Ertekin v Euro Natural Stone Pty Ltd
[2021] FCCA 512
•18 March 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Ertekin v Euro Natural Stone Pty Ltd [2021] FCCA 512
File number(s): SYG 1571 of 2020 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 18 March 2021 Catchwords: PRACTICE AND PROCEDURE – Industrial Law – application for default judgment based on statement of claim alleging contraventions of provisions of Fair Work Act2009 (Cth) – whether on the face of statement of claim applicant has established an entitlement for declaratory relief and other relief including orders for the payment of pecuniary penalties – declarations and orders made including orders for the payment of pecuniary penalties. Legislation: Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 44(1), 44(2), 61(3), 90(2), 96, 117, 323(1), 340(1), 341(1)(a), 341(1)(c)(ii), 342(1), 357, 360, 361(1), 539(1), 545, 546(1), 546(2), 546(3)(c), 547(2), 550(1), 550(2), 557(1), 557A
Federal Circuit Court Act 1999 (Cth) ss 76(2), 76(3),
Federal Circuit Court Rules 2001 (Cth) rr 1.05, 13.03.A(2), 13.03B(2), 13.03C(2)
Federal Court Rules 1979 (Cth) O 35A, r 3(2)(c)
Judiciary Act 1903 (Cth) s 79(1)
Long Service Leave Act 1955 (NSW) ss 4(1), 4(5), 12
Cases cited: Australasian Performing Right Association Limited v Escape Bar & Night Club Pty Limited & Anor [2017] FCCA 2690
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (the BKH Contractors Case) (No 2) [2018] FCA 1563
Australian Competition and Consumer Commission v Dataline.Net.Au Pty Limited [2006] FCA 1427
Australian Licenced Aircraft Engineers Association v International Aviations Service Assistance Pty Ltd [2011] FCA 333
Australian Securities and Investments Commission v Edensor Nominees Pty Ltd [2001] HCA 1
Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Visy Packaging Pty Ltd (No 3) [2013] FCA 525
Barclay v Board of Bendigo Regional Institute of Technical and Further Education [2010] FCA 284; (2010) 193 IR 251
Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082
Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; (2012) 86 ALJR 1044
Construction, Forestry, Mining and Energy Union v Anglo Coal (Dawson Services) Pty Ltd [2015] FCAFC 157
Cummins South Pacific Pty Ltd v Keenan [2020] FCAFC 204
Director of The Fair Work Building Industry Inspectorate v Baulderstone Pty Ltd & Ors [2014] FCCA 721
Director of the Fair Work Building Industry Inspectorate v Serdar Tunc & Anor [2013] FCCA 438
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301
Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor (No.3) [2019] FCCA 1756
Kelly v Fitzpatrick [2007] FCA 1080
Macquarie Bank Limited v Seagle [2005] FCA 1239
Macquarie Bank Limited v Seagle [2008] FCA 1417
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
PIA Mortgage Services Pty Ltd v King [2020] FCAFC 15
Phonographic Performance Ltd v Maitra (1998) 41 IPR 225
Rathner, in the matter of Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626
Rizeq v Western Australia [2017] HCA 23
Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4
Shea v TRUenergy Services Pty Ltd (No 6) [2014] FCA 271
Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227
Turnbull v Symantec (Australia) Pty Ltd [2013] FCCA 1771
Tzovaras v Jeandin [2014] FCCA 2039
Number of paragraphs: 91 Date of hearing: 9 March 2021 Place: Sydney Solicitor for the Applicant: Mr D W Murdock of MurdockCheng Legal Practice, by telephone First Respondent: No appearance by the First Respondent Second Respondent: No appearance by the Second Respondent ORDERS
SYG 1571 of 2020 BETWEEN: EMIN BURAK ERTEKIN
Applicant
AND: EURO NATURAL STONE PTY LTD ACN 162 935 122
First Respondent
CHRISTOPHER JARRET
Second Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
18 MARCH 2021
THE COURT DECLARES THAT:
1.The first respondent contravened s 340(1) of the Fair Work Act 2009 (Cth) (FW Act) by sending to the applicant on 25 February 2020 an email purporting to accept a resignation by the applicant in circumstances where the applicant did not resign from his employment.
2.The first respondent contravened s 323(1) of the FW Act by failing to pay in full the salary that was due to the applicant for work the applicant performed in the period from 3 February 2020 to 25 February 2020.
3.The first respondent contravened s 44(1) of the FW Act by failing to pay to the applicant, contrary to s 90(2) of the FW Act, $16,712.80, being the amount payable for annual leave that had accrued to the applicant at the time the first respondent dismissed the applicant but which the applicant had not taken.
4.The first respondent contravened s 44(1) of the FW Act by purporting to dismiss the applicant from his employment without, contrary to s 117(2) of the FW Act, either giving the applicant four weeks’ notice or paying to the applicant four weeks salary in lieu of such notice.
5.The second respondent was within the meaning of s 550(2) of the FW Act involved in each of the first respondent’s contraventions identified in declarations 1, 2, 3, and 4 and, because of s 550(1) is taken to have contravened each of s 340(1), s 44(1), and s 323(1) of the FW Act.
THE COURT ORDERS THAT:
6.Pursuant to s 546(1) of the FW Act the first respondent pay pecuniary penalties in the sum of $69,300 for the first respondent’s contraventions of s 340(1), s 44(1), and s 323(1) of the FW Act identified in declarations 1, 2, 3, and 4.
7.Pursuant to s 546(3)(c) of the FW Act the first respondent pay the pecuniary penalties referred to in order 6 to the applicant within 28 days after the day on which these orders are pronounced.
8.Pursuant to s 546(1) of the FW Act the second respondent pay pecuniary penalties in the sum of $16,380 for the contraventions of s 340(1), s 44(1), and s 323(1) of the FW Act identified in declaration 5.
9.Pursuant to s 546(3)(c) of the FW Act the second respondent pay the pecuniary penalties referred to in order 8 to the applicant within 28 days after the day on which these orders are pronounced.
10.There be judgment in the sum of $77,160.82 against the first respondent.
11.There be judgment in the sum of $62,426.91 against the second respondent.
THE COURT NOTES THAT:
12.In relation to the judgments ordered referred to in orders 10 and 11 the applicant will not be entitled to recover from the first and second respondents in the aggregate an amount that exceeds $77,160.82 and any interest that may become payable on the judgments.
REASONS FOR JUDGMENT
INTRODUCTION
The applicant, Mr Ertekin, applies under r 13.03B(2) of the Federal Circuit Court Rules 2001 (Cth) (FCC Rules) for default judgment against the respondents, Euro Natural Stone Pty Ltd (ENS) and its director, Mr Jarret, in a proceeding Mr Ertekin has brought under the Fair Work Act 2009 (Cth) (FW Act).
Mr Ertekin claims ENS contravened s 340(1) of the FW Act by dismissing him from his employment. Mr Ertekin also claims ENS contravened s 323(1) of the FW Act by failing to pay, in full, salary that had become due to Mr Ertekin, and ENS contravened s 44(1) of the FW Act by terminating Mr Ertekin’s employment without giving him the notice provided for by s 117(3) of the FW Act or paying him money in lieu of notice, and by failing to pay to Mr Ertekin, contrary to s 90(2) of the FW Act, annual leave that had accrued but which he had not taken. Mr Ertekin also claims that Mr Jarret was, within the meaning of s 550(2) of the FW Act, a person involved in ENS’s contraventions of these provisions of the FW Act and, therefore, is taken to have contravened those provisions.
Mr Ertekin makes two further claims, and these do not arise under the FW Act. First, Mr Ertekin claims damages against ENS for breach of contract. Mr Ertekin claims that his contract contained an implied term that neither party could terminate it without giving reasonable notice, and ENS breached that term by purporting to dismiss Mr Ertekin from his employment without giving any notice. Second, Mr Ertekin claims ENS failed to pay to Mr Ertekin an amount that became due to him under the Long Service Leave Act 1955 (NSW) (LSL Act).
