Fair Work Ombudsman v Amritsaria Four Pty Ltd
[2016] FCCA 968
•29 April 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v AMRITSARIA FOUR PTY LTD & ANOR | [2016] FCCA 968 |
| Catchwords: INDUSTRIAL LAW – Penalty – contraventions of modern award relating to remuneration – failure to keep records – failure to keep records that were not false and misleading – liability conceded – appropriate penalty to be imposed – relevant considerations – applicable penalty unit. |
| Legislation: Acts Interpretation Act1901 (Cth), s.10 Building and Construction Industry Improvement Act2005 (Cth) Crimes Act 1914 (Cth), s.4AA Fair Work Act 2009 (Cth), ss.3, 45, 47(1), 48(1), 535, 539, 546, 549, 550, 557 Fair Work Regulations 1994 (Cth), regs.3.33, 3.44, 4.01A |
| Cases cited: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476; [2015] HCA 46 Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 229 FCR 331; [2015] FCAFC 59 Einfeld v The Queen [2010] NSWCCA 87 Fair Work Ombudsman v Bound For Glory Enterprises & Anor [2014] FCCA 432 Fair Work Ombudsman v Cleaners New South Wales Pty Ltd (2009) 186 IR 467; [2009] FMCA 683 Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151 Fair Work Ombudsman v Ultra Tune Australia Ltd (2012) 225 IR 326; [2012] FMCA 560 Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 Kenny v The Queen [2010] NSWCCA 6 Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; [2008] FCAFC 70 Murrihy v Betezy.com.au Pty Ltd (No. 2) (2013) 221 FCR 118; [2013] FCA 1146 R v White (New South Wales Court of Criminal Appeal, unreported, 25 July 1991 Ryan v R (2000) 206 CLR 267; [2000] HCA 21 Scolara v Shepherd (No 2) [2010] WASC 271 | ||
| Applicant: | FAIR WORK OMBUDSMAN | |
| First Respondent: | AMRITSARIA FOUR PTY LTD (ACN 151 620 245) |
| Second Respondent: | HARMANDEEP SINGH SARKARIA |
| File Number: | SYG 1601 of 2015 |
| Judgment of: | Judge Smith |
| Hearing date: | 23 November 2015 |
| Date of Last Submission: | 22 April 2016 |
| Delivered at: | Sydney |
| Delivered on: | 29 April 2016 |
REPRESENTATION
| Counsel for the Applicant: | Ms E. Raper |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| Counsel for the Respondents: | Mr N. Furlan |
| Solicitors for the Respondents: | Harmers Workplace Lawyers |
DECLARATIONS MADE BY CONSENT
The first respondent has contravened:
(a)section 45 of the Fair Work Act 2009 (“FW Act”) by failing to pay Aqeel Ahmed and Muhammad Imran Yousaf the minimum casual adult rate for Monday to Friday work as required by clause A.2.5 of Schedule A of the Vehicle, Manufacturing, Repair and Retail Award 2010 (“Modern Award”), by reference to clause 36.3 of the Modern Award;
(b)section 45 of the FW Act by failing to pay Aqeel Ahmed and Muhammad Imran Yousaf Saturday rates as required by clause A.7.3 of Schedule A of the Modern Award, by reference to clause 36.3 of the Modern Award;
(c)section 45 of the FW Act by failing to pay Aqeel Ahmed and Muhammad Imran Yousaf Sunday rates as required by clause A.7.3 of Schedule A of the Modern Award, by reference to clause 36.3 of the Modern Award;
(d)section 45 of the FW Act by failing to pay Aqeel Ahmed and Muhammad Imran Yousaf public holiday rates as required by clause A.7.3 of Schedule A of the Modern Award, by reference to clause 36.3 of the Modern Award;
(e)section 45 of the FW Act by failing to pay Aqeel Ahmed and Muhammad Imran Yousaf overtime as required by clause 36.3 of the Modern Award;
(f)section 535(1) by failing to keep records required by regulation 3.34 of the Fair Work Regulations 2009 (Cth) (“FW Regulations”) in relation to Aqeel Ahmed and Muhammad Imran Yousaf;
(g)section 535(2) by failing to keep records in relation to Aqeel Ahmed and Muhammad Imran Yousaf in the form required by regulation 3.33(1)(b) of the FW Regulations;
(h)regulation 3.44(1) of the FW Regulations by failing to ensure that records required to be kept in relation to Aqeel Ahmed and Muhammad Imran Yousaf were not false or misleading; and
(i)regulation 3.44(6) of the FW Regulations by making use of entries in employee records for Aqeel Ahmed and Muhammad Imran Yousaf, knowing that those records were false or misleading.
The second respondent was involved (within the meaning of section 550(2) of the FW Act) in each of the contraventions admitted by the first respondent as set out in the first declaration above.
ORDERS MADE BY CONSENT
The first respondent undertake, or at its expense engage a third party with qualifications in accounting or workplace relations to undertake, an audit of the first respondent's compliance with the FW Act and the Modern Award on the following terms:
(a)the audit period will be the period of six months commencing on the date of this order;
(b)the audit is to be completed within 30 days of the end of the audit period;
(c)the audit will apply to all employees employed at any time during the audit period in a classification of work under the Modern Award;
(d)the audit will assess the first respondent's compliance with the following obligations according to each employee's classification of work, category of employment and hours worked during the audit period:
(i)wages and work related entitlements under the Modern Award;
(ii)accrual and payment of entitlements under the National Employment Standards in Part 2−2 of the FW Act; and
(iii)record keeping obligations in Division 3 of Part 3−6 of the FW Act and Division 3 of Part 3−6 of the FW Regulations.
Within 30 days of the audit referred to above being completed, the first respondent provide to the Applicant:
(a)a copy of the audit report which will include a statement of the methodology used in the audit; and
(b)written details of any contraventions identified in the audit and the steps the first respondent will take to rectify any identified contravention(s) and by when the rectification will occur.
An order that the second respondent is to engage, at his own expense, a person or organisation with professional qualifications in workplace relations, to provide training to the second respondent within six months of the date of this order that covers the following:
(a)obligations on employers under the Modern Award and the National Employment Standards in the FW Act;
(b)payment of wages in accordance with Division 2 of Part 2−9 of the FW Act; and
(c)record keeping obligations in Division 3 of Part 3−6 of the FW Act and Division 3 of Part 3−6 of the FW Regulations.
Within 30 days of completing the training set out above, the second respondent provide to the Applicant, in writing:
(a)the date on which the training was completed;
(b)the name of the person or organisation that conducted the training; and
(c)the details of the method of delivery of the training and the content of the training.
The applicant have liberty to apply on seven days' notice in the event that any of the preceding orders are not complied with.
FURTHER ORDERS
The first respondent pay a penalty of $178,500 pursuant to section 546(1) of the FW Act in respect of its contraventions of the FW Act.
The second respondent pay a penalty of $35,700 pursuant to section 546(1) of the FW Act in respect of his involvement in the first respondent’s contraventions.
The penalties imposed in orders 8 and 9 be payable to the Commonwealth within 28 days of these orders.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1601 of 2015
| FAIR WORK OMBUDSMAN |
Applicant
And
| AMRITSARIA FOUR PTY LTD (ACN 151 620 245) |
First Respondent
| HARMANDEEP SINGH SARKARIA |
Second Respondent
REASONS FOR JUDGMENT
The first respondent (“Amritsaria”) has operated a 7-Eleven franchise in Blacktown, a suburb of Sydney since August 2011. Between 2012 and 2014 it committed a number of contraventions of the Fair Work Act 2009 (Cth) (“Act”[1]) by failing to pay two of its employees their entitlements under the relevant modern award and failing to maintain employee records. The second respondent, Mr Sarkaria, is the only director and shareholder of Amritsaria and contravened the Act by being knowingly involved in its contraventions.
[1] Unless indicated, all statutory references are to the Act.
