was quite deliberate and, whilst of little economic moment, was in deliberate defiance of the respondent’s obligations under the Enterprise Agreement.
On behalf the respondent, it was submitted that the conduct of the respondent did not jeopardise the place of Unions in the workplace or make Union membership less likely. The consultation contravention was one that was the result of major change, not being understood by the relevant manager, Mr Ellis or Mr Hermus. The Court should conclude that the contravention, whilst made out, was a result of ineptitude. The RDO contravention that was found to be proven was simply a result of employees being given the option to revert to a 38 hour week and again, was the result of ineptitude failure to understand the provisions of the new Enterprise Agreement.
The Court rejects the submissions of the respondent. The Court is satisfied that the termination of two employees within one month of them agreeing to become Union delegates sent a clear message to other employees that engaging with the unions, and pressing workplace rights, was likely to result in serious consequences in terms of continued employment.
The Court does not accept that the contraventions were as a result of ineptitude or a failure to understand the provisions of the new Enterprise Agreement. Both Mr Hermus and Mr Ellis were experienced managers with a long history in the relevant industry. They presumably had access to expert advice had they chosen to do so, but they did not.
The Court is not satisfied that there was any real attempt by the respondent or its managers to grapple with the changes brought about by the Enterprise Agreement, and indeed, both Mr Hermus and Mr Ellis took deliberate action to undermine the 36 hour per week clause contained within the Enterprise Agreement.
The amount of loss or damage caused
On behalf of the applicants, it was submitted that the dismissal contraventions caused each of the affected employees to suffer substantial economic loss, with each experiencing a period without wages before finding alternative work. The Court should consider that period of time spent without income, at a time of significant social economic uncertainty, as aggravating the immediate financial effect of the conduct. Further, both Mr Nesbitt and Mr Burton suffered significant stress and distress as a result of the respondent’s unlawful conduct.
On behalf for the respondents, it was submitted the contraventions took place in a straitened economic environment due to the effects of COVID-19 and, in the context of a new Enterprise Agreement, that management did not fully understand. It is conceded that management did not seek advice on the major change provision of the Enterprise Agreement.
The Court is of the view that there was significant economic and non-economic loss occasioned to each of the employees, including the necessity for one to move from the Central Coast to Canberra to gain new employment and the other to accept a lesser paid job due to his partner’s pregnancy. The Court does not accept that the contraventions were a result of ineptitude, having found that the redundancies were deliberately targeted at each of the employees.
Whether there has been similar previous conduct by the respondents
There is no information before the Court to indicate previous contraventions by the respondent. This entitles the degree of leniency on the basis that the respondent is a first offender
Whether the breaches are properly distinct or arose out of one course of conduct
On behalf of the applicants, it was submitted that each applicant claimed contraventions of
s 50 of the Act in relation to, first the RDO contraventions and second the consultation contraventions. Second, pursuant to s 557 of the Act, the RDO contraventions are taken to constitute a single contravention because they were committed by the same person and because they arose out of a course of conduct. The consultation contraventions are taken to constitute a single contravention because they were committed by the same person and they arose out of the same course of conduct.
In addition, the respondent committed contraventions of s 50 of the Act by contravening the Enterprise Agreement by failing to pay Mr Burton $44.59 per hour and instead paying at the rate of $44.00 per hour. The second contravention of s 50 of the Act was by failing to pay the amount of $79.00 per week into the PROTECT fund as required by clause 18 of the Enterprise Agreement in relation to Mr Burton. It was submitted that the above entitlements arose under different provisions of the Enterprise Agreement have a different character, and thus there was no basis on the available evidence to conclude the contraventions arose out of the same course of conduct.
It was submitted that the respondent therefore should be taken to a committed four contraventions of s 50 of the Act the maximum penalty of $66,000.00 for each contravention. Further, there were contraventions of both ss 340 at 346 of the Act in respect of Mr Nesbitt and Mr Burton. However, due to the application of s 556 of the Act, only one penalty should be ordered against each respondent in respect of each dismissal.
It was submitted therefore that the following contraventions exist:
a. The RDO contraventions;
b. the Consultation contraventions;
c. the Burton underpayment contraventions
d. the Burton protect payment contravention;
e. the Nesbitt dismissal; and
f. the Burton dismissal.
The respondent submits that the contraventions in fact should be placed into three groups, being the RDO contraventions for both applicants, second the consultation contravention and the termination, and thirdly the two underpayments.
In the Court’s view, the RDO and consultation contraventions cannot be treated as a single contravention. Rather, each contravention is an operative provision that results in a penalty. However, multiple breaches of the same provision may be caught by s 557 of the Act.
The Court is satisfied that the RDO contraventions should be grouped together. In relation to the terminations, it was submitted that the employees were members of two Unions and the contravention was of significance to two separate groups on employees. The Court is satisfied it is appropriate to treat the dismissals as a single course of conduct, with a single penalty.
The size of the business involved
The Court is satisfied that the respondent is a medium size business, with 94 employees located in Victoria and 22 employees in New South Wales. On behalf the respondent, it was submitted that there are issues with the respondent’s ability to pay, noting the Affidavit of Mr George Tokatlian, who describes himself as the current sole Director of the respondent.
That Affidavit attaches unsigned financial accounts for the year ended 30 June 2022 showing a loss during the financial year of $3,289,507. That Affidavit was sworn on 20 June 2023. Curiously, in an Affidavit of Kathyrn Presdee, a senior national legal officer employed by the AMWU, attaches an extract from the Australian Securities and Investments Commission showing that Mr Hermus was reappointed as a company Director on 21 June 2023, having previously ceased as a Director on 27 April 2023. The Court is puzzled as to the timing of Mr Tokatlian’s Affidavit which provides certain information, only for that information to be rendered inaccurate the following day.
