Fair Work Ombudsman v Abella Travel Pty Ltd
[2019] FCCA 3262
•13 November 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v ABELLA TRAVEL PTY LTD & ANOR | [2019] FCCA 3262 |
| Catchwords: INDUSTRIAL LAW – contraventions – declarations – cash back arrangement to facilitate 457 visa applications – underpayments – penalties. |
| Legislation: Other materials: |
| Cases cited: Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2006) 236 ALR 665; (2008) ASAL 55-176; (2007) ATPR 42-138; [2006] FCA 1427 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8 Browne v Dunn (1893) 6 R 67 Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; (2015) 326 ALR 476; (2015) 90 ALJR 113; (2015) 255 IR 87; [2015] HCA 46 Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228; [2001] FCA 1364 Fair Work Ombudsman v Bedington [2012] FMCA 1133 Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 Mason v Harrington Corp Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; (2008) 247 ALR 714; (2008) 171 IR 455; [2008] FCAFC 70 Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170 Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65 Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First respondent: | ABELLA TRAVEL PTY LTD (ACN 126 808 437) |
| Second respondent: | JOUNG HYUN LEE |
| File number: | MLG1348 of 2017 |
| Judgment of: | Judge Riley |
| Hearing date: | 14 & 15 August 2019 |
| Date of last submission: | 15 August 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 13 November 2019 |
REPRESENTATION
| Counsel for the applicant: | Joel Fetter |
| Solicitors for the applicant: | Fair Work Ombudsman |
| Counsel for the respondents: | Angus Galbraith |
| Solicitors for the respondents: | Jem Lawyers Pty Ltd |
THE COURT DECLARES THAT, having regard to the admissions made by the first and second respondents in the statement of agreed facts filed in this proceeding:
The first respondent contravened the following civil remedy provisions:
(a)section 325 of the Fair Work Act 2009 (“the Act”), by requiring Haehwa Shin to return part of her wages to the first respondent;
(b)section 325 of the Act, by requiring Mi Jin Seo to return part of her wages to the first respondent;
(c)section 45 of the Act, by failing to pay Haehwa Shin the minimum hourly rate of pay, in contravention of clause 17 of the General Retail Industry Award;
(d)section 45 of the Act, by failing to pay Haehwa Shin the applicable Saturday penalty rates, in contravention of subclause 29.4(b) of the General Retail Industry Award;
(e)section 45 of the Act, by failing to pay Haehwa Shin public holiday penalty rates, in contravention of subclause 29.4(d) of the General Retail Industry Award;
(f)section 45 of the Act, by failing to pay Haehwa Shin overtime rates of pay applicable from Monday to Saturday, in contravention of subclause 29.2(a) of the General Retail Industry Award;
(g)section 45 of the Act, by failing to pay Haehwa Shin overtime rates of pay applicable on Sundays, in contravention of subclause 29.2(c) of the General Retail Industry Award;
(h)section 45 of the Act, by failing to pay Haehwa Shin double her minimum rate of pay for all hours of work where she was not provided with a 12 hour break between work periods, in contravention of subclause 31.2(b) of the General Retail Industry Award;
(i)subsection 44(1) of the Act, by failing to pay Haehwa Shin her base rate of pay for ordinary hours of work for the periods when she took annual leave, in contravention of subsection 90(1) of the Act;
(j)section 45 of the Act, by failing to pay Haehwa Shin her entitlement to annual leave loading for periods when she took annual leave, in contravention of clause 32.3 of the General Retail Industry Award;
(k)subsection 44(1) of the Act, by failing to pay Haehwa Shin her annual leave on termination of her employment in contravention of subsection 90(2) of the Act;
(l)subsection 44(1) of the Act, by failing to pay Haehwa Shin her entitlement to her base rate of pay for ordinary hours of work for periods she took personal leave in contravention of section 99 of the Act;
(m)subsection 44(1) of the Act, by failing to pay Haehwa Shin her base rate of pay for ordinary hours of work during periods she was absent from work on a public holiday in contravention of section 116 of the Act;
(n)section 293 of the Act, by failing to pay Mi Jin Seo the national minimum wage in contravention of clause 4.2 of the National Minimum Wage Order 2012;
(o)sub-regulation 3.44(1) of the Fair Work Regulations 2009 (“the Regulations”), by failing to ensure that the records it kept in respect of Haehwa Shin’s employment were not false or misleading to its knowledge;
(p)sub-regulation 3.44(6) of the Regulations, by producing records in respect of Haehwa Shin’s employment to the Fair Work Ombudsman that were false and misleading;
(q)subsection 535(1) of the Act, by failing to make and keep records of the kind prescribed by the Regulations in respect of Mi Jin Seo; and
(r)subsection 536(1) of the Act, by failing to provide pay slips to Haehwa Shin and Mi Jin Seo.
The second respondent was involved, pursuant to section 550 of the Act, in the first respondent’s contraventions set out in declaration 1.
ORDERS BY CONSENT:
The respondents pay penalties pursuant to subsection 546(1) of the Act for the contraventions set out in declarations 1 and 2.
Within 90 days, pursuant to paragraph 546(3)(a) of the Act, the respondents pay their respective penalties to the Commonwealth.
ORDERS:
The first respondent pay penalties of $332,100.
The second respondent pay penalties of $66,420.
DIRECTIONS:
The registrar provide a copy of these orders and the reasons for judgment to the Minister for Immigration for investigation into whether there have been breaches of s.245AR and s.245AS of the Migration Act 1958.
The registrar provide to the Minister for Immigration such documents from the court file as he may request.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1348 of 2017
| FAIR WORK OMBUDSMAN |
Applicant
And
| ABELLA TRAVEL PTY LTD (ACN 126 808 437) |
First respondent
And
| JOUNG HYUN LEE |
Second respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns declarations in relation to, and the penalties to be imposed for, certain contraventions of the Fair Work Act 2009 (“the Act”).
The applicant is the Fair Work Ombudsman. The first respondent is a company which, at all material times, operated a travel agency with offices in Australia and Korea. The second respondent and his wife were the two directors of the first respondent from 31 July 2007 until 31 July 2017 and the second respondent was the sole director of the first respondent from 1 August 2017.
The parties filed a statement of agreed facts in which the contraventions were admitted. The most significant of the contraventions was that the first respondent entered into a cash back arrangement with two of its employees whereby the employees were required to repay part of their salaries to the first respondent. This arrangement appears to have been made because the two employees wanted subclass 457 visas, and there was a minimum salary that had to be paid for any position nominated for such a visa. The contracts specified salaries above that minimum, but the cash back arrangements brought the salaries well below that minimum.
The only issues in dispute were:
a)whether it was the second respondent or the employees who proposed the cash back arrangement, which the parties considered to be an issue going to the quantum of penalty; and
b)the amount of the penalties.
Legislation
The parties agreed that the cash back arrangement was in breach of s.325(1) of the Act, which provided that:
An employer must not directly or indirectly require an employee to spend, or pay to the employer or another person, an amount of the employee's money or the whole or any part of an amount payable to the employee in relation to the performance of work, if:
(a) the requirement is unreasonable in the circumstances; and
(b) for a payment – the payment is directly or indirectly for the benefit of the employer or a party related to the employer.
The statement of agreed facts
On 24 June 2019, the parties filed an amended statement of agreed facts which, with some further corrections agreed to by the parties, is attached to these reasons as attachment 1.