The contraventions are admitted and the respondents consent to the declarations which will be so ordered. The only issue in the proceedings is the appropriate penalty that ought to be imposed. The matter was heard on 23 November 2015 and on that day the parties made submissions on the facts and law. However, in light of the decision of the Full Court in Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 229 FCR 331; [2015] FCAFC 59, they did not make any submissions about the range of appropriate penalties. On 9 December 2015 the High Court overturned the decision of the Full Court: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476; [2015] HCA 46 (“CFMEU”). Although that case concerned proceedings under the Building and Construction Industry Improvement Act2005 (Cth), the principles discussed in it are applicable to all civil penalty proceedings including the present proceedings. In light of that, I invited the parties to make further submissions on penalty. They have each taken that opportunity, although they have not agreed on the appropriate penalty.
The applicant submits that the appropriate range of penalties:
a)for the first respondent is from $176,035 to $198,645; and
b)for the second respondent is from $35,207 to $39,729.
The respondents submit that the range of appropriate total penalties to be imposed:
a)on the first respondent is from $89,250 to $123,760; and
b)on the second respondent is from $19,040 to $23,205.
In my view, for the reasons that follow, the appropriate aggregate penalties are:
a)for the first respondent: $178,500; and
b)for the second respondent: $35,750.
The contraventions
The essential facts are set out in an amended statement of agreed facts prepared by the parties and tendered at the hearing. That statement is annexed to, and forms part of these reasons. The facts set out in this section of the reasons are derived from that statement.
There were essentially two groups of contraventions by Amritsaria: failure to pay minimum wages and failure to keep proper records. As will be seen, those groups each contain a number of different types of contraventions and the approach suggested by the parties was to treat each type of contravention as a single contravention.
The contraventions by Mr Sarkaria were brought about by his knowing involvement in Amritsaria’s contraventions.
It is convenient to deal first with the underpayment contraventions.
A person must not contravene a term of a modern award: s.45. Section 45 is a civil remedy provision: s.539, item 2.
The business operated by Amritsaria included the supply of motor fuel. For that reason, the relevant modern award was the Vehicle, Manufacturing, Repair and Retail Award 2010 (“Modern Award”) which commenced on 1 January 2010 (s.49(1)). Pursuant to cl.4.1, the award covers employers throughout Australia of employees engaged in "vehicle manufacturing and/or vehicle industry repair, services and retail, as defined in this clause, to the exclusion of any other modem award and where the employer's establishment, plant or undertaking is principally connected or concerned with: … operations or allied businesses concerned with selling, distributing or supplying running requirements for vehicles (including motor fuels, gas and oils) [or] any operation concerned with roadside/mobile service ...": see ss.47(1) and 48(1)) .
The Modern Award requires employers to pay employees a minimum wage set by reference to the duties ordinarily carried out by them. Amritsaria relevantly employed two people, Mr Ahmed and Mr Yousaf, on a casual basis. The duties carried out by those two employees included serving customers, handling cash, using the cash register and console, packing and refilling stock and refilling fuel pumps. That meant that they were properly classified as Level 4 employees pursuant to sch.B, cl.B.4 of the Modern Award.
For reasons more fully explained in the amended statement of agreed facts, the transitional provisions in the Modern Award (in sch.A) meant that the relevant minimum wages for the employees were determined by the Australian Pay and Classification Scale derived in turn from the Vehicle Industry, Repair Services and Retail (State) Award AN120631. The amount of wages payable depended on the days on which work was performed. There was a different rate for work on Monday to Friday, Saturday, Sunday and Public Holidays (“ordinary hours”) and also for any hours worked in excess of 10 hours per day. I will deal with the ordinary hours first.
In the period 26 March 2012 to 28 March 2014 (“Ahmed employment period”) Mr Ahmed worked the following ordinary hours:
a)1978 hours on Mondays to Fridays;
b)322 hours on Saturdays;
c)419 hours on Sundays; and
d)75 hours on Public Holidays.
Amritsaria was required to pay Mr Ahmed a total of approximately $67,400 in respect of that work. Instead, it paid him a total of approximately $24,800.
Mr Yousaf suffered a similar fate.
In the period 11 August 2013 to 28 March 2014 (“Yousaf employment period”) Mr Yousef worked the following ordinary hours:
a)205.75 hours on Mondays to Fridays;
b)69 hours on Saturdays;
c)55.17 hours on Sundays; and
d)9 hours on Public Holidays.
Amritsaria was required to pay Mr Yousaf a total of approximately $8,700 in respect of that work. Instead, it paid him a total of approximately $3,600.
Although Amritsaria was required to pay Mr Ahmed and Mr Yousaf additional amounts for any hours worked in excess of 10 hours per day (overtime hours), it did not pay them any additional amounts for those hours. The parties agreed that the amount it should have paid Mr Ahmed was $6,013.43 and that the amount it should have paid Mr Yousef was $582.15.
Taking into account a number of cash payments made to Mr Ahmed, the total amount of underpayment was approximately $49,000 (gross).
In those circumstances, Amritsaria contravened s.45 of the Act.
In rectification of the underpayments, Amritsaria paid a total of $39,002 to the applicant by way of three instalments in May, June and July 2015. In August 2015, Amritsaria remitted $10,346.00 to the Australian Taxation Office. I note that at the hearing, the applicant and the respondents both submitted that the underpayments had been rectified in full.
The underpayments were not accidental. They were the result of a deliberate effort to retain as much profit from the business as possible. They were for the benefit of Amritsaria and, ultimately, for Mr Sarkaria, its only director and shareholder. For present purposes it suffices to note that Mr Sarkaria was responsible for everything Amritsaria did and failed to do. The underpayments were also deliberately concealed by a failure to keep proper records and, indeed, by falsification of the records kept. Those matters form the circumstances of the next group of contraventions.
As an employer, Amritsaria was required to make and keep certain prescribed records for 7 years: s.535(1) of the Act. Those records were also to include the information prescribed by the regulations: sub-s.535(2)(b). They are civil remedy provisions: s.539, item 29.
If a penalty rate or loading has to be paid in respect of overtime (as it did in this case), an employer has to keep a record that specifies the number of overtime hours worked during each day, or when the employee started and ceased working overtime hours: Fair Work Regulations 2009 (Cth) (“Regulations”), reg.3.34. Amritsaria did not keep any records that specified either of those matters.
The records kept by Amritsaria also had to include the gross and net amounts paid to each employee: sub-reg.3.33(1)(b). In contravention of that obligation, the cash payments made to Mr Ahmed by Amritsaria (as referred to at [20] above) were not recorded.
Amritsaria was also required to keep a record of the hours worked by each of its employees: reg.3.33(2). Unsurprisingly, Amritsaria was required to ensure that its records were not, to its knowledge, false or misleading: reg.3.44(1). Amritsaria did keep a record that contained information about the hours worked by Mr Ahmed and Mr Yousaf; however, in contravention of its obligations under s.535 and the Regulations, that record was deliberately inaccurate.
Finally, Amritsaria was required not to make use of an entry in an employee record made and kept by it under the Act and Regulations, if it did so knowing that the entry was false or misleading: reg.3.44(6).
Amritsaria provided its records of the hours worked by Mr Ahmed and Mr Yousaf to an inspector appointed under the Act. When it did so, it knew that the records were false and misleading and so contravened reg.3.44(6).
Section 550(1) of the Act provides that a person “who is involved in a contravention of a civil remedy provision is taken to have contravened that provision”. Subsection (2) determines when a person is “involved in a contravention of a civil remedy provision”. Relevantly, a person is so involved if he or she “has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention”: sub-s.550(2)(c).
Mr Sarkaria had actual knowledge of Amritsaria’s failure to comply with the Modern Award and the contraventions relating to its records. He knew of, and at all times had access to, the relevant records of the company. In his evidence he acknowledged that he was responsible for Amritsaria’s contraventions. That responsibility was not simply on the basis that he was the sole director of the company, but because he personally kept the inaccurate records and underpaid the employees.
