Fair Work Ombudsman v ACN 146 435 118 Pty Ltd & Anor (No.2)
[2013] FCCA 1270
•5 September 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
FAIR WORK OMBUDSMAN v ACN 146 435 118 PTY LTD & ANOR (No.2) [2013] FCCA 1270
Catchwords:
INDUSTRIAL LAW – Contraventions of Fair Work Act 2009 (Cth), Fair Work Regulations 2009 (Cth) and modern award – failure to pay and underpayment of entitlements – failure to maintain proper records and issue payslips – failure to comply with notices to produce – penalty – factors to be considered.
Legislation:
Cleaning Services Award 2010
Crimes Act 1914 (Cth), s.4AA
Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Act 2012 (Cth)Fair Work Act 2009 (Cth), ss.3, 4(1), 44(1), 45, 90(2), 323, 535, 536(1) and (2), 539, 546(1) and (3), 557(1) and (2), 712(3)
Fair Work Regulations 2009 (Cth), regs.3.32, 3.33, 3.34, 3.36, 3.37, 3.40, 3.44, 3.46(1)(g), 4.01A, 4.03A
Workplace Relations Act 1996 (Cth)
Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited (No.2) (2002) 190 ALR 169; [2002] FCA 559
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; [2008] FCAFC 8
Blandy v Coverdale NT Pty Ltd ACN 102 611 423 [2008] FCA 1533
Brobbel v Darrell Lea Chocolate Shops Pty Ltd [2008] FMCA 714
Fair Work Ombudsman v ACN 146 435 118 Pty Ltd & Anor [2013] FCCA 803
Fair Work Ombudsman v Go Yo Trading Pty Limited & Anor [2012] FMCA 865
Fair Work Ombudsman v Industrial Roadpavers (WA) Pty Ltd (2010) 194 IR 436; [2010] FMCA 204
Fair Work Ombudsman v Kentwood Industries Pty Ltd (No.2) (2010) 201 IR 234; [2010] FCA 1156
Fair Work Ombudsman v Kentwood Industries Pty Ltd (No.3) [2011] FCA 579
Fair Work Ombudsman v Kingsford Carwash Pty Ltd & Anor (No.2) [2012] FMCA 1210
Fair Work Ombudsman v Maclean Bay Pty Ltd (No.2) [2012] FCA 557
Fair Work Ombudsman vMMP Management Services Pty Ltd & Anor (2012) 219 IR 397; [2012] FMCA 207
Fair Work Ombudsman v Nerd Group Australia Pty Ltd (No.3) [2012] FMCA 891
Fair Work Ombudsman v Orwill Pty Ltd & Ors [2011] FMCA 730
Fair Work Ombudsman v Promoting U Pty Ltd & Anor [2012] FMCA 58
Fair Work Ombudsman v Sanada Investments Pty Ltd [2010] FMCA 401
Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd & Anor [2012] FMCA 258
Fair Work Ombudsman v Terrence Cyril Thomas (t/as Over the Top Happy Cleaning Services Pty Ltd) [2013] FCCA 536
Fair Work Ombudsman v Ultra Tune Australia Pty Ltd (2012) 225 IR 326; [2012] FMCA 560
Finance Sector Union v Commonwealth Bank of Australia (2005) 147 IR 462; [2005] FCA 1847
Flattery v The Italian Eatery t/as Zeffirelli's Pizza Restaurant) (2007) 163 IR 14; [2007] FMCA 9
Gibbs v The Mayor, Councillors and Citizens of The City of Altona (1992) 37 FCR 216
Hanssen Pty Ltd v Jones (2009) 179 IR 57; [2009] FCA 192
Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080
Liquor, Hospitality and Miscellaneous Union v Cuddles Management Pty Ltd (No 2) (2009) 188 IR 435; [2009] FMCA 746McIver v Healey [2008] FCA 425
Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; [2008] FCAFC 70
Olsen v Sterling Crown Pty Ltd (2008) 177 IR 337; [2008] FMCA 1392
Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; [2008] FCAFC 170
Ponzio v B & P Caelli Constructions Pty Ltd & Ors (2007) 158 FCR 543; [2007] FCAFC 65Rowe v Capital Territory Health Commission (1982) 39 ALR 39
Seymour v Stawell Timber Industries Pty Ltd (1985) 9 FCR 241
Workplace Ombudsman v Golden Maple Pty Ltd (2009) 186 IR 211; [2007] FMCA 6
Workplace Ombudsman v KSN Engineering Pty Ltd (2009) 185 IR 316; [2009] FMCA 538
Applicant: FAIR WORK OMBUDSMAN
First Respondent: ACN 146 435 118 PTY LTD
Second Respondent: CATHERINE PAINO-POVEY
File Number: PEG 6 of 2013
Judgment of: Judge Lucev
Hearing date: 6 August 2013
Date of Last Submission: 6 August 2013
Delivered at: Perth
Delivered on: 5 September 2013 REPRESENTATION
Counsel for the Applicant: Ms E Raper
Solicitors for the Applicant: The Office of the Fair Work Ombudsman
For the Respondents: No appearance
Solicitors for the Respondents: Dean Love & Associates ORDERS
(1)The First Respondent pay penalties pursuant to s.546(1) of the Fair Work Act 2009 (Cth) (“FW Act”) in the total amount of $286,550 in respect of the contraventions referred to in the declarations and orders made by this Court on 12 July 2013 (“Default Orders”).
(2)The Second Respondent pay penalties pursuant to s.546(1) of the FW Act in the total amount of $57,310 in respect of the contraventions referred to in the Default Orders.
(3)Pursuant to s.546(3)(a) of the FW Act the Respondents shall pay the penalty amounts referred to in orders (1) and (2) above to the Consolidated Revenue Fund of the Commonwealth by 4 October 2013.
(4)The parties have liberty to apply at three days’ notice in the event that orders 4 to 7 of the Default Orders are not complied with.
FEDERAL CIRCUIT COURT OF AUSTRALIA
AT PERTH
PEG 6 of 2013
FAIR WORK OMBUDSMAN Applicant
And
ACN 146 435 118 PTY LTD First Respondent
CATHERINE PAINO-POVEY Second Respondent
REASONS FOR JUDGMENT
Originating Application
1.The Originating Application sought orders as set out in the Statement of Claim filed with the Originating Application on 11 January 2013, by the Fair Work Ombudsman[1] against the First Respondent, ACN 146 435 118 Pty Ltd,[2] and the Second Respondent, Catherine Paino-Povey,[3] in relation to alleged contraventions of:
a)the Fair Work Act 2009 (Cth);[4]
b)the Fair Work Regulations 2009 (Cth),[5] and
c)an applicable modern award, the Cleaning Services Award 2010.[6]
[1] “FW Ombudsman”.
[2] “the Corporation”.
[3] “Ms Paino-Povey”.
[4] “FW Act”.
[5] “FW Regulations”.
[6] “Modern Award”.
Default judgment
2.In Fair Work Ombudsman v ACN 146 435 118 Pty Ltd & Anor[7] the Court made declarations of contravention by the Corporation, and involvement in the contraventions by Ms Paino-Povey, and entered default judgment against the Corporation and Ms Paino-Povey.
[7] [2013] FCCA 803 (“ACN 146 435 118”).
Current proceedings
3.The current proceedings follow on from the default judgment in ACN 146 435 118, and concern the penalties to be imposed in relation to the declarations of contravention by the Corporation, and involvement in the contraventions by Ms Paino-Povey, found in ACN 146 435 118.
FW Ombudsman’s evidence and submissions
4.The FW Ombudsman’s detailed evidence and submissions are considered hereunder in relation to the matters relevant to penalty.
The Respondents’ Submissions
5.There was no affidavit evidence filed by the Corporation or Ms Paino-Povey. Joint submissions were filed on behalf of the Corporation (signed by Mr Povey in his capacity as a director of the Corporation) and Ms Paino-Povey.[8] Some of the Respondents’ Submissions made were relevant to the position of the Corporation and Ms Paino-Povey, but much of the content was unsupported and irrelevant assertions concerning the nature of the Modern Award, and the role and functions of Fair Work Australia (now the Fair Work Commission) and the FW Ombudsman. The Respondents’ Submissions had attached to them various documents including the following:
[8] “Respondents’ Submissions”.
a)a letter to Mr Povey from the Australian Taxation Office[9] concerning an overdue amount of $232,964.33, seemingly in relation to director’s penalty liability, and warning of intended debt collection action. The letter does not indicate which company of which Mr Povey is a director the penalty liability relates to, and as the evidence indicates that he is, and has been, a director of more than one company, the relevance of the Deputy Commissioner of Taxation’s warning of intended debt collection action to these proceedings is not readily apparent. In any event, the debt relates to Mr Povey personally, and not to either the Corporation or Ms Paino-Povey, the Respondents in these proceedings;
[9] “ATO”.
b)medical records related to Mr Povey indicating diagnosed illnesses and current medications (as at July 2012), further medication and treatment (as at August 2012), and about five weeks of unfitness for work from mid-December 2012 to mid-January 2013;
c)an email sent from Mr Povey and Ms Paino-Povey to their lawyer (who appeared in the default judgment hearing but not at the penalty hearing) dated 13 June 2013 and sent from an email address of “Commercial + Residential Cleaning Group Pty Ltd” (a company not respondent to these proceedings), and indicating an intention to “plead guilty” in relation to these proceedings;
d)a National Police Certificate for Ms Paino-Povey dated 26 June 2013;
e)undated comments on a website for “reverseaustralia” complaining about ACN 146 435 118, under its former corporate name of Housekeeping Pty Ltd;
f)an undated article from the website of The West Australian newspaper headed “Povey Company in Court” in relation to these proceedings, and purporting to quote Mr Povey as accusing the FW Ombudsman of pursuing him unfairly, and disputing that the employees were subject to the Modern Award, and quoting Mr Povey as saying “I am by no means an idiot or someone who doesn’t know what the law is”;
g)a letter from the FW Ombudsman’s Infoline adviser to Ms Paino-Povey in relation to rates of pay for a Level 1 classification under the Modern Award;
h)a Form 4 in the Western Australian Magistrates Court (civil jurisdiction), being a minor case claim by the Water Corporation for charges alleged to be due and payable by Paino and Povey Investments Pty Ltd (ACN 109 632 644), a company which is not a respondent in these proceedings;[10]
i)a Form 3 general procedure claim in the Magistrates Court of Western Australia (civil jurisdiction) by the owners of Palmerston Mews, Strata Plan 388433 against Paino and Povey Investments for monies due, being various levies, costs and charges (including charges for the removal of dog waste);
j)various documents from Bluestone Mortgages concerning loans by Paino and Povey Investments, indicating the dishonouring of direct-debit payments in June and July 2013;
k)a demand for payment directed to the Corporation dated 15 May 2013 from Centrepoint Alliance Premium Funding Pty Ltd in the amount of $6,328.48;
l)two letters from Charter Mercantile Agency to Ms Paino-Povey in relation to two David Jones American Express cards debts of $1,015.29 and $13,469.00, offering to settle those debts for $600 and $8,000 respectively;
m)a letter addressed to Mr Povey at a Bibra Lake address from Forbes Darling Lawyers dated 15 July 2013 on behalf of the Australia and New Zealand Banking Group Limited in relation to an amount due of $5,761.17, threatening legal action if an unspecified matter is not settled; and
n)two pages from a Commonwealth Bank account for Paino and Povey Investments indicating that between 9 April 2013 and 1 August 2013 the account was overdrawn by as much as $6,550,94 (6 June 2013), and was overdrawn by $647.06 at as 1 August 2013.
[10] “Paino and Povey Investments”.
6.The Court notes that the assertions made in the Respondents’ Submissions are generally bare assertions, in respect of which there is no relevant affidavit or oral corroborative evidence. Insofar as the documents relate to Mr Povey’s personal circumstances, unrelated to the discharge of his duties as a director of the Corporation, and to Paino and Povey Investments, they are not directly relevant to these proceedings, particularly at the penalty stage. To the extent that any of the material in the Respondents’ Submissions is relevant it is considered hereunder in relation to the matters relevant to penalty.
