Fair Work Ombudsman v A and S Wholesale Fruit and Vegetables Pty Ltd

[2019] FCCA 1838

FEDERAL CIRCUIT COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v A & S WHOLESALE FRUIT & VEGETABLES PTY LTD & ORS [2019] FCCA 1838

Catchwords:
INDUSTRIAL LAW – Application for civil penalty– admitted contraventions of the Fair Work Act 2009 (Cth) by first respondent – admitted accessorial liability by second and third respondents – where parties have agreed on penalties – whether agreed penalty is appropriate.

Legislation:

Fair Work Act 2009 (Cth) ss.45, 44 ,99, 116, 62, 90, 535, 536, 546, 550, 545, 557, 535, 536, 545, 546

Fair Work Regulations 2009 (Cth), rr.3.33, 3.34, 3.46, 3.44

General Retail Industry Award 2010

Evidence Act (Cth) 1995 s.191

Crimes Act 1914 (Cth) s.4AA

Cases cited:

Fair Work Ombudsman v Han Investments Pty Ltd [2017] FCA 623
BlueScope Steel Limited v The Australian Worker’s Union [2019] FCA 182
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285
Minister for Industry, Tourism and Resources v Mobile Oil Australia Pty Ltd [2004] FCAFC 72
Kelly v Fitzpatrick [2007] FCA 1080
Sayed v Construction, Forestry Mining and Energy Union (No.2) [2015] FCA 338
Fair Work Ombudsman v NHS North Pty Ltd trading as New Shanghai Charleston [2017] FCA 1301
Australian Building and Construction Commissions v Construction, Forestry, Mining and Energy Union [2018] HCA 3

Applicant: FAIR WORK OMBUDSMAN

First Respondent: A & S WHOLESALE FRUIT & VEGETABLES PTY LTD (ACN 006 598 796)

Second Respondent: STEPHEN FANOUS

Third Respondent: ETHERAH LOULI

File Number: MLG 643 of 2017

Judgment of: Judge O'Sullivan

Hearing date: 16 May 2019

Date of Last Submission: 16 May 2019

Delivered at: Melbourne

Delivered on: 4 July 2019

REPRESENTATION

Counsel for the Applicant: Mr Easton

Solicitors for the Applicant: Fair Work Ombudsman

Counsel for the First, Second and Third Respondents: Mr Dalton QC and Mr Minucci

Solicitors for the First, Second and Third Respondents: Lewenberg & Lewenberg

ORDERS

THE COURT DECLARES THAT:

(1)The First Respondent contravened the following civil remedy provisions in respect of Ghulam:

(a)section 45 of the FW Act, by contravening clauses A.2.5 of Schedule A and 17 of the Modern Award;

(b)section 45 of the FW Act, by contravening clause 29.4(a) of the Modern Award;

(c)section 45 of the FW Act, by contravening clause 29.4(b) of the Modern Award;

(d)section 45 of the FW Act, by contravening clause 29.4(c) of the Modern Award;

(e)section 45 of the FW Act, by contravening clause 29.4(d) of the Modern Award;

(f)section 45 of the FW Act, by contravening clause 29.2(a) of the Modern Award;

(g)section 45 of the FW Act, by contravening clause 29.2(c) of the Modern Award;

(h)section 45 of the FW Act, by contravening clause 29.2(c) of the Modern Award;

(i)section 45 of the FW Act, by contravening clause 31.2(a) of the Modern Award;

(j)section 45 of the FW Act, by contravening clause 32.3(b)(i) of the Modern Award;

(k)section 44(1) of the FW Act, by contravening by section 99 of the FW Act;

(l)section 44(1) of the FW Act, by contravening section 116 of the FW Act;

(m)section 44(1) of the FW Act, by contravening section 62(1) of the FW Act;

(n)section 44(1) of the FW Act, by contravening section 90(1) of the FW Act;

(o)section 535(1) of the FW Act, by contravening regulations 3.33(1)(a), 3.33(1)(b) and 3.34 of the FW Regulations;

(p)section 536(2) of the FW Act, by contravening regulation 3.46(1)(e) of the FW Regulations; and

(q)regulation 3.44(1) of the FW Regulations, by failing to ensure that records required to be kept were not false or misleading.

(2)The First Respondent contravened the following civil remedy provisions in respect of Michelle:

(a)section 45 of the FW Act, by contravening clause 17 of the Modern Award;

(b)section 45 of the FW Act, by contravening clause 29.4(a) of the Modern Award;

(c)section 45 of the FW Act, by contravening clause 29.4(c) of the Modern Award;

(d)section 45 of the FW Act, by contravening clause 29.4(d) of the Modern Award;

(e)section 45 of the FW Act, by contravening clause 29.2(a) of the Modern Award;

(f)section 45 of the FW Act, by contravening clause 29.2(c) of the Modern Award in respect of Sunday overtime rates;

(g)section 45 of the FW Act, by contravening clause 32.3(b)(i) of the Modern Award;

(h)section 44(1) of the FW Act, by contravening section 99 of the FW Act;

(i)section 44(1) of the FW Act, by contravening section 116 of the FW Act;

(j)section 44(1) of the FW Act, by contravening section 90(1) of the FW Act; and

(k)section 535(1) of the FW Act, by contravening regulations 3.33(3)(c), 3.33(3)(d), 3.33(3)(e) and 3.34 of the FW Regulations.