In essence, the respondents admitted in the amended statement of agreed facts, as corrected, that:
a)at all material times, the second respondent controlled the relevant activities of the first respondent;
b)the first respondent employed Ms Haehwa Shin from 2 February 2015 until 24 March 2016;
c)in or about February 2015, the first respondent required Ms Shin to repay to the first respondent part of her salary in circumstances in which the requirement was unreasonable;
d)although the first respondent required Ms Shin to repay to the first respondent part of her salary, she did not do so;
e)the first respondent employed Ms Mi Jin Seo from 11 February 2013 until 17 February 2015;
f)between about June 2013 and 17 February 2015, the first respondent required Ms Seo to pay to the first respondent part of her salary in circumstances in which the requirement was unreasonable;
g)the amount the first respondent required Ms Seo to pay to the first respondent, and which Ms Seo did pay, was $20,854;
h)the first respondent created and produced to the Ombudsman false payslips for Ms Shin, which showed that her rate of pay was higher than it actually was;
i)the first respondent failed to pay Ms Shin minimum hourly rates, with the result that the first respondent underpaid Ms Shin $9,154.23;
j)the first respondent failed to pay Ms Shin Saturday penalty rates, with the result that the first respondent underpaid Ms Shin $94.80;
k)the first respondent failed to pay Ms Shin minimum public holiday penalty rates, with the result that the first respondent underpaid Ms Shin $156.53;
l)the first respondent failed to pay Ms Shin overtime rates for Mondays to Saturdays, with the result that the first respondent underpaid Ms Shin $554.77;
m)the first respondent failed to pay Ms Shin overtime rates for Sundays, with the result that the first respondent underpaid Ms Shin $305.90;
n)the first respondent failed to pay Ms Shin double the minimum rate of pay for ordinary hours worked where she was not provided with a 12 hour break between work periods, with the result that the first respondent underpaid Ms Shin $1,892.58;
o)the first respondent failed to pay Ms Shin minimum public holiday penalty rates, with the result that the first respondent underpaid Ms Shin $156.53;
p)the first respondent failed to pay Ms Shin for annual leave, with the result that the first respondent underpaid Ms Shin $123.90;
q)the first respondent failed to pay Ms Shin annual leave loading, with the result that the first respondent underpaid Ms Shin $109.50;
r)the first respondent failed to pay Ms Shin annual leave on termination, with the result that the first respondent underpaid Ms Shin $3,043.20;
s)the first respondent failed to pay Ms Shin for personal leave, with the result that the first respondent underpaid Ms Shin $27.08;
t)the first respondent failed to pay Ms Shin for public holidays when she was absent from work, with the result that the first respondent underpaid Ms Shin $238.56;
u)the first respondent failed to pay Ms Seo minimum hourly rates, with the result that the first respondent underpaid Ms Seo $909.24;
v)the first respondent failed to keep required pay records;
w)the first respondent failed to give payslips as required;
x)the first respondent underpaid Ms Shin a total of $15,701.05;
y)on 11 July 2016, the first respondent repaid Ms Shin $6,505.94;
z)on 14 February 2019, the first respondent repaid Ms Shin the outstanding balance of $9,195.11;
aa)the first respondent underpaid Ms Seo a total of $21,763.24 (including the cashback amount of $20,854.00);
bb)on 14 February 2019, the first respondent repaid Ms Seo $13,393.24; and
cc)on 17 April 2019, the first respondent repaid Ms Seo the outstanding balance of $8,370.
Declarations
The parties agreed that the court should make declarations as follows:
1.The First Respondent has contravened the following civil remedy provisions:
(a)section 325 of the FW Act by requiring Ms Shin to return part of her wages to the First Respondent;
(b)section 325 of the FW Act by requiring Ms Seo to return part of her wages to the First Respondent;
(c)section 45 of the FW Act by failing to pay Ms Shin the minimum hourly rate of pay during the Shin Employment Period, in contravention of clause 17 of the General Retail Industry Award;
(d)section 45 of the FW Act by failing to pay Ms Shin the applicable Saturday penalty rates during the Shin Employment Period, in contravention of subclause 29.4(b) of the General Retail Industry Award;
(e)section 45 of the FW Act by failing to pay Ms Shin public holiday penalty rates during the Shin Employment Period, in contravention of clause 29.4(d) of the General Retail Industry Award;
(f)section 45 of the FW Act by failing to pay Ms Shin overtime rates of pay from Monday to Saturday during the Shin Employment Period, in contravention of subclause 29.2(a) of the General Retail Industry Award;
(g)section 45 of the FW Act by failing to pay Ms Shin overtime rates of pay on Sundays during the Shin Employment Period, in contravention of subclause 29.2(c) of the General Retail Industry Award;
(h)section 45 of the FW Act by failing to pay Ms Shin double her minimum rate of pay for all hours of work where she was not provided with a 12 hour break between work periods during the Shin Employment Period, in contravention of subclause 31.2(b) of the General Retail Industry Award;
(i)section 44(1) of the FW Act by failing to pay Ms Shin her base rate of pay for ordinary hours of work for the periods when she took annual leave during the Shin Employment Period, in contravention of subsection 90(1) of the FW Act;
(j)section 45 of the FW Act by failing to pay Ms Shin her entitlement to annual leave loading for periods when she took annual leave during the Shin Employment Period, in contravention of clause 32.3 of the General Retail Industry Award;
(k)section 44(1) of the FW Act by failing to pay Ms Shin her annual leave on termination of her employment in contravention of subsection 90(2) of the FW Act;
(l)section 44(1) of the FW Act by failing to pay Ms Shin her entitlement to her base rate of pay for ordinary hours of work for periods she took personal leave during the Shin Employment Period in contravention of section 99 of the FW Act;
(m)section 44(1) of the FW Act by failing to pay Ms Shin her base rate of pay for ordinary hours of work during periods she was absent from work on a public holiday during the Shin Employment period in contravention of section 116 of the FW Act;
(n)section 293 of the FW Act by failing to pay Ms Seo the national minimum wage in contravention of clause 4.2 of the National Minimum Wage Order 2012;
(o)sub-regulation 3.44(1) of the FW Regulations by failing to ensure that the records it kept in respect of Ms Shin’s employment were not false or misleading to the employer’s knowledge;
(p)sub-regulation 3.44(6) of the FW Regulations by producing records in respect of Ms Shin’s employment to the FWO that were false and misleading;
(q)subsection 535(1) of the FW Act, by failing to make and keep records of the kind prescribed by the FW Regulations in respect of Ms Seo; and
(r)subsection 536(1) of the FW Act, by failing to provide pay slips to Ms Shin and Ms Seo.
2.The Second Respondent was involved in the First Respondent’s contraventions as set out in paragraph 1 above, pursuant to section 550 of the FW Act.
There has been authority in the past to the effect that it is not appropriate for a court to make declarations based on admissions. However, there is more recent authority that in certain cases it is appropriate for the court to make declarations in such circumstances.
In particular, in Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2006) 236 ALR 665; (2008) ASAL 55-176; (2007) ATPR 42-138; [2006] FCA 1427, Kiefel J, as her Honour then was, considered at paragraphs 52 to 59 the rationale for the previous approach taken by the courts. Her Honour came to the view that the previous approach may no longer be warranted, particularly in public interest cases such as this, and particularly if the declarations are preceded by a statement that they are made upon admissions.
In all the circumstances of this case, I am satisfied that it is appropriate to make the declarations sought by the parties on the basis of the admissions made by the respondents, provided that the declarations are preceded by an appropriate preamble. Those declarations will be made accordingly.
Consent orders
The parties agreed that the court should make orders as follows:
3.The First Respondent and the Second Respondent pay penalties pursuant to section 546(1) of the FW Act for the contraventions set out at paragraph 1 above.
4.The First Respondent and the Second Respondent pay their respective penalty amounts to the Commonwealth, pursuant to section 546(3)(a) of the FW Act, within 90 days of the order.
I consider that it is appropriate to make those orders.
The affidavit evidence on the cash back arrangement
Ms Shin said in her affidavit affirmed on 7 March 2018 that:
2.I was employed by Abella Travel Pty Ltd from 2 February 2015 to 24 March 2016.
3.My date of birth is 11 April 1985. I am currently 32 years old.
4.I live in Seoul in the Republic of Korea (Korea). I lived in Australia from approximately September 2008 to October 2016.
5.My first language is Korean. However, I can read and write in the English language.
6.When I came to Australia I was on a working holiday visa for the first year. After that, I was on a student visa until March 2015. From March 2015, while I was waiting for my 457 visa to be approved, I was on a bridging visa that expired in March 2016. ...
7.Prior to starting work at Abella Travel Pty Ltd (Abella), I had worked as a travel agent in the travel industry for approximately 5 years in travel agencies in Cairns and Sydney. I have a Diploma of Hospitality and a Diploma of Management from the Holmes Institute and a Diploma of Marketing from EIM International Training. ...
Starting employment with Abella
8.I first met Mr Joung Hyun Lee (Joung) in September 2014 when I went on a day trip that was by a co-operator of Abella that was based in Cairns. Joung was also known as “John”. I told Joung that I worked for another travel agency, called Okeydokey Cairns Tours, in Cairns.
9.In December 2014, Joung called me and offered me a job at Abella Travel in Melbourne. We met up at a café in Cairns while he was visiting. He told me that:
(a)he had previously sponsored two other staff on a 457 visa;
(b)it would normally be 38 hours of work each week, sometimes more;
(c)I would receive 4 weeks of annual leave per year; and
(d)my position would be sales and marketing.
10.At this time my visa was about to expire and I was thinking of returning to Korea, but I decided to accept the position with Abella and move to Melbourne. Joung asked me to come to Melbourne as soon as possible because he needed staff. He told me that 457 visa approval normally takes one month.
