FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v ALERTVALE PTY LTD | [2018] FCCA 1998 |
| Catchwords: INDUSTRIAL LAW – Penalty Hearing – where contraventions of ss.44 and 323(1) of the Fair Work Act 2009 (Cth) admitted – s.557 and the common law “course of conduct” principle – consideration of factors relevant to penalty – totality principle – consideration of the appropriate penalty. |
| Legislation: Fair Work Act 2009, ss.44, 117, 119, 323, 324, 539, 545, 546, 557 |
| Applicant: | FAIR WORK OMBUDSMAN |
| Respondent: | ALERTVALE PTY LTD (ACN 113 321 850) |
| File Number: | BRG 1236 of 2017 |
| Judgment of: | Judge Harper |
| Hearing date: | 4 June 2018 |
| Date of Last Submission: | 4 June 2018 |
| Delivered at: | Sydney |
| Delivered on: | 24 July 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Payard |
| Solicitors for the Applicant: | The Office of the Fair Work Ombudsman |
| Counsel for the Respondent: | Mr Massy |
| Solicitors for the Respondent: | South Geldard Lawyers |
ORDERS
THE COURT DECLARES THAT:
The Respondent contravened each of the following penalty provisions:
(a)Section 44 of the Fair Work Act 2009 (Cth), by failing to pay the Employees, Jeffrey Balbago and Glen Salarda (“the Employees”) redundancy pay in accordance with section 119(2) of the Fair Work Act 2009 (Cth);
(b)Section 44 of the Fair Work Act 2009 (Cth), by failing to provide the Employees payment in lieu of notice in accordance with section 117(2)(b) of the Act; and
(c)Section 323(1) of the Fair Work Act 2009 (Cth), by failing to pay the Employees amounts payable to them in relation to the performance of work in full.
THE COURT ORDERS THAT:
The Respondent pay to the Consolidated Revenue Fund of the Commonwealth within twenty-eight (28) days of these orders a total pecuniary penalty of $31,590.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 1236 of 2017
| FAIR WORK OMBUDSMAN |
Applicant
And
| ALERTVALE PTY LTD (ACN 113 321 850) |
Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant, the Fair Work Ombudsman (“FWO”) seeks declarations and the imposition of pecuniary penalties against the Respondent, Alertvale Pty Ltd (“the respondent”) for contraventions of the Fair Work Act 2009 (Cth) (“the Act”) with respect to the employment of two employees, Jeffrey Balbago and Glen Salarda (“the employees”).
The Employees were underpaid a total of $9,931.13. Specifically, the contraventions were:
a)At termination each employee was entitled to receive 4 weeks redundancy totalling $3,648; no redundancy was paid to either employee, resulting in a total underpayment of $7,296, in contravention of s.119(2) and therefore s.44 of the Act
b)Each employee was entitled to receive $2,184 as payment in lieu of notice of termination. Each employee received only $1,824, being an underpayment of $360 each, or a total underpayment of $720, in contravention of s.117(2)(b) and therefore s.44 of the Act.
c)The respondent further deducted:
i)$715 from Mr Balbago’s termination payment of $1,824, being the cost of Elevated Work Platform training undertaken on 5 February 2016; and
ii)$1,200.53 from Mr Salarda’s termination payment of $1,824, being the cost of Elevated Work Platform training undertaken on 5 February 2016 and BMA Access Pass induction undertaken on 28 July 2015.
making total deductions of $1,915.53, in contravention of s.323(1)(a) of the Act.
The respondent admits the contraventions. It does not oppose the making of the declarations sought by the FWO.
It can be seen that there were two contraventions in each category. The parties further agreed that the respondent was entitled to the benefit of the application of s.557 of the Act, with the result that the two contraventions in each category are treated as a single contravention in each category.
Accordingly, this judgment requires determination of the appropriate penalty for each of the nominated contraventions.
The FWO seeks penalties totalling $36,450 be imposed upon the Respondent for its contraventions.
The Respondent concedes that declarations of contravention should be made and penalties should be imposed for the contraventions. The Respondent submits that consideration should be given to a number of mitigating factors and that a penalty in the range of $7,000 to $8,000 for each contravention, and a total penalty of $21,000 to $24,000, would be appropriate.