NATURE AND SCOPE OF R 13.03B(2) OF THE FCC RULES
Subrule 13.03B(2) of the FCC Rules applies to a respondent who “is in default”. Under r 13.03A(2) a respondent is in default if the respondent has not satisfied the applicant’s claims, and the respondent has failed to do one or more of the things identified in r 13.03A(2)(b) of the FCC Rules. The things identified in r 13.03A(2)(b) that are relevant to the application before me are the failure to file a response or defence before the time for doing so has expired, and the failure to defend the proceedings with due diligence. Also relevant is r 13.03C(2) of the FCC Rules which provides that the Court may make an order of the kind mentioned in r 13.03B(1), (2) or (4), if a party to a proceeding is absent from a hearing.
When a respondent is in default, or when a respondent is absent from a hearing, the Court may make one of the orders set out in r 13.03B(2) of the FCC Rules. Relevant to the application before me is r 13.03B(2)(c) which provides that the Court may:
if the proceeding was commenced by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings – give judgment against the respondent for the relief that:
(i) the applicant appears entitled to on the statement of claim; and
(ii) the Court is satisfied it has power to grant . . .
There are a number of matters to note about r 13.03B(2)(c) of the FCC Rules.
(a)First, r 13.03B(2)(c) of the FCC Rules “does not require proof of the claim by evidence, but only requires that – on the face of the statement of claim – there is a claim for the relief sought”.[1]
(b)Second, before the Court may make an order under r 13.03B(2)(c) of the FCC Rules it must be satisfied that the document which the applicant has filed with the application is in fact a “statement of claim”. A statement of claim is a pleading, which means it must comply with the rules of pleading.[2]
(c)Third, it follows from (b) that the statement of claim must plead at least one reasonable cause of action that supports the granting of the relief the applicant seeks in the application. More particularly, “each element of the relevant civil wrong” of which the applicant complains must be “properly and discretely pleaded in the statement of claim”.[3]
(d)Fourth, although r 13.03B(2)(c) of the FCC Rules does not require proof of the claim by evidence, it is permissible for the applicant to adduce evidence that is relevant to the relief sought.[4]
(e)Fifth, the Court retains a discretion not to make an order under r 13.03B(2)(c) of the FCC Rules even if the preconditions for making an order are satisfied.[5]
[1] Rathner, in the matter of Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626, at [9] (Gordon J) referring to O 35A r 3(2)(c) of the Federal Court Rules 1979 (Cth), being the equivalent to r 13B(2)(c) of the FCC Rules
[2] Under r 1.05 of the FCC Rules, the rules of the Federal Court Rules 2011 (Cth) (FC Rules) identified in Part 2 of Schedule 3 to the FCC Rules apply, with necessary changes, to general federal law proceedings. The FC Rules there identified include the rules of pleading.
[3] Macquarie Bank Limited v Seagle [2005] FCA 1239, at [24] (Conti J); Macquarie Bank Limited v Seagle [2008] FCA 1417, at [20] (Jagot J)
[4] Phonographic Performance Ltd v Maitra (1998) 41 IPR 225, at page 230; Australian Competition and Consumer Commission v Dataline.Net.Au Pty Limited [2006] FCA 1427, at [50] and [51]
[5] Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227, at [20]
ARE THE RESPONDENTS IN DEFAULT?
There is no question the respondents are in default. The respondents have not satisfied Mr Ertekin’s claims; and the respondents have failed to file a response, and they have failed to file a defence by the times provided for by the orders Judge Altobelli made on 21 September 2020 and 18 November 2020, and by the time provided by the orders I made on 12 February 2021.
MR ERTEKIN’S PLEADED CASE, CLAIMS FOR RELIEF, AND EVIDENCE
In his statement of claim Mr Ertekin alleges the following facts.
Mr Ertekin commenced employment with ENS on about 2 February 2015. In about July 2019 it was agreed that with effect from September 2019 Mr Ertekin would act in the capacity of general manager, and he would be paid a salary of $167,128 per annum.[6] It is not alleged that this salary was agreed to be net of any superannuation; and I will proceed on the basis that the agreed salary of $167,128 was inclusive of superannuation. (In his affidavit made on 7 February 2021, Mr Ertekin deposes that it was agreed he would be paid a salary of $164,000 plus superannuation.)
[6] Statement of claim, [6]
The statement of claim does not allege the salary or wage it was agreed Mr Ertekin would be paid, or the role he was engaged to perform. In his affidavit Mr Ertekin deposes it was agreed he would be paid at the hourly rate of $18. Mr Ertekin, however, has annexed weekly payslips for some of the weeks after 15 July 2019. There is a payslip for the week commencing 15 July 2019 that shows Mr Ertekin earned $2,656 at the hourly rate of $66.40. Payslips for weeks after 16 September 2019 show a weekly salary of $3,214 at the hourly rate of $80.35.
It was an implied term of Mr Ertekin’s contract of employment that neither party could terminate it without giving the other party reasonable notice or payment in lieu of reasonable notice (Reasonable Notice Term).[7]
[7] Statement of claim, [7]
In about February 2020 ENS proposed that the production, sales, and marketing activities would be removed from Mr Ertekin’s responsibilities, and he would continue with administrative responsibilities (restructure).[8]
[8] Statement of claim, [8]
In about February 2020 ENS unilaterally reduced Mr Ertekin’s salary to $115,960 per annum.[9]
[9] Statement of claim, [9]
On 12 February 2020 Mr Ertekin commenced a period of absence from work due to his being unfit for work (sick leave).[10] On 10 February 2020 Mr Ertekin obtained a medical certificate certifying his unfitness for work, and on 11 February 2020 Mr Ertekin provided the medical certificate by email to ENS.[11]
[10] Statement of claim, [10]
[11] Statement of claim, [10], [11]
On 12 February 2020 Mr Jarret sent to Mr Ertekin a text message stating: “Are you feeling better today princess?”[12] Mr Ertekin responded by email, part of which included the following:[13]
As you know, I am not happy with the way that I have recently been treated by Euro Natural Stone Pty Ltd (ENS). In particular, I object to:
•The unilateral decision to remove production and sales and marking [sic] responsibilities from me, leaving me only with responsibility for administrative matters;
•The unilateral decision to cut my salary from $2,200 per week net to $1,600 per week net. In gross terms, this is a reduction from $167,128 per annum to $115,960 per annum.
Either of these changes alone would be sufficient to constitute a repudiation of my contract of employment and I currently reserve all my rights whether to accept/reject the repudiation.
[12] Statement of claim, [12]
[13] Statement of claim, [14]
On 24 February 2020 the applicant met with Mr Jarret and complained orally about the unilateral reduction in Mr Ertekin’s salary and about the restructure.[14]
[14] Statement of claim, [16]
On 25 February 2020 Mr Jarret sent Mr Ertekin the following email:[15]
I am writing in response to your email to me dated 24th February, 2020.
I will respond to the matters raised in the same order as your email and address the matters raised by you that we are prepared to consider. We are not prepared to consider the other matters raised in your email:-
1.Salary Reduction- this will be reversed and any moneys owing to you will be credited to your bank account. We are currently calculating this backpay. We will advise the amount calculated as owing to you by the end of this week,
2.Accrued Leave- we are currently calculating any moneys owing to you for any untaken annual leave and the amount of any such leave will be credited to your bank account calculated on the applicable salary at the time of any unused leave accumulating. Again here we will advise the amount calculated by the end of this week,
3.We will ensure any superannuation payments owing to you are brought up to date and advise you accordingly,
4.We accept your resignations from Euro Natural Stone Pty Ltd with immediate effect. The necessary forms will be completed and filed with ASIC.
5.Any items provided to you by way of motor vehicles, telephones, SIM cards, access passes, credit cards and any other items that fall under this category are to returned [sic] to the company immediately.
[15] Statement of claim, [18]
On 26 February 2020 Mr Ertekin sent to Mr Jarrett the following text message:[16]
I am perplexed by your email. I have not resigned from Euro Natural Stone and this is in fact a termination of employment at my employer’s initiative. I have passed your email to my lawyer and you can expect some correspondence from her in the next day or two.
