Fair Work Ombudsman v 63 Racecourse Rd Pty Ltd
[2021] FCCA 1875
•12 AUGUST 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Fair Work Ombudsman v 63 Racecourse Rd Pty Ltd [2021] FCCA 1875
File number(s): BRG 496 of 2020 Judgment of: JUDGE JARRETT Date of judgment: 12 August 2021 Catchwords: INDUSTRIAL LAW – Commonwealth – compliance and enforcement – civil remedies – pecuniary penalty orders – assessing penalty – admitted contraventions – agreed penalty
INDUSTRIAL LAW – Commonwealth – compliance and enforcement – civil remedies – pecuniary penalty orders – amount of penalty – particular cases
Legislation: Crimes Act 1914 (Cth), s 4AA
Fair Work Act 2009 (Cth), ss 45, 144, 144(2), 323(1), 323(1)(b), 323(2), 539(2), 546, 546(2), 550(1)
557(1)
Fair Work Regulations 2009 (Cth), reg 4.01(A)
Restaurant Industry Award 2010, cl 7.1
Cases cited: Australian Building and Construction Commissioner v CFMMEU [2020] FCA 549
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
Bristow v City Petroleum [1987] 1 WLR 529
CFMMEU v ABCC (2018) 264 FCR 155
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Fair Work Ombudsman v Bundaberg Security Pty Ltd [2014] FCCA 592
Fair Work Ombudsman v Zillion Zenith International Pty Ltd & Anor [2014] FCCA 433
Number of paragraphs: 58 Date of last submission/s: 16 July 2021 Date of hearing: 20 July 2021 Place: Brisbane Solicitor for the Applicant: Office of the Fair Work Ombudsman Solicitor for the Respondents: MinterEllison ORDERS
BRG 496 of 2020
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: 63 RACECOURSE RD PTY LTD
First Respondent
HAMISH RUSSELL WATSON
Second Respondent
ORDER MADE BY:
JUDGE JARRETT
DATE OF ORDER:
12 AUGUST 2021
BY CONSENT, THE COURT DECLARES THAT:
1.The First Respondent, contravened the following civil remedy provisions of the Fair Work Act 2009 (Cth):
(a)s.45 of the Fair Work Act 2009 (Cth) by contravening at all relevant times between 31 July, 2017 and 27 August, 2017 the following clauses of the Restaurant Industry Award 2010:
(i)clause 20.1 by failing to pay 18 employees the minimum hourly wage for ordinary time hours worked Monday to Friday;
(ii)clause 13.1 by failing to pay the 26 casual employees an additional loading of 25% of the minimum hourly wage for ordinary time hours worked Monday to Friday;
(iii)clause 24.2 by failing to pay Gurtej Hehar a split-shift allowance for each separate work period of two hours or more;
(iv)clause 34.1 by failing to pay 27 employees the required Saturday penalty rate;
(v)clause 34.1 by failing to pay 31 employees the required Sunday penalty rate;
(vi)clause 34.1 by failing to pay 25 employees the required Public Holiday penalty rate;
(vii)clause 34.2(a)(i) by failing to pay 11 employees an additional loading of 10% of the standard hourly rate when they worked ordinary hours between 10pm and midnight Monday to Friday;
(viii)clause 34.2(a)(ii) by failing to pay 15 employees an additional loading of 15% of the standard hourly rate when they worked ordinary hours between midnight and 6am Monday to Friday; and
(ix)clause 33.1 by failing to pay four employees overtime rates when they worked overtime.
(b)s.45 of the Fair Work Act 2009 (Cth) by contravening at all relevant times between 6 November, 2017 and 28 January, 2018:
(i)the following clauses of the Restaurant Industry Award 2010 relating to individual flexibility arrangements:
A.clause 7.4(a) by failing to record the arrangement in writing, name the parties to the arrangement and be signed by the individual employee with respect to 18 employees;
B.clause 7.4(b) by failing to state each term of the Restaurant Industry Award 2010 the parties have agreed to vary with respect to 32 employees;
C.clause 7.4(c) by failing to detail how the application of each term of the Restaurant Industry Award 2010 has been varied with respect to 32 employees;
D.clause 7.4(d) by failing to detail how the arrangement results in the individual employee being better off overall with respect to 32 employees;
E.clause 7.4(e) by failing to state the date the arrangement commenced to operate with respect to all 32 employees;
F.clause 7.7 by failing to provide a written proposal to the employee with respect to 18 employees;
(ii)the individual flexibility arrangement with Radhika Bhandari in respect of her IFA pay rate entitlement;
(iii)clause 12.3 of the Restaurant Industry Award 2010 by failing to enter into written part-time agreements with the employees employed on a part-time basis;
(iv)clause 12.5 of the Restaurant Industry Award 2010 by failing to pay Jenita Lamsal and Kamala Shrestha the minimum shift engagement;
(v)clause 12.5(b) of the Restaurant Industry Award 2010 by failing to pay Hayun Mok the minimum shift engagement;
(vi)clause 35.2(b) of the Restaurant Industry Award 2010 by failing to pay four employees an additional leave loading of 17.5% of the base rate of pay for each hour of annual leave taken; and
(c)s.323(1)(b) of the Fair Work Act 2009 (Cth) by failing to pay 32 employees part of the amount payable to them in relation to the performance of work in money.