Principles relevant to determining penalty
7.The following principles are to be taken into account when determining the appropriate penalty, if any, to be imposed:
a)firstly, the Court must identify the separate contraventions. Each contravention of each separate obligation found in the FW Act, FW Regulations and the Modern Award in relation to the employees concerned[11] is a separate contravention;[12]
b)secondly, the Court must consider whether the contraventions constitute a single course of conduct. Where the same person commits two or more contraventions of a civil remedy provision set out in s.557(2) of the FW Act, and the contraventions arise out of the same course of conduct by that person, the contraventions are to be taken to constitute a single breach of the applicable civil remedy provision.[13] Relevantly, s.557(2) of the FW Act does not include contraventions of s.712(3) of the FW Act. Regulation 4.03A of the FW Regulations similarly provides for multiple contraventions of the same regulation to be taken as a single course of conduct;
c)thirdly, where two or more contraventions have common elements, this must be taken into account in considering an appropriate penalty in all the circumstances for each contravention, and the penalties may be grouped. The Corporation and Ms Paino-Povey should not be penalised more than once for the same conduct, and any penalties should be an appropriate response to the conduct of the Corporation and Ms Paino-Povey.[14] This task is distinct from and in addition to the final application of the “totality principle”;[15]
d)fourthly, determine an appropriate penalty to impose in respect of each contravention (whether a single contravention alone or taken to be so as part of a course of conduct or group), having regard to all of the relevant circumstances of the case; and
e)finally, having fixed an appropriate penalty for each group of contraventions or course of conduct, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate response to the conduct which led to the contraventions.[16] The Court should apply an “instinctive synthesis” in making this assessment.[17] This is known as an application of the “totality principle”.
[11] Collectively the “Employees”.
[12] Gibbs v The Mayor, Councillors and Citizens of The City of Altona (1992) 37 FCR 216 at 223 per Gray J; McIver v Healey [2008] FCA 425 at para.16 per Marshall J.
[13] FW Act, s.557(1).
[14] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at 571 per Graham J; [2008] FCAFC 8 at para.46 per Graham J (“Australian Ophthalmic Supplies”).
[15] Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at 396-396 per Stone and Buchanan JJ; [2008] FCAFC 70 at paras.41-46 per Stone and Buchanan JJ (“Mornington Inn”).
[16] See Kelly v Fitzpatrick (2007) 166 IR 14 at 21-22 per Tracey J; [2007] FCA 1080 at para.30 per Tracey J (“Kelly”); Australian Ophthalmic Supplies FCR at 567 per Gray J, 576 per Graham J and 583 per Buchanan J; FCAFC at paras.23 per Gray J, para.71 per Graham J and para.102 per Buchanan J.
[17] Australian Ophthalmic Supplies FCR at 567-567 per Gray J, 572-573 and 577 per Graham J; FCAFC at para.27 per Gray J and paras.55 and 78 per Graham J.
Identification of the separate contraventions
8.The contraventions relate to the failure of the Corporation and Ms Paino-Povey to:
a)properly pay a range of minimum entitlements due to the Employees, who were employees of the Corporation;
b)keep and maintain adequate or correct records and to issue payslips to the Employees whose minimum entitlements had not been properly paid; and
c)comply with Notices to Produce[18] issued by the FW Ombudsman.
[18] “NTP”.
9.The Employees, their period of employment, and the amount of their underpayment appear from the following table:
Name
Period of employment
Amount of underpayment
Ling Chai
8 June 2011 to 15 August 2011
$4,489.68
Yuan-Miao Wen
17 August 2011 to 20 September 2011
$1,915.38
Fleur McMillan
3 October 2011 to 3 January 2012
$4,554.65
Jai Vainu
3 October 2011 to 3 January 2012
$4,220.79
Susan McDermott
17 October 2011 to 9 December 2011
$4,392.67
Shuk Pui Yau
16 November 2011 to 21 December 2011
$2,937.45
10.Orders made in ACN 146 435 118 for the payment by the Corporation to the Employees of the above underpaid amounts, interest and superannuation have not, on the evidence available to the Court at the time of hearing, been complied with.
11.Each of the Employees were employed as cleaners to undertake house cleaning duties at domestic premises in and around Perth for customers of the Corporation.[19] The hourly rate paid to each Employee did not meet their minimum entitlement, particularly when the Employees worked additional hours attracting overtime or allowances, and the Corporation did not pay the Employees on time, or at all, for some work performed. Additionally, the Corporation did not pay the Employees in respect of termination entitlements, including annual leave.
[19] Statement of Claim at para.17.
12.The contraventions found by the Court in ACN 146 435 118, and the maximum penalties[20] for each of the Corporation and Ms Paino-Povey in respect of each contravention are as follows:
[20] The Court notes that the penalty unit amount applicable in these proceedings is $110 per penalty unit, being the amount specified in s.4AA of the Crimes Act 1914 (Cth) (applicable because of the definition of “penalty unit” in s.4(1) of the FW Act) immediately prior to its amendment by the Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Act 2012 (Cth).
| Provision Contravened | Description of contravention | Contraventions / employees | Maximum Penalty FIRST RESPONDENT | Maximum Penalty SECOND RESPONDENT |
| Section 45 of the FW Act | Contravening a term of a modern award (Minimum rates of Pay – Clause 16.1 of the Modern Award) | Repeated contravention All 6 employees | $33,000 per breach. | $6,600 per breach. Section 539 of the FW Act |
| Section 45 of the FW Act | Contravening a term of a modern award (Frequency of payment – Clause 20 of the Modern Award) | Repeated contravention All 6 employees | $33,000 per breach. | $6,600 per breach. Section 539 of the FW Act |
| Section 45 of the FW Act | Contravening a term of a modern award (Overtime rates – Clause 28.1 of the Modern Award) | Repeated contravention All 6 employees | $33,000 per breach. | $6,600 per breach. Section 539 of the FW Act |
| Section 324 of the FW Act | Unlawful deduction of amounts payable to the Employees in the initial weeks of their employment. | Repeated contravention All 6 employees | Not a civil penalty provision | |
| Section 323(1) of the FW Act | Failure to pay Yau’s wages in full in her last week of employment resulting in an underpayment to Yau. | 1 contravention Yau | $33,000 per breach. Section 539 of the FW Act | $6,600 per breach. Section 539 of the FW Act |
| Section 323(1) of the FW Act | Failure to pay each of the Employees’ wages in full in relation to the performance of work. | Repeated contravention All 6 employees | $33,000 per breach. Section 539 of the FW Act | $6,600 per breach. Section 539 of the FW Act |
| Section 44 of the FW Act | Contravening a provision of the National Employment Standards (s 90(2) of the FW Act) (failing to pay annual leave on termination of employment) | Repeated contravention All 6 employees | $33,000 per breach. Section 539 of the FW Act | $6,600 per breach. Section 539 of the FW Act |
| Section 45 of the FW Act | Contravening a term of a modern award (failing to pay annual leave on termination of employment – Clause 29.1 of the Modern Award) | Repeated contravention All 6 employees | $33,000 per breach. Section 539 of the FW Act | $6,600 per breach. Section 539 of the FW Act |
| Section 45 of the FW Act | Contravening a term of a modern award (failing to pay annual leave loading on termination of employment – Clause 29.7 of the Modern Award) | Repeated contravention All 6 employees | $33,000 per breach. Section 539 of the FW Act | $6,600 per breach. Section 539 of the FW Act |
| Section 45 of the FW Act | Contravening a term of a modern award (failing to provide access to rosters that showed the Employees’ start and finish times – Clause 25 of the Modern Award) | Repeated contravention All 6 employees | $33,000 per breach. Section 539 of the FW Act | $6,600 per breach. Section 539 of the FW Act |
| Section 45 of the FW Act | Contravening a term of a modern award (failing to provide meal breaks after 4 hours and 30 minutes of work – Clause 26.2 of the Modern Award) | Repeated contravention McMillan, Vainu, McDermott and Yau | $33,000 per breach. Section 539 of the FW Act | $6,600 per breach. Section 539 of the FW Act |
| Section 712(3) of the FW Act | Failing to comply with 5 NTPs | Repeated contravention 5 NTPs | $33,000 per breach. Section 539 of the FW Act | $6,600 per breach. Section 539 of the FW Act |
| Section 535(1) FW Act | Failing to make and keep records in relation to employees of the kind prescribed in regulations 3.32(c), 3.32(d), 3.33(1)(a), 3.33(1)(d), 3.34(a), 3.36(1), 3..37 and 3.40 of the FW Regulations | Repeated contravention All 6 employees | $33,000 per breach. Section 539 of the FW Act | $6,600 per breach. Section 539 of the FW Act |
| Section 536(1) FW Act | Failing to issue payslips to Employees within one working day of paying wages. | Repeated contravention All 6 employees | $33,000 per breach. Section 539 of the FW Act | $6,600 per breach. Section 539 of the FW Act |
| Section 536(2) FW Act | Failing to issue payslips that include the information required by the FW Regulations. | Repeated contravention All 6 employees | $33,000 per breach. Section 539 of the FW Act | $6,600 per breach. Section 539 of the FW Act |
| Regulation 3.44 of the FW Regulations | Making payslips that contain information which was false or misleading. | Repeated contravention McMillan and Vainu | $11,000 per breach Regulation 4.01A of the FW Regulations | $2,200 Regulation 4.01A of the FW Regulations |
| Section 45 of the FW Act | Contravening a term of a modern award (failing to pay the Employees for travel time – Clause 17 of the Modern Award) | Repeated contravention All 6 employees | $33,000 per breach. Section 539 of the FW Act | $6,600 per breach. Section 539 of the FW Act |
Course of conduct
13.The Corporation and Ms Paino-Povey are entitled to the benefit of the course of conduct provisions in relation to their repeated contraventions of each relevant provision, so that multiple contraventions of:
a)each record keeping requirement; and
b)the minimum wage provision for the Employees,
may be treated as a single breach of each provision, except for the breaches of s.712(3) of the FW Act. Where, however, contraventions arise at different points in time and from different decisions made by the employer, the contraventions are properly treated as separate and distinct, and not arising from a single course of conduct.[21]
[21] Rowe v Capital Territory Health Commission (1982) 39 ALR 39 at 65 per Keely J; Seymour v Stawell Timber Industries Pty Ltd (1985) 9 FCR 241 at 266-267 per Gray J. Workplace Ombudsman v Golden Maple Pty Ltd (2009) 186 IR 211 at 230 per Lucev FM; [2007] FMCA 664 at paras.40-43 per Lucev FM.
14.The Court agrees with the submissions of the FW Ombudsman that the two declared contraventions in respect of s.323 of the FW Act should be treated as two separate courses of conduct, and therefore two contraventions, because they arise out of different sets of facts and different decisions by the Corporation, namely:
a)the ongoing failure of the Corporation to pay the Employees in full and to withhold payment from them in relation to work performed during the periods of their employment;[22] and
b)the decision by the Corporation not to pay Yau in respect of her final week of wages as a result of the dispute regarding her notice period, which resulted in payment for her notice period being withheld.[23]
[22] Statement of Claim, paras.51-54.
[23] Statement of Claim, paras.55-62.
15.The Court also recognises that by reason of s.557(2) of the FW Act not including contraventions of s.712(3) of the FW Act the contraventions of the latter provision therefore comprise five separate contraventions.
Common elements
16.The Court may group separate contraventions together where the contraventions overlap or involve repeat punishment for the same or substantially similar conduct.[24]
[24] Australian Ophthalmic Supplies FCR at 571 and 576 per Graham J and 580-581 per Buchanan J; FCAFC at paras.46 and 72 per Graham J and para.93 per Buchanan J; Mornington Inn FCR at 398, 403-404 and 408 per Stone and Buchanan JJ; FCAFC at paras.46, 72 and 93 per Stone and Buchanan JJ.
17.The Court accepts that it is appropriate to group the contraventions relating to the failure to:
a)pay annual leave entitlements on termination pursuant to ss.44(1) and 45 of the FW Act, in accordance with s.90(2) of the FW Act and clause 29.1 of the Modern Award; and
b)give a payslip to each of the Employees within one working day of paying an amount in relation to the performance of work, and the failure to ensure that the payslips contained the information prescribed in the FW Regulations, pursuant to ss.536(1) and 536(2) of the FW Act.
18.The Court agrees that this is not a case where the five NTP contraventions sufficiently overlap to justify grouping. That is because:
a)each of the NTPs required the production of documents relating to different employees or groups of employees, save for the NTPs issued on 25 October 2011 and 1 February 2012[25] which both requested documents relating to Mailys Andreiu. However, the 1 February 2012 NTP required the production of documents relating to seven other employees in addition to Ms Andreiu;[26]
b)the NTPs were issued over a number of months between October 2011 and May 2012 and each of the NTPs informed the Corporation and Ms Paino-Povey of the possible consequences of failing to comply with the NTPs;[27]
c)the Corporation and Ms Paino-Povey failed to produce any documents to the FW Ombudsman in response to any of the NTPs;[28]
d)after the date for compliance with each of the NTPs had passed the FW Ombudsman issued a separate letter entitled “Failure to comply with a Notice to Produce Records or Documents”[29] which gave the Corporation seven days to provide a reasonable excuse for non-compliance and warned that the failure to provide such an excuse could result in the FW Ombudsman commencing legal action;[30]
e)in relation to each of the Failure to Comply Letters that were issued, the Corporation and Ms Paino-Povey failed to provide a reasonable excuse for non-compliance with the NTPs issued;[31] and
f)on three occasions the Corporation, through either Ms Paino-Povey or Mr Povey, sought an extension of time to comply with the various NTPs; indicating an understanding of the requirements under the NTP, but still did not comply.[32]
[25] “1 February 2012 NTP”.
