Fair Work Ombudsman v Ainley
[2021] FCCA 89
•27 January 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v AINLEY | [2021] FCCA 89 |
| Catchwords: INDUSTRIAL LAW – Penalties – failure to comply with a compliance notice – small cleaning business. |
| Legislation: Other material: |
| Cases cited: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8 Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (CFMEU) (2018) 262 CLR 157; (2018) 351 ALR 190; (2018) 92 ALJR 219; (2018) 273 IR 211; [2018] HCA 3 Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 90 ALJR 113; (2015) 255 IR 87; (2015) 326 ALR 476; [2015] HCA 46 Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228; [2001] FCA 1364 Fair Work Ombudsman v Bedington [2012] FMCA 1133 Fair Work Ombudsman v Hongyun Chinese Restaurant Pty Ltd (in liquidation) [2013] FCCA 52 Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown (2017) 275 IR 148; [2017] FCA 1301 Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; (2008) 247 ALR 714; (2008) 171 IR 455; [2008] FCAFC 70 Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170 Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65 Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 |
| Applicant: | FAIR WORK OMBUDSMAN |
| Respondent: | KERRYN ELIZABETH AINLEY |
| File number: | MLG 836 of 2020 |
| Judgment of: | Judge Riley |
| Hearing date: | 18 December 2020 |
| Date of last submission: | 18 December 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 27 January 2021 |
REPRESENTATION
| Advocate for the applicant: | Teresa Dwight |
| Solicitors for the applicant: | Office of the Fair Work Ombudsman |
| Advocate for the respondent: | In person |
| Solicitors for the respondents: | None |
ORDERS
Pursuant to s.546(1) of the Fair Work Act 2009 (“the Act”), the respondent pay a pecuniary penalty of $1,250 to the Commonwealth for the contravention of s.716(5) of the Act within 180 days of this order.
The applicant have liberty to apply on seven days’ notice in the event that the preceding order is not complied with.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 836 of 2020
| FAIR WORK OMBUDSMAN |
Applicant
And
| KERRYN ELIZABETH AINLEY |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns the penalty to be imposed for a contravention of the Fair Work Act 2009 (“the Act”). The court declared on 24 April 2020 that the respondent had contravened s.716(5) of the Act by failing to comply with a compliance notice.
Background
The applicant’s outline of submissions on penalty filed on 5 August 2020 provided the following background to the matter:
4.In the relevant period, Ms Ainley operated a cleaning business from her home [in rural Victoria] (Business) and engaged casual employees to provide domestic cleaning services.
5.Around 21 June 2019, FWI Roberts commenced an investigation after receiving requests for assistance from four casual cleaners employed by the Business, Emma Dal, Carissa McKay, Jane Goodwin and Mary Buchanan (Employees) alleging underpayment of wages.
6.In around October 2019, Ms Ainley provided the FWO with a spreadsheet, which indicated that the Employees were underpaid during their employment with Ms Ainley.
7.On 6 November 2019, FWI Roberts gave the Compliance Notice to Ms Ainley after conducting the investigation and forming the belief that Ms Ainley had contravened clause 12.5(a) of the Cleaning Services Award 2010 (Cleaning Award) by failing to pay the Employees casual loading during the period from 3 March 2017 to 15 September 2018. The Compliance Notice required Ms Ainley to calculate and rectify any underpayments of casual loading and any superannuation payable on these amounts in respect of the Employees by 4 December 2019 as well as provide evidence of this to the FWO by 12 December 2019.
8.Ms Ainley did not comply with the Compliance Notice by 4 December 2019 or at all.
9.On 17 December 2019, FWI Roberts sent Ms Ainley a letter stating that she had failed to comply with the Compliance Notice. Ms Ainley did not respond to this letter.
(footnotes omitted)
That summary of the background to this matter was not challenged and I accept that it is accurate.