2.The Second Respondent was, within the meaning of s.550(1), involved in each of the contraventions by the First Respondent set out above with the exception of the contraventions of clause 7.4(a) and clause 7.7 of the Restaurant Industry Award 2010.
BY CONSENT THE COURT ORDERS THAT:
3.Pursuant to s.545(1) of the Fair Work Act 2009 (Cth), the First Respondent and Second Respondent jointly and severally pay to the Applicant (to be distributed to JungAh Noh) the total of $970.79 (less applicable tax and any amounts already paid) within 28 days of the date of this order.
4.Pursuant to s.546(1) of the Fair Work Act 2009 (Cth):
(a)the First Respondent pay pecuniary penalties of $130,000 in respect of the contraventions declared in declaration 1 above;
(b)the Second Respondent pay pecuniary penalties of $40,000 for his involvement in the contraventions declared in declaration 2 above;
(c)all pecuniary penalties be paid within 28 days to the Consolidated Revenue Fund of the Commonwealth.
AND THE COURT NOTES:
5.The Respondents do not read and rely on paragraphs 19 and 23(c) of Hamish Watson’s affidavit affirmed on 22 February, 2021.
REASONS FOR JUDGMENT
JUDGE JARRETT:
Until December, 2019 the first respondent conducted a café at Hamilton, Brisbane known as Café 63. In August, 2017 the applicant commenced an investigation into a group of companies trading under the Café 63 brand in Queensland, including the first respondent.
The investigation uncovered that between 31 July, 2017 and 27 August, 2017 and between 6 November, 2017 and 28 January, 2018 33 employees of the first respondent were underpaid their entitlements in one form or another. Other contraventions of the Fair Work Act were also discovered as detailed below.
By these proceedings the applicant seeks declarations that the first respondent has contravened the Fair Work Act 2009 (Cth) in certain specified respects. She seeks the imposition of pecuniary penalties for those contraventions. The applicant also alleges that the second respondent, as the sole director, shareholder and controlling mind of the first respondent was involved in those contraventions for the purposes of s.550(1) of the Act.
The respondents admit the contraventions and the second respondent admits that save for two of the contraventions the subject of these proceedings, he was involved in those contraventions.
The application has proceeded before me by a penalty hearing. The parties agree on the orders to be made and have agreed on the penalties to be imposed upon the first and second respondent. These reasons are necessary because the Court’s role when dealing with a civil penalty case where the parties have agreed on the penalty is not to simply “rubber stamp” that agreed penalty. However, subject to the Court being satisfied that the proposed penalty is appropriate, it is highly desirable in practice for the Court to impose the proposed penalty: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at [58].
Having regard to the statement of agreed facts filed by the parties on 14 April, 2021, it is apparent that the following matters are agreed between them.
The first respondent, as trustee for the WWOZ Trust operated a café under the name or style Café 63 Racecourse Rd, selling food and drink to be largely consumed on the premises located at 63 Racecourse Road, Hamilton Central, Brisbane, Queensland. At all relevant times, the second respondent was the sole shareholder, director and secretary of the first respondent.
The proceedings concern the two periods that I have set out above. The parties agree that for each of those two periods the first respondent employed 32 individuals (33 individuals across both periods). Save for two employees, the same individuals were employed during both periods.
The parties agree that the Restaurant Industry Award 2010 applied to the first respondent in respect of the employment of the relevant employees. The nature of the employment varied from employee to employee. Some were employed on a full-time basis, some on a part-time basis and some on a casual basis. The classification of the employees pursuant to the award also varied. The classification of the various employees ranged from introductory level employees through Food & Beverage Attendants (grades 1, 2 and 3) to Cooks (grades 2 and 4).