(3)The First Respondent contravened the following civil remedy provisions in respect of Courtney:

(a)section 45 of the FW Act, by contravening clause A.2.5 of Schedule A of the Modern Award in respect of minimum junior rates;

(b)section 45 of the FW Act, by contravening clause 29.4(b) of the Modern Award;

(c)section 45 of the FW Act, by contravening clause 29.4(c) of the Modern Award;

(d)section 45 of the FW Act, by contravening clause 12.2 of the Modern Award;

(e)section 535(1) of the FW Act, by contravening regulations 3.33(1)(a) and 3.33(1)(b) of the FW Regulations;

(f)section 536(1) of the FW Act; and

(g)regulation 3.44(6) of the FW Regulations, by making use of an entry in the Courtney Payroll Record knowing that the entry was false or misleading.

(4)From least 30 January 2014, the Second Respondent was involved in each of the following First Respondent’s contraventions, within the meaning of section 550(2)(a) and/or (c) of the FW Act:

(a)section 45 of the FW Act, by contravening clauses 17 and A.2.5 of the Award (failing to minimum adult wages) in respect of Ghulam and Michelle;

(b)section 45 of the FW Act, by contravening clauses 17 and A.2.5 of the Award (failing to minimum adult wages) in respect of Michelle;

(c)section 45 of the FW Act, by contravening clause 29.4(a) of the Modern Award (failure to pay evening penalty rates) in respect of Ghulam;

(d)section 45 of the FW Act, by contravening clause 29.4(b) of the Modern Award (failure to pay Saturday penalty rates) in respect of Ghulam;

(e)section 45 of the FW Act, by contravening clause 29.4(c) of the Modern Award (failure to pay Sunday penalty rates) in respect of Ghulam;

(f)section 45 of the FW Act, by contravening clause 29.4(d) of the Modern Award (failure to pay public holiday penalty rates) in respect of Ghulam;

(g)section 45 of the FW Act, by contravening clause 29.2(a) of the Modern Award (failure to pay overtime rates Monday to Saturday) in respect of Ghulam;

(h)section 45 of the FW Act, by contravening clause 29.2(c) of the Modern Award (failure to pay overtime rates on Sunday) in respect of Ghulam;

(i)section 45 of the FW Act, by contravening clause 29.2(c) of the Modern Award (failure to pay overtime rates on a public holiday) in respect of Ghulam;

(j)section 45 of the FW Act, by contravening clause 31.2(a) of the Modern Award (failure to provide breaks between work periods) in respect of Ghulam;

(k)section 45 of the FW Act, by contravening clause 32.3(b)(i) of the Modern Award (failure to pay annual leave loading) in respect of Ghulam;

(l)section 44(1) of the FW Act, by contravening section 116 of the FW Act (failure to pay applicable rates for absence on a public holiday) in respect of Ghulam;

(m)section 44(1) of the FW Act, by contravening section 90(1) of the FW Act (failure to pay applicable rates for paid annual leave) in respect of Ghulam; and

(n)section 44(1) of the FW Act, by contravening by section 99 of the FW Act (failure to pay applicable rates for paid personal leave) in respect of Ghulam.

(5)The Second Respondent was involved in each of the following First Respondent’s contraventions, within the meaning of section 550(2)(a) and/or (c) of the FW Act:

(a)section 44(1) of the FW Act, by contravening section 62(1) of the FW Act (exceeding maximum weekly hours) in respect of Ghulam;

(b)section 535(1) of the FW Act, by contravening regulations 3.33(1)(a), 3.33(1)(b) of the FW Regulations (failure to make and keep employee records) in respect of Ghulam;

(c)section 535(1) of the FW Act, by contravening regulations 3.33(1)(a), 3.33(1)(b) of the FW Regulations (failure to make and keep employee records) in respect of Courtney;

(d)section 535(1) of the FW Act, by contravening regulations 3.34 of the FW Regulations (failure to make and keep employee records) in respect of Ghulam;

(e)regulation 3.44(1) of the FW Regulations (failing to ensure that records required to be kept were not false or misleading) in respect of Ghulam; and

(f)regulation 3.44(6) of the FW Regulations (making use of an entry in knowing that the entry was false or misleading) in respect of Courtney.

(6)The Third Respondent was involved in each of the following First’s Respondent’s contraventions, within the meaning of section 550(2)(a) and/or (c) of the FW Act:

(a)section 535(1) of the FW Act, by contravening regulations 3.33(1)(a), 3.33(1)(b) and FW Regulations (failure to make and keep employee records) in respect of Ghulam;

(b)section 535(1) of the FW Act, by contravening regulations 3.34 of the FW Regulations (failure to make and keep employee records) in respect of Ghulam;

(c)section 536(2) of the FW Act, by contravening regulation 3.46(1)(e) of the FW Regulations (failure to provide payslips with the required content) in respect of Ghulam;

(d)regulation 3.44(1) of the FW Regulations (failing to ensure that records required to be kept were not false or misleading) in respect of Ghulam; and

(e)section 536(1) of the FW Act (failure to provide pay slips) in respect of Courtney.

THE COURT ORDERS THAT:

(7)The First Respondent pay penalties pursuant to sub-section 546(1) of the FW Act in the total amount of $200,000 in respect of the First Respondent’s contraventions of the FW Act and FW Regulations as declared by the Court in declarations 1 – 3 above.