Essentially, the respondent failed to pay four employees casual loading for about 18 months. The applicant conceded and I accept that, if this matter had not been dealt with by a compliance notice, after the application of the course of conduct provisions and grouping, there probably would have been a single contravention consisting of a breach of the casual loading provision in cl.12.5(a) of the Cleaning Services Award 2010 (“the Award”).
Legislation
The applicant is empowered to issue compliance notices under s.716 of the Act. That section provided as follows:
Application of this section
(1)This section applies if an inspector reasonably believes that a person has contravened one or more of the following:
(a)a provision of the National Employment Standards;
(b)a term of a modern award;
(c)a term of an enterprise agreement;
(d)a term of a workplace determination;
(e)a term of a national minimum wage order;
(f)a term of an equal remuneration order;
(g)a provision of Part 6-4C (which deals with the Coronavirus economic response);
(h)a jobkeeper enabling direction (within the meaning of Part 6-4C);
(i)a provision of an agreement authorised by Part 6-4C.
Giving a notice
(2)The inspector may, except as provided by subsection (4), give the person a notice requiring the person to do either or both of the following within such reasonable time as is specified in the notice:
(a)take specified action to remedy the direct effects of the contravention referred to in subsection (1);
(b)produce reasonable evidence of the person's compliance with the notice.
(3)The notice must also:
(a)set out the name of the person to whom the notice is given; and
(b)set out the name of the inspector who gave the notice; and
(c)set out brief details of the contravention; and
(d)explain that a failure to comply with the notice may contravene a civil remedy provision; and
(e)explain that the person may apply to the Federal Court, the Federal Circuit Court or an eligible State or Territory Court for a review of the notice on either or both of the following grounds:
(i) the person has not committed a contravention set out in the notice;
(ii) the notice does not comply with subsection (2) or this subsection; and
(f)set out any other matters prescribed by the regulations.
Relationship with enforceable undertakings
(4)An inspector must not give a person a notice in relation to a contravention if:
(a)the person has given an undertaking under section 715 in relation to the contravention; and
(b)the undertaking has not been withdrawn.
Relationship with civil remedy provisions
(4A)An inspector must not apply for an order under Division 2 of Part 4-1 in relation to a contravention of a civil remedy provision by a person if:
(a)the inspector has given the person a notice in relation to the contravention; and
(b)either of the following subparagraphs applies:
(i) the notice has not been withdrawn, and the person has complied with the notice;
(ii) the person has made an application under section 717 in relation to the notice that has not been completely dealt with.
Note:A person other than an inspector who is otherwise entitled to apply for an order in relation to the contravention may do so.
(4B)A person who complies with a notice in relation to a contravention of a civil remedy provision is not taken:
(a)to have admitted to contravening the provision; or
(b)to have been found to have contravened the provision.
Person must not fail to comply with notice
(5)A person must not fail to comply with a notice given under this section.
Note:This subsection is a civil remedy provision (see Part 4-1).
(6)Subsection (5) does not apply if the person has a reasonable excuse.
In paragraph 10 of her outline of submissions on penalty filed on 5 August 2020, the applicant said that:
The power of a Fair Work Inspector to issue a compliance notice was introduced into the FW Act to provide a mechanism for dealing with non-compliance with minimum entitlements in the FW Act as an alternative to commencing litigation for each underlying contravention.8 The Courts have recognised compliance notices provide a mechanism for the efficient and cost effective rectification of identified contraventions of the FW Act, including underpayments to employees.9
8Explanatory Memorandum to the Fair Work Bill 2008 at [2673].
9See: Fair Work Ombudsman v Blu Hornsby Pty Ltd [2016] FCCA 1150 at [29]; Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor (No. 2) [2019] FCCA 2144 at [19]; Fair Work Ombudsman v Scott Redmond t/as Cleaning Excellence [2019] FCCA 3697 at [21] and Fair Work Ombudsman v ASGBRIS Pty Ltd & Anor [2020] FCCA 553 at [37.