11.I did not sign any paperwork when I met with Joung in December 2014, but after the meeting, his lawyer, Shannon, provided me with an employment contract via email. On 22 December 2014, I signed the contract and returned it. The contract stated that I would be paid $58,000 per annum. …
12.After I had signed the contract, Joung told me that I had to make two payments to Shannon for the visa processing. The first payment was $1,500 for legal costs and the second was approximately $1,000 for the 457 visa application fee. I made the payments as requested. …
13.I moved to Melbourne on 31 January 2015. The next day, on 1 February 2015, I met up with Joung at a cafe to discuss my work. The cafe was located near the corner of Elizabeth Street and Little Collins Street in Melbourne. During this meeting we had a conversation about the salary in my contract stating I would be paid $58,000 per [annum], as follows, in words to the following effect:
Joung:"I am going to pay you $40, 000 per year and you will have to pay me back the remainder for superannuation and tax ".
Me:"You should have told me this before I came to Melbourne."
Joung:"This is what Abella does."
Me:"I will think about it."
Joung:"You are already here and will get your visa. I usually pay staff much less than that, but if you work hard and the profit increases, then I will pay you more money."
14.I agreed because I had already spent more than $2,000 moving my belongings from Cairns to Melbourne and my car was on the way. I had also turned down alternative offers of employment in Cairns because I was moving to Melbourne, so I decided to work at Abella.
…
Cashback arrangement
39.In or around mid-February 2015, I had a discussion with Joung in the outside smoking area next to the Abella Travel office. The conversation was in words to the following effect:
Me:"How am I going to be paid after the training period?"
Joung:"Normally after the training period I pay the full wage on the sponsorship contract, and you will pay me back in cash for tax and superannuation."
Me:"I don't understand."
Joung:"The sponsorship will only be approved if the salary is $58,000, but I am going to pay you $40,000 so you will have to pay back the difference in cash each week."
Me:"No, my visa hasn't been approved yet. I will do this once it has been approved."
Joung:"Ok then. Until your 457 visa is approved I will pay you 20 hours into your bank account and 20 hours in cash."
Me:"Ok."
40.At the time I only expected it to be two or three weeks until my 457 [visa] was approved but this did not eventuate. I never had to pay money back to Joung because my visa was not approved.
…
Direction about wages
46.In or around the middle of 2015, Joung said words to the effect of "If someone from Immigration comes to talk to you, just say that you're being paid the right way, so Abella Travel doesn't have any problems." When Joung said this to me, I believed that he was half kidding and half serious.
47.When a staff member from the Department of Immigration (Immigration) visited me at work and asked about my wages I told them that I was getting proper payment, because I did not want to get in trouble with Immigration or Abella Travel.
48.When an inspector from the Fair Work Ombudsman came to my work I didn't tell them that I wasn't being paid properly because I was scared about not getting my visa and having to leave Australia.
Ms Seo said in her affidavit sworn on 8 March 2018 that:
1.I was employed by Abella Travel Pty Ltd (Abella) between May 2010 and 15 May 2011 and between 7[1] February 2013 and 17 February 2015.
[1] Ms Seo corrected this date in her affidavit affirmed on 3 April 2019 to read 11 February 2013.
2. Where I refer to conversations, the words used are to the effect of those spoken.
…
4.I was born on 14 August 1979 in the Republic of Korea (Korea).
5.My first language is Korean. I can read, write and speak in the English language.
6.I have a Bachelor's degree in chemical engineering.
7.I have lived in Australia since on or around 24 October 2012.
8. On 4 March 2015, I was granted my permanent residence visa. …
…
10.The boss of Abella was Mr Joung Hyun Lee (Mr Lee). I also knew Mr Lee by the name “John”.
…
First employment period with Abella
12.In or around May 2010, I was employed by Abella at its Melbourne office. I was hired by Mr Lee.
13.I worked as a part-time travel consultant and paid cash in hand by Mr Lee. I was paid approximately $250 to $300 per week for three days of work. At the time, I was in Australia under a 417 working holiday visa.
14.In or around March 2011, I quit my job with Abella and returned to Korea because my 417 visa expired. Before I left Australia, Mr Lee said to me words to the effect of, “I want to sponsor you for a 457 visa.” I refused his offer.
Return to Korea and discussions with Mr Lee
15.Between May 2011 and September 2012, I worked in a marketing role for a company in Korea.
16.While I was in Korea, Mr Lee visited me on three occasions on business trips. I had a meeting with him on each occasion. I had two meetings with him in 2011 and one in the early or middle stage of 2012. The meetings took place at a restaurant in Seoul and a friend of Mr Lee's would also attend. I do not recall his friend's name. At each meeting Mr Lee said to me, among other things, words to the following effect: “Come work for me in Australia. I want you for the office. You can work as the manager and look after the office. I will pay you around $50,000 per year.” On each occasion I refused his offer.
17.In or around September 2012, I decided I wanted to return to Australia to be with my boyfriend in Melbourne. After having made this personal decision, I had a telephone conversation with Mr Lee during which I said to him words to the following effect: “I have decided to come back to Australia and I want to work again for Abella.”
Return to Australia and meetings with Mr Lee
18.I arrived in Australia in October 2012 under an Electronic Travel Authority which was valid for a 90-day stay. I then applied for and was granted a Short Stay (Visitor) visa (Visitor Visa). …
19.In or around early November 2012 I had a meeting with Mr Lee at a cafe near the Abella office. During the conversation, I said to Mr Lee words to the following effect: “If the job is still available, I will take it”. During the conversation, we discussed how and when I could start working at the office. I also told Mr Lee that I needed a subclass 457 visa (457 visa) to work in Australia, and Mr Lee recommended some different visa agents for me to consult.
20.Following my conversation with Mr Lee referred to in the previous paragraph, I met some different visa agents to obtain more information about my 457 visa application.
First cash back discussion
21.I had approximately five further meetings with Mr Lee between December 2012 and February 2013 to discuss the details of my 457 visa sponsorship and the position with Abella. The meetings took place at a cafe on Little Collins Street near the office.
22.During one of the meetings that took place in or around January 2013, Mr Lee said to me words to the following effect:
“You will be working full time hours, Monday to Friday. For the 457 visa, you need to be paid a certain salary. For this job it is $52,000 per year. That is too much money. I will pay you around $42,000. For the records for your 457 visa I have to pay you the full salary amount of $52,000 and you will have to pay me back the difference. This is a condition of your sponsorship.”
23.I felt I had no other choice but to accept the lower amount because I needed the 457 visa. I thought that if I followed what he said, I would have my visa granted.
Requirement to work prior to the 457 visa approval
24.In January and early February 2013, which is the period while I was still under a Visitor Visa but before 11 February 2013, I had conversations with Mr Lee on more than one occasion during which we exchanged words to the following effect:
Mr Lee:“I want you to start working now.”
Me:“I want to start working after my 457 visa is granted. I am not allowed to work now.”
Mr Lee:“No, I want you to start working now.”
25.I was aware that I was not allowed to work in Australia under a Visitor Visa, but Mr Lee kept asking me to work for him. I felt I had to work for him so he would sponsor me for my 457 visa because I was still preparing my visa application and I needed certain documents from Mr Lee for my application.
Marketing role and contract
26.From on or around 11 February 2013, after Mr Lee kept asking me to work for him, I started working for Abella in a full-time Marketing role.
…
29.On 2 April 2013, I received a contract from Mr Lee. It was for the role of “Marketing Specialist” and there was a job description attached it. …
30.In or around late April 2013, I went with Mr Lee on a business trip to Korea. During this trip we visited 20 travel agencies in Korea to promote Abella and its tours.
31.Between 15 May 2013 and 3 June 2013 I took unpaid personal leave.
32.On 29 May 2013, my 457 visa application was granted. …
33.After I received the notification that my 457 visa was granted, I spoke with Mr Lee and we exchanged words to the following effect:
Me:“My 457 visa has been granted”
Mr Lee:“You can come back to the office and start work again. You will do trial work for two weeks. It will be unpaid. You need to complete this trial otherwise you will not get the position under the 457 visa.”
…
Wages and cash back arrangement
51.From 11 February 2013 to 19 May 2013, I was paid $580 per week. This was often paid into my bank account. Sometimes I received less in my bank account but received cash payments to make up the difference. I do not know why this happened.
52.In or about early June 2013, Mr Lee and I had a discussion about my pay and the cash back arrangement referred to at paragraph 22 above. During this conversation, Mr Lee said to me words to the following effect: “Send me an email with the details of what we discussed about your pay when we talked about it back in January."
53.On 6 June 2013 I sent Mr Lee an email with my calculations of how the cash back arrangement would work. The introductory sentence is in Korean but the English translation is "I am sending the salary calculation and relative details. Please refer to them and apply accordingly." In my email to Mr Lee I included the gross, net, tax and superannuation amounts for my wages based on the $52,000 annual salary I was to be paid under the 457 visa, and the same based on my actual reduced salary of $38,220, including the weekly amount I had to pay back to Mr Lee.
...
