Cerin v ACI Operations Pty Ltd
[2015] FCCA 2762
•14 October 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CERIN v ACI OPERATIONS PTY LTD & ORS | [2015] FCCA 2762 |
| Catchwords: INDUSTRIAL LAW – Fair Work Act 2009 (Cth) (“FW Act”) – contravention of a National Employment Standard, namely s.117 of the FW Act being the requirement for notice of termination or payment in lieu – Contravention a breach of s.44(1) – civil remedy provision – corporate entity and employee of corporate entity each liable to pay penalties – penalties imposed – $20,400 and $1,020 respectively – penalties payable to Applicant. |
| Legislation: Fair Work Act 2009 (Cth), ss.44, 117, 550, 570(2) |
| Cerin v ACI Operations Pty Ltd & Ors [2015] FCCA 1654 Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v ACI Operations Pty Ltd [2005] FCA 1662 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v ACI Operations Pty Ltd [2006] FCA 7 (16 January 2006) Fair Work Ombudsman v ACN 146 435 118 Pty Ltd & Anor (No.2) [2013] FCCA 1270 (5 September 2013) Ratnayake v Greenwood Manor Pty Ltd (No.2) [2012] FMCA 440 Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65 Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union (CMFEU) (No.2) (2010) 199 IR 373 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 Finance Sector Union of Australia v Commonwealth Bank of Australia (2005) 147 IR 462 Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union (2008) 171 FCR 357 Fair Work Ombudsman v A Dalley Holdings Pty Ltd [2013] FCA 509 |
| Applicant: | ANTHONY CERIN |
| First Respondent: | ACI OPERATIONS PTY LTD |
| Second Respondent: | NICOLA POWELL |
| Third Respondent: | PATT BIGGINS |
| Fourth Respondent: | MARIO MINNITI |
| File Number: | ADG 343 of 2012 |
| Judgment of: | Judge Simpson |
| Hearing date: | 22 September 2015 |
| Date of Last Submission: | 22 September 2015 |
| Delivered at: | Adelaide |
| Delivered on: | 14 October 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr M Ats |
| Solicitors for the Applicant: | Lieschke & Weatherill |
| Counsel for the Respondents: | Mr R Manuel |
| Solicitors for the Respondents: | Zeitz Workplace Lawyers |
ORDERS
The First Respondent shall pay the Applicant a penalty of TWENTY THOUSAND, FOUR HUNDRED DOLLARS ($20,400).
The Second Respondent shall pay the Applicant a penalty of ONE THOUSAND AND TWENTY DOLLARS ($1,020).
The Applicant shall pay the Fourth Respondent his costs of the action to be agreed or taxed, and if taxed shall be on the Federal Court Scale.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 343 of 2012
| ANTHONY CERIN |
Applicant
And
| ACI OPERATIONS PTY LTD |
First Respondent
| NICOLA POWELL |
Second Respondent
| PATT BIGGINS |
Third Respondent
| MARIO MINNITI |
Fourth Respondent
REASONS FOR JUDGMENT
Introduction
On the 22 June 2015 I gave reasons in relation to the Applicant’s claim that the Respondents, or one or more of them, contravened provisions of the Fair Work Act 2009 (Cth) (“the FW Act”). It had been agreed that the trial would proceed in relation to liability only and that penalty and other consequential orders would be addressed after the liability issues had been determined.
Having found, firstly, that the First Respondent contravened s.44 of the FW Act by failing to provide the Applicant, Anthony Cerin, with five weeks’ notice of termination, or pay in lieu thereof, as was required by s.117 of the FW Act, when it notified the Applicant on the 12 October 2012 that his employment with the First Respondent was terminated effective from the 12 November 2012, and secondly, my further finding that the Second Respondent, Nicola Powell, was, pursuant to s.550 of the FW Act, involved in the contravention mentioned, the matter now comes before me to impose such penalty, if any, that I consider appropriate, and that I make any other appropriate consequential orders.
I allowed the parties to file any further affidavit evidence relevant to the question of penalty and required that they each also provide the Court with an Outline of Submissions including a list of the authorities to be referred to.