[16] Statement of claim, [19]
Mr Jarret’s email of 25 February 2020 constituted the dismissal of Mr Ertekin from his employment.[17]
[17] Statement of claim, [21]
For the three-week period from 3 February to 23 February 2020 Mr Ertekin was paid $6,690 when he should have been paid $9,642; Mr Ertekin was therefore underpaid $2,952.[18] On 24 February 2020 ENS paid to Mr Ertekin $1,800 on account of the underpayment of his salary. In addition, Mr Ertekin did not receive salary for 24 and 25 February 2020. The statement of claim alleges there was “an underpayment of $1,285.60 gross”.[19]
[18] Statement of claim, [22]-[24]
[19] Statement of claim, [26]
ENS dismissed Mr Ertekin from his employment because he had taken sick leave, and also because Mr Ertekin had complained about the unilateral reduction of his salary and the restructure.
ENS dismissed Mr Ertekin from his employment without giving him reasonable notice,[20] and without paying him an amount in lieu of notice under s 117(2) of the FW Act.[21] ENS did not pay Mr Ertekin any other amount.[22]
[20] Statement of claim, [33]
[21] Statement of claim, [35]
[22] Statement of claim, [41], [45]
At the time ENS dismissed Mr Ertekin from his employment, Mr Ertekin had accrued 208 hours’ worth of annual leave which he had not taken but which, had he taken, he would have been paid $16,712.80. ENS has not paid to Mr Ertekin any amount for accrued but untaken annual leave.[23]
[23] Statement of claim, [36]-[42]
Mr Jarret sent the email by which ENS terminated Mr Ertekin’s employment. At that time, and at all other relevant times, Mr Jarret was the sole director and controller of ENS; he was responsible for the carriage, control, and conduct of ENS; and he was responsible for maintaining employment records and ensuring ENS complied with its obligations under the FW Act and relevant industrial instruments.[24]
[24] Statement of claim, [3]
On the basis of these alleged facts, Mr Ertekin relies on the following causes of action.
(a)A cause of action against ENS based on ENS’s contravention of s 340(1) of the FW Act. Mr Ertekin claims that his complaints about the unilateral reduction of his salary and restructure constituted the exercise by him of a workplace right within the meaning of s 341(1)(c)(ii) of the FW Act; and that his taking sick leave was the exercise of an entitlement to the benefit of a workplace law and, for that reason, constituted the exercise by him of a workplace right within the meaning of s 341(1)(a) of the FW Act. Mr Ertekin further claims that ENS terminated his employment because he exercised those workplace rights.
(b)A cause of action against ENS based on ENS’s contravention of s 323(1) of the FW Act, that contravention consisting of ENS’s not paying to Mr Ertekin in full the amount of salary he was owed for the work he performed from 3 February 2020 to 25 February 2020. Mr Ertekin claims he was underpaid $1,285.60
(c)A cause of action against ENS based on ENS’s contravention of s 44(1) of the FW Act, that contravention consisting of ENS, contrary to s 117(2) of the FW Act (being a National Employment Standard within the meaning of s 61(3) of the FW Act (NES)), terminating Mr Ertekin’s employment without giving Mr Ertekin notice for the period worked out under s 117(3), being 4 weeks, or paying to Mr Ertekin an amount equal to 4 weeks of his salary in lieu of such notice, that amount being $12,856.
(d)A cause of action against ENS based on ENS’s contravention of s 44(1) of the FW Act, such contravention consisting of ENS, contrary to s 90(2) of the FW Act (being a NES), failing to pay to Mr Ertekin $16,712.80 for annual leave that had accrued to Mr Ertekin but which he had not taken.
(e)Causes of action against Mr Jarret based on his being a person involved in each of ENS’s contraventions of s 44(1), s 323(1), and s 340(1) of the FW Act, and therefore based on Mr Jarret himself having contravened each of s 44(1), s 323(1), and s 340(1) of the FW Act.
(f)A cause of action for damages against ENS for breach of the Reasonable Notice Term.
(g)A cause of action against ENS under s 12 of the LSL Act for ENS’s failure to pay for pro-rata long service leave of 4.3899 weeks which, under s 4(5)(a) of the LSL Act, was deemed to have commenced on the termination of Mr Ertekin’s services.
Mr Ertekin claims the following compensation under s 545(2)(b) of the FW Act in relation to each of ENS’s and Mr Jarret’s contraventions of the FW Act:
Contravening conduct
Provisions
Compensation sought
Dismissal from employment
s 340(1)
$167,128 (12 months’ salary)
Distress, hurt, and humiliation
s 340(1)
$10,000-$20,000
Underpayment
s 323(1)
$1,285.60
Dismissal without notice or payment in lieu
s 44(1); s 117
$12,856 (4 weeks salary including 9.5% super)
Non-payment of accrued but untaken leave
s 44(1); s 90(2)
$16,712.80
In addition to orders for compensation under s 545(3) of the FW Act, Mr Ertekin claims declarations to the effect that by engaging in the conduct referred to in column 1 of the above table ENS and Mr Jarret had contravened the provisions referred to in column 2 of the table.
Mr Ertekin also claims damages for $167,128 against ENS (but not against Mr Jarret) for breach of the Reasonable Notice Term. That claim is based on the contention that 1 year was reasonable notice for the termination of the employment contract. Finally, Mr Ertekin claims $14,109.14 against ENS under s 12 of the LSL Act.
CONTRAVENTION OF FW ACT?
In this section of my reasons I consider whether the facts alleged in the statement of claim establish contraventions of the FW Act by ENS and Mr Jarret.
Subsection 340(1) of the FW Act
Subsection 340(1) of the FW Act provides:
A person must not take adverse action against another person:
(a) because the other person:
(i) has a workplace right; or
(ii) has, or has not, exercised a workplace right; or
(iii)proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or
(b)to prevent the exercise of a workplace right by the other person.
Three matters must be established before a person will be held to have contravened s 340(1) of the FW Act. First, the person has taken “adverse action against another person”. That expression is defined in a table contained in s 342(1) of the FW Act which identifies in one column the persons by whom and against whom adverse action must be taken, and, in another column, the conduct that, if taken by and against such persons, constitutes adverse action. For the purposes of these proceedings, the relevant person who must take the adverse action is “an employer”, and the person against whom the employer takes the adverse action must be “an employee”; and the employer takes “adverse action” if the employer, among other things, “dismisses the employee”. The expression “dismisses the employee” means the repudiation by the employer of the employment contract, whether or not the employee accepts the repudiation.[25]
[25] Director of The Fair Work Building Industry Inspectorate v Baulderstone Pty Ltd & Ors [2014] FCCA 721, at [29]
The second matter that must be established is that the employee against whom the employer has taken adverse action has, among other things, exercised a “workplace right”. Under s 341(1)(c)(ii) of the FW Act a person has a “workplace right” if, among other things, the person, being an employee, “is able to make a complaint . . . in relation to his or her employment”. The ordinary meaning of the word “complaint” is a statement expressing a grievance or a finding of fault; and an expression of grievance or accusation need not be factually correct, substantiated or ultimately made out in order to constitute a complaint within the meaning of s 341(1)(c)(ii) of the FW Act.[26]
[26] Shea v TRUenergy Services Pty Ltd (No 6) [2014] FCA 271, at [600]
There is an aspect of the construction of s 341(1)(c)(ii) of the FW Act to which I need to refer, and that relates to the words “is able”. There is controversy within the Federal Court about the proper construction of these words. In Cummins South Pacific Pty Ltd v Keenan,[27] all three justices of the Full Federal Court were of the view that all three justices in PIA Mortgage Services Pty Ltd v King[28] construed “is able” in s 341(1)(c)(ii) of the FW Act as requiring a complaint to be “underpinned by a right or entitlement to make it”.[29] In Cummins Bromberg and Mortimer JJ were of the view that that construction was incorrect, and said they would have refused to follow that construction if that would have been necessary to dispose of the appeal.[30] In PIA Mortgage Services, however, Rangiah and Charlesworth JJ held that an “employee is “able to complain” to his or her employer within s 341(1)(c)(ii) of the FW Act concerning the employer’s alleged breach of the contract of employment” and that the “source of that ability is the general law governing contracts of employment”.[31]
[27] Cummins South Pacific Pty Ltd v Keenan [2020] FCAFC 204
[28] PIA Mortgage Services Pty Ltd v King [2020] FCAFC 15
[29] Cummins South Pacific Pty Ltd v Keenan [2020] FCAFC 204, at [64] (Bromberg J), [209] (Mortimer J), [286] (Anastassiou J)
[30] Cummins South Pacific Pty Ltd v Keenan [2020] FCAFC 204, at [66] (Bromberg J), [209] (Mortimer J)
[31] PIA Mortgage Services Pty Ltd v King [2020] FCAFC 15, at [26]
The third matter that must be established is that the employer took the adverse action for a particular reason, or for reasons that included a particular reason.[32] That requirement arises from the presence of the word “because”;[33] s 340(1) of the FW Act prohibits a person from taking adverse action “because” a person has a “workplace right”, or “because” the person has exercised, or has not exercised, or proposes to exercise, or proposes not to exercise, such a right. Further, where the particular reason is one of a number of reasons for which the adverse action is taken, the particular reason must be “a “substantial and operative factor” as to constitute a “reason”, potentially amongst many reasons”,[34] or must be an “operative or immediate reason for the action”.[35]
[32] FW Act, s 360
[33] Director of The Fair Work Building Industry Inspectorate v Baulderstone Pty Ltd & Ors [2014] FCCA 721, at [20] relying on Barclay v Board of Bendigo Regional Institute of Technical and Further Education [2010] FCA 284; (2010) 193 IR 251, at 258 ([26]) (Tracey J)
[34] Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; (2012) 86 ALJR 1044, at 1066 ([127]) (Gummow and Hayne JJ)
[35] Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; (2012) 86 ALJR 1044, at 1068 ([140]) (Heydon J)
Relevant to determining whether in any given case a person has taken adverse action “because” of one or more of the matters specified in s 340(1) of the FW Act is s 361(1) of that Act. That subsection provides:
If:
(a)in an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or with a particular intent; and
(b)taking that action for that reason or with that intent would constitute a contravention of this Part;
it is presumed that the action was, or is being, taken for that reason or with that intent, unless the person proves otherwise.