On that basis, I find that Mr Sarkaria was involved in each of Amritsaria’s contraventions within the meaning of sub-s.550(2)(c) of the Act and so is taken to have contravened the same provisions.
Relevant principles
As I am satisfied that both Amritsaria and Mr Sarkaria have contravened civil remedy provisions, I have the power to order them to pay a pecuniary penalty I consider appropriate: s.546. Contraventions are not offences: s.549. That means that the penalties are to be imposed by the application of the principles relating to civil rather than criminal penalties.
Like any discretionary power, the power to order a pecuniary penalty must be exercised having regard to the purpose for which the power is given. In CFMEU, the High Court explained the purpose of the imposition of penalties for civil contraventions at [55]:
[55]… 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[2]:
“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.”
[2] (1991) ATPR ¶41-076 at 52,152
Over the course of time the courts have developed a number of guidelines for the exercise of their power to impose pecuniary penalties. In Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 (“Kelly”) at 18-19 [14], Tracey J referred to the following:
· The nature and extent of the conduct which led to the breaches.
· The circumstances in which that conduct took place.
· The nature and extent of any loss or damage sustained as a result of the breaches.
· Whether there had been similar previous conduct by the respondent.
· Whether the breaches were properly distinct or arose out of the one course of conduct.
· The size of the business enterprise involved.
· Whether or not the breaches were deliberate.
· Whether senior management was involved in the breaches.
· Whether the party committed the breach had exhibited contrition.
· Whether the party committing the breach had taken corrective action.
· Whether the party committing the breach had co-operated with the enforcement authorities.
· The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employees entitlements.
· The need for specific and general deterrence.
Those guidelines are meant to assist in the determination of what penalty is appropriate and do not constitute mandatory considerations. In Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151 (“Lifestyle SA”), Mansfield J said this about the guidelines:
[74]That provides a convenient checklist, but it does not restrict matters that may be taken into account in the exercise of judicial discretion: Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 at [11]; Australian Ophthalmic Supplies v McAlary-Smith (2008) 165 FCR 560 (Australian Ophthalmic Supplies) at [91]; Offshore Marine Services[3] at [12]. Nor does it require specific attention to matters which are not relevant or not focused on in submissions. In the exercise of judicial discretion, the Court should not be distracted from paying “appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain the public confidence in the statutory regime which imposes the obligations”: Australian Ophthalmic Supplies at [91]; Offshore Marine Services at [12]; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Service Union of Australia v QR Limited (No 2) [2010] FCA 652 at [34]-[35].
[3] Fair Work Ombudsman v Offshore Marine Services Pty Ltd [2012] FCA 498.
The parties’ submissions were addressed to these guidelines and I will consider the question of penalty having regard to those submissions.
Before turning to those submissions, it is important to note that there were multiple contraventions of the Act by both respondents. As I have mentioned, the applicant’s submissions treated the conduct of the respondents as having constituted seven separate contraventions falling into two separate categories: the breaches of the Modern Award and the breaches of the record keeping obligations. The respondents did not suggest that this approach was wrong. I am satisfied that it is the correct approach. That is primarily because the various contraventions of each award provision and each record keeping obligation constituted a course of conduct.
Section 557(1) of the Act provides that two or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if they are committed by the same person and arose out of a course of conduct by that person.
Sections 45 and 535 are referred to in sub-ss.557(2) and (3) does not apply.
For those reasons, I will proceed on the basis that there were the following contraventions by each of the respondents:
i)failure to pay minimum hourly rate (s.45);
ii)failure to pay weekend and public holiday rates (constituted by the Saturday, Sunday and Public Holiday rates) (s.45);
iii)failure to pay overtime rate (s.45);
iv)failure to keep records of overtime (s.535(1));
v)failure to keep records of amounts paid (s.535(1));
vi)failure to ensure records were not false or misleading (reg.3.44(1)); and
vii)making use of records knowing they were false or misleading (reg.3.44(1)).
The pecuniary penalty that may be imposed depends on the type of contravention and whether or not the person in question is an individual or a body corporate. A penalty in respect of an individual must not be more than the maximum number of penalty units referred to in the relevant item in column 4 of the table in sub-s.539(2) and, in respect of a body corporate it must not be more than 5 times the maximum number of penalty units in that column: s.546(2).
The maximum penalty for the contravention of the regulations is included in the table in s.539(2) by the operation of reg.4.01A.
A “penalty unit” in the Act has the same meaning as in the Crimes Act 1914 (Cth). Section 4AA(1) of that Act currently provides that a penalty unit is $180. At the time of the enactment of the Fair Work Act, and until 28 December 2012 a penalty unit was $110. From 28 December 2012[4] until 26 June 2015[5] it was $170. In the Amending Act, it was provided, by item 9(1) of sch.3, that the amendment “applies in relation to an offence committed after the commencement” of that item, namely, 28 December 2012. Item 9(1), however, has no application to a contravention of a civil remedy provision under the Fair Work Act, since such a contravention is not an offence (s.549): see Murrihy v Betezy.com.au Pty Ltd (No. 2) (2013) 221 FCR 118; [2013] FCA 1146 at [7] (Jessup J) (“Murrihy”). The consequence of that is considered further below.
[4] When it was amended by the Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Act 2012(Cth) (“Amending Act”).
[5] When it was amended by the Crimes Legislation Amendment (Penalty Unit) Act 2015 (Cth).
It will be recalled that some of the contraventions relating to the underpayment of Mr Ahmed and the record keeping associated with it occurred in the period commencing on 26 March 2012. At that time, a penalty unit was $110. However, I have concluded that the “course of conduct” provisions in s.557 apply so that all of the contraventions of each provision constituted one contravention. Assuming for present purposes that the penalty unit did in fact change in respect of contraventions that creates the circumstance in respect of each contravention that, while there is one contravention, that contravention spans a period during which the penalty units changed. The question then is which penalty unit is applicable.
In Murrihy Jessup J considered a related but distinct question. There, the contravention in question had occurred prior to the amendment to the amount of a penalty unit. The question was whether the increase in the monetary value of a penalty unit legislated by an Amending Act applies in the case of a civil contravention of the Fair Work Act which occurred before the commencement of the amending act but for which the penalty will be imposed after that commencement: [8]. After detailed consideration, his Honour concluded that the earlier value of the penalty unit applied: [28]. The question here is different because, although relevant acts occurred both before and after the amendment date, there was only one contravention.
A preliminary issue arises in light of the fact that the amendment is expressed to apply only to offences which occurred after the date of the amendment. Does the amendment apply to contraventions? That is a matter of statutory construction.
The evident purpose of setting penalties under the Act by reference to an amount in another act is to achieve some level of uniformity across different legislation and to facilitate amendment to the amount of legislative penalty values without the need for numerous amendments. That suggests that any amendment to the value of the penalty unit in the Crimes Act would apply equally to the Act.
However, there was a common law presumption that a reference in one Act (“the primary Act”) to another enactment is a reference to that enactment as it stood at the time of the enactment of the primary Act. That would mean that a penalty unit in the Act would remain at $110.
That presumption was overturned by s.10 of the Acts Interpretation Act1901 (Cth). That relevantly provides:
Where an Act contains a reference to a short title that is or was provided by law for the citation of another Act as originally enacted, or of another Act as amended, then:
(a)the reference shall be construed as a reference to that other Act as originally enacted and as amended from time to time…
Thus, the reference in the Act to penalty unit is a reference to that term in the Crimes Act as amended from time to time. For that reason, in spite of the apparently limited application of the amendment, the increased value of the penalty unit applies to contraventions of the Act.
Returning to the question stated at [45] above, the applicant submitted that, as the bulk of the relevant conduct had occurred after the amendment to the penalty units, the higher amount should apply. The respondents did not demur from that proposition except to say that the Court should take into account the fact that there was initially a lower penalty unit. Both approaches are consistent with the approach taken to sentencing for criminal offences: R v White (New South Wales Court of Criminal Appeal, unreported, 25 July 1991, Gleeson CJ, Lee CJ at CL and Hunt J). That was a decision involving a conspiracy which, like the contraventions in this case, took place over a period of time during which the relevant maximum penalty increased. In my view, the reasoning in that case is applicable to the circumstances of this case.