[26] Truong Affidavit, annexures MT-1 and MT-4.
[27] Statement of Claim, para.91; Truong Affidavit.
[28] Statement of Claim, para.92.
[29] “Failure to Comply Letter”.
[30] Truong Affidavit, paras.11, 27, 34, 37 and 44; annexures MT-2, MT-6, MT-9, MT-10 and MT-12.
[31] Truong Affidavit, paras.18, 27, 36, 39 and 46.
[32] Truong Affidavit, paras.13-17, 22-23 and 31-32; annexures MT-3, MT-5 and MT-8.
Actual number of contraventions and maximum penalties
19.The Court therefore accepts the FW Ombudsman’s submissions that there are 18 contraventions, which together with their maximum penalties, are set out as follows:
| Provision Contravened | Proposed penalty range | Maximum Penalty | Maximum Penalty reduced by course of Conduct[33] &/ or common elements | Maximum Penalty | Maximum Penalty reduced by course of Conduct[34] &/or common elements |
| FIRST RESPONDENT | SECOND RESPONDENT | ||||
| 1. Clause 16.1 Award (minimum rate) Total: 6 contraventions | Mid to high range | $198,000 ($33,000 x 6) | $33,000 | $39,600 ($6,600 x 6) | $6,600 |
| 2. Clause 20 Award (frequency of payment) Section 45 FW Act Total: 6 contraventions | Mid to high range | $198,000 ($33,000 x 6) | $33,000 | $39,600 ($6,600 x 6) | $6,600 |
| 3. Clause 28.1 Award (overtime) Total: 6 contraventions | Mid to high range | $198,000 ($33,000 x 6) | $33,000 | $39,600 ($6,600 x 6) | $6,600 |
| 4. Section 323(1) FW Act (failure to pay Yau in full) Total: 6 contraventions | Mid to high range | $198,000 ($33,000 x 6) | $33,000 | $39,600 ($6,600 x 6) | $6,600 |
| 5. Section 323(1) FW Act (failure to pay wages in full) Total: 1 contravention | Mid to high range | $33,000 | single contravention | $6,600 | single contravention |
| 6. Section 90(2) FW Act (annual leave on termination) Section 44 FW Act Total: 6 contraventions | Mid to high range | $198,000 ($33,000 x 6) | $33,000[35] | $39,600 ($6,600 x 6) | $6,600[36] |
| 6. Clause 29.1 Award (annual leave on termination) Section 45 FW Act Total: 6 contraventions | Mid-range (70% to 80%) | $198,000 ($33,000 x 6) | $39,600 ($6,600 x 6) | ||
| 7. Clause 29.7 Award (annual leave loading) Section 45 FW Act Total: 6 contraventions | Mid-range | $198,000 ($33,000 x 6) | $33,000 | $39,600 ($6,600 x 6) | $6,600 |
| 8. Clause 25 Award (rostering) Total: 6 contraventions | Low to mid-range | $198,000 ($33,000 x 6) | $33,000 | $39,600 ($6,600 x 6) | $6,600 |
| 9. Clause 26.2 Award (meal breaks) Section 45 FW Act Total: 4 contraventions | Mid-range | $132,000 ($33,000 x 4) | $33,000 | $26,400 ($6,600 x 4) | $6,600 |
| 10-14. Section 712(3) FW Act (NTP) Total: 5 contraventions | Mid-range (60%) | $165,000 ($33,000 x 5) | $165,000[37] | $33,000 ($6,600 x 5) | $33,000[38] |
| 15. s535(1) FW Act (records) Total: 6 contraventions | Mid to high range | $99,000 ($16,500 x 6) | $16,500 | $19,800 ($3,300 x 6) | $3,300 |
| 16. s536(1) FW Act (payslips) Total: 6 contraventions | Mid to high range | $99,000 ($16,500 x 6) | $16,500[39] | $19,800 ($3,300 x 6) | $3,300[40] |
| 16. s536(2) FW Act (payslips) Total: 6 contraventions | Mid to high range | $99,000 ($16,500 x 6) | $19,800 ($3,300 x 6) | ||
| 17. reg 3.44 (payslips) Total: 2 contraventions | Mid to high range | $22,000 ($11,000 x 2) | $11,000 | $4,400 ($2,200 x 2) | $2,200 |
| 18. Clause 17.10 Award (travel time) Section 45 FW Act Total: 6 contraventions | Mid-range | $198,000 ($33,000 x 6) | $33,000 | $39,600 ($6,600 x 6) | $6,600 |
| TOTALS | $2,431,000 | $539,000 | $486,200 | $107,800 | |
[33] Section 557 of the FW Act.
[34] Section 557 of the FW Act.
[35] Common elements applied as both contraventions relate to a failure to pay annual leave on termination.
[36] Common elements applied as both contraventions relate to a failure to pay annual leave on termination.
[37] Section 557(2) (course of conduct) does not apply to s.712 of the FW Act: Fair Word Ombudsman v Nerd Group Australia Pty Ltd (No. 3) [2012] FMCA 891 (“Nerd Group (No. 3)”).
[38] See fn.37.
[39] Common elements applied as both contraventions relate to the failure to issue payslips.
[40] Common elements applied as both contraventions relate to the failure to issue payslips.
20.The maximum penalty for the Corporation is $539,000. For Ms Paino-Povey the maximum penalty is $107,800.
General factors relevant to determining penalty
21.A non-exhaustive list of factors relevant to the imposition of a penalty under the FW Act appears in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar.[41] Those factors include:
[41] [2007] FMCA 7 (“Mason”).
a)the nature and extent of the conduct which led to the breaches;
b)the circumstances in which that conduct took place;
c)the nature and extent of any loss or damage sustained as a result of the breaches;
d)whether there had been similar previous conduct by the respondent;
e)whether the breaches were properly distinct or arose out of the one course of conduct;
f)the size of the business enterprise involved;
g)whether or not the breaches were deliberate;
h)whether senior management were involved in the breaches;
i)whether the party committing the breach had exhibited contrition;
j)whether the party committing the breach had taken corrective action;
k)whether the party committing the breach had cooperated with the enforcement authorities;
l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
m)the need for specific and general deterrence.[42]
[42] Mason at paras.26-59 per Mowbray FM.
22.This summary was adopted in Kelly,[43] and has been applied in any number of subsequent workplace penalty proceedings in the Federal Court and this Court. While the summary is a convenient checklist, it does not prescribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion.[44]
[43] IR 14 at 21-22 per Tracey J; FCA at para.30 per Tracey J.
[44] Australian Ophthalmic Supplies FCR at 580 per Buchanan J; FCAFC at para.91 per Buchanan J; Fair Work Ombudsman v MMP Management Services Pty Ltd (2012) 219 IR 397 at 407-408 per Lucev FM; [2012] FMCA 207 at para.7 per Lucev FM (“MMP Management Services”).
Nature and extent of the conduct
Wage and entitlement contraventions
23.The contravening conduct extended over the entire duration of each of the Employees’ respective periods of employment, and involved a failure to pay the Employees:
a)at all during their first few weeks of employment;[45] and
b)full and proper entitlements when they were due for all hours worked,[46]
[45] Statement of Claim, paras.40-44.
[46] Statement of Claim, paras.36 and 52.
in accordance with the FW Act and the Modern Award.
24.On a number of occasions when the Employees did receive payments, those payments were less than the full entitlements owing to them. For example:
a)McMillan and Vainu were paid reduced amounts for the weeks ending 30 October 2011 and 20 November 2011;[47]
b)McDermott received a reduced payment for the week ending 4 December 2011;[48] and
c)Chai, Yau and Wen received reduced payments each time they were paid.[49]
[47] Statement of Claim, para.52 (iv) and (v).
[48] Statement of Claim, para.52(i).
[49] Statement of Claim, para.52(ii), (iii) and (vi).
25.After the Employees’ employment with the Corporation ended they were not paid their full outstanding wages, including entitlements to overtime rates and allowances, nor were they paid their accrued annual leave and annual leave loading entitlements.[50]
[50] Statement of Claim, para.53.
26.The Corporation obtained a benefit from the underpayment of the Employees. As the underpayments have yet to be rectified the Corporation continues to receive the benefit of the Employees’ unpaid entitlements. It has been approximately 18 months since the last of the Employees, Vainu and McMillan, left the employment of the Corporation, and almost two years since Chai left the employment of the Corporation, and they are yet to be paid their full entitlements.
27.The FW Ombudsman submits that the contraventions represent a failure to provide basic entitlements to the Employees in accordance with minimum standards established under the FW Act. These minimum obligations provide an even playing field for employers with regard to employment costs, and establish a safety net of minimum entitlements for all employees in the national system, particularly those who are vulnerable or in low income roles, such as the Employees in this proceeding.
28.The Respondents’ Submissions purport to dispute the claim that the Employees worked up to ten hours a day, and suggest that work was only performed between 9.00am and 4.00pm, and that having regard to a 30 minute lunch break and an hours travelling time, there would only be eight hours paid work time per day. It suffices to observe that:
a)there is no evidence from the Corporation or Ms Paino-Povey to support the proposition put in the Respondent’s Submissions (which are not evidence) that only eight hours per day were worked;
b)there is evidence, from the FW Ombudsman and the Employees, which was not challenged, and which formed the basis for the default judgment in ACN 146 435 118, which indicates that the Employees did work up to ten hours a day; and
c)the default judgment in ACN 146 435 118 is conclusive for these purposes, no application having been made to set it aside, nor to lead any evidence to the contrary in the course of the penalty hearing at which neither the Corporation nor Ms Paino-Povey appeared.
29.At paragraph 10 of the Respondents’ Submissions the Corporation and Ms Paino-Povey submit that:
a)the FW Ombudsman ought to have pro-actively negotiated with the Corporation and Ms Paino-Povey, instead of being adversarial, hostile and antagonistic to them;
b)it is easy for a disgruntled employee to make a complaint and use this as leverage against a small business employer to extract “unfair demands”;
c)they “emphatically endorse the need to protect the rights of all Employees”, but that there “needs to be scope in accommodating … particular industry needs”;
d)small business lacks a “Small Business Ombudsman” to “assist in helping pursue an unaccommodating [Modern Award] which does not reflect the cottage industry nature of the work done”; and
e)there is terminology in the Modern Award which does not reflect the nature of the industry in which the Corporation and Ms Paino-Povey say they are engaged,
and also complain about a website posting concerning the Corporation and Ms Paino-Povey.
30.With respect to the above matters:
a)it is evident that the FW Ombudsman gave ample opportunity to the Corporation and Ms Paino-Povey to rectify the contraventions the subject of the default judgment in ACN 146 435 118, both before and after instituting these proceedings. The Corporation and Ms Paino-Povey have allowed default judgment to be entered against them. The admission of liability thereby finally extracted from the Corporation and Ms Paino-Povey was extracted at significant cost to the taxpayer by reason of the work required to be done by the FW Ombudsman in preparation for what was, until very late in the piece, to be a contested hearing, in circumstances where the ultimate outcome could not, on any reasonable view, have ever been in doubt insofar as liability is concerned;
b)to rail against disgruntled ex-employees extracting “unfair demands” in circumstances where those Employees have not been paid between 38% and 76% of their total entitlements for the periods that they worked is high order hypocrisy. So too is the purported endorsement of the need to protect the rights of employees made by the Corporation and Ms Paino-Povey in circumstances where their conduct with respect to these Employees is diametrically at odds with that endorsement;
c)the nature and terms of the Modern Award were a matter for Fair Work Australia (now the Fair Work Commission) at the time of the making of the Modern Award. The reality is that the terms of the Modern Award must be adhered to by employers such as the Corporation.[51] It was no doubt open for any party able to obtain leave to appear before Fair Work Australia to put any proper submission in support of arguments concerning the terms of the Modern Award. The Corporation did not do so. Nor is there any evidence that the Corporation endeavoured to enter into any specific enterprise arrangements, or sought to vary the terms of the Modern Award in any way, under the terms of the FW Act. To complain about the terms of the Modern Award in circumstances where there were unused options available to seek to change or vary those terms, is a complaint with a hollow ring; and
d)as to the complaint concerning the website posting, the Court intends to disregard it completely. Apart from the fact that it comes from the “reverseaustralia” website, there is no indication of its authorship or its accuracy. The content is, in any event, inadmissible hearsay, and material the veracity of which, both as to authorship and content, cannot be verified.