55.On 7 June 2013, I sent Mr Lee a further email which attached a revised table for my weekly wage calculations. … On the basis of this revised table, the weekly amount I calculated I was required to pay back to Mr Lee was $289. …
56.After these emails were sent, Mr Lee confirmed that he agreed with the numbers at a meeting that we had. From this time:
(a)Mr Lee paid me $837 (net) each week into my bank account; and
(b)I paid back to Mr Lee $289 each week until he later directed me to pay back a different amount, as I explain immediately below.
Changes to the cash back amounts
57.There was another 457 visa holder working at the office who joined after me. His name was Michael Wonsang Lee (Michael).
58.In late August 2013, I had a conversation with Mr Lee which included words to the following effect:
Mr Lee:“I want to reduce your wage to $380 because Michael accepted a lower amount.”
Me: “That is too low. If you reduce it that much, I will quit.”
Mr Lee:“Okay. I will reduce your net wage to $450.”
Me:“Okay.”
As a result of this change, the cash back amount increased to $387 from 27 August 2013.
59.In or around July or August 2014, Mr Lee raised my net wage by $40. As from 18 September 2014, my cash back amount decreased from $387 to $347.
The second respondent said in his affidavit sworn on 20 February 2019 that:
15.It was not until March 2016, when the Applicant commenced its investigation of the business that I first became aware of the complaint by Ms Mi Jin Seo ("Seo") and Ms Haehwa Shin ("Shin") ( collectively, the "employees").
16.The arrangements that were subsequently entered into with the employees were matters that were proposed by each of them. Had I known that such arrangements would contravene the Fair Work Act 2009 (Cth), I would have not agreed to this.
17.I only agreed to the arrangements because I believed each party would mutually benefit from it. That is, the employees would and did ultimately obtain Permanent Residence.
…
21.When I started the travel agency business, I did not think to question whether the wages paid to the employees was not correct.
22.I can honestly say that any failure to meet my obligations as the director of Abella has not been intentional.
23.The contraventions were not deliberate or in any way an attempt to shirk my obligations to the employees in question. The contraventions were the result of my lack of knowledge of the employment laws in Australia.
Ms Shin, in reply to the second respondent’s affidavit sworn on 20 February 2019, said in her affidavit affirmed on 15 April 2019 that:
7.In response I:
(a)refer to paragraph 12 to 14, 19 to 22, 41 to 44 and 46 to 48 of my First Affidavit;
(b)refer to paragraphs 39 and 40 of my First Affidavit, and say further that during this discussion Mr Lee made it clear that requiring employees to enter into a cash-back arrangement was Mr Lee's standard practice when Abella sponsored them for 457 visas. When I said to Mr Lee words to the effect of “Isn't that illegal?”, he responded with words to the effect of “It's what Abella does”;
(c)say further that:
(i) Mr Lee was responsible for determining my rates of pay and conditions of employment at Abella, as well as for paying my salary;
(ii) I did not, at any time, propose the arrangement for Abella to underpay me or require me to make payments to Shannon Wood (a Migration Agent from SL Consultancy engaged by Mr Lee) for the processing of my 457 visa application;
(iii) those arrangements were proposed by Mr Lee;
(iv) I did not "benefit" from Abella underpaying me during the time I worked there, and I never obtained a sponsored visa as a result of my work for Abella, or permanent residency in Australia; and
(v) I felt I had to agree to these low rates of pay because I needed Abella to sponsor my 457 visa application.
Ms Seo, in reply to the second respondent’s affidavit sworn on 20 February 2019, said in her affidavit sworn on 3 April 2019 that:
8.In response:
(a)I refer to paragraphs 16, 22 to 23, 33 to 34, 43, 51 to 63 of my First Affidavit; and
(b)[I] say further that:
(i) I never suggested to Mr Lee that I pay back the difference under the cash back arrangement. Mr Lee proposed the cash back arrangement and I followed it; and
(ii) Mr Lee determined my rates of pay and conditions of employment at Abella, and was responsible for paying my salary.
The second respondent, in response to Ms Shin and Ms Seo’s reply affidavits, said in his affidavit sworn on 16 May 2019 that:
4.I refer to paragraphs 4 and 5 of the Shin Second Affidavit and repeat paragraph 14 of my First Affidavit and say further that during the relevant period I employed a travel agency manager.
5.I refer to paragraph 7(b) of the Shin Second Affidavit and say that I did not have those discussions with Ms Shin nor did I have the discussions described in paragraphs 39 to 40 of the Shin First Affidavit. I did have a discussion with Shin with words to the effect of:
Ms Shin: “Have you sponsored employees for 457 visas?”
John:“Yes, Abella has previously sponsored two employees for their 457 visas”
6.I refer to paragraphs 7(c)(i) to (v) of the Shin Second Affidavit and repeat paragraphs 16 and 17 of My First Affidavit and say further that during Ms Shin’s employment with Abella:
(a)Ms Shin was granted a Bridging Visa (Class WA) on 15 March 2015 (“Shin Bridging Class Visa”). ...
(b)The Shin Bridging Class Visa states in its relevant parts that:
“…A Bridging visa (class WA) has been granted to the applicant listed in the table below to allow you to remain in Australia during the processing of your application for a Temporary Work (Skilled) (subclass 457) visa…”
(c)I did not make any arrangements or apply for the Temporary Work (Skilled) (subclass 457) visa for Ms Shin. I only agreed on behalf of Abella to sponsor Ms Shin’s application and signed documents required to assist Ms Shin in her application, one of those documents being an employment contract which I signed. ...
(d)The employment agreement states in its relevant parts that Ms Shin position would be employed as a “Travel Manager” and the [remuneration] was “… salary at a rate of $58,000.00 per annum…”. At the time I did not know the significance of the position description and [remuneration] amount. The employment agreement was prepared by Shannon Wood, an immigration lawyer engaged and instructed by Ms Shin.
...
7.… it was never the intention of Abella or its agents to underpay Ms Shin or cause any difficulties to her in her daily life. The arrangement was offered by Ms Shin and meant I believed that it would be mutually beneficial.
…
10.I refer to paragraphs 5 and 6(a)(i) to (iv) of the Seo Second Affidavit and repeat paragraph 14 of My First Affidavit and, say further again that during the relevant period I employed a travel agency manager.
11.I refer to paragraph 8(a) of the Seo Second Affidavit (and the associated paragraphs of the Seo First Affidavit referenced in that paragraph) and adopting the same numbering I say as follows:
(a)Paragraph 16: I did not have multiple meetings with Ms Seo but recall there only being one meeting with Ms Seo.
(b)Paragraph 22 to 23: The discussions as described in paragraph 22 of the Seo First Affidavit did not take place except that there were discussions between myself and Ms Seo whereby I offered to pay her $42,000.00 per annum but she wanted to be paid $52,000.00 per annum so that she could get her Temporary Work (Skilled) (subclass 457) visa then she would repay Abella the difference of $52,000.00 and $42,000.00.
(c)Paragraph 33 and 34: The discussions as described in paragraph 33 of the Seo First Affidavit did not take place.
(d)Paragraph 43: I did not prepare, give or sign the employment contract referred to in paragraph 43 of Seo First Affidavit and Abella did not agree to sponsor Ms Seo for a permanent residence visa.
...
12.I refer to paragraph 8(b)(i) to (ii) of the Seo Second Affidavit and repeat the discussions set out in paragraph 11(b) above.
In cross-examination, the second respondent agreed that paragraph 11(d) of his affidavit sworn on 16 May 2019 was wrong when it said that he did not sign the employment contract referred to in paragraph 43 of the first affidavit affirmed by Ms Seo.
The respondents did not require Ms Shin or Ms Seo to attend for cross-examination. Nevertheless, the respondents argued that the court should prefer the second respondent’s evidence on the question of who proposed the cash back arrangement. The respondents argued that they challenged the evidence given by Ms Shin and Ms Seo by the second respondent giving contrary evidence. These arguments are considered below.