I note here that in the Statement of Claim the FWO at paragraphs 32(c) and (d) sought orders pursuant to s.545(1) of the Act compelling the directors of the Respondent to undergo training with liberty to apply in the event of non-compliance. The Respondent opposed these orders. The FWO did not press these orders at the hearing, and on the evidence I am satisfied they are unnecessary.
Neither party sought to cross examine any witness. The material facts were undisputed. The area of debate was centred on their legal characterisation and consequences.
Procedural History
The FWO filed an Application and Statement of Claim on 13 December 2017.
By way of a Defence filed 1 February 2018, the Respondent admitted to:
a)Failing to pay the employees redundancy pay in accordance with s.119(2) of the Act;
b)Failing to pay the employees in lieu of notice of termination of employment in accordance with s.117(2)(b) of the Act; and
c)Failing to pay the Employees amounts payable to them in full as required by s.323(1) of the Act.
Due to the Respondent’s admissions, on 2 February 2018, Orders were made in Chambers by Judge Jarrett for the matter to be adjourned to a later date for hearing on the issue of penalty.
On 4 June 2018, the matter came before me for hearing on the issue penalty.
Material relied upon
The FWO relies on the following:
a)the FWO’s Statement of Claim, filed 13 December 2017;
b)the Respondent’s Defence, filed 1 February 2018;
c)the Respondent’s Response, filed 1 February 2018;
d)Affidavit of Fair Work Inspector Davina Anne Barnett, filed on 6 March 2018;
e)Affidavit of Glen Mark Salarda, filed on 6 March 2018;
f)Affidavit of Jeffrey Vizcocho Balbago, filed on 6 March 2018; and
g)FWO’s Outline of Submissions, filed 6 April 2018.
The Respondent relies on the following:
a)the Respondent’s Response, filed on 1 February 2018;
b)the Respondent’s Defence, filed on 1 February 2018;
c)the Affidavit of Francis Conal Humphreys, filed 26 March 2018;
d)the Affidavit of John William Trenaman, filed 26 March 2018; and
e)the Respondent’s Outline of Submissions.
Material Facts
The Respondent operates a business providing field servicing, manufacturing and breakdown repair and rebuild services to customers in the mining and heavy industry sector. Part of the Respondent’s business includes operating a work in Rockhampton which employs, inter alia, welders.
In or around August 2014, the Respondent made written offers of employment to the employees to engage them as welders on a full-time basis, with an entitlement to an additional five hours per week of overtime.
The employees accepted the offers of employment.
As the employees were Filipino citizens, both employees were granted 457 Visas sponsored by the Respondent.
Mr Balbago commenced employment on 12 September 2014 and Mr Salarda commenced employment on 3 October 2014.
On 23 February 2016, the employees were given a letter from the Respondent which informed them that, due to a downturn in work, the Respondent would have to make decisions which may affect the employees 457 Visas. The letter required the Employees to select an option regarding their future employment with the Respondent. The options were:
a)The Respondent to terminate the employees’ employment;
b)The Respondent to offer alternative work, or redeployment to other work, for a temporary period which would involve a reduction in hours of work and a reduction in the weekly amounts the employees would be paid (“the redeployment option”); or
c)The employees to take unpaid leave until work became available.
(referred to hereinafter as “the options”)
The FWO submits the employees did not select an option at that time but indicated they required time to consider the options.
On either 25 or 26 February 2016, the employees received a telephone call from Riley Boland, a manager employed by the Respondent, who informed the employees that the Respondent was going to terminate their employment. At this stage, the FWO submits the employees had still not selected an option.
On 29 February 2018, the employees attended the Respondent’s office where Mr Boland provided them with letters of termination. The reason cited for the termination was as a result of “significant downturn in business”.
The Respondent submits that due to a breakdown in communication within the Respondent, the Respondent had formed the view that the employees had refused the redeployment option and therefore they were not redundant.
At the time their employment was terminated, the employees were entitled to receive four weeks’ redundancy pay, totalling $3,648.00. Despite this, the Respondent did not pay any amount to the employees for this entitlement.
The Respondent submitted that redundancy pay was not made because it considered the employees were not redundant. In retrospect, the Respondent admitted such a characterisation was wrong and that redundancy pay ought to be paid to the employees.