In relation to the first period of contraventions the parties agree that the first respondent underpaid 32 of its employees their minimum wage entitlements, casual loading (in respect of those employees employed on a casual basis), split shift allowances (in respect of one employee), Saturday rates (in respect of 27 employees), Sunday rates (in respect of 31 employees), public holiday rates (in respect of 25 employees), evening penalty rates (in respect of 11 employees), morning penalty rates (in respect of 15 employees) and overtime rates (in respect of four employees). The respondents agree that each failure by the first respondent to make the relevant payments to its employees was a contravention of s. 45 of the Fair Work Act.
The contraventions of the Act that occurred in the second period set out above are of a different nature. The first respondent purported to enter into individual flexibility arrangements with the 32 employees the subject of the second contravention period as permitted by clause 7.1 of the award and s.144 of the Act. However, some of the arrangements were backdated (that is to say they commenced before the written agreement was executed) and some arrangements that were recorded in writing were not executed or dated at all. The arrangements contained terms that provided for the relevant employee not to be paid penalty rates for weekends and public holidays or for overtime pursuant to the award in exchange for receiving a flat rate for all hours worked and extra “allowances”. Some of the arrangements excluded leave loading. One of the “allowances” provided for in the agreement was the right to eat meals and drink beverages supplied by the first respondent’s business, up to a value of $35 per day when working. Other allowances included an “overnight bonus” and a “KPI bonus”. None of the individual flexibility arrangements:
(a)identified each term of the Restaurant Award the parties had agreed to vary;
(b)detailed how the application of each term of the Restaurant Award had been varied;
(c)detailed how the agreement resulted in the individual employee being better off overall; nor
(d)stated the date the agreement commenced to operate.
In respect of some of the arrangements, the first respondent did not provide a written proposal to the individual employee when seeking to enter into the agreement as required by the Restaurant Award.
Each of these matters was a contravention of the Restaurant Award and consequently a contravention of s.45 of the Fair Work Act.
By s.144(2) of the Act, if an employee and employer agree to an individual flexibility arrangement such as those in issue here, the award has effect in relation to the employee and the employer as if it were varied by the flexibility arrangement and the arrangement is taken, for the purposes of the Act, to be a term of the award.
The parties agree that in respect of one employee, the terms of the individual flexibility arrangement were not observed by the first respondent and consequently there was a contravention of s.45 of the Act because that particular employee was underpaid having regard to the rate of pay set out in her individual flexibility arrangement.
Further, for the second period of contraventions, the parties agree that the first respondent was required to have in place written arrangements with each of its part-time employees that specified certain matters. The parties agree that the first respondent did not make written part-time arrangements with any of its part-time employees that were in a form that complied with the legal requirement upon the first respondent in that respect. Each time the first respondent failed to have a written agreement with one if its part-time employees, it committed a contravention of s.45 of the Fair Work Act.
During the second period of contraventions, the Restaurant Award required certain minimum hours to be made available to part-time employees. Three of the first respondent’s employees were rostered and paid for less than the minimum number of hours required by the award. Those matters too, amount to contraventions of s.45 of the Fair Work Act.
Finally, the parties agree that the first respondent was required by the Restaurant Award to pay its full-time and part-time employees annual leave loading in respect of any periods of annual leave taken by them. The first respondent did not pay any amounts in respect of annual leave loading to any of the four employees entitled to receive that benefit. Those matters amount to contraventions of s.45 of the Fair Work Act.
By ss.323(1) and 323(2), the Fair Work Act provides that an employer must pay an employee amounts payable to the employee in relation to the performance of work in money by one, or a combination, of the following methods, namely:
(a)cash;
(b)cheque, money order, postal order or similar order, payable to the employee;
(c)the use of an electronic funds transfer system to credit an account held by the employee; or
(d)a method authorised under a modern award or an enterprise agreement.
The parties agree that during the second period of contravention the first respondent paid each of its employees part of the amount payable to them in relation to the performance of their work by providing them with an entitlement to take food and beverages from the first respondent’s business up to the value of $35. However, the provision of food and beverages was not a method of payment authorised by s.323(2) of the Fair Work Act. The parties agree that the first respondent contravened s.323(1)(b) of the Act by paying each of its employees in that manner.