Oral evidence
The second respondent was cross-examined. He did not ask for an interpreter to assist him in his oral evidence. However, it was clear that the second respondent’s command of the English language is far from perfect. He said in cross-examination that:
a)he did not offer Ms Seo $50,000 per year; he offered her $40,000 per year;
b)he did not take issue with the $50,000 in his reply affidavit;
c)he said to Ms Seo that the first respondent would pay her $52,000 per year but she would have to pay some back, so that she would be left with $42,000 per year;
d)the cash back arrangement was his idea not Ms Seo’s;
e)the cash back arrangement was Ms Seo’s idea;
f)he did not know whose idea the cash back arrangement was;
g)he thought it was Ms Seo’s idea;
h)he cannot remember whose idea the cash back arrangement was;
i)he would like to say yes to whatever counsel asked him;
j)he cannot remember who proposed the cash back arrangement;
k)the cash back arrangement was his idea;
l)he signed a contract with Ms Seo saying that her salary will be $52,000 per year;
m)he had in fact already decided that her salary would be $42,000;
n)contrary to his affidavit, he did have the discussion described in paragraph 33 of Ms Seo’s first affidavit about unpaid trial work;
o)he did not take care when he was doing his affidavit;
p)after the two week unpaid trial period, he told Ms Seo she had to start the cash back arrangement;
q)he knew at the time that Australian law did not allow cash back arrangements;
r)at the same time, he also had a cash back arrangement with another employee called Wongsang Lee;
s)the second respondent wrote to Wongsang Lee on 12 July 2018 saying:
The purpose of this letter is to let you know that we have reviewed your timesheets and accept the underpayment calculations undertaken by you is $50,000.00. In addition to this, we will also be repaying to you the incentive amount of $20,000.00 that you paid to Abella Travel Pty Ltd in order for Abella Travel Pty Ltd to assist you in your permanence (sic) residency application.
t)it was the second respondent’s idea to increase Ms Seo’s cash back amount from $289 per week to $387 per week, reducing her weekly income to $450 per week;
u)he did not know it was too low for Australian law because Ms Seo agreed to that amount;
v)he knows that living on $450 per week would have been very hard in Melbourne in 2014;
w)he knew that, in Korea, an employee cannot agree to take less than the minimum wage and he understood the law was the same in Australia;
x)he knew about the rules because he had previously had problems in 2014 with the Ombudsman for underpaying a staff member, Ms Wu, in 2012 and the correct position was explained to him in 2014;
y)on 3 September 2014, he wrote to Katherine Coonan of the Ombudsman’s office in the following terms:
First of all, I apologise for causing disputes and trouble with staff. Even though this kind of trouble had already occurred in 2012, I was unaware of the seriousness of the situation at the time, and so I was faced with the Issue at hand.
In the case of the previous issue, I was so panicked and scared that I focused on solving the problem itself as I saw it, rather than based focussing on appropriate procedure and methods for the future. If I had realised the seriousness of the situation at that time, I would have proceeded differently, so as not to cause the issue in question.
In fact, I was not aware of the minimum wage that the Australian government prescribed; I orally explained to staff that I would increase wages when the company developed more, as the situation of the company was that it did not have many Korean tour visitors. And we have proceeded so far by accepting that work commences after the training period is over.
I have realised that I had been so ignorant of work-related law, and didn’t know that this matter was really a serious problem.
After meeting with Ms Katherine, I started to realise the seriousness of the matter at hand. Then I had meeting with all staff, adjusted work hours and wages to meet the threshold prescribed by the Australian government. This adjustment started from 01 September.
I also apologised for my ignorance of the law to all staff, and promised them that I would make appropriate payments according to all work done.
Duties to perform are to pay the formal minimum wage $16.90 per hour and to fix part-time work hours for all staff.
So far, all our staff has been paid tax and superannuation. Minjeong Woo asked for her tax file during the training period, but I forgot it as I was busy doing other things at that time. When applying for a tax report for 2013-2014, I asked her for it, but I hadn’t received it until now. Ms Katherine, if I had known the seriousness of the present situation, I wouldn’t have repeated my mistake.
This incident let me know that I cannot use my ignorance as an excuse for what I didn’t know beforehand.
Now that I know the law, I will not make trouble again and do my best to do responsible business in Australian society, to care for staff and to become a more sincere worker with a humble attitude.
Thank you for reading this.
z)contrary to the letter, he did know that, in Australia, there was a minimum wage;
aa)although the letter stated that all staff were paid correctly from 1 September 2014, the cash back arrangement with Ms Seo continued past that date;
bb)he wrote the letter just to make the Ombudsman go away;
cc)on 26 September 2014, the second respondent signed another contract with Ms Seo whereby the first respondent would pay her $55,000 per year;
dd)his affidavit was wrong when it said that he did not sign the contract, but it was true when it said that he did not prepare it;
ee)he said in his affidavit that he did not sign the contract because he was trying to mislead the court;
ff)he signed an enforceable undertaking on 8 December 2014 in which the first respondent undertook in paragraph 19 to:
(d)Ensure that [the first respondent] complies at all times and in all respects with the FW Act, the Regulations and the Retail Award, including by implementing systems and processes to:
(i)ensure employees receive the correct minimum rates of pay and entitlements, such as penalty rates and overtime rates;
(ii)ensure that pay slips are issued to employees within 1 working day of payment; and
(iii)ensure the keeping of accurate and complete records to ensure employees receive their correct wages and entitlements.
(e)Provide the FWO, within 28 days of the date of execution of this Undertaking, details of systems and processes already in place or to be implemented to comply with paragraph (d) above.
(f)Within 4 months of the execution of this Undertaking, organise and ensure training (the Training) is provided to any and all persons who have managerial responsibility for or are involved in human resource, recruitment or payroll functions for Abella Travel;
(g)Ensure the Training relates to compliance with applicable Commonwealth of Australia workplace laws and instruments …;
(h)Ensure the Training is conducted by an accredited workplace trainer, such person or organisation to be approved in advance by the FWO and paid for by Abella Travel;
(i)Provide the training materials to be used to the FWO no later than 14 days before the Training is to be conducted;
(j)Provide evidence of attendance at the Training to the FWO within 7 days of the Training being provided …; and
(k)For a period of 18 months from the execution of this undertaking, ensure that training is conducted … to any new or existing employees or contractors who … acquire managerial responsibilities and/or human resources, recruitment or payroll functions on behalf of Abella Travel.
gg)he was the only manager of the business;
hh)he did not have any of the training required by the enforceable undertaking;
ii)paragraph 19 of the enforceable undertaking also required the first respondent to:
(l)Within 14 days of the execution of this Undertaking, provide to the FWO a copy of:
(i)all time and wage records kept by Abella Travel for its employees relating to the pay period immediately prior to the date for the provision of the records (Records Audit Period); and
(ii)all pay slips issued to employees … relating to the Records Audit Period …
jj)the enforceable undertaking also required the first respondent to be audited by external auditors;
kk)the second respondent did not tell the auditors about the cash back arrangement;
ll)the audit showed that, of the first respondent’s six employees, four were paid correctly and two were paid incorrectly, in that Wong Sang Lee was underpaid $10 per week and Sung Hwan Choi’s payslips were incorrect;
mm)the auditors said that the errors were remedied by the first respondent;
nn)the auditors could not check that claim with the two employees because the first respondent was unable to supply their contact details;
oo)on 22 December 2014, the second respondent signed a contract with Ms Shin with her salary being $58,000 per year;
pp)he provided the Ombudsman with payslips for Ms Shin that he created after the fact;
qq)he used a program that was shown to him by the external auditors to make payslips after the Ombudsman asked for them;
rr)he told the auditors that Ms Shin was paid $27.83 per hour but she was not;
ss)he met Ms Shin in a café in February 2015 and discussed her contract, which specified that she would be paid $58,000 per year, and he said to her words to the effect that, I am going to pay you $40,000 per year and you will have to pay me back the remainder;
tt)Ms Shin said to him that he should have told her that before she moved to Melbourne and he said words to the effect of, Well, this is what Abella does;
uu)he proposed the cash back arrangement to Ms Shin, rather than she proposing it to him;
vv)his affidavit was not correct when it said otherwise;
ww)he said the wrong thing in his affidavit because he was trying to make his case look better;
xx)Ms Shin started working for the first respondent in February 2015;
yy)the first respondent paid Ms Shin $300 per week;
zz)the second respondent knew that amount of pay was too low for Australian law;
aaa)the arrangement for the cash back was only meant to start if Ms Shin got a 457 visa and she never did, so the cash back arrangement with her did not actually start;
bbb)when Ms Shin discussed with the second respondent how she would be paid after the training period, he confirmed that there would be the cash back arrangement;
ccc)he did not recall Ms Shin saying to him that the cash back arrangement was illegal;
ddd)pursuant to the enforceable undertaking, the first respondent was required to place a notice in a place accessible to staff to the effect that the first respondent had breached the law about pay rates;
eee)he placed it in his own office, but everyone could see it there;
fff)he considered that the first respondent was compliant with workplace laws when he put the notice up, notwithstanding the cash back arrangement with Ms Shin, and even though he did not pay her Saturday penalty rates, because she only worked four hours on the Saturday;
ggg)on 16 January 2015, the second respondent wrote to the Ombudsman saying:
I joung Hyun Lee keep to further business promise to
Pay the lawful minimum hourly rates of pay for the time worked Monday to Friday.