The employees were also entitled to two weeks’ payment in lieu of notice of termination of employment, totalling $2,184.00. Upon termination, the Respondent paid the employees $1,824.00 each in relation to this entitlement. This figure failed to include the amount of $360 being the employee’s entitlement to 10 hours of guaranteed overtime for each employee.
The Respondent later admitted that the omission of payment to the employees for overtime was unintentional.
The Respondent also deducted from the employees termination payment, the following amounts:
a)$1,200.53 from Mr Salarda’s termination payments for Elevated Work Platform (“EWP”) training and a BMA Access Pass induction he undertook whilst in the employment of the Respondent; and
b)$715.00 from Mr Balbago’s termination payments for EWP training he undertook whilst in the employment of the Respondent.
The FWO submits the employees undertook the above further training as the Respondent required them to. The Respondent admits that these deductions were neither authorised in writing by the employees or principally for their benefit and consequently were not permitted deductions under s.324 of the Act.
Because of the underpayments and unpermitted deductions as detailed above, the employees were underpaid a total of $9,931.13.
On 16 March 2018, the Respondent offered written apologies to the employees.
On 19 July 2017, the Respondent repaid all underpayments to the employees.
Approach to determining penalty
The High Court has said the purpose of the imposition of civil penalties is primarily, if not wholly, protective of the public interest in ensuring compliance: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate and CFMEU [2015] HCA 46; (2015) 255 IR 87 at [55]. Those objectives are closely allied with the overall objective of upholding the relevant statutory purposes.
The FWO submitted the five step approach, recently confirmed in Fair Work Ombudsman v NSH North Pty Ltd [2017] FCA 1301 at [36], should be adopted in determining penalty.
First, the Court should identify the number of separate contraventions resulting from the Respondent's conduct, bearing in mind that each breach of each a separate obligation found in the Act is a separate contravention of a civil remedy provision for the purposes of section 539(2) of the FW Act: Gibbs v The Mayor, Councillors and Citizens of City of Altona (1992) [1992] FCA 374; 37 FCR 216 at p. 223; McIver v Healey [2008] FCA 425 at [16].
Second, the Court should consider whether any of the contraventions arise from a single course of conduct and can be grouped pursuant to section 557 of the FW Act.
Third, to the extent that two or more contraventions have common elements, the Court should consider whether to take this into account in determining what an appropriate penalty is, in all the circumstances, for each contravention: Australian Ophthalmic Supplies Pty Ltd v McAlary−Smith [2008] FCAFC 8; (2008) 165 FCR 560 at 576 [71].
Fourth, the Court should consider the factors relevant to penalty and an appropriate penalty to impose in respect of each individual group of contraventions.
Fifth, having fixed an appropriate penalty the Court should apply the totality principle determining whether the aggregate penalty is an appropriate response to the contravening conduct: Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 at [30]; McAlary−Smith at [23], [71] and [102]. The Court should apply an "instinctive synthesis" in making this assessment: McAlary−Smith at [27], [55] and [78].
The Respondent did not substantially diverge from this approach. However, its submissions appeared to combine steps two and three (Written Submissions, paragraph 25).
The parties appeared to differ on the application of s.557 and the common law “course of conduct” principle.
The Respondent submitted that s.557 is concerned with questions of liability and the number of contraventions, or in other words, the section is not strictly concerned with penalty but with the extent of liability, citing Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union (No.2) [2017] FCA 368 at [6]. The common law “course of conduct” principle, on the other hand, is a principle of sentencing which aims to ensure offenders are not penalised twice for the same wrongdoing. The Respondent relied on a number of decisions which held s.557 does not exclude the common law principle when imposing a penalty, e.g., Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 53 at [88] where Dowsett and Rares JJ said:
“In our opinion, s 557 did not cover the field and did not exclude the common law principle of taking into account, when imposing a penalty, whether the conduct complained of constituted a single course of conduct. However, s 557 provided a legislative indication that certain forms of concerted industrial action, such as multiple contraventions of ss 417(1) and 434, would be deemed, only in the case of a first contravention by the person, to be a single contravention.”
This statement of principle was accepted as correct by White J in Australian Building and Construction Commissioner v Huddy (No.2) [2017] FCA 1088 at [53], however he also said “…I do not accept that means the application of the course of conduct principle warrants by itself the imposition of a single penalty for multiple contraventions.”