Material before me on the penalty hearing
As well as the evidence put before me at the trial, I have been provided with the following further material which I have also carefully considered:
a)An affidavit of Catriona Murdoch affirmed on 24 September 2015;
b)An affidavit of the Applicant sworn on 31 August 2015, save that only paragraph 41 was admissible;
c)An affidavit of the Applicant sworn on 11 September 2015;
d)An affidavit of Joseph Kane affirmed on 14 September 2015;
e)An affidavit of Susan Zeitz affirmed on 4 September 2015; and
f)An affidavit of Nicola Powell sworn on 1 September 2015.
At the penalty hearing there were submissions put about the admissibility or otherwise of portions of the affidavits. I have proceeded on the basis that I will not take into account, or give any weight, to the inadmissible evidence and will give the remainder of the evidence such weight as I consider it deserves.
Each of the parties provided the Court with detailed and very helpful written submissions. I have been greatly assisted by those submissions as well as by the oral submissions that were put at the hearing.
Consent order
At the commencement of the penalty hearing, I was asked by the parties to make an order by consent that would resolve all outstanding issues between the parties other than the question of any penalties to be imposed and costs. The requested order was in the following terms:
“The First Respondent pay the Applicant $181.66 within 14 days.”
The order was duly made.
Costs
The Applicant’s counsel indicated that his client did not seek any order for costs. Counsel for the respondents indicated that the only order for costs that was sought was on behalf of the Third Respondent who sought that the Applicant pay his costs of the action. I propose to deal with this costs issue later in these reasons.
Preliminary matters
In these reasons I do not propose to repeat the details of the background to this dispute. This background is readily available in my earlier decision of Cerin v ACI Operations Pty Ltd & Ors.[1]
[1] [2015] FCCA 1654.
As the two parties liable to penalties in this action are so different in their involvement in the matter, it is necessary that I consider the two respondents individually as to whether a penalty should be imposed and, if so, the quantum of that penalty.
The parties agree that the correct approach to a determination of the penalty is to be found in the reasons in the case of Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar[2] (“Pangaea case”) in which Mowbray FM suggested a non-exhaustive list of matters that could be considered to assist a judge to come to a fair and just decision in relation to penalty. Each counsel provided in their Outline of Submissions the parties’ comments on the various factors identified in the Pangaea case. I have considered it helpful to provide in these reasons the parties’ submissions using the list of factors identified in the Pangaea case in so far as they are relevant.
[2] [2007] FMCA 7.
I propose to consider the submissions of the parties in relation to each of the factors raised by the Pangaea case and to then make my own findings.
(a) The nature and extent of the conduct which led to the contraventions
Respondents’ submissions
There was a single decision to terminate employment authorised by the Workers Compensation Authority, pursuant to the application of s.58B of the Worker Rehabilitation and Compensation Act 1986 (SA) (“the WRC Act”) that requires the giving of 28 days’ notice of termination of employment. The notice period was not fanciful or arbitrary but complied with the applicable workers compensation legislation.
The conduct took place as a direct consequence of authority given by the Workers Compensation Authority, pursuant to which the First Respondent was no longer required to provide suitable alternative employment to the Applicant, and the responsibility for payment of ongoing weekly payments vested in SafeWork SA.
The evidence of Nicola Powell filed in these proceedings in both affidavits makes plain that the actions taken by her and by the First Respondent were procedural and were not a deliberate failure to apply the extra weeks’ notice. The Applicant received 28 days’ notice.
The affidavit of Susan Zeitz filed in these proceedings demonstrates that the Applicant had opportunity to raise his alleged underpayment of notice prior to, and during, proceedings in the Fair Work Commission and did not do so. The first occasion that the Applicant sought to raise the matter was in the context of a General Protections Application to which this claim was appended.
Applicant’s submissions
The contravention was deliberate and intentional. Ms Powell’s evidence was that since August 2008 she had been the Human Resources Manager for the First Respondent and was responsible for day-to-day management of human resources issues at the Adelaide plant, which is where the Applicant worked until his employment was terminated.[3] She was aware that the FW Act includes minimum employment standards, known as the National Employment Standards, which ordinarily would apply to all of the employees of the First Respondent.[4] She was also aware that those standards include requirements about the amount of notice to be given on the termination of employment, and the amount of notice varies dependent on the length of service of the employee concerned.[5] She made a deliberate and conscious decision that the Applicant would not be given five weeks’ actual notice or be paid five weeks in lieu.[6]
[3] Affidavit of Nicola Powell, sworn and filed on 20 March 2014, paras 1 - 3.