In Construction, Forestry, Mining and Energy Union v Anglo Coal (Dawson Services) Pty Ltd, Jessup J (with whose reasons Rangiah J agreed), made the following observations about the effect and operation of s 361(1) of the FW Act:[36]
In the context of a provision such as ss 340 and 352, the effect of s 361 is to reverse the legal onus in relation to the reason or reasons for which the adverse action was taken. That is to say, at the end of the trial of fact, the question will be whether the respondent has established, on the civil standard, that the action taken was not taken for a reason, or for reasons which included a reason, proscribed by the legislation. That question is to be answered by reference to all of the evidence which bears upon it. Section 361 does not impose upon the respondent concerned the onus of calling any and every piece of evidence that might arguably influence the answer to the question of reasons or intent. The section is not, in other words, concerned to impose upon the respondent a continuing, unchanging, evidentiary onus with respect to that question.
In Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500, 516 [41], French CJ and Crennan J said that “the question of why an employer took adverse action against an employee is a question of fact arising from the operation of interdependent provisions of the [FW] Act.” Their Honours continued (248 CLR at 517 [45]):
This question is one of fact, which must be answered in the light of all the facts established in the proceeding. Generally, it will be extremely difficult to displace the statutory presumption in s 361 if no direct testimony is given by the decision-maker acting on behalf of the employer. [See, eg, General Motors-Holden’s Pty Ltd v Bowling (1976) 136 CLR 676 (note) …] Direct evidence of the reason why a decision-maker took adverse action, which may include positive evidence that the action was not taken for a prohibited reason, may be unreliable because of other contradictory evidence given by the decision-maker [See, eg, Pearce v WD Peacock & Co Ltd (1917) 23 CLR 199 at 208 per Isaacs J; at 211 per Higgins J.] or because other objective facts are proven which contradict the decision-maker’s evidence. However, direct testimony from the decision-maker which is accepted as reliable is capable of discharging the burden upon an employer even though an employee may be an officer or member of an industrial association and engage in industrial activity. [See, eg, Harrison v P & T Tube Mills Pty Ltd (2009) 188 IR 270 at 276 [31]-[33].]
In other words, whether the onus arising under s 361 has been discharged in a particular case will depend upon the assessment of all of the facts by the trier of fact, including, most importantly in the conventional case, his or her assessment of the evidence given by the decision‑maker acting on behalf of the employer.
[36] Construction, Forestry, Mining and Energy Union v Anglo Coal (Dawson Services) Pty Ltd [2015] FCAFC 157, at [27], [28]
Finally, I should note that s 361 of the FW Act does not apply to claims against persons alleged to have been involved in another person’s contraventions of a civil remedy provision.[37]
[37] Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Visy Packaging Pty Ltd (No 3) [2013] FCA 525, at [241] (Murphy J)
On the basis of the matters alleged in the statement of claim, I am satisfied of the following:
(a)Mr Ertekin’s email of 24 February 2020 to ENS by which he objected to the restructure and the unilateral reduction of his salary constituted the exercise by Mr Ertekin of his ability to complain about ENS’s breach of contract and, for that reason, constituted the exercise of a workplace right by him within the meaning of s 341(1)(c)(ii) of the FW Act.
(b)Mr Ertekin’s taking sick leave constituted the exercise of an entitlement to the benefit under a workplace law, namely, s 96 of the FW Act (which deals with the entitlement to be paid “personal/carer’s leave”) and, for that reason, constituted the exercise by him of a workplace right within the meaning of s 341(1)(a) of the FW Act.
(c)ENS’s email of 25 February 2020 constituted the dismissal by ENS of Mr Ertekin’s employment with ENS and, for that reason, constituted ENS’s taking adverse action against Mr Ertekin.
(d)Mr Ertekin alleges ENS dismissed him from his employment because he exercised the workplace rights in (a) and (b); and there is nothing in the statement of claim which alleges otherwise.
(e)Given (a)-(d), by sending the email of 25 February 2020 to Mr Ertekin ENS contravened s 340(1) of the FW Act.
(f)Mr Jarret sent the 25 February 2020 email in his capacity as director of ENS, and within his actual authority; and at the time he sent the email Mr Jarret knew Mr Ertekin made the complaints referred to in (a) and had taken the sick leave referred to in (b).
(g)Given the matters in (f), Mr Jarret sent the email on 25 February 2020 because Mr Ertekin made the complaint referred to in (a) and because he took the sick leave referred to in (b).
(h)Because of (f) and (g), Mr Jarret was, within the meaning of s 550(2) of the FW Act, involved in ENS’s contravention of s 340(1) of the FW Act and, because of s 550(1), is also taken to have contravened s 340(1) of the FW Act.
Underpayment – s 323(1) of the FW Act
Subsection 323(1) of the FW Act provides that an employer must, among other things, pay an employee amounts for work performed “in full”. By paying Mr Ertekin amounts that were $1,285.60 less than the amount he was entitled to receive for work performed in the period from 3 February 2020 to 25 February 2020, ENS contravened s 323(1) of the FW Act by not paying to Mr Ertekin in full the amount payable to him in relation to the performance of work.
Mr Jarret was the sole director and controller of ENS; he was the person responsible for maintaining ENS’s employment records and ensuring ENS complied with its obligations under the FW Act and relevant industrial instruments; and Mr Jarret, therefore, was the person responsible for ensuring that ENS paid to Mr Ertekin the amounts due to him for work performed. Given these matters, Mr Jarret knew that Mr Ertekin performed work for the period 3 February 2020 to 25 February 2020 and knew the amounts ENS was obliged to pay to Mr Ertekin for the work he performed, and he knew the amounts ENS in fact paid to Mr Ertekin. Mr Jarret, therefore, was, within the meaning of s 550(2) of the FW Act, involved in ENS’s contravention of s 323(1) of the FW Act and, because of s 550(1), is also taken to have contravened s 323(1) of the FW Act.
Dismissal without notice or payment in lieu of notice - s 117(2) and s 44(1) of FW Act
Section 117(2) of the FW Act provides that an employer must not terminate an employee’s employment unless the employer gives to the employee notice for the period worked out under s 117(3) of the FW Act, or, in lieu of notice, the employer pays to the employee at least the amount the employer would have been liable to pay to the employee during the period of the notice the employer would otherwise have been required to give.