(8)The Second Respondent pay penalties pursuant to sub-sections 546(1) and 550(1) of the FW Act in the total amount of $30,000 in respect of his involvement in the Frist Respondent’s contraventions of the FW Act and FW Regulations as declared by the Court in 4 – 5 above.

(9)The Third Respondent pay penalties pursuant to sub-sections 546(1) and 550(1) of the FW Act in the total amount of $13,000 in respect of her involvement in the First Respondent’s contraventions of the FW Act and FW Regulations as declared by the Court in 6 above.

(10)The Respondents are to pay the penalty amounts set out above in Orders 7 – 9 above respectively to the Commonwealth pursuant to subsection 546(3)(a) of the FW Act within a period of 28 days.

(11)Pursuant to section 545(1) of the FW Act the First Respondent will, at its own expense, engage a third party with qualifications in accounting or workplace relations to undertake an audit of the First Respondent's compliance with the FW Act and the Modern Award on the following terms:

(a)the audit period will commence on 1 April 2018 and be for a period of six months;

(b)the audit is to be completed within 60 days of the end of the audit period;

(c)the audit will apply to all employees employed by the First Respondent at any time during the audit period in a classification of work under the Modern Award;

(d)the audit will assess the First Respondent's compliance with the following obligations according to each employee's classification of work, category of employment and hours worked during the audit period:

(i)wages and work related entitlements under the Modern Award;

(ii)accrual and payment of entitlements under the National Employment Standards in Part 2−2 of the FW Act; and

(iii)record keeping obligations in Division 3 of Part 3−6 of the FW Act and Division 3 of Part 3−6 of the FW Regulations;

(e)within 30 days of the audit being completed, the First Respondent will provide to the Applicant:

(i)a copy of the audit report which will include a statement of the methodology used in the audit;

(ii)a copy of the source materials used to audit the times worked by the employees, including but not limited to rosters and timebooks; and

(iii)details of any contraventions identified in the audit and the steps the First Respondent will take to rectify any identified contravention(s) and by when the rectification will occur.

(12)Pursuant to section 545(1) of the FW Act the First Respondent will, within 30 days of the date of this order, display a notice in a prominent position in the premises of the Chirnside Store and each of the Florist Stores that can be easily viewed by all employees (Workplace Notice) on the following terms:

(a)the Workplace Notice must contain:

(i)information on the minimum rates of pay, penalty rates and overtime loadings under the Award;

(ii)a link to the Fair Work Ombudsman’s webpage at where employees can obtain information about the Fair Work Ombudsman’s ‘Record My Hours’ app; and

(iii)information on how to contact the Fair Work Ombudsman;

(b)the Workplace Notice must be in a form approved by the Applicant at least 7 days prior to the First Respondent displaying the Workplace Notice;

(c)the First Respondent will provide proof of the display of the Workplace Notice to the Applicant within 14 days of the Workplace Notice being approved by the Applicant; and

(d)the Workplace Notice must be displayed for a period of one year.

(13)The Applicant have liberty to apply on 7 days’ notice in the event that any of the preceding Orders are not complied with.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 643 of 2017

FAIR WORK OMBUDSMAN

Applicant

And

A & S WHOLESALE FRUIT & VEGETABLES PTY LTD
(ACN 006 598 796)

First Respondent

STEPHEN FANOUS

Second Respondent

ETHERAH LOULI

Third Respondent

REASONS FOR JUDGMENT

Introduction

“Unless an employer complies with the law, and makes and keeps employment records, an effective safety net for employees is difficult to maintain. The result is that employees are more vulnerable to exploitation. The job of the Fair Work Ombudsman, as regulator, in detecting and protecting employees’ workplace entitlements is reduced in effectiveness.”[1]

[1] see Fair Work Ombudsman v Han Investments Pty Ltd [2017] FCA 623 at [114]

1.These reasons concern proceedings in which the wisdom of that observation is manifest.

2.On 30 March 2017, the Fair Work Ombudsman (“the applicant”) commenced proceedings in this Court against A & S Wholesale Fruit & Vegetables Pty Ltd (“the first respondent”), Stephen Fanous (“the second respondent”) and Etherah Louli (“the third respondent”).

3.The applicant alleged that the first respondent had contravened, and the second and third respondents were involved in, various contraventions of the Fair Work Act 2009 (Cth) (“the Act”), the Fair Work Regulations 2009 (Cth) (“the Regulations”) and the General Retail Industry Award 2010 (“the Award”).

4.On 20 July 2018, following a number of directions hearings, and after all parties had filed amended pleadings and attended a mediation, the parties filed a Statement of Agreed Facts (“SOAF”) in which the first respondent made a number of admissions as to contraventions of the Act.

5.At that time, there remained a dispute between the parties as to whether the second and third respondents were liable pursuant to s.550 of the Act for their involvement in the admitted contraventions by the first respondent. Accordingly, the proceedings were fixed for a liability hearing on that issue in May 2019.

6.However, shortly prior to the liability hearing on 2 May 2019, the parties filed a Second Statement of Agreed Facts (“Supplementary SOAF”) in which the remaining respondents made admissions as to liability for their involvement in the contraventions of the first respondent. The parties also agreed on the amount of penalties which they submitted should be imposed for the whole of the contravening conduct by the respondents and requested the matter proceed as a penalty hearing.

7.At the penalty hearing held on 16 May 2019, the applicant was represented by Mr Easton of Counsel and the respondents were represented by Mr Dalton of Queens Counsel and Mr Minucci of Counsel.

