Balding v Ten Talents Pty Ltd and Anor (No.4)
[2008] FMCA 463
•18 April 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BALDING v TEN TALENTS PTY LTD & ANOR (No.4) | [2008] FMCA 463 |
| INDUSTRIAL LAW – Penalty – contravention – duress in relation to an AWA – agreed statement of facts – agreed indicative range of penalty. |
| Workplace Relations Act 1996 (Cth) s.400(5) |
| ACCC v Colgate-Palmolive Pty Ltd [2002] FCA 619 Australian Opthalmic Supplies Pty Ltd v McAlary–Smith [2008] FCAFC 8 Balding v Ten Talents Pty Ltd & Anor (No. 3) [2008] FMCA 255 Carr v CEPU & Anor [2007] FMCA 1526 Furlong v AWU & Ors [2007] FMCA 443 Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 |
| Applicant: | GAYLE NAOMI BALDING |
| First Respondent: | TEN TALENTS PTY LTD |
| Second Respondent | CYBERLINK PTY LTD |
| File Number: | PEG 253 of 2006 |
| Judgment of: | Lucev FM |
| Hearing date: | 11 April 2008 |
| Date of Last Submission: | 11 April 2008 |
| Delivered at: | Perth |
| Delivered on: | 18 April 2008 |
REPRESENTATION
| Counsel for the Applicant: | Written submissions |
| Solicitors for the Applicant: | Blake Dawson |
| Counsel for the First Respondent: | Written Submissions |
| Solicitors for the First Respondent: | Clayton Utz |
| Counsel for the Second Respondent | Written Submissions |
| Solicitors for the Second Respondent | CCI Legal |
ORDERS
That –
(a)The First Respondent; and
(b)the Second Respondent;
each pay a penalty of $6,700.00 imposed under s.407(1)(b) and (2)(zi) of the Workplace Relations Act 1996 (Cth).
The penalty in order (1) be paid to the Commonwealth within 60 days.
That the First and Second Respondents pay compensation to Ms Debbie Lee Franklin in the sum of $983.40 under s.413 of the Workplace Relations Act 1996 (Cth), and that the First and Second Respondents be jointly and severally liable for that amount.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 253 of 2006
| GAYLE NAOMI BALDING |
Applicant
And
| TEN TALENTS PTY LTD |
First Respondent
| CYBERLINK PTY LTD |
Second Respondent
REASONS FOR JUDGMENT
Introduction
On 6 March 2008 this Court declared that the First Respondent and the Second Respondent had contravened s.400(5) of the Workplace Relations Act 1996 (Cth) by the application of duress to an employee, Debbie Lee Franklin, in connection with an AWA.[1]
[1] Balding v Ten Talents Pty Ltd & Anor (No. 3) [2008] FMCA 255 (“Ten Talents (No. 3)”)
The parties ultimately filed agreed written submissions[2] in relation to penalty, and the amount of compensation payable to Ms Franklin, and further agreed to dispense with an oral hearing on penalty and compensation, leaving the Court to determine the matter on the Agreed Written Submissions alone.
Those Agreed Written Submissions are set out below.
Agreed Submissions on Penalty and Compensation
The parties have filed very comprehensive and useful Agreed Written Submissions on penalty and compensation. As the Court would not readily improve on the Agreed Written Submissions filed, it gratefully adopts those submissions as indicative of the relevant matters for consideration in the ultimate determination of penalty and calculation of compensation.
“A. AGREED SUBMISSIONS IN RESPECT OF PENALTY
[2] “Agreed Written Submissions”
On 6 March 2008 the Court declared that:
"On or about 15 to 22 September 2006 the First Respondent and the Second Respondent contravened s400(5) of the Workplace Relations Act, 1996 (Cth), by the application of duress to an employee, Debbie Lee Franklin, in connection with an AWA."
The principles for assessing penalty are well known and understood. Relevant considerations (and relevant cases) are indicated in Jones v Hanssen Pty Ltd [2008] FMCA 291.
