Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Visy Paper Pty Ltd (No 2)
[2012] FMCA 1049
•14 November 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION (NO 2) v VISY PAPER PTY LTD | [2012] FMCA 1049 |
| INDUSTRIAL LAW – Contraventions of s.323 and s.340 of the Fair Work Act 2009 (Cth) found proved – whether respondent should be ordered to pay agreed compensation to affected employees – whether respondent should be ordered to pay agreed pecuniary penalties pursuant to s.546 of the Fair Work Act 2009 (Cth) – whether agreed pecuniary penalties are within the permissible range – whether pecuniary penalties should be paid to the applicant pursuant to s.546(3) of the Fair Work Act 2009 (Cth) – whether respondent should be ordered to pay interest on the agreed compensation and agreed penalties – whether agreed declarations should be made. |
| Fair Work Act 2009 (Cth), ss.12, 323, 340, 361, 470, 545, 546 Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) Crimes Act 1914 (Cth), s.4AA |
| Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Visy Paper Pty Ltd [2012] FMCA 407 Kelly v Fitzpatrick [2007] FCA 1080 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 Fair Work Ombudsman v Hungry Jack’s Pty Ltd [2011] FMCA 233 Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 Fair Work Ombudsman v W.K.O. Pty Ltd [2012] FCA 1129 Alfred v Construction, Forestry, Mining and Energy Union [2011] FCA 556 Wells v Locarno Management Pty Ltd [2008] FCA 1034 Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 Community and Public Sector Union (CPSU) v Telstra Corp Ltd (2001) 108 IR 228 Plancor Pty Ltd v Liquor, Hospitality, and Miscellaneous Union (2008) 171 FCR 357 |
| Applicant: | AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION |
| Respondent: | VISY PAPER PTY LTD |
| File Number: | SYG 262 of 2011 |
| Judgment of: | Emmett FM |
| Hearing date: | 3 August 2012 |
| Date of Last Submission: | 26 September 2012 |
| Delivered at: | Sydney |
| Delivered on: | 14 November 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Kennedy |
| Solicitors for the Applicant: | Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union |
| Counsel for the Respondent: | Mr R Marshall |
| Solicitors for the Respondent: | Fisher Cartwright Berriman Pty Ltd |
THE COURT DECLARES THAT:
The applicant was at all material times:
(a)an ‘employee organisation’ within the meaning of section 12 of the Fair Work Act 2009 (Cth);
(b)an ‘industrial association’ within the meaning of section 12 of the Fair Work Act 2009 (Cth);
(c)an employee organisation to which the collective agreement-based transitional instrument (the Visy (Smithfield, Warwick Farm, Dandenong, O’Connor, FAG Carole Park) Enterprise Agreement 2007) concerned applies, within the meaning of Schedule 3, Item 3 and Schedule 16 of the Fair Work(Transitional Provisions and Consequential Amendments) Act 2009 (Cth);
(d)a person eligible to apply to this Court for orders in relation to a contravention of section 323 of the Fair Work Act 2009 (Cth) (a civil remedy provision) for the purposes of section 539(2) of the Fair Work Act 2009 (Cth), in that it is an ‘employee organisation’;
(e)a person eligible to apply to this Court for orders in relation to a Contravention of section 340 of the Fair Work Act 2009 (Cth) (a civil remedy provision) for the purposes of section 539(2) of the Fair Work Act 2009 (Cth), in that it is an ‘industrial association’; and
(f)a person eligible to apply to this Court for orders in relation to a contravention of a collective agreement-based transitional instrument (a civil remedy provision) for the purposes of Schedule 16, Item 16 of the Fair Work(Transitional Provisions and Consequential Amendments) Act 2009 (Cth) and section 539(2) of the Fair Work Act 2009 (Cth), in that it is an employee organisation to which the collective agreement-based transitional instrument concerned applies.
The affected employees were at all material times employed by the respondent and are identified in Schedule 1 to this Order.
The respondent was at all material times:
(a)a company duly incorporated in Australia and liable to be sued in its corporate name;
(b)a constitutional corporation within the meaning of section 12 of the Fair Work Act 2009 (Cth);
(c)an employer for the purposes of section 538, section 335 and section 12 of the Fair Work Act 2009 (Cth);
(d)a national system employer for the purposes of section 332 and section 14 of the Fair Work Act 2009 (Cth);
(e)an employer for the purposes of Schedule 16 of the Fair Work(Transitional Provisions and Consequential Amendments) Act 2009 (Cth); and
(f)a party bound to comply with the terms of the Visy (Smithfield, Warwick Farm, Dandenong, O’Connor, FAG Carole Park) Enterprise Agreement 2007
In contravention of section 323 of the Fair Work Act 2009 (Cth), the respondent failed to pay the employees identified in Schedule 1 to this Order their due entitlements during the pay period ending on 2 February 2011.
5. In contravention of section 340 of the Fair Work Act 2009 (Cth), the respondent took adverse action against the affected employees identified in Schedule 1 to this Order by failing to pay the affected employees their due entitlements during the pay period ending on 2 February 2011 in contravention of section 323 of the Fair Work Act 2009 (Cth).
