Fair Work Ombudsman v ABMENG Pty Ltd (No 2)
[2024] FedCFamC2G 1287
•27 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v ABMENG Pty Ltd (No 2) [2024] FedCFamC2G 1287
File number: MLG 2298 of 2023 Judgment of: JUDGE LADHAMS Date of judgment: 27 November 2024 Catchwords: INDUSTRIAL LAW – Fair Work – where the first respondent admitted contraventions of ss 716(5) and 712(3) of the Fair Work Act 2009 (Cth) – where the second respondent admitted he was involved, within the meaning of s 550 of the Fair Work Act, with those contraventions – determination of the appropriate penalty in respect of the contraventions. Legislation: Corporations Act 2001 (Cth) s 440
Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 90, 539, 545, 546, 550, 712, 716
Workplace Relations Act 1996 (Cth)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 9.04
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157; [2018] HCA 3
Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13
Fair Work Ombudsman v ABMENG Pty Ltd [2024] FedCFamC2G 636
Fair Work Ombudsman v Klinsic Constructions Pty Ltd (No 2) [2023] FedCFamC2G 283
Fair Work Ombudsman v Mai Pty Ltd [2016] FCCA 1481
Fair Work Ombudsman v NSN Pty Ltd (t/as New Shanghai Charlestown) (2017) 275 IR 148; [2017] FCA 1301
Fair Work Ombudsman v Pure Telecom Pty Ltd [2024] FedCFamC2G 664
Inspector Zeljko Kovacevic v Pareker Engineering Corporation (Australia) Pty Ltd (unreported, Magistrate AJ Chambers, Magistrates Court at Melbourne, 18 February 2009)
Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; [2008] FCAFC 70
Trade Practices Commission v CSR Ltd [1991] ATPR 41-076; [1990] FCA 762
Division: Division 2 General Federal Law Number of paragraphs: 77 Date of hearing: Determined on the papers with a short hearing on 26 November 2024 Place: Perth (via Microsoft Teams) Counsel for the Applicant: Ms K Ruhl Solicitor for the Applicant: Office of the Fair Work Ombudsman Respondents: The second respondent on behalf of the respondents ORDERS
MLG 2298 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: ABMENG PTY LTD (ACN 617 448 512)
First Respondent
JAY PARKER
Second Respondent
ORDER MADE BY:
JUDGE LADHAMS
DATE OF ORDER:
27 NOVEMBER 2024
BY CONSENT THE COURT DECLARES THAT:
1.The first respondent contravened s 716(5) of the Fair Work Act 2009 (Cth) (Fair Work Act) by failing to comply with the Compliance Notice given to the first respondent on 18 August 2022.
2.The first respondent contravened s 712(3) of the Fair Work Act by failing to comply with the Notice to Produce issued on 17 November 2021.
3.The second respondent was involved, within the meaning of s 550(2) of the Fair Work Act, in the contraventions by the first respondent declared at orders 1 and 2 above.
BY CONSENT THE COURT ORDERS THAT:
4.Pursuant to s 545(1) of the Fair Work Act, within 28 days of this Order, the first respondent is to compensate the employees named in this Order for loss suffered as a direct effect of the contravention of the Fair Work Act declared in order 1 by:
(a)paying the following amounts to the employees:
(i)$2,007.56 (gross) to Ms Bhavneet Kaur;
(ii)$6,101.21 (gross) to Mr Mark Dagnall; and
(iii)$3,895.13 (gross) to Mr David Hart; and
(b)calculating and paying to the employees’ nominated superannuation funds the additional superannuation contributions required to be paid on the amounts referred to in order 4(a)(i)-(iii) above.
5.Pursuant to s 547(2) of the Fair Work Act, within 28 days of this Order, the first respondent is to pay the named employees interest on the amounts in order 4(a)(i)-(iii) at the following pre-judgment interest rates:
(a)in the period from 14 October 2022 to 31 December 2022, a rate of 4.85%;
(b)in the period from 1 January 2023 to 30 June 2023, a rate of 7.10%;
(c)in the period from 1 July 2023 to 31 December 2023, a rate of 8.10%; and
(d)in the period from 1 January 2024 to 27 November 2024, a rate of 8.35%.
THE COURT FURTHER ORDERS THAT:
6.Pursuant to s 546(1) of the Fair Work Act, the first respondent pay a pecuniary penalty in the amount of $56,000 to the Commonwealth for the contraventions declared at orders 1 and 2.
7.Pursuant to s 546(1) of the Fair Work Act, the second respondent pay a pecuniary penalty in the amount of $11,000 to the Commonwealth for the contravention declared at order 3.
BY CONSENT THE COURT FURTHER ORDERS THAT:
8.The parties have liberty to apply on seven days’ notice in the event that any of the above orders are not complied with.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE LADHAMS:
INTRODUCTION
By an application filed on 20 December 2023, the Fair Work Ombudsman (Ombudsman) commenced proceedings against the respondents alleging that the first respondent, ABMENG Pty Ltd[1] (ABMENG), failed to comply with a Compliance Notice and a Notice to Produce in contravention of provisions of the Fair Work Act 2009 (Cth) (Fair Work Act), and that the second respondent, Mr Jay Parker, was involved in those contraventions.
