Awwad v Vic Solar Technologies Pty Ltd
[2020] FCCA 2838
•20 October 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| AWWAD v VIC SOLAR TECHNOLOGIES PTY LTD & ANOR | [2020] FCCA 2838 |
| Catchwords: INDUSTRIAL LAW – Default judgment – multiple contraventions of the relevant award – failure to pay entitlements – first respondent in external administration – first respondent and second respondent jointly and severally liable to pay entitlements to the applicant – second respondent liable to pay pecuniary penalties – pecuniary penalties payable to the applicant. |
| Legislation: Fair Work Act 2009 (Cth) ss.45, 323, 536, 545, 546, 550, 570(2). Federal Circuit Court of Australia Rules 2001 (Cth) rr.13.03A(2), 13.03B(2)(c), 13.03B(2)(d). |
| Cases cited: Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 Kelly v Fitzpatrick [2007] FCA 1080 Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 Other Materials: Electrical, Electronic and Communication Contracting Award 2010, cl. 26.1, 28. |
| Applicant: | MICHAEL AWWAD |
| First Respondent: | VIC SOLAR TECHNOLOGIES PTY LTD |
| Second Respondent: | SUNNY SRINIVASAN |
| File Number: | MLG 4199 of 2019 |
| Judgment of: | Judge McNab |
| Hearing date: | 28 July 2020 |
| Date of Last Submission: | 22 September 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 20 October 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Ryan |
| Solicitors for the Applicant: | Hughes Legal |
| No appearance by the Respondents |
ORDERS
Pursuant to rule 13.03B(2)(c) of the Federal Circuit Court Rules 2001 (Cth) and section 545(1) of the Fair Work Act 2009 (Cth) (“the Fair Work Act”), default judgment be entered in favour of the Applicant against the Respondents.
The Court makes declarations that:
(a)the First Respondent contravened section 45 of the Fair Work Act by:
(i)failing to pay the Applicant’s overtime entitlements arising under Clause 26.1 of the Electrical, Electronic and Communication Contracting Award 2010 (“the Award”);
(ii)failing to pay the Applicant’s annual leave entitlements arising under clause 28 of the Award;
(b)the First Respondent contravened section 323 of the Fair Work Act in failing to pay to the Applicant:
(i)the base weekly rate entitlement pursuant to clause 4 the Employment Contract;
(ii)the notice period entitlement pursuant to clause 7.1 of the Employment Contract;
(iii)the overtime entitlement pursuant to clause 26.1 of the Award; and
(iv)the annual leave loading entitlement pursuant to clause 28 of the Award;
(c)the First Respondent contravened section 536 of the Fair Work Act by failing to provide payslips to the Applicant for the weeks ending 7 April 2019, 14 April 2019, 21 April 2019, 28 April 2019 and 5 May 2019;
(d)the Second Respondent was knowingly concerned in the contraventions, pursuant to section 550 of the Fair Work Act;
(e)by reason of the First Respondent’s contraventions of section 45 of the Fair Work Act:
(i)in relation to overtime entitlements under clause 26.1 of the Award, the Applicant has suffered a loss of entitlements in the amount of $11,964.54;
(ii)in relation to annual leave loading entitlements under clause 28 of the Award, the Applicant has suffered a loss of entitlements in the amount of $517.23;
(f)by reason of the of the First Respondent’s contraventions of section 323 of the Fair Work Act:
(i)in relation to entitlements under clause 26.1 and 28 of the Award, the Applicant has suffered loss as declared under Order 2(e)(i) and 2(e)(ii) above;
(ii)in relation to base weekly rate entitlements under the Employment Contract, the Applicant has suffered a loss of entitlements in the amount of $1,346.10; and
(iii)in relation to notice period entitlements under the Employment Contract, the Applicant has suffered a loss of entitlements in the amount of $3,846.15;
(g)Pursuant to section 550 of the Fair Work Act, the First Respondent and Second Respondent are jointly and severally liable to compensate the Applicant for the loss and damage suffered by the Applicant as a consequence of the contraventions referred to in Order 2 above, in the sums set out in Order 2(e)(i), 2(e)(ii), 2(f)(ii) and 2(f)(iii).