[4] See transcript for 16 May 2014, page 35, lines 17 – 24.
[5] See transcript, for 16 May 2014 page 35, lines 25 – 30.
[6] See transcript, for 16 May 2014 page 44, lines 25 – 27.
(b) The nature and extent of any loss or damage sustained as a result of the contraventions
Respondents’ submissions
The Applicant continued to receive weekly payments. If the Applicant were to be paid a weeks’ notice he would be required to repay to the Workers Compensation Authority all but the amount representing the sum he would have earned if he had received five weeks’ notice and the amount he was paid. That amount is agreed by the parties as $181.66.
Applicant’s submission
The Applicant refers to, and repeats, his earlier comments.
The contravention also reduced the Applicant’s capacity to seek employment from the position of having employment, rather than from the position of being unemployed.[7]
[7] See transcript, for 16 May 2014 page 28, lines 42 to page 29, line 25.
(c) Whether there had been similar previous conduct by any respondent
Respondents’ submission
There is no evidence or allegation of similar conduct.
Applicant’s submission
The Federal Court found that the First Respondent contravened Part XA of the Workplace Relations Act 1996 (Cth) (“the WR Act”) in the case of Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v ACI Operations Pty Ltd.[8] The Federal Court ordered that the First Respondent pay a civil penalty of $16,500 for that contravention; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v ACI Operations Pty Ltd.[9]
[8] [2005] FCA 1662.
[9] [2006] FCA 7 (16 January 2006).
(d) The size of the business enterprise involved
Respondents’ submission
The First Respondent is a large employer that has been in operation in the State of South Australia and nationally for many decades.
Applicant’s submission
The Applicant respectfully refers to and adopts the Court’s findings in paragraph 10 of the liability decision.[10] The First Respondent is, and was, the world’s largest glass container manufacturer.
[10] Cerin v ACI Operations Pty Ltd & Ors [2015] FCCA 1654.
The First Respondent has plants in Brisbane, Sydney, Melbourne and Adelaide.[11] The Adelaide plant has approximately 208 employees.
[11] See transcript, evidence of Powell, page 35, lines 40 – 44.
(e) Whether or not the contraventions were deliberate
Respondents’ submission
The action to make the payment in accordance with the information provided by the Third Respondent and the payroll department, was intentional but there was no intention to engage in conduct in breach of the FW Act. As is the case with most accounting functions, there was a structured approach that did not require the Second Respondent to make any decision other than to comply with the directions given to her.
Applicant’s submission
The Applicant refers to and repeats his response to (a) above.
(f) Whether senior management were involved in the contraventions
Respondents’ submission
Senior management was involved, but the Applicant chose not to pursue that action against the person identified by the evidence of having authority in relation to the matter (previously the Fourth Respondent), but chose to only take action against the Second Respondent whose involvement in the breach was incidental at best and inadvertent on her evidence which was not challenged by the Applicant. The Applicant cannot use this unilateral change to impose upon the Second Respondent the responsibility that should have been on the Fourth Respondent.
Applicant’s submission
Senior management was involved in the breaches. Whilst the Applicant accepts that questions of who is and is not ‘senior’ management involves questions of fact and degree, the Applicant submits that the Second Respondent was senior management for reasons, including that the Second Respondent is responsible for human resources management at the First Respondent’s plant which employs 208 persons. The Second Respondent, in relation to human resources matters, at relevant times reported to the First Respondent’s National Employee Relations Manager. The Second Respondent’s position, in terms of seniority, is to be contrasted with lower-level management such as a team leader who works on the factory floor. The Court has found that the Second Respondent was involved in the contravention. Mr Mario Minniti, the First Respondent’s National Employee Relations Manager was involved in the breach. Mr Minniti is plainly a senior manager. Mr Minniti is involved in the breach for reasons including the following:
a)The breach is an ongoing breach. At no point has the First Respondent taken any steps to correct the breach;
b)After the matter was commenced in the Fair Work Commission, Mr Minniti was responsible for the conduct of the proceedings. Ms Powell’s evidence about that corroborates the evidence of Mr Kane in his affidavit of 21 February 2014 which was admitted into evidence at trial; and
c)Whilst there is no evidence before the Court that Mr Minniti was involved in the initial decision to contravene s.117 of the FW Act, it is plain that he is involved in the breach because following the breach having been brought to his attention, the First Respondent decided to continue the breach. In addition to the evidence of Ms Powell and Mr Kane as to Mr Minniti’s involvement, the Applicant also refers to Annexure AC16 of his affidavit of 18 February 2014.