[1] The first respondent commenced using this company name on 6 March 2024. At the time of many of the relevant events referred to in this judgment, the first respondent was known as ABM (AUS) PTY LTD. For simplicity, I will refer to the first respondent as ABMENG throughout this judgment.
The Ombudsman seeks declarations that ABMENG contravened s 716(5) of the Fair Work Act by failing to comply with a Compliance Notice given to ABMENG on 18 August 2022 and s 712(3) of the Fair Work Act by failing to comply with a Notice to Produce given to ABMENG on 17 November 2021 and that Mr Parker was involved in those contraventions within the meaning of s 550(2) of the Fair Work Act. The Ombudsman further seeks orders that ABMENG pay compensation to its employees for the loss suffered because of the conduct, such compensation representing the amounts that employees were underpaid by contraventions of Fair Work Act which were the contraventions underlying the Compliance Notice, with interest, and that both respondents pay a pecuniary penalty.
The parties to this proceeding have agreed facts. ABMENG has admitted that it engaged in conduct that amounts to contraventions of ss 712(3) and 716(5) of the Fair Work Act and that it underpaid employees, with those underpayments not rectified at the time of the agreed facts. Mr Parker has admitted that he was involved in the contraventions of ss 712(3) and 716(5) of the Fair Work Act. The parties have also agreed consent orders which include declarations relating to the contraventions and orders for compensation. It is also agreed by consent that ABMENG and Mr Parker should pay pecuniary penalties, but there is no formal agreement as to the appropriate quantum of the penalties that should be payable. I address the consent orders and the imposition of pecuniary penalties in this judgment.
PROCEDURAL HISTORY
The proceeding was commenced by the Ombudsman by way of an application and statement of claim filed on 20 December 2023.
The respondents were initially represented by a lawyer but that representation ceased in May 2024. The respondents did not file any pleading, evidence or submissions during the time they were represented by a lawyer.
The matter was reallocated to me and listed for hearing on 15 July 2024 at a time I was scheduled to be sitting in Melbourne on circuit. Upon reviewing the matter some weeks ahead of the hearing, I formed doubts as to whether it was ready to be listed for hearing, noting that the parties had not complied with an Order made by Judge Kirton on 24 January 2024, and I listed the matter for a directions hearing on 28 June 2024. After hearing from the parties on that occasion I ordered the parties to file a statement of agreed facts, vacated the final hearing listed on 15 July 2024 and instead listed a directions hearing on that date and gave the parties an opportunity to consider the steps that would need to be taken to progress the matter to hearing on penalty.
A statement of agreed facts was filed on 4 July 2024.
At the directions hearing on 15 July 2024 I also heard an oral application for ABMENG to be granted leave to be represented by Mr Parker. ABMENG is a corporation and would ordinarily be required to be represented by a lawyer, pursuant to r 9.04 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth). I granted leave to Mr Parker to represent ABMENG and my reasons for that decision are set out in Fair Work Ombudsman v ABMENG Pty Ltd [2024] FedCFamC2G 636. I also made further directions to progress the matter to hearing and listed the matter for a hearing on penalty on 15 October 2024. At the parties’ request, I included an order that gave the parties an opportunity to request that the issue of penalty be determined on the papers.
The Ombudsman filed two affidavits and an outline of submissions on 16 August 2024, in compliance with the Order of 15 July 2024.
The respondents were required by that Order to file and serve any affidavit evidence and submissions in respect of penalty on or before 6 September 2024. They did not file any documents in compliance with the Order.
On 2 October 2024 the Ombudsman’s lawyer sent an email to the Court attaching a minute of proposed consent orders signed by the parties. The orders and declarations to which the parties consent are:
THE COURT DECLARES BY CONSENT THAT:
1.ABMENG contravened section 716(5) of the FW Act by failing to comply with the Compliance Notice given to ABMENG on 18 August 2022.
2.ABMENG contravened section 712(3) of the FW Act by failing to comply with the NTP issued on 17 November 2021.
3.Mr Jay Parker was involved, within the meaning of section 550(2) of the FW Act, in the contraventions by ABMENG declared at orders 1 and 2 above.
THE COURT ORDERS BY CONSENT THAT:
4. Pursuant to section 545(1) of the FW Act, within 28 days of these orders being made, ABMENG is to compensate the Employees for loss suffered as a direct effect of the contravention of the FW Act declared in order 1 by:
a. paying the following amounts to the Employees:
i. $2,007.56 (gross) to Ms Bhavneet Kaur;
ii.$6,091.21 (gross) to Mr Mark Dagnall; and
iii $3,895.13 (gross) to Mr David Hart.
b.calculating and paying to the Employees’ nominated superannuation funds the additional superannuation contributions required to be paid on the amounts referred to in orders 4a.i-a.iii above.
5.Pursuant to section 547(2) of the FW Act, within 28 days of these orders being made, ABMENG is to pay the Employees interest on the amounts in order 4.a.i-4.a.iii at the applicable pre-judgment interest rate.
6.Pursuant to section 546(1) of the FW Act, ABMENG pay a pecuniary penalty to the Commonwealth for each of the contraventions declared at orders 1 and 2.