The Court orders that:
(a)Pursuant to section 545 of the Fair Work Act, the Second Respondent compensate the Applicant for the loss and damage suffered by the Applicant as a consequence of the contraventions referred to in Order 2 above, in the sums set out in Order 2(e)(i), 2(e)(ii), 2(f)(ii) and 2(f)(iii), being a total of $17,674.02.
(b)The Second Respondent pay to the Applicant interest in the sum of $694.76.
(c)Pursuant to section 546(1) of the Fair Work Act, the Second Respondent pay a pecuniary penalty of $10,000.00 for the contraventions of the Fair Work Act declared by the Court under Order 2(a) and 2(b) above.
(d)Pursuant to section 546(3)(c) of the Fair Work Act, the pecuniary penalties ordered under Order 3(c) be paid by the Second Respondent to the Applicant.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 4199 of 2019
| MICHAEL AWWAD |
Applicant
And
| VIC SOLAR TECHNOLOGIES PTY LTD |
First Respondent
| SUNNY SRINIVASAN |
Second Respondent
REASONS FOR JUDGMENT
(As Corrected)
This matter commenced by an application filed on 28 November 2019.
Mr Awwad (“the Applicant”) holds an A-Grade Electricians licence. He commenced employment with Vic Solar Technologies Pty Ltd (“the First Respondent” or “Vic Solar”) on 17 December 2018 as an in-house solar installer/technician.
The Applicant's employment agreement was partly in writing and partly oral. In so far as it was in writing it is constituted by a document headed “Employment Contract” which was dated 7 December 2018.
There were terms of the Employment Contract that:
a)the Applicant's employment was subject to a probation period for three months;
b)his salary was set at $90,000 plus statutory superannuation;
c)his salary would increase to $100,000 per annum plus super superannuation after three months upon satisfactory feedback being received from the First Respondent's installation team leader; and
d)where he was employed for not more than one year of continuous service he was entitled to two months’ notice of termination.
The Applicant’s employment with Vic Solar was terminated by way of redundancy on 3 May 2019.
The statement of claim, which was filed with the originating application on 28 November 2019, sets out the Applicant's entitlements arising under the Electrical Electronic and Communication Contracting Award 2010 (MA000025) (“the Award”), under which the Applicant was classified as an ‘Electrical Worker Grade 5’. The Applicant’s statement of claim pleads in a detailed way the Applicant's entitlements, pursuant to his employment agreement and pursuant to the Award.
On 27 February 2020 an amended statement of claim was filed, joining Mr Sunny Srinivasan (“the Second Respondent”), being the Director of Vic Solar, to the proceeding. He was joined in this proceeding on the basis that it was alleged that he was knowingly involved in contraventions of the Award: see s550 of the Fair Work Act.
The matter was listed for a directions hearing on 14 April 2020. The Respondents did not appear at that directions hearing, and the matter was fixed for a further case management hearing due to:
a)the non-appearance by the Respondents; and
b)the Applicant not effecting service of the amended statement of claim on the Second Respondent.
On 7 May 2020 an application was made for substituted service of the Second Respondent. That application was heard and orders were made on 12 May 2020 for the substituted service of the amended application on the Second Respondent.
Pursuant to the orders of 12 May 2020, service was affected on the Second Respondent on 15 May 2020 by ordinary prepaid post, by email and by the Applicant’s solicitor sending a text message to the known telephone number of the Second Respondent.
Orders were made on 9 June 2020 for the Second Respondent to file and serve a defence to the amended statement of claim by 30 June 2020, and that in the event that the Second Respondent failed to file a defence then the Applicant would be at liberty to apply for judgement in default of defence against the Second Respondent.
The Applicant made an application in a case on 28 July 2020 for judgement in default of defence against the Second Respondent on the basis that no defence had been served in accordance with the orders of 9 June 2020.
On the basis of the application for judgment in default of defence, the Court made orders on 28 July 2020 that:
“1. By 4.00pm on 30 July 2020 the Applicant file an affidavit of service confirming the service of the order made by Registrar Allaway on 9 June 2020.