(g) Whether the party committing the contravention had exhibited contrition or taken corrective action
Respondents’ submission
The First Respondent believed that the payments made to the Applicant, including workers compensation, meant that he was appropriately paid in accordance with its obligations and taking into account that the Applicant was throughout the relevant period, challenging Return to Work plans that did not include his return to work at the First Respondent. The amount involved, as opposed to the payments by workers compensation, show that the amount is peripheral.
The First Respondent sought to take corrective action after the General Protections Application was discontinue.
The Applicant did not provide it with an opportunity to take corrective action prior to issuing the proceedings in this Honourable Court. Once proceedings were issued the Applicant refused to accept the following offers made after the substantial General Protections Application was discontinued by the Applicant:
·A week’s pay on or about 20 January 2014 being an amount substantially in excess of his alleged loss;
·$2,000 on or about 14 February 2014 being an amount 10 times in excess of the Applicant’s alleged loss; and
·In response to the Applicant’s offer to settle the matter for $181.66, plus $500 in satisfaction of fines and penalties plus apologies, on or about 16 May 2014 accepted the offer excluding the apologies and noted that the Applicant’s monetary offer was less than both of the offers already made.
At all relevant times the Applicant required that the First Respondent make declarations and apologies for publication by him and or a non-party to the proceedings, being the Australian Workers Union, when that was and remains a claim outside the jurisdiction of this Court.
Despite the assertion by the Applicant that he was effectively acting in the public good in bringing his action, this is clearly untrue. Despite his alleged commitment to an apology, he was prepared to give up that position in exchange for $10,000.
The Applicant failed at all times to act reasonably in response to the offers set out above.
Applicant’s submission
The respondents received the Application in December 2012 and filed a Notice of Address for Service in the Court on 7 January 2013. Neither respondent has exhibited any contrition or taken any corrective action. Relevant context to the lack of contrition and corrective action include the correspondence set out at Annexure AC16 of the Applicant’s affidavit of 18 February 2014. It has been within the power and capacity of the respondents to take corrective action at all relevant times.
(h) Whether the party committing the contravention had cooperated with the enforcement authorities
Respondents’ submission
Not relevant, but nevertheless remained at all times willing to hold discussions with the Applicant and his union.
Applicant’s submission
The respondents filed an Application in a Case on 11 April 2013 seeking inter alia the summary dismissal of the application. That application was never pursued to hearing and was abandoned at trial. No evidence of that was given until after the respondents opened their case.[12]
[12] See transcript, 16 May 2014, page 44, lines 17 – 122.
The respondents filed an Application in a Case on 6 May 2013 seeking inter alia an order restraining the Applicant from further pursuing the substantive application. That Application was never pursued to hearing and was abandoned at trial, but no notice of that was given until after the respondents opened their case.[13]
(i) The objects of the Fair Work Act, including the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements
Respondents’ submissions
[13] See transcript, 16 May 2014, page 44, lines 17 – 122.
The evidence filed by the Applicant discloses that the First Respondent is a large employer that has taken action in relation to redundancies applicable to its workforce. This is the only occasion when an error has been made that has not been identified by the First Respondent and able to be acted upon by it prior to these proceedings being issued. The failure is clearly unusual and a failure in unusual circumstances.
Applicant’s submission
In Fair Work Ombudsman v ACN 146 435 118 Pty Ltd & Anor (No.2)[14] this Honourable Court said the following about the importance of compliance with minimum standards:
“A fundamental object of the FW Act is to provide a guaranteed safety net of adequate minimum entitlements for employees. This object has particular force for those employees who are vulnerable or in low income roles, and in providing an “even playing field” for all employers with regard to employment costs.