7.Pursuant to section 546(1) of the FW Act, Mr Parker pay a pecuniary penalty to the Commonwealth for the contravention declared at order 3.
8.The Parties have liberty to apply on seven days’ notice in the event that any of the above orders are not complied with.
9.Such further orders as the Court considers appropriate.
The covering email indicated that the parties seek by consent that the matter of penalty be determined on the papers.
In circumstances where the respondents were not represented by a lawyer and where they had not filed documents in compliance with the Order of 15 July 2024, my associate wrote to the parties on 4 October 2024 to confirm the position of the respondents. On 8 October 2024 Mr Parker sent an email to the Court providing the responses in bold to the queries of the Court:
1.Please confirm whether or not you consent to the matter being determined on the papers. Yes I consent
2.The Court has not received any affidavits or submissions from the respondents as required by order 5 of the Order made on 15 July 2024. Please confirm whether you are intending to file any further documents. No further documents will be submitted
3.If the respondents are not intending to file further documents, please indicate whether you consent to the quantum of penalty proposed by the Fair Work Ombudsman, or whether you otherwise wish to be heard on issues relating to the penalty that should be imposed. I consent to the FWO imposing the penalty
Taking into account these responses, I determined that it was appropriate to make the consent orders agreed between the parties and determine the quantum of penalty on the papers.
Shortly before judgment was to be delivered, I formed a view that there were some issues that required clarification from the parties, because there were some facts agreed in the statement of agreed facts that differed in some ways from the evidence filed by the Ombudsman. The matter was listed on 26 November 2024, with the parties advised that I wished to seek clarification on particular matters and, if appropriate, I would then deliver judgment shortly thereafter. Ms Ruhl for the Ombudsman and Mr Parker appeared before the Court on 26 November 2024 and addressed the issues I had raised. One issue I raised related to the outstanding amounts owed to ABMENG’s employees pursuant to the Compliance Notice, with the figures recorded differently in the affidavit evidence filed on behalf of the Ombudsman and in the statement of agreed facts. Both parties agreed that the figures relating to the outstanding amounts owed to employees of ABMENG referred to in the statement of agreed facts were correct, save for one minor miscalculation. I also raised a question about an agreed fact that ABMENG failed to comply with the Compliance Notice as a result of errors in the figures (as well as the failure to pay the amount owing under the Compliance Notice), in circumstances where the Ombudsman had previously represented to Mr Parker and ABMENG that the figures were correctly calculated. Ms Ruhl explained that there had subsequently been a recalculation of the figures and the parties agreed that the original calculations were not compliant with the Compliance Notice for the reasons given in the statement of agreed facts. Mr Parker agreed with the explanation offered and I thank the parties for the clarification of these issues.
At the listing on 26 November 2024, I also discussed with the parties an issue that had been raised by Mr Parker in an email communication with the Court about the possibility of ABMENG going into administration. Mr Parker provided documents to the Court that suggested that ABMENG resolved on 25 November 2024 to appoint a particular person as an administrator of ABMENG. This had the potential to impact whether I could proceed to deliver judgment in this matter, in the light of s 440D of the Corporations Act 2001 (Cth) (Corporations Act), which provides that during the administration of a company, a proceeding in a court against the company or any of its property cannot be begun or proceeded with except with the administrator’s written consent or with the leave of the court. At the listing on 26 November 2024, Mr Parker indicated that he was not sure whether ABMENG was already in administration and thought that the administration had not started yet. Ms Ruhl agreed that if ABMENG was now in administration, the matter may have to be stayed, at least until the administrator indicated whether he would consent to the proceeding continuing.
The upshot of the discussion between the Court and the parties was that I indicated that I would not deliver judgment on 26 November 2024 but would await clarification as to whether ABMENG was in fact in administration, and I invited Mr Parker to provide evidence from the administrator. On 27 November 2024 the Ombudsman provided an email from the proposed administrator which confirmed that ABMENG was not at that time in administration. In circumstances where ABMENG is not currently in administration, I am satisfied that it is appropriate to deliver judgment in this matter.
DOCUMENTS BEFORE THE COURT
The documents before the Court for the purpose of this judgment are:
(a)the application and statement of claim filed on 20 December 2023;
(b)the statement of agreed facts filed on 4 July 2024;
(c)an affidavit of Chelsea Diane Hannaford filed on behalf of the Ombudsman on 4 July 2024;
(d)a further affidavit of Chelsea Diane Hannaford filed on behalf of the Ombudsman on 16 August 2024;
(e)an affidavit of Yolanda Joy Sutton filed on behalf of the Ombudsman on 16 July 2024; and
(f)the signed consent order provided to the Court on 2 October 2024.
RELEVANT FACTS
ABMENG is a company incorporated under the provisions of the Corporations Act which operates a business that engages in instrument calibration, high voltage testing, electrical/instrumentation, procurement, sales and integrity non-destructive testing. Mr Parker is and was at all material times the sole director and shareholder of ABMENG and the person with actual or apparent responsibility for the operation, management and control of ABMENG, including the day-to-day operations of the business, and responsible for ensuring that ABMENG complied with its obligations under the Fair Work Act.