2. By 4.00pm on 30 July 2020 the Applicant file brief submissions regarding penalty and the submissions be considered in Chambers and Judgement given on the papers.”
Registrar Allaway’s orders of 9 June 2020 were in the following terms:
“1. The second respondent file and serve a defence to the amended statement of claim by 30 June 2020.
2. In the event that a defence is not filed by the second respondent in accordance with paragraph 1 of these orders, the proceeding be listed before a Judge for further directions at which hearing the applicant may apply for judgment in default of defence against the second respondent.
3. In the event that a defence is filed and served by the second respondent in accordance with paragraph 1 of these orders, the proceeding be referred to mediation by a Registrar of the Court to be conducted not before 31 July 2020.
4. The applicant is to serve a sealed copy of this order on the second respondent as soon as practicable by post and email to the addresses referred to in paragraph 3 of the orders made by Registrar Luxton on 12 May 2020.
5. Costs are reserved.”
I am satisfied that the application has been served on the Second Respondent, the Second Respondent has not defended the proceeding and the Applicant has set out the basis of the claims against Second Respondent, being that he was a person who is knowingly involved in the contraventions of the Fair Work Act 2009 (Cth) (“the Fair Work Act”).
The Court then made orders on 4 August 2020 for the matter to be adjourned for delivery of judgment.
I am satisfied that it is appropriate for judgement to be given pursuant to r13.03A(2) of the Federal Circuit Court of Australia Rules 2001 (Cth) (“the Federal Circuit Court Rules”) on the basis of the default of the Second Respondent in filing a response in accordance with the orders which are outlined above. The Court is satisfied on the face of the statement of claim that there is a claim for relief and that the court has jurisdiction to grant that relief: see Arthur v Vaupotic InvestmentsPty Ltd [2005] FCA 433.
The amended statement of claim pleads that the Second Respondent was:
a)at all material times a director of the First Respondent who was responsible for the day-to-day management, direction and control of the First Respondent's operations; and
b)a person authorised decisions regarding the First Respondent's employment practices including in respect of the Applicant’s employment.
Paragraphs [46] to [51] of the Applicant’s amended statement of claim plead the accessorial liability of the Second Respondent in clear terms.
The Applicant pleads at [40] of the amended statement of claim that that the First Respondent contravened section 323 of the Fair Work Act by failing to pay to the Applicant:
a)the base weekly rate entitlement under clause 4 of the Employment Contract;
b)the overtime entitlement pursuant to clause 26.1 of the Award or alternatively the time off in lieu entitlement pursuant to the Employment Contract ;
c)the notice period entitlement under clause 7.1 of the Employment Contract; and
d)the annual leave loading entitlement under clause 28 of the Award.
The Applicant further pleads at [41] – [42] in the amended statement of claim that First Respondent contravened s45 of if the Fair Work Act by breaching the Award in failing to pay to the Applicant:
a)the overtime entitlement under clause 26.1 of the Award; and
b)the annual leave loading entitlement under clause 28 of the Award.
The Applicant also briefly pleads at [43] that the First Respondent contravened s536 of the Fair Work Act by failing to provide payslips to the Applicant.
The Applicant pleads at [51] of the amended statement of claim that the Second Respondent was knowingly “…involved in and is therefore treated as having personally contravened each of the provisions that Vic Solar is…alleged to have contravened” pursuant to s550(1) of the Fair Work Act.
On that basis, the Applicant’s application in a case filed on 28 July 2020 seeks declaration orders at [5] that, pursuant to s545 of the Fair Work Act, the First Respondent and Second Respondent be jointly and severally liable to pay the amounts of the entitlement underpayments, as set out below, arising from the default in appearance and responses by the Respondents: Pursuant to s546 of the Fair Work Act, the Applicant also seeks at [6] – [7] that the First Respondent and Second Respondent pay pecuniary penalties for the contraventions of the Fair Work Act as above.
Particulars of the Applicant’s Claim
Base Weekly rate entitlement claim
At [11] – [18] of the amended statement of claim filed 27 February 2020, the Applicant makes the following claims as to his base weekly rate entitlements:
“11.Awwad's employment was not terminated during his probation period.