[51] FW Act, s.45: “A person must not contravene a term of a modern award.”
31.In all of the circumstances, the Court is of the view that the wage and entitlement contraventions by the Corporation and Ms Paino-Povey were deliberate. Their conduct had elements of design and continuity by reason of the failure to pay Employees during the first few weeks of employment, the failure to pay full and proper entitlements thereafter, and the failure to pay outstanding entitlements, including accrued annual leave and leave loading, on termination.
Recording keeping and payslip contraventions
32.In relation to the record keeping and payslips the evidence indicates that:
a)the Corporation did not provide any payslips at all to Chai, McDermott, Yau or Wen during their respective periods of employment;[52]
b)the Corporation provided only five payslips to McMillan and Vainu;[53]
c)the payslips provided to McMillan and Vainu were false or misleading in that they stated that McMillan and Vainu each worked 7.6 hours per day, even though they worked in excess of 7.6 hours per day;[54] and
d)the payslips that were issued did not include details of the amounts paid to the Employees as overtime rates and penalty rates as required by reg.3.46(1)(g) of the FW Regulations or the amount of superannuation the Corporation was liable to contribute in relation to the Employees.[55]
[52] Statement of Claim, para.96.
[53] Statement of Claim, para.97.
[54] Statement of Claim, paras.23 and 98-100.
[55] Statement of Claim, para.101.
33.The FW Ombudsman submits that:
a)record keeping and payslip obligations play a pivotal role in monitoring compliance with industrial instruments. The non-provision of payslips can impact significantly on employees’ capacity to verify and prove their income and entitlements; and
b)central to the enforcement of workplace laws is the ability of employees and the regulator to ascertain and verify employees’ entitlements. It is for this reason that the maintenance of accurate records and payslips is of fundamental importance, and should not be viewed as being technical or secondary to underpayments.
34.The Court has observed as follows:
(a)Whilst the record keeping obligation with respect to pay slips only appears in the Regulations, its central importance in industrial matters cannot be underestimated. Proper pay slips allow employees to understand how their pay is calculated and therefore easily obtain advice. Pay slips provide the most practical check on false record keeping and underpayments, and allow for genuine mistakes or misunderstandings to quickly be identified. Without proper pay slips employees are significantly disempowered, creating a structure within which breaches of the industrial laws can easily be perpetrated.[56]
(b)Manifestly, failure to make and maintain records in relation to employee entitlements, undermines the utility and effectiveness of workplace inspectors, and their ability to determine whether or not there has been compliance with minimum standards and industrial instruments, and the provision of effective means for investigation and enforcement of employee entitlements.[57]
[56] Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd & Anor [2012] FMCA 258 at para.67 per Riethmuller FM (“Taj Palace”).
[57] Fair Work Ombudsman v Orwill Pty Ltd & Ors [2011] FMCA 730 at para.21 per Lucev FM (“Orwill”).
35.There is little to be added to the Court’s observations in Taj Palace and Orwill cited above with respect to the failure to keep payslips and the effect upon the means for investigation and enforcement of employee entitlements. In this case, the few payslips which were provided by the Corporation to McMillan and Vainu were false in their particulars. The fact that payslips with false particulars were produced by the Corporation is, like the failure to make or maintain payslips, conduct which, if anything, may make it more difficult to deal with compliance, investigation and enforcement issues in relation to employment entitlements. The fact that there is some record, seemingly on its face correct, is apt to deflect from, rather than assist in, the task of investigation and enforcement of employee entitlements. That might be particularly so where the employees are at some kind of disadvantage, which might make them vulnerable to some form of exploitation by their employer. In any event, failure to maintain, or the provision of falsely maintained, payslips, must attract a significantly appropriate penalty.
NTP contraventions
36.The five separate NTP contraventions occurred over a period of months, during which time the Corporation and Ms Paino-Povey made representations to the FW Ombudsman via email on 27 October 2011, 1 February 2012 and 29 February 2012. Those representations suggested that the Corporation and Ms Paino-Povey would be able to comply, or facilitate compliance with the NTPs, albeit at a time later than the required time for compliance under each of the NTPs.[58] The Corporation’s failure to keep records or issue payslips or to comply with the NTPs has undermined the ability of the FW Ombudsman to effectively investigate the complaints and enforce compliance with minimum standards and industrial instruments.[59]
[58] Truong Affidavit, annexure MT-3 (email dated 27 October 2011), MT-5 (email dated 1 February 2012) , MT-8 (email dated 29 February 2012).
[59] See for example Fourth Lucey Affidavit, para.42.
37.In the Court’s view the conduct of the Corporation and Ms Paino-Povey:
a)was dishonest, insofar as the representations suggested the existence of records, where, by and large, there were none; and
b)has stifled the FW Ombudsman’s ability to conduct a proper investigation of complaints made against the Corporation and Ms Paino-Povey. Thereby, the effectiveness of the principal objects of the workplace relations system is undermined. In Nerd Group (No. 3) in relation to the potential loss or damage arising from a failure to comply with NTPs the Court observed that:
11. The extent of the conduct and loss and damage might be said to be limited to the failure to produce the relevant documents. It goes further than that, however, because it involves not merely a failure to comply with the requests in the First NTP and Second NTP, but also has the following consequence[s]:
a. the powers conferred on Fair Work Inspectors, which are designed to provide the FW Ombudsman with means to investigate and enforce compliance with minimum legislated standards, and industrial instruments, are impaired by a failure to comply with an NTP; and
b. employees may be denied their lawful entitlements, or part thereof, because the failure to comply with the NTP means that documents essential to a determination of which entitlements have been complied with are not produced, and entitlements, or partly met entitlements, might not be able to be calculated, properly or at all.
12. The investigative, compliance and enforcement powers of the FW Ombudsman, and the payment to employees of entitlements, are therefore adversely affected by a failure to comply with an NTP. Thus there is damage and loss in the sense of a failure to comply with a statutory objective, and “this effect must be considered as being of similar importance as would be the case if loss and damage were suffered.” By failing to provide the records as requested, Nerd Group and Mr Garber engaged in conduct undermining the utility and effectiveness of the relevant legislative provisions.[60]
[60] Nerd Group (No. 3) at paras.11-12 per Lucev FM (footnotes deleted). See also Fair Work Ombudsman v Industrial Roadpavers (WA) Pty Ltd (2010) 194 IR 436 at 446-447 per Lucev FM; [2010] FMCA 204 at paras.28 and 33 per Lucev FM.
38.By failing to comply with the NTPs the Corporation and Ms Paino-Povey have engaged in conduct that undermines the utility and effectiveness of objects of the FW Act and FW Regulations, in particular s.3(b) of the FW Act in relation to ensuring a guaranteed safety net of minimum terms and conditions, and s.3(e) of the FW Act in relation to the provision of effective compliance mechanisms. In this case there were five NTPs over five months which were not complied with. Both the nature and extent of the conduct by the Corporation and Ms Paino-Povey was, therefore, ongoing and serious.
39.In the Respondents’ Submissions it is suggested that health problems suffered by Mr Povey had the consequence that the Corporation did not attend to the requests of the FW Ombudsman in relation to the NTPs. In MMP Management Services where the blindness of a director of the company was put forward as a reason why an employer in a small business did not produce records to the FW Ombudsman, the Court observed that accessing and producing the records was a task that could be done by others, whether existing employees or someone engaged specifically to carry out the task, under direction.[61] The Povey’s medical records attached to the Respondents’ Submissions are inadmissible hearsay. In any event, they do not evidence any incapacity on the part of Mr Povey apart from during a period from 10 December 2012 to 14 January 2013, which was not a period in issue in relation to the failure to pay wages and entitlements, or to keep records and payslips, or to produce documents in accordance with the NTPs. Even if there were incapacity evidenced, which there is not, there is no significant evidence of active steps being taken by Mr Povey to otherwise direct or ensure compliance with the FW Ombudsman’s NTPs. In any event, what puts paid to the suggestion by Mr Povey that it was his incapacity which resulted in these contraventions is the involvement of Ms Paino-Povey who, at relevant times, made representations to the FW Ombudsman, for example, that there would be compliance with the NTPs, albeit late. Put simply, Ms Paino-Povey was empowered to facilitate compliance with the FW Ombudsman’s NTPs, but failed to do so. In the circumstances, the Court does not consider that there is anything in the medical condition of Mr Povey which explains or justifies the NTP contraventions. The Court reiterates the conclusions reached in the preceding paragraph.
[61] MMP Management Services IR at 425 per Lucev FM; FMCA at para.58 per Lucev FM.
Circumstances in which the conduct took place
40.The FW Ombudsman submits that the circumstances of this case are an aggravating factor weighing in favour of a high penalty being imposed.
41.The Employees were vulnerable employees and, the FW Ombudsman submits, this is relevant to the question of penalty. Four of the six Employees were foreign nationals residing in Australia subject to various visas. Three of those Employees were from non-English speaking backgrounds. From the evidence regarding the Employees, particularly the Employees who were visa holders and from a non-English speaking background it may be inferred that most of the Employees had limited experience in, and knowledge of, the Australian workplace relations regime and were likely limited at that time in their choice of employment positions. The circumstances of the Employees put them at a considerable disadvantage to the Corporation and Ms Paino-Povey, and the FW Ombudsman submits that the Corporation and Ms Paino-Povey exploited the Employees for their benefit. This is exemplified by the statement made by Ms Paino-Povey to Vainu to the effect that the first few weeks of wages would be withheld in case the Employees owed the Corporation money at the end of the employment.[62] Further, as the Employees were classified at the base level pursuant to the Modern Award, the FW Ombudsman submits it is reasonable to submit that the Employees were performing low skilled work and were reliant on the payment of statutory minimum wages and on the safety net conditions in the Modern Award and FW Act.
[62] Statement of Claim, para.41.
42.The FW Ombudsman cited and relied on Fair Work Ombudsman v Go Yo Trading Pty Limited & Anor[63] where a number of authorities were cited accepting the proposition that foreign nationals holding a visa fall into a class of vulnerable workers:
Foreign nationals working in Australia on visas, be they 417 visas or 457 visas or some other form of visa, in my view, represent a particular class of employee who are potentially vulnerable to improper practices by their employer. The cases demonstrate that those characteristics mean that a particular employee concerned is of a vulnerable class: see, for example, Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd (2012) FMCA 258, Fair Work Ombudsman v Orwill Pty Ltd (2011) FMCA 730; Fair Work Ombudsman v Sanada Investments Pty Ltd [2010] FMCA 401 at [60].[64]
[63] [2012] FMCA 865 (“Go Yo”).
[64] Go Yo at para.15 per Jarrett FM.
43.Whether an employee is vulnerable, and whether that vulnerability has been exploited in the course of an employer’s contravention is relevant to the determination of penalty. It is not open for this Court to assume that because an employee belongs to a general class of persons, such as foreign nationals, young persons (who are not minors), lowly paid or itinerant workers or non-English speakers, that they are more vulnerable than any other employee or were in fact actually exploited on that basis.[65] In Jones v Hanssen Pty Ltd[66] the Federal Magistrates Court observed that:
7. The fifteen employees concerned were in Australia on subclass 457 visas. As such their remaining in Australia was, at least in part, dependent upon their remaining on good terms with the Respondent, who was their sponsor for migration purposes.
8. The Respondent was aware of the employees’ vulnerability. Mr Hanssen, the director and secretary of the Respondent, acknowledged that the employees “would sign anything” because they “are frightened of … being sent back”. The Court has no difficulty in concluding that this was a vulnerable set of employees, that the Respondent, through its principal officer Mr Hanssen had knowledge of that, and that he exploited his perception of these employees as being malleable to the wishes of the Respondent.
[65] Fair Work Ombudsman v Ultra Tune Australia Pty Ltd [2012] FMCA 560 at para.14 per Lucev FM.
[66] [2008] FMCA 291 (“Hanssen”).
In Hanssen no evidence was led from the employees concerned.[68]
[68] Hanssen at para.3 per Lucev FM.