The Ombudsman commenced an investigation into ABMENG in August 2021 following a request for assistance by an employee of ABMENG. Fair Work Inspector Rebecca Williams (FWI Williams), who is and was at all relevant times a Fair Work Inspector appointed by the Ombudsman under s 700 of the Fair Work Act, had primary carriage of the investigation.
The Notice to Produce
On 17 November 2021, pursuant to s 712(1) of the Fair Work Act, FWI Williams issued a Notice to Produce to ABMENG. The Notice to Produce was, on 19 November 2021, delivered to ABMENG at an address that was, at that time, the address of its registered office and was sent to Mr Parker by email on 22 November 2021. The Notice to Produce required ABMENG to produce by 3.00pm AEDT on 13 December 2021 the following documents in respect of three identified employees:
1.All records or documents outlining terms of engagement applying to the Employees, during their Employment Periods, including but not limited to:
(a) employment agreements
(b) employment contracts
(c) letters of offer
2.All records or documents outlining the duties and/or position description of the Employees, engaged to work during their respective Employment Periods.
3.All records or documents identifying where the Employees had competency at the existing level, including certification, qualifications, or recognized level of competency documents to appropriately classify the Employees in accordance with the classification definitions within the Awards.
4.All records or document that evidence or record the hours worked by the Employees, during their respective Employment Periods (including but not limited to dates, start times, finish times and any meal breaks or recalls), including:
(a) rosters
(b) timesheets
(c) attendance records
(d)any record or document that recorded or notified the Employee of corrections, alterations, adjustments or changes to records of the Employees’ hours of work or pay.
5.All records or documents that detail or relate to, all payments made by ABM to the Employees for wages paid, during each pay period falling within their respective Employment Periods, including but not limited to, pay slips, which contain any of the following information:
(a) rates of pay (either hourly or weekly) and/or salaries
(b) details of pay period and dates paid
(c) gross amounts and net amounts paid per pay period
(d) superannuation fund details and superannuation contributions
(e)the payment of bonuses, loadings, allowances, overtime and penalty rates, incentive-based payment, or separately identifiable entitlements under the Award.
6.All records or documents that evidence annual leave taken by the Employees (where applicable) during their respective Employment Periods including:
(a) the start date of leave
(b) the end date of leave
(c) leave accrued
(d)leave entitlements paid (including on termination of employment).
The Notice to Produce complied with the requirements of s 712(2) of the Fair Work Act, in that it was in writing, served on ABMENG and required ABMENG to produce the records or documents at a specified place within a specified time of at least 14 days. Pursuant to s 712(3) of the Fair Work Act, ABMENG was required to comply with the Notice to Produce.
ABMENG admitted that it made and kept pay slips in respect of each of the employees during the assessment period of the investigation and that those pay slips recorded all payments made by ABMENG to the employees for wages paid during the assessment period. ABMENG did not, by 13 December 2021 or at all, produce any documents in response to the Notice to Produce or provide a reasonable excuse for non-compliance with the Notice to Produce. This amounts to a contravention of s 712(3) of the Fair Work Act.
Mr Parker had actual or apparent authority for ensuring that ABMENG complied with its obligations under s 712(3) of the Fair Work Act in respect of the Notice to Produce. Mr Parker has admitted that, at all relevant times:
(a)he knew that ABMENG kept pay slips in respect of each of the employees which recorded all payments made by ABMENG to the employees for wages paid;
(b)he had actual knowledge that the Notice to Produce was given to ABMENG and that ABMENG was required to comply with the Notice to Produce by 13 December 2021;
(c)he had actual knowledge of ABMENG’s failure to comply with the Notice to Produce; and
(d)he was an intentional participant in ABMENG’s failure to comply with the Notice to Produce.
Mr Parker was involved, within the meaning of s 550(2)(c) of the Fair Work Act, in ABMENG’s contravention of s 712(3) of the Fair Work Act.
The Compliance Notice
As a result of the investigation, FWI Williams formed a belief, within the meaning of s 716(1) of the Fair Work Act, that ABMENG contravened:
(a)cl 16.1 of the Clerks – Private Sector Award 2020 by failing to pay its employee, Ms Bhavneet Kaur, her full-time minimum rate of pay;
(b)cl 15.1 of the Miscellaneous Award 2020 by failing to pay its employee, Mr Mark Dagnall, his full-time minimum rate of pay;
(c)cl 20.1 of the Manufacturing and Associated Industries and Occupations Award 2020 by failing to pay its employee, Mr David Hart, his full-time minimum rate of pay; and
(d)s 90(1) of the Fair Work Act by failing to pay Ms Kaur, Mr Dagnall and Mr Hart their annual leave entitlements on termination.