12.Awwad did not receive unsatisfactory feedback from the Installation Team Leader during his employment.
13.[…] Awwad was entitled to be paid a yearly salary" of $100,000 from three months after the date he commenced employment, namely 17 March 2019.
14.Pursuant to paragraph 13, from 17 March 2019, Awwad was entitled to a base weekly payment of $1,923.07 (base weekly rate entitlement).
15.From 17 March 2019 until 3 May 2019, Awwad continued to be paid a yearly salary of$90,000, and a base weekly payment (original base weekly payment) of $1,730.77.
16.By reason of paragraphs 14 and 15, Awwad was underpaid his base weekly rate entitlement in the amount of $1,346.10.
PARTICULARS
Base weekly rate entitlement = $1,923.07.
17 March 2019 to 3 May 2019 = 7 weeks.
7 weeks x $1,923.07 = $13,461.49.
Original base weekly payment = $1,730.77.
7 weeks x $1,730.77 x 7 = $12,115.39.
$13,461.49 - $12,115.39 = $1,346.10.
17.By failing to pay the base weekly entitlement, Vic Solar breached the Employment Agreement.
18.By reason of Vic Solar's breach of the Employment Agreement, Awwad suffered loss and damage in the sum of$1,346.10.”
Time Off in Lieu Claim/Overtime Entitlement Claim
Relevant to the time off in lieu (“TOIL”) claim and the overtime entitlement claim, the Applicant states at [10] of the amended statement of claim that he worked the following hours during his employment with Vic Solar:
Date from
Date To
Hours
Overtime hours (hours each week above 38)
17/12/2018
23/12/2018
38
0
24/12/2018
30/12/2018
15.2
0
31/12/2018
6/01/2019
38
0
7/01/2019
13/01/2019
54
16
14/01/2019
20/01/2019
56
18
21/01/2019
27/01/2019
57
19
28/01/2019
3/02/2019
52
14
4/02/2019
10/02/2019
63
25
11/02/2019
17/02/2019
61
23
18/02/2019
24/02/2019
66
28
25/02/2019
3/03/2019
64
26
4/03/2019
10/03/2019
57
19
11/03/2019
17/03/2019
58.85
20.85
18/03/2019
24/03/2019
53.25
15.25
25/03/2019
31/03/2019
50.25
12.25
1/04/2019
7/04/2019
63.5
25.5
8/04/2019
14/04/2019
54.5
16.5
15/04/2019
21/04/2019
53.35
15.35
22/04/2019
28/04/2019
38 (on annual leave)
0
29/04/2019
3/05/2019
38 (on annual leave
0
Total
1,038
301.3 hours
At [19] – [23] of the Applicant’s amended statement of claim, the Applicant makes the following claims in relation to his TOIL entitlements under the Employment Contract:
“19. It was a term of the Employment Agreement that:
(a) Any hours that Awwad worked in excess of 38 hours in a week were to be treated as time off in lieu; and
(b) Awwad was entitled to be paid his accrued time off in lieu as an overtime entitlement (the TOIL entitlement).
PARTICULARS
The TOIL entitlement was agreed orally between the patties and was made during a conversation between Awwad and the Ms Sonya Causer, the Accounts Manager of Vic Solar, Mr Sunny Srinivasan in or around late December 2018.
20. Awwad was entitled.to be paid $15,248.79 as a TOIL entitlement.
PARTICULARS
Base weekly rate entitlement = $1,923.07, or $50.61 per hour. Ove1time hours = 301.3.
$50.61 x301.3=$15,248.79.
21. Vic Solar bas not paid Awwad his TOIL entitlement.
22. By reason of paragraphs 19 to 21 above, Vic Solar has breached the Employment Agreement.
23. By reason of Vic Solar's breach of the Employment Agreement, Awwad has suffered loss and damage in the sum of $15,248.79.”
In the alternative to the TOIL claim, the Applicant makes the following claims at [24] – [34] on the basis of his overtime entitlements pursuant to the Award:
“24.Alternatively to the TOIL entitlement claim, clause 26.1 of the Electrical Award provides that for all work done outside ordinary hours, the rates of pay will be time and a half for the first two hours and double ti.me thereafter.