Pay the penalty rate for time worked Saturdays
Pay the penalty rate for time Public Holiday
Pay overtime
Pay accrued annual leave and leave loading upon the termination of employment
make and keep records as required
. Abella Travel has formally admittd to Fwo that these contraventions occurred has entered into an Enforceable Undertaking with FWO committing to a number of measures to remedy the contraventions. These include conducting training in workplace laws, registering for the FWO MY Account, issuing payslips to employees within one day of payment, ensuring correct record keeping and undergoing two auditor its compliance with workplace laws.
. Further more, Abella Travel gives a commitment that such conduct will not occur again and that it will comply with all requirements of the Commonwealth workplace relations laws in the future.
(errors in original)
hhh)the first respondent did not get help from anyone to improve its pay systems;
iii)Ms Seo left the first respondent’s employ in February 2015;
jjj)the second respondent knew at that time that the first respondent had to pay out Ms Seo’s unused annual leave;
kkk)he knew he had to pay Ms Shin annual leave loading;
lll)he knew he was breaking the rules;
mmm)he wanted to break the rules to help his business;
nnn)he broke the rules intentionally;
ooo)he said in his affidavit that he did not want to shirk his obligations but he does not know what the word shirk means;
ppp)he knew what he was doing;
qqq)he knew it was wrong;
rrr)he told Ms Shin to say to the Immigration Department if they asked about her pay that she was being paid correctly;
sss)he cannot recall saying that;
ttt)he thinks he did not say that;
uuu)he was trying to hide the underpayments;
vvv)he did not correct the underpayments when they were first explained to him by the Ombudsman in October 2017;
www)it was his lawyers fault that he did not make the payments earlier;
xxx)he did not admit the contraventions until after the Ombudsman’s evidence was filed;
yyy)in July 2018, the first respondent sold the Abella Travel business to Ms Lee, who had been a former employee, for $20,000;
zzz)the second respondent stopped working for the business at that time;
aaaa)the company that bought the business was called JLYJL Pty Ltd;
bbbb)the business went into liquidation in April 2018;
cccc)the purchaser was actually called JLYL Pty Ltd, contrary to what it stated on the contract of sale;
dddd)the first respondent has $20,000 in a bank account;
eeee)the second respondent is working for a Korean company as a manager, but he does not have any control over payments to other staff;
ffff)he and his wife own their family home, which was worth about $800,000 to $900,000 with a $250,000 mortgage, leaving an equity of about $550,000 to $650,000;
gggg)he and his wife own a unit in A’Beckett Street worth about $340,000 with a mortgage of about $250,000 or $280,000, leaving an equity of about $60,000 to $90,000;
hhhh)the person who bought the business is called Ms Sang Yeung Lee, and last year she rented the second respondent’s apartment in A’Beckett Street;
iiii)the unit is now tenanted by other people who pay $400 rent per week;
jjjj)he has $200,000 in personal savings;
kkkk)his wife does not work; and
llll)he earns $30,000 per year for working one month on, one month off, in Korea.
In re-examination, the second respondent said:
a)his son lives with the second respondent and his wife and contributes $1,000 per month to the household;
b)Ms Seo asked him to notionally pay her $52,000 but really pay her $42,000;
c)his affidavit was true;
d)Ms Shin also proposed the cash back arrangement to him; and
e)he said yes to many questions in cross-examination because he was just trying not to argue.
In answer to a question from the court, the second respondent said that he understood that, to be eligible for a 457 visa, the visa applicant needed to be paid a certain amount of money. Exhibit 5, which is an instrument dated 12 June 2012 under the Migration Regulations 1994, IMMI 12/047, specifies that the relevant amount was $51,400 commencing on 1 July 2012. Exhibit 6, which is an instrument dated 28 June 2013 under the Migration Regulations 1994, IMMI 13/028, specifies that the relevant amount was $53,900 commencing on 1 July 2013.
Who proposed the cash back arrangement?
On the evidence before me, I am satisfied that it was the second respondent who proposed the cash back arrangement to Ms Seo and Ms Shin. That conclusion accords with their affidavit evidence. They were not required for cross-examination. On a simplistic analysis, that would usually be sufficient for the court to accept their evidence. However, Ms Seo and Ms Shin’s evidence was challenged sufficiently for the purposes of Browne v Dunn (1893) 6 R 67 (HL) as the contrary position was clearly stated in the second respondent’s affidavit evidence, and in discussions between the parties prior to the hearing commencing.
On the other hand, the second respondent himself said in cross-examination, repeatedly, that it was his proposal. In re-examination, he sought to resile from the concession he had made in cross-examination. However, I prefer the evidence consisting of his concession rather than his attempts to resile from it. His concession appeared to me to be more genuine than his attempts to retrieve his position by back-tracking on his evidence.
The second respondent also conceded in cross-examination that significant parts of his affidavit evidence were not accurate, and were just an attempt to make his case look better. Again, in re-examination, he sought to resile from that concession. However, I prefer the evidence that he gave in cross-examination to the effect that his affidavits were not entirely accurate. This casts doubt on everything that the second respondent said in his affidavit evidence.
The matters that the respondents admitted in the amended statement of agreed facts and the second respondent’s concessions in oral evidence demonstrate significant dishonesty. The second respondent admitted in cross-examination that he had intended that the first respondent would underpay staff to assist the business financially. He admitted continued dishonesty even after giving an enforceable undertaking to the Ombudsman and having his legal obligations to employees spelt out to him. This general dishonesty also casts doubt on everything else the second respondent said in his affidavit and oral evidence.
It strikes me as much more probable, though not impossible, that the second respondent would have proposed the cash back arrangement to Ms Seo and Ms Shin, and possibly Mr Wongsang Lee, than that Ms Seo and Ms Shin, and possibly Mr Lee, would each have independently proposed the cash back arrangement to the second respondent.
I accept that the cash back arrangement was of potential benefit to Ms Shin and Ms Seo, in that it may have helped them to get 457 visas. That is presumably why they were prepared to go along with the second respondent’s proposal. However, that circumstance does not persuade me that Ms Seo and Ms Shin independently came up with the idea and proposed it to the second respondent.
Approach to determining penalty
In paragraph 37 of her written submissions, the Ombudsman described the steps to be followed in determining penalty as follows:
37.The appropriate penalties are to be determined in the following manner:46
(a)the first step is to identify the separate contraventions involved. Each contravention of each separate obligation found in the FW Act, the Retail Award and the FW Regulations is a separate contravention of a civil remedy provision for the purposes of section 539(2) of the FW Act;47
(b)second, section 557(1) of the FW Act makes provision for treating multiple contraventions of the same civil remedy provision that result from a single course of conduct, as a single contravention;
(c)third, to the extent that two or more contraventions have common elements, this should be taken into account in considering the appropriate penalty in all the circumstances for each contravention. The penalties imposed by the Court should be an appropriate response to the Respondents' conduct.48 This task is distinct from, and in addition to, the final application of the "totality principle”;49
(d)fourth, the Court should 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)finally, having fixed an appropriate penalty for each contravention (or, if relevant, each group of contraventions), the Court should consider the aggregate penalty to determine whether it is an appropriate response to the contravening conduct.50 The Court should apply an "instinctive synthesis" in making this assessment.51 This is known as the totality principle.
46Fair Work Ombudsman v NSH North Pty Ltd [2017] FCA 1301 (NSH North) at [36] (Bromwich J).
47 Gibbs v The Mayor, Councillors and Citizens of City of Altona [1992] FCA 374; (1992) 37 FCR 216 at [24]; McIver v Healey [2008] FCA 425 at [16].
48 Ophthalmic Supplies at [46] (per Graham J).
49 Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70; (2008) 168 FCR 383 (Mornington Inn) at [41]-[46] (per Stone & Buchanan JJ).
50 See Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 (Kelly) at [30] (per Tracey J); Ophthalmic Supplies at [23] (per Gray J), [71] (per Graham J) and [102] (per Buchanan J).
51 Merringtons at [27] (per Gray J); [55] and [78] (per Graham J).
The respondents did not dispute that approach to determining penalty. The court will follow the steps outlined by the Ombudsman.