The relevant underpayments are summarised in the following table:
Employee Ms Kaur Mr Dagnall Mr Hart Position Level 2, Year 2 Customer Service Officer Level 2 employee Level C13 Service Engineer Applicable Award Clerks – Private Sector Award 2020 Miscellaneous Award 2020 Manufacturing and Associated Industries and Occupations Award 2020 Period of employment 8 March 2021 to 9 July 2021 1 March 2021 to 26 July 2021 29 March 2021 to 30 May 2021 Minimum rate of pay $23.52 per hour from 8 March 2021 to 1 July 2021
$24.11 per hour from 1 July 2021 to 9 July 2021$21.18 per hour from 1 March 2021 to 1 July 2021
$21.72 per hour from 1 July 2021 to 26 July 2021$20.41 per hour Hours worked for which the employee was not paid 56 hours 80 hours 152 hours Hours worked for which the employee was paid less than the minimum rate Period: 21 May 2021 to 13 June 2021
Entitlement: $1695.20
Actual pay: $744.93Period: 14 June 2021 to 27 June 2021
Entitlement: $1,695.20
Actual pay: $744.93Period: 28 June 2021 to 11 July 2021
Entitlement: $1,737.60
Actual pay: $740Accrued but untaken annual leave balance at termination 44.46 hours 61.8 hours 26.23 hours
On 18 August 2022 FWI Williams gave ABMENG a Compliance Notice pursuant to s 716(2) of the Fair Work Act.
The Compliance Notice required ABMENG to take actions by 14 October 2022 to remedy the contraventions identified at [26] above, including:
(a)in relation to the failure to pay its employees at least the minimum wage for work performed, by:
(i)identifying the number of hours the employees worked during the relevant assessment period;
(ii)identifying the amounts paid to each employee during the relevant assessment period;
(iii)calculating the amounts the employees should have been paid during the relevant assessment period;
(iv)making payments to the employees of the difference been the amounts paid to the employees and the amounts that should have been paid to the employees during the relevant assessment period; and
(v)making a record of the information referred to (i)-(iv) above; and
(b)in relation to the failure to pay the employees’ accrued annual leave entitlements on termination, by:
(i)identifying the number of accrued but untaken annual leave hours that the employees had on the termination of their employment;
(ii)identifying the amount ABMENG paid to the employees on termination of their employment in respect of their accrued but untaken annual leave;
(iii)calculating the amounts ABMENG should have paid to the employees for accrued but untaken annual leave on termination;
(iv)making a payment to the employees of the difference between the amount that they were paid on termination in respect of their accrued but untaken annual leave and the amounts that they should have been paid; and
(v)making a record of the information and amounts referred to in (i)-(iv) above; and
(c)by calculating and paying the employees’ superannuation fund any additional superannuation contributions required under the applicable Award as a result of the other action required under the Compliance Notice.
The Compliance Notice also required ABMENG to produce reasonable evidence to the Ombudsman by 21 October 2022 to show its compliance with the Compliance Notice, including by producing a schedule of the amounts it was required to calculate and identify, and evidence that the employees had been paid the amounts that ABMENG was required to pay to the employees under the Compliance Notice.
ABMENG provided some calculations to the Ombudsman on 13 September 2022, 14 September 2022 and 13 October 2022 but these did not comply with the action required by the Compliance Notice because there were errors in the calculations and ABMENG did not make the payments to the employees required by the Compliance Notice.
ABMENG admitted that it failed to fully take the action required by the Compliance Notice by 14 October 2022 and that it failed to produce to the Ombudsman reasonable evidence of compliance with the Compliance Notice by 21 October 2022 or at all. ABMENG admitted that it did not have a reasonable excuse for failing to comply with the Compliance Notice, for the purposes of s 716(6) of the Fair Work Act. ABMENG contravened s 716(5) of the Fair Work Act by failing to comply with the Compliance Notice.
Mr Parker had actual or apparent responsibility for ensuring that ABMENG complied with its obligations under s 716(5) of the Fair Work Act in respect of the Compliance Notice. Mr Parker admitted that at all relevant times he:
(a)had actual knowledge that the Compliance Notice was given to ABMENG;
(b)had actual knowledge that ABMENG failed to comply with the Compliance Notice; and
(c)was an intentional participant in ABMENG’s failure to comply with the Compliance Notice.
Therefore Mr Parker:
(a)was involved, within the meaning of s 550(2) of the Fair Work Act, in the contravention by ABMENG of s 716(5) of the Fair Work Act; and
(b)pursuant to s 550(1) of the Fair Work Act is taken to have contravened s 716(5) of the Fair Work Act by failing to comply with the Compliance Notice.
Payments made to the employees and further payments required
As a result of the failure by ABMENG to pay the amounts owing to the employees that ABMENG was required to pay pursuant to the Compliance Notice, the three employees suffered losses totalling more than $14,600 (gross).
In the period between 4 March 2024 and 4 April 2024, ABMENG made some payments to the three employees. The following table shows the amounts owed to the employees, the amounts paid and the amounts outstanding:
Employee Total amount owed Amount paid between 4 March 2024 and 4 April 2024 Amount outstanding Ms Kaur $2,586.08 $578.52 $2,007.56 Mr Dagnall $7,768.67 $1,667.46 $6,101.21[2] Mr Hart $4,335.13 $440 $3,895.13 [2] The amount recorded in the statement of agreed facts was a miscalculation. The parties agreed on 26 November 2024 that the figure $6,101.21 is the correct figure.
THE COURT’S SATISFACTION AS TO THE APPROPRIATENESS OF THE DECLARATION AND ORDERS PROPOSED BY CONSENT
Based on the evidence before the Court, I agree with the parties that ABMENG has contravened ss 712(3) and 716(5) of the Fair Work Act and that Mr Parker was involved in those contraventions within the meaning of s 550 of the Fair Work Act. It is therefore appropriate to make declarations to the effect of those in the minute of consent orders provided to the Court on 2 October 2024.