The maximum penalty for breaching s.400(5) of the WR Act is 300 penalty units for a corporation (see s.407(1)(b) and s.407(2) of the WR Act).
The parties submit that the considerations set out at points 5 to 33 below are relevant to penalty in the present circumstances. Bearing in mind the relevant considerations set out below, and acknowledging the Court's ultimate authority to determine the size of penalty, the parties submit that the appropriate range of penalty for each respondent should be in the "low to lower mid‑range" of available penalties.
Relevant considerations
Circumstances of the conduct
Ms Debbie Franklin was a vulnerable employee to the extent that:
(a)She is a relatively low paid worker ($16.17 per hour (Franklin [9]));
(b)She is of a relatively low standard of education (no formal qualifications other than completing her year 10 certificate (Franklin [7]));
(c)She is low-skilled (Franklin [7]);
(d)She had no-one present with her when being "interviewed" by Ms Jackson and Ms Ripley and had thought the interview would be "one-on-one" (Franklin [26]-[28]).
However it is also recognised that Ms Franklin was a union member (Franklin [75]); and was entitled to obtain the assistance of a bargaining agent (s.334 of the WR Act). There is no evidence that Ms Franklin had knowledge of her rights in this regard prior to interview with Ms Jackson and Ms Ripley. However the standard AWA information provided at interview indicated that Ms Franklin was entitled to engage a bargaining agent to assist her.
The AWA terms were themselves not negotiable (it was "take it or leave it") (Franklin [T46]). There was no opportunity whatsoever for Ms Franklin to negotiate a different instrument or different terms and conditions within the AWA offered to her (Judgement 18(f)). (It is acknowledged however that other efforts, separate from amending the AWA, were made to allay Ms Franklin's concerns about aspects of the AWA) (Franklin [T37]-[T48]). In both respects see the Judgement 23(b). Furthermore, the terms and conditions of some other employees were changed after discussions about their respective AWAs (Judgement 13(d) and 14(a)).
The conduct was part of a concerted plan to ensure that the applicable EBA not apply to anyone (Jackson [T76]).
Ms Franklin was put in a position whereby if she did not sign an AWA (on the terms presented to her) she would not have a job with the First Respondent (Franklin [60]).
There is no evidence that Ms Franklin was informed at any stage of any opportunity for a redundancy payment, should she not gain employment with Ten Talents and her existing employment be terminated (rather, see Jackson [T73], Islip [T92]-[T93]; Ehrenfeld [T116]-[T117]). As a matter of law, the Respondents were not responsible or liable for Ms Franklin's redundancy entitlements.
Ms Franklin did not know she could get work at another Action store until 22 September 2006 after she decided not to sign the AWA, on the day when she was asked to make up her mind "in the next 30 to 60 minutes" (Franklin [67], [70 – 73]; [T29-30]).
Deliberateness of the conduct
The conduct (offering AWAs without any opportunity whatsoever for Ms Franklin to negotiate a different instrument or different terms and conditions within the AWA offered to her) was clearly deliberate (see for example Judgement 18(f) and 23(b)). However the Respondents' have not been shown to have engaged in conduct which was calculated to deliberately breach of the law.
Section 400(6) of the WR Act was a new sub-section inserted into the legislation in March 2006 (cf s.170WG of the pre-Work Choices WR Act). It is acknowledged that there was scope for misinterpretation of s.400(6), by a person unfamiliar with the pre-existing case law, or in error notwithstanding familiarity with the case law. Further s.400(6A) was later included (after these proceedings commenced) to clarify the law.
Nevertheless some regard must be had to the fact that the Second Respondent was a services company engaged specifically to deal with employment issues (ie an area of its specialisation), and further that assistance was clearly being obtained from CCIWA (see for example Correia [T62-66]; Jones [pg26] – email from Mr Moss of CCIWA to Ms Jackson.)