For those reasons, I proceed on the basis that the appropriate maximum penalty unit is $170 but I take into account that, at least for some time, the maximum penalty was $110.
Applying those provisions, the maximum penalties for the contraventions are as follows:
Contravention Amritsaria Mr Sarkaria Casual rates
$51,000
$10,200
Holiday and weekend loading
$51,000
$10,200
Overtime
$51,000
$10,200
Record of overtime
$25,500
$5,100
Record of amount paid
$25,500
$5,100
False or misleading records
$17,000
$3,400
Use of false or misleading records
$17,000
$3,400
TOTAL $238,000 $47,600
With those maximum amounts in mind, it is necessary to consider the matters relied on by each of the parties in support of the appropriate penalty.
Consideration
The respondents argued that the Court should have regard to the following mitigating factors when determining the appropriate penalty:
a)the respondents’ early admission of liability and the considerable saving of public money in the avoidance of a trial of any issue of liability;
b)Mr Sarkaria’s contrition and remorse;
c)the rectification of the underpayments;
d)the extra curial punishment received as a result of adverse publicity; and
e)the measures that are to be taken by the respondents to ensure their future compliance with workplace laws.
I have taken these matters into account to varying degrees together with the fact that the amount of the penalty unit increased during the period in question. My consideration of them is set out below. The applicant’s submissions were organised by reference to the matters referred to at [35] above and it is convenient to deal with them in that way although there is a good deal of cross-over between the different matters.
Circumstances, nature and extent of the conduct
The circumstances of the contraventions are fully set out in the statement of agreed facts and are summarised elsewhere in these reasons. It suffices for present purposes to note that relevant conduct constituted a sustained and deliberate process of deception engaged in by the respondents to maximise financial return.
The applicant submitted, amongst other things, that the Court should take into account the extensive and sophisticated business arrangements of Mr Sarkaria and his experience as a business man, and the vulnerability of the two employees in question. I deal with the first of these later in these reasons.
The evidence of the vulnerability of the employees was sketchy. In their complaints to the applicant, both Mr Yousaf and Mr Ahmed claimed that they were new to this country and jobless. Mr Yousaf claimed that he had found it difficult to find a job. I accept that this was the case and that this made them both vulnerable to exploitation. However, I do not think that this goes very far. Many employees are vulnerable to a certain extent and for different reasons: age, employment experience, financial needs, lack of control of record-keeping, and lack of knowledge of workplace rights. As Lucev FM (as his Honour then was) said in Fair Work Ombudsman v Ultra Tune Australia Ltd (2012) 225 IR 326; [2012] FMCA 560 at 336 [14], one cannot simply assume that because an employee is a foreign national, he or she is unfamiliar with Australia’s labour practices, or more vulnerable to underpayment or exploitation than any other employee.
In a sense, to give too much weight to such vulnerability (that is to say, at that level of generality) is to ignore the fact that the workplace laws are intended to protect employees to a certain extent. There is an element of double-counting involved in the applicant’s submission to the contrary. It may, of course, be different if the evidence were to have gone further.
Nature and extent of the loss
There is no question that the underpayments, particularly to Mr Ahmed, were significant. He was paid approximately $43,000 less than his entitlement. The proportion by which Mr Yousaf was underpaid was roughly the same (38%), although the amount was lower. Mr Ahmed was deprived of his proper income over a two year period and Mr Yousaf was deprived for a period of about seven months. While it is significant that both men have now been paid their full entitlements, the amount and duration of the underpayment is an important factor in determining penalty.
Any similar previous conduct
There is no evidence of any similar previous conduct by either respondent.
Size and financial circumstances of the business
The applicant submitted that Mr Sarkaria had extensive and sophisticated business arrangements. I do not accept that. While it is true that, at various times, he has controlled a number of companies that have owned different businesses, those businesses were not numerous and were principally the same as the business of Amritsaria. That is, they were small retail food outlets, some including the sale of petrol. Mr Sarkaria also gave evidence that he had not received any formal business training (save for the training provided by 7-Eleven). That said, the obligations of employers in small enterprises have the same obligations as large corporations in respect of the minimum payments to employees: see for example, Kelly at [28].
The respondents relied, to a certain extent, on the nature and obligations of the 7-Eleven franchise agreement. Those included the obligation to pay 57% of gross profit to the franchisor and that wages and other overheads are deducted after that payment. Amritsaria was required to operate its business 24 hours per day, seven days a week.
The respondents did not suggest that those matters justified or excused the contraventions, but did submit that they were amongst the circumstances in which the contraventions occurred.
Deliberateness of the contraventions
As I have already noted, the contraventions were not accidental but, rather, part of a deliberate scheme aimed at maximising financial benefit to the respondents. In other words, this was part of the respondents’ business model. In my view, this approaches the worst type of each type of contravention.
In this context the respondents also relied to some extent on the difficulties inherent in running a franchise. I have referred to this immediately above. The point here however, is that Mr Sarkaria was perfectly aware of Amritsaria’s obligations to pay its employees at certain rates and to keep honest records but, instead of complying with his obligations, he used those records in order to hide the fact that he was not paying the two employees properly.
Involvement of senior management
Mr Sarkaria was clearly senior (if not the only) management in respect of Amritsaria. He has admitted his direct responsibility for its contraventions.
Contrition and corrective action
The parties were at odds as to whether Mr Sarkaria was contrite at all. In my view he was not. I accept that the fact that the respondents did not contest these proceedings, the respondents have agreed to undertake an audit and training and that the employees have been fully paid their entitlements must be taken into account; however, those facts alone do not prove contrition.
Broadly speaking, Mr Sarkaria’s conduct during the applicant’s investigation of the employee’s complaints was not frank and honest and, while he and Amritsaria did not contest the Court proceedings, his cooperation in that respect only arose after the proceedings had been commenced. There are several specific matters that suggest to me that Mr Sarkaria is not contrite. That suggestion was confirmed by my impression of him as a witness.
The first matter was his evidence under cross-examination that, when he first received a letter from the applicant in June 2014 seeking documents from him he did not take it seriously. Secondly, when he did produce documents to the applicant, they were inaccurate and I consider were deliberately given by him to avoid any likelihood that he would have to pay penalties. Thirdly, he affirmed an affidavit in which he stated that he told an inspector employed by the applicant that he paid Mr Ahmed whatever he was owed in cash. He accepted under cross-examination that that was not correct and that he had misled the inspector. Fourthly, in another affidavit, the applicant stated that he was frank and honest in the interview with the inspector. Under cross-examination he said that during the interview he “was frank but maybe not very honest.” That statement is, at best, internally inconsistent and indicates that Mr Sarkaria still does not fully accept his responsibility for the contraventions and his subsequent conduct towards the applicant.
Mr Sarkaria was asked whether he had misled the inspector about his arrangement with Mr Ahmed that is, to pay him cash. He replied “Not entirely”. However, later, he did agree that he had misled the inspector in that regard. Under cross-examination he apologised for his behaviour in the interview but then immediately stated, as though by way of exculpation, that he had intended to pay.
Yet further, Mr Sarkaria stated in one of his affidavits that he had assisted the applicant in its investigations. Taken at that level of generality, this statement was demonstrably inconsistent with his evidence under cross-examination. Even though he appeared at the hearing to be accepting responsibility and apologised, he appeared to me still to be denying real responsibility for his actions. He was not, as I have said, an impressive witness.
In short, I find that Mr Sarkaria certainly regrets the consequences of his actions, but I do not accept that he is truly sorry for having engaged in the conduct constituting the contraventions.
In arriving at this conclusion I have taken into account Mr Sarkaria’s evidence that he has engaged his lawyers to provide certain training and to undertake a workplace relations law compliance audit on the Blacktown business. The odd thing about that evidence is that, even though it was in an affidavit affirmed on 2 September 2015, there was no suggestion that either the audit or education had taken place prior to the hearing in November 2015 or, indeed, that there was any set date for either to occur. For those reasons, while I take it into account and note that the respondents have agreed to orders giving effect to this proposal, I do not give it significant weight.
