Burke v Serco Pty Ltd
[2013] FMCA 196
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BURKE v SERCO PTY LTD | [2013] FMCA 196 |
| INDUSTRIAL LAW – Termination in breach of a general protection – assessment of compensation for contraventions – imposition of penalty. |
| Crimes Act 1914, s.4AA Federal Magistrates Act 1999, s.76(1) Fair Work Act 2009 (Cth), ss.340(1), 361, 539, 539(2), 545(1), 545(2)(b), 546, 546(2)(b), 546(3)(c), 546(5), 547(1)(2), 547(3), 570(1) |
| Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 Bagnall v National Tobacco Corp of Australia Ltd (1934) 34 SR(NSW) 421 Burke v Serco Pty Ltd [2012] FMCA 1134 Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 Drury v Andreco Hurll Refractory Services Pty Ltd (No.4) (2005) 225 ALR 339 Haines v Bendall (1991) 172 CLR 60 Harding v Harding (1928) 29 SR (NSW) 96 Kelly v Fitzpatrick [2007] FCA 1080 McIlwain v Ramsey Food Packaging Pty Ltd (No 4) (2006)158 IR 181 Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant and Bar [2007] FMCA 7 Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41-375 |
| Applicant: | DOMINIC BURKE |
| Respondent: | SERCO PTY LTD |
| File Number: | BRG 317 of 2011 |
| Judgment of: | Jarrett FM |
| Hearing date: | 30 January 2013 |
| Date of Last Submission: | 30 January 2013 |
| Delivered at: | Brisbane |
| Delivered on: | 21 March 2013 |
REPRESENTATION
| The Applicant appeared in person |
| Solicitors for the Respondent: | Baker & McKenzie |
ORDERS
THE COURT ORDERS THAT
The Respondent pay to the Applicant by way of compensation for contravention of s.340(1) of the Fair Work Act 2009 the sum of $18,879.51.
The respondent pay a pecuniary penalty for contravention of s.340(1) of the Fair Work Act 2009 in the amount of $16,500.
The penalty in order 2 hereof be paid to the applicant;
The penalty and compensation be paid within 28 days of this order.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 317 of 2011
| DOMINIC BURKE |
Applicant
And
| SERCO PTY LTD |
Respondent
REASONS FOR JUDGMENT
For the reasons I gave on 29 November, 2012 (see Burke v Serco Pty Ltd [2012] FMCA 1134), I determined that Serco contravened s.340(1) of the Fair Work Act2009 Act by taking adverse action against Mr Burke when it terminated his employment on 25 January, 2011.
By orders that I made on 29 November, 2012, I adjourned this application to 30 January, 2013 for hearing as to the relief to which Mr Burke is entitled by reason of my findings. I further ordered that each party file and serve any further evidence upon which they intended to rely at that hearing by certain dates specified in the order.
Mr Burke has filed two affidavits, one on 25 January, 2013 and the other on 4 February, 2013. He also filed what might be described as written submissions. Serco has not filed any further evidence, but has filed written submissions. When the application came before me for further hearing on 30 January, 2013, both parties were content to rely upon their written material. No further oral submissions were made. Serco took no objection to the material relied upon by Mr Burke and there was no request to cross-examine him on that material. Plainly, he had not filed his last affidavit in accordance with the directions for him to do so, but it serves only to exhibit a pay slip that he received from Serco when he was in Serco’s employ. No objection was taken to the receipt of that affidavit.
Mr Burke seeks orders for compensation, interest and the imposition of a pecuniary penalty totalling $2,304,173.00. It is entirely unclear if he pursues reinstatement. He does not claim that in his original claim, but his written submissions suggest that “I am not totally against the idea of being reinstated”.
The Court may make any order it considers appropriate if the Court is satisfied that a person has contravened a civil remedy provision of the Fair Work Act2009: s.545(1). Section 340(1) of the Act is a civil penalty provision for the purposes of s.545(1): s.539(1) of the Act. On 29 November, 2012 I found that Serco had contravened s.340(1) of the Act.
The Court might award compensation for loss that an applicant has suffered because of the contravention: s.545(2)(b) of the Act.