I am also satisfied based on the admissions in the statement of agreed facts that ABMENG still owes amounts to three former employees as a result of failing to fully comply with the Compliance Notice. In circumstances where the parties consent to orders requiring the amounts outstanding to the employees to be paid, together with superannuation entitlements and interest, I am satisfied it is appropriate to make those orders, with a minor adjustment to one of the figures to correct a miscalculation, as discussed with the parties on 26 November 2024. As Judge Cameron explained in Fair Work Ombudsman v Pure Telecom Pty Ltd [2024] FedCFamC2G 664 at [68], it is the contravention of the Compliance Notice, which created a discrete payment obligation, that may be compensated under s 545(1) and (2)(b) of the Fair Work Act, rather than the contraventions underlying the Compliance Notice.
I also accept the position agreed between the parties that it is appropriate for the Court to impose pecuniary penalties on ABMENG and Mr Parker and I address that issue below.
I also agree to grant liberty to apply to the parties in the event that the orders are not complied with.
APPROPRIATE PENALTIES
Approach to determining appropriate penalty
Section 546(1) of the Fair Work Act allows the Court to order that a person pay a pecuniary penalty that the Court considers to be appropriate if the Court is satisfied that the person has contravened a civil remedy provision. Sections 712(3) and 716(5) of the Fair Work Act are both civil remedy provisions. The primary purpose of imposing a penalty is deterrence: Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13 (Pattinson) at [15].
The steps that the Court will ordinarily take in determining an appropriate penalty were summarised in Fair Work Ombudsman v NSN Pty Ltd (t/as New Shanghai Charlestown) (2017) 275 IR 148; [2017] FCA 1301. The five steps summarised at [36] of that judgment are:
(a)identify the separate contraventions;
(b)consider whether each separate contravention should be dealt with independently or with some degree of aggregation for contraventions arising out of the same course of conduct;
(c)consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of contravention, there is no double penalty imposed;
(d)consider the appropriate penalty for each final individual group of contraventions; and
(e)consider the overall penalties arrived at and apply the totality principle, making adjustments as necessary.
The contraventions
As indicated above, there are two contraventions to be considered: the failure to comply with the Compliance Notice, in contravention of s 716(5) of the Fair Work Act, and the failure to comply with the Notice to Produce, in contravention of s 712(3) of the Fair Work Act.
In my view, these contraventions should be considered separately and not with any degree of aggregation. As the Ombudsman submitted, the Compliance Notice and the Notice to Produce were issued on separate dates for separate purposes and required ABMENG to take distinct steps by different due dates. The obligations imposed by the two notices were separate and distinct.
The appropriate penalty for the contraventions
The approach that a court should take when determining the appropriate penalty was considered by the High Court in Pattinson. In that case, the High Court held that the power conferred by s 546 of the Fair Work Act is not constrained by the criminal law notion of proportionality and there is nothing in the text, context or purpose of s 546 which requires that the maximum penalty be reserved for the most serious cases: Pattinson at [10], [49], [50]. The task of the Court remains to determine the ‘appropriate’ penalty in the circumstances of the particular case: Pattinson at [19]. An ‘appropriate’ penalty is one that ‘strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case’: Pattinson at [46].
The types of factors which can inform an assessment of what amounts to an appropriate penalty were summarised by French J in Trade Practices Commission v CSR Ltd [1991] ATPR 41-076; [1990] FCA 762 (CSR Ltd) at [42].[3] The factors are:
[3] See also Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [14], where a similar, albeit not identical, list of relevant factors is set out.
1.The nature and extent of the contravening conduct.
2.The amount of loss or damage caused.
3.The circumstances in which the conduct took place.
4.The size of the contravening company.
5.The degree of power it has, as evidenced by its market share and the ease of entry into the market.
6.The deliberateness of the contravention and the period over which it extended.
7.Whether the contravention arose out of the conduct of senior management or at a lower level.
8.Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention.
9.Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention.
These factors are not to be treated as any sort of checklist and the Court’s task remains to determine the appropriate penalty: Pattinson at [19]. I have addressed these factors below to the extent that they are the subject of evidence or relevant to the present application.
Maximum penalties
Pursuant to ss 539(2) and 546(2) of the Fair Work Act, the maximum penalty that the Court can impose on the respondents is:
(a)for a contravention of s 712(3), 60 penalty units in the case of Mr Parker and 300 penalty units in the case of ABMENG; and
(b)for a contravention of s 716(5), 30 penalty units in the case of Mr Parker and 150 penalty units in the case of ABMENG.
Pursuant to s 12 of the Fair Work Act, ‘penalty unit’ has the meaning given by s 4AA of the Crimes Act 1914 (Cth) and, at the time of the contraventions, was $222. This means that the maximum penalties the Court may impose in this matter in monetary terms are:
(a)for a contravention of s 712(3), $13,320 in the case of Mr Parker and $66,600 in the case of ABMENG; and
(b)for a contravention of s 716(5), $6,660 in the case of Mr Parker and $33,300 in the case of ABMENG.