In summary then, the admitted contraventions for the first period relate to the underpayment of a total of $36,653.554 to 32 employees for entitlements under the Restaurant Award. The admitted contraventions in respect of the second period include failures to comply with requirements of the award in relation to individual flexibility arrangements, the recording of part-time arrangements in writing and the provision of minimum hours of work per week to some of those employees, the failure to pay annual leave loading and paying 32 employees partly in food and drink in breach of s.323(1) of the Fair Work Act.
Consistent with the agreement reached between the parties the parties ask the Court to make:
(a)declarations of contravention of the Fair Work Act by each of the respondents; and
(b)pecuniary penalty orders pursuant to s.546 of the Act in respect of each of the respondents in the amounts of:
(i)the first respondent – $130,000; and
(ii)the second respondent – $40,000.
Additional orders are sought in respect of two employees who have not received payment of entitlements due, but not paid to them.
CONSIDERATION OF THE AGREED PENALTY
Deterrence, both specific and general, is the “principal and indeed only” objective of pecuniary penalties under the Fair Work Act: Commonwealth of Australia v Director of the FWBII (2015) 258 CLR 482 at 506 [55]; CFMMEU v ABCC (2018) 264 FCR 155 at 167 [19]; Australian Building and Construction Commissioner v CFMMEU [2020] FCA 549 at [26]. Retribution, denunciation and rehabilitation have no part to play.
The penalties in this case must be set at a level such that it would be likely to act as a deterrent to preventing similar contraventions by like-minded persons. It must have the necessary “sting or burden” to secure “the specific and general deterrent effects that are the raison d’être of its imposition”: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at [116].
Subsections 539(2) and 546(2) of the Act, along with reg.4.01(A) of the Fair Work Regulations 2009, prescribe maximum penalties that may be imposed for contraventions of civil remedy provisions, by reference to penalty units within the meaning of s.4AA of the Crimes Act 1914 (Cth).
THE CONTRAVENTIONS
The specific contraventions that I have summarised above are set out in the statement of agreed facts filed on 15 April, 2021. There are great many contraventions. However, by s.557(1) of the Act, the Court must treat multiple contraventions of certain provisions of the Act which arise out of a single course of conduct and committed by the same person or entity as a single contravention and on that basis determine a single apposite penalty. Further, where there are multiple contraventions which cannot be dealt with pursuant to s.557(1) of the Act, the Court may nonetheless recognise the commonality or overlap between contraventions and take that into account: see for example Fair Work Ombudsman v Bundaberg Security Pty Ltd [2014] FCCA 592 at [12].
The parties have agreed on how the contraventions should be treated under s.557(1) of the Act and how they should otherwise be dealt with for the purposes of the imposition of penalty. The parties’ agreement about those matters, which I endorse, is reflected in the annexure to these reasons. That annexure sets out a range of information about the contraventions or groups of contraventions the subject of these proceedings.
Having regard to these contraventions identified after the application of s.557(1) of the Act and the other groupings agreed between the parties, and having regard to the value of a penalty unit, the maximum penalties that the court may impose for the contraventions are:
(a)$945,000 for the 15 contraventions on the part of the first respondent; and
(b)$176,400 for the 14 contraventions on the part of the second respondent.
The contraventions relating to the first period set out above are characterised by the first respondent paying its employees a flat hourly rate of between $15.72 and $29.35 irrespective of when the work was performed. For 18 of the 32 employees, the flat rate paid by the first respondent was less than the minimum wage pursuant to the award. For most of these employees, the flat rate was $1-$3 less per hour than the required minimum. The second respondent was involved in setting the flat rates of pay. According to statements that he made to the applicant’s investigators when the investigation was commenced, the second respondent paid employees what they asked for. His “fundamental principle” was to make his employees happy. He said that no one asked to be paid in accordance with the award and he paid some employees $17 - $18 per hour flat rate and one employee $29 per hour.
The respondents took this approach, despite the applicant having provided the second respondent with a range of tools relating to the award and rates of pay earlier in 2016. The second respondent had no regard to those when setting the flat rates.
As a result of paying flat rates, the total underpayment for the 32 employees over the one month from 31 July, 2017 to 27 August, 2017 comprised was $36,653.55. Underpayments to individual employees ranged from $181.42 to $1,914.39.