The parties agree that when the Second Respondent became aware that offering employment conditional upon signing an AWA in a transmission situation may breach the WR Act it ceased to make offers on that basis. It immediately rectified its conduct in relation to future offers made by it on behalf of its clients in transmission situations. However the Second Respondent did not rectify its conduct directly with Ms Franklin. (The Second Respondent was arguing before the Court that it had engaged lawfully in the conduct vis-à-vis Ms Franklin which was the subject of the Proceedings).
Relevant record of civil penalty contraventions
There are no prior penalties/contraventions to be taken into account.
Whether the contraventions are distinct or arise from a single course of conduct
There is only one breach of the WR Act in respect of each Respondent for which the Applicant seeks a penalty.
Consequences of the conduct
Ms Franklin was powerless to negotiate employment on any other basis.
As a consequence, Ms Franklin was not employed by Ten Talents at the Hilton store (ie she did not continue in work as part of the transmitted business). Her reasons for this are explained at Franklin [68]-[69]. However, Ms Franklin's employment with her existing employer was not terminated following transmission of the Hilton Store to Ten Talents (Judgement 6(c)).
However it is acknowledged that immediately after deciding not to sign the AWA Ms Franklin was offered other work. The monetary losses suffered by Ms Franklin were relatively low (see "B. AGREED SUBMISSIONS IN RESPECT OF COMPENSATION" below).
Ms Franklin was also personally stressed by the circumstances of the AWA offer (Franklin [83]-[84]).
Deterrence both general and specific
A light-handed approach is no longer applicable to civil breaches of industrial law (Carr v CEPU & Anor [2007] FMCA 1526 at [29]). Nevertheless this does not mean that a "heavy-handed approach" will always be warranted.
On this occasion the Respondents engaged in deliberate conduct but probably in "ignorance" of the law. There is no evidence of any "scheme" to break the law (see points 11 to 14 above).
The conduct was "one-off" and the Second Respondent did not perpetuate the conduct when making offers in other transmission of business circumstances, including before judgement in these proceedings.
There is no evidence to suggest that a high penalty needs to be awarded in these proceedings to ensure that the Respondents do not breach s.400(5) or the WR Act civil penalty provisions more generally.
However the penalty imposed must act as a general deterrent to breaches of s.400(5) which continues to operate in relation to the making of ITEAs under the WR Act post-transition to "Forward with Fairness", and to ensure more generally compliance by employers with civil penalty provisions of the WR Act.
A penalty in circumstances such as the present must show the seriousness with which the Court views such contraventions. Failure to comply with s.400 threatens the system of (workplace) agreement making established by the WR Act which largely leaves the process for agreement making in the hands of employers and employees. The system relies upon legal compliance by those parties rather than proactive supervision of the process for making workplace agreements under the WR Act (see points 29 to 30 below).
The penalty should be at a meaningful level to make a potentially offending corporation think that similar conduct in the future is "not worth the prospect of gain" (Merkel J in Finance Sector Union v Commonwealth Bank of Australia (2005) 224 ALR 467 at [41]ff).
Capacity to pay the penalty (size and financial resources of the contravener)
There is no evidence that either Respondent does not have capacity to pay the penalty imposed on them.
Objects of the WR Act
Section 3(f) of the Workplace Relations Act, 1996 (Cth) (WR Act) provides that a principal object of the WR Act is to ensure:
"compliance with minimum standards … and bargaining processes, by providing effective means for the investigation and enforcement of:
… (ii) the rights and obligations of employers and employees."
The object in section 3(f) and the responsibility cast upon employers and employees to determine matters affecting the employment relationship at the workplace level (s.3(d)) indicate the importance of a sound and effective regime for penalising and deterring specified prohibited conduct under the WR Act.
The Respondents' contrition
The Applicant notes:
(a)The Respondents' cooperation in reaching an agreed position in respect of the relevant penalty submissions in these proceedings;
(b)The Respondents' cooperation in resolving; and willingness to avoid argument about; the amount of compensation payable to Ms Franklin. That amount has been agreed upon (subject to the Court's satisfaction in this regard).
(c)While the Respondents each argued the merits of the case, this was the first case in respect of s.400(6). Further, the Respondents' successfully defended the case in so far as it concerned Mr King.