The importance of ensuring compliance with Australia’s workplace laws should not be underestimated, and is to be given appropriate weight in considering what penalties should be imposed for the contraventions. In Fair Work Ombudsman v Kentwood Industries Pty Ltd (No.3) the Federal Court said:
In imposing a penalty against the respondents, it is necessary for the court to set the penalty in a range that reinforces the fundamental importance of compliance with the employment standards enshrined in Commonwealth workplace laws.”
[14] [2013] FCCA 1270 (5 September 2013).
As a consequence of changes since 2006 to the penalty provisions of what is now the Fair Work Act, the time has long since passed when Courts adopted a light handed approach to contraventions of industrial laws.[15]
[15] Fair Work Ombudsman v ACN 146 435 118 Pty Ltd & Anor (No.2) [2013] FCCA 1270 (5 September 2013).
Because of his work injuries, the Applicant was a vulnerable employee.
Whilst it is accepted that there is an overlap with matters of deterrence, the respondents’ conduct, and in particular since the Court made declarations in the liability judgment, demonstrates that a significant penalty is required to ensure compliance with minimum standards by these respondents.
(j) The need for specific and general deterrence
Respondents’ submissions
This is not a case of demonstrated wilful or deliberate contravention but the product of an industrial dispute between the First Respondent and the Australian Workers Union, and the Applicant’s dispute regarding the failure to pay him redundancy pay and/or to return him to employment with the First Respondent. It should be noted that this matter has been significantly complicated by the Applicant for insisting upon redundancy pay and taking action against other respondents, when he eventually determined not to do these things. As a consequence, his position was regularly shifting.
Applicant’s submission
In Ratnayake v Greenwood Manor Pty Ltd (No.2)[16] this Honourable Court considered the need for specific and general deterrence in relation to a contravention of s.117 of the FW Act. The Court said as follows:
“In relation to specific deterrence, Gray J observed in Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170 at [37] that:
Specific deterrence focuses on the party on whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future. Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur.”
[16] [2012] FMCA 440.
In relation to general deterrence, Lander J noted in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65 at [93]:
“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 likeminded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, 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. Similarly, in CPSU v Telstra Corporation Limited (2001) 108 IR 228; [2001] FCA 1364 at 230-231, Finkelstein J said:
[9]… even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law’s disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct…”[17]
[17] Ratnayake v Greenwood Manor Pty Ltd (No.2) [2012] FMCA 440 at paras 30 - 32.
Penalties
Section 44 of the FW Act is a civil remedy provision. A contravention of such a provision attracts a maximum penalty of 60 penalty units. The value of a penalty unit is $170. By reason of s.546(2)(b), the maximum penalty for a corporation is five times the maximum number of penalty units that otherwise would apply. As a result, the maximum penalty that might be imposed on a corporation for such a contravention at the relevant time was at $51,000 (ie 300 penalty units) and for an individual was $10,200 (ie 60 penalty units).
The overriding principle when fixing a penalty is to ensure that it is proportionate to the gravity of the contravening conduct.[18]
[18] See Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union (CMFEU) (No.2) (2010) 199 IR 373 at 376.
The authorities have recognised that the purpose to be served by the imposition of penalties are three fold: firstly, punishment, which must be proportionate to the offence and in accordance with prevailing standards; secondly, deterrence, both specific and personal, aimed at deterring the respondents from reoffending and as a deterrent to others who might be likely to offend; and, finally, rehabilitation.
The Court is required to take into account all relevant factors and arrive at a single result which takes due account of them all. In Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith[19] Buchanan J stated that:
“… 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 a public confidence in the statutory regime which imposes the obligations.”
[19] (2008) 165 FCR 560.
In Finance Sector Union of Australia v Commonwealth Bank of Australia[20] Merkel J observed:
“The legislature has overtime also moved to increase the penalties that may be imposed in respect of unlawful industrial conduct. In my view any light-handed approach that might have been taken in the past to serious, wilful and ongoing breaches of the industrial laws should no longer be applicable.”
[20] (2005) 147 IR 462 at 483.