44.On appeal in Hanssen Pty Ltd v Jones[69] the exploitation findings were contested, however, the appellant employer did not contest the fact that the employees represented a vulnerable class.[70] The Federal Court held that:
a)the evidence supported the fact that the appellant employer knew the employees were vulnerable, but not that they were exploited to their disadvantage, notwithstanding they were prepared to “sign anything”; and
b)for the Court to take the exploitation of an employee by an employer into consideration when determining penalty, the conduct and detriment must be clearly articulated, and supported by specific and explicit evidence, and that this should go to establishing the fact that the vulnerable employee suffered a detriment of greater and different character than a non-vulnerable employee who had had their statutory rights contravened.[71]
[69] (2009) 179 IR 57; [2009] FCA 192 (“Hanssen Appeal”).
[70] Hanssen Appeal IR at 66-67 per Siopis J; FCA at para.55 per Siopis J.
[71] Hanssen Appeal IR at 67-68 per Siopis J; FCA at paras.57-62 per Siopis J.
45.In Go Yo the employer underpaid two employees $7,779.31.[72] The Federal Magistrates Court held that young (20 and 23 year old) foreign nationals with English as a second language on working holiday visas and without a complete understanding of their entitlements were part of a potentially vulnerable class, and that such potentially vulnerable employees ought to have their entitlements met, and that employers ought to understand that such employees are not available for exploitation.[73] The judgment in Go Yo was extempore, and whilst the judgments in Taj Palace, Orwill and Fair Work Ombudsman v Sanada Investments Pty Ltd[74] are referred to, there is no specific conclusion beyond the fact of a foreign national on a temporary form of visa as a person who is potentially vulnerable and of a vulnerable class of employee. Hanssen Appeal was not cited in Go Yo.
[72] Go Yo at paras.10 and 17 per Jarrett FM.
[73] Go Yo at paras.14-16 per Jarrett FM.
[74] [2010] FMCA 401 at para.60 per Jarrett FM (“Sanada Investments”).
46.In Taj Palace the employee, an Indian national on a subclass 457 visa with little to no English language skill, was underpaid $24,217.90.[75] The Federal Magistrates Court held:
40. …The employee in this case was more vulnerable that [sic] the average Australian worker as his visa was conditional upon his employment, and he came from a country where wages and working conditions are very poor.
41. In the context of this case it appears that this was simply an exploitation of a foreign worker.[76]
[75] Taj Palace at para.42 per Riethmuller FM.
[76] Taj Palace at paras.40-41 per Riethmuller FM.
In Taj Palace the Federal Magistrates Court concluded that the employee concerned had been exploited because he was a foreign worker, whose visa was conditional upon his employment, and then cast the possible basis for a finding of exploitation widely by reason of the employee’s country of origin and the wages and working conditions in such a country.[77] There is no indication in Taj Palace of the evidence upon which the latter conclusion as to wages and working conditions was based.
[77] Taj Palace at paras.40-42 per Riethmuller FM.
47.Brobbel v Darrell Lea Chocolate Shops Pty Ltd[78] concerned breaches of the Workplace Relations Act 1996 (Cth) by the employer respondent in making employees sign Australian Workplace Agreements, and underpaying wages to casual employees, who were earning a minimum wage and some of whom were as young as 16. The Federal Magistrates Court:
a)held that the employer’s actions cost poorly-paid employees amounts of money which were doubtless significant to those employees;[79] and
b)said that the retail industry tends to attract casual and youthful workers, and that this should be reflected in the penalty decision with respect to general deterrence.
[78] [2008] FMCA 714 (“Darrell Lea”).
[79] Darrell Lea at para.35 per Burchardt FM.
48.Go Yo, Taj Palace and Darrell Lea are not expressly consistent with the Federal Court’s views in Hanssen Appeal, as each concluded that exploitation had occurred without providing explicit evidence that clearly articulated the exploitative nature and character of the contravention vis-a-vis the position of any employees who were not “vulnerable”.
49.In Sanada Investments the employees were typically foreign nationals in Australia on working holiday visas, often employed for periods between 1-3 months, and had limited English language skills.[80] There were 181 separate employees, who were collectively underpaid $119,760.92.[81]
[80] Sanada Investments at para.6 per Jarett FM.
[81] Sanada Investments at paras.2 and 61 per Jarett FM.
50.In the present case the Applicant contends that the Employees were vulnerable. This is because five were foreign nationals, three were from non-English speaking backgrounds, and all were employed in the cleaning industry which is typically low skilled and low paid. The Applicant contends that on the evidence it can be inferred that the Employees were of limited knowledge and experience of Australian workplace relations, and were likely limited in their choice of employers.
51.The relevant evidence regarding the Employees is as follows:
a)Vainu:
i)is a New Zealand citizen who has lived in Australia since 2006 or 2007, and his previous employment was with Serco at the Derby Detention Centre and as a qualified chef in Australia and New Zealand for 20 years;
ii)was underpaid 38% of his total entitlement, a sum of $4554.65;
iii)was being paid for 7.6 hours per day when he worked 8 or more hours per day;
iv)complained for months about not receiving regular payslips;
v)had sick leave taken out of annul leave, and states that he did not give Ms Paino-Povey authority to do so; and
vi)after his employment with the Corporation ended he had not been paid. He contacted Ms Paino-Povey and requested that any monies owed to him be paid immediately;[82] and
[82] Affidavit of Vainu; Statement of Claim.
b)McMillan:
i)is an Australian citizen who has worked in restaurants, as a commercial cleaner and was also employed by Serco at the Derby Detention Centre;
ii)was underpaid 40% of her total entitlement, a sum of $4554.65;
iii)was not paid for the first three weeks of employment. When she asked Ms Paino-Povey about this she was told, “you don’t get paid for the first three weeks, when you finish working here you get the pay back”. McMillan was provided with a $200 advance by Ms Paino-Povey. McMillan stated that she did not question it at that time because she was impecunious at the time;
iv)complained about not receiving payslips from the Corporation and stated to Ms Paino-Povey that receiving payslips was their legal entitlement, and she needed them because she was trying to get a loan; and
v)after lodging a complaint with the FW Ombudsman, McMillan contacted Ms Paino-Povey requesting payment of monies owed;[83] and
[83] Affidavit of McMillan; Statement of Claim.
c)Yau:
i)is a Hong Kong citizen, subject to a subclass 417 working visa, and has previously worked as a rubbish collector in Australia;
ii)was not paid for her first 3 weeks employment;
iii)was underpaid 76% of her entitlement, a sum of $2937.45;
iv)was not paid for her last week of work, nor paid any notice;
v)received no payslips during her employment with the Corporation;
vi)was given no paid time off in lieu, nor paid any annul leave in lieu;
vii)is not fluent in English and had to use an interpreter to affirm her affidavit. Yau does read English but required the interpreter for particular sections; and
viii)sent an email to Ms Paino-Povey that if she was not paid her proper wages she would lodge a complaint with the FW Ombudsman;[84] and
[84] Affidavit of Yau; Statement of Claim.
d)Chai:
i)was underpaid 59% of her entitlement, a sum of $4489.68;
ii)indicated she required an interpreter on her Workplace Complaint Form, but in her interview with the FW Ombudsman there is no indication that she required an interpreter;
iii)alleged to the FW Ombudsman that she was owed $1078 in unpaid wages or two weeks wages;
iv)indicated she did not know she was entitled to payslips; and
v)was unsure whether or any conduct by the Corporation or Ms Paino-Povey was unlawful;[85] and
[85] Affidavit of Rosendorff.
e)Wen
i)was underpaid 48% of his entitlement, a sum of $1915.38;
ii)indicated in his complaint to the FW Ombudsman and in correspondence to Ms Paino-Povey that he had not been paid one week’s wages; and
iii)had relocated back to Taiwan by the time of his interview with the FW Ombudsman on 4 May 2012;[86] and
[86] Affidavit of Lucey.
f)McDermott:
i)is an Irish citizen in Australian on a working holiday visa, who commenced work with the Corporation on 17 October 2011;
ii)was underpaid 59% of her total entitlement, a sum of $4392.67;
iii)indicated that she started keeping records but stopped when a co-worker informed her she had not had any difficulties with payment of wages by the Corporation;
iv)in her first three weeks had wages withheld from her, and she was told they would be paid to her when she ceased employment with the Corporation. McDermott was not paid those wages or any other monies; and
v)asked once for payslips when Ms Paino-Povey was not there because she was concerned about paying the correct tax and the implications this would have for her visa. McDermott was not given any payslips and was discouraged by a colleague from asking for them again.[87]
[87] Affidavit of McDermott; Statement of Claim.
52.Vainu and McMillan’s circumstances are similar. Both:
a)demonstrated at least a basic knowledge of the Australian workplace relations landscape;
b)have had previous experience in an Australian workplace environment, particularly having been employed by a government contractor Serco; and
c)complained to Ms Paino-Povey about not receiving payslips, and McMillan specifically made reference to their legal entitlement to them.
Vainu made numerous complaints to Ms Paino-Povey when his employment ceased and he had not been paid his proper entitlements. Vainu’s New Zealand citizenship does not afford him vulnerable status. This goes to support the finding that Vainu and McMillan were not vulnerable employees. Although they were underpaid low paid workers whilst employed by the Corporation, Vainu and McMillan do not otherwise exhibit any significant degree of vulnerability and the Court is not prepared to find that they were vulnerable employees.
53.There is evidence that Chai, McDermott, Wen, and Yau may be vulnerable. They displayed limited and unsophisticated knowledge of entitlements under Australian workplace law. Chai and Yau were on a working holiday visa and spoke limited English. Chai was unclear at the interview as to whether any of the Corporation’s or Ms Paino-Povey’s conduct was unlawful or a breach of her statutory rights, including whether or not she had received, or was aware she ought to receive, for example, annual leave. Yau’s English skills were limited, at least to the extent that she had to use an interpreter to swear her affidavit. There is no evidence to suggest whether Wen had limited English skills or not, however he was a foreign national and in Australia on a temporary basis, as were Chai and Yau. Chai’s, Wen’s and Yau’s circumstances are comparable to Sanada Investments where the employees in that case were foreign nationals, on temporary working holiday visas, had limited English skills, and were employed for short periods. McDermott was also on a working holiday visa and employed for a short period, however, as an Irish national it is reasonable to infer she had basic English language skills. Chai, McDermott, Wen and Yau respectively were all low paid workers, and were underpaid 59%, 59%, 48%, and 76% of their total entitlements. These are large (and in Yau’s case, very large) underpayments. This is more than both Vainu and McMillan who appear by reason of their national origin, workplace knowledge and employment history to be less vulnerable than Chai, McDermott, Wen and Yau, all of whom, by a combination of their being foreign nationals on temporary visas, and in the case of Chai, Wen and Yau, with English as a second language, together with the nature of the work, combined to put those four employees into the category of vulnerable employees. It is not without significance that their treatment, particularly in relation to the quantum of underpayment, was worse (and in the case of Yau significantly worse) than that afforded to Vainu and McMillan. In the Court’s view, the more vulnerable the employee, the more likely it was that the Corporation and Ms Paino-Povey would underpay them.
Nature and extent of loss or damage
54.The FW Ombudsman submits that the nature and extent of the loss suffered by the Employees was significant and warrants the imposition of a significant penalty because:
a)it involves contravention of minimum standards of the most fundamental kind, namely the payment of wages and entitlements;
b)it involves a significant amount of underpayment, being $22,510.61, over relatively short periods of employment (between one and three months for the Employees);
c)the Corporation and Ms Paino-Povey were able to potentially profit from the underpayments during this period of time;
d)the contravening conduct in relation to each of the Employees only ceased because the Employees’ employment ended with the Corporation;
e)in addition to the failure to pay wages for all hours worked the Corporation also failed to make superannuation contributions for the Employees;
f)the Corporation has not yet rectified the underpayments and the Employees continue to suffer the underpayments ordered by the Court on 12 July 2013 to be paid within 30 days of that date; and
g)there is evidence that suggests that the Corporation may voluntarily wind up, indicating, at least by inference, that it may not intend to rectify the underpayments.[88]
[88] See Thomson Affidavit, annexure KT-14 (email from Dean Love to Keelyann Thomson dated 14 June 2013).
55.The Employees are owed a total of $22,510.61, plus superannuation and interest. The significance of the loss for each Employee has to be viewed in the context of the length of employment, and the amount of the underpayment as a percentage of their total entitlements. In this regard:
a)Wen was underpaid $1,915.38, representing approximately 48% of his total entitlement for the period 17 August to 20 September 2011;
b)Yau was underpaid $2,937.45, representing approximately 76% of her total entitlement for the period 16 November to 21 December 2011;
c)Chai was underpaid $4,489.68, representing approximately 59% of her total entitlement for the period 8 June to 15 August 2011;
d)McDermott was underpaid $4,392.67, representing approximately 59% of her total entitlement for the period 17 October to 9 December 2011;
e)McMillan was underpaid $4,554.65, representing approximately 40% of her total entitlement for the period 3 October 2011 to 3 January 2012; and
f)Vainu was underpaid $4,220.79, representing approximately 38% of his total entitlement for the period 3 October 2011 to 3 January 2012.