ENS dismissed Mr Ertekin from his employment by email sent on 25 February 2020. ENS had employed Mr Ertekin since 2 February 2015. In those circumstances, under s 117(3) ENS was required to give Mr Ertekin four weeks’ notice or the equivalent of four weeks salary in lieu of notice. ENS did neither. It follows that ENS contravened s 117(2) of the FW Act. Given that s 117 of the FW Act is a NES, by contravening s 117(3) ENS contravened s 44(1) of the FW Act.
Mr Jarret was the sole director and controller of ENS. He was the person responsible for maintaining ENS’s employment records and ensuring ENS complied with its obligations under the FW Act and relevant industrial instruments; and Mr Jarret sent the email of 25 February 2020. Mr Jarret, therefore, knew that ENS dismissed Mr Ertekin without giving him any notice and without paying him any money in lieu of notice. Mr Jarret, therefore, was, within the meaning of s 550(2) of the FW Act, involved in ENS’s contravention of s 44(1) of the FW Act and, because of s 550(1), is also taken to have contravened s 44(1) of the FW Act.
Failure to pay accrued leave – s 90(2) and s 44(1) of the FW Act
Subsection 90(2) of the FW Act provides that if, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee an amount that would have been payable to the employee had the employee taken that period of leave.
At the time ENS dismissed Mr Ertekin from his employment, Mr Ertekin had accrued annual leave of 208 hours which he had not taken but which, had he taken, he would have been paid $16,712.80. ENS has not paid to Mr Ertekin any amount for accrued but untaken annual leave. ENS, therefore, contravened s 90(2) of the FW Act; and, given s 90(2) is a NES, by contravening s 90(2) of the FW Act ENS contravened s 44(2) of the FW Act.
Mr Jarret was the sole director and controller of ENS. He was the person responsible for maintaining ENS’s employment records and ensuring ENS complied with its obligations under the FW Act and relevant industrial instruments. Mr Jarret, therefore, knew Mr Ertekin had accrued but had not taken 208 hours’ worth of annual leave, and that ENS did not pay to Mr Ertekin the amount ENS would have paid to Mr Ertekin had he taken annual leave, that amount being $16,712.80. Mr Jarret, therefore, was within the meaning of s 550(2) of the FW Act involved in ENS’s contravention of s 44(1) of the FW Act and, because of s 550(1), is also taken to have contravened s 44(1) of the FW Act.
BREACH BY ENS OF REASONABLE NOTICE TERM
By sending the 25 February 2020 email ENS repudiated Mr Ertekin’s employment contract because it had incorrectly represented that Mr Ertekin had resigned when Mr Ertekin did not resign, and there is nothing that could have suggested to ENS that Mr Ertekin had resigned; and ENS treated the employment contract to be at an end. I find that Mr Ertekin’s text message of 26 February 2020 constituted an acceptance by him of ENS’s repudiation of the contract, and the contract of employment ended when ENS received Mr Ertekin’s text message. Thus, Mr Ertekin has a cause of action for damages for breach of contract.
CLAIM UNDER LSL ACT
In broad terms the LSL Act provides for the accrual of 2 months leave on an employee serving 10 years or a proportionate amount of leave once an employee performs 5 years of service. Paragraph (a) of s 4(5) of the LSL Act provides that, where the services of an employee who has accrued an entitlement to leave under the LSL Act are terminated (other than by death), the employee is “deemed to have entered upon the leave from the date of such termination and the employer shall forthwith pay to the worker in full the worker’s ordinary pay for the leave less any amount already paid to the worker in respect of that leave”.
Subsection 12(1) of the LSL Act is as follows:
Any worker may apply to the Local Court, or to the Supreme Court, for an order directing the employer to pay to the worker the full amount of any payment which has become due to the worker under this Act at any time during the period of 6 years immediately preceding the date of the application but not earlier than 2 years before the date of assent to the Long Service Leave (Amendment) Act 1980.
The Local Court or Supreme Court may make any order it thinks just in the matter and may award costs to either party, and assess the amount of such costs.
Subsection 12(1) of the LSL Act confers jurisdiction on the Local Court of New South Wales and on the Supreme Court of New South Wales. That, however, does not prevent this Court from exercising the jurisdiction s 12(1) of the LSL Act confers on those courts. Mr Ertekin’s claim under s 12(1) of the LSL Act arises out of the same substratum of facts as his claims under the FW Act and, for that reason, forms part of the one matter that arises under the FW Act that is before the Court. In those circumstances s 79(1) of the Judiciary Act 1903 (Cth) operates to apply s 12(1) of the LSL Act “as a source of rights and remedies in federal jurisdiction even though, on its own terms, that law identifies only the courts of the enacting State as the courts to provide those remedies”.[38]
[38] Australian Securities and Investments Commission v Edensor Nominees Pty Ltd [2001] HCA 1, at [68] (Gleeson CJ, Gaudron and Gummow JJ); and see generally Rizeq v Western Australia [2017] HCA 23
Mr Ertekin’s services ended on 25 February 2020. By that time he had served as an employee for at least 5 years. On the termination of his services, therefore, he is deemed to have entered upon leave for a proportionate amount of the leave provided for by s 4(1) of the LSL Act, that leave being 4.3899 weeks; and, under s 4(5)(a) of the LSL Act, ENS became liable to pay to Mr Ertekin his salary for the period of that leave. That amount is $14,109.14.
REMEDIES
I now consider the remedies to which Mr Ertekin is entitled.
Orders under s 545 of the FW Act
Subsection 545(1) of the FW Act provides that this Court may make an order the Court considers appropriate if it is satisfied that a person has contravened, or proposes to contravene, a “civil remedy provision”, being any of the provisions of the FW Act identified in s 539(1). Under s 545(2)(b) of the FW Act the Court may make an order “awarding compensation for loss that a person has suffered because of the contravention”.
Principles
To determine whether an applicant has suffered economic loss because of a contravention of a civil remedy provision of the FW Act, two sets of circumstances must be compared.[39] Where it is not alleged that an applicant failed to mitigate his or her loss, one set of circumstances is actual, and the other is hypothetical. The actual circumstances are those in which the applicant finds himself or herself at the date compensation is fixed or at some earlier appropriate date. The second, and hypothetical, circumstances are the financial position in which the applicant would have found himself or herself at the relevant time had the employer not contravened a civil remedy position. If, after these two positions are identified, the applicant’s actual financial position is less favourable than the hypothetical financial position, compensation will be fixed in an amount that reflects the difference between the two positions. That is, compensation will be fixed in such amount as will put the employee in, or substantially in, the position he or she would have been, had the employer not contravened a civil remedy provision.
[39] I substantially repeat here what I said in Turnbull v Symantec (Australia) Pty Ltd [2013] FCCA 1771, at [87], [88]
There will usually be little difficulty in determining an applicant’s actual financial position. That will be a matter of history, most of the traces of which will be captured in documents. It is another matter to determine the hypothetical position. Here, judgments must be made, often on the basis of incomplete evidence. That will usually give rise to a range of plausible hypothetical financial positions against which to compare the applicant’s actual financial position and, hence, a range of amounts that it may be reasonable to assess as compensation. Nevertheless, an applicant bears the onus of adducing evidence from which the court can rationally infer a relevant hypothetical position.
Compensation for breach of s 340(1) of the FW Act
On the evidence, which I accept, Mr Ertekin has not found alternative employment; and there is nothing to suggest Mr Ertekin has not done everything that it is reasonable for him to have done to find alternative employment. The question is what position he would have found himself had ENS not contravened s 340(1) of the FW Act.
Given the restructure, the inference is available to be drawn that ENS had no further need for Mr Ertekin. That means it is likely that ENS would have terminated Mr Ertekin’s contract of employment. In assessing damages, however, the assumption must be made that ENS would have done so by complying with the Reasonable Notice Term. That is, compensation should be assessed by reference to the period for which Mr Ertekin would have been employed, had ENS given notice in accordance with the Reasonable Notice Term, or by reference to the amount ENS would have paid to Mr Ertekin in lieu of such notice. That requires consideration of what would have constituted reasonable notice under the Reasonable Notice Term.