The nature and extent of the contravening conduct, circumstances in which it took place and the extent of the loss
The evidence before the Court shows that FWI Williams and Mr Parker exchanged emails about compliance with the Notice to Produce on 22 December 2021 and communicated by telephone on 28 March 2022 and 8 July 2022 about information required to be provided under the Notice to Produce. While Mr Parker has referred to the cost of complying with the Notice to Produce, there is no evidence that he was unable to comply with the Notice to Produce because of cost and he admitted that he did not have a reasonable explanation for not complying with the Notice to Produce.
I accept the Ombudsman’s submission that ABMENG’s failure to comply with the Notice to Produce frustrated the Ombudsman’s ability to investigate compliance and enforce compliance with minimum standards under the Fair Work Act and Fair Work instruments.
The failure to comply with the Compliance Notice is serious. The Ombudsman has appropriately drawn to the Court’s attention cases in which the courts have recognised the importance of compliance notices, including as a means of providing efficient and cost effective rectification of identified contraventions: see Fair Work Ombudsman v Klinsic Constructions Pty Ltd (No 2) [2023] FedCFamC2G 283 at [28].
The Ombudsman submitted that the Ombudsman made extensive efforts to assist ABMENG to comply with the Compliance Notice prior to and after commencing these proceedings, including by assessing three versions of calculations and providing payment details for the employees, and agreeing to two payment plans in October 2022 and June 2023, neither of which were complied with by the respondents. I have reviewed the evidence before the Court and accept this submission. The evidence shows that during the period for compliance with the Compliance Notice, the Ombudsman exchanged a series of communications with Mr Parker and ABMENG’s bookkeeper, including regarding the calculation of monies outstanding, with confirmation that FWI Williams approved the calculations provided on 13 October 2022. As indicated above, the parties confirmed on 26 November 2024 that the figures were subsequently reviewed and found to be incorrect.
The evidence also shows that the Ombudsman entered into two separate payment plans with ABMENG for the payment of the outstanding monies to the employees prior to commencing these proceedings. Those payment plans were agreed in October 2022 and June 2023, but ABMENG did not make payments in accordance with the payment plans.
As a consequence of the failure to comply with the Compliance Notice, the employees are still not paid their lawful entitlements more than two years after compliance with the Compliance Notice became due. As submitted by the Ombudsman, while ABMENG has now repaid some of the amounts, approximately 80% of the amounts payable under the Compliance Notice remain outstanding.
I accept the Ombudsman’s submission that ABMENG did not have a reasonable excuse for the failure to comply with the Compliance Notice and that the failure to comply with the Compliance Notice had the effect of continuing to deny the employees their entitlements.
Deterrence
It is appropriate to consider both general and specific deterrence in this case.
General deterrence
I accept the Ombudsman’s submissions in relation to the need for general deterrence. Those submissions highlight the need for general deterrence against non-compliance with statutory notices such as compliance notices and notices to produce in order to maintain the integrity of the Ombudsman’s statutory enforcement mechanisms. I accept that there is a need to ensure that recipients of statutory notices issued by regulators are aware that a failure to comply will not be tolerated and therefore penalties imposed in this matter should be sufficiently high to impress upon other employers the importance of complying with their legal obligations to comply with statutory notices issued by the Ombudsman.
As noted above, compliance notices provide a mechanism for the efficient and cost-effective rectification of identified contraventions of the Fair Work Act, such as underpayments. Likewise, the issuing of a notice to produce is a vital investigative tool for the Ombudsman which allows it to ascertain compliance with the Fair Work Act and Fair Work Instruments, which is a core statutory function of the Ombudsman.
Specific deterrence
Specific deterrence is particularly important in cases such as this one which involve contravening conduct of a deliberate nature: see, for example, Fair Work Ombudsman v Mai Pty Ltd [2016] FCCA 1481 at [135].
There is evidence before the Court to suggest that Mr Parker has a history of non-compliance with workplace laws and with Court orders. This includes evidence that on 25 November 2008 the Magistrates Court in Melbourne found that a company known as Pareker Engineering Corporation (Australia) Pty Ltd, of which Mr Parker (then known as Ferhan Parker) was the sole director, breached the Australia Fair Pay and Conditions Standard under the Workplace Relations Act 1996 (Cth) by failing to pay to employees a total of $14,167.37 in wages and superannuation, and that Mr Parker was involved in those contraventions: see Inspector Zeljko Kovacevic v Pareker Engineering Corporation (Australia) Pty Ltd (unreported, Magistrate AJ Chambers, Magistrates Court at Melbourne, 18 February 2009). The Court ordered that the underpayments be repaid and imposed pecuniary penalties of $50,000 against the company and $10,000 against Mr Parker. The Ombudsman indicated that its records show that the underpayments were repaid in full by November 2012 (almost four years after the Court Orders), but only $250 was paid in respect of Mr Parker’s penalty and no amounts were paid in respect of the penalty against the company.
It is of particular concern to the Court that Mr Parker has previously been found to have been involved in contraventions of workplace laws, has paid only $250 of the $10,000 penalty imposed on him, and then engaged in further contraventions of workplace laws with a different company. The need for specific deterrence in this case is high.