The FWO relied upon the more recent decision of Bromwich J in Fair Work Ombudsman v Lohr [2018] FCA 5. That was an appeal from a judge of this court who applied s.557 to reduce a large number of contraventions of s.45 to 12 contraventions. In imposing a penalty the primary judge further treated the 12 contraventions as a single contravention, because each of the 12 contraventions was the same. Bromwich J followed the decision of the Full Court of the Federal Court in Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62; (2014) 221 FCR 153 at [10]-[18] in accepting the submission of the FWO that, having applied s.557 to reduce the number of contraventions to 12, it was not open to the primary judge to further consolidate the 12 contraventions into one. At [34], Bromwich J said: “Even if s 557 allows for the continued application of the course of conduct principle, which may be doubted, the application of s 557 to the facts of this case meant that there was no remaining work for the course of conduct principle to do.”
There appears to be some conflict in the authorities. The weight of authority appears to favour the reasoning of Bromwich J in Lohr and it has been followed in this Court: Fair Work Ombudsman v VIP Security Services Pty Ltd & Anor [2018] FCCA 1969 at [42]. In any event, on the facts of this case, and the approach of the parties, I do not consider that it is necessary to express a view about this apparent conflict of authority concerning the relationship between s.557 and the common law “course of conduct” principle. The authorities are consistent in holding that the “course of conduct” principle does not permit the imposition of a single penalty for multiple contraventions, after grouping has taken place pursuant to s.557: eg Huddy (No.2) at [70]-[71]. The parties accepted this, and the approach of each to the facts in this case was not materially different in this regard. In the third step submitted by the FWO, it accepted “the extent that two or more contraventions have common elements” could be taken into account in assessing penalty. The FWO submitted that it was not appropriate on the facts of this case to group any of the contraventions on the basis of common elements. The three contraventions arose from different factual circumstances and from separate decisions by the Respondent, so there is no overlap warranting further grouping. As already noted, the Respondent agreed there were three separate contraventions. The Respondent expressly did not contend that those three separate contraventions should be treated as a course of conduct, and accepted that a separate penalty should be imposed for each. Thus the Respondent accepted that no further grouping should occur, which accorded with the position of the FWO.
The Respondent did argue, and I accept, that this did not exclude the application of the totality principle in respect of those three penalties. The FWO agreed that the totality principle properly formed part of the fifth step, in determining whether the aggregate penalty is an appropriate response to the contravening conduct.
As already noted, the parties have agreed the first two steps, with the result that consideration can move to the third step.
Maximum penalties
It was common ground that the maximum penalty available for each contravention is $54,000. This maximum applies because the Court may impose a maximum of 300 penalty units for each contravention: ss.539(2) and 546(2)(b) and as at 1 March 2016 each penalty unit had a value of $180.
FWO Proposed Penalties
The FWO submitted that penalties should be imposed as follows:
a)For the failure to pay redundancy, 50% of the maximum with a further 25% discount, giving a penalty of $20,250;
b)For the failure to pay correct amount in lieu of notice, 15% of the maximum with a further 25% discount, giving a penalty of $6,075;
c)For the failure to pay amounts payable after unpermitted deductions were made, 25% of the maximum with a further 25% discount, giving a penalty of $10,125.
The matters going to penalty
The High Court has made clear that the overarching purpose for the imposition of civil penalties 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." Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) [2015] HCA 46; 258 CLR 482 at [55].
The parties were in material agreement that a non−exhaustive list of factors relevant to the assessment of penalties for contraventions of workplace laws was as follows:
a)the nature and extent of the conduct which led to the contraventions and the circumstances in which that conduct took place;
b)the nature and extent of loss suffered by the Employees;
c)whether the Respondent exhibited contrition or had taken corrective action;
d)whether the Respondent had cooperated with the FWO; and
e)the need for specific and general deterrence.
These criteria were adopted in Mason v Harrington Corporation Pty Ltd t/as Pangea Restaurant and Bar [2007] FMCA 7.
The Respondent included a sixth factor, namely, whether the contraventions were properly distinct or arose out of the one course of conduct. I have discussed this question above. This factor requires no further discussion on the facts of this case.