Further, and incapacity to pay is not a basis upon which the Court would not impose penalties which specifically reflect the gravity of the contraventions found. There is no indication that the company has ceased trading and is unable to pay its debts as and when they full due.
The Court is satisfied that this was a medium-sized company, which, had it so wished, could have easily accessed expert advice which would have enabled them to understand what was required under the Enterprise Agreement and what consultation was required when major change was being contemplated.
Whether or not the breaches were deliberate
On behalf of the applicants, it was submitted that the Court would find the contraventions were deliberate with the dismissals involving the respondents taking positive action.
The Court is of the view that the contraventions in this case were not as a result of any ineptitude or a ham fisted attempt by management to carry out a necessary process. The Court does not accept they were honest mistakes which were as a result of inadvertence. Rather, the Court is reasonably satisfied this was a deliberate targeting of two employees who had raised issues in relation to their rights under the new Enterprise Agreement and had also volunteered to be Union delegates in their workplace.
Whether or not senior management were involved in the breaches
Counsel for the respondent conceded that senior management were involved in the contraventions.
Whether the party committing the breach had exhibited contrition
The respondent relies upon the Affidavit of Mr Tokatlian as an expression of remorse. He blames Ms Nguyen for the failure to pay the PROTECT money and that payment was made on 3 August 2021. The Court does not accept the underpayments were the fault of Ms Nguyen, rather she acted on instructions from managers. Mr Tokatlian asserts that he has appointed a new manager, a Mr Mastrogiovanno, to handle matters such as the current one in the future. The Court notes however no evidence has been provided by that person in relation to his background, experience, and capacity to abide by relevant industrial agreements.
The Court also notes that no explicit apology has been offered by Mr Tokatlian. Had such an apology been offered and given, the Court may have been moved to provide further mitigation of any penalty that might otherwise be imposed.
Whether the party committing the breach is taken corrective action
Counsel for the respondent submitted that the company now understands the Enterprise Agreement and will engage with HR professionals and lawyers when it comes to the employment side of the business. It was also asserted that the respondent would engage with Unions on a professional basis in the future. The Court gives these assertions very limited weight, noting that some time has passed since the contraventions, together with the liability finding, and no evidence of greater engagement has been provided.
Cooperation with law enforcement authorities and the need to ensure compliance with minimum standards are not relevant factors in the consideration of this matter.
The need for specific and general deterrence
Contraventions of the Act are serious matters in which there is a need for both specific deterrence as well as general deterrence. There must be sufficient sting in the tail to ensure that both the respondent and those who might otherwise be involved in like contraventions consider the financial benefits that might accrue from contraventions as compared to the risk of pecuniary penalties. The Court has already found that the breaches were deliberate on the part of the respondent and this calls for a significant penalty. The Court has taken into account that there has been action taken to rectify the underpayments to Mr Burton.
While some discount must be allowed on the basis that the respondent has not previously contravened the Act, this needs to be balanced by the fact that there was no early admission of liability, and that liability was hard fought by the respondent.
Counsel for the respondent submitted the low range of 20% to 30% of the maximum penalties should be applied in each of the identified four categories. The Court does not accept that the deliberate breaches which have been identified, even allowing for the fact that there has been no previous reported contraventions by the respondent, can attract a penalty in this range. The Court does not accepted that there has been real contrition by the respondent. As set out above, the appropriate penalties arrived at on an intuitive basis and must be sufficient to protect the public interest from future contraventions.
The Court is of the view that the appropriate penalty should be 50% of the maximum of $66,000.00 that can be imposed in each of the identified grouped contraventions.
Accordingly, the penalties to be imposed in isolation are as follows:
1. Contravening of s 50 of the Act by contravening cl 15 of the relevant Enterprise Agreement by failing to make arrangements for rostered days off in relation to Mr Nesbitt and Mr Burton: Penalty $33,000.00.
2. Contravening s 50 of the Act by contravening cl 7 of the relevant Enterprise Bargain by failing to consult with employees about a major change: Penalty $33,000.
3. Contravening s 340 of the Act in dismissing both Mr Nesbitt and Mr Burton as they exercised workplace rights by making complaints to their employer and because they were delegates of industrial associations: Penalty $33,000.
4. Contravening s 50 of the Act by failing to pay Mr Burton at the rate of $44.00 per hour rather than the required rate under the relevant Enterprise Agreement of $44.59 and failing to pay the amount of $79.oo per week into the PROTECT Fund as required by cl 18 of the relevant Enterprise Agreement: Penalty $33,000
The above totals $132,000.000. As a final step, the Court is required to consider the overall penalty arrived at and apply the totality principle to ensure the overall penalty is appropriate. The Court is of the view that a further reduction is appropriate to reduce the individual penalties to $30,000.00 each, or a total of $120,000.00 for the four identified grouped contraventions
The penalties should be paid in equal amounts of $60,000.00 in the case of file SYG521/2022 to the Australian Manufacturers Workers’ Union and in the case of file SYG521/2022 to Mr Nesbitt.
There is a claim for the payment of interest.
I amThe Court is satisfied it is appropriate for interest to be paid on the economic and non-economic loss ordered. The parties are to confer and agree on an amount to be paid as interest to both Mr Nesbitt and Mr Burton, failing which leave is granted to approach the Court for an order in relation to interest.
I certify that the preceding ninety-four (94) numbered paragraphs are a true copy of the Reasons for Judgment of Judge D Humphreys. Deputy Associate:
Dated: 14 July 2023
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