The principles governing the determination of reasonable notice have been usefully summarised in the following passage from a textbook on labour law (footnotes omitted):[40]
The principal purpose of notice is to enable the recipient of the notice sufficient time either to seek other similar employment or employ a replacement. The length of reasonable notice is assessed at the time the notice is given, by reference to five critical factors. First, the length of the service: the longer the service, the longer the notice required. Second, the employee’s age, which is particularly important factor for employees aged over 50. Third, the character of the employment: that is, the relative seniority of the position within the business, the responsibility attached to the position, whether the employment requires specialised qualifications, experience or technical skills, the employee’s remuneration and the nature of the engagement. The higher the status, the longer the period of notice that tends to be awarded. Fourth, the availability of similar employment or the availability of replacement labour. Longer notice will be justified when the circumstances or position of the employee make finding similar employment harder, such as when the employee has a peculiar or narrow skill set, or suffers from ill health, or needs to relocate to find employment, or there is high unemployment. The employer’s financial circumstances are not, however, relevant in determining the length of the notice.
[40] Creighton & Stewart’s Labour Law Sixth edition, The Federation Press 2016, at [22.20]
Mr Ertekin was employed for 5 years, and, according to the statement of claim, he occupied a senior position since around September 2019. The payslips after 15 July 2019 describe Mr Ertekin as “Associate Director”. That is a basis for inferring that at least by July 2019 Mr Ertekin had come to occupy a senior position within ENS. There is no allegation of fact, however, and no evidence, about the position Mr Ertekin held within ENS before July 2019, other than Mr Ertekin’s having deposed that he began at the hourly rate of $18. Mr Ertekin’s inability to find a similar position is a basis for inferring, and I do infer, that at the time ENS dismissed him from his employment, work that he had performed for ENS was not readily available from other employers. On the other hand, Mr Ertekin is relatively young, and that is a factor in favour of a shorter notice period. Weighing these matters, I am satisfied that 3 months was a reasonable notice period.
On the basis of this finding, the fair reflection of the loss Mr Ertekin suffered because of ENS’s contravention of s 340(1) of the FW Act is $41,782, which represents 3 months’ salary; and this is the amount for which ENS and Mr Jarret should be ordered to pay as compensation to Mr Ertekin for ENS’s and Mr Jarret’s contraventions of s 340(1) of the FW Act.
Compensation for breaches of s 323(1) and s 44(1) of the FW Act
ENS’s contraventions of s 323(1) and s 44(1) of the FW Act have resulted in ENS and Mr Jarret becoming liable to pay liquidated amounts to Mr Ertekin, namely, the $1,285 salary ENS failed to pay, in contravention of s 323(1); the 4 weeks salary of $12,856 ENS failed to pay in contravention of s 117(2) of the FW Act, and the accrued but untaken annual leave of $16,712.80 ENS failed to pay in contravention of s 90(2) of the FW Act. These amounts represent Mr Ertekin’s losses occasioned by ENS’s contraventions of s 323(1) and s 44(1) of the FW Act.
Compensation for distress, hurt, and humiliation
A compensatory order for distress, hurt, and humiliation is available under s.545 of the FW Act.[41] It can only be made, however, if the applicant has in fact suffered distress, hurt, and humiliation as a result of the contravention.
[41] Australian Licenced Aircraft Engineers Association v International Aviations Service Assistance Pty Ltd [2011] FCA 333 (Barker J)
Mr Ertekin relies on his affidavit in which he deposes that the termination of his employment caused him a lot of pain and other difficulties it is unnecessary to set out in these reasons.[42] I am not satisfied this evidence demonstrates distress, hurt, and humiliation that is attributable to ENS contravening s 340(1) of the FW Act. These are matters that arise from Mr Ertekin having been dismissed from his employment, not from ENS having dismissed Mr Ertekin from his employment in contravention of s 340(1) of the FW Act.
[42] Affidavit E B Ertekin 07.02.2020, [42]
Damages for breach of Reasonable Notice Term
I have already found ENS was required under the Reasonable Notice Term to give Mr Ertekin 3 months’ notice. That means that the measure of damages for ENS’s breach of the Reasonable Notice Term an amount equal to the salary Mr Ertekin would have earned had he remained employed for a further 3 months, that amount being $41,782.
Remedy under LSL Act
Subsection 12(1) of the LSL Act confers a right on Mr Ertekin to recover amounts payable under that Act. I have found that, on its dismissal of Mr Ertekin ENS became liable under s 4(5)(a) of the LSL Act to pay him $14,109.14.
Formulation of compensation orders
In framing the orders I should make to give effect to these conclusions, it is necessary to ensure there is no double recovery in relation to the one loss.[43] That will be achieved as follows:
[43] See Tzovaras v Jeandin [2014] FCCA 2039, at [52]-[57]
(a)Judgment should be ordered against ENS for $77,160, including interest (as calculated below), being the sum of the following amounts:
Amount Loss Source of liability $41,782 Not serving 3 months of employment contract or not being paid 3 months’ salary in lieu (includes not being paid 4 weeks in lieu; includes super) s 340(1) FW Act; s 117(3) FW Act; breach of Reasonable Notice Term $1,285 Underpayment for period 3 February 2020 to 25 February 2020 s 323(1) FW Act $16,712.80 Accrued but untaken annual leave s 90(2); s 44(1) FW Act $14,109.14 Pro rata long service leave s 4(5)(a) LSL Act $73,888.94 Loss before interest $3,271.88 Interest as calculated below for the period 1 March 2020 to 18 March 2020 s 547(2) FW Act; s 76(3) FCC Act $77,160.82 LOSS INCLUDING INTEREST
(b)Judgment should be entered against Mr Jarret for $62,426.91, including interest (as calculated below), being the sum of the following amounts:
Amount Loss Source of liability $41,782 Not serving 3 months of employment contract or not being paid 3 months’ salary in lieu (includes not being paid 4 weeks in lieu) s 340(1) FW Act; s 117(3) FW Act; breach of Reasonable Notice Term $1,285 Underpayment for period 3 February 2020 to 25 February 2020 s 323(1) FW Act $16,712.80 Accrued but untaken annual leave s 90(2); s 44(1) FW Act $59,779.80 Loss before interest $2,647.11 Interest as calculated below for the period 1 March 2020 to 18 March 2020 s 547(2) FW Act; s 76(3) FCC Act $62,426.91 LOSS INCLUDING INTEREST
(c)A notation will be made to the effect that Mr Ertekin will not be entitled to recover in the aggregate from ENS and Mr Jarret an amount that exceeds $77,160.82.
Interest
Subsection 547(2) of the FW Act provides that in making an order in relation to an amount that a person was required to pay to another person under the FW Act or a fair work instrument, the Court must, on application, include an amount of interest. This provision appears to be restricted to amounts the Court finds a person was required to pay under the FW Act or a fair work instrument, and does not include amounts the Court may order to pay by way of compensation. Even if that is so, the Court has power under s 76(2) of the Federal Circuit Court Act 1999 (Cth) (FCC Act) to order interest. That subsection provides that an application may be made for interest under s 76(3) of the FCC Act. Subsection 76(3) provides that if an application is made for an order under s 76(2) of the FCC Act, and if the Court is not satisfied that good cause has been shown for not making an order for interest under s 76(3) of the FCC Act, the Court must either:
(c)order that there be included in the sum for which judgment is given interest at such rate as the Federal Circuit Court of Australia or the Judge thinks fit on the whole or any part of the money for the whole or any part of the period between:
(i) the date when the cause of action arose; and
(ii) the date as of which judgment is entered; or
(d)without proceeding to calculate interest in accordance with paragraph (c), order that there be included in the sum for which judgment is given a lump sum in lieu of any such interest.