Nature and Extent of Conduct
The parties agreed that the Respondent’s conduct was deliberate, in the sense that it intended to do each of the acts which amounted to a contravention. The parties also agreed that, although its conduct was deliberate, the Respondent had no intention to contravene the Act. I accept that, at a high level of generality, this is a factor which weighs in mitigation.
However, all the circumstances must be considered. The FWO drew a distinction between conduct that was deliberate and reckless, and conduct which was accidental and reckless. The FWO submitted the nature of the Respondent's contravening conduct can broadly be described as being:
a)deliberate and reckless in respect of its failure to pay the Employees' redundancy pay and for deducting amounts from the Employees' termination payments; and
b)accidental and reckless in respect of its failure to pay the correct amount in lieu of notice of termination.
The evidence is undisputed that the Respondent failed to pay redundancy payments because it initially believed the employees had not been made redundant. This belief was mistaken. The Respondent argued that it was entitled to make the deductions from the termination payments under the terms of the contracts of employment. However, these deductions were neither authorised in writing by the Employees or principally for their benefit as required by s.324(1)(a) of the Act.
The failure to pay guaranteed overtime arose because, according to the Respondent’s evidence, it usually did not guarantee overtime. Consequently, this entitlement was simply overlooked.
The central point made by the FWO was that, although these contraventions may have resulted from inadvertence, the Respondent, according to its own evidence, was a large employer, which had increased in size from 180 employees in August 2016 to 350 employees in March 2018. It had for many years engaged an industrial relations consultant in relation to its industrial obligations. Its approach to dealing with the entitlements of the Employees could fairly be described as, careless or offhand. The Respondent’s size and its long standing system for receiving industrial advice makes this apparent disinterest in a correct outcome for the Employees difficult to ignore or play down. According to Mr Humphreys (Affidavit, paragraph [25]), who is a director of the Respondent, the Respondent gave specific consideration to the issues of termination the employment of the Employees, because they were holders of 457 visas. The Respondent was assiduous in making precise calculations in its own favour, e.g., deducting $1,200.53 from Mr Salarda’s termination payments and $715 from Mr Balbago’s. However, the same level of rigour was not applied when assessing and calculating the entitlements in favour of the Employees, such as whether any deductions should be made at all or whether the employees had entitlements to overtime. The Respondent had the resources and expertise to be accurate and compliant with the relevant industrial laws. As migrant workers, the Employees were hardly in as good or better position to work out their entitlements. The FWO submitted I should infer that the Respondent simply failed to make proper inquiries. I accept the Respondent was both reckless and negligent.
Taken together, these considerations are factors which mean the conduct of the Respondent regarding redundancy should not be characterised as mere inadvertence. The FWO submitted that a mid-range penalty was appropriate for the contraventions in respect of redundancy pay and for deducting amounts from the Employees' termination payments, while a low range penalty was appropriate for failure to pay the Employees' payment in lieu of notice of termination.
Similar Previous Conduct
Although the Respondent has been involved in litigation in the Fair Work Commission, where unfair dismissal has been alleged, I am satisfied the Respondent has not previously breached the Act or an industrial law. This is a factor in mitigation.
Nature and Extent of Loss Suffered.
The FWO pointed out that Mr Salarda was underpaid $5,208.53 and Mr Balbago was underpaid $4,723.00, amounts which were significant to the Employees, equating to more than four weeks wages. Further, the Employees were not paid these amounts until more than 16 months after their employment was terminated. In relation to Mr Salarda, his family in the Philippines was supported by him sending approximately $1,000.00 per month to them. He was unable to do so, until his entitlements were paid. The FWO submitted that significance of the underpayments necessitates the imposition of a mid−range penalty.
On the question of loss and damage, the Respondent referred to the decision of Perram J in Australian Competition and Consumer Commission v MSY Technology Pty Ltd & Ors (No.2) (2011) 279 ALR 609; [2011] FCA 382 at [79] where he held:
“…if harm is likely to have been suffered by reason of the contravening conduct but no evidence is led which suggests that it was, the respondent is entitled to be sentenced on the basis that the conduct has not caused harm which, plainly enough, will be a mitigating circumstance.”