The Respondents also inform the Court as follows:
(a)The Respondents were keen to retain the employment of as many transferring employees as possible (Judgement 14(b));
(b)The Respondents did seek to allay some of the concerns of Ms Franklin (albeit not by varying her AWA). The Respondents submit that they did not seek to engage in conduct in breach of s.400 of the WR Act;
(c)The First Respondent engaged the Second Respondent to assist with the transfer of employees from the vendor of the Hilton Store to the purchaser of the Hilton Store (Judgement 13(a)).
Penalty to the Applicant
The Applicant seeks the common order that any penalty be paid to the Applicant.
B. AGREED SUBMISSIONS IN RESPECT OF COMPENSATION
The parties agree to payment of an amount of $983.40 in compensation to Ms Franklin. Both Respondents agree to be jointly and severally liable for the amount.
The agreed amount is calculated as follows:
(a)Lost penalty rates following "transmission". As a result of ceasing to work at the Hilton store under her then applicable arrangements, Ms Franklin lost a minimum of 2 hours of "early start" work per week for 18 weeks at a penalty rate of 1.3 x ordinary pay (see cl 5.1.2 and cl 5.1.3 of the EBA). This amounts to $176.58 (0.3 x 2 hours x 18 weeks at the applicable hourly rate of $16.17 and subsequently $16.44 per hour). Of course, under the sale of business arrangement, and as Ms Franklin was told, "Nobody can lose any money each week (Franklin [41]).
(b)Travel. Ms Franklin was required to travel "further a field" than the Hilton store to perform work with Action after the transmission. Over the course of some 57 trips this amounted to an extra 46.5 hours of travel time. The compensable loss for this time is calculated by reference to cl 7.2(c) and (d) of the EBA to be $763.14 in reimbursement for travel time and, in respect of fuel costs for 14 "Gateways" trips $43.68 (fuel for other trips was recovered from her employer).”
Consideration of penalty
The parties have suggested that the penalty be in the lower to lower-mid range of penalty. In Carr v CEPU & Anor[3] this Court said:
[3] [2007] FMCA 1526 at para.6 per Lucev FM. (“Carr”)
In dealing with proposed agreed penalties the courts have developed certain principles for guidance. They include:
a) that the court bears ultimate responsibility for penalty, is not bound by the parties agreement, and must consider for itself what constitutes an appropriate penalty;[4]
[4] Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at paras 53(i), 56 and 79 per Branson, Sackville and Gyles JJ (“Mobil Oil”); Furlong v AWU & Ors [2007] FMCA 443 at para 7 per Burchardt FM (“Furlong”).
b) determining penalty quantum is not an exact science, and within a permissible range a particular figure is not necessarily more appropriate than another figure;[5]
[5] Mobil Oil at para 53(ii) per Branson, Sackville and Gyles JJ.
c) promoting settlement of litigation (particularly lengthy litigation) is in the public interest, and where the parties agree on facts and penalty, they may present a statement of agreed facts, including a view as to the effect of those facts, and submissions on penalty;[6]
[6] Mobil Oil at para 53(iii) per Branson, Sackville and Gyles JJ.
d) the view of the regulatory body is relevant, particularly where the view concerns matters within the regulator’s expertise, but not determinative of penalty;[7]
[7] Mobil Oil at para 53(iv) per Branson, Sackville and Gyles JJ.
e) in determining appropriate penalty the court will examine all the circumstances, including an agreed statement of facts, and, if appropriate, may act on that statement;[8] and
[8] Mobil Oil at para 53(v) per Branson, Sackville and Gyles JJ.
f) a jointly proposed penalty will not be rejected simply because the court might have chosen a different figure: it is sufficient if the jointly proposed penalty is “within the permissible range”[9] or “broadly speaking” within that range.[10]
[9] Mobil Oil at para 53(vi) per Branson, Sackville and Gyles JJ.
[10] ACCC v Colgate-Palmolive Pty Ltd [2002] FCA 619 at para 24 per Weinberg J.