The contravening conduct for the second period involved the first respondent entering into individual flexibility arrangements between 15 September, 2017 and 19 January, 2018 with 32 employees which did not comply with the provisions of the Fair Work Act. Information was given to the first respondent in late November, 2017 to the effect that the use of individual flexibility arrangements may nonetheless result in penalties in relation to breaches of the applicable awards if the arrangements did not comply with the law. The first respondent was provided with a template individual flexibility arrangement document but notwithstanding that, the first respondent continued to enter into arrangements which did not contain the information included in the template and as required by the Restaurant Award.
The first respondent paid each of the employees part of the amount payable to them for the performance of work by providing them with an entitlement to take food and drink from the first respondent’s business up to the value of $35.48. The entitlement to take food and drink was a standard term contained in each of the individual flexibility arrangements. One employee was underpaid a total amount of $196.96 in respect of her hourly rate under her individual flexibility arrangement.
Moreover, the first respondent did not enter written part-time arrangements with part-time employees; underpaid three employees a total of $111.04 in respect of minimum shift engagements and failed to pay four employees a total of $381 in respect of annual leave loading.
All of the contraventions across both the first and second periods were deliberate. The second respondent was responsible for the overall direction, management and control of the first respondent and had overarching responsibility for the management of the first respondent’s business. He admits that he was wilfully blind to the fact that the Restaurant Award covered the first respondent and its employees. In that respect, the evidence shows that in June, 2016 the second respondent responded to an email sent by the applicant about a request for assistance from a former employee of another entity that operated a café business known as Café 63 Stanley St. Whilst that business was not operated by the first or second respondents, the second respondent had been providing consulting services to the business. Between 16 June, 2016 and 29 June, 2016 the applicant provided the second respondent with a range of information about wages, rates of pay and the relevant award, including links to resources on the applicant’s website. One of those resources was a pay and conditions tool used to assist employers and employees to work out entitlements. Thus, well prior to the contraventions now at issue here, the applicant had provided to the first and second respondents the means by which they could work out the employees’ entitlements and otherwise complied with the award and the Act.
The evidence shows that the second respondent made a deliberate choice for the first respondent to pay its employees flat rates with no regard to the minimum rates of pay provided in the award. That was despite having the benefit of information from the applicant and links to the applicant’s online resources to enable him to clearly identify the first respondent’s obligations.
Moreover, at the time the first respondent was entering into the individual flexibility arrangements with its employees set out above, the second respondent knew that the Restaurant Award covered the first respondent and its employees. He had been provided with information in late November, 2017 that the use of individual flexibility arrangements may result in penalties in relation to breaches of the award. However, the first respondent stayed its course with the second respondent having his hand firmly on the tiller.
Despite all of the advice that he had received, the second respondent persisted with using the individual flexibility arrangements that included the offensive term permitting the first respondent to make payment to its employees through a food and beverage allowance.
The contraventions relating to the first period and the second period are both deliberate and serious and represent a significant departure from the standards of conduct expected from employers and those that control them.
General deterrence is a significant aspect of the imposition of the penalties in this case. I accept the applicant’s submission that the café and restaurant industry is one that is notorious for underpayment to staff. The number of cases that are dealt with in the Federal Circuit Court of Australia where contraventions of the Fair Work Act in the café and restaurant industry are at issue are testament to that proposition.
I also accept that specific deterrence is an important factor in these proceedings in relation to the second respondent. The evidence shows that the second respondent is the sole director of a company or entity described as 63 Group that has entered into arrangements with various others to operate Café 63 brand stores in Queensland. There are licensing arrangements in place whereby those others are allowed to use the Café 63 brand in exchange for a licensing fee. The licensing fees are paid to 63 Group. The income generated from licensing fees are said to be invested into 63 Group for the purpose of building and promoting the Café 63 brand, developing the Café 63 business model and paying the 12 employees of the 63 Group. Moreover, the second respondent’s evidence is that from late 2020, 63 Group has commenced transitioning to a franchise business model.
In addition to the first respondent and 63 Group, the second respondent is the director of four other companies which appear to be connected with the Café 63 brand. It is clear that the second respondent has and will continue to have a significant and ongoing involvement in the café and restaurant industry, at the very least through the provision of advice and other information to licensees of the Café 63 brand or its franchisees.
I accept that given the second respondent’s involvement, any penalty must be fixed at a level which specifically deters the second respondent from engaging in further contravening conduct.
The evidence shows that the first respondent has ceased trading, does not hold assets or employ staff and does not intend to do so in the future although it remains registered.