Step 1: identifying the breaches
As stated above, the first respondent breached:
a)s.325 of the Act, by requiring Ms Shin to return part of her wages to the first respondent;
b)s.325 of the Act, by requiring Ms Seo to return part of her wages to the first respondent;
c)s.45 of the Act, by failing to pay Ms Shin the minimum hourly rate of pay, in contravention of cl.17 of the General Retail Industry Award;
d)s.45 of the Act, by failing to pay Ms Shin the applicable Saturday penalty rates, in contravention of cl.29.4(b) of the General Retail Industry Award;
e)s.45 of the Act, by failing to pay Ms Shin public holiday penalty rates, in contravention of cl.29.4(d) of the General Retail Industry Award;
f)s.45 of the Act, by failing to pay Ms Shin overtime rates of pay from Monday to Saturday, in contravention of cl.29.2(a) of the General Retail Industry Award;
g)s.45 of the Act, by failing to pay Ms Shin overtime rates of pay on Sundays, in contravention of cl.29.2(c) of the General Retail Industry Award;
h)s.45 of the Act, by failing to pay Ms Shin double her minimum rate of pay for all hours of work where she was not provided with a 12 hour break between work periods during the Shin Employment Period, in contravention of cl.31.2(b) of the General Retail Industry Award;
i)s.44(1) of the Act, by failing to pay Ms Shin her base rate of pay for ordinary hours of work for the periods when she took annual leave during, in contravention of s.90(1) of the Act;
j)s.45 of the Act, by failing to pay Ms Shin her entitlement to annual leave loading for periods when she took annual leave, in contravention of cl.32.3 of the General Retail Industry Award;
k)s.44(1) of the Act, by failing to pay Ms Shin her annual leave on termination of her employment in contravention of s.90(2) of the Act;
l)s.44(1) of the Act, by failing to pay Ms Shin her entitlement to her base rate of pay for ordinary hours of work for periods she took personal leave in contravention of s.99 of the Act;
m)s.44(1) of the Act, by failing to pay Ms Shin her base rate of pay for ordinary hours of work during periods she was absent from work on a public holiday in contravention of s.116 of the Act;
n)s.293 of the Act, by failing to pay Ms Seo the national minimum wage in contravention of cl.4.2 of the National Minimum Wage Order 2012;
o)reg.3.44(1) of the Fair Work Regulations 2009 (“the Regulations”), by failing to ensure that the records it kept in respect of Ms Shin’s employment were not false or misleading to the employer’s knowledge;
p)reg.3.44(6) of the Regulations, by producing to the Ombudsman records in respect of Ms Shin’s employment that were false and misleading;
q)s.535(1) of the Act, by failing to make and keep records of the kind prescribed by the Regulations in respect of Ms Seo; and
r)s.536(1) of the Act, by failing to provide pay slips to Ms Shin and Ms Seo.
The second respondent was involved in those breaches.
Step 2: single course of conduct
The Ombudsman accepted that, pursuant to s.557(1) of the Act, the multiple breaches of each relevant provision should be treated as a single contravention, except the breach of s.325 of the Act relating to the cash backs. The Ombudsman submitted that s.557(1) of the Act should not be applied to the cash back arrangements because they involved different employees, occurred two years apart and arose in the context of different factual circumstances. In the Ombudsman’s submission, there were 18 contraventions, as set out above, after the application of s.557(1) of the Act.
The respondents did not ultimately dispute the Ombudsman’s approach. Initially, the respondents argued that the two breaches of s.325 of the Act, in relation to Ms Seo and Ms Shin, should be grouped. However, in their amended outline of submissions handed up during the hearing and emailed to chambers on 15 August 2019, the respondents accepted that the two breaches of s.325 of the Act should not be grouped.
Consequently, at the step 2 stage, I consider that there were 18 contraventions.
Step 3: grouped breaches
Under the common law, the court may also group breaches that have common elements. The parties agreed that it would appropriate to group the Monday to Saturday overtime breaches and the Sunday overtime breaches so that all of the overtime breaches would all constitute a single breach. They are the breaches identified in paragraphs (f) and (g) in the list set out above. I accept the parties’ proposal in this regard.
In addition, the respondents proposed, and the Ombudsman disputed, a further grouping of the breaches being the breach of failing to ensure employee records were not false and misleading and the breach of producing employee records that were false and misleading, being the breaches identified in paragraphs (o) and (p) in the list above.
Subregulation 3.44(1) of the Regulations provided that:
An employer must ensure that a record that the employer is required to keep under the Act or these Regulations is not false or misleading to the employer’s knowledge.
Subregulation 3.44(6) of the Regulations provided that:
A person must not make use of an entry in an employee record made and kept by an employer for this Subdivision if the person does so knowing that the entry is false or misleading.
On this point, the Ombudsman said that the breach of failing to ensure employee records were not false and misleading involved creating and keeping a false record whereas the breach of producing to the Ombudsman employee records that were false and misleading involved the entirely separate step of providing false and misleading records to the Ombudsman for the purpose of throwing the Ombudsman off the scent.
The respondents submitted that the false records were only created because the Ombudsman asked for records to be produced, so the creation and production to the Ombudsman of the records was a single criminal enterprise.
The respondents said in paragraphs 19 to 22 and 25 of their written submissions filed on 25 June 2019:
19.It is open to the Court to group separate contraventions together where those various contraventions may be said to overlap with each other and involve potential punishment of the offender for the same or similar conduct. A discretion to do this has been said to arise:
“...where a number of acts of a similar nature committed by one or more defendants were connected with one another, in the time and place of their commission or by their common purpose, in such a way that they could fairly be regarded as forming part of the same transaction or criminal enterprise”10
20.In Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39, Middleton and Gordon JJ said at [39]:
“As the passages in Williams [2009] FCAFC 171; 262 ALR 417 explain, a “course of conduct” or the “one transaction principle” is not a concept peculiar to the industrial context. It is a concept which arises in the criminal context generally and one which may be relevant to the proper exercise of the sentencing discretion. The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is “the same criminality” and that is necessarily a factually specific enquiry. Bare identity of motive for commission of separate offences will seldom suffice to establish the same criminality in separate and distinct offending acts or omissions.”
21. Their honours continued at [41]:
“... the principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, the Court must ensure that the offender is not punished twice for the same conduct. In other words, where two offences arise as a result of the same or related conduct that is not a disentitling factor to the application of the single course of conduct principle but a reason why a Court may have regard to that principle, as one of the applicable sentencing principles, to guide it in the exercise of the sentencing discretion: Johnson v The Queen [2004] HCA 15; (2004) 205 ALR 346 at [3] – [4] and [34] and Attorney-General v Tichy (1982) 30 SASR 84 at 92 – 93. ...”
10 See: Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417, [2009] FCAFC 171 at [15], quoting Lord Diplock in Director of Public Prosecutions v Merriman [1973] AC 584 at 607
22.To the extent that there is commonality or overlap between contraventions, it is possible to take into account 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”11.
11Gibbs v Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216 at 223, (Gray J); See also: Kelly v Fitzpatrick [2007] 166 IR 14 at 17
…
25.The Respondents maintain that it is appropriate to group the contraventions of regulations 3.44(1) and 3.44(6) of the FW Regs on the basis that those contraventions arise as a result of the same “course of conduct” or the "one transaction”, in that the relevant false and misleading payslips were created for the sole purpose of production to the Applicant in response to a request to produce and not for record keeping purposes.12 Put another way, without the request for production, the payslips would not exist as a record of any kind. The legal and factual interrelationship of the contraventions and their connection with one another, in the time and place of their commission and by their common purpose, is apparent from the pleadings13 and the ASOAF14, and in such a way that they could fairly be regarded as forming part of the same transaction or contravening enterprise. This same course of conduct contention is further supported by the fact that the Respondents have admitted contravening s.536(1) by failing to provide Ms Shin with payslips during her employment (which necessarily includes any false or misleading payslips)15.
12 NOTE: This is acknowledged by the Applicant in the Applicant’s submissions on penalty at [61]
13 Further Amended Statement of Claim at [76] – [83]; Amended Defence of the First and Second Respondents at [76] –[ 83]
14 See, and compare: ASOAF at [71] – [73] and [75]
15 ASOAF at [78] & [79]
In reply, the Ombudsman said at paragraphs 8 to 10 of her written submissions that:
8.This submission should not be accepted. The Respondents have the burden of proving that their contraventions of regulation 3.44(1) and 3.44(6) arose out of the same course of conduct.6 They have provided no evidence that the records were created “for the sole purpose of production” to the FWO, and not for other purposes.7 In fact there is substantial evidence before the Court that the Respondents made and kept false documents throughout the Employees’ employment periods (including employment contracts and pay slips which specified false rates of pay),8 which were not created for the purpose of production to the FWO.