Background

8.The factual background is contained in the “SOAF”[2] and the Supplementary SOAF[3] filed by the parties.

[2] see  s.191 of the Evidence Act (Cth) 1995

[3] Ibid

9.The first respondent operates a number of retail, fruit, vegetable and flower shops at various shopping centres in the Melbourne metropolitan area. During 2012 to 2014, the second and third respondents were employed as managers by the first respondent.

10.Between 1 February 2012 to 2 December 2014 the first respondent employed:

(a)Mr. Glulam Hussaini from 1 February 2012 to 30 July 2014;

(b)Ms. Michelle Willard from (at least) 3 August 2012 to 2 December 2014; and

(c)Ms. Courtney Moon from (at least) 1 May 2013 to 28 January 2014. (collectively, “the employees”)

11.During their employment, the employees were paid varying flat rates of pay between $10.00 and $18.52 per hour. For at least two of the employees there was a system of payment both ‘on the books’ and ‘off the books’ for various hours or periods of their employment. The rates paid were insufficient to meet the minimum requirements prescribed by the Award and did not provide for penalty rates or overtime. As a result, it is uncontroversial that the employees were underpaid a total of $132,956.88.

12.In March 2014, the applicant investigated allegations that the first respondent had been paying staff cash in hand.[4] The first respondent was served with an Infringement Notice and a Letter of Caution in June 2014 as a result of that investigation.[5] In 2015, as a consequence of further allegations made against the first respondent, the applicant conducted a record of interview with the second respondent and then commenced proceedings against the respondents.[6]

[4] see paragraph [2] of Inspector Hurrell affidavit filed 27 November 2018

[5] see paragraph [39] Inspector Chum affidavit filed 28 November 2018

[6] see Annexure 35 of Inspector Chum affidavit filed 28 November 2018

13.Since the proceedings were commenced the first respondent has remedied the underpayments. As set out above, the respondents have now made admissions to the various contraventions of the Act and the parties have embodied these admissions in the SOAF and the Supplementary SOAF.

14.On the basis of the SOAF and the Supplementary SOAF, the Court is able to make the declarations referred to in the latter.  Accordingly, the only matter that remains to be determined by the Court is the appropriate penalty to be imposed on the respondents.

15.The position of the parties on the appropriate total penalties is set out at Annexure A to these reasons.

Penalty hearing

16.At the penalty hearing, the applicant relied upon the following documents:

(a)the application filed 30 March 2017;

(b)the amended statement of claim filed 23 April 2017;

(c)the SOAF and the Supplementary SOAF;

(d)affidavit of Mr Hussaini;

(e)affidavit of Ms Willard;

(f)affidavit of Ms Moon;

(g)affidavit of Ms Bennett;

(h)affidavit of Ms Hurrell;

(i)affidavit of Inspector Chum;

(j)written submissions and agreed minutes.

17.The applicant relied on the affidavit of Inspector Chum. The respondents objected to the admissibility of certain parts of that affidavit.[7] For reasons given ex tempore at the penalty hearing, those objections were upheld and those parts of Inspector Chum’s affidavit were not read.

[7] see Annexure B to the respondents’ outline of submissions filed 13 May 2019

18.At the penalty hearing, the respondents relied upon the following documents:

(a)the notice of defence;

(b)the amended notice of defence;

(c)the affidavit of Mr Michael Shulman

(d)written submissions and agreed minutes

19.The respondents relied on the affidavit of Mr. Michael Shulman, a partner at Stannards Accountants, who deposed to his involvement in an audit of the first respondent’s business. Senior Counsel for the respondents did not suggest that this evidence was relied on to demonstrate compliance by the first respondent. Instead, it was submitted this evidence demonstrated a preparedness by the first respondent to comply.

Agreed contraventions

20.In the SOAF and the Supplementary SOAF, the parties indicated they had agreed on the declarations necessary to record that, in summary, the first respondent had contravened certain provisions in the Act, the Regulations and the Award and the second and third respondent were involved in certain of these contraventions.

21.In the SOAF, the first respondent has admitted failing to pay minimum hourly rates, evening rates, Saturday, Sunday and public holiday rates along with overtime for Monday to Sunday, overtime on Sunday and public holidays.

22.The first respondent also admitted in the SOAF to exceeding the maximum weekly hours, failing to provide breaks, annual leave loading as well as failing to provide the applicable rates for personal and public holiday leave, annual leave, not making or keeping records or providing payslips and making use of a record knowing it was false or misleading.

23.By virtue of the admissions in the Supplementary SOAF, the second and third respondents admit they were involved in many of the abovementioned admitted contraventions.

Agreed penalty

24.The Court’s role when dealing with a civil penalty case, where the parties have agreed on the pecuniary penalty, is not to simply “rubber stamp” that agreed penalty.[8] That said, subject to the Court being satisfied that the proposed penalty is appropriate, it is accepted that it is “highly desirable in practice” for the Court to impose the proposed penalty[9].

[8] BlueScope Steel Limited v The Australian Worker’s Union [2019] FCA 182 at [3]

[9] see Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at [58]

25.The proposed penalty will be consistent with the principle that if it falls within the range of penalties that the Court could, in the exercise of its discretion, impose having regard to the facts and circumstances of the contraventions and the legal principles that apply to the fixing of penalties for civil penalty provisions.[10]

[10]see NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285; Minister for Industry, Tourism and Resources v Mobile Oil Australia Pty Ltd [2004] FCAFC 72

26.In the applicant’s penalty submissions, the parties agreed position was summarised as follows:

“…

15.    The Applicant and Respondent’s jointly recommend that penalties be imposed against the Respondents, taking into account a discount for early submissions and co-operation, as follows:

(a)    $200,000 be imposed against the First Respondent;

(b)    $30,000 be imposed against the Second Respondent;

(c)        $13,000 be imposed against the Third Respondent.”