6. The respondent contravened the Visy (Smithfield, Warwick Farm, Dandenong, O’Connor, FAG Carole Park) Enterprise Agreement 2007 by failing to pay the affected employees identified in Schedule 1 to this Order their due entitlements during the pay period ending on 2 February 2011.
THE COURT ORDERS THAT:
Pursuant to section 545(2)(b) of the Fair Work Act 2009 (Cth), the respondent pay within 28 days each of the affected employees identified in Schedule 1 to this Order the amount identified in Schedule 1 as owing to that affected employee.
Pursuant to section 547 of the Fair Work Act 2009 (Cth), the respondent pay within 28 days to each of the affected employees identified in Schedule 1 to this Order interest on each amount identified as owing to that employee from 1 February 2011 to date, subject to taxation.
Pursuant to section 546(1) of the Fair Work Act 2009 (Cth), the respondent pay the following pecuniary penalties:
(a)As to the contravention of section 323 of the Fair Work Act 2009 (Cth): a pecuniary penalty of $6,666.66;
(b)As to the contravention of section 340(1) of the Fair Work Act 2009 (Cth): a pecuniary penalty of $6,666.68; and
(c)As to the contravention of the Visy (Smithfield, Warwick Farm, Dandenong, O’Connor, FAG Carole Park) Enterprise Agreement 2007: a pecuniary penalty of $6,666.66.
The Court orders that, pursuant to section 546(3) of the Fair Work Act 2009 (Cth), the respondent pay the penalties in Order 8 above to the applicant within 28 days.
No order as to costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 262 of 2011
| AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION |
Applicant
And
| VISY PAPER PTY LTD |
Respondent
REASONS FOR JUDGMENT
A. Introduction
The applicant is an employee organisation and an industrial association within the meaning of the Fair Work Act 2009 (Cth) (“the FW Act”) and an employee organisation within the meaning of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), and brings this proceeding on behalf of 33 employees of the respondent.
In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Visy Paper Pty Ltd [2012] FMCA 407 (“Visy”), I found that, in deducting amounts from the pay of 33 employees who had taken part in protected industrial action, the respondent had contravened the Visy (Smithfield, Warwick Farm, Dandenong, O’Connor, FAG Carole Park) Enterprise Agreement 2007 (“the Visy Agreement”) thereby contravening s.323 of the FW Act. I also found that the respondent had not rebutted the presumption pursuant to s.361 of the FW Act that this conduct was adverse action for the purposes of s.340 of the FW Act.
By consent, the parties seek declarations to that effect, as well as a declaration that the respondent contravened the Visy Agreement. By consent, the parties also seek orders that the respondent pay compensation to the affected employees in agreed amounts plus interest; that the respondent pay pecuniary penalties in respect of the contraventions of s.323 and s.340 of the FW Act in agreed amounts; and that the penalties agreed be paid to the applicant.
B. Legislative framework
Section 323 of the FW Act provides that an employer must pay an employee in full the amounts payable to the employee in relation to the performance of work, including all loadings, allowances, overtime or penalty rates, and leave payments.
Section 324 of the FW Act provides that an employer may deduct an amount from the mount payable to an employee if the deduction is authorised.
Section 340 of the FW Act provides that, inter alia, a person must not take adverse action against another person who has exercised a workplace right.
Section 362 of the FW Act provides that in an application in relation to, relevantly, a contravention of s.323 of the FW Act, if it is alleged that a person took action for a particular or with a particular intent and taking that action for that reason or with that intent constitutes, relevantly, a contravention of s.323 of the FW Act, it is presumed that the action was taken for that reason or with that intent, unless the person proves otherwise.
Both s.323 and s.340 of the FW Act are civil remedy provisions.
Section 545(1) of the FW Act provides that the Court may make any order that it considers appropriate if it is satisfied that a person has contravened a civil remedy provision. Section 546(1) of the FW Act provides that the Court may order a person to pay a pecuniary penalty that it considers appropriate if the Court is satisfied that a person has contravened a civil remedy provision.
Section 546(2) of the FW Act and s.539(2) together provide that any pecuniary penalty imposed upon a body corporate, such as the respondent, must not be more than 300 penalty units for each contravention of s.323 or s.340 of the FW Act. “Penalty unit” is defined in s.12 of the FW Act as having the same meaning as in s.4AA of the Crimes Act 1914 (Cth) (“the Crimes Act”). Section 4AA(1) of the Crimes Act defines “penalty unit” to be $110. Therefore, the maximum penalty that may be imposed by the Court on the respondent is $33,000 for each contravention of the FW Act.
Section 546(3) of the FW Act provides that the Court may order that the pecuniary penalty be paid to the Commonwealth, a particular organisation or a particular person.