9.Further, the decision and act to create false or misleading records and the decision and act to provide such documents to the regulator to disguise the true nature of an employee’s conditions should properly be regarded as distinct. The Respondents’ submissions on this point overlook the fact that false records of rates of pay are by their very nature not created for an employer’s genuine record keeping. It is frequently the case that the reason such documents are created is to conceal wrongdoing from a regulator. In establishing two conceptually distinct civil penalty provisions in regulations 3.44(1) and 3.44(6), it is clear that the legislature intended for these contraventions to be penalised separately, due the very serious nature of making and using false records.9
10.An argument that conduct captured by to (sic) regulations 3.44(1) and 3.44(6) should be grouped has also previously been rejected by this Court.10 As succinctly put by Burchardt J in Fair Work Ombudsman v Oz Staff Holdings Pty Ltd (No 2)11 “it was one thing to create these records and keep them. It was another matter altogether to use them”. To accept the Respondents’ submission that the contraventions of regulations 3.44(1) and 3.44(6) should be grouped would undermine the seriousness of the Respondents’ conduct in deliberately creating records they knew to be false or misleading,12 and then providing those records to the FWO in order to conceal the underpayment of Ms Shin’s entitlements.13
6Fair Work Ombudsman v Skyter Trade Pty Ltd [2018] FCCA 1483 at [38] per Jarrett J; Re Australasian Meat Industry Employees Union v Meneling Station Pty Limited [1987] FCA 2 at [45], applied in (for example) Workplace Ombudsman v Securit-E Holdings Pty Ltd (2009) 187 IR 330 at [5], Fair Work Ombudsman v Jay Group Services Pty Ltd [2014] FCCA 2869 at [22].
7 The claim at footnote 12 of the Respondents Penalty Submissions that the FWO have “acknowledged” that the false records were only created to be provided to the FWO is without any foundation, and is not correct.
8 First Seo Affidavit, [43], [66] - [67], Annexure MS-3, Annexure MS-6 & Annexure MS-12; First Shin Affidavit, [11], [41] & Annexure HS-3.
9 As reflected in the Federal Parliament’s decision to increase the penalties, and introduce new provisions, for providing false or misleading records under the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth).
10Fair Work Ombudsman v Deja Vu Elite Security Pty Ltd (No 2) [2018] FCCA 2960 at [33] per Riley J; FWO v OZ Staff Holdings Pty Ltd (No 2) [2016] FCCA 2594 at [16] per Burchardt J (Oz Staff Holdings).
11 Oz Staff Holdings at [16].
12 ASOAF, [74] & [76].
13 ASOAF, [74] & [76]; Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 at [200] – [201] (NSH North); further discussion at [222] – [229]
During the Shin Employment Period, Ms Shin:
(a)took one day of personal leave on 21 April 2015;
(b)was paid $115.20;
(c)was entitled to be paid $142.28; and
(d)was underpaid $27.08.
The First Respondent admits that it:
(a)contravened the NES, being section 99 of the FW Act, by failing to pay Ms Shin her minimum rate of pay for ordinary hours of work for periods when she took paid personal leave; and
(b)as a result, contravened section 44(1) of the FW Act, which is a civil remedy provision under subsection 539(2) of the FW Act.
Contravention 13: failure to provide payment for absence on public holidays – Ms Shin
During the Shin Employment Period, the First Respondent admits that it was required to pay Ms Shin her minimum rate of pay for ordinary hours of work on days she was absent from employment that was a public holiday pursuant to section 116 of the FW Act.
During the Shin Employment Period, Ms Shin:
(a)was absent from work for 75 hours on public holidays;
(b)was paid $1,208.87;
(c)was entitled to be paid $1,447.43; and
(d)was underpaid $238.56.
The First Respondent admits that it:
(a)contravened the NES, being section 116 of the FW Act, by failing to pay Ms Shin her minimum rate of pay for periods absent on a public holiday; and
(b)as a result, contravened section 44(1) of the FW Act, which is a civil remedy provision under subsection 539(2) of the FW Act.
Contravention 14: failure to pay minimum hourly rate pursuant to the NMWO – Ms Seo
The First Respondent admits that it was required at all relevant times, to pay Ms Seo the national minimum wage of $606.40 per week (calculated on the basis of 38 ordinary hours) as set out in paragraph 4.2 of the NMWO.
From 11 February 2013 until 19 May 2013, Ms Seo:
(a)worked 544 hours;
(b)was paid $7,773.00;
(c)was entitled to be paid $8,682.24; and
(d)was underpaid $909.24.
The First Respondent admits that it:
(a)contravened a term of the NMWO by failing to pay Ms Seo her minimum hourly rate of pay; and
(b)as a result, contravened section 293 of the FW Act, which is a civil remedy provision under subsection 539(2) of the FW Act.
Total underpayments
Ms Shin
During the Shin Employment Period, the First Respondent admits that it underpaid Ms Shin $15,701.05.
On 11 July 2016 the First Respondent repaid Ms Shin an amount of $6,505.94.
On 14 February 2019 the First Respondent repaid Ms Shin the remaining outstanding amount of $9,195.11.
Ms Seo
During the Seo Employment Period, the First Respondent admits that it underpaid Ms Seo $909.24 for failure to pay minimum hourly rate pursuant to the NMWO (Contravention 14) and $20,854.00 for unreasonable requirement to spend (Contravention 2) totalling to $21,763.24.
On 14 February 2019 the First Respondent repaid Ms Seo an amount of $13,393.24.
On 17 April 2019, the First Respondent repaid Ms Seo the remaining outstanding amount of $8,370.00.
[deleted]
PART E: RECORD-KEEPING CONTRAVENTIONS
Contravention 15: failure to ensure a record is not false or misleading – Ms Shin
At all material times, the First Respondent admits that it:
(a)was required to keep records that specified the rate of remuneration paid to Ms Shin, pursuant to regulation 3.33(1) of the FW Regulations and in accordance with subsection 535(2) of the FW Act; and
(b)had to ensure that such a record, required to be kept pursuant to section 535 of the FW Act, was not false or misleading to its knowledge, pursuant to sub-regulation 3.44(1) of the FW Regulations.
On 30 June 2016, the First Respondent produced payslips in relation to Ms Shin (Shin Records) to the Applicant.
The Shin Records were false and misleading as they incorrectly recorded Ms Shin’s rate of remuneration as being $27.83 per hour.
The First Respondent knew that the Shin Records were false or misleading and as a result, admits that it contravened regulation 3.44(1) of the FW Regulations, which is a civil remedy, provision pursuant to regulation 4.01A(2) of the FW Regulations.
Contravention 16: making use of false or misleading records – Ms Shin
At all material times, the First Respondent admits that it was required to not make use of an entry in an employee record made and kept by it (for the purposes of Division 4 of Part 3-6 of the FW Regulations), knowing that the entry was false or misleading, in accordance with regulation 3.44(6) of the FW Regulations.
The First Respondent knew that the Shin Records were false or misleading and made use of the Shin Records by producing them to the Applicant, in contravention of regulation 3.44(6) of the FW Regulations, which is a civil penalty provision pursuant to sub-regulation 4.01A(2) of the FW Regulations.
Contravention 17: failure to make and keep records with information prescribed by the FW Regulations – Ms Seo
At all material times, the First Respondent admits that it was required to make and keep records pursuant to section 535(2) of the FW Act that specified:
(a)the name of the employer and employee, whether the employee is full-time or part-time, whether the employee is permanent, temporary or casual, the date on which the employees’ employment began and the employer’s ABN (pursuant to regulation 3.32 of the FW Regulations);
(b)the rate of remuneration paid and the gross and net amounts to be paid to the employee and any deductions made from the gross amount paid to the employee (pursuant to regulation 3.33(1) of the FW Regulations);
(c)for any leave that the employee takes, the balance of the employee’s entitlement to leave from time to time (pursuant to regulation 3.36(1) of the FW Regulations); and
(d)the amount of superannuation contributions made, the period over which the contributions were made, the date on which each contribution was made, the name of any fund to which the contribution was made and the basis on which the employer became liable to make the contribution (pursuant to regulation 3.37(1) of the FW Regulations).
During the Seo Employment Period the First Respondent failed to keep any records concerning her employment, in contravention of section 535(1) of the FW Act, which is a civil remedy provision pursuant to subsection 539(2) of the FW Act.
Contravention 18: failure to provide pay slips
At all material times, the First Respondent admits that it was required to provide the Employees with a pay slip within one day of paying an amount to them in relation to the performance of work in accordance with section 536 of the FW Act.
The First Respondent failed to provide the Employees with pay slips during their Employment Period in contravention of subsection 536(1) of the FW Act, which is a civil remedy provision pursuant to subsection 539(2) of the FW Act.
PART F: ACCESSORIAL LIABILITY
By reasons of the matters admitted in paragraph 3 above, the Second Respondent:
(a)had actual knowledge of the factual matters which comprise each of the 18 contraventions of the First Respondent; and
(b)was a participant in the factual matters which comprise each of the 18 contraventions of the First Respondent.
By reason of the matters admitted at paragraph 81 above, the Second Respondent:
(a)aided, abetted, counselled or procured; and
(b)was, by his acts or omissions, directly or indirectly, knowingly concerned in, or, a party to each of the contraventions alleged against the First Respondent; and
(c)is taken to have personally contravened each of the 18 civil penalty provisions of the First Respondent, pursuant to section 550(1) of the FW Act.
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