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
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…
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- Case
- [2021] FCCA 1875
- Decision Date
CaseChat Overview and Summary
The court was required to determine the appropriate pecuniary penalty to be imposed on the respondents for the admitted contraventions. In doing so, it needed to consider the principles governing the assessment of penalties under the Fair Work Act, particularly the objective of deterrence, and how to treat multiple contraventions, including those arising from a single course of conduct. The court also had to consider the maximum penalties prescribed by the Act and Regulations, taking into account the value of a penalty unit.
Judge Jarrett applied the principle that the principal and only objective of pecuniary penalties under the Fair Work Act is deterrence, both specific and general. The penalties must have a sufficient "sting or burden" to achieve this deterrent effect. The court noted that while there were numerous contraventions, section 557(1) of the Act requires multiple contraventions arising from a single course of conduct to be treated as a single contravention for penalty assessment. Where section 557(1) does not apply, the court may still recognise commonality or overlap between contraventions. The parties had agreed on how the contraventions should be treated under section 557(1) and for penalty purposes, an agreement which the court endorsed. The court also considered the respondents' approach to wage payments, where a flat hourly rate was paid irrespective of award requirements, and Mr. Gribble's stated principle of paying employees what they asked for to ensure their happiness, which resulted in rates below the minimum wage for many employees.
The court endorsed the parties' agreement regarding the treatment of contraventions and the calculation of penalties. This agreement, reflected in an annexure, led to maximum potential penalties of $945,000 for the first respondent and $176,400 for the second respondent, based on the number of contraventions after applying section 557(1) and other agreed groupings, and the value of a penalty unit.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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.