C. Background
In Visy, I made findings in accordance with the Agreed Chronology filed by the parties on 9 February 2011. For ease of reference, those findings were as follows:
“a. In February 1999, a 60 week rostering system covering the respondent’s employees employed at its Smithfield, NSW site commenced operation, following negotiation and agreement between the applicant and the respondent.
b. The 60 week rostering system operated under a succession of enterprise agreements covering the respondent’s employees at Smithfield from 1999 and continued in operation under the Visy Agreement.
c. In July 2010, the applicant and the respondent commenced bargaining for a new enterprise agreement to replace the Visy Agreement under the provisions of the FW Act.
d. On 25 October 2010, Commissioner Cargill of Fair Work Australia in the matter of Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Visy Board Pty Ltd and Visy Paper Pty Ltd [PR503022] made an order that a protected action ballot be held.
e. On 19 November 2010, the Australian Electoral Commission declared the results of the protected action ballot, with the ballot being successful.
f. The employees on each shift had been rostered to work on Monday, 29 November 2010 as follows:
i) “A” shift was not rostered on to work, as they were on annual leave, in accordance with the roster;
ii) “B” and “C” shifts were not rostered on to work;
iii) “D” shift was rostered on to work a night shift; and
iv) “E” shift was rostered on to work a day shift.
g. On Monday 29 November 2010, the employees who were rostered on to work took protected industrial action in accordance with the FW Act, in the form of a 24 hour stoppage.
h. On or shortly after 30 November 2010, the employees on each shift were paid as follows for the pay period of 24 November until 30 November 2010:
i) “A”, “B” and “C” shifts received their ordinary weekly pay;
ii) “D” and “E” shifts received $385.32 less than their ordinary weekly pay (representing 12 hours multiplied by the hourly rate), with their total gross weekly pay being $1,314.90.
i. From Friday, 3 December 2010 to 17 December 2010 inclusive, employees at the Smithfield site took protected industrial action under the FW Act, in the form of an indefinite strike.
j. The rostering, work and pay arrangements for the employees for the pay periods of 1 December to 7 December 2010, 8 December to 14 December 2010, and 15 December until 21 December 2010 are reflected in the following table:
Shift Pay Period Rostered shifts during pay period Shift worked or on protected industrial action (PIA) Weekly gross pay received A 1/12/10 to 7/12/10 None (on annual leave and rostered days off) None (on annual leave and rostered days off) $1,700.22 8/12/10 to 14/12/10 Wednesday 8/12
Thursday 9/12
Friday 10/12
Saturday 11/12PIA
PIA
PIA
PIA$0 15/12/10 to 21/12/10 Thursday 16/12
Friday 17/12
Saturday 18/12
Sunday 19/12PIA
PIA
Shift worked
Shift worked$929.58 B 1/12/10 to 7/12/10 Wednesday 1/12 Thursday 2/12 Friday 3/12 Shift worked
Shift worked
PIA$1,314.90 8/12/10 to 14/12/10 None (on annual leave and rostered days off) None (on annual leave and rostered days off) $1,700.22 15/12/10 to 21/12/10 None (on annual leave and rostered days off) None (on annual leave and rostered days off) $1,700.22 C 1/12/10 to 7/12/10 Thursday 2/12
Friday 3/12 Saturday 4/12 Sunday 5/12Shift worked
PIA
PIA
PIA$0 8/12/10 to 14/12/10 Friday 10/12
Saturday 11/12 Sunday 12/12
Monday 13/12PIA
PIA
PIA
PIA$0 15/12/10 to 21/12/10 Saturday 18/12 Sunday 19/12
Monday 20/12
Tuesday 21/12Shift worked
Shift worked
Shift worked
Shift worked$1,700.22 D 1/12/10 to 7/12/10 Saturday 4/12 Sunday 5/12 Monday 6/12 Tuesday 7/12 PIA
PIA
PIA
PIA$96.43 8/12/10 to 14/12/10 Sunday 12/12
Monday 13/12
Tuesday 14/12PIA
PIA
PIA$0 15/12/10 to 21/12/10 Wednesday 15/12
Monday 20/12
Tuesday 21/12PIA
Shift worked
Shift worked$1314.90 E 1/12/10 to 7/12/10 Monday 6/12 Tuesday 7/12 PIA
PIA$929.58 8/12/10 to 14/12/10 Wednesday 8/12 Thursday 9/12 Tuesday 14/12 PIA
PIA
PIA$544.26 15/12/10 to 21/12/10 Wednesday 15/12
Thursday 16/12
Friday 17/12PIA
PIA
PIA$544.26 k. On 16 December 2010, the Australian Manufacturing Workers’ Union (“AMWU”) applied to Fair Work Australia in relation to a general protections dispute between the parties.
l. On 18 December 2010, the employees returned to work, in accordance with the roster.
m. On 22 December 2010, the dispute was listed for a conference before Commissioner Cargill of Fair Work Australia. The dispute was not resolved in that conference.
n. On 23 December 2010, the respondent wrote to the employees on each of the respective shifts regarding adjustments that the respondent considered it needed to make to employees’ hours of work in respect of the periods of protected industrial action. The respondent said that it did so to comply with the requirements of the FW Act regarding payment in relation to the periods of industrial action. The respondent confirmed that the adjustments would be made by way of pay deductions in the pay period 26 January 2011 to 1 February 2011.
o. During the pay period, from 26 January 2011 to 1 February 2011, the employees worked their ordinary rostered hours in accordance with their roster.
p. On 1 February 2011, the AMWU wrote to the respondent requesting that the respondent refrain from making the deductions until the dispute could be resolved.
q. On 2 February 2011, the respondent’s solicitors replied to the AMWU’s letter, confirming that the adjustments to employees’ wages would be made in the pay period 26 January 2011 to 1 February 2011.
r. On 17 February 2011, the applicant commenced this proceeding.”