This approach was followed in an industrial context by Barker J in Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2016] FCA 798 at [68] as follows: “What might be said is that unless there is further evidence led as to the extent of harm suffered, in terms of particular financial loss or damage, the Court should not assume that the harm disclosed was extensive.”
The evidence of harm in this matter shows it was not extensive. I accept the Respondent’s submissions that although all underpayments are significant to wage earners, the amounts in the present matter are at the lower end of the scale.
Contrition, Co-operation and Corrective Action
It was common ground that the Respondent engaged and co-operated with the FWO during the investigation. I accept the submission of the Respondent that it acknowledged its wrongdoing from the first time that it was informed of the FWO’s view and made good its contraventions to the employees at that time.
It was also common ground that the Respondent admitted liability at the first available opportunity, in its Defence and before a directions hearing had occurred. I accept this obviated the need for a contested trial, the expenditure of public monies in advancing the claim and the Court’s time associated with such a trial.
The Respondent has written letters of apology to the Employees on 16 March 2018. This was late in the day. Mr Treneman gave evidence that the reason for the late apology was that the Respondent believed that the Employees had left the country. An apology was forthcoming immediately when it was learned this was wrong. The FWO submitted little weight should be given to these letters of apology because they were apparently written in response to the affidavits filed by the Employees, did not address the impacts to the Employees and were written so long after the relevant conduct that they were self-serving and could not be taken as a mark of true contrition. I do not accept that submission. The letters are consistent with the Respondent’s other long standing conduct acknowledging fault and its steps to redress the impact of the contraventions. They do not appear as some abrupt change of position. They express regret and acknowledge the inconvenience. I am satisfied that they, together with the Respondent’s co-operative attitude, are evidence of contrition.
The Respondent also submitted that it has taken corrective action, by requiring its directors to undertake further training in respect of its obligations as an employer. According to the evidence of Mr Trenaman, (Affidavit, paragraph [66]) in addition to that training, the respondent also proposes to undertake an audit of its employment practices to ensure that it is complying with its obligations in respect of all of its employees.
The FWO treated this evidence with scepticism, submitting it shows the Respondent’s directors were not controlling or overseeing the Respondent's processes relevant to its contraventions. It is true that neither Mr Trenaman, nor Mr Humphreys gave evidence regarding authorising, overseeing or being part of the decision-making process when finalising the Employees' termination payments which lead to the contraventions.
The FWO also submitted that the Respondent has not lead any evidence regarding who is currently responsible for the relevant decision making, nor whether any changes have been made to the Respondent's internal processes to ensure that the Respondent's contravening conduct does not occur again. The FWO submits that in the absence of such evidence the corrective action taken by the Respondent may be flawed and could well fail. Therefore, the Court should give some, but little, weight to the corrective action taken by the Respondent when determining appropriate penalties.
The evidence of Mr Trenaman is that in addition to the directors, employees, including the operations team and those in supervisory roles, will undergo training covering topics associated with employment obligations and industrial relations (Affidavit, paragraph [62]). I am satisfied that this training, together with the proposed audit, as the Respondent submitted, demonstrates insight into the effect of the wrongdoing and a concerted effort to ensure that it does not occur again. It is true that there is little detail in the Respondent’s evidence about how the training will effect any change in the internal processes of the Respondent dealing with the accurate assessment and calculation of employee entitlements at termination. However, I accept the steps taken are meaningful and are directed towards ensuring similar contraventions are not repeated. I give weight to the Respondent’s proposed corrective action.
These matters weigh in favour of a reduction of penalties.
The FWO submitted that a discount on penalty should be applied in light of the principles formulated in Mornington Inn Pty Ltd v Jordan (2008) [2008] FCAFC 70; 168 FCR 383, in which it was noted that it is not a sufficient basis for a discount that any admissions have saved the costs of a contested hearing. Rather, "the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice.": Mornington Inn at [76].
Applying these principles to the current proceedings, the FWO submits that it would be appropriate for the Court to apply a discount of 25% on penalty for the following reasons:
a)the Respondent cooperated during the investigation and during the proceedings which indicates a willingness to facilitate the course of justice;
b)the admissions of liability saved the costs of liability hearing which indicates both an acceptance or wrongdoing and a willingness to facilitate the course of justice; and
c)the Respondent rectified the underpayment to the Employees which indicates an acceptance of wrongdoing, albeit the rectification occurred 16 months after the contraventions occurred.