As was said in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at paragraph [53] that:

“…

(iii)   There is a public interest in promoting settlement of litigation...

…

(vi)   Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court’s view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range.” (emphasis added)

Value of penalty unit

27.Under s.12 of the Act, a “penalty unit” has the meaning by section 4AA of the Crimes Act 1914 (Cth). Until 28 December 2012, a penalty unit was $110. So far as is relevant for present purposes, from that date, the value of a penalty unit was $170. The majority of the agreed contraventions occurred during that period.

28.In my view, the maximum penalty to be applied in respect of each of the admitted contraventions is to be assessed by reference to the higher amount. This is because by operation of the statutory course of conduct provisions in the Act much of the conduct in question is being treated as a single contravention and covers the period after the increase in the value of the penalty unit.

Principles relevant to the determination of penalty

29.The approach of the Court in determining penalties involves the following steps:

(a)the Court is to identify the separate contraventions involved. For the purposes of s.539(2), each contravention of an obligation located in the Act constitutes a separate contravention of a civil remedy provision of the Act;

(b)the Court should consider whether any of the breaches taken together constitute a single course of conduct pursuant to s.557(1) such that multiple contraventions should be treated as a single contravention;

(c)to the extent that two or more contraventions have common elements, this should be taken into account in considering what an appropriate penalty is in all the circumstances for each contravention. The respondents should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to the respondents’ actions. Importantly, this third task is distinct from, and in addition to, the final application of the “totality principle”;

(d)the Court will consider an appropriate penalty to impose in respect of each contravention, whether a single contravention, a course of conduct, or group of contraventions, having regard to all of the circumstances of the case; and

(e)having fixed an appropriate penalty for each contravention, the Court should then review the aggregate penalty so as to determine whether it is an appropriate response to the contravening conduct. In doing so, the Court should apply an “instinctive synthesis” in making this assessment. This final step is commonly known as the “totality principle”.

30.The parties submissions addressed the non-exhaustive considerations by Tracey J identified in Kelly v Fitzpatrick [2007] FCA 1080, which were as follows:

(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 respondents;

(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 co-operated 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.

The contraventions

31.The separate contraventions admitted by the respondents are set out in the SOAF and Supplementary SOAF. A helpful agreed summary is at Annexure A.

Course of conduct

32.Section 557(1) of the Act provides as follows:

“For the purposes of this Part, two or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if: (a) the contraventions are committed by the same person; and (b) the contraventions arose out of a course of conduct by the person.”

33.The parties agreed, as Senior Counsel for the respondents noted in submissions before the Court, that s.557 of the Act had “work to do” in relation to the admitted contraventions. I accept that these provisions are accurately reflected in the table at Annexure A.

34.The Court considers an appropriate penalty in respect of each contravention, whether a single contravention, a course of conduct or a group of contraventions, having regard to all of the circumstances of the case. Each of the 21 contraventions at Annexure A relates to a separate and distinct entitlement or obligation and each should be treated as a separate contravention attracting an appropriate penalty.

Grouping

35.The applicant’s submissions, which the respondents accepted, was that it is appropriate for the Court to group the contraventions as follows:

Proposed grouping	Maximum Penalty
	1st Respondent	2nd Respondent	3rd Respondent
Ghulam and Michelle minimum hourly rates	$51,000	$10,200	Not alleged
Evening penalty rates	$51,000	$10,200	Not alleged
Saturday penalty rates	$51,000	$10,200	Not alleged
Sunday penalty rates	$51,000	$10,200	Not alleged
Public holiday penalty rates	$51,000	$10,200	Not alleged
Ghulam overtime rates	$51,000	$10,200	Not alleged
Michelle overtime rates	$51,000	Not alleged	Not alleged
Failure to make a part-time agreement	$51,000	Not alleged	Not alleged
Annual leave loading	$51,000	$10,200	Not alleged
Annual leave	$51,000	$10,200	Not alleged
Personal leave	$51,000	$10,200	Not alleged
Exceeding maximum weekly hours	$51,000	$10,200	Not alleged
Courtney record keeping	$51,000	$10,200	Not alleged
Glulam & Michelle record keeping	$51,000	$10,200	$10,200
	-	$3,400	$3,400
Use of false or misleading records	$17,000	$3,400	Not alleged
Pay slips	$51,000	Not alleged	$10,200
TOTAL:	$782,000.00	$129,200.00		$23,800.00

36.As Senior Counsel for the respondents pointed out in submissions before the Court the agreed position of the parities was that a number of the contraventions could be grouped because of commonality as there was “plainly some overlap”.

The nature, extent and circumstances of the conduct which led to the breaches;

37.The applicant’s written submissions address this consideration at paragraphs [36] to [48] and the respondents’ written submission address this consideration directly at paragraphs [12] to [20].

38.The majority of the contraventions in question were contraventions of s.45 of the Act which provides that “[a] person must not contravene a term of a Modern Award.” Most of the other contraventions included either contraventions of record keeping and payslips. However, the gravest contravention was the production of false or misleading records which Counsel for the respondents acknowledged merited a penalty at the higher end in these circumstances.