25.Awwad worked 301.3 hours of overtime during his employment with Vic Solar.
26.Awwad was entitled to overtime payments of $11,964.54 (the overtime entitlement).
PARTICULARS
Awwad's overtime entitlement calculations are set out in Annexure A to this statement of claim.
Awwad's overtime entitlements are calculated at time and a half of the ordinary hours rate under the A ward for the first 10 hours of overtime each week, and at double time for each hour thereafter, pursuant to the table in paragraph [10] of this Claim.
27.Vic Solar has not paid Awwad his overtime entitlement.
28.By reason of paragraphs 24 to 27 above:
(a)Vic Solar has breached the overtime entitlement; and
(b)Awwad is entitled to payment of the overtime entitlement.”
Annual Leave Entitlement Claim
At [29] – [34] of the Applicant’s amended statement of claim, the Applicant makes the following claims in relation to his annual leave entitlements:
“29.Awwad was entitled to annual leave under:
(a)Section 90 of the FW Act; and
(b)Clause 28.2 of the Electrical Award.
30.Vic Solar was required to pay annual leave loading of 17.5% to Awwad under cl 28.4 of the Electrical Award (the accrued annual leave loading entitlement).
31.Vic Solar did not pay Awwad his accrued annual leave loading entitlement.
32.By reason of paragraphs 30 and 31 above, Vic Solar was required to pay Awwad an accrued annual leave loading entitlement of $517 .23.
PARTICULARS
Awwad worked for 20 weeks.
He accrued 2.92 hours of annual leave per week of employment. He accrued 58.4 weeks of annual leave (20 weeks x 2.92 hours per week). His gross pay each week was $1,923.07, or $50.61 _per hour.
$50.1 X 58.4 = $2,955.62.
17.5% of $2,955.62 = $517.23.
33.In breach of cl 28.2(a) of the Electrical Award, Vic Solar did not pay Awwad his accrued annual leave loading entitlement.
34.Pursuant to cl 28.4 of the Electrical Award, Awwad is entitled to a payment of $517.23.”
Notice Period Entitlement Claim
At [35] – [38] the Applicant makes the following claims in relation to his entitlement to two weeks’ notice of termination:
“35.Clause 7.1 of the Employment Contract provided that Awwad was entitled to two weeks' notice of termination, or payment in lieu thereof, upon termination of his employment.
36.Awwad was not paid his notice period entitlement.
37.By reason of its failure to pay Awwad the notice period entitlement, Vic Solar breached the Employment Contract.
38.By reason of Vic Solar's breach of the Employment Contract, Awwad has suffered loss and damage in the sum of $3,846.15.”
Payslips
At [39] of the amended statement of claim, the Applicant claims that:
“Vic Solar did not provide pay slips to Awwad for the weeks ending 7 April 2019, 14 April 2019, 21 April 2019, 28 April 2019 and 5 May 2019.”
Penalties Sought
On the basis of the TOIL claim, or in the alternative the overtime entitlement claim, as above, the Applicant pleads in the prayer for relief at sub-paragraph E of the amended statement of claim, that the First Respondent pursuant to s545 of the Fair Work Act, be liable to pay to the Applicant:
“a. The sum of $15,248.79 for the breach of the TOIL entitlement;
b. Alternatively to [a], the sum of $11,964.54 for the breach of the Overtime entitlement;
c. The sum of $3,846.15 for the breach the notice period entitlement;
c. The sum of $1,346.10 for the breach of the base weekly rate entitlement; and
d. The sum of $517.213 for the breach of the annual leave loading entitlement.”
As stated above, pursuant to s545(1) of the Fair Work Act, the Applicant made an application on 28 July 2020 for the First Respondent and the Second Respondent to be held jointly and severally liable to pay the amounts of the entitlement underpayments, as above. In submissions filed on 28 July 2020 in support of that application, the Applicant states at [1] – [7], under the heading ‘The Second Respondent’s Liability’, that it is appropriate to hold the Second Respondent liable for the following reasons:
“1. The Second Respondent should be taken to have admitted the allegations contained in the Amended Statement of Claim dated 27 February 2020.