56.The nature of the loss was aggravated by the conduct of the Corporation and Ms Paino-Povey which included:
a)making promises to the Employees that they would be paid for their initial weeks of work at the termination of their employment,[89] and then failing to pay those wages to them when their employment ended;[90]
b)continuing to accept the Employees work for the duration of their employment knowing that they were not being paid for all of the hours they were working for the Corporation;
c)on a numerous occasions failing to pay the Employees the amount stated in the Employment Facts and Employment Contract (which was less than the amount they were entitled to for all hours worked);[91] and
d)making promises to some of the Employees to pay them their outstanding entitlements at the end of the employment relationship and then failing to do so.[92]
[89] Statement of Claim, para.41.
[90] Statement of Claim, para.53.
[91] Statement of Claim, para.21 and Schedule A of the Statement of Claim.
[92] Second Lucey Affidavit, annexure AL-10 (emails dated 22 and 24 February 2012).
57.The nature of the damage is, as has previously been observed, significant in that it relates to fundamental entitlements, including wages and annual leave for the Employees, and the requirement to maintain and produce upon request by the FW Ombudsman, proper records, including payslips. Aside from the fact that the periods of employment are relatively short, a fact unsurprising in itself in the circumstances, the extent of the damage during the period of employment is very significant. As has already been observed, the underpayments are, by percentage, large, and in the case of Yau very large. Whilst not in the category of complete non-payment of all entitlements, there is a very significant failure to pay entitlements, which, again as has already been observed, has elements of deliberate design and conduct, and far exceeds in terms of culpability, cases, for example, of innocent omission or genuine dispute about the entitlements to be paid. Further the evidence is not inconsistent with a mode of operation by the Corporation and Ms Paino-Povey consisting of deliberately engaging, in some cases, potentially vulnerable employees, and then exploiting them by failing to pay them during the first few weeks of their employment, failing to pay them their full entitlements when they fell due, and then failing to pay outstanding wages and other entitlements owed to the Employees on the termination of their employment relationship.
Similar previous conduct and prior contraventions
58.The FW Ombudsman suggested that the Court may consider it appropriate to place some weight on matters associated with the Corporation and Ms Paino-Povey, and other entities of which Ms Paino-Povey’s husband (Mr Povey) and Ms Paino-Povey have been directors, which were said to demonstrate a significant history of past involvement with the FW Ombudsman, and on that basis it ought to be accepted that they were on notice of their obligations as employers and the potential consequences of a failure to comply. In that regard, the Court notes that it is conduct relevant to the contraventions complained of which might go to the question of the circumstances in which the conduct took place, and might include for example, opportunities to remedy that conduct, or to make payment of underpayments, prior to, and during the course of, any proceedings instituted in respect of the contraventions which is relevant. As for other conduct of the directors and related entities which has not resulted in contravention findings, that conduct must be accorded very limited weight. That said, such conduct of directors and related entities may still be relevant for the purposes of the specific and general deterrence and deliberateness factors to be considered by the Court in imposing penalty. It is to prior contraventions and conduct of respondents that the Court must primarily look for the purposes of this factor, and not the investigative record of the regulator. The Court must be careful not to impose sentence in respect of matters which have not, and may not, ever result in contravention proceedings, and which may not, in any event, constitute a contravention of the statute. Worse than that, it ought not contribute to an inappropriate over-zealousness on the part of the regulator if courts were to consider prior involvement with the regulator as a significant sentencing factor, except as it relates to the circumstances of the particular contraventions before the Court.
59.There is no evidence that either the Corporation or Ms Paino-Povey have a record of prior contraventions. They are entitled to be considered to be, and to be treated as, first time contraveners for penalty purposes. Ordinarily, that might entitle them to a significant discount on penalty.
Whether the breaches were distinct or arose out of one course of conduct
60.These matters are considered at paragraphs 8-19 above.
Size of the business
61.The FW Ombudsman accepts that the Corporation can be characterised as a small business. There is, however, no direct evidence of the size of the Corporation, and very limited evidence of:
a)the current financial position of the Corporation or Ms Paino-Povey; and
b)any financial hardship which may be suffered by the Corporation or Ms Paino-Povey as a consequence of the making of orders imposing a penalty.
62.The evidence before the Court indicates that the Corporation remains a registered corporation with no financial charges against it.[93] There is evidence of a demand for payment of a relatively modest sum, $6,328.48, recently made against the Corporation,[94] but no actual evidence of incapacity to pay. The evidence before the Court does not indicate that Ms Paino-Povey is bankrupt, or that she is otherwise impecunious.[95] The evidence indicates that Ms Paino-Povey is currently the director and secretary of Commercial and Residential Cleaning Group Pty Ltd (ACN 110 759 236)[96] which operates a business similar to the business operated by the Corporation,[97] but, this does not add to or assist with further consideration of Ms Paino-Povey’s financial position as it gives no further indication as to her financial position.
[93] Fourth Lucey Affidavit, para.12 and annexure AL-16.
[94] See para.5(k) above.
[95] Fourth Lucey Affidavit, para.10 and annexure AL-14.
[96] “CRCG”.
[97] Fourth Lucey Affidavit, paras.11 and 55-56 and annexures AL-15 and AL-43.
63.In MMP Management Services it was said that:
39. Properly evidenced, and for proper reasons, incapacity to pay may afford some relief by way of mitigation of penalty.
41. In Kelly the Federal Court did not disavow size as a factor to be considered in relation to penalty. What the Federal Court there said was:
a) regardless of size, corporate employers are obliged to meet minimum employment standards;
b) when corporate employers do not meet minimum employment standards it will be normal to impose an “appropriate” monetary sanction; and
c) the sanction must be at a meaningful level.
42. The size of the employer is relevant to a consideration of what the “appropriate” sanction is, and whether that sanction is at a meaningful level. Whether any reduction ought to be afforded to an employer by reason of the size of the corporation concerned is a matter for consideration having regard to the particular circumstances of each case.
49. In Sterling Crown, this Court having reviewed Federal Court authorities with respect to the payment of penalties in trade practices and workplace relations cases, some of which have been cited above, as well as the judgments of this Court concerning the size of the employer and capacity to pay a penalty, concluded that:
It therefore appears that the size and financial resources of a contravener are factors to be considered, and the impact of those factors upon the setting of penalty is in each case a matter for consideration of the particular circumstances of the size and financial resources of the contravener, plus the other factors which are relevant.[98]
[98] MMP Management Services IR at 421 per Lucev FM; FMCA at paras.39 and 41-42 per Lucev FM. See also the extensive treatment of the issue in Olsen v Sterling Crown Pty Ltd (2008) 177 IR 337 at 352-356 per Lucev FM; [2008] FMCA 1392 at paras.58-76 per Lucev FM, and the various authorities referred to therein, including Federal Court authorities on penalties in trade practices and workplace relations cases.
64.In this case, there is no evidence of incapacity to pay on the part of either the Corporation or Ms Paino-Povey. Further, there is nothing in the size of the business which mitigates the failure to pay entitlements, keep or maintain adequate or correct records, or to produce those records upon demand in accordance with the provisions of the FW Act by the FW Ombudsman. Overall, there is nothing in the materials before the Court which indicates that the size of the Corporation or the capacity to pay of either the Corporation or Ms Paino-Povey is a factor which warrants any reduction in the penalty which might otherwise be imposed.
Deliberateness of the contraventions
65.The FW Ombudsman submits that:
a)the evidence demonstrates that the contraventions were deliberate;
b)this is a further consideration weighing in favour of a penalty in the high range; and
c)this is a case where the Corporation and Ms Paino-Povey set about a deliberate course of conduct to arguably exploit the labour of the Employees, and to maximise the profitability of the business, to the benefit of the Corporation, while denying the Employees their minimum entitlements under the Modern Award and FW Act.
66.Evidence said to support the contention that that the contraventions were deliberate includes:
a)the correspondence annexed to the Fourth Affidavit of Ann Lucey affirmed on 26 July 2013 relating to the compliance history of the Corporation and other entities operated by either or both of Ms Paino-Povey and Mr Povey which demonstrates that the current director of the Corporation, Mr Povey, and the previous director of the Corporation, Ms Paino-Povey, had a history of engagement with the FW Ombudsman in relation to the obligations of employers under the Modern Award and FW Act and their predecessors, and could have been in no doubt as to their obligations. The evidence indicates that the Corporation and Ms Paino-Povey or companies previously run by Mr Povey or Ms Paino-Povey:
i)had been the subject of 67 complaints since 2006,[99] and those complaints in many instances related to similar alleged circumstances as those presently before the court;[100]
ii)displayed a similar lack of regard for the authority of the regulator, in that in many instances they failed to respond to the regulator’s attempts to investigate and enforce the complaints;
iii)were informed of determined contraventions in many instances, thus putting them on notice of their obligations pursuant to workplace laws;[101] and
iv)did in fact voluntarily rectify some of the earlier complaints, indicating either an acceptance of fault, or a wish to avoid further action by the regulator; and
b)the admissions in the Statement of Claim regarding the practice of not paying the Employees for their first few weeks of employment indicates a deliberate decision to withhold entitlements from the Employees.[102]
[99] Fourth Lucey Affidavit, paras.16-21; annexures AL-20 to AL-22.
[100] Fourth Lucey Affidavit at paras.23, 24, 27-29, 31 and 37-41; annexures AL-23, AL-24, AL-26, AL-27, AL-28, AL-31, AL-32, AL-33, AL-34 andAL-35.
[101] Fourth Lucey Affidavit, paras.23, 24, 27-29, 31 and 37-41, annexures AL-23, AL-24, AL-26, AL-27, AL-28, AL-31, AL-32, AL-33, AL-34 and AL-35.
[102] Statement of Claim, paras.40-46.
67.In relation to the failure to comply with the NTP contraventions the evidence said to support the contention that the contraventions were deliberate includes the prior compliance history, which indicates that although requests for documents were initially complied with,[103] as time progressed there was a lower level of compliance and cooperation, and that by April 2011 the entity operated by Mr Povey at that time (Povey Service Group ACN 113 204 407 Pty Ltd) failed to comply with an NTP issued to it.[104]
[103] Fourth Lucey Affidavit, annexures AL-22, letter dated 18 September 2007 and AL-26 email dated 6 December 2010.
[104] Fourth Lucey Affidavit, para.38, annexure AL-32.
68.On the basis of the evidence set out immediately above, the Court is satisfied that:
a)the wage and entitlement underpayments were deliberate and part of a specific mode of operation, which had elements of design and continuity; and
b)the failure to provide payslips or provide accurate payslips, and the NTP contraventions was also deliberate.
69.The Corporation and Ms Paino-Povey were on notice as to their obligations. There is no evidence to suggest that the Corporation and Ms Paino-Povey were in any way unable to maintain and provide accurate payslips to their employees or comply with the NTPs. Therefore, the Court finds that the payslip contraventions and the NTP contraventions were not errors, but part of a deliberate course of conduct embarked upon by the Corporation and Ms Paino-Povey.
70.The deliberate course of conduct in relation to the contraventions was deliberate, and benefitted the Corporation directly. This should be taken into consideration when assessing penalty, and taken together with the deliberateness of the conduct tends to indicate that a higher range penalty might be appropriate.
Involvement of senior management
71.From 20 September 2010 until 1 August 2011 Ms Paino-Povey was a director of the Corporation.[105] Mr Povey was a director of the Corporation from at least 1 August 2011, and was the sole shareholder in the Corporation.[106] The evidence also indicates a “hands on” role for each of them as directors.
[105] First Lucey Affidavit, annexures AL-1 and AL-3.
[106] Statement of Claim, paras.5-6.
72.Throughout the period of the contraventions Ms Paino-Povey was responsible for the day to day operations of the business, was responsible for supervising the Employees with respect to their daily duties,[107] and was the point of contact for the employees if they were unable to come to work, or wanted to take time off work.[108] Ms Paino-Povey communicated with the Employees with respect to the end of their employment with the Corporation.[109]
[107] Statement of Claim, paras.7-8.
[108] Statement of Claim, para.12.
[109] Defence, para.14(i); McDermott Affidavit, paras.42-47, annexure SEM-3.