39.The conduct in this matter is serious. The first and second respondents paid the employees less than their entitlements. The first and second respondents also failed to make and keep certain employee records, and used record keeping practices which had the effect of concealing the contraventions. The third respondent failed to provide payslips to one of the employees in accordance with the Regulations. Additionally, the records produced were misleading employment records.

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

40.The applicant’s written submissions addressed this consideration at paragraphs [49] to [52].

41.The contravening conduct continued over an extended period of approximately two and a half years and resulted in substantial underpayments of $132,956.88. Moreover, as a result of the first respondent’s record keeping practices, determination of employee entitlements was made more difficult.

42.For the employees concerned, the impact of the contraventions is greater because they are award reliant workers and this is a factor that should be taken into account.

Whether there has been similar previous conduct by the respondents;

43.The applicant’s written submissions address this consideration at paragraphs [53] to [54].

44.It should be observed that the lack of any prior matter having been brought against the respondents in the current proceedings counts for little in circumstances where at Court (the first and second respondents) were plainly on notice as to what was required to comply with the Act.[11]

[11] see Fair Work Ombudsman v NHS North Pty Ltd trading as New Shanghai Charleston [2017] FCA 1301

45.The absence of previous similar conduct is not a mitigating factor, but means that there is no evidence of that nature which might otherwise have contributed to an increase in the penalty imposed.[12]

[12] Sayed v Construction, Forestry Mining and Energy Union (No.2) [2015] FCA 338 at [51]

The size of the business enterprise involved;

46.The applicant’s written submissions addressed this consideration at paragraphs [55] to [56].

47.Where the respondents have consented to the ordering of the agreed penalties, the Court can be satisfied that the proposed penalties can be met and are not crushing or oppressive, taking into account their respective circumstances.

Whether or not the breaches were deliberate;

48.The applicant’s written submissions addressed this consideration at paragraphs [57] to [62]. The respondents’ written submissions addressed this consideration directly at paragraphs [23] to [25].

49.An aggravating factor in this matter is the first respondent was issued with an Infringement Notice and Letter of Caution in 2014.  Senior Counsel for the respondents in his submissions before the Court acknowledged the “off the books” arrangement “bespeaks deliberate wrong doing” and the contraventions regarding records also attract a higher penalty because of this consideration.

Whether senior management was involved in the breaches;

50.The applicant’s written submissions addressed this consideration at paragraphs [63] to [64]. The second and third respondents’ were at all relevant times, senior managers of the first respondent.

Contrition, corrective action and co-operation;

51.The applicant’s written submissions addressed this consideration at paragraphs [65] to [70].

52.It is noted that the underpayments have been remedied. Accordingly, what otherwise would be an aggravating factor is absent rather than being a mitigating penalty. That aside, in the circumstance these considerations favour the respondents in assessing the appropriate penalty.

53.It is also the case that after these proceedings were commenced the first respondent, at an early stage, (the others much later) made admissions and formulated the SOAF and the Supplementary SOAF.

The need to ensure compliance with minimum standards;

54.The applicant’s written submissions addressed this consideration at paragraphs [71] to [77].

55.The first respondent’s failure to make proper records, keep false employment records and failure to make timely provision of accurate pay slips to the employees, undermines the utility and fundamental objectives of the Act.

The need for specific and general deterrence

56.The applicant’s written submissions addressed this consideration at paragraphs [78] to [88]. The respondents’ written submissions addressed this consideration at paragraphs [26] to [29].

57.The primary purpose of the imposition of a civil penalty is deterrence. The overarching importance of deterrence as a means of ensuring compliance with the statutorily ordained norms of behaviour, such as compliance with the Act, was confirmed by the High Court in Australian Building and Construction Commissions v Construction, Forestry, Mining and Energy Union [2018] HCA 3; (2018) CLR 157 at [116] where the following statement was made by Keane, Nettle and Gordon JJ:

“As has been observed, the principle object of an order that a person pay a pecuniary penalty under s.546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners. According to orthodox sentencing conceptions as they apply to the imposition of civil pecuniary penalties, specific deterrence inheres in the sting or burden which the penalty imposes on the contraveners. Other things being equal, it is assumed that the greater the sing or burden the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and this the more likely it will be that the contravener is deterred from further contraventions; likewise, the more potent will be the example that the penalty sets for other would—be contraveners and therefore the greater the penalty’s general deterrent effect. Conversely, the less the sting or burden that a contravener is deterred from further contraventions and the less the general deterrent effect of the penalty. Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any, specific or general deterrent effect, and so it will be unlikely, or at least less likely, to achieve the specific and general deterrent effect that are the raise d’etre of its imposition.”

[footnote references omitted and emphasis added]

58.In this case, notwithstanding the evidence upon which the respondents relied and the audit carried out, it is nevertheless necessary that the appropriate penalty for each reflect an element of specific deterrence. This is to remind the respondents of the continuing need to comply with their statutory obligations.

59.Further, the penalty arrived at for each of the respondents should act as a deterrent to others who may be minded to flout the law and so they should contain an element of general deterrence and the penalties should be at a level such that the payment of a penalty is not regarded as simply the cost of doing business.

Totality principle

60.Having fixed an appropriate penalty for each contravention, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate response to the contravening conduct.

61.A reduction on the basis of totality is appropriate in this case. The cumulative effect of the significant number of contraventions in this matter, when considering penalties in relation to each in accordance with the usual steps, results in an aggregate figure which warrants a reduction on account of totality to reflect the totality of the conduct as a whole.