2. Having been taken to have admitted the allegations contained, the Court should find that the Second Respondent was at all material times, a Director of the First Respondent, who was responsible for the day to day management, direction and control of the First Respondent’s operations and a person who authorised decisions on behalf of the First Respondent and the person responsible for compliance with legal obligations on behalf of the First Respondent.
3. Specifically, the Second Respondent was responsible for and involved in the hiring and remuneration decisions […]
4. Furthermore, at all material times the Second Respondent knew, that during the Applicant’s employment, the terms and conditions of employment, the work being performed by the Applicant was governed by the Electrical Award.
5. This knowledge, taken to be admitted is sufficient to demonstrate an intent to engage in the contraventions of the Act.
6. These findings having been made out, the Applicant argues the Court can comfortably find the Second Respondent has breached both or either of s550(2)(a) and/or s550(2)(c) […]
7. The Court can be satisfied that the Second Respondent had the sufficient knowledge that these breaches of the Act occurred or were occurring during the course of the employment of the Applicant.”
On 30 July 2020, the Applicant filed initial submissions as to the pecuniary penalties sought against the Second Respondent pursuant to s546 of the Fair Work Act, in addition to the penalties sought under s545 of the Fair Work Act against Vic Solar. At the request of the Court, the Applicant filed additional submissions as to particulars of the pecuniary penalties sought against the Second Respondent on 22 September 2020.
Those submissions included the following table as to the pecuniary penalties sought by the Applicant against the Second Respondent:
Contravention
Statute
Maximum Penalty
Penalty Sought
Section 45 – Contravene a modern award
Fair Work Act 2009 (Cth)
60 penalty units.
Half of the maximum being 30 penalty units.
Section 323 – Employer obligations in relation payslips.
Fair Work Act 2009 (Cth)
60 penalty units.
Half of the maximum being 30 penalty units.
(Table copied exactly)
In making submissions as to penalty, the Applicant states in the table that they are seeking pecuniary penalties in relation to “Section 323 – Employer Obligations in relation payslips”. The Applicant seems to confuse s323 and s536 of the Fair Work Act, both of which have been pleaded in the Applicant’s amended statement of claim and which the Applicant seek declarations in relation to, as s323 refers to “Method and frequency of payment” while s536 refers to “Employer obligations in relation to payslips”. As a result, it is not entirely clear what breaches of the Fair Work Act the Applicant is seeking pecuniary penalties in relation to. The Court will proceed on the basis of the penalties sought in relation to the contraventions of s323 of the Fair Work Act.
The Applicant seeks penalties payable that represent up to 50% of the maximums available for each of the breaches. This is a total of 60 penalty units. The value of a single penalty unit during the period of the claimed contraventions was $210.00, as defined by s4AA of the Crimes Act 1914 (Cth). As such, the Applicant seeks pecuniary penalties in the sum of $12,600. Whilst it is not clear from the Applicant’s submissions, it appears that the Applicant has asked the Court to group all breaches of the Award (the failure to pay overtime and annual leave loading entitlements) as one breach and the failure to provide the payslips as a second breach. The Court has proceeded on this basis.
Approach to be taken in relation to fixing penalty
A non-exhaustive list of factors relevant to the imposition of a penalty was usefully summarised by Mowbray FM (as he then was) in
Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar[2007] FMCA 7 at [26] to [59]. Those factors include:
a)the nature and extent of the conduct which led to the breaches;
b)the circumstances in which that conduct took place;
c)the nature and extent of any loss or damage sustained as a result of the breaches;
d)whether there had been similar previous conduct by the Respondents;
e)whether the breaches 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 breaches were deliberate;
h)whether senior management was involved in the breaches;
i)whether the party committing the breach had exhibited contrition, taken corrective action and co-operated with the enforcement authorities;
j)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
k)the need for specific and general deterrence.
This summary was adopted by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080 at [14]. While the summary is a convenient checklist, it does not prescribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion: see Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550. The discretion remains at large.
The factors which are material to this matter and the question of appropriate penalties are addressed below. What the Court needs to determine is an appropriate penalty proportionate to the gravity of the contravention.
