CHILESHE v E and M Business Trust T/A Yellow Brick Road Service Group (No.2)

[2013] FCCA 442

FEDERAL CIRCUIT COURT OF AUSTRALIA

CHILESHE v E & M BUSINESS TRUST T/A YELLOW BRICK ROAD SERVICE GROUP (No.2) [2013] FCCA 442

Catchwords:
INDUSTRIAL LAW – Appropriate penalty for single breach of s.340 of the Fair Work Act 2009 (Cth) – consideration of relevant factors – no application for compensation made.

Legislation:  
Fair Work Act 2009 (Cth), ss.340, 546

Cleaning Services Award 2010 [MA000022]

Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7

Applicant: RISYAD CHILESHE

Respondent: E & M BUSINESS TRUST T/A YELLOW BRICK ROAD SERVICE GROUP

File Number: MLG 739 of 2012

Judgment of: Judge Whelan

Hearing date: 21 February 2013

Date of Last Submission: 9 May 2013

Delivered at: Melbourne

Delivered on: 7 June 2013

REPRESENTATION

Counsel for the Applicant: Applicant in person

Counsel for the Respondent: Mr Hooper

Solicitors for the Respondent: Kelly Workplace Lawyers

ORDERS

1. Pursuant to s.546 of the Fair Work Act 2009 (Cth) (“the Act”), the Respondent pay a penalty of $11,000.00 for contravention of s.340 of the Act.

2. Pursuant to s.546(3)(c) of the Act, the penalty payable by the Respondent in accordance with Order 1 herein be paid to the Applicant within 28 days of the date of this order.

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT MELBOURNE

MLG 739 of 2012

RISYAD CHILESHE

Applicant

And

E & M BUSINESS TRUST T/A YELLOW BRICK ROAD SERVICE GROUP

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 12 April 2013, the Court, in the substantive proceedings in this matter, declared that the Respondent has contravened s.340 of the Fair Work Act 2009 (Cth) (“the Act”).  The Court ordered that:

   ·The Applicant is given 14 days to file and serve submissions in writing in support of the penalty sought (i.e., 26 April 2013).

   ·The Respondent is to have a further 14 days to make any submissions in reply (i.e., 10 May 2013).

   ·Unless a request is made in writing for an oral hearing, the issue of appropriate penalty will be dealt with on the basis of the written submissions.

2. This judgment deals only with the issue of appropriate penalty. 

3. The Court found a single breach of s.340(1) of the Act and under the provisions applicable at the time (the value has been increased with respect to matters initiated after 28 December 2012), the maximum penalty for a body corporate was $33,000.00.

The applicable principles

1. The factors the Court should take into account in determining an appropriate penalty were set out by Mowbray FM in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7. The appropriate principles are set out below, however such principles are not mandatory or exclusive but provide guidance to the Court:

   ·the nature and extent of the conduct which led to the breaches;

   ·the circumstances in which the conduct took place;

   ·the nature and extent of any loss or damage sustained as a result of the breaches;

   ·whether there had been similar previous conduct by the respondent;

   ·whether the breaches were properly distinct or arose over the one course of conduct;

   ·the size of the business enterprise involved;

   ·whether or not the breaches were deliberate;

   ·whether senior management was involved in the breaches;

   ·whether the party committing the breach has exhibited contrition;

   ·whether the party committing the breach has taken corrective action;

   ·whether the party committing the breach has co-operated with enforcement authorities;

   ·the need to ensure compliance with minimum standards; and

   ·the need for specific and general deterrence.

2. These matters have been taken into account by this Court and the Federal Court in a large range of cases.

3. The Respondent also submits that the Court should also take into consideration the following principles:

   (1)Any penalty imposed should not exceed that which is commensurate to the gravity of the contravention found to be proven.

   (2)The maximum penalty provided by the statute should be reserved for the worst type of cases.

   (3)The penalty should reflect the minimum term consistent with the relevant purpose of the legislation.

a)       The nature and extent of the conduct.

1. The conduct lead to the loss of the Applicant’s employment. The Applicant was entitled to the benefit of the Cleaning Services Award 2010 [MA000022] (“the Award”) and the Act. The Respondent did not take appropriate action to ensure that the conditions of employment offered to the Applicant complied with the employee’s statutory entitlements. The Applicant was dismissed when he refused to accept the conditions offered.

b)          The circumstances in which the conduct took place.

1. The Applicant points to the fact that Mr EVAN PETRIDES
   (“Mr Petrides”) had been running the business for 15 years and ought to have known that the contract was not consistent with the Award. 
   A simple Google search would have given him the correct information.

2. The Respondent points to the nature of the business as a small business with limited resources and no internal HR expertise. The Respondent maintains that they pay above award wages and paid the Applicant above award wages when he worked for the Respondent. It observed all other Award and Act terms and the breach of s.340(1) of the Act was an unwitting one.