In Visy, I also made findings in accordance with the Agreed Statement of Facts filed by the parties on 5 May 2011. Again, for ease of reference, those findings were as follows:
“a. At all material times, each of the employees was:
i) employed at the site as a “machine operator” pursuant to the Visy Agreement, and paid an hourly rate of $32.11 per hour;
ii) employed under the Visy Agreement in accordance with a shift roster;
iii) paid for 52.95 hours each week under the Visy Agreement, regardless of when he or she was rostered to work, amounting to a gross weekly wage of $1,700.55;
iv) paid on a weekly basis under the Visy Agreement, with the pay period running from Wednesday each week through to the following Tuesday; and
v) a member of the AMWU.
b. The employees were at all material times not paid shift penalties, overtime penalties, weekend penalties, or annual leave loading as separate entitlements; under the Visy Agreement, those entitlements were converted into an hourly amount per week and added to the ordinary weekly hours of work (35 hours), totalling 52.95 hours per week.
c. The roster that applied to the employees commenced on 27 January 2010 and continued for a period of 60 weeks and finished on 22 March 2011.
d. There were, at all material times, five shifts in operation under the roster. The shifts are called “A”, “B”, “C”, “D” and “E” shift respectively.
e. Each individual shift worked under the roster by the employees was 12 hours in length.
f. Shifts “A” to “E” each follow the same pattern under the roster, in that the employees work two day shifts, followed by two night shifts, followed by four days off or rostered periods of leave.
g. The employees’ annual leave and rostered days off were built into the roster.
h. On 20 December 2010, the employees rostered to work during the period of protected industrial action received a notice from the respondent regarding further proposed deductions in respect of the periods of protected industrial action.
i. The foreshadowed deductions for each shift rostered during the protected industrial action were calculated by subtracting the ordinary weekly paid hours (52.95) from the number of hours the employee was rostered to work during the protected industrial action. The respondent proposed to make deductions only from the pay of those employees who had a “negative hours” balance as a consequence of this calculation process.
j. Eleven employees on “D” shift were scheduled to attend training during the pay period of 1 to 7 December 2010, which was four hours in duration.
k. For the pay period 26 January 2011 to 1 February 2011, the employees worked their ordinary rostered hours in accordance with their roster.
l. For the pay period 26 January 2011 to 1 February 2011, the employees on each shift had the following amounts deducted from their pay:
i) The employees on “A” shift had the amount of $226.38 deducted from their ordinary weekly pay, representing 7.05 hours;
ii) The employees on “B” shift did not have any amount deducted from their ordinary weekly pay;
iii) The employees on “C” shift had the amount of $838.07 deducted from their ordinary weekly pay, representing 26.1 hours;
iv) The employees on “D” shift had the amount of $452.75 deducted from their ordinary weekly pay, representing 14.1 hours; and
v) The employees on “E” shift did not have any amount deducted from their ordinary weekly pay.”
After considering the evidence, I then made the following findings as to the liability of the respondent:
“1. The respondent has not paid the relevant employees all amounts payable in relation to the performance of work during the periods of protected industrial action in the period 29 November 2010 to 17 December 2010.
2. The respondent, in deducting amounts from the pay of the relevant employees in the period of 26 January 2011 to 1 February 2011, contravened s.323 of the FW Act.
3. For the purposes of s.324(1) of the FW Act, the respondent, in deducting amounts from the pay of the relevant employees in the pay period of 26 January 2011 to 1 February 2011, was not authorised to do so under a law of the Commonwealth.
4. The respondent, in deducting amounts from the pay of the relevant employees in the pay period of 26 January 2011 to 1 February 2011, contravened the Visy Agreement.
5. The respondent was not required to make the deductions from the pay of the relevant employees in order to comply with s.470(1) of the FW Act.
6. The deduction by the respondent from the pay of the relevant employees is capable of being adverse action as contemplated by s.342(1) of the FW Act.
7. The respondent did take adverse action against the relevant employees because they exercised their workplace rights as contemplated by s.340 of the FW Act.”
D. Relevant factors in considering penalty
In Kelly v Fitzpatrick [2007] FCA 1080 (“Kelly”), Tracey J adopted the following list of factors as potentially relevant and applicable to the assessment of penalty:
(a) the nature and extent of the conduct which led to the contraventions;
(b) the circumstances in which the conduct took place;
(c) the nature and extent of any loss or damage sustained as a result of the contravening conduct;
(d) whether there had been similar previous conduct by the respondents;
(e) whether the contraventions were properly distinct or arose out of the one course of conduct;
(f) the size of the business enterprise involved;
(g) whether or not the contravening conduct was deliberate;
(h) whether senior management was involved in the contravening conduct;
(i) whether the party committing the contravening conduct had exhibited contrition;
(j) whether the party committing the contravening conduct had taken corrective action;
(k) whether the party committing the contravening conduct had cooperated with the enforcement authorities;
(l) the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(m) the need for specific and general deterrence.
This list of relevant factors has been applied in a number of cases. However, I note the cautionary comments of Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [91] that:
“Check lists of this kind can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations.”
For ease of reference and in light of the written submissions of the parties, I have considered the factors relevant to penalty below.