Those principles are relevant here, adapted to the circumstance of an agreed indicative range of penalty following a hearing resulting in a finding of contravention by the Respondents. Thus it is for the Court to determine the final quantum of penalty, whether within or without the range agreed as appropriate by the parties.
The maximum penalty for a breach of s.400(5) is $33,000.00.
The Respondents are entitled to a penalty reduction of 20–30% as first time contravenors.
Ordinarily an early admission of contravention and subsequent co-operation with the regulatory authority might entitle a respondent to a penalty reduction of 25-30%. Here, there was no early admission. There has been co-operation subsequent to the declaration of 6 March 2008, and clearly (and especially in light of the agreed written submissions) that co-operation has been significant. In the circumstances, the Court considers that a further penalty reduction of around 10-12% is appropriate.
With respect to contrition the Court notes the matters set out at paragraphs 31 and 32 of the Agreed Written Submissions, and considers that they constitute some evidence of contrition, embodying some steps recently identified by the Federal Court as indicia of contrition.[11]
[11] Australian Opthalmic Supplies Pty Ltd v McAlary–Smith [2008] FCAFC 8 at para.16 per Gray J.
The Court does however note that there is no evidence of an apology, and in particular no evidence of an apology to Ms. Franklin. It is also relevant that while by the conduct referred to at paras 31 and 32 of the Agreed Written Submissions there is evidence of contrition by conduct, neither of the Respondents has had to give evidence of contrition, either orally or by affidavit, and to a certain extent that diminishes, in the Court’s view, the quality of the contrition. Ordinarily, fulsome contrition might result in a penalty reduction of 25-30%. In all the circumstances of this case the Court considers that a penalty reduction in the order of 15-18% is appropriate on the basis of the Respondents’ contrition.
The contraventions in this case are far from the worst category of case which might come before this Court. The Court accepts that the Respondents “did not seek to engage in conduct” in contravention of s.400(5), but notes nevertheless that it was a consequence of the plan adopted by them in relation to the purchase of the supermarket.[12] Thus a further reduction in penalty of 10-20% is appropriate.
[12] See Agreed Written Submissions at para.32(b); see also paras 22 and 23.
In determining the final amount of the penalty the Court must take account of the need for general and specific deterrence. In the circumstances of this case the need for specific deterrence is minimal. The Second Respondent, for example, immediately ceased the contravening conduct when it became aware that the conduct may have been contravening conduct. That fact would tend to favour greater rather than lesser penalty reduction in this case.
Consideration must be given to whether the same or a different penalty ought to be imposed on each of the First Respondent and the Second Respondent. Although the Second Respondent was a services company specifically engaged to assist with the employment issues arising from the sale of the supermarket, it was a services company with a close (and seemingly prior and ongoing) connection with the First Respondent. Thus while the First Respondent was employer and “guiding mind” of the relevant activities, the Second Respondent was integrally involved (with the First Respondent) in determination of the relevant strategic and operational steps to be taken. The degree of overlap between the activities and steps taken was sufficient for this Court to conclude that there ought be no difference between the penalty to be imposed upon the First Respondent and the Second Respondent.
Having considered all of the circumstances of this case the Court concludes that the Respondents are entitled to a penalty reduction of 80% on the maximum penalty for the contravention. There will therefore be an order that each of the First Respondent and the Second Respondent pay a penalty of $6,700.00, payable to the Commonwealth, with 60 days to pay.
Consideration of compensation
The Agreed Written Submissions deal fully with the question of compensation for Ms Franklin at paragraphs 34 and 35.
The Court will make an order for the payment of compensation of $938.40 to Ms Franklin, with the Respondents being jointly and severally liable for that payment.
Conclusion
There will be orders as indicated in the preceding Reasons for Judgment for:
a)each of the First and Second Respondents to pay to the applicant a penalty of $6,700.00 within 60 days; and
b)that the First and Second Respondents pay compensation of $938.40 to Ms Franklin, and that the First and Second Respondents be jointly and severally liable for that amount.
I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate: S. Gough
Date: 18 April 2008
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