I accept these submissions. I also accept, consistently with my findings about contrition, co-operation and corrective action, that the Respondent has also “indicated an acceptance of wrongdoing and a suitable and credible expression of regret”.
Deterrence
Deterrence is well recognised as an important consideration in imposing penalties for contraventions of commonwealth statutes. In Comcare v Post Logistics Australasia Pty Limited [2012] FCAFC 168 the Full Court of the Federal Court said at [58]:
A similar approach has been taken in determining civil pecuniary penalties in other Commonwealth statutory contexts. In particular, deterrence has been regarded as an important purpose in setting such pecuniary penalties in such Commonwealth legislative settings as: regulation of petroleum retailing sites (Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72; (2004) ATPR 41-993; superannuation (see Australian Prudential Regulation Authority v Derstepanian [2005] FCA 1121; (2005) 60 ATR 518); environmental harm (Minister for the Environment and Heritage v Greentree (No.3) [2004] FCA 1317; (2004) 136 LGERA 89 and, on appeal [2005] FCAFC 128; , (2005) 144 FCR 388 at [51]- [57]); therapeutic goods (Secretary, Department of Health and Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545 (“Pagasa”)); broadcasting (Australian Communications and Media Authority v Radio 2UE Sydney Pty Ltd (No 2) [2009] FCA 754; (2009) 178 FCR 199 at [31] ff); and industrial laws (Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union [2008] FCAFC 170; (2008) 177 IR 243 at [37] and [61]; Draffin v Construction, Forestry, Mining and Energy Union [2009] FCAFC 120; (2009) 189 IR 145 at [89] and Fair Work Ombudsman v Wongtas Pty Ltd (No 2) [2012] FCA 30 at [54])).
The Full Court at [59] also held that “primacy must be given to the relevant terms of the particular Commonwealth legislation which empowers the imposition of a civil pecuniary penalty.” See also Secretary, Department of Health and Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545 at [27]; Minister for the Environment and Heritage v Greentree (No.3) [2005] FCAFC 128; (2005) 144 FCR 388 at [58].
The High Court has made clear in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) [2015] HCA 46; 258 CLR 482 at [55] and [110], that the purpose of a civil penalty, is primarily if not wholly protective in promoting the public interest in compliance, citing as French J in Re Trade Practices Commission v CSR Ltd [1990] FCA 521; (1991) ATPR 41-076 at 52,152. A primary purpose of civil penalties is to promote the public interest in compliance, and to attempt to put a price on a contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene legislation.
Specific deterrence
The need for specific deterrence is significant in this case as the Respondent continues to operate in a similar business to that from which the contraventions arose. In particular the Respondent:
a)has increased in size from approximately 180 employees in August 2016 to over 350 employees in March 2018: Barnett Affidavit at [19]; Treneman Affidavit at [6].
b)has experienced such significant growth, but still does not have a dedicated human resources department;
c)operates in the mining and heavy industry sectors which are known for experiencing downturns which lead to redundancies and terminations like those experienced by the Employees; and
d)as of February 2017, continues to sponsor 12 employees on 457 Visas.
The FWO submits that there is a real and present risk that future contraventions, similar to those that occurred in these proceedings, could occur unless the Court imposes considerable penalties for the Respondent's conduct.
The Respondent submitted that the need for specific deterrence was limited in the circumstances of this case. The respondent has voluntarily repaid the monies owing, has undertaken corrective action and has apologised for its wrongdoing. The respondent is also voluntarily undertaken a review of its employment practices to ensure that it is complying with all of its obligations. In those circumstances, the court can be satisfied that the prospect of further contravening conduct is unlikely.
General Deterrence
The FWO also made submissions about general deterrence. The FWO submits that general deterrence is a critical factor in these proceedings. The Respondent made no separate submissions about general deterrence.
In order to be useful as a general deterrent, a penalty "should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like−minded persons organisations." Ponzio v B&P Caelli Constructions [2007] FCAFC 65; (2007) 158 FCR 543, [93].
There is a need to send a message to the community, and particularly employers of visa−holders, that employees must be provided with the correct entitlements.