Cooperation with the applicant
I have already set out my concerns about the way in which the respondents acted in connection with the applicant’s investigation of the employees’ complaints. While it is true that Mr Sarkaria attended an interview when there was no obligation to do so, he was not, by his own admission, entirely honest during it and had already provided misleading documents in response to a request by the applicant. I also note that the interview was conducted some six months after the applicant first requested an interview with Mr Sarkaria.
That said, there is no question that, once proceedings were commenced, the respondents facilitated the efficient conduct of the proceedings by admitting liability and agreeing to a statement of facts. This resulted in a large saving of public time and money, not only for the applicant but also for the Court. The applicant is entitled to a discount for this.
Compliance with minimum standards
The point of this consideration is to give adequate effect to one of principal objects of the Act, namely, to preserve an effective safety net for employee entitlements and effective enforcement mechanisms: s.3. The obligation to keep and use accurate records is central to the achievement of that object and its contravention in this case is significant for that reason: see, for example, Fair Work Ombudsman v Bound For Glory Enterprises & Anor [2014] FCCA 432.
The applicant also contended that this consideration was important in order to discourage businesses from contravening the Act in order to obtain a competitive advantage. No authority was cited for this proposition and I cannot readily see that the Act is intended to operate at an inter-business level. In any event, the evidence in this matter does not allow any conclusions to be drawn about a competitive advantage actually obtained in this case or, indeed, to be satisfied, as the applicant submitted, that labour costs in retail businesses form a significant portion of a business’ running costs. For those reasons, I give this particular submission little weight.
Specific and general deterrence
The need for specific deterrence in this case is high. Mr Sarkaria deliberately flouted his legal obligations and, to a certain extent, set out to mislead the applicant in the investigation of his conduct. Although he says that he has engaged his lawyers to undertake an audit of his business and to provide relevant training and has agreed to orders to that effect, I am not convinced that he is truly sorry for his conduct. The same applies, of course, to Amritsaria. I give this matter significant weight.
General deterrence is also important in this case. One of the aims of imposing a penalty is to mark a warning for others who might be tempted to engage in similar conduct. That is not to say that the respondents are to be treated as scape goats; however, in this instance, there was evidence of substantial non-compliance by other 7-Eleven franchisees. This suggests that general deterrence is particularly important.
The respondents argue that the widespread negative media coverage about 7-Eleven franchises undermines the need for significant weight to be given to general deterrence in assessing the appropriate penalty in this case. I accept that submission to some extent. The relevance of the media coverage has significance beyond the issue of general deterrence. It is convenient to deal with that separately.
Media coverage
The media coverage relevant to these proceedings includes a media release by the applicant as well as newspaper articles both in Australia.
The applicant’s media release gave a fair outline of the allegations made in the proceedings (and which have now been agreed) and named the respondents. Clearly enough, it is part of the applicant’s role under the Act to bring attention to allegations of contraventions. This serves not only as deterrence to others, but also perhaps as an incentive to other employees who might be suffering from similar contraventions: see, too, the comments of Driver FM (as his Honour then was) in Fair Work Ombudsman v Cleaners New South Wales Pty Ltd (2009) 186 IR 467; [2009] FMCA 683 at 476 – 477 [35]. The respondents were correct not to take issue with the media release.
The other media coverage has also been directed at, and named, the respondents. There was an article about them in a newspaper published in the Punjab, the area in India from which Mr Sarkaria and his wife originate and where their parents still live. This coverage, together with a number of incidents in which Mr Sarkaria’s wife was subject to verbal racial abuse, threats and egg throwing has left her feeling extremely anxious and concerned for their safety and that of their infant child. Their evidence was that they were considering moving house in order to avoid further harassment.
The applicant argued that this media coverage and its sequelae were no more than ordinary incidents of the respondents’ contraventions. The respondent agreed with this submission to the extent that the reports involved accurate and fair reporting; however, they pointed to a number of instances in the media reports that were not accurate, such as where the respondents were mentioned in connection with allegations that did not concern them and other instances of extreme and emotive language such as “slavery” and “sweatshop”. In respect of those instances, the respondents argued that they had already been subject to a form of extra-curial punishment which ought to be taken into account in determining penalty.
The respondents relied on Ryan v R (2000) 206 CLR 267; [2000] HCA 21 at [123] and [177] respectively. There, Kirby J agreed, at [123], with the conclusion of Callinan J, at [177], that the adverse effects of publicity and humiliation should not be ignored by a sentencing judge. McHugh J disagreed (see [52]-[55]), noting that there was no reason why the well-known individual should get a lesser sentence than the person who is hardly known in his or her community. The question has been addressed on a number of occasions (see, for example, Kenny v The Queen [2010] NSWCCA 6 at [49], and Einfeld v The Queen [2010] NSWCCA 87 at [85] - [111], per Basten JA) but does not appear to have been resolved in the High Court: see Scolara v Shepherd (No 2) [2010] WASC 271 at [210].
The difficulty with applying the principles discussed in those cases is that they all concerned sentencing for crime. As the High Court recently made plain in CFMEU, the imposition of civil penalties does not raise the same considerations. Thus, the extra-curial punishment said to have been suffered, for example, by Mr Einfeld (formerly a judge of the Federal Court and one of Her Majesty’s Counsel in the State of New South Wales) might have been relevant to the punitive purpose of sentencing for the crime of perjury but, as I have noted above, the principal if not only purpose of a civil penalty is deterrence. For that reason, while I do take into account the effect of the media coverage as relevant to general deterrence, I do not think that it is otherwise relevant to the determination of penalty.
Conclusion
I consider that there should be a discount of 5% from the maximum penalty for each contravention for the fact that the proceedings were not contested as to liability. This case falls into the second category referred to by Stone and Buchanan JJ in Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; [2008] FCAFC 70 at 405 [76]:
… 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.
Had there been an expression of real contrition and earlier assistance to the applicant, that discount would have been far greater.
I consider that each of the contraventions falls into the high end of the scale and assess that, after the discount just referred to, each respondent should pay a penalty fixed at 75% of the maximum for each contravention.
In concrete terms, that means that the appropriate penalty for each contravention is as follows:
Contravention Amritsaria Mr Sarkaria Casual rates
$38,250
$7,650
Holiday and weekend loading
$38,250
$7,650
Overtime
$38,250
$7,650
Record of overtime
$19,125
$3,825
Record of amount paid
$19,125
$3,825
False or misleading records
$12,750
$2,550
Use of false or misleading records
$12,750
$2,550
TOTAL $178,500 $35,700
Having determined the penalty appropriate for each contravention, it is necessary to determine whether the aggregate of those amounts is appropriate for the total contravening conduct. The purpose of doing that is to ensure that the total of the penalties is not oppressive or crushing.
Taking that approach, I think that the aggregates of the individual penalties corresponds appropriately to the seriousness of the conduct engaged in and is an appropriate response to the contraventions.
For those reasons, I make the orders set out above.
I certify that the preceding ninety-six (96) paragraphs are a true copy of the reasons for judgment of Judge Smith
Associate:
Date: 29 April 2016
ANNEXURE
IN THE FEDERAL CIRCUIT COURT OF AUSTRALIA
File number: SYG1601/2015
REGISTRY: SYDNEY
FAIR WORK DIVISION
FAIR WORK OMBUDSMAN
Applicant
AMRITSARIA FOUR PTY LTD
(ACN 151 620 245)
First Respondent
HARMANDEEP SINGH SARKARIA
Second Respondent
AMENDED STATEMENT OF AGREED FACTS
This Amended Statement of Agreed Facts is made by the Applicant and the First and Second Respondents in these proceedings for the purposes of section 191 of the Evidence Act 1995 (Cth).