Further, the Court may order a person to pay a pecuniary penalty that the Court considers is appropriate if the Court is satisfied that the person has contravened a civil remedy provision: s.546(1) of the Act. In the case of a body corporate, the pecuniary penalty must not be more than 5 times the maximum number of penalty units referred to in the relevant item in column 4 of the table in s.539(2) of the Act: s.546(2)(b) of the Act. A penalty unit is currently set at $110.00: s.4AA of the Crimes Act 1914. The maximum pecuniary penalty that can be imposed upon Serco in this case is $33,000.
The Court may order that the pecuniary penalty, or a part of the penalty, be paid to the applicant: s.546(3)(c) of the Act. The Court may award compensation and order the payment of a pecuniary penalty: s.546(5) of the Act.
In making an order (other than a pecuniary penalty order) the Court must, on application, include an amount of interest unless good cause is shown to the contrary: s.547(1)(2) of the Act. The Court must take into account the period between the day the relevant cause of action arose and the day the order is made when fixing the amount for interest: s.547(3) of the Act.
Mr Burke was employed by Serco as a casual client services officer. His employment was governed by a letter of offer dated 16 August, 2010 and the Serco Immigration Detention Centres Agreement 2009. Pursuant to that agreement Mr Burke’s employment could be terminated upon 4 hours notice or payment for 4 hours work in lieu of notice: clause 12(d) of the Agreement.
At the time of his termination Mr Burke appears to have been earning an hourly rate of $29.88 per hour (affidavit filed on 4 February, 2013). His ordinary time earnings per week appear to be $1,254.90 before tax. There is nothing to suggest that Mr Burke did not intend to continue in his employment indefinitely. According to him, it was the best paid job he has had.
Mr Burke submits, without supporting evidence, that his psychiatrist “has said the most I can do” is part time work of about 15 hours per week “as my health has suffered through this horrible life experience of working for Serco”. However, there is evidence that as a result of some prior matters involving the Queensland Police (referred to in my earlier reasons for judgment), Mr Burke has ongoing psychological difficulties. It is impossible on the evidence to conclude that Serco’s conduct has led to any psychiatric or psychological injury to Mr Burke that now prevents him from further employment.
The assessment of compensation should be approached in accordance with the ordinary principles set out by the High Court in Haines v Bendall (1991) 172 CLR 60. That is to say, Mr Burke should be put in the position he would have been in if Serco had not contravened the Act. Had Serco not contravened the Act, Mr Burke might have remained in Serco’s employ, but I cannot be certain about that because I formed the impression that Serco management wished for Mr Burke to cease working for the company. However, as I indicated in my earlier reasons, there was no probative evidence before me about the reason Mr Burke was terminated. There was some evidence that appeared at best to be speculation or unsourced hearsay, but no probative evidence. Nonetheless, I doubt that Mr Burke would have remained employed at Serco for much longer than he was.
If Mr Burke had remained in Serco’s employ to the date of the trial, his economic loss would have consisted of his loss of wages (excluding any overtime or other penalty rates, about which there was no evidence) and other entitlements for the period from his termination on 25 January, 2011 until the date of the trial (469 days). His loss of gross wages for that period is $84,080.98 ($2,509.88 per fortnight for 33.5 fortnights). Applying the published marginal tax rates to Mr Burke’s fortnightly rate of pay, his nett loss for that period is $66,327.32. Those sums take no account of overtime or other penalty rates to which Mr Burke might have been entitled.
On the same basis, for the period since the trial to the present Mr Burke’s loss has been $44,406.78 nett of tax.
Although Serco does not directly raised an argument against Mr Burke that he has not taken proper steps to mitigate his loss, the question of the loss suffered by Mr Burke necessarily encompasses an enquiry about the cause of his loss. He cannot recover loss which could have been avoided if he had acted reasonably: Drury v Andreco Hurll Refractory Services Pty Ltd (No.4) (2005) 225 ALR 339 at [42].