Consideration
For the purpose of fixing the penalty it is appropriate to determine the amount owed to the Applicant by reference to the overtime entitlement, as pleaded in the Applicant’s amended statement of claim. The claim was pleaded in the alternate to the TOIL claim, however the overtime claim is an Award claim whereas the TOIL claim was said to arise from an oral agreement between the parties.
The Australian Securities and Investment Commission Records indicate that the First Respondent is under external administration.
As such, pursuant to r13.03B(2)(d) of the Federal Circuit Court Rules, I am satisfied that the Court is entitled to make the orders sought by the Applicant that the First and Second Respondent by jointly and severally liable to pay the amounts of the entitlement underpayments. On that basis, the Court orders that the Second Respondent pay to the Applicant the amounts owing in relation to the entitlement underpayments as above, being a total sum of $17,674.02. The Court also makes Orders the Second Respondent pay interest on the basis of the total amount of the underpaid entitlements, in the sum of $694.76.
In relation to the pecuniary penalties that are sought against the Respondents, the Applicant states at [5] of his additional submissions filed on 22 September 2020 that “it is appropriate to impose meaningful penalties” as the relevant factors in determining the appropriate penalty are, amongst other things:
“6. Specific and General Deterrence. It is important to send a strong message to directors involved in breaches of this kind and this director specifically.
7. The need to ensure compliance with minimum standards as a means for investigation and compliance.
8. Deliberateness of the conduct.
9. Involvement of senior management.”
The Applicant then briefly addresses at [15] – [16] the non-exhaustive list of factors in determining the appropriate penalty, as stated earlier in this Judgment, stating:
“15. Unfortunately, due to his lack of engagement in the proceedings, little is known about the personal and professional situation of the Second Respondent. The need for general deterrence looms large, with specific deterrence a factor due to his lack of cooperation with the Applicant before proceedings commenced. The need to ensure compliance with minimum standards as an effective means for investigation and enforcement is closely related to these considerations. The fact that the Second Respondent did not cooperate or engage with these proceedings should tend towards a greater penalty. Furthermore, although it appears the Second Respondent is the owner of real property with capacity to pay the compensation ordered by the Court, there is little assurance that he will comply with this order. An pecuniary penalty will provide further assurance the Court’s orders are complied with and the Applicant receives some compensation for the legal wrongs.
16. Using the Applicant’s Amended Statement of Claim as a guide, he is taken to have admitted the contraventions as alleged. His involvement in these contraventions were significant and substantial and a serious penalty should be awarded.”
In terms of the nature and extent of the conduct, the conduct occurred across the Applicant’s entire employment period, being approximately five and a half months. The extent of the loss resulting from the breaches in this case is significant. The Applicant suffered a total loss across the relatively short employment period in the sum of $17,674.02 on the basis of the overtime entitlement claim. A significant portion of the loss was due to contraventions of the overtime entitlements (being $11,964.54 owed), in which the amount of work done often exceeded 50 hours per week and occasionally exceeded 60 hours per week.
As the Applicant noted in his submissions, the Respondents have not participated in these proceedings, and as a result, there is no evidence before the Court in relation to:
a)whether the Respondents have engaged in similar conduct previously;
b)the size of the Vic Solar business; and
c)either of the respondent’s financial circumstances.
The respondents’ failure to engage in these proceedings to any extent, indicates a lack of contrition, corrective action or cooperation. It is important for the Court to make clear that businesses, whether large or small, must comply with the minimum standards set out in Awards under the National Employment Standards. Here, both specific and general deterrence play a significant role.
The pecuniary penalty set must be set at a rate that makes it clear that underpayment of entitlements and the risk of pecuniary penalties is not just simply part of the costs of doing business. The Court orders the pecuniary penalties be in the sum of $5,000 per contravention and as such, the Second Respondent must pay the Applicant the sum of $10,000.
By way of the amended application filed on 27 February 2020 and the application in a case filed on 28 July 2020, the Applicant seeks costs in this matter. I am not minded to make an order for costs, by reason of the operation of s570(2) of the Fair Work Act.
I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of Judge McNab
Associate:
Date: 20 October 2020
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