ADMITTED CONTRAVENTIONS AND AGREED DECLARATIONS AND ORDERS
The Respondents expressly admit to contravening the provisions set out in paragraph 3 and, in conjunction with the Applicant, agree to the making of declarations and orders in the terms set out herein.
The parties agree to the following declarations and orders:
(a)Declarations that the First Respondent has contravened:
(i) section 45 of the Fair Work Act (FW Act) by failing to pay Aqeel Ahmed and Muhammad Imran Yousaf the minimum casual adult rate for Monday to Friday work as required by clause A.2.5 of Schedule A of the Vehicle, Manufacturing, Repair and Retail Award 2010 (Modern Award), by reference to clause 36.3 of the Modern Award;
(ii) section 45 of the FW Act by failing to pay Aqeel Ahmed and Muhammad Imran Yousaf Saturday rates as required by clause A.7.3 of Schedule A of the Modern Award, by reference to clause 36.3 of the Modern Award;
(iii) section 45 of the FW Act by failing to pay Aqeel Ahmed and Muhammad Imran Yousaf Sunday rates as required by clause A.7.3 of Schedule A of the Modern Award, by reference to clause 36.3 of the Modern Award;
(iv) section 45 of the FW Act by failing to pay Aqeel Ahmed and Muhammad Imran Yousaf public holiday rates as required by clause A.7.3 of Schedule A of the Modern Award, by reference to clause 36.3 of the Modern Award;
(v) section 45 of the FW Act by failing to pay Aqeel Ahmed and Muhammad Imran Yousaf overtime as required by clause 36.3 of the Modern Award; and
(vi) section 535(1) by failing to keep records required by regulation 3.34 of the Fair Work Regulations 2009 (Cth) (FW Regulations) in relation to Aqeel Ahmed and Muhammad Imran Yousaf;
(vii) section 535(2) by failing to keep records in relation to Aqeel Ahmed and Muhammad Imran Yousaf in the form required by regulation 3.33(1)(b) of the FW Regulations;
(viii) regulation 3.44(1) of the FW Regulations by failing to ensure that records required to be kept in relation to Aqeel Ahmed and Muhammad Imran Yousaf were not false or misleading; and
(ix) regulation 3.44(6) of the FW Regulations by making use of entries in employee records for Aqeel Ahmed and Muhammad Imran Yousaf, knowing that those records were false or misleading,
(b)A declaration that the Second Respondent was involved (within the meaning of section 550(2) of the FW Act) in each of the contraventions admitted by the First Respondent as set out in paragraph 3(a) above.
(c)An order that the First Respondent will undertake, or at its expense engage a third party with qualifications in accounting or workplace relations to undertake, an audit of the First Respondent's compliance with the FW Act and the Modern Award on the following terms:
(i) the audit period will be the period of six months commencing on the date of this order;
(ii) the audit is to be completed within 30 days of the end of the audit period;
(iii) the audit will apply to all employees employed at any time during the audit period in a classification of work under the Modern Award;
(iv) the audit will assess the First Respondent's compliance with the following obligations according to each employee's classification of work, category of employment and hours worked during the audit period:
(A)wages and work related entitlements under the Modern Award;
(B)accrual and payment of entitlements under the National Employment Standards in Part 2−2 of the FW Act; and
(C)record keeping obligations in Division 3 of Part 3−6 of the FW Act and Division 3 of Part 3−6 of the FW Regulations.
(d)An order that within 30 days of the audit referred to above being completed, the First Respondent will provide to the Applicant:
(i) a copy of the audit report which will include a statement of the methodology used in the audit; and
(ii) written details of any contraventions identified in the audit and the steps the First Respondent will take to rectify any identified contravention(s) and by when the rectification will occur.
(e)An order that the Second Respondent is to engage, at his own expense, a person or organisation with professional qualifications in workplace relations, to provide training to the Second Respondent within six months of the date of this order that covers the following:
(i) obligations on employers under the Modern Award and the National Employment Standards in the FW Act;
(ii) payment of wages in accordance with Division 2 of Part 2−9 of the FW Act; and
(iii) record keeping obligations in Division 3 of Part 3−6 of the FW Act and and Division 3 of Part 3−6 of the FW Regulations.
(f)An order that within 30 days of completing the training set out above, the Second Respondent is to provide to the Applicant, in writing:
(i) the date on which the training was completed;
(ii) the name of the person or organisation that conducted the training; and
(iii) the details of the method of delivery of the training and the content of the training.
(g)An order that the Applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
(h)Such further or other orders as the Court deems fit.
THE PARTIES AND THE EMPLOYEES
THE APPLICANT
The Applicant is, and was at all relevant times:
(a)a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to Division 2 of Part 5-2 of the Fair Work Act 2009 (FW Act);
(b)a Fair Work Inspector pursuant to section 701 of the FW Act;
(c)a person with standing under section 539(2) of the FW Act to apply for orders in respect of contraventions of civil remedy provisions under the FW Act.
THE FIRST RESPONDENT
The First Respondent is and was at all relevant times:
(a)from 21 June 2011, a company incorporated under the Corporations Act 2001;
(b)able to be sued in and by its corporate name;
(c)a constitutional corporation within the meaning of section 12 of the FW Act; and
(d)a national system employer within the meaning of section 14 of the FW Act.
At all relevant times, the First Respondent operated a 7-Eleven convenience store and service station from premises at 354 Flushcombe Road, Blacktown, in the State of New South Wales (Blacktown Store).
On or around 30 August 2011, the First Respondent entered a franchise agreement with 7-Eleven Pty Ltd ACN 151 620 245 (7 Eleven Head Office) to operate the Blacktown Store.
THE SECOND RESPONDENT
The Second Respondent is and was at all relevant times:
(a)the sole director and shareholder of the First Respondent;
(b)the secretary of the First Respondent;
(c)responsible for the overall direction, management and supervision of the First Respondent’s operations in relation to setting pay rates, wages and conditions of the First Respondent’s employees and maintaining employee records;
(d)responsible for processing payments to employees, which was done by entering data (including the hours worked by each employee) on a weekly basis into the electronic payroll system of 7 Eleven Head Office (Payroll Portal), so that 7 Eleven Head Office could transfer funds to each employee by direct debit transfer;
(e)responsible for making decisions on behalf of the First Respondent regarding the terms and conditions upon which persons would be employed by the First Respondent, the work to be performed, and the time, method and manner of payments to employees;
(f)responsible for ensuring that the First Respondent complied with its legal obligations under the FW Act; and
(g)by reason of section 793(2) of the FW Act, a person whose state of mind was the state of mind of the First Respondent for conduct engaged in within the scope of his actual or apparent authority.
THE EMPLOYEES
During the period from 26 March 2012 to 28 March 2014 (Employment Period) the First Respondent employed the following employees in the Blacktown Store:
(a)Aqeel Ahmed (Mr Ahmed); and
(b)Muhammad Imran Yousaf (Mr Yousaf),
(collectively, the Employees).
At all relevant times, Mr Ahmed was employed by the First Respondent:
(a)during the period from at least 26 March 2012 to 28 March 2014 (Ahmed Employment Period);
(b)on a casual basis;
(c)as a console operator; and
(d)performing duties in the Blacktown Store which included serving customers, handling cash, using the cash register and console, packing and refilling stock and refilling fuel pumps.
During the Ahmed Employment Period, Mr Ahmed was paid by:
(a)transfer of electronic funds into his nominated bank account directly from 7 Eleven Head Office in accordance with the number of hours entered into the Payroll Portal by the Second Respondent (usually 10 hours per week, with occasional variation); and
(b)cash (to a total of $5,210.00) received from the Second Respondent (on behalf of the First Respondent), made on various occasions, irregularly and not by reference to any specific pay period or entitlement (Cash Payments).
At all relevant times, Mr Yousaf was employed by the First Respondent:
(a)during the period from at least 11 August 2013 to 28 March 2014 (Yousaf Employment Period);
(b)on a casual basis;
(c)as a console operator; and
(d)performing duties in the Blacktown Store which included serving customers, handling cash, using the cash register and console, packing and refilling stock and refilling fuel pumps.