However, it is for Serco to establish the facts going to Mr Burkes’ failure to mitigate his loss: Harding v Harding (1928) 29 SR (NSW) 96 at 106; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 428. In Bagnall v National Tobacco Corp of Australia Ltd (1934) 34 SR(NSW) 421 Jordan CJ said at 429 that:
In the case of wrongful dismissal, the measure of damage is the amount of wages or salary which the employee has been prevented from earning… plus the value of any other benefits to which he is entitled by virtue of the contract of employment and of which he has been deprived by its breach, with a deduction of the value to him of the time placed at his disposal by his dismissal — ie, what he has earned, or might have earned if he could by due diligence have obtained similar suitable employment elsewhere during the period…
There is no difficulty in the present case in arriving at the proper basis. It is simply a question of calculating the amount of his salary, at the rate of P400 per annum, for the proper period of notice, since there is no evidence suggesting that anything additional was receivable in respect of percentage on the company's net profits or commission on the sale of debentures, and then making a proper deduction in respect of other similar employment which the plaintiff might have obtained. It is true that, upon the latter point, there was no evidence before the jury; but inasmuch as the onus is upon the defendant to establish facts going to mitigation of damages: Roper v Johnson (1873) LR 8 CP 167 at 181–2); James Finlay and Co Ltd v NV Kwik Hoo Tong Handel Maatschappij ([1928] 2 KB 604); Tooth v Kitto ((1913) 30 WN (NSW) 86); Criss v Alexander ((1928) 45 WN (NSW) 187), and this principle applies to cases of wrongful dismissal: Harding v Harding ((1928) 29 SR (NSW) 96 at 106), the only consequence was that the jury were not called upon to make any deduction.
In the present case, Mr Burke gave no evidence of any attempts to find alternative employment following the termination of his employment with Serco. He was not cross-examined about that matter and no issue of a failure to mitigate his loss has been raised by Serco.
Having regard to the above matters, the fact that Mr Burke was a casual employee whose employment could be terminated upon 4 hours notice and that it was likely he would not have remained in Serco’s employment in the long term, I am satisfied that I should assess Mr Burke’s loss over a three month period. I consider that but for Serco’s termination of his employment in breach of the Fair Work Act, Mr Burke was likely to have remained employed for another three months or so, but no longer. Accordingly, I assess compensation for lost wages at $15,059.28 (12 weeks at $2,509.88 per fortnight).
He has lost his employer’s superannuation contributions on that amount, which is $1,355.34.
He is entitled to interest pursuant to s.76(1) of the Federal Magistrates Act 1999 at 7.0% from the date the cause of action arose to judgment, a period of 783 days, on those sums. Interest amounts to $2,464.89.
No allowance is appropriate for loss beyond the three month period I have already identified.
Compensation for non-economic loss is available: McIlwain v Ramsey Food Packaging Pty Ltd (No 4) (2006)158 IR 181. Although dealing with a claim under the Workplace Relations Act 1996, Greenwood J set out the following concerning the circumstances in which an award for non-economic loss will be appropriate. I consider that his Honour’s remarks and summary of the relevant authorities guides the assessment of compensation for non-economic loss in a case such as the present:
87. In reaching the conclusion that it is appropriate in the circumstances of the case to order compensation, I recognise that compensation must be confined within reasonable limits and that restraint is required (Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144 at 156). In addition, not every termination of employment will attract compensation. In Burazin, their Honours Wilcox CJ, Von Doussa and Marshall JJ concluded that in the circumstances of that case, there were “unusual exacerbating circumstances that make it appropriate to include in the compensation an allowance for distress unnecessarily caused to Mrs Burazin”. In Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v ACI Operations Pty Ltd (2006) 150 IR 179 at [11], Marshall J concluded that something more than the usual element of distress which accompanies most terminations must be demonstrated although the notion of “unusual and exacerbating circumstances” is not necessarily the test. In Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia (WA Branch) (1995) 63 IR 1 at 9, Lee J made a number of observations concerning those factors which might inform whether it is “appropriate in all the circumstances of the case to make an order requiring the employer to pay to the employee compensation of such amount as the court thinks appropriate” in respect of a contravention of the relevant Division of the Industrial Relations Act 1998 (Cth) (the IR Act) for the purposes of s 170EE of the IR Act. That particular legislation also set a cap upon the amount of the compensation that might be ordered. As a matter of general principle, Lee J considered that the court would have regard to “what is reasonable in the circumstances” and would consider “the detriment occasioned to the employee by the employer’s contravention of the Act” and the extent to which “it is reasonable to compensate the employee for such consequences”. In some cases, it may be appropriate to include in the measure of compensation a sum “sufficient to compensate an employee for mental distress or injured feelings caused by a harsh, unjust or unreasonable termination of employment”. Although the statutory context is, of course, a different one, notions of what might be “reasonable” are relevantly analogous to notions of what is “appropriate”. A consideration of a compensable component of mental distress in the context of conduct characterised as an unjust or unreasonable termination of employment suggests such a consideration would be more so relevant in the circumstances of the prohibited purposes identified by the Workplace Relations Act (s 298L(1)) and the objects the Act seeks to achieve by force of the prohibition.