3. In my view, weight should be given to the fact that Mr Petrides had operated the business for 15 years and ought to have been aware, and should have made it his business to be aware, of the relevant Award and statutory provisions. The Court made no finding concerning the Applicant’s appropriate classification and whether he was paid in excess of the Award requirements as it was not necessary to do so in the context of the case to be determined. 

4. Further, there was evidence that the employer had not complied with other Award provisions and appeared to be unaware, for example, of the relevant provisions with respect to overtime (see evidence of
   

   [1] Transcript of proceedings of 21 February 2013, page 39, lines 15-25.

   Ms CHARMAINE SMITH, the company administrator).[1]

c)               The nature and extent of any loss or damage sustained as a result of the conduct.

1. The Applicant claimed in submissions that he suffered extreme financial difficulty as a result of the dismissal and it took him over six months to find another job. There was however no evidence of either financial difficulty or the Applicant’s attempts to find employment post the dismissal.

2. The Respondent points out that the Applicant has not sought compensation for loss or damage. The Respondent made further submissions concerning the Applicant’s likelihood of obtaining alternative employment and his possible alternative activities which, equally, were not supported by evidence.

3. Clearly, having found that the Applicant did not intend to leave his employment on 27 April 2012, it is reasonable to assume that there was some loss associated with his dismissal. The Court is not, however, able to quantify any loss or damage suffered by the Applicant.

d)              Whether there has been similar previous conduct by the Respondent.

1. There was no evidence of the Respondent previously offering contracts to employees which failed to meet the statutory or the Award requirements or of contravening the general protection provisions of the Act. There was some evidence of a prior failure to abide by the Award conditions.

e)          Whether the contraventions arose out of one course of conduct.

1. There was a single course of conduct leading from the offer of the contract to the dismissal and one contravention of s.340(1) of the Act.

f)          The size of the business enterprise involved.

1. There was some dispute about the number of employees involved in the business. On any count, however, it is clear that this was a small business with limited HR resources.

g)          Whether or not the breaches were deliberate.

1. The Respondent has submitted that the breach was inadvertent. The directors were using a ‘template’ contract which they did not understand to be in contravention of the Award.

2. The Applicant submits that the Respondent was not prepared to negotiate and was insistent on him signing the contract despite his reservations.

3. I accept that the Respondent did not embark on a deliberate course of action when it offered the Applicant the contract, however, the decision to terminate the Applicant when he refused to sign the contract required a deliberate decision on the part of the Respondent, even if it was a spur of the moment one.

h)          Whether senior management was involved in the breaches.

1. The two directors of the business, who are also the managers of the business, were involved in the conduct.

1. Whether there had been any contrition exhibited.

1. The only contrition shown by the Respondent was in submissions made following the Court’s findings. The Court found that in their evidence the directors were not entirely truthful. They made no attempt to respond to the Applicant’s emails after the dismissal and took no other action until this application was made.

j)          Whether the party has taken correction action.

1. The Applicant in these proceedings has not been compensated for his loss of employment. In submissions, the Respondent stated that action had been taken to ensure that, with respect to the employees placed on a similar contract since the termination of the Applicant’s employment, all provisions of the Award and the Act are observed.

k)         The cooperation of the Respondent.

1. The Respondent has cooperated with the Court processes in the conduct of the matter.

l)           The need to ensure compliance with minimum standards.

1. The Award and the Act represent a safety net of employment conditions. The Court has a responsibility to ensure that those conditions are observed and that relevant industrial instruments are enforced.

m)        The need for specific and general deterrence.

1. The obligations on an employer are not excused by the size of the employer or the nature of the industry within which they operate. In this case, the need for specific deterrence in my view is low, given the one off nature of the contravention and my acceptance of the Respondent’s evidence that there was no deliberate intention to avoid the obligations of the Award.

2. There is a need for employers, generally however, to be aware of their obligations and the limitations on their capacity to ‘contract out’ of these obligations.

Appropriate Penalty

1. The Court needs to consider all of the circumstances of the matter and the issues of proportionality in determining what is an appropriate penalty. 

2. The Applicant urges the Court to impose a penalty of $30,000.00 on the Respondent. For their part, the Respondent submits that a penalty of $2,000.00 would be appropriate.

3. Clearly, the contravention by the Respondent is not of the worst type and does not, in my view, justify a penalty at the very high end of the scale. On the other hand, the Respondent was prepared to offer a contract to the employee without checking if that contract met the basic standards of the Award and the Act, and to dismiss the Applicant when he rejected that contract. In my view, the conduct of the Respondent was serious.

4. I am satisfied that a penalty of between 30 and 35 percent of the maximum would be appropriate in all the circumstances of the case.  On that basis I fix the amount payable at $11,000.00.

5. Further, I am satisfied that the penalty should be paid to the Applicant in accordance with the provisions of s.546(3)(c) of the Act.

6. The Applicant is unrepresented. He has not sought compensation for any loss arising out of the dismissal. There is no evidence concerning such loss before the Court but I am satisfied that if any penalty is payable to him it will not present a windfall gain.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Judge Whelan

Date:  7 June 2013