The FWO submits that the Court should consider sending a strong message to the general community and to employers of migrant workers by imposing a meaningful penalty to deter employers from engaging in similar conduct. General deterrence is of fundamental importance to deter those employers who may be tempted to exploit the specific vulnerabilities of employees reliant on their employers for the ability to remain in Australia. The Court therefore should send a message to Australian employers that workplace protections in Australia provide a safety net to all employees, regardless of their visa status. I accept these submissions.
Totality
Both parties accepted that the totality principle should be applied. According to this principle, having fixed an appropriate penalty for each contravention, the Court must examine the aggregate penalty, to determine whether it is an appropriate response to the conduct, which led to the breaches, and is not oppressive or crushing: See Kelly at [30]; McAlary−Smith at [23], [71], [102].
Whilst the penalty imposed must not be crushing or oppressive, it must nevertheless bear relativity to the seriousness of the conduct engaged in by the Respondents and mark the Court's disapproval of the Respondent's conduct.
The Respondent pointed out that the proper approach is for the Court to determine a penalty for each contravention, rather than attempt to assess a total penalty for all contraventions. The totality principle can then be applied; McAlary-Smith at [23] to [24] per Gray J and at [54] per Graham J and John Holland No.2 at [74] to [77] per Greenwood J. However, as already discussed, the totality principle does not permit one penalty to be imposed for multiple contraventions: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [148].
The Respondent submitted that the penalties proposed by the FWO are excessive, particularly in respect of the redundancy related contravention, and disproportionate to the gravity of the contravening conduct.
Conclusion
I generally accept the approach of the FWO to quantification of the penalties. However, for the reasons discussed, in my view the FWO’s proposed penalties would not give sufficient recognition to my findings concerning the contrition and corrective action, although I keep in mind that growth in size of the Respondent since the contravention and the need for its directors and senior management to maintain a proper focus on the careful and considered calculation of its workers’ entitlements. Balancing the factors discussed above, and in light of the importance of general deterrence and application of the totality principle, I have come to the view that the FWO’s proposed penalties are not appropriate, and should be further reduced. In each case therefore I am satisfied a discount of 35% is appropriate. I set the penalties as follows:
a)For the failure to pay redundancy, 50% of the maximum with a further 35% discount, giving a penalty of $17,550;
b)For the failure to pay correct amount in lieu of notice, 15% of the maximum with a further 35% discount, giving a penalty of $5,265;
c)For the failure to pay amounts payable after unpermitted deductions were made, 25% of the maximum with a further 35% discount, giving a penalty of $8,775.
The total amount payable is therefore $31,590. In my view this is an appropriate response to the conduct which led to these contraventions. There is no evidence that it is, or is likely to be, oppressive or crushing.
I certify that the preceding ninety-one (91) paragraphs are a true copy of the reasons for judgment of Judge Harper
Associate:
Date: 24 July 2018
- AGLC
- Fair Work Ombudsman v Alertvale Pty Ltd [2018] FCCA 1998
- Case
- [2018] FCCA 1998
- Decision Date
CaseChat Overview and Summary
The primary legal issue before the Court was whether Alertvale had a valid excuse for failing to comply with the section 487 notice. The FWO contended that Alertvale's non-compliance was a contravention of section 487(1) of the Act, which imposes a positive obligation to comply with such notices unless a reasonable excuse exists. Alertvale argued that it had a reasonable excuse due to concerns about the confidentiality and potential misuse of the requested information, particularly in relation to its business operations and client relationships.
Judge Harper considered the scope of "reasonable excuse" under section 487 of the Act. The Court found that while concerns about confidentiality might be relevant in some circumstances, they did not, in themselves, constitute a reasonable excuse for a complete failure to comply with a lawful notice. The Court emphasised that the Act provides mechanisms for addressing confidentiality concerns, such as seeking undertakings or applying for court orders to protect sensitive information. Alertvale had not availed itself of these mechanisms and had instead refused to provide any information. The Court concluded that Alertvale had failed to establish a reasonable excuse for its non-compliance.
Consequently, the Court found that Alertvale had contravened section 487(1) of the Act. The Court ordered Alertvale to comply with the notice within a specified timeframe and imposed a penalty for the contravention.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
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Ratio Decidendi
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