73.Ms Paino-Povey’s level of involvement in the contraventions of the Corporation, and her knowledge of the Corporation’s obligations under the FW Act and Modern Award, is admitted by the default judgment. The evidence contained in the Truong Affidavit clearly identifies Ms Paino-Povey as the person on whom the NTPs were served and as one of the persons who contacted the FW Ombudsman in relation to those NTPs.
74.The Truong Affidavit also demonstrates that Mr Povey was involved in the non-compliance with the NTPs and the general failure of the Corporation to engage with the FW Ombudsman.
75.The evidence contained in the Fourth Lucey Affidavit includes communications between either or both Mr Povey and Ms Paino-Povey and the FW Ombudsman. This evidence demonstrates that both Mr Povey and Ms Paino-Povey had a high level of awareness of the FW Ombudsman as a regulator and of an employer’s obligation to pay their Employees the appropriate minimum rates for all hours worked and to make and keep records.
76.The evidence demonstrates that Ms Paino-Povey and Mr Povey held senior management roles with the Corporation, and had direct involvement in the contraventions. This tends towards a more significant penalty being imposed.
Contrition, corrective action and cooperation with authorities
77.The FW Ombudsman submits that:
a)the Corporation has not yet rectified the significant underpayment outstanding to the Employees, nor indicated any intention to do so;
b)correspondence received by the FW Ombudsman from the legal representatives of the Corporation and Ms Paino-Povey that:
i)the Corporation is considering a voluntary winding up; and
ii)Ms Paino-Povey is considering declaring bankruptcy,
suggests that neither the Corporation nor Ms Paino-Povey have any intention to take corrective action;[110]
c)the material regarding the subsequent complaints received by the FW Ombudsman suggests that Ms Paino-Povey and Mr Povey continue to operate the cleaning business either through the Corporation, or through CRCG, a company about which further complaints have been made against alleging contraventions of workplace laws. Although it is acknowledged that these investigations are not concluded, it indicates that corrective action may not have been undertaken, either by the Corporation or by Ms Paino-Povey, to give the Court confidence that further contraventions will not occur;
d)the Corporation and Ms Paino-Povey have failed to cooperate with the FW Ombudsman in relation to its investigations into the Corporation in any way;
e)since the FW Ombudsman has commenced these proceedings the Corporation and Ms Paino-Povey have failed to engage with the Court process in any meaningful way. As the Court noted in ACN 146 435 118, this failure is despite “significant efforts by Applicant to facilitate the filing and service of an Amended Defence by the Corporation and Mrs Paino-Povey….”;[111] and
f)the conduct of the Corporation and Ms Paino-Povey has put the FW Ombudsman to considerable time, expense and commitment of resources in the investigation of these matters, the filing of liability evidence and the various applications to the Court to progress this matter, which is a cost borne by the public purse. Demand has also been placed on the Court’s time and resources. This conduct indicates a general disregard for the Court and the regulator’s authority, and certainly not a willingness to facilitate the course of justice.
[110] Thomson Affidavit.
[111] ACN 146 435 118 at para.8(d) per Judge Lucev.
78.For the reasons set out above, the FW Ombudsman submits that no discount in penalty should be afforded to either the Corporation or Ms Paino-Povey in relation to their conduct throughout this proceeding and the prior investigation by the FW Ombudsman.
79.In this case the Court’s view is that there was no contrition or corrective action by the Corporation or Ms Paino-Povey. This is highlighted by the submissions on penalty provided by the Corporation and Ms Paino-Povey in which the Corporation and Ms Paino-Povey suggested that this case is simply one of disgruntled employees extracting unfair demands on their employer, and that the FW Ombudsman ought to have negotiated with them, rather than antagonise them. This conduct is similar to that of the respondent in Liquor, Hospitality and Miscellaneous Union v Cuddles Management Pty Ltd (No. 2),[112] where, inconsistent with any notion of contrition, a bullying and resistant approach to the regulator and the Court was adopted. In doing so the respondent tried to justify its contravention by casting blame on the employee concerned, and failed to participate meaningfully in the Court proceedings including, as in this case, failing to attend the penalty hearing.[113]
[112] (2009) 188 IR 435; [2009] FMCA 746 (“Cuddles Management (No 2)”).
[113] Cuddles Management (No. 2) IR at 442 per Lucev FM; FMCA at paras.20-22 per Lucev FM.
80.There is no evidence of contrition or corrective action on the part of the Corporation or Ms Paino-Povey, and therefore the Court will not discount penalty on account of contrition or corrective action.
81.There is no evidence of cooperation with the FW Ombudsman during the investigation, or once proceedings were instituted in this Court. The failure to comply with the NTP’s stifled the FW Ombudsman’s investigation and during the Court proceedings the conduct of the Corporation and Ms Paino-Povey was marked by an ongoing series of failures to meaningfully participate.[114] Some small degree of cooperation might be acknowledged insofar as the Corporation and Ms Paino-Povey did not oppose default judgment being entered, and have not appeared at the penalty hearing to press the Respondents’ Submissions, thereby making the Court’s task in determining penalty easier than it might otherwise have been. Given that there has not been the usual cooperation by the Corporation or Ms Paino-Povey there can be no significant discount of penalty on that account.
[114] ACN 146 435 118 [2013] FCCA 803 at para.8 per Judge Lucev.
Ensuring compliance with minimum standards
82.A fundamental object of the FW Act is to provide a guaranteed safety net of adequate minimum entitlements for employees.[115] This object has particular force for those employees who are vulnerable or in low income roles, and in providing an “even playing field” for all employers with regard to employment costs.
[115] FW Act. s.3(b).
83.The importance of ensuring compliance with Australia’s workplace laws should not be underestimated, and is to be given appropriate weight in considering what penalties should be imposed for the contraventions. In Fair Work Ombudsman v Kentwood Industries Pty Ltd (No. 3)[116] the Federal Court said:
In imposing a penalty against the respondents, it is necessary for the court to set the penalty in a range that reinforces the fundamental importance of compliance with the employment standards enshrined in Commonwealth workplace laws.[117]
[116] [2011] FCA 579 (“Kentwood Industries (No. 3)”).
[117] Kentwood Industries (No. 3) at para.36 per McKerracher J.
84.As a consequence of changes since 2006 to the penalty provisions of what is now the FW Act the time has long since passed when courts adopted a light handed approach to contraventions of industrial laws.[118]
[118] Finance Sector Union v Commonwealth Bank of Australia (2005) 147 IR 462 at 483 per Merkel J; [2005] FCA 1847 at para.72 per Merkel J (“Finance Sector Union”).
85.The FW Ombudsman submits that:
a)the maintenance of this safety net is particularly pertinent in a competitive service industry such as contract cleaning;
b)beyond the inherent seriousness of the failure of the Corporation and Ms Paino-Povey’s to afford the Employees basic minimum employment entitlements in the form of regular wages and entitlements, the circumstances of this case are characterised by the presence of the numerous aggravating factors, including:
i)the vulnerability of some of the Employees; and
ii)the deliberate nature of the conduct of the Corporation and Ms Paino-Povey; and
c)the Corporation has failed to comply with its obligations to its Employees, and the reasonable extension of this is that the Corporation was financially advantaged in comparison with the contract cleaning businesses which were paying their employees their proper entitlements under the FW Act and Modern Award.
86.The Corporation and Ms Paino-Povey’s contraventions involved significant failures to adhere to the minimum standards required by the FW Act and FW Regulations. In respect of at least some of the Employees, those failures were in relation to vulnerable employees. The Court can logically infer that there was benefit by way of financial advantage to the Corporation, both of itself and by comparison to any employer meeting its obligations under the FW Act and Modern Award. These matters all tend to a greater rather than lesser penalty being imposed.
Specific and general deterrence
Specific deterrence
87.The FW Ombudsman submits that specific deterrence is significant in this case, and that there is a strong need for specific deterrence,[119] because:
a)whilst the Corporation and Ms Paino-Povey’s legal representative indicated an intention of the Corporation to voluntarily wind up there is evidence that the Corporation is continuing to operate;
b)Mr Povey, the current director of the Corporation, also remains a director of two other entities. Ms Paino-Povey is also the director of another entity, CRCG, which appears to be employing staff and carrying on a similar business to that of the Corporation. The penalty to be imposed on the Corporation and Ms Paino-Povey should, therefore, leave no doubt in the Corporation and Ms Paino-Povey’s minds that failing to comply with minimum obligations will not be tolerated by the Court; and
c)the bringing of these proceedings has not induced the Corporation and Ms Paino-Povey to alter their method of dealing with the FW Ombudsman. In May 2013, four months after the commencement of these proceedings, the FW Ombudsman received four complaints by individuals claiming to be employees of CRCG, and to have been underpaid. The FW Ombudsman issued NTPs to CRCG which were not complied with. Both Ms Paino-Povey and Mr Povey contacted the FW Ombudsman in relation to these NTPs and advised that the four complainants were actually employees of the Corporation. When the FW Ombudsman issued NTPs to the Corporation in relation to these complaints they were also not complied with.[120] Furthermore:
i)the Corporation has failed to rectify the underpayments;
ii)there is no evidence that the Corporation and Ms Paino-Povey have taken any steps to ensure that their workplace relations obligations are complied with in the future;
iii)the previous complaints received by the FW Ombudsman in relation to the Corporation and Povey Service Group Pty Ltd suggest that the Corporation has been engaging in conduct that the FW Ombudsman has found to be contravening conduct in this matter for a number of years;[121] and
iv)both the Corporation and Ms Paino-Povey have failed to show any form of contrition or intention to alter their behaviour which suggests a lack of responsibility for their actions, and that the likelihood of further contraventions is high, whether this is via the Corporation or through other corporate entities with which Ms Paino-Povey is involved.
[119] Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 at 369 per Gray J; [2008] FCAFC 170 at para.37 per Gray J (“Plancor”).
[120] Fourth Lucey Affidvait, paras.48-54, annexures AL-39 to AL-42.
[121] Fourth Lucey Affidavit generally.
88.Specific deterrence is required to deter contravenors from committing further breaches of Australian work place law.[122] Specific deterrence is appropriate in circumstances where:
a)there has been no contrition;
b)there has been no cooperation with the Court or the regulator;
c)the contravention was serious and deliberate; and
d)the respondent has continuing involvement in the industry.[123]
[122] Australian Competition and Consume Commission v IPM Operation and Maintenance Loy Yang Pty Ltd (No. 2) [2007] FCA 11 at [66] per Young J.
[123] Cuddles Management Pty Ltd (No 2) IR at 444 per Lucev FM; FMCA at para.33 per Lucev FM.
89.In this case the Corporation and Ms Paino-Povey have shown no contrition or corrective action, and virtually no cooperation with the FW Ombudsman or the Court. There is no evidence of any attempt to rectify underpayment of entitlements to the Employees. The submissions of the Corporation and Ms Paino-Povey described the Employees as “disgruntled” and that the complaints process as an “unfair leverage against a small business employer extracting unfair demands”.[124] The Employees’ demands were not of course “unfair”, but rather reflected their legal entitlements. And, if the Employees were “disgruntled”, they were entitled to be so given the level and extent of delays in payment, and non-payment, of legal entitlements. There is evidence to suggest there is an intention to wind up the Corporation, and from that it can be reasonably inferred that the Corporation has no intention of rectifying underpayments. Likewise, there is evidence to suggest that Ms Paino-Povey might declare herself bankrupt, which would, at least, delay payment of any penalty imposed. But to date neither winding up nor bankruptcy has come to pass. There has been no cooperation with the FW Ombudsman, and there has been little cooperation with the Court, and the conduct was serious and deliberate. There is evidence that the Corporation and Ms Paino-Povey, at least for the time being, have continuing involvement in the cleaning industry, and that involvement has generated ongoing complaints to the FW Ombudsman. In the circumstances, specific deterrence ought to loom large in consideration of penalty in this case.
[124] Respondents’ Submissions, para.10.