The workplace laws of this country put in place a framework whereby employees are entitled to be paid minimum amounts of remuneration commensurate with the level and nature of their work and that they receive their remuneration in money. The contraventions in this case (across both periods) worked to thwart one of the main objects of the Far Work Act, namely to provide a guaranteed safety net of minimum terms and conditions for employees and to provide effective enforcement mechanisms. I accept that the maintenance of such a safety net is of particular importance in a competitive service industry such as the restaurant and café industry, where the underpayment of wages can provide a competitive advantage over employers who
do notmeet lawful wage costs.Paying employees by the provision of food or drink is a practice that “belongs in the dark ages”: per Judge O’Sullivan in Fair Work Ombudsman v Zillion Zenith International Pty Ltd & Anor [2014] FCCA 433 at [1], citing Lord Ackner in Bristow v City Petroleum [1987] 1 WLR 529. Here, the effect of the respondents’ scheme by which employees were paid for their work in part by way of a meals and drinks allowance tied a portion of the employee’s income to expenditure at the first respondent’s business and if employees did not take advantage of the meal allowance (whether in full or in part) they were not entitled to receive the unclaimed component as cash. Such an arrangement was and is abhorrent and serves only to promote the employer’s advantage.
The second respondent’s approach to the individual flexibility arrangements was a complete affront to the integrity of awards as an industrial safety net for employees. The evidence demonstrates that the respondents used the opportunity to employ individual flexibility arrangements to avoid the protections offered to the first respondent’s employees by the Restaurant Award. No attention was paid to whether the particular employees would be better off overall under the individual flexibility arrangements. 18 of the 32 employees subject to such arrangements were not provided with a written proposal (as required) and the arrangements were not recorded in writing. I accept that not providing employees with a written proposal or record of the bargain again undermines the individual flexibility arrangements scheme established by the Fair Work Act.
At the relevant time, the award required written arrangements for part-time employees to specify at least the hours worked each day, which days of the week the employee will work and the actual starting and finishing times each day. This provides part-time employees with the reasonable predictability that characterises part time (as distinct from casual) employment and ensures that employers and employees could clearly identify when an employee had worked outside of their agreed hours and would be entitled to overtime pursuant to the award. The first respondent’s failure to make written part-time arrangements with 22 part-time employees, undermined their ability to properly assess their entitlements.
The evidence shows that the first respondent had a net loss of $802,767.16 for the year ending 30 June, 2018 (being the year in which all the contraventions occurred). According to the evidence, this was a substantial reduction on the net loss from the previous year. In or around December, 2019 the first respondent sold the business to a Café 63 licensee. No purchase price is in evidence, but the first respondent has a substantial liability to the Australian Taxation Office. Further, according to the evidence, the second respondent’s income for several financial years to up to 2018 was below the reportable threshold; he did not receive a salary from the first respondent but did receive loan repayments.
Notwithstanding these matters, the size of the business or its capacity to pay a penalty is of less relevance to the objective of general deterrence as that objective is not centred on whether the penalties imposed can be paid; rather, it is focused on imposing a penalty that will deter other companies from similar contravening conduct in the future.
The evidence shows and the parties agree that the first respondent and the second respondent complied with notices issued under the Fair Work Act and responded to requests from the Fair Work Inspectors. With the exception of two employees the assessed underpayments to the employees were rectified in full by the first respondent during the period between 21 July, 2020 and 22 September, 2020. The two unpaid exceptions relate to two employees whose funds were returned to the first respondent from the bank accounts previously used by the affected employees. That is to say, the first respondent has attempted rectification in respect of those employees, but was not successful.
The applicant accepts that by admitting the contraventions, each of the respondents have reduced the cost and complexity of the proceedings and that such admissions demonstrate a willingness to take responsibility for their actions with respect to the contraventions. I accept that concession.
The agreed penalties incorporate a 20% discount for the admissions made by each respondent sparing the public purse the cost of a contested hearing and demonstrating each respondents’ acceptance of their wrongdoing. I endorse that discount.
PENALTIES
The parties have consented to pecuniary penalties for each of the respondents as follows:
(a)$130,000 in respect of the first respondent; and
(b)$40,000 in respect of the second respondent.
The parties submissions demonstrate that the agreed pecuniary penalty amounts fall for the first respondent and the second respondent within the penalty range that are available given the circumstances of this case. The penalties also take into account a recommendation from the parties after looking at the totality of the penalties a further reduction of 40% for the first respondent and 15% for the second respondent is appropriate. Those discounts recognise the degree of overlap in the contraventions, the respondents’ financial positions and for the first respondent, the reduced need for specific deterrence. I accept those recommendations.