The nature and extent of the conduct which led to the contraventions and the circumstances in which the conduct took place
The applicant has submitted that the respondent’s conduct was deliberate, premeditated and “extremely serious in nature”. The applicant has further submitted that the respondent’s actions were committed whilst being involved in proceedings questioning that conduct and despite clear written notice from the applicant that the respondent’s conduct was unlawful.
The respondent submitted that its conduct must be viewed at the opposite end of the spectrum to cases where penalties have been ordered against employers who have been found to have contravened, deliberately or wilfully, their statutory obligations. The respondent submitted that the deductions made by the respondent arose from the respondent applying its interpretation of the rostering and pay system to the requirements of the FW Act.
Each of the affected employees was employed under the Visy Agreement by the respondent as ‘machine operators’ at its Smithfield site. In Visy, I found that there was a wage averaging agreement between the parties whereby employees’ wages would be averaged over the 60 week roster cycle and would include all shift penalties, loading, overtime, annual leave and other entitlements. I found that this wage averaging agreement entitled the relevant employees to be paid $1700.22 per week for a 60 week roster irrespective of the hours and shifts worked, subject to any agreed pay readjustments, and was inclusive of all penalties, shift loadings, allowances and leave loadings.
As such, I was not persuaded that the wage averaging agreement entitled the respondent to make further deductions beyond withholding employees’ wages during the relevant periods of protected industrial action.
These findings were based upon the Visy Agreement and my construction of the document titled “VP3&6 Annualised Salary Calculations” (“the ASC Document”), being the only written evidence of the way in which the wage averaging agreement operated. In Visy, I expressed my dissatisfaction with both parties that the wage averaging agreement between the parties was not expressed clearly in writing. Both parties had a responsibility to ensure clarity and certainty of the terms and conditions upon which the workers of the respondent were employed.
In the light of s.340 and s.361 of the FW Act, I also found that the respondent’s conduct was adverse action because I was not satisfied that the respondent had rebutted the presumption that the unauthorised deductions from the employees’ wages were made because the employees had exercised their workplace rights.
At the hearing in Visy, Mr Kingma, the General Manager of the respondent in New South Wales, gave unchallenged evidence that the sole reason for his decision to effect the unauthorised deductions was to ensure that employees were not paid in relation to their protected industrial action. By this, I understood and I accepted, that the respondent effected the deductions to comply with s.470(1) of the FW Act which provides that:
“If an employee engaged, or engages, in protected industrial action against an employer on a day, the employer must not make a payment to an employee in relation to the total duration of the industrial action on that day.”
Mr Kingma’s evidence is corroborated by a letter, dated 2 February 2011, from the respondent’s letter to the applicant, asserting that the respondent was making the necessary wage adjustments for relevant employees who participated in protected industrial action in order to comply with its obligations under the FW Act with respect to payment for periods of industrial action. That letter was annexure “G” to the Agreed Statement of Facts.
However, I found that the respondent had not rebutted the presumption in s.361 of the FW Act because there was no evidence of the line of authority to Mr Kingma from the respondent to make the decision to make the deductions. In such circumstances, I found that Mr Kingma’s evidence could not be determinative of the real reason for the respondent’s conduct and therefore was not capable of rebutting the presumption in s.361 of the FW Act.
I do, however, accept the respondent’s submission that the respondent’s conduct was not due to deliberate non-compliance with, or ignorance of, the requirements of the FW Act or provisions of the Visy Agreement. In light of the uncertainty of the meaning of the writing that governed the terms and conditions upon which the workers of the respondent were employed, it was not unreasonable for the respondent to contend that a proper construction of that writing was different to the applicant’s contentions.
However, ultimately the alleged contraventions were found proved. I accept the applicant’s submission that the respondent had express notice of the applicant’s construction of the Visy Agreement and the ASC Document, yet left its interpretation of its obligations under those documents to its general manager, a non lawyer.
I accept the applicant’s submission that on 15 December 2010, the respondent informed the applicant that it proposed to make the deductions. I also accept that the respondent had a substantial amount of time to reconsider its actions following being made aware on 16 December 2010 that the employees and the applicant did not agree to the deductions. A period of seven weeks elapsed between 15 December 2010 and when the deductions were made in February 2011. I also accept the applicant’s submission that the respondent was on clear notice that its proposed actions were unlawful throughout that period and that there was no evidence before the Court that on 15 December 2010 the respondent was acting in reliance on any external legal advice.
In the circumstances, I accept that the respondent’s conduct was deliberate and serious.
The nature and extent of any loss or damage sustained as a result of the contravening conduct
The respondent’s contraventions of the FW Act led to unlawful deductions from the pay of 33 employees totalling $16,689.17. These deductions ranged from $226.38 to $838.07 for each of the 33 employees.
The respondent submitted that the deductions arose from the respondent applying its interpretation of its rostering and pay system to the requirements of the FW Act and that the Court in Visy found that both parties were at fault for the paucity of evidence regarding the rostering and pay system.
However, I accept the applicant’s submission that the sums are not immaterial or trivial and that the employees’ loss arose because of the exercise by them of their workplace rights. In the circumstances, a meaningful and effective penalty should be imposed on the respondent.