Appropriate penalties

62.The respondents’ written submissions address the rationale for the penalties agreed by the parties for the contraventions set out at Annexure A.[13] The first respondent’s contraventions are particularised at items 1-21 of Annexure A. The second respondent has admitted to being involved in the contraventions particularised at items 1, 3-7 and 11-19. The third respondent had admitted to being involved in the contraventions at items 18 and 20.

[13] see paragraphs [14]-[20]

63.So far as the first respondent is concerned the grouping the parties have agreed on results in fifteen (15) contraventions at $51,000.00 and one (1) contravention at $17,000.00. The maximum penalties for the other respondents are accurately set out in Annexure A.

64.The parties have agreed, and I accept for the reasons set out in the respondents’ submissions that no penalty should be imposed and the first and second respondents for those contraventions at items 8, 12, 13, 15 and 21 in Annexure A.

65.Plainly, there is commonality or overlap between some of the contraventions in relation to both the first and second respondents. This will be taken into account in the substance of the matter by imposing no penalty, or a nominal penalty, in respect of breaches of some terms, but a substantial penalty in respect of others. I note that this approach is consistent with the agreed position of the parties.

66.It is important in a case such as this to take into account the totality of the circumstances. This is a case that involves some degree of synthesis of the above matters, some of which tell in favour of and some of which tell against each of the respondents.

67.Therefore;

(a)in relation to the first respondent it is appropriate to impose penalties for the contraventions as follows:

Grouping	Penalty
failing to pay minimum hourly rates	$20,400.00
failing to pay evening penalty rates	$6,120.00
failing to pay Saturday penalty rates	$16,320.00
failing to pay Sunday penalty rates	$16,320.00
failing to public holiday penalty rates	$16,320.00
failing to pay Ghulam overtime penalty rates	$28,560.00
failing to pay Michelle overtime penalty rates	$16,320.00
failure to make a part-time agreement	$12,240.00
failing to pay annual leave loading	$0.00
failing to pay annual leave	$6,120.00
failing to pay personal leave	$0.00
exceeding maximum weekly hours	$24,480.00
Courtney record keeping	$24,480.00
Ghulam and Michelle record keeping	$32,640.00
payslips	$28,560.00
making use of records that are false or misleading	$6,800.00
TOTAL:	$255,680.00

(b)in relation to the second respondent, give his particular involvement it is appropriate to impose penalties for the contraventions as follows:

Grouping	Penalty
failing to pay minimum hourly rates	$4,335.00
failing to pay evening penalty rates	$1,300.50
failing to pay Saturday penalty rates	$3,468.00
failing to pay Sunday penalty rates	$3,468.00
failing to public holiday penalty rates	$3,468.00
failing to pay Ghulam overtime penalty rates	$6,069.00
failing to pay Michelle overtime penalty rates	$0.00
failure to make a part-time agreement	$0.00
failing to pay annual leave loading	$0.00
failing to pay annual leave	$1,300.50
failing to pay personal leave	$0.00
exceeding maximum weekly hours	$5,202.00
Courtney record keeping	$5,202.00
Ghulam and Michelle record keeping	$6,936.00
payslips	$0.00
making use of records that are false or misleading	$1,445.00
TOTAL:	$42,194.00

(c)in relation to the third respondent, it is appropriate to impose penalties for the contraventions as follows:

Grouping	Penalty
Ghulam and Michelle record keeping	$6,936.00
payslips	$6,069.00
TOTAL:	$13,005.00

68.After a reduction for totality (of between 20% and 30% for the first two respondents) the total penalty to be imposed on the first respondent for the grouped contraventions equates to $200,000.00. For the second respondent, this equates to $30,000.00. The third respondent (for whom a smaller percentage reduction for totality is appropriate) and this results in a penalty of $13,000.00.

Conclusion

69.The applicant and the respondents submit that the proposed total penalties are appropriate and that they are within the permissible range for contraventions of the Act. On the basis of the consideration of the factors outlined above, I accept this submission. The level of penalties imposed will serve as a reminder that contraventions of the Act will be met with significant monetary penalties.

70.Therefore, as the Court:

(a)is directed by the relevant authorities to consider what is appropriate in all the circumstances of this case; and

(b)in its discretion in relation to penalty is not fettered by a checklist of mandatory criteria; and

(c)notes the parties have filed the SOAF, a Supplementary SOAF and agreed on penalties which are within the permissible range; and

(d)is satisfied the agreed penalties are just and appropriate;

there will be orders as set out in the beginning of these reasons for decision.