During the Yousaf Employment Period, Mr Yousaf was paid by transfer of electronic funds into his nominated bank account directly from 7 Eleven Head Office in accordance with the number of hours entered into the Payroll Portal by the Second Respondent (usually 10 hours per week with occasional variation).
At all relevant times during the Employment Period, the FW Act applied to the First Respondent in respect of the employment of the Employees.
APPLICABLE INDUSTRIAL INSTRUMENT
At all relevant times during the Employment Period, the First Respondent was bound by the Modern Award in respect of the Employees because:
(a)pursuant to section 49(2) of the FW Act and clause 2.1 of the Modern Award, the Modern Award commenced operation on 1 January 2010;
(b)pursuant to sections 47(1) and 48(1) of the FW Act, a modern award applies to the employer if the award is expressed to cover the employer, the modern award is in operation and no other provision of the FW Act applies so that the modern award does not apply to the employer;
(c)pursuant to clause 4.1 of the Modern Award, the Modern Award covers employers throughout Australia of employees engaged in “vehicle manufacturing and/or vehicle industry repair, services and retail, as defined in this clause, to the exclusion of any other modern award and where the employer’s establishment, plant or undertaking is principally connected or concerned within: operations or allied businesses concerned with selling, distributing or supplying running requirements for vehicles (including motor fuels, gas and oils); or any operation concerned with roadside/mobile service…”
(d)pursuant to the matters agreed at paragraph 6 above, the First Respondent operated the Blacktown Store as a convenience store and a service station.
By reason of the duties and responsibilities of each of the Employees as agreed in paragraphs 10(d) and 12(d) above, each of the Employees were properly classified as Level 4 employees pursuant to Schedule B, clause B.4 of the Modern Award.
At all relevant times during the Employment Period, Schedule A of the Modern Award applied because the minimum wages and loadings under the Transitional Instrument (as defined in paragraph 18 below) were less than the minimum wages and loadings under the Modern Award as at 1 January 2010.
At all relevant times during the employment of the Employees, the relevant minimum wage instrument for the purposes of Schedule A of the Modern Award was the Australian Pay and Classification Scale derived from the Vehicle Industry, Repair Services and Retail (State) Award AN120631 (Transitional Instrument).
By reason of the duties and responsibilities of each of the Employees as agreed in paragraphs 10(d) and 12(d) above, each of the Employees fell within the classification of “Level 3, Console operator” pursuant to the Transitional Instrument.
UNDERPAYMENT CONTRAVENTIONS
Failure to pay minimum rates
The First Respondent was required by section 45 of the FW Act to pay the Employees the casual minimum wage pursuant to clause A.2.5 of the Modern Award, by reference to clause 36.3 of the Modern Award.
During the following periods within the Employment Period, the First Respondent was required to pay the Employees the following casual minimum rates under the Modern Award for each ordinary hour worked Monday to Friday (Weekday Ordinary Hours):
(a)during the period from 26 March 2012 to 30 June 2012: $22.00;
(b)during the period from 1 July 2012 to 30 June 2013: $22.81; and
(c)during the period from 1 July 2013 to 28 March 2014: $23.57.
During the Ahmed Employment Period:
(a)Mr Ahmed worked 1978 Weekday Ordinary Hours for the First Respondent;
(b)the First Respondent was required to pay Mr Ahmed $45,468.44 in respect of Weekday Ordinary Hours;
(c)instead, the First Respondent paid Mr Ahmed a total of $18,125.99 for Weekday Ordinary Hours; and
(d)by virtue of the matters above, the First Respondent underpaid Mr Ahmed $27,496.75.
In relation to Mr Yousaf, the parties agree that, during the Yousaf Employment Period:
(a)Mr Yousaf worked 205.75 Weekday Ordinary Hours for the First Respondent;
(b)the First Respondent was required to pay Mr Yousaf a total of $4,849.55 in respect of Weekday Ordinary Hours;
(c)instead, the First Respondent paid Mr Yousaf a total of $2,200.99 in respect of his Weekday Ordinary Hours; and
(d)by virtue of the matters above, the First Respondent underpaid Mr Yousaf $2,688.14.
By reason of the matters set out at paragraphs 20 to 23 above, the First Respondent contravened section 45 of the FW Act by failing to pay the Employees the minimum casual rates for Monday to Friday as required by clause A.2.5 of Schedule A of the Modern Award, by reference to clause 36.3 of the Modern Award.
Failure to pay Saturday rates
The First Respondent was required by section 45 of the FW Act to pay the Employees the Saturday rates pursuant to clause A.7.3 of the Modern Award, by reference to clause 36.3 of the Modern Award.
During the following periods within the Employment Period, the First Respondent was required to pay the Employees the following rates under the Modern Award for each hour worked on a Saturday (Saturday Hours):
(a)during the period from 26 March 2012 to 30 June 2012: $24.70;
(b)during the period from 1 July 2012 to 30 June 2013: $26.97; and
(c)during the period from 1 July 2013 to 28 March 2014: $29.27.
During the Ahmed Employment Period:
(a)Mr Ahmed worked 322 Saturday Hours for the First Respondent;
(b)the First Respondent was required to pay Mr Ahmed a total of $8,662.87 for his Saturday Hours;
(c)instead, the First Respondent paid Mr Ahmed a total of $2,796.28 for his Saturday Hours; and
(d)by virtue of the matters above, the First Respondent underpaid Mr Ahmed $5,866.59.
During the Yousaf Employment Period:
(a)Mr Yousaf worked 69 Saturday Hours for the First Respondent;
(b)the First Respondent was required to pay Mr Yousaf a total of $2,019.63 for his Saturday Hours;
(c)instead, the First Respondent paid Mr Yousaf a total of $702.26 for his Saturday Hours; and
(d)by virtue of the matters above, the First Respondent underpaid Mr Yousaf $1,341.75
By reason of the matters set out at paragraphs 25 to 28 above, the First Respondent contravened section 45 of the FW Act by failing to pay the Employees Saturday rates as required by clause A.7.3 of Schedule A of the Modern Award, by reference to clause 36.3 of the Modern Award.
Failure to pay Sunday rates
The First Respondent was required by section 45 of the FW Act to pay the Employees the Sunday rates pursuant to clause 36.3 and in accordance with clause A.7.3 of the Modern Award.
During the following periods within the Employment Period, the First Respondent was required to pay the Employees the following rates under the Modern Award for each hours worked on a Sunday (Sunday Hours):
(a)during the period from 26 March 2012 to 30 June 2012: $24.70;
(b)during the period from 1 July 2012 to 30 June 2013: $26.97; and
(c)during the period from 1 July 2013 to 28 March 2014: $29.27.
During the Ahmed Employment Period:
(a)Mr Ahmed worked 419 Sunday Hours for the First Respondent;
(b)the First Respondent was required to pay Mr Ahmed a total of $11,346.39 for all Sunday Hours;
(c)instead, the First Respondent paid Mr Ahmed a total of $3,441.69 for the Sunday Hours; and
(d)by virtue of the matters above, the First Respondent underpaid Mr Ahmed $7,904.86.
During the Yousaf Employment Period:
(a)Mr Yousaf worked 55.17 Sunday Hours for the First Respondent;
(b)the First Respondent was required to pay Mr Yousaf a total of $1,614.83 for the Sunday Hours;
(c)instead, the First Respondent paid Mr Yousaf a total of $606.75 for the Sunday Hours; and
(d)by virtue of the matters above, the First Respondent underpaid Mr Yousaf $1,008.08.
By reason of the matters set out at paragraphs 30 to 33 above, the First Respondent contravened section 45 of the FW Act by failing to pay the Employees Sunday rates as required by clause A.7.3 of Schedule A of the Modern Award, by reference to clause 36.3 of the Modern Award.
Failure to pay public holiday rates
The First Respondent was required by section 45 of the FW Act to pay the Employees the public holiday rates pursuant to clause 36.3 and in accordance with clause A.7.3 of the Modern Award.