Whether there had been similar previous conduct by the respondents
There is no evidence before the Court that the respondent has ever previously contravened a civil remedy provision of the FW Act.
Whether the contraventions were properly distinct or arose out of the one course of conduct
The protected industrial action engaged in by the relevant employees occurred in the period 29 November 2010 to 17 December 2010. The respondent made the unlawful deductions from the pay of the employees in the period of 26 January 2011 to 1 February 2011 with the deductions from each employee occurring at the same time.
In the circumstances, I accept the submissions from both parties that, pursuant to s.557 and s.323 of the FW Act, the respondent’s conduct should be seen as only the one course of conduct.
The size of the business enterprise involved
I accept the applicant’s unchallenged submission that the respondent is a large employer. The respondent employs 94 people at its Smithfield site and the Visy Agreement itself applies to 8 different sites.
I note that any penalties should be imposed at a meaningful level and that the expectations that a large employer should comply with its workplace relations obligations may be greater (see Fair Work Ombudsman v Hungry Jack’s Pty Ltd [2011] FMCA 233 at [49] per Burchardt FM).
Whether senior management was involved in the contravening conduct
Mr Kingma, the General Manager of the respondent in New South Wales, gave evidence that it was his decision to make the deductions from the pay of the employees who had engaged in protected industrial action.
Contrition, cooperation with enforcement authorities and corrective action
The respondent submits that the circumstances giving rise to the unlawful deductions are unique and that, therefore, there is no relevant way to measure whether the respondent has shown any contrition for its contraventions and that there is no corrective action that the respondent can make.
While wage averaging agreements are not unusual and are specifically provided for in s.63 of the FW Act, the precise operation of the Visy Agreement had not been clearly reduced to writing. One would like to think that such circumstances may be considered unusual or unique, having regard to the size of the respondent and the number of employees affected.
However unusual, the Visy Agreement could have operated effectively, and the contraventions which are the subject of this litigation avoided, if the way the agreement was to operate had been clearly stated in writing. This is something for which the respondent has not shown any contrition. Moreover, there is no evidence before me of any corrective action taken by the respondent to try and ensure that no such uncertainty will arise in the future in relation to the terms and conditions of the workers employed by it.
However, I do have regard to the fact that the respondent participated in the filing, by consent, of an agreed statement of facts, an agreed statement of issues, an agreed statement of facts on penalty, and agreed proposed orders and declarations. The respondent also participated in Court annexed mediation which resulted in the agreement of the proposed civil penalties. I accept that such conduct by the respondent is a mitigating factor to be taken into account in the imposition of penalties.
The need for specific and general deterrence
The applicant has submitted that, because the respondent has not made a proper expression of contrition or “rectified the breaches”, specific deterrence is necessary.
The applicant has further submitted that, even absent considerations of specific deterrence, significant penalties should be imposed on the respondent for reasons of general deterrence.
In relation to specific deterrence, I accept that there is no evidence that the respondent has ever previously contravened a civil remedy provision of the FW Act, that the contraventions arose out of the one course of conduct, that the respondent cooperated constructively in the litigation by agreeing to the filing by consent of an agreed statement of facts, participated in a mediation on penalty and ultimately agreed declarations and penalties, that the dispute between the parties arose from a disagreement with the construction of the document governing the terms and conditions of the respondent’s workers employment, the need for specific deterrence is not high. However, in circumstances where the documents governing the terms and conditions of the respondent’s employees were uncertain and unclear, even though the applicant was complicit in such situation, the need for specific deterrence cannot be ignored.
In considering general deterrence in determining an appropriate penalty, I note the comments of Lander J in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [93] that:
“In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217.”
The purpose of imposing a civil penalty is to ensure that that the objectives of the particular regulatory scheme embodied in the legislation in question is achieved. The penalty imposed should send a message to other persons affected by the scheme of regulation in question concerning the need to comply with the provisions of the Act in order to meet the objectives of the legislation (see Fair Work Ombudsman v W.K.O. Pty Ltd [2012] FCA 1129 at [92] per Barker J).
To this end, I have regard to the objects of the FW Act, one of which is to enforce effectively the obligations imposed by Awards and other industrial instruments. I note that the penalties for the sections of the FW Act breached by the respondent in this case were increased substantially by Parliament in 2004.
The need to deter generally contraventions of s.323, and particularly s.340 of the FW Act, must be considered to be high in the light of the objects of the FW Act and requires the imposition of a meaningful penalty in all the circumstances.
E. Penalties, compensation, interest and declarations
Penalties
The penalties which the parties ask the Court to impose pursuant to s.546(1) of the FW Act in respect of each of the agreed contraventions are as follows:
(a)In relation to the contravention of s.323 of the FW Act: a pecuniary penalty of $6,666.66
(b)In relation to the contravention of s.340(1) of the FW Act: a pecuniary penalty of $6,666.68; and
(c)In relation to the contravention of the Visy Agreement: a pecuniary penalty of $6,666.66
To the credit of both parties, they have agreed on the pecuniary penalties to be paid by the respondent as reflected above. It is well established that only where the proposed penalty falls outside the permissible range should the Court depart from the figure agreed between the parties (see Ponzio v B & P Caelli Constructions [2007] FCAFC 65 at [129] per Jessup J and Alfred v Construction, Forestry, Mining and Energy Union [2011] FCA 556 at [68] per Tracey J). To that end, I note the statement in Wells v Locarno Management Pty Ltd [2008] FCA 1034 at [23] of Jessup J:
“The court is not bound by the agreement of the parties as to the level of penalty which should be imposed in a case such as the present. However, the court will not depart from an agreed figure merely because it might otherwise have been disposed to award some other figure. The predictability involved in the resolution of penal proceedings in accordance with a pre-trial agreement reached by the parties is something which should, as a matter of public policy, be regarded as beneficial. Only where the agreed penalty falls outside the permissible range should the court depart from the figure agreed by the parties. In this context, the permissible range is the range which would be permitted by the court, that is, a range within which the penalty is neither manifestly inadequate nor manifestly excessive.”