I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of Judge O'Sullivan

Date: 4 July 2019

ANNEXURE A

Contraventions		Proposed groupings	Maximum Penalty		Reduced maximum 20% discount	Reduced maximum 15% discount	Proposed penalty ranges and amounts
			First Respondent	Second & Third Respondents	First Respondent	Second & Third Respondents	First Respondent	Second Respondent	Third Respondent
1	Section 45 of the FW Act: Contravening modern award (Minimum hourly rates of pay – Clauses 17 and A.2.5 of the Award)	Ghulam and Michelle Minimum Hourly Rates	$51,000	$10,200	$40,800	$8,670	50% $25,500	50% $5,100	Not Alleged
2	Section 45 of the FW Act: Contravening modern award (Minimum rates of Pay for junior employee – Clauses 18.1 and A.2.5 of the Award)	$51,000	Not Alleged	$40,800	Not Alleged	30%-40% $15,300 -$20,400	N/A	N/A
3	Section 45 of the FW Act: Contravening modern award (Evening penalty rates – Clause 29.4(a) of the Award)	Evening penalty rates	$51,000	$10,200	$40,800	$8,670	15% $7,650	15% $1,530	Not Alleged
4	Section 45 of the FW Act: Contravening modern award (Sat penalty rates – Clause 29.4(b) of the Award)	Saturday penalty rates	$51,000	$10,200	$40,800	$8,670	40%-60% $20,400 - $30,600	50% $5,100	Not Alleged
5	S.45 of the FW Act: Contravening modern award (Sun loading – Clause 29.4(c) of Award)	Sunday penalty rates	$51,000	$10,200	$40,800	$8,670	40%-60% $20,400 - $30,600	50% $5,100	Not Alleged
6	S. 45 of the FW Act: Contravening modern award (P Holiday loading – Clause 29.4(d) of the Award)	Public Holiday penalty rates	$51,000	$10,200	$40,800	$8,670	40%-60% $20,400 - $30,600	50% $5,100	Not Alleged
7	Section 45 of the FW Act: Contravening modern award (Mon-Sat overtime rates–Clause 29.2(a) of the Award)	Ghulam Overtime rates	$51,000	$10,200	$40,800	$8,670	70% $35,700	70% $7,140	Not Alleged
	Section 45 of the FW Act: Contravening modern award (Sunday overtime rates – Clause 29.2(b) of the Award)
8	Section 45 of the FW Act: Contravening modern award (Public Holiday overtime rates – Clause 29.2(c) of the Award)	-	-	-	-	-	-	-	Not Alleged
9	Section 45 of the FW Act: Contravening modern award (Mon-Sat overtime rates – Clause 29.2(a) of the Award)	Michelle Overtime rates	$51,000	Not Alleged	$40,800	Not Alleged	40%-50% $20,400 - $25,500	N/A	N/A
	Section 45 of the FW Act: Contravening modern award (Sunday overtime rates – Clause 29.2(b) of the Award)
	Section 45 of the FW Act: Contravening modern award (Public Holiday overtime rates – Clause 29.2(c) of the Award)
10	Section 45 of the FW Act: Contravening modern award (Failure to make a part-time agreement- Clause 29.4(b) of the Award)	$51,000	Not Alleged	$40,800	Not Alleged	30% $15,300	N/A	Not Alleged
11	Section 45 of the FW Act: Contravening modern award (Break between work periods – Clause 31.2(a) of the Award)	$51,000	$10,200	$40,800	$8,670	40% $20,400	40% $4,080	Not Alleged
12	Section 45 of the FW Act: Contravening modern award (Annual leave loading – Clause 32.3(b)(i) of the Award)	Annual leave loading	$51,000	$10,200	$40,800	$8,670	0%	0%	Not Alleged
13	Section 44(1) of the FW Act – Contravening section 116 FW Act (rates for absence on a Public Holiday)	$51,000	$10,200	$40,800	$8,670	0% $0	0% $0	Not Alleged
14	Section 44(1) of the FW Act – Contravening section 90(1) of the FW Act – Rates for paid annual leave	Annual leave	$51,000	$10,200	$40,800	$8,670	15%-20% $7,650 - $10,200	0% (sic) $1,530 - $2,040	Not Alleged
15	Section 44(1) of the FW Act – Contravening section 99 of the FW Act (Rates paid for personal leave)	Personal Leave	$51,000	$10,200	$40,800	$8,670	0% $0	0% $0	Not Alleged
16	Section 44(1) of the FW Act – Contravening s 62(1) of the FW Act (Exceeding maximum weekly hours)	$51,000	$10,200	$40,800	$8,670	60% $30,600	60% $6,120	Not Alleged
17	Section 535(1) of the FW Act (Failure to make and keep employee records)	Courtney Record keeping	$51,000	$10,200	$40,800	$8,670	60%-70% $30,600 - $35,700	60%-70% $6,120 - $7,140	Not Alleged
18	Section 535(1) of the FW Act (Failure to make and keep employee records)	Ghulam and Michelle Record Keeping	$51,000	$10,200	$40,800	$8,670	80%-90% $40,800 - $45,900	80%-90% $8,160 - $9,180	80%-90% $8,160 - $9,180
	Regulation 3.44(1) FW Regulations (requirement to ensure that records kept are not false and misleading)		$17,000	$3,400	$13,600	$2,890

19	Regulation 3.44(6) of the FW Regulations – making use of records which are false and misleading	$17,000	$3,400	$13,000	$2,890	50-60% $8,500 - $10,200	50-60% $7,700 $2,040	Not alleged
20	Section 536(1) – Failure to provide payslips	Payslips	$51,000	$10,200	$40,800	$8,670	70% $35,700	Not Alleged	70% $7,140
21	Section 536(2) of the FW Act (Payslips with the required content required by Reg 3.46 of the FW Regulations)	-	-	-	-	-	-	-	-
TOTAL			$782,000	Second Respondent $129,200	$625,600	Second Respondent $109,820	$255,680 $328,440	$42,194 – $50,719.50	$13,005 – $13,872
				Third Respondent $23,800		Third Respondent $20,230
RECOMMENDED PENALTY (TOTALITY PRINCIPLE APLLIED)							$200,000	$30,000	$13,000