Mr Ertekin claims interest. I am not satisfied that good cause has been shown for not making an order for interest under s 76(3) of the FCC Act. I propose to calculate interest by applying the rates prescribed by the Interest on Judgments Practice Note (GPN-INT) issued by the Federal Court of Australia. That practice note provides for an interest rate of 4% above the cash rate last published by the Reserve Bank of Australia. I propose to apply the average rate of interest over the period 1 March 2020 to 18 March 2021, being the day on which I propose to pronounce my orders. I have calculated the average rate of interest to be 4.22% per annum. On these assumptions I have calculated interest on the sum of $73,888.94 for the 383 day period from and including 1 March 2020 up to and including 18 March 2018 to be $3,271.88,[44] and interest on the sum of $59,779.80 for the same period to be $2,647.11.[45]
[44] (4.22% x $73,888.94)/365 x 383 = $3,271.88
[45] (4.22% x $59,779.80)/365 x 383 = $2,647.11
Declarations
I have considered elsewhere whether it is appropriate for the Court to make declarations in applications under r 13.03B(2) of the FCC Rules,[46] and I am satisfied there would be utility in making declarations to the effect Mr Ertekin seeks.
PENALTY
[46] Australasian Performing Right Association Limited v Escape Bar & Night Club Pty Limited & Anor [2017] FCCA 2690, at [45], [46]
Power and principles
Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”.[47] That expression is defined in s 539(1) of the FW Act to include the provisions identified in column 1 of the table to s 539(2) of the Act. Sections 44 and 323 of the FW Act are in column 1 of the table to s 539(2) of the Act.
[47] I repeat in this and the following 4 paragraphs what I said in Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082, at [33]-[38]
Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)” and, if the person is a body corporate, must not be more than five times “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”. The maximum penalty units for a contravention of s 44(1) and s 323(1) of the FW Act at the relevant time (excluding “serious contraventions”, as defined in s 557A of the FW Act) are 60 penalty units for an individual, and 300 penalty units for a body corporate. Section 12 of the FW Act provides that “penalty unit” has the meaning given by s 4AA of the Crimes Act 1914 (Cth). The penalty unit provided for by s 4AA of that Act as at February 2020 was $210. Thus, $63,000 is the maximum penalty a corporation may be ordered to pay for each contravention of a civil remedy provision, and $12,600 is the maximum penalty an individual may be ordered to pay for each contravention of a civil remedy provision.
The approach to assessing penalties for contraventions of provisions of the FW Act was outlined by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown as follows (emphasis in original):[48]
(1)Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2)Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3)Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
(4)Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5)Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23], [71] and [102].
[48] Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301, at [36]. In the following five paragraphs I repeat what I said in Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor (No.3) [2019] FCCA 1756, at [17]-[21]
The approach of most judges when assessing penalties for single contraventions of a provision of the FW Act is to take into account the non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick,[49] which his Honour adopted from the judgment of Mowbray FM in Mason v Harrington Corporation Pty Ltd. [50] Those considerations are:
[49] Kelly v Fitzpatrick [2007] FCA 1080, at [14]
[50] Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
(a)the nature and extent of the conduct which led to the breaches;
(b)the circumstances in which that conduct took place;
(c)the nature and extent of any loss or damage sustained as a result of the breaches;
(d)whether there had been similar previous conduct by the respondent;
(e)whether the breaches were properly distinct or arose out of the one course of conduct;
(f)the size of the business enterprise involved;
(g)whether or not the breaches were deliberate;
(h)whether senior management was involved in the breaches;
(i)whether the party committing the breach had exhibited contrition;
(j)whether the party committing the breach had taken corrective action;
(k)whether the party committing the breach had cooperated with the enforcement authorities;
(l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(m)the need for specific and general deterrence.
Also relevant is the maximum penalty for the contravention provided for by the FW Act; and here I need only refer to the following passage from the judgment of Flick J in The BKH Contractors Case (No 2):[51]
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed . . . .
[51] The BKH Contractors Case (No 2) [2018] FCA 1563, at [19]
What are the contraventions?
There are four contraventions – ENS’s and Mr Jarret’s contravening s 340(1) of the FW Act by ENS dismissing Mr Ertekin from his employment; ENS’s and Mr Jarret’s contravening s 323(1) of the FW Act by ENS not paying in full Mr Ertekin the salary he earned from 3 February 2020 to 25 February 2020; ENS’s and Mr Jarret’s contravening s 44(1) of the FW Act by ENS not paying to Mr Ertekin accrued but untaken annual leave; and ENS’s and Mr Jarret’s contravening s 44(1) of the FW Act by ENS not paying to Mr Ertekin four weeks’ salary in lieu of notice.
Assessing penalty for contravention of s 340(1) of the FW Act
The following matters are relevant to assessing penalty for this contravention:
(a)The contravention consisted in ENS dismissing Mr Ertekin because Mr Ertekin had complained about the restructure and the purported reduction in his salary. The matters of which Mr Ertekin complained, and in particular, the reduction in his salary, were matters that were central to his contract of employment; and the action ENS took, dismissal, was as substantial an injury as ENS could have inflicted on Mr Ertekin’s rights as an employee, namely, his right to remain employed until such time as ENS could lawfully terminate the contract of employment. The dismissal was also deliberate. These are matters that weigh in favour of assessing penalty at the higher end of the scale.
(b)The contravention led to the loss of 3 months’ salary of $41,782 and his not being employed for at least that time. These are significant losses. These, too, are matters that weigh in favour of assessing penalty at the higher end of the scale.
(c)There is no evidence that ENS has engaged in similar conduct on other occasions. Mr Murdock, however, who appeared for Mr Ertekin, referred me to the judgment of Director of the Fair Work Building Industry Inspectorate v Serdar Tunc & Anor where Mr Jarret had agreed he contravened what appears to be s 357 of the FW Act, as a consequence of which this Court ordered that he pay a civil penalty of $10,000.[52] That is different conduct to the contravening conduct before me.
(d)There is no evidence about the size of ENS’s business. Mr Murdock, however, submitted that ENS no longer conducts the business it conducted when it employed Mr Ertekin, but that Mr Jarret has taken steps to operate the same business through another company called BC Stone Pty Ltd (BC Stone). There is in evidence a copy of the webpage that is or had been apparently maintained by ENS. The webpage represents the business of ENS consists or consisted in the supply and fabrication of natural stone and porcelain, the provision of services associated with fabricating such stone to meet the needs of designers and architects, and to install such stones.[53] There is also in evidence the webpage apparently maintained by BC Stone. It represents the business of BC Stone consists of the importation of natural stone. [54] Although there may be some overlap between the nature of the businesses of ENS and BC Stone, I am not satisfied on the basis of this evidence that BC Stone has taken over the business of ENS.
(e)Next, there is the question of deterrence. Mr Jarret is a director and shareholder of BC Stone; and for that reason there is a real likelihood he will manage a business that engages employees. That circumstance, when considered against Mr Jarret’s having already been ordered to pay a pecuniary penalty for admitted contraventions of the FW Act, are matters that weigh in favour of including an element for specific deterrence.
(f)General deterrence should constitute a significant element in the assessment of penalty. The penalty should therefore be set at a level that signals to employers, and to persons involved in the management of companies that employ persons, that there will be a significant penalty to pay if they do not comply, or take steps necessary to ensure they comply, with the FW Act.
(g)Neither ENS nor Mr Jarret has taken or attempted to take any corrective action, and they have otherwise expressed no contrition.
[52] Director of the Fair Work Building Industry Inspectorate v Serdar Tunc & Anor [2013] FCCA 438
[53] Exhibit C
[54] Exhibit C
I consider that $22,050 (35% of the maximum of $63,000) is an appropriate penalty for ENS to pay, and $5,040 (40% of the maximum of $12,600) for Mr Jarret to pay.
Assessing penalty for contravention of s 323(1) of the FW Act
The following matters are relevant to assessing penalty for this contravention:
(a)The contravention consisted in ENS not paying Mr Ertekin in full the salary Mr Ertekin earned for work performed in the period 3 February 2020 to 25 February 2020. The underpayment was deliberate in that ENS and Mr Jarret knew the salary to which Mr Ertekin was entitled.
(b)The contravention led to the loss of $1,285.60. That is not an insignificant amount.
(c)There is no evidence that ENS has engaged in any similar conduct. The conduct in which Mr Jarret engaged in Serdar Tunc is different.