Having fixed an appropriate penalty for each contravention, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate response to the conduct which led to the contraventions (see Kelly at [30] per Tracey J). This involves an assessment of whether the agreed penalty is “appropriate in all the circumstances” (see Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at [51] per Branson, Sackville and Gyles JJ).
The total of the agreed penalty is $20,000. I am satisfied that a total penalty of $20,000 is an appropriate response to the conduct which led to the contraventions and is neither manifestly excessive nor manifestly inadequate. The penalty falls within the permissible range.
In the circumstances and for all the reasons referred to above, I am satisfied that the respondent should be ordered to pay the penalties agreed to by the parties.
Compensation and Interest
The parties have agreed that the following compensation shall be paid to the following affected employees:
MASOOD ASIMMI $226.38
SCOTT GARDNER $226.38
ROB COYLE $226.38
KON ANGIEVSKI $226.38
BOB ZAERDO $226.38
DALE EDWARDS $226.38
STEVE SHARP $226.38
KEONG WONG $226.38
BEN BABCYZYN $226.38
SHANE MACDONALD $226.38
RICKY COLEMAN $226.38
MICHAEL ROELOFS $838.07
MILCO STRAVRESKI $838.07
BRAD LANGWORTHY $611.07
GEORGE SMITH $838.07
JOHN LADOMATOS $838.07
TONY ZAPALLA $838.07
JOHN STERJOVSKI $838.07
RAUL PLANES $838.07
RICHARD YOUNG $838.07
FRANK MARRON $838.07
TONY FIORENZA $838.07
GEORGE PADOVAN $452.75
DON SWANSON $452.75
PAUL LORD $452.75
PAT MAHER $452.75
ROSS WILSON $452.75
PETER VO $452.75
LACHLAN PITKIN $452.75
MATTHEW REYNOLDS $452.75
JUSTIN OWENS $452.75
TOM REYNOLDS $452.75
PAUL LANGWORTHY $452.75
I am satisfied that the agreed amounts referred to above should be paid by the respondent to each of the identified employees within 28 days.
The agreed proposed agreed orders also provide for interest to be paid by the respondent on the compensation to be paid to each of the affected identified employees.
Under s.547 of the FW Act, the Court must make an order for interest unless good cause is shown to the contrary. In the circumstances, I am satisfied that interest should be paid by the respondent to the affected employees on the amounts identified should be calculated from 1 February 2011, being the day the cause of action arose.
Declarations
In addition to the imposition of penalties, the parties agreed that declarations should be made in relation to the respondent’s contraventions of s.323 and s.340 of the FW Act and the Visy Agreement:
In the circumstances, and having regard to the need for general deterrence in respect of the conduct engaged in by the respondent, I am satisfied that the agreed declarations should be made.
F. Whether pecuniary penalties should be paid to the applicant
The parties also seek an order that the respondent pay the agreed pecuniary penalties to the applicant.
Neither party made any submission in respect of such an order. However, in light of the following considerations I am satisfied that such an order is appropriate.
The applicant brought this proceeding on behalf of its members in accordance with its statutory entitlement. The applicant is an industrial association within the meaning of s.12 of the FW Act and is recognised by the relevant legislation as having a special interest in the enforcement of industrial agreements affecting its members. Pursuant to Sch.3, It.15 of the FW Act, the applicant has standing to apply to this Court for the relief it seeks.
The hearing went for two days, with counsel engaged by both parties, and the parties have attended several directions hearings and two Court annexed mediations. I note that there has been no order made as to costs in respect of this proceeding and none is sought by the applicant.
In the circumstances, I am satisfied that the agreed pecuniary penalties would not give rise to a “windfall” to the applicant in the sense referred to by Finkelstein J in Community and Public Sector Union (CPSU) v Telstra Corp Ltd (2001) 108 IR 228 at [22]-[28] and referred to by Branson and Lander JJ in Plancor Pty Ltd v Liquor, Hospitality, and Miscellaneous Union (2008) 171 FCR 357 (“Plancor”) at 377-379, particularly at [69] as follows:
“69. In our view, neither the total penalty actually imposed in this case, nor the amount of the penalty likely to be imposed on reconsideration of that penalty, is sufficient to give rise to concerns about a “windfall”. We understand a ‘windfall’ in this context to involve an unexpected and relatively large financial benefit. Within an organisation such as the respondent, the true cost of bringing a legal proceeding is likely to prove substantial if the time of all staff involved is appropriately accounted for and other costs, possibly including overheads, identified. Before a penalty could constitute a ‘windfall’ in the relevant sense it would need to exceed the total amount of that cost by a significant margin. For this reason, and because we did not hear full argument on the appropriateness of the observation of Finkelstein J in the CPSU case, we do not consider that we should express a concluded view on whether, in a case in which it would otherwise be appropriate for “the usual order” to be made, such an order should not be made if it would be likely to result in a windfall to the applicant.”