The parties submit that these penalties are commensurate with the contravening conduct and properly reflect the circumstances of this case. They further submit that the agreed penalties are within the Court’s power to make and are appropriate.
I agree. Accordingly, there will be orders in the terms set out at the commencement of these reasons.
I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jarrett delivered on 12 August, 2021. Associate:
Dated: 12 August 2021
ANNEXURE A
PENALTY TABLE FOR THE COMPANY
Description of contravention
Maximum penalty
Total Underpayment
Employees affected
Penalty post- grouping
Penalty with 20% discount
Proposed penalty range
% % Amount Contravention period 1 1 section 45 by failing to pay the Minimum Wage (clause 20.1) $63,000
$1,886.73
18
$63,000
$50,400
50
60
$25,200
$30,240
2
section 45 by failing to pay the Casual Loading to the Casual Loading Employees (clause 13.1)
$63,000
$9,081.14
26
$63,000
$50,400
50
60
$25,200
$30,240
3
section 45 by failing to pay Saturday Rates to the Saturday Rate Employees (clause 34.1)
$63,000
$5,709.66
27
$63,000
$50,400
30
40
$15,120
$20,160
4
section 45 by failing to pay Sunday Rates to the Sunday Rate Employees
(clause 34.1)
$63,000
$10,332.30
31
$63,000
$50,400
30
40
$15,120
$20,160
5
section 45 by failing to pay Public Holiday Rates to the Public Holiday Rate Employees (clause 34.1)
$63,000
$5,575.22
25
$63,000
$50,400
30
40
$15,120
$20,160
Description of contravention
Maximum penalty
Total Underpayment
Employees affected
Penalty post- grouping
Penalty with 20% discount
Proposed penalty range
% % Amount 6
section 45 by failing to pay the Evening Penalty to the Evening Penalty
$63,000
$151.23
11
$63,000
$50,400
5
10
$2,520
$5,040
Employees (clause 34.2(a)(i)) 7 section 45 by failing to pay the Morning Penalty to the Morning Penalty Employees (clause
34.2(a)(ii))
$63,000
$826.21
15
$63,000
$50,400
10
20
$5,040
$10,080
8
section 45 by failing to pay Overtime Rates to the Overtime Rate Employees (clause 33.1) $63,000
$3,082.96
4
$63,000
$50,400
30
40
$15,120
$20,160
9
section 45 by failing to pay the split shift allowance to Gurtej
Hehar (clause 24.2)
$63,000
$8.10
1
No penalty sought
Description of contravention
Maximum penalty
Total Underpayment
Employees affected
Penalty post- grouping
Penalty with 20% discount
Proposed penalty range
% % Amount Contravention period 2 10
section 45 by failing to record the agreement in writing (clause 7.4(a))
$63,000
18
$63,000
$50,400
30
40
$15,120
$20,160
11
section 45 by failing to state the terms of the
Award varied (clause 7.4(b))
$63,000
32
Grouped with 12 below
12 section 45 by failing to detail how each term was varied (clause 7.4 (c)) $63,000
32
$63,000
$50,400
30
40
$15,120
$20,160
13
section 45 by failing to detail how the agreement results in each employee being better off overall
(clause 7.4(d))
$63,000
32
$63,000
$50,400
50
60
$25,200
$30,240
14
section 45 by failing to state the commencement date (clause 7.4(e))
$63,000
32
No penalty sought
Description of contravention
Maximum penalty
Total Underpayment
Employees affected
Penalty post- grouping
Penalty with 20% discount
Proposed penalty range
% % Amount 15
section 45 by failing to provide a written proposal to the employee when seeking to enter the IFA (clause 7.7)
$63,000
18
Grouped with 10
16 section 45 by contravening the Bhandari IFA in respect of her IFA pay rate
entitlement
$63,000
$196.96
1
$63,000
$50,400
5
10
$2,520
$5,040
17
section 45 by failing to enter into written part−time agreements
(clause 12.3)
$63,000
21
$63,000
$50,400
5
10
$2,520
$5,040
18
section 45 by failing to pay minimum shift engagement (clauses 12.5 and 12.5(b)) $63,000
$111.04
3
No penalty sought
19 section 45 by failing to pay Annual Leave Loading (clause 35.2(b)) $63,000
$381.00
4
$63,000
$50,400
5
10
$2,520
$5,040