During the following periods within the Employment Period, the First Respondent was required to pay the Employees the following rates under the Modern Award for each hours worked on a public holidays (Public Holiday Hours):
(a)during the period from 26 March 2012 to 30 June 2012: $24.70;
(b)during the period from 1 July 2012 to 30 June 2013: $26.97; and
(c)during the period from 1 July 2013 to 28 March 2014: $29.27.
During the Ahmed Employment Period:
(a)Mr Ahmed worked 75 Public Holiday Hours for the First Respondent;
(b)the First Respondent was required to pay Mr Ahmed a total of $2,009.40 for the Public Holiday Hours;
(c)instead, during the Ahmed Employment Period, the First Respondent paid Mr Ahmed a total of $448.22 for the Public Holiday Hours; and
(d)by virtue of the matters agreed above, the First Respondent underpaid Mr Ahmed $1,561.18.
During the Yousaf Employment Period:
(a)Mr Yousaf worked 9 Public Holiday Hours for the First Respondent;
(b)the First Respondent was required to pay Mr Yousaf a total of $263.43 for the hours worked on a public holiday;
(c)instead, during the Yousaf Employment Period, the First Respondent paid Mr Yousaf a total of $90.00 for the Public Holiday Hours; and
(d)by virtue of the matters agreed above, the First Respondent underpaid Mr Yousaf $173.43.
By reason of the matters set out at paragraphs 35 to 38 above, the First Respondent contravened section 45 of the FW Act by failing to pay the Employees Public Holiday rates as required by clause A.7.3 of Schedule A of the Modern Award, by reference to clause 36.3 of the Modern Award.
Failure to pay overtime rates
The First Respondent was required by section 45 of the FW Act to pay the Employees overtime rates pursuant to clause 36.3 of the Modern Award for hours worked in excess of 10 hours per day (Overtime Hours).
By reason of the matters agreed at paragraph 40 above, during the following periods within the Employment Period, the First Respondent was required to pay the Employees the following minimum overtime rates under the Modern Award for each Overtime Hour worked:
Monday to Friday overtime
Saturday, Sunday & public holiday overtime
26 March 2012 to 30 June 2012
$34.75
$37.45
1 July 2012 to 30 June 2013
$35.93
$40.09
July 2013 to 28 March 2014
$37.03
$42.72
During the Ahmed Employment Period:
(a)Mr Ahmed worked a total of 457 hours of Overtime Hours for the First Respondent;
(b)the First Respondent was required to pay Mr Ahmed a total of $6,013.43 for his Overtime Hours;
(c)the First Respondent did not pay Mr Ahmed for his Overtime Hours at all; and
(d)by virtue of the matters agreed above, the First Respondent underpaid Mr Ahmed $6,013.43.
During the Yousaf Employment Period:
(a)Mr Yousaf worked a total of 43.25 Overtime Hours for the First Respondent;
(b)the First Respondent was required to pay Mr Yousaf a total of $582.15 for his Overtime Hours;
(c)the First Respondent did not pay Mr Yousaf for his Overtime Hours at all; and
(d)by virtue of the matters above, the First Respondent underpaid Mr Yousaf $582.15.
By reason of the matters set out at paragraphs 40 to 43 above, the First Respondent contravened section 45 of the FW Act by failing to pay the Employees overtime as required by clause 36.3 of the Modern Award.
TOTAL UNDERPAYMENT
By reason of the contraventions admitted herein, the First Respondent underpaid the Employees a total amount of $49,426.17gross, as follows:
(a)$43,632.64to Mr Ahmed, ($48,842.64total underpayments less Cash Payments of $5,210.00); and
(b)$5,793.53 to Mr Yousaf.
RECTIFICATION
As at the date of this Statement of Agreed Facts, the First Respondent has rectified the following amounts by paying to the Applicant on account of entitlements owing to the Employees:
(a)$20,000 on 12 May 2015;
(b)$10,000 on 18 June 2015; and
(c)$9,002 on 1 July 2015.
The Respondents will provide evidence of the remittance of any taxation amounts to the Australian Taxation Office prior to the penalty hearing in this matter.
RECORD KEEPING CONTRAVENTIONS
During the Employment Period, pursuant to section 535(1) of the FW Act, the First Respondent was required to make, and keep for 7 years, records relating to the employment of all employees as prescribed by the Fair Work Regulations 2009 (FW Regulations).
Failure to make and keep records of overtime worked
By reason of the First Respondent’s obligation under clause 36.3 of the Modern Award to pay the Employees overtime rates for hours worked in excess of 10 hours per day pursuant to regulation 3.34 of the FW Regulations, the First Respondent was required to make and keep a record of the number of overtime hours worked by each Employee during each day, or when the Employee started and ceased working overtime hours.
During the Employment Period each of the Employees worked Overtime Hours as set out in paragraphs paragraphs 42 and 43 above.
The payroll records produced to the Applicant by the First Respondent (Payroll Records) did not record any of the Overtime Hours worked by the Employees.
The First Respondent did not keep any record of the Overtime Hours worked by either of the Employees
The Second Respondent admits that he intentionally failed to enter all the hours worked by the Employees worked into the Payroll Portal.
By reason of the matters set out at paragraphs 49 to 53 above, the First Respondent contravened section 535(1) by failing to keep records required by regulation 3.34 of the FW Regulations.
Failure to make and keep records of amounts paid
Pursuant to section 535(2) of the FW Act, the records which the First Respondent was required to make and keep under the FW Regulations pursuant to section 535(1) were required to include the information prescribed by the regulations.
Pursuant to regulation 3.33(1)(b) of the FW Regulations, the First Respondent was required to make and keep a record of the gross and net amounts paid to each of the Employees.
The First Respondent did not keep a complete record of the gross and net amounts paid to each of the Employees because the Payroll Records did not include the Cash Payments made to Mr Ahmed (as set out at paragraph 11(b) above).
By reason of the matters pleaded in paragraphs 55 to 57 above, the First Respondent contravened section 535(2) of the FW Act by failing to keep records in the form required by regulation 3.33(1)(b) of the FW Regulations.
Keeping false or misleading records
Pursuant to regulation 3.44(1) of the FW Regulations, the First Respondent was required to ensure that a record it was required to keep under the FW Act or the FW Regulations was not false or misleading to the First Respondent’s knowledge.
Pursuant to regulation 3.33(2) of the FW Regulations, the First Respondent was required to make and keep a record of the hours worked by each of the Employees.
On 21 July 2014, the Second Respondent (on behalf of the First Respondent) produced to Fair Work Inspector Fleur Millington (Inspector Millington) certain timesheets in which the hours allegedly worked by the Employees are handwritten for the periods from 31 December 2012 to 23 March 2014.
On 7 October 2014, the Second Respondent (on behalf of the First Respondent) produced to Fair Work Inspector Verity Okno (Inspector Okno) a copy of certain timesheets of the First Respondent in which the hours allegedly worked by the Employees are handwritten for the period from 19 March 2012 to 30 September 2012 (together with the records referred to in paragraph 61, the Company Time Records).
The Respondents admit that the Company Time Records were false or misleading because they did not accurately record the hours worked by the Employees.
The Second Respondent admits that he knew that the Company Time Records did not accurately record the hours worked by the Employees.
When the Second Respondent (on behalf of the First Respondent) produced the records to Inspector Millington on 21 July 2014 and to Inspector Okno on 7 October 2014, the Respondents knew that the Company Time Records were false or misleading.
By reason of the matters set out at paragraphs 59 to 65 above, the First Respondent contravened regulation 3.44(1) of the FW Regulations by failing to ensure that the records it was required to keep under the FW Act and FW Regulations in respect of each of the Employees were not false or misleading.
Making use of false or misleading records
Pursuant to regulation 3.44(6) of the FW Regulations, the First Respondent was required to not make use of an entry in an employee record made and kept by it under the FW Act or the FW Regulations, if it did so knowing that the entry was false or