The compliance notice
In the agreed statement of facts filed on 20 April 2020, the parties agreed that the compliance notice served on the respondent on 6 November 2019 required the respondent:
a)by 4 December 2019, to take the following action (“the specified action”):
i)identify each employee employed by the respondent who was not paid casual loading during the assessment period, and in respect of those employees:
A.identify their classification under the Award, employment status, and the number of hours worked during the assessment period;
B.identify the amount the respondent paid to the employee during the assessment period for casual loading;
C.calculate the amount the respondent should have paid to the employee during the assessment period for casual loading;
D.make a payment to the employee of the difference between the amounts at paragraphs 7(a)(i)(B) and 7(a)(i)(C) (“the underpayment”);
E.in relation to each employee, calculate additional superannuation contributions required to be paid as a result of the underpayment and for each employee who is owed such additional superannuation contributions, pay those amounts to the chosen Superannuation Fund of the employee;
F.make a record of the information and the amounts referred to at paragraphs 7(a)(i)(B) to 7(a)(i)(C) and the amount of the payment referred to at paragraph 7(a)(i)(D) (“underpayment rectification information”); and
(b)by 12 December 2019, produce reasonable evidence to the applicant of its compliance with the compliance notice, by producing a schedule that sets out the name of each employee, the underpayment rectification information, the additional superannuation contribution amounts calculated and paid, and evidence that full payment of the amounts owed have been made to each employee.
The parties also agreed that the respondent did not:
a)take the specified action by 4 December 2019 or at all; or
b)produce to the applicant reasonable evidence of compliance with the compliance notice by 12 December 2019.
Consequently, the respondent failed to comply with the compliance notice and thereby contravened s.716(5) of the Act.
Material relied upon
In paragraph 3 of the applicant’s submissions on penalty filed on 5 August 2020, the applicant said she relied on:
a)the application filed on 13 March 2020;
b)the statement of claim filed on 13 March 2020;
c)the statement of agreed facts filed on 20 April 2020; and
d)the affidavit of Fair Work Inspector Natalie Clare Roberts filed on 4 August 2020.
The respondent appeared at the hearing on 18 December 2020, but did not file material. She made some oral submissions to the court which contained certain assertions of fact. There was no objection to those assertions being relied on by the respondent, who was unrepresented. The applicant told the court that the matters asserted by the respondent had been taken into account by the applicant in reaching her recommendation as to penalty. I accept that the assertions made by the respondent to the court were true.
In summary, the respondent said that:
a)she had worked really hard as a cleaner and built her business up to a point where should could employ other mothers;
b)they all worked within school hours;
c)she paid her employees what she understood to be the going rate;
d)when she learned that she had been underpaying her employees, she immediately began to pay them the correct rates;
e)she had always paid superannuation for her employees;
f)she was under a lot of stress in May 2019 because her marriage ended and she became the single mother of four children [that was after the underpayments and before she was required to comply with the compliance notice];
g)the COVID-19 pandemic, which began to have substantial economic consequences in March 2020, had a massive impact on her business;
h)she recently had a baby with her new partner;
i)she is on maternity leave and she is not actively working;
j)her cleaning business is still going but she does not expect to employ anyone in the future; and
k)she thinks that she will just do cleaning herself.
Proposed orders
In her outline of submissions filed on 5 August 2020, the applicant sought orders as follows:
1.Pursuant to section 545(1) of the FW Act, the Respondent pay $9,301.73 into the nominated bank accounts of Emma Dal, Carissa McKay, Jane Goodwin and Mary Buchanan in accordance with the amounts set out in the table below within 150 days of this order.