It is fair to say that the courts now regard far more seriously any contravention of industrial laws than was generally the case in the past. These comments of Merkel J were endorsed by the Full Court of the Federal Court in Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union[21].
[21] (2008) 171 FCR 357 per Branson & Lander JJ.
The Court must also take into account the totality principle in determining the appropriate level of penalty. This principle requires that, after determining an appropriate penalty for each contravention, the court must stand back and consider whether the combined total of the penalties is appropriate for the total contravening conduct.
The courts exercising an industrial jurisdiction have identified a range of factors which may or may not be relevant to the circumstances of a particular case when assessing an appropriate penalty. The courts have, however, warned against the mechanical use of checklists because they give rise to the risk of transforming the process of instinctive synthesis into the application of a rigid catalogue of matters for attention by the judge. Further the courts have also warned against comparing the case the subject of the assessment with any other particular case so as to derive from it the amount of penalty to be fixed.
Bearing in mind these warnings, the authorities have recognised certain factors as potentially relevant to the imposition of a pecuniary penalty in an industrial regulatory context. I propose to address certain factors raised by the cases insofar as they are relevant to the penalty assessments in this matter. In doing so, I will take into account the submissions of the parties as well as the parties’ comments on the ‘Pangaea factors’ that they addressed.
Court’s analysis and findings
The Applicant had been an employee of the First Respondent since March 1996 until November 2012 when he was unlawfully terminated. He at all relevant times had the assistance of the Australian Workers Union, an organisation that he was a member of.
The Applicant had sustained a work injury on 20 April 2009 which resulted in him qualifying for workers compensation. On 12 October 2012, the Applicant was advised by the First Respondent that his employment would be terminated on 12 November 2012. This notice of termination complied with the provisions of the Workers Rehabilitation and Compensation Act 1986 (SA) (“WRC Act”).
Unfortunately, the termination did not comply with the relevant provisions of the FW Act. The Applicant was entitled to a further two days’ notice (ie 5 weeks’ notice) under the FW Act. It will be seen that the circumstances of this case are quite rare and unusual.
The conduct of the First Respondent in terminating the Applicant’s employment without giving proper notice or pay in lieu is somewhat bizarre. No satisfactory excuse for not complying has been provided. It would seem that the First Respondent argues that the authority to terminate the Applicant’s employment was given to them by the Workers Compensation Authority and that this authority somehow excused them from complying with the FW Act provisions. It did not. In its Outline of Submissions, the First Respondent ignores the fact that it was obliged to comply with the provisions of the FW Act, and in particular, the provision that required that it give the Applicant five weeks’ notice of termination of employment, or five weeks’ pay in lieu thereof. They say that they believe that they were properly complying with industrial legislation by complying with s.58B of the WRC Act.
What makes the respondents’ case even harder to understand is that Ms Powell admitted in cross-examination that she was aware of the FW Act and that it provided for minimum employment standards known as the National Employment Standards. She said that she was aware that those standards applied to all the employees of the First Respondent. She also admitted that she was aware that as part of the standards, there are requirements as to the amount of notice that is to be given on termination and that the amount of notice varies depending on the length of service of the employee concerned. She also said that it was within her authority to decide whether an employee on termination is entitled to four or five weeks’ notice, or pay in lieu thereof. She gave no explanation of why, if she was aware of all of these provisions in the Act, that she gave the Applicant only four weeks’ notice, rather than the required five. No satisfactory explanation has been provided.
Given the admissions made by Ms Powell, I do not see how the First Respondent can submit that the failure to provide the Applicant with the extra two days of notice can be described as, “procedural and not a deliberate failure” on their part.
I accept that the respondents had been concerned about and were concentrating on the authority given to them by the Workers Compensation Authority, which resulted in the First Respondent being relieved of its obligation to provide suitable alternative employment for the Applicant. But this is no excuse for the respondents to ignore their obligations under the FW Act.
Ms Zeitz’s affidavit, lodged on 7 September 2015, provides no satisfactory explanation as to why the respondents did not comply with the provisions of the FW Act. It would appear that the parties, and in particular the respondents and their solicitors, were more concerned about the workers compensation aspect of the matter, rather than the FW Act aspects. This may well have been because the parties had for a long time prior to commencing proceedings in this Court, been dealing with the matter in the State workers compensation jurisdiction. This however does not provide the respondents with a satisfactory explanation for their actions.