I acknowledge that there is evidence before the Court to suggest that Mr Parker proposes to wind down or has wound down ABMENG. ABMENG remains registered at the time of preparing this judgment, although there appears to be a possibility that the company may, at some stage in the near future, go into administration. ABMENG is not yet deregistered and there remains a need for specific deterrence against ABMENG in the event that the company resumes trading.
The Court also notes the evidence before it that Mr Parker continues to be an office holder in other companies, including that he is the sole director and secretary of Parker Capital Group Pty Ltd and of T2 Scientific Pty Ltd, both of which were registered on 1 September 2023, with Mr Parker the sole shareholder of Parker Capital Group Pty Ltd and Parker Capital Group Pty Ltd the sole shareholder of T2 Scientific Pty Ltd. That Mr Parker continues to be an office holder in other corporations, registered after the contraventions the subject of the present proceeding, reinforces the need for specific deterrence.
I accept the submission of the Ombudsman that in the light of ABMENG’s continued operation and Mr Parker’s continued involvement in companies, that the non-compliance with the Compliance Notice has not been rectified, and in the light of Mr Parker’s previous involvement in contraventions of workplace laws, the penalty imposed in this matter must contain sufficient ‘sting or burden’ that the respondents will ‘seek to avoid the risk of future penalties’ and be deterred from future contraventions: see Australian Buildingand Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157; [2018] HCA 3 at [116].
Cooperation, contrition and corrective action
A discount can be available to a respondent who accepts wrongdoing and makes suitable expressions of regret, or who otherwise indicates a willingness to facilitate the course of justice. As Stone and Buchanan JJ said in Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; [2008] FCAFC 70 (Mornington Inn) at [76]:
[A] discount should not be available simply because a respondent has spared the community the cost of a contested trial. Rather, the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice.
In the present case, both respondents have made admissions and agreed facts, including agreeing that they contravened ss 712(3) and 716(5) of the Fair Work Act. I give this some weight in assessing penalty. While this litigation has been on foot, ABMENG has paid $2,696.28 to the employees, although this is a small portion of the total outstanding and ABMENG has not paid the amounts owing under the Compliance Notice.
There have been many expressed intentions to pay the employees the amounts outstanding under the Compliance Notice since the contravention, but with little meaningful action following the expressed intentions. Since prior to the commencement of this proceeding, Mr Parker and/or the respondents’ lawyer made a number of representations that payment would be made in full within a few weeks. The respondents’ intention to pay was also recorded in the Order made by Judge Kirton on 24 January 2024. Despite the repeated representations, only a small portion of the outstanding amount under the Compliance Notice has been paid. The representations that payment will be made in full have had the effect of delaying this proceeding, with minimal benefit to the employees who are owed money by ABMENG. I give no weight in determining whether to apply a discount to penalty to the various agreements and representations by or on behalf of the respondents that the outstanding amounts will be paid in full to the employees within a few weeks.
I agree with the Ombudsman submission that any discount in this matter should be small, and no more than 15%.
Size and financial circumstances of the business
There is evidence before the Court, albeit not current evidence, to suggest that ABMENG has faced financial difficulties, including that it has a significant debt to the Australian Taxation Office and that its profit and loss statement for the financial year ended 30 June 2022 recorded a loss of $65,294.81.
I accept the Commissioner’s submission that the capacity to pay a penalty is less relevant than the objective of specific deterrence: see Mornington Inn at [69]. I also accept that the penalty to be imposed should be meaningful regardless of the size or financial position of the company: Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [28].
I also note that respondents have not made submissions to this Court and therefore have not requested that the Court impose a lower penalty than it otherwise might to take into account any financial hardship that ABMENG may be facing.
Penalty
The Ombudsman seeks the penalties set out in the table below:
Maximum penalty Penalty with 15% discount Recommended penalty range Penalty range ABMENG Contravention of s 716(5) $33,300 $28,305 70-80% $19,800 to $22,600 Contravention of s 712(3) $66,600 $56,610 50-60% $28,300 to $33, 900 Proposed penalty: $48,000 to $56,000 Mr Parker Contravention of s 716(5) $6,600 $5,661 70-80% $3,900 to $4,500 Contravention of s 712(3) $13,320 $11,322 50-60% $6,600 to $6,700 Proposed penalty: $10,000 to $11,000
While I consider that higher penalties could have been sought in this matter, particularly against Mr Parker given his prior contravention and failure to pay any more than a token amount of the penalty imposed by the Magistrates Court in 2009, I am satisfied that the penalty recommended by the Ombudsman is within the range of penalty that is appropriate.
I consider a penalty at the higher end of the range recommended by the Ombudsman to be appropriate and I therefore impose a penalty of $56,000 on ABMENG and $11,000 on Mr Parker. I have considered these amounts in accordance with the totality principle and consider the total amount payable to be appropriate and not oppressive.
CONCLUSION
For the reasons indicated above, I am satisfied that it is appropriate for the Court to make the declarations and orders that the parties propose be made by consent, with minor modifications.
I am also satisfied that it is appropriate to require ABMENG to pay a pecuniary penalty of $56,000 in respect of the declared contraventions of ss 712(3) and 716(5) of the Fair Work Act and to require Mr Parker to pay a pecuniary penalty of $11,000 in respect of his involvement in those contraventions.
I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Ladhams. Associate:
Dated: 27 November 2024
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