Employee
Amount of underpayment
Proportion of total underpayment
Emma Dal
$3,475.15
37.36%
Carissa McKay
$2,415.85
25.97%
Jane Goodwin
$1,039.64
11.18%
Mary Buchanan
$2,371.09
25.49%
Total
$9,301.73
100.00%
2.Pursuant to section 545(1) of the FW Act, should the Respondent fail to comply with the order set out in paragraph 1, the Respondent pay all outstanding underpayments to the Applicant within a further 28 days.
3.The Applicant distribute any amounts ordered to be paid pursuant to paragraph 2 above, to Emma Dal, Carissa McKay, Jane Goodwin and Mary Buchanan, or, in the event that only a proportion of the outstanding underpayment is paid, the proportions of the total underpayment in accordance with the percentages set out in the table above at paragraph 1.
4.Pursuant to s 545(1) of the FW Act, the Respondent take the steps that were required by the compliance notice issued to the Respondent on 6 November 2019 within 150 days by:
(a)calculating the additional superannuation contributions in respect of the total underpayment amount of $18,603.23 required to be paid to Emma Dal, Carissa McKay, Jane Goodwin and Mary Buchanan;
(b)make payment of the additional superannuation contributions to the chosen superannuation funds of Emma Dal, Carissa McKay, Jane Goodwin and Mary Buchanan as required by clause 23.2 [of] the Cleaning Services Award 2010; and
(c)providing to the FWO a schedule that sets out any additional superannuation contributions calculated by way of paragraph 4(a) above.
5.Pursuant to section 546(1) of the FW Act, the Respondent pay a pecuniary penalty to the Commonwealth for the contravention of section 716(5) of the FW Act within 180 days of this order.
6.The Applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
However, at the commencement of the hearing on 18 December 2020, the respondent said that she had rectified all of the underpayments, including the underpayments of superannuation. The matter was stood down to enable the respondent to provide evidence of that to the applicant. When the matter resumed, the applicant indicated to the court that all of the underpayments had been rectified.
The applicant then provided a further minute of proposed orders to the court in which she sought the following orders:
1.Pursuant to section 546(1) of the FW Act, within 90 days of these orders, the Respondent pay to the Commonwealth a pecuniary penalty of $[for the Court to insert] for failing to comply with the Compliance Notice in contravention of section 716(5) of the FW Act.
2.The applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
Approach to determining penalty
As s.716 of the Act is a civil remedy provision, the court may impose a penalty pursuant to s.546 of the Act.
Bromwich J summarised the proper approach to determining penalty in cases such as this in Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown (2017) 275 IR 148; [2017] FCA 1301 at [36] as follows:
(1)Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2)Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3)Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
(4)Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5)Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23]. [71] and [102].
A convenient checklist of the factors that the court might consider in determining penalty include the matters that were identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at [26]-[59] and adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [14]. That list is as follows, (with paragraph letters inserted):
(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 was involved in the breaches.
(i)Whether the party committing the breach had exhibited contrition.
(j)Whether the party committing the breach had taken corrective action.
(k)Whether the party committing the breach had 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.
(m)The need for specific and general deterrence.
The court must, of course, be mindful of the caution expressed by Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8 at [91] as follows:
Check lists of this kind can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations. There is no suggestion in the present case that the learned magistrate made any relevant error in her identification of the matters which she should consider in fixing penalties.
The court will consider the circumstances of the case under the various headings suggested by Mowbray FM, and then consider whether any other matters are relevant.
Step 1: identifying the breaches
As stated above, the respondent breached s.716(5) of the Act by failing to comply with a compliance notice.
Step 2: single course of conduct
As there was only one contravention, this step is not required.
Step 3: grouped breaches
As there was only one contravention, this step is not required.
Step 4: the appropriate penalty for the breaches
a. the nature and extent of the conduct which led to the breach
There was a single breach of s.716(5) of the Act, consisting of a failure to comply with a compliance notice. That breach continued from 4 December 2019 until 18 December 2020, when evidence of rectification of the underpayments was provided to the applicant.