General deterrence
90.The FW Ombudsman submits that:
a)the need for general deterrence in the present case is strong and the law should mark its disapproval of the Corporation and Ms Paino-Povey’s conduct and set a penalty which serves as a warning to others;[125]
[125] Kelly IR at 20 per Tracey J; FCA at para.25 per Tracey J, and the cases cited therein.
b)it should be made clear to employers that they have a positive obligation to ensure compliance with the obligations they owe to their employees under the law. Recently, the Federal Court observed:
It is important to ensure that the protections provided by the Act to employees are real and effective and properly enforced. The need for general deterrence cannot be understated. Rights are a mere shell unless they are respected.[126]
[126] Fair Work Ombudsman v Maclean Bay Pty Ltd (No. 2) [2012] FCA 557 at para.29 per Marshall J.
c)the Corporation and Ms Paino-Povey’s conduct in this matter was objectively serious, and in and of itself warrants a significant deterrent penalty. Consequently, a very clear statement is required that such conduct will not be tolerated, and that avoiding obligations to employees will not be financially beneficial, but rather will result in significant penalties. In this regard, the FW Ombudsman refers to the recent decision of Fair Work Ombudsman v Terrence Cyril Thomas (trading as Over the Top Happy Cleaning Services) Pty Ltd[127] in which the Court stated:
[127] Fair Work Ombudsman v Terrence Cyril Thomas (t/as Over the Top Happy Cleaning Services Pty Ltd) [2013] FCCA 536 (“Thomas”).
There must be a clear message to employers that not paying vulnerable employees will not be tolerated.
It is difficult to detect, investigate and bring to court contraventions such as the present, where the employees are unfamiliar with Australian workplace standards and systems. Consequently, the objective of deterrence calls for a more substantial penalty than might otherwise be the case.[128]
d)the Court should consider sending a message to the industry in which the Corporation operates.[129] It is arguable that the cleaning industry attracts unskilled labour and so is more likely to attract vulnerable workers,[130] some of whom, like the Employees, are from overseas backgrounds with little understanding of their workplace rights;
e)such conduct is not easily detected or enforced, particularly where the employer is not responsive, and hence the fundamental importance of general deterrence is to reach those employers who may be tempted to commit similar contraventions within a large industry; and
f)in this case, the warning to others that general deterrence will send is that blatant contraventions of the kind in this case will not be tolerated and vulnerable workers are not available for exploitation.[131] As was recently stated in Fair Work Ombudsman v Kingsford Carwash Pty Ltd & Anor (No. 2)[132] courts need to send a strong message and remind employers that:
… there has been provision in Commonwealth legislation since 2006 for a basic minimum rate of pay for unskilled work, whether permanent or casual, and whether part-time or full-time. No Australian business should be able to think that it can make its profits by disregarding the requirements of these laws.[133]
[128] Thomas at paras.47-48 per Judge Riley.
[129] Flattery v The Italian Eatery t/as Zeffirelli's Pizza Restaurant (2007) 163 IR 14 at 28-29 per Mowbray FM; [2007] FMCA 9 at paras.63-66 per Mowbray FM. See also Plancor FCR at 369 per Gray J; FCAFC at para.37 per Gray J.
[130] Thomas at paras.42 and 47-48 per Judge Riley. Notably in that matter the Court imposed a penalty of 90% of the maximum penalty, reduced to 80% on application of the totality principle.
[131] See also Go Yo at para.16 per Jarrett FM.
[132] [2012] FMCA 1210 (“Kingsford Carwash (No. 2)”).
[133] Kingsford Carwash (No. 2) at para.37 per Smith FM.
91.The role of general deterrence in determining the appropriate penalty was dealt with by the Full Court of the Federal Court in Ponzio v B & P Caelli Constructions Pty Ltd & Ors:[134]
In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by likeminded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217.[135]
[134] (2007) 158 FCR 543; [2007] FCAFC 65 (“Caelli Constructions”).
[135] Caelli Constructions FCR at 559-560 per Lander J; FCAFC at para.93 per Lander J.
92.The Court ought to mark its disapproval of serious breaches of Australian workplace law. The penalty must be at an appropriate level to deter others within the relevant industry, and other industries, from committing similar breaches of Australian workplace law. The conduct is this case was serious and involved a failure to pay minimum entitlements to employees, some of whom were vulnerable, and to cooperate with the FW Ombudsman. This case therefore requires a robust measure of general deterrence.
Consideration of penalty for each contravention
93.Taking into account all of the matters outlined above, the FW Ombudsman submits that the Court should impose penalties against the Corporation and Ms Paino-Povey in the ranges set out in the “Proposed penalty range” column of the table at para.19 above.
94.The FW Ombudsman submits that it is appropriate to seek lesser penalties for the contraventions in relation to travelling time, meal breaks, annual leave loading and rosters as these contraventions may be said to have had less impact on the Employees’ minimum entitlements in this matter than the contraventions arising from the failure to pay wages and annual leave and the NTP contravention. A lesser penalty is sought for annual leave loading as opposed to the annual leave entitlement to reflect the fact that the annual leave entitlement and annual leave loading entitlements are interrelated, although it is submitted that this contravention ought not be grouped.
95.The FW Ombudsman submits that in this matter, given Ms Paino-Povey’s high degree of involvement in the contraventions of the Corporation and her lack of contrition, cooperation or corrective action that it is appropriate to impose penalties in the same ranges against Ms Paino-Povey as against the Corporation.
96.In monetary terms, the suggested penalty range equates to:
a)for the Corporation $317,900 - $355,300; and
b)for Ms Paino-Povey: $63,580 - $71,060.
97.The FW Ombudsman submits that although the penalties recommended are significant in comparison with amount of the underpayment, such a comparison should be of little weight in the context of the other circumstances of this matter, which warrant that level of sanction. The contraventions involve breaches of important statutory protections relating to acceptable workplace conduct and a “light-handed” approach to contraventions of these types of provisions is no longer appropriate.[136]
[136] Finance Sector Union IR at 483 per Merkel J; FCA at para.72 per Merkel J.
98.The FW Ombudsman submits that the objective circumstances of this matter are serious, and that there is little before the Court which ought to operate to mitigate the penalty sought.
99.Additionally, the FW Ombudsman submits that there is no basis for a reduction of the penalty, in the absence of any cooperation, contrition or corrective action by the Corporation and Ms Paino-Povey.
100.The Court accepts that the totality of the contraventions in this case call for a penalty of significance. The conduct of the Corporation and Ms Paino-Povey evinces a deliberate and designed course of conduct resulting in the failure to pay the Employees (at least four of whom exhibited degrees of vulnerability) their proper entitlements, and a failure to cooperate with the FW Ombudsman, and to a lesser degree, the Court. In the circumstances that conduct, taken together with concerns about the possible future conduct of the Corporation and Ms Paino-Povey, demands a significant level of specific deterrence, as well as a level of general deterrence to discourage others from acting in a like manner. The above considerations must be balanced against the fact that the Corporation and Ms Paino-Povey are first-time contraveners, for which a reasonably significant discount must be given, and the contraventions in this case relate to a limited number of employees over a limited time, and although serious contraventions, do not fall into the worst possible category of case of a complete denial of entitlements. In the circumstances of the case, the Court accepts that Ms Paino-Povey ought have penalties imposed which are in the same range as those against the Corporation.
101.The Court does not necessarily agree with the FW Ombudsman’s submissions that Modern Award breaches in relation to travelling time, meal breaks, annual leave loading and rosters ought to be treated as of lesser significance than other Modern Award contraventions. They are all contraventions of the Employees’ entitlements under a Modern Award. That said, in this case the penalties sought for those contraventions were less than for the wage and annual leave and NTP contraventions, and in the circumstances it would be a denial of procedural fairness to impose a penalty higher than the maximum sought by the FW Ombudsman for those contraventions.
102.Taking into account all of the above factors, and having considered them at length, having regard to the FW Ombudsman’s lengthy but helpful submissions, and the Respondent’s Submissions so far as they were relevant, the Court has determined that penalties in and around the mid-range of penalties ought to be imposed on the Corporation and Ms Paino-Povey as set out in the following table:
Provision Contravened
Penalty range
Penalty
Penalty
First Respondent
Second Respondent
1. Clause 16.1 Award (minimum rate)
Section 45 FW ActTotal: 6 contraventions
55%
$18,150
$3,630
2. Clause 20 Award (frequency of payment)
Section 45 FW Act
Total: 6 contraventions
55%
$18,150
$3,630
3. Clause 28.1 Award (overtime)
Section 45 FW ActTotal: 6 contraventions
55%
$18,150
$3,630
4. Section 323(1) FW Act (failure to pay Yau in full)
Total: 6 contraventions
55%
$18,150
$3,630
5. Section 323(1) FW Act (failure to pay wages in full)
Total: 1 contravention
55%
$18,150
$3,630
6. Section 90(2) FW Act (annual leave on termination)
Section 44 FW Act
Total: 6 contraventions
55%
$18,150
$3,630
6. Clause 29.1 Award (annual leave on termination)
Section 45 FW Act
Total: 6 contraventions
55%
7. Clause 29.7 Award (annual leave loading)
Section 45 FW Act
Total: 6 contraventions
50%
$16,500
$3,300
8. Clause 25 Award (rostering)
Section 45 FW ActTotal: 6 contraventions
40%
$13,200
$2,640
9. Clause 26.2 Award (meal breaks) Section 45 FW Act
Total: 4 contraventions
50%
$16,500
$3,300
10-14. Section 712(3) FW Act (NTP)
Total: 5 contraventions
55%
$90,750
$18,150
15. s535(1) FW Act (records)
Total: 6 contraventions
55%
$9,075
$1,815
16. s536(1) FW Act (payslips)
Total: 6 contraventions
55%
$9,075
$1,815
16. s536(2) FW Act (payslips)
Total: 6 contraventions
55%
17. reg 3.44 (payslips)
Total: 2 contraventions
55%
$6,050
$1,210
18. Clause 17.10 Award (travel time)
Section 45 FW Act
Total: 6 contraventions
50%
$16,500
$3,300
TOTALS
$286,550
$57,310
103.Application of penalties as prescribed above results in total penalties of:
a)$286,550 for the Corporation; and
b)$57,310 for Ms Paino-Povey.
Totality Principle
104.Having fixed an appropriate penalty for each contravention, the Court should then consider the aggregate penalty, to determine whether it is an appropriate response to the conduct which led to the contraventions, and is not oppressive or crushing.[137]
[137] Kelly IR at 21-22 per Tracey J; FCA 1080 at para.30 per Tracey J; Australian Ophthalmic Supplies FCR at 567 per Gray J, 576 per Graham J and 583 per Buchanan J; FCAFC at paras.23 per Gray J, 71 per Graham J and 102 per Buchanan J. See also Markarian v The Queen (2005) 228 CLR 357 at 389-390 per McHugh J; [2005] HCA 25 at para.83 per McHugh J.
105.Despite the opportunities for them to do so, the Corporation and Ms Paino-Povey have not elected to submit any evidence to the Court to demonstrate the impact that a penalty in the range proposed by the FW Ombudsman would be oppressive or crushing. In the absence of such evidence this should be considered to be a neutral factor.
106.To the extent that the Corporation and Ms Paino-Povey seek to argue that a penalty would be oppressive or crushing, the FW Ombudsman draws the Court’s attention to the recent comments of the Court in Fair Work Ombudsman v Promoting U Pty Ltd & Anor[138] where it was stated:
Turning to the application of the totality principle, given the parlous financial position of the First and Second Respondents, imposition of a penalty at [the level proposed] would be highly likely to be crushing in the sense described by Lander J in Caelli. Nonetheless, the Respondents cannot hope to have their conduct in effect exonerated by the Court merely because they are impecunious. Parliament has set significant penalties for the sort of contraventions that the Respondents engaged in and I do not think it is appropriate for the totality principle to operate simply to ensure that penalties are imposed in suitably insignificant amounts to meet the Respondents’ capacity to pay.[139]
[138] [2012] FMCA 58 (“Promoting U”).
[139] Promoting U at para.57 per Burchardt FM.
107.The Court is conscious of the parliamentary intention referred to in Promoting U. It is also conscious that penalties were, as has been mentioned above, significantly increased in 2006 to reflect the fact that a light-handed approach ought not continue to be applied to contraventions of industrial law. Looking at the penalties of $286,550 for the Corporation and $57,310 for Ms Paino-Povey as determined above, and having regard to the number of employees and the length of time over which the contraventions occurred, and also factoring in the lack of cooperation with the FW Ombudsman over a significant period of time, the Court, having determined penalties which ultimately fall around the mid-range of applicable penalties, is not satisfied that those penalties contravene the totality principle. There will therefore be no adjustment of the penalties having regard to the totality principle.
Conclusions and orders
108.The Court has concluded that:
a)the Corporation must pay a penalty of $286,550; and
b)Ms Paino-Povey must pay a penalty of $57,310,
the penalties to be paid to the Commonwealth Consolidated Revenue Fund by 4 October 2013. There will be orders accordingly.
109.The Court will hear the parties as to costs.
I certify that the preceding one hundred and nine (109) paragraphs are a true copy of the reasons for judgment of Judge Lucev
Associate:
Date: 5 September 2013
[67] Hanssen at paras.7-8 per Lucev FM.
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