Description of contravention
Maximum penalty
Total Underpayment
Employees affected
Penalty post- grouping
Penalty with 20% discount
Proposed penalty range
% % Amount 20
section 323(1)(b) by failing to pay each of the contravention period 2 employees in money $63,000
32
$63,000
$50,400
50
60
$25,200
$30,240
TOTALS
$1,260,000
$945,000
$756,000
$206,640
$272,160
TOTALS with 40% totality discount $123,984 $163,296 AGREED PENALTY $130,000 PENALTY TABLE FOR MR WATSON
Description of contravention
Maximum penalty per contravention
Total Underpaymen t
Employees affected
Penalty post- grouping
Penalty with 20% discount
Proposed penalty range
% % Amount Contravention period 1 1 section 45 by failing to pay the Minimum Wage (clause 20.1) $12,600
$1,886.73
18
$12,600
$10,080
50
60
$5,040
$6,048
2
section 45 by failing to pay the Casual Loading to the Casual Loading
Employees (clause 13.1)
$12,600
$9,081.14
26
$12,600
$10,080
50
60
$5,040
$6,048
3
section 45 by failing to pay Saturday Rates to the Saturday Rate Employees (clause 34.1) $12,600
$5,709.66
27
$12,600
$10,080
30
40
$3,024
$4,032
4
section 45 by failing to pay Sunday Rates to the Sunday Rate Employees
(clause 34.1)
$12,600
$10,332.30
31
$12,600
$10,080
30
40
$3,024
$4,032
5
section 45 by failing to pay Public Holiday Rates to the Public Holiday Rate Employees (clause 34.1) $12,600
$5,575.22
25
$12,600
$10,080
30
40
$3,024
$4,032
Description of contravention
Maximum penalty per contravention
Total Underpaymen t
Employees affected
Penalty post- grouping
Penalty with 20% discount
Proposed penalty range
% % Amount 6
section 45 by failing to pay the Evening Penalty to the Evening Penalty Employees (clause
34.2(a)(i))
$12,600
$151.23
11
$12,600
$10,080
5
10
$536
$1,071
7
section 45 by failing to pay the Morning Penalty to the Morning Penalty Employees (clause
34.2(a)(ii))
$12,600
$826.21
15
$12,600
$10,080
10
20
$1,071
$2,142
8
section 45 by failing to pay Overtime Rates to the Overtime Rate Employees (clause 33.1) $12,600
$3,082.96
4
$12,600
$10,080
30
40
$3,024
$4,032
9
section 45 by failing to pay the split shift allowance to Gurtej
Hehar (clause 24.2)
$12,600
$8.10
1
No penalty sought
Contravention period 2 10
section 45 by failing to state the terms of the Award varied (clause
7.4(b))
$12,600
32
Grouped with 11 below
Description of contravention
Maximum penalty per contravention
Total Underpaymen t
Employees affected
Penalty post- grouping
Penalty with 20% discount
Proposed penalty range
% % Amount 11
section 45 by failing to detail how each term was varied (clause 7.4 (c)) $12,600
32
$12,600
$10,080
30
40
$3,024
$4,032
12
section 45 by failing to detail how the agreement results in each employee being better off overall
(clause 7.4(d))
$12,600
32
$12,600
$10,080
50
60
$5,040
$6,048
13
section 45 by failing to state the commencement date (clause 7.4(e))
$12,600
32
No penalty sought
14 section 45 by contravening the Bhandari IFA in respect of her IFA pay rate
entitlement
$12,600
$196.96
1
$12,600
$10,080
5
10
$504
$1,008
15
section 45 by failing to enter into written part−time agreements
(clause 12.3)
$12,600
21
$12,600
$10,080
5
10
$536
$1,071
16
section 45 by failing to pay minimum shift
engagement (clauses 12.5 and 12.5(b))
$12,600
$111.04
3
No penalty sought
Description of contravention
Maximum penalty per contravention
Total Underpaymen t
Employees affected
Penalty post- grouping
Penalty with 20% discount
Proposed penalty range
% % Amount 17
section 45 by failing to pay Annual Leave Loading (clause 35.2(b)) $12,600
$381.00
4
$12,600
$10,080
5
10
$504
$1,008
18
section 323(1)(b) by failing to pay each of the contravention period 2 employees in money $12,600
32
$12,600
$10,080
50
60
$5,040
$6,048
TOTALS $226,800 $176,400 $151,200 $40,698 $53,550 TOTALS with 15% totality discount $34,593 $45,518 AGREED PENALTY $40,000
0
5
5