88. In determining that each employee ought to be paid compensation of $3,000 in the circumstances of the breach by the Greater Dandenong City Council of s 298K of the Act, Madgwick J made reference to Fryar v System Services Pty Ltd (1996) 137 ALR 321 at 330-331 per Von Doussa J. The Respondents say that Fryar’s case is not an illustration of the exercise of such a jurisdiction. It seems to me that the reference by Madgwick J to Fryar’s case was simply intended to recognise that at least in the context of a severance payment which is a form of compensation for the loss of “non-transferable credits and entitlements built up through length of service such as sick leave, long service leave and for inconvenience and hardship imposed by the termination of employment through no fault of the employee” (Von Doussa J at 331, line 15), the inconvenience and hardship element “includes the disruption to the employee’s routine” and other matters. In point of principle, compensation in respect of the contravention of the Act might also take account of disruption and dislocation.
I am not satisfied on the evidence that there are any unusual exacerbating circumstances that make it appropriate to include in the compensation an allowance for distress unnecessarily caused to Mr Burke (adopting the phraseology used in Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144). I decline to include a component for non-economic loss.
Mr Burke seeks the imposition of a pecuniary penalty and that the penalty be paid to him. The general considerations to be applied in considering the position of a pecuniary penalty are summarised in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant and Bar [2007] FMCA 7. That authority has been cited with approval in the Federal Court in Kelly v Fitzpatrick [2007] FCA 1080 and in the Full Court in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8. They identify a number of factors that ought to be taken into account in deciding whether particular conduct calls for a penalty and the quantum of such a penalty. While those cases identify a convenient checklist of matters, they do not prescribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion. Generally, it should be noted, as was observed by Burchett J in Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41-375, that:
“It cannot be denied that the fixing of the quantum of a penalty is not an exact science. It is not done by the application of a formula and, within a certain range, Courts have always recognised that one precise figure cannot be incontestably said to be preferable to another.”
The contravention in this case is not trivial or technical. Serco submits that there is no positive finding by the Court as to the reason that Mr Burke was terminated and that the only basis upon which Mr Burke has succeeded is that Serco has failed to discharge the onus of proof upon it. But I do not think that is a correct interpretation of the circumstances. Having successfully engaged s.361 of the Fair Work Act, the Court is to presume that the reasons alleged by Mr Burke were the reasons or part of the reasons for the adverse action taken against him. Thus the reasons for the adverse action were that:
a)he made complaints about safety issues in his employment;
b)he made complaints about health concerns; and
c)he made a workers compensation claim
That he should have been terminated for those things is a serious breach of the Fair Work Act. The breach strikes at the heart of the protections afforded to employees by s.340(1) of the Act.
Serco demonstrates no contrition for the way in which it has treated Mr Burke. There was no probative evidence by way of explanation offered by Serco for its conduct. As I made clear in my earlier reasons, the decision maker or decision makers did not give evidence in the proceedings.
General deterrence has a part to play in this matter. Serco is a large employer, on the evidence, and has a human resources department that was, apparently, involved in the decision to terminate Mr Burke’s employment. It is appropriate that there is a message that the protections in the Fair Work Act are to be observed.
In my view a penalty which is midway in the range of penalty available is appropriate. That is a penalty of 150 penalty units, or $16,500. It is appropriate in the circumstances as a mark of the Court’s disapproval of the way in which Mr Burke has been treated by Serco in this case.
An order that the penalty be paid to Mr Burke ought not to be made if it will result in a windfall gain for him: McIlwain v Ramsey Food Packaging Pty Ltd (No 4) (above) at 218. Such a windfall might arise in circumstances where the party receiving the benefit of the order has already received compensation for economic loss in respect of the contravention and non-economic loss in the nature of general damages. However, I have declined to make an award of general damages. An order for costs is unlikely: s.570(1). In the circumstances, payment of the penalty to Mr Burke is not likely to be a windfall. I will order that it be paid to him.
I make the orders set out at the commencement of these reasons.
I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Jarrett FM
Date: 22 March 2013
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