The Applicant suffered the loss of $181.66. This miniscule sum pails into insignificance when compared with the time and expense that must have resulted from this litigation. It is to be remembered that the time and expense has not only been borne by the parties, but also the public purse. The trial and other hearings in this matter has taken up a lot of court time, both in and out of court. Without knowing the industrial tactics of this dispute, from the Court’s point of view, it would seem to be a storm in a tea cup that should have been resolved at a very early stage.
Somewhat surprisingly in the circumstances, the First Respondent did not inform the Court of any instances of similar previous conduct saying that, “(t)here is no evidence or allegation of similar conduct”.
The Applicant however, identified a case that needs to be taken into account: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v ACI Operations Pty Ltd.[22] This case concerned the termination of an employee for a prohibited reason contrary to the provisions of the WR Act. In that case, his Honour Marshall J made orders that the worker be re-instated to the position he held prior to the unlawful termination and imposed a mid-range penalty of $16,500, the maximum penalty being $33,000.
[22] [2005] FCA 1662; [2006] FCA 7; and [2006] FCA 122.
The First Respondent is an Australian branch of an international business that makes glass bottles. At the time it had a workforce of approximately 22,500 people at 77 plants in 21 countries around the world. Relevantly, it had a plant on Port Road at West Croydon in South Australia. The Applicant worked at the West Croydon plant. The First Respondent also had plants at Brisbane, Sydney and Melbourne. The Adelaide plant had approximately 208 employees.
Given the admissions that were made by Ms Powell, the only conclusion that I can come to is that her actions and those of the First Respondent, were deliberate. I cannot agree with the submission put on behalf of the respondents that the ‘structured approach’ to the accounting functions at the business did not require the Second Respondent to make any decision other than to comply with the directions given to her. As she knew that there was a provision in the FW Act requiring that the employer give a certain number of weeks’ notice to an employee who is to be dismissed, she should not have taken the actions that she did.
The First Respondent concedes that senior management were involved in the contraventions. The First Respondent points out that the Applicant chose not to pursue actions against all the senior management of the company, but instead took action against the First and Fourth Respondents.
On the basis of her evidence, which was not challenged by the Applicant, I agree with the respondents’ submission that the Second Respondent’s involvement in the breach was incidental and inadvertent.
Counsel for the First Respondent submits that the First Respondent had believed that the payments made to the Applicant, including workers compensation payments, meant that he was appropriately paid in accordance with its obligations.
I accept that once the Applicant commenced proceedings in this Court, the First Respondent took the initiative to try to resolve the matter by negotiations. Obviously, I am unaware of the details of these negotiations. I am aware however that the negotiations did not resolve the dispute and that one stumbling block was the Applicant’s demand that any settlement include an apology for publication. This request was and remains a claim that is outside the jurisdiction of this Court to make. The respondents say that the Applicant failed at all times to act reasonably in response to the offers that were made.
Compliance with minimum standards is an important consideration in all industrial disputes such as this one. One of the objects of the FW Act is the maintenance of an effective safety net of minimum terms and conditions and effective enforcement mechanisms. The substantial penalties set by Parliament, and awarded by the Courts for contraventions for failure to comply with compliance notices, re-enforces the importance placed on compliance with minimum standards. As was said in Fair Work Ombudsman v A Dalley Holdings Pty Ltd[23]:
“In imposing a penalty, it is imperative for the Court to impose a penalty that reinforces the fundamental importance of compliance with the safety net of entitlements specified by the National Employment Standards and the general protection provisions of the FW Act.”
The penalty that I propose to make will be a warning to employers of the need to comply with the legislation to the letter.
[23] [2013] FCA 509.
Counsel for the respondents submits that the Court should take into account that this is the only occasion when an error has been made and has not been identified by the First Respondent and able to be acted upon by it prior to proceedings being issued, notwithstanding that the First Respondent is a large employer. It is further submitted that the failure is clearly unusual and a failure in unusual circumstances. I agree with the respondents’ submission on this topic. It will be properly taken into account in the penalty to be imposed.