I am satisfied that the applicant is the proper recipient of the pecuniary penalties as part of a system of recognising particular interests in certain classes of persons in upholding the integrity of industrial agreements, such as the Visy Agreement (see Plancor at 371 per Gray J).
Accordingly, I am satisfied that the pecuniary penalties to be paid by the respondent should be paid to the applicant.
G. Conclusion
In the circumstances, and for all the reasons referred to above, I am satisfied that the following declarations and orders should be made:
1. The Court declares that, the applicant was at all material times:
(a) an ‘employee organisation’ within the meaning of section 12 of the Fair Work Act 2009 (Cth);
(b) an ‘industrial association’ within the meaning of section 12 of the Fair Work Act 2009 (Cth);
(c) an employee organisation to which the collective agreement-based transitional instrument (the Visy (Smithfield, Warwick Farm, Dandenong, O’Connor, FAG Carole Park) Enterprise Agreement 2007) concerned applies, within the meaning of Schedule 3, Item 3 and Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth);
(d) a person eligible to apply to this Court for orders in relation to a contravention of section 323 of the Fair Work Act 2009 (Cth) (a civil remedy provision) for the purposes of section 539(2) of the Fair Work Act 2009 (Cth), in that it is an ‘employee organisation’;
(e) a person eligible to apply to this Court for orders in relation to a Contravention of section 340 of the Fair Work Act 2009 (Cth) (a civil remedy provision) for the purposes of section 539(2) of the Fair Work Act 2009 (Cth), in that it is an ‘industrial association’; and
(f) a person eligible to apply to this Court for orders in relation to a contravention of a collective agreement-based transitional instrument (a civil remedy provision) for the purposes of Schedule 16, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) and section 539(2) of the Fair Work Act 2009 (Cth), in that it is an employee organisation to which the collective agreement-based transitional instrument concerned applies.
2. The Court declares that, the affected employees were at all material times employed by the respondent and are identified in Schedule 1 to this order.
3. The Court declares that, the respondent was at all material times:
(a) a company duly incorporated in Australia and liable to be sued in its corporate name;
(b) a constitutional corporation within the meaning of section 12 of the Fair Work Act 2009 (Cth);
(c) an employer for the purposes of section 538, section 335 and section 12 of the Fair Work Act 2009 (Cth);
(d) a national system employer for the purposes of section 332 and section 14 of the Fair Work Act 2009 (Cth);
(e) an employer for the purposes of Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth); and
(f) a party bound to comply with the terms of the Visy (Smithfield, Warwick Farm, Dandenong, O’Connor, FAG Carole Park) Enterprise Agreement 2007
4. The Court declares that, in contravention of section 323 of the Fair Work Act 2009 (Cth), the respondent failed to pay the employees identified in Schedule 1 to this Order their due entitlements in full during the pay period ending on 2 February 2011.
5. The Court declares that, in contravention of section 340 of the Fair Work Act 2009 (Cth), the respondent took adverse action against the affected employees identified in Schedule 1 to this Order by failing to pay the affected employees their due entitlements during the pay period ending on 2 February 2011 in contravention of section 323 of the Fair Work Act 2009 (Cth).
6. The Court declares that, the respondent contravened the Visy (Smithfield, Warwick Farm, Dandenong, O’Connor, FAG Carole Park) Enterprise Agreement 2007 by failing to pay the affected employees identified in Schedule 1 to this Order their due entitlements during the pay period ending on 2 February 2011.
7. The Court orders that, pursuant to section 545(2)(b) of the Fair Work Act 2009 (Cth), the respondent pay within 28 days each of the affected employees identified in Schedule 1 to this Order the amount identified in Schedule 1 as owing to that affected employee.
8. The Court orders that, pursuant to section 547 of the Fair Work Act 2009 (Cth), the respondent pay within 28 days to each of the affected employees identified in Schedule 1 to this Order interest on each amount identified as owing to that employee identified in Schedule 1 to this Order from 1 February 2011 to date, subject to taxation.
9. The Court orders that, pursuant to section 546(1) of the Fair Work Act 2009 (Cth), the respondent pay the following pecuniary penalties:
(a) As to the contravention of section 323 of the Fair Work Act 2009 (Cth): a pecuniary penalty of $6,666.66;
(b) As to the contravention of section 340(1) of the Fair Work Act 2009 (Cth): a pecuniary penalty of $6,666.68; and
(c) As to the contravention of the Visy (Smithfield, Warwick Farm, Dandenong, O’Connor, FAG Carole Park) Enterprise Agreement 2007: a pecuniary penalty of $6,666.66.
10. The Court orders that, pursuant to section 546(3) of the Fair Work Act 2009 (Cth), the respondent pay the penalties in Order 8 above to the applicant within 28 days.
I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of Emmett FM
Date: 14 November 2012
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