The underlying offence was a breach of a single provision of the Award in respect of four employees, which continued for 18 months.
b. the circumstances in which that conduct took place
While the court accepts that the respondent was genuinely not aware of her employees’ entitlement to casual loading, as has been said many times, it is the employer’s responsibility to make the appropriate enquiries to ascertain their employees’ proper entitlements. For example, this court said in Fair Work Ombudsman v Hongyun Chinese Restaurant Pty Ltd (in liquidation) [2013] FCCA 52 at [46]:
… it is incumbent upon employers to make all necessary enquiries to ascertain their employees’ proper entitlements and pay their employees at the proper rates.
In any event, the respondent was well aware that she had underpaid her employees when the compliance notice was issued to her. Nevertheless, she failed to comply with it at all from December 2019 until April 2020, when she began to make some repayments.
As discussed above, this was in the context of the respondent becoming a single mother.
c. the nature and extent of any loss or damage sustained
The underlying underpayments of wages totalled $18,603.23 for the four employees. There was also a further underpayment of superannuation. The court was not told the extent of the superannuation underpayment but it was presumably about $1,767.30 (being $18,603.23 x 9.5%).
The loss and damage caused by the failure to comply with the compliance notice consisted largely of the inconvenience to the applicant in having to bring this proceeding.
d. whether there had been similar previous conduct
It was not suggested that the respondent had previously breached any workplace laws.
e. whether the breaches arose out of the one course of conduct
The failure to comply with a compliance notice constituted a single breach. If the matter had not been dealt with by a compliance notice, it would probably have constituted a single breach in any event.
f. the size of the business enterprise involved
The respondent’s business was very small. Nevertheless, as Tracey J said in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [28]:
No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does not it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction “must be imposed at a meaningful level” (citation omitted)
Similarly, in Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412, the court said at [27]:
Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to the Court’s consideration of penalty. …
g. whether or not the breach was deliberate
The breach of the compliance notice was deliberate, in the sense that the respondent was well aware that she had been issued with the compliance notice, it required her to do certain things, and she did not do them.
h. whether senior management was involved in the breach
Senior management was involved in the breach in the sense that the respondent was the only manager of the business.
contrition, corrective action and co-operation with the authorities
The respondent did not begin to rectify the underpayments, and thereby begin to comply with the compliance notice, until April 2020, after these proceedings were commenced. She did not fully rectify the underpayments until about the day of the penalty hearing, being 18 December 2020. It is probably fair to say that, without the legal proceedings, and the threat of a substantial penalty, the respondent may still not have fully rectified the underpayments. However, the respondent needs to be given credit for rectifying the underpayments eventually.
In addition, the respondent admitted the contravention and signed a statement of agreed facts, thereby simplifying these proceedings.
j. the need to ensure compliance with minimum standards
The respondent in this case breached the employees’ minimum entitlements. It is fundamental that employers must pay their employees their minimum entitlements.
k. the need for specific and general deterrence
In Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; (2015) 326 ALR 476; (2015) 90 ALJR 113; (2015) 255 IR 87; [2015] HCA 46, French CJ, Kiefel, Bell, Nettle and Gordon JJ said at [55]:
No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
“Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. ... The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.”
(footnotes omitted)
Similarly, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (CFMEU) (2018) 262 CLR 157; (2018) 351 ALR 190; (2018) 92 ALJR 219; (2018) 273 IR 211; [2018] HCA 3, Keane, Nettle and Gordon JJ said at [116]:
As has been observed, the principal object of an order that a person pay a pecuniary penalty under s 546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners. According to orthodox sentencing conceptions as they apply to the imposition of civil pecuniary penalties, specific deterrence inheres in the sting or burden which the penalty imposes on the contravener. Other things being equal, it is assumed that the greater the sting or burden of the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and thus the more likely it will be that the contravener is deterred from further contraventions; likewise, the more potent will be the example that the penalty sets for other would-be contraveners and therefore the greater the penalty's general deterrent effect. Conversely, the less the sting or burden that a penalty imposes on a contravener, the less likely it will be that the contravener is deterred from further contraventions and the less the general deterrent effect of the penalty. Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any, specific or general deterrent effect, and so it will be unlikely, or at least less likely, to achieve the specific and general deterrent effects that are the raison d'être of its imposition.