Counsel for the Applicant points out that as a consequence of changes since 2006 to the penalty provisions of what is now the FW Act, the time has long since passed when courts adopted a light handed approach to contraventions of industrial laws. They submit that because of his work injuries, the Applicant was a vulnerable employee. The Applicant submits that a significant penalty is required to ensure compliance with minimum standards by these respondents.
Sections 44 and 117 of the FW Act combine to create an important protection for employees and it is therefore important that the penalties imposed reflect the objective seriousness of breaching them. The National Employment Standards are the minimum standards governing almost all employment relationships in Australia. Relevantly, they require employers to provide employees with appropriate notice of termination of employment or a payment in lieu of notice. Notice of termination is an important entitlement which, normally, would give employees time to process their termination and to make arrangements to find new employment. In the present case, and with his somewhat unusual circumstances, the Applicant employee is unlikely to have been surprised about his termination. It is unlikely too that he would have used the additional time to make arrangements to find new employment.
It is important that the penalties in relation to the First Respondent’s contravention are substantial enough to act as a general deterrent to other employers who would seek to unlawfully avoid their obligation to provide notice of termination. The penalty should act as a deterrent to others who might be tempted to ignore giving an employee who is about to be terminated the correct amount of time for notice of termination or the correct amount of pay in lieu.
Specific deterrents are also relevant in this case. The penalties must be sufficient to deter the respondents from engaging in further unlawful conduct of this kind. In the unusual circumstances in this case I do not consider specific deterrents to be a major factor given the First Respondent’s size and only one prior contravention, as mentioned earlier in these reasons, and the fact that the First Respondent gave some but not all of the notice that was required to satisfy s.117.
Conclusion in relation to penalty
I consider that taking into account all relevant circumstances in combination, the First Respondent’s contravention can be regarded as being in the middle range of seriousness for contraventions of this kind. In my view, a penalty of 40% of the maximum penalty is called for. There will be a penalty in relation to the First Respondent in the sum of $20,400.
I consider the Second Respondent’s conduct to be significantly less serious than that of the First Respondent. She was not heavily involved in the contravention. I note that she only issued the termination letter and authorised payment. She was not present at the meeting when Ms Biggins, the Third Respondent, advised the Applicant that his employment was terminated. In the circumstances detailed in these reasons, I find that a penalty at the low end of the range is called for. In my view, a penalty of 10% of the maximum penalty is suffice. There will be a penalty in relation to the Second Respondent in the sum of $1,020.
Costs
The Fourth Respondent, Mr Mario Minniti, seeks an order for his costs of the action.
In matters such as the present one, costs will not be ordered unless there are certain unusual circumstances. Section 570(2) of the FW Act provides as follows:
“570 Costs only if proceedings instituted vexatiously etc.
…
(2)The party may be ordered to pay the costs only if:
(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b) the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or
(c) the court is satisfied of both of the following:
(i)the party unreasonably refused to participate in a matter before the FWC;
(ii)the matter arose from the same facts as the proceedings.”
In the present case, the Fourth Respondent seeks an order for costs. In my opinion, for the reasons that follow, this application comes within the terms of s.570(2) of the FW Act and costs should be allowed.
The Applicant commenced proceedings with Mr Mario Minniti, the Fourth Respondent. At no stage did the Applicant discontinue its action against the Fourth Respondent. The Fourth Respondent engaged solicitors (the same solicitors that acted for the other respondents) and participated in the litigation. At trial the Applicant made no attempt to prosecute its action against Mr Minniti. No orders were obtained against him.
In my view, the Applicant’s course of conduct in relation to the Fourth Respondent was vexatious and was made without reasonable cause. The Applicant’s behaviour in taking the action that it did, has no doubt resulted in the Fourth Respondent incurring costs. He should be entitled to an order. I note that he only seeks an order for costs on a party/party basis. I am prepared to make such an order. I consider it appropriate that the costs be calculated using the Federal Court scale.
I make the orders to be found at the beginning of these reasons.
I certify that the preceding eighty-seven (87) paragraphs are a true copy of the reasons for judgment of Judge Simpson
Associate:
Date: 14 October 2015
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