(d)There is no evidence about the size of ENS’s business. For reasons I have already given, I am not satisfied the business of ENS is now being conducted by BC Stone.
(e)Mr Jarret is a director and shareholder of BC Stone; and for that reason there is a real likelihood he will manage a business that engages employees. That circumstance, when considered against Mr Jarret’s having already been ordered to pay a pecuniary penalty for admitted contraventions of the FW Act, are matters that weigh in favour of including an element for specific deterrence.
(f)The penalty should also incorporate a significant element for general deterrence. The penalty should be set at a level that will signal to employers, and to persons involved in the management of companies that employ persons, that there will be a significant penalty to pay if they do not comply, or take steps necessary to ensure they comply, with the FW Act, particularly those provisions, of which s 323(1) is one, that establish minimum standards.
(g)Neither ENS nor Mr Jarret has taken or attempted to take any corrective action, and they have otherwise expressed no contrition.
I consider that $12,600 (20% of the maximum of $63,000) is an appropriate penalty for ENS to pay, and $3,150 (25% of the maximum of $12,600) for Mr Jarret to pay.
Assessing penalty for contravention of s 90(2) of the FW Act
The following matters are relevant to assessing penalty for this contravention:
(a)The contravention consisted in ENS not paying Mr Ertekin annual leave that had accrued by the time ENS dismissed Mr Ertekin from his employment. That is a contravention of a NES, being a minimum requirement provided by the FW Act. The contravention was deliberate in that ENS and Mr Jarret knew that Mr Ertekin had accrued but untaken annual leave, and they knew ENS did not pay to Mr Ertekin any amount on account of the accrued but untaken annual leave.
(b)The contravention led to the loss of $16,712.80. That is a significant amount.
(c)There is no evidence that ENS has engaged in any similar conduct; and the conduct in which Mr Jarret engaged in Serdar Tunc is different.
(d)There is no evidence about the size of ENS’s business; and for reasons I have already given, I am not satisfied the business of ENS is now being conducted by BC Stone.
(e)Mr Jarret is a director and shareholder of BC Stone; and for that reason there is a real likelihood he will manage a business that engages employees. That circumstance, when considered against Mr Jarret’s having already been ordered to pay a pecuniary penalty for admitted contraventions of the FW Act, are matters that weigh in favour of including an element for specific deterrence.
(f)The penalty should also incorporate a significant element for general deterrence. The penalty should be set at a level that will signal to employers, and to persons involved in the management of companies that employ persons, that there will be a significant penalty to pay if they do not comply, or take steps necessary to ensure they comply, with the FW Act, particularly those provisions, of which s 90(2) is one, that establish minimum standards.
(g)Neither ENS nor Mr Jarret has taken or attempted to take any corrective action, and they have otherwise expressed no contrition.
I consider that $18,900 (30% of the maximum of $63,000) is an appropriate penalty for ENS to pay, and $4,410 (35% of the maximum of $12,600) for Mr Jarret to pay.
Assessing penalty for contravention of s 117(2) of the FW Act
The following matters are relevant to assessing penalty for this contravention:
(a)The contravention consisted in ENS not paying Mr Ertekin four weeks salary in lieu of notice. That is a contravention of a NES, being a minimum requirement provided by the FW Act. The contravention was deliberate in that ENS and Mr Jarret knew ENS dismissed Mr Ertekin and ENS did not pay Mr Ertekin any amount in lieu of notice.
(b)The contravention led to the loss of $12,856 (including superannuation). That is a significant amount.
(c)There is no evidence that ENS has engaged in any similar conduct; and the conduct in which Mr Jarret engaged in Serdar Tunc is different.
(d)There is no evidence about the size of ENS’s business; and for reasons I have already given I am not satisfied the business of ENS is now being conducted by BC Stone.
(e)Mr Jarret is a director and shareholder of BC Stone; and for that reason there is a real likelihood he will manage a business that engages employees. That circumstance, when considered against Mr Jarret’s having already been ordered to pay a pecuniary penalty for admitted contraventions of the FW Act, are matters that weigh in favour of including an element for specific deterrence.
(f)The penalty should also incorporate a significant element for general deterrence. The penalty should be set at a level that will signal to employers, and to persons involved in the management of companies that employ persons, that there will be a significant penalty to pay if they do not comply, or take steps necessary to ensure they comply, with the FW Act, particularly those provisions, of which s 117(2) is one, that establish minimum standards.
(g)Neither ENS nor Mr Jarret has taken or attempted to take any corrective action, and they have otherwise expressed no contrition.
I consider that $18,900 (30% of the maximum of $63,000) is an appropriate penalty for ENS to pay, and $4,410 (35% of the maximum of $12,600) for Mr Jarret to pay.
Aggregation and totality
The penalties I have (provisionally) assessed are as follows:
Contravening conduct
ENS
Mr Jarret
Dismissal from employment (s 340(1) FW Act)
$22,050 (35% of $63,000)
$5,040 (40% of $12,600)
Underpayment (s 323(1) of the FW Act)
$12,600 (20% of $63,000)
$3,150 (25% of $12,600)
Non-payment of accrued but untaken leave (s 44(1); s 90(2) FW Act)
$18,900 (30% of $63,000)
$4,410 (35% of $12,600)
Dismissal without notice or payment in lieu (s 44(1); s 117(2) FW Act)
$18,900 (30% of $63,000)
$4,410 (35% of $12,600)
TOTAL
$72,450
$17,010
An adjustment should be made to the penalties I have (provisionally) assessed for the contraventions of s 340(1) and s 117(2) of the FW Act; and that is because the two contraventions caused the same loss, namely, Mr Ertekin not being paid at least four weeks’ worth of salary in lieu of the payment s 117(2) of the FW Act required ENS to make in lieu of notice. The adjustment is to reduce the penalty from 30% to 25% for the contravention of s 117(2) in the case of ENS (resulting in a penalty of $15,750), and to reduce the penalty from 35% to 30% for the contravention of s 117(2) in the case of Mr Jarret (resulting in a penalty of $3,780).
With this adjustment, the penalties are as follows:
Contravening conduct
ENS
Mr Jarret
Dismissal from employment (s 340(1) FW Act)
$22,050 (35% of $63,000)
$5,040 (40% of $12,600)
Underpayment (s 323(1) of the FW Act)
$12,600 (20% of $63,000)
$3,150 (25% of $12,600)
Non-payment of accrued but untaken leave (s 44(1); s 90(2) FW Act)
$18,900 (30% of $63,000)
$4,410 (35% of $12,600)
Dismissal without notice or payment in lieu (s 44(1); s 117(2) FW Act)
$15,750 (25% of $63,000)
$3,780 (30% of $12,600)
TOTAL
$69,300
$16,380
I am satisfied these sums are a just and appropriate response to ENS’s and Mr Jarret’s contravening conduct. I do not, therefore, propose to adjust the amounts I have assessed because of the totality principle.
I propose, therefore, to order that ENS and Mr Jarret pay penalties in the sums I have set out in paragraph 87.
To whom penalties should be paid
Subsection 546(3)(c) of the FW Act provides that the Court may order that a pecuniary penalty be paid to a “particular person”. Mr Ertekin is in the position of the applicant in Sayed v Construction, Forestry, Mining and Energy Union:[55]
In this appeal . . . the policy considerations of s 546(3) “speak loudly” in the circumstances to justify the payment of the penalty imposed to the individual affected by the contravention who, under the authority of the FW Act, commenced and maintained this enforcement proceeding. If [the applicant] had not pursued the action, it is unlikely that it would have been pursued. He took on the proceeding at obvious cost to himself.
[55] Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4, at [116]
It is appropriate, and I therefore propose, to make an order under s 546(3)(c) of the FW Act that the penalties I propose ENS and Mr Jarret pay be paid to Ms Ertekin.
DISPOSITION
I propose to make declarations to the effect sought by Mr Ertekin. In addition, I propose to order that ENS and Mr Jarret pay pecuniary penalties in the sums of $69,300 and $16,380 respectively, and that these sums be paid to Mr Ertekin within 28 days; and that judgment be entered against ENS and Mr Jarret in the amounts of $77,160.82 and $62,426.91 respectively.
I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 18 March 2021
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