(footnotes omitted)
In relation to specific deterrence, Gray J observed in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170 at [37] that:
… Specific deterrence focuses on the party on whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future. Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur. …
In relation to general deterrence, Lander J noted in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65 at [93]:
… 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. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded 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…(citations omitted)
Similarly, in Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228 at 230-231; [2001] FCA 1364, Finkelstein J said:
… even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law's disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct ….
In the present case, the respondent has indicated that she is unlikely to employ anyone else to assist her in her cleaning business in the future. For that reason, specific deterrence is not a substantial issue in the present case.
However, general deterrence remains an important factor. The scourge of the underpayment of low skilled employees, who are not paid very much even when paid correctly, must be overcome. It is incumbent upon courts to impose an appropriate penalty in such cases.
Other issues
In Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; (2008) 247 ALR 714; (2008) 171 IR 455; [2008] FCAFC 70, Stone and Buchanan JJ held at [75]:
A conventional consideration in assessing a discount in a criminal case for a plea of guilty is the stage in the proceedings at which the plea is entered. Normally, the maximum discount for this factor, sometimes thought to be 25%, is reserved for a plea made at the first reasonable opportunity …
In Fair Work Ombudsman v Bedington [2012] FMCA 1133 Jarrett FM held at [87]:
The cases indicate that a discount on the penalty to be imposed is appropriate where there has been co-operation and admissions early in the course of an investigation or soon after the commencement of proceedings. Such discounts range as high as 30% in some cases. …
The applicant submitted that a 20% discount for admissions was appropriate in this case.
I accept that submission, in all the circumstances of this case.
Step 4: the appropriate penalty
The maximum penalty for a breach of s.716(5) of the Act is specified in the table in s.539 of the Act as 30 penalty units. Subsection 546(2) of the Act provides that individuals, such as the respondent, are to receive a penalty of no more than the maximum number of penalty units set out in the table in s.539(2) of the Act.
At the time of the breach in the present case, a penalty unit was defined in s.4AA of the Crimes Act 1914 to be worth $210. Thirty penalty units are therefore worth $6,300.
The applicant proposed that the court give a 20% discount for admissions, bringing the maximum penalty down to $5,040, and order a penalty in the range of 20% to 30% of that figure, being $1,008 to $1,512.
The respondent proposed that the court order no penalty, or the smallest possible penalty. In my view, it would not be proper in this case to order no penalty or a nominal penalty.
In my view, the appropriate penalty in this case is $1,250. While I accept that the respondent’s underlying contravention was not deliberate, it was incumbent upon her to ascertain her employees’ correct entitlements. Moreover, the respondent’s actual contravention in this case, being the failure to comply with a compliance notice, was deliberate, in the sense that she was by then well aware of her obligations and did not begin to rectify them until after this proceeding commenced.
Having said that, the respondent was eventually cooperative, and has fully rectified her default.
While the respondent is unlikely to have employees in the future, there remains a need for general deterrence.
The respondent had difficulties, including becoming a single mother and the financial impact of COVID-19, around the time that the compliance notice was issued and had to be complied with. However, proper weight must also be given to the needs of employees to have their basic minimum entitlements paid in full and on time, and the burden on the community when the applicant is required to enforce those basic minimum entitlements.
Step 5: the totality principle
The check that is required by the totality principle is not applicable in this case, as there was only one contravention, and I consider that the penalty mentioned above for that one contravention is appropriate for the whole of the respondent’s contravening conduct.
There will be orders accordingly.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Judge Riley
Associate:
Date: 27 January 2021
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