Director of the Fair Work Building Industry Inspectorate v Buildpower Pty Ltd and Anor (No.2)

[2013] FCCA 2236

FEDERAL CIRCUIT COURT OF AUSTRALIA

DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE v BUILDPOWER PTY LTD & ANOR (No.2) [2013] FCCA 2236

Catchwords:

INDUSTRIAL LAW – Penalty – breaches of both the Workplace Relations Act 1996 (Cth) and the Fair Work Act 2009 (Cth) – applicable principles.

Legislation:

Fair Work Act 2009 (Cth), ss.539, 546, 712

Workplace Relations Act 1996 (Cth), ss.182(1), 226(1), 539, 719(4)

CPSU v Telstra Corporation Limited (2001) 108 IR 228
Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543
R v Thompson (1975) 11 SASR 217
Yardley v Betts (1979) 22 SASR 108

Applicant: DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE

First Respondent: BUILDPOWER PTY LTD

Second Respondent: MICHAEL CHARLES SLABBERT

File Number: PEG 286 of 2012

Judgment of: Judge Whelan

Hearing date: 16 May 2013

Date of Last Submission: 5 September 2013

Delivered at: Melbourne

Delivered on: 20 December 2013

REPRESENTATION

Counsel for the Applicant: Mr M McDonald

Solicitors for the Applicant: Fair Work Building and Construction

For the First Respondent: Mr M Slabbert, Director

Solicitors for the First Respondent: Second Respondent in person

ORDERS

THE COURT ORDERS THAT:

1. The First Respondent pay the following penalties:

   (i)Pursuant to s.719 of the Workplace Relations Act 1996 (Cth) (“the WR Act”), for the breach of s.182(1) of the WR Act, the sum of $9,900.00;

   (ii)Pursuant s.719 of the Workplace Relations Act 1996 (Cth) (“the WR Act”), for the breach of s.226(1) of the WR Act, the sum of $9,900.00; and

   (iii)Pursuant to s.546 of the Fair Work Act 2009 (Cth) (“the FW Act”) for the breach of s.712 of the FW Act, the sum of $13,200.00

   equalling a total of $33,000.00 to be paid to the Applicant within

   
   

   28 days.

2. The Second Respondent pay the following penalties:

   (i)Pursuant to s.719 of the Workplace Relations Act 1996 (Cth) (“the WR Act”), for the breach of s.182(1) of the WR Act, the sum of $1,980.00;

   (ii)Pursuant s.719 of the Workplace Relations Act 1996 (Cth) (“the WR Act”), for the breach of s.226(1) of the WR Act, the sum of $1,980.00; and

   (iii)Pursuant to s.546 of the Fair Work Act 2009 (Cth) (“the FW Act”) for the breach of s.712 of the FW Act, the sum of $2,640.00

   equalling a total of $6,600.00 to be paid to the Applicant within

   
   

   28 days.

3. There be no order as to costs.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT PERTH

PEG 286 of 2012

DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE

Applicant

And

BUILDPOWER PTY LTD

First Respondent

MICHAEL CHARLES SLABBERT

Second Respondent

REASONS FOR JUDGMENT

Background

1. In a judgment issued on 9 August 2013,[1] the Court found that the

   
   

   First Respondent, BUILDPOWER PTY LTD (“the First Respondent”) and Mr MICHAEL CHARLES SLABBERT (“the Second Respondent”) (collectively “the Respondents”) had contravened ss.182(1) and ss.226(1) of the Workplace Relations Act 1996 (Cth) (“the WR Act”) and s.712 of the Fair Work Act 2009 (Cth) (“the FW Act”).

   [1] Director of the Fair Work Building Industry Inspectorate v Buildpower Pty Ltd & Anor [2013] FCCA 1037.

2. Section 182 and ss.226(1) of the WR Act are civil penalty provisions pursuant to ss.719(4) of the WR Act and s.712 of the FW Act is a civil penalty provision pursuant to s.539 of the WR Act. At the relevant time, the maximum penalty for each contravention was $33,000.00 for a company and $6,600.00 for an individual.

3. The purpose of s.182 of the WR Act, as part of a series of provisions, was to ensure that employees had access to a set of minimum wages and conditions guaranteed by the WR Act. The purpose of ss.226(1) of the WR Act was to prevent employees from being directed to work unreasonable hours, based on a standard working week of 38 hours.

4. The purpose of s.712 of the FW Act is to ensure that Fair Work Inspectors charged with investigating suspected contraventions of the FW Act are able to access the information necessary to ensure compliance with the provisions of the Act.

5. These provisions are all part of a legislative scheme designed to provide that employees are able to enjoy the legislated minimum employment standards and that employers are aware of and comply with those standards.

The applicable principles

1. The factors the Court should take into account in determining an appropriate penalty for contravention of the WR Act and the FW Act 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.

The nature and extent of the conduct

1. Mr FLORANTE ALCANTARA (“Mr Alcantara”) was employed by the First Respondent from 24 February 2007 to 12 February 2009. The breaches of ss.226(1) of the WR Act occurred predominantly in the earlier part of the employment. The Second Respondent says that this was because Mr Alcantara, at the beginning, wanted to work a lot of hours in order to send money home to the Philippines. Later on, as

   
   

   Mr Alcantara became more integrated into a community of other Filipino s.457 visa holders, he became less keen.

2. It is equally as plausible that, as Mr Alcantara became more integrated into the community, he became more aware of his rights as an employee and less keen to work long hours; or that as the business became affected by the global financial crisis (“the GFC”), the Second Respondent had less need for Mr Alcantara to work excessive hours.

The circumstances in which the conduct took place

1. Mr Alcantara was a s.457 visa holder. He was not well versed in the English language. Initially, Mr Alcantara was dependent on the

   
   

   First Respondent for accommodation and for his transport to and from work. Mr Alcantara was not familiar with Australian employment conditions when he signed a contract of employment with the First Respondent in the Philippines.

2. The First Respondent is a small business. The Second Respondent says that both he, personally, and the First Respondent relied upon the Migration Agent who drafted the contract under which

   
   

   Mr Alcantara was employed and the Australian Department of Immigration that approved the s.457 visa after seeing the contract. The Second Respondent understood from media reports that it was the policy of the Australian Government to allow companies and individuals to enter into contracts outside of the award system.

3. Neither the First nor Second Respondent made submissions with respect to the circumstances under which the breach of s.712 of the FW Act occurred.

The nature and the extent of any loss

1. The employment of Mr Alcantara terminated in February 2009. He was not paid his outstanding entitlements determined by the Court to be $2,947.41.[2] Mr Alcantara has still not, so far as the Court is aware, been paid that amount.

   [2] Director of the Fair Work Building Industry Inspectorate v Buildpower Pty Ltd & Anor [2013] FCCA 1037 at p.3.

Previous conduct

1. The Applicant submits:

   On 8 October 2010, in proceedings PEG64 of 2010, Buildpower was ordered by Federal Magistrate Lucev to pay a civil penalty of $4,400 for contravention of regulation 3.42(4) of the Fair Work Regulations 2009 (Cth) (FW Regs).

   In that case, Mr Slabbert appeared as representative for Buildpower.

   The Court held that Buildpower had failed to provide the CFMEU (who represented Mr Alcantara) with copies of employment records for Mr Alcantara and another employee of Buildpower.

   The CFMEU had requested the employment records from Buildpower on 7 April 2010 in order to investigate a possible underpayment of wages.

   Court proceedings were issued by the CFMEU on 28 May 2010. On 30 August 2010, the Federal Magistrates Court found Buildpower liable for breaching regulation 3.42(4) of the

   
   

   FW Regs. The employment records of Mr Alcantara were only produced by Buildpower on 14 September 2010.

   The Court found that there had been a “deliberate defiance of the provisions of the FW Regulations”. Further “that deliberate defiance was effected through Mr Slabbert, one of the Buildpower’s then two directors, who was, on the evidence, Buildpower’s guiding mind and most senior management person. Further, the contraventions occurred in circumstances where Buildpower had a system in place to facilitate compliance with a request to produce records”.

   The Court found that Mr Slabbert’s actions hindered the inquiry being undertaken by the CFMEU on behalf of the workers into possible underpayment.[3]

   [3] Applicant’s Outline of  Submissions on Penalty filed 22 August 2013,  pp.6-7 at paras.41-47.

Whether or not the breaches were deliberate

1. The Respondents submit that there was no intention to breach the provisions of the WR Act. The Respondents also submit that they were entitled to expect that the Department of Immigration would have ensured that any contract entered into by a s.457 visa holder complied with Australian law.

2. The Applicant submits that the Second Respondent had been aware, as far back as 8 June 2012, that it was alleged that Mr Alcantara had not been paid his full entitlements. The Second Respondent knew that the Applicant had served a s.712 Notice to Produce on the

   
   

   First Respondent on 23 August 2012, and took responsibility for responding to the Notice. The Second Respondent was well aware that neither he nor the First Respondent had complied with the notice.

Whether senior management was involved

1. The Second Respondent was the Director of the First Respondent and found to have been involved in the contraventions.

Whether there has been any contrition or corrective action

1. The Respondents have never admitted liability. The Respondents have consistently blamed either:

   ·The Department of Immigration; or

   ·The difficulties of being involved in the construction industry; or

   ·The uncertainties of the GFC,

   for the circumstances that led to the contraventions.

   The Respondents have not sought to pay Mr Alcantara the amount owed to him even after Orders were made by the Court.

The co-operation of the Respondents

1. The Respondents have not co-operated with the Applicant in the investigation. They failed to provide documents when requested or in response to the Notice to Produce. The Respondents have not responded to invitations by the Applicant to discuss possible penalties.

The need to ensure compliance with minimum standards

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

2. This is particularly the case with vulnerable employees, such as

   
   

   s.457 visa holders who are dependent on their employer for the continuation of their visa. As with Mr Alcantara, such employees may not have a very good command of the English language and have little knowledge of Australian employment law.

The need for general and specific deterrence

1. The Applicant submitted the following with respect to deterrence:

   The role of general deterrence in determining the appropriate penalty is important. The observations of Lander J in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543, [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 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 will not operate to deter others from contravening the section. However, 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 at 231 where Finkelstein J said:

   “. . . 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 act as a warning to others not to engage in similar conduct.”[4]

   [4] Applicant’s Outline of Submissions on Penalty filed 22 August 2013, pp.7-8 at paras.53-54.

2. The Applicant submits that general deterrence has a special role in this case, and penalties should be meaningful in order to deter other small or medium business operators from committing similar contraventions.

3. The Respondents submit that the First Respondent is not currently trading and the Second Respondent submits that he is currently unemployed.

4. The obligations on an employer are not excused by the size of the employer or the nature of the industry within which an employer operates. There is a need for employers, generally, to be aware of their legal obligations and the limitations on their capacity to ‘contract out’ of those obligations. It is not adequate to rely on what one reads in the press.

Appropriate penalty

1. The Applicant proposes that a penalty of 40% for the contraventions of s.712 of the FW Act and 30% for each of the contraventions of the WR Act be imposed. This would equate to the following.

   First Respondent:

   ·$9,900.00 for contravention of ss.182(1) of the WR Act.

   ·$9,900.00 for contravention of ss.226(12) of the WR Act.

   ·$13,200.00 for contravention of s.712 of the FW Act.

   Second Respondent:

   ·$1,980.00 for contravention of ss.182(1) of the WR Act.

   ·$1,980.00 for contravention of ss.226(1) of the WR Act.

   ·$2,640.00 for contravention of s.712 of the FW Act.

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

3. In this matter, I consider the extreme vulnerability of the employee and the failure of the employer to co-operate in the investigation to be significant factors. The Second Respondent’s failure to take responsibility as the ‘guiding mind’ of the First Respondent for failing to comply with the legal requirements of being an employer is also a matter to which I give weight.

4. In all the circumstances I am satisfied that the penalties proposed by the Applicant are appropriate, and not oppressive.

5. The Court therefore orders that the First Respondent pay the following penalties:

   ·$9,900.00 for contravention of ss.182(1) of the WR Act;

   ·$9,900.00 for contravention of ss.226(12) of the WR Act; and

   ·$13,200.00 for contravention of s.712 of the FW Act,

   equalling a total amount of $33,000.00.

6. The Second Respondent pay the following penalties:

   ·$1,980.00 for contravention of ss.182(1) of the WR Act;

   ·$1,980.00 for contravention of ss.226(1) of the WR Act; and

   ·$2,640.00 for contravention of s.712 of the FW Act,

   equalling a total amount of $6,600.00.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Judge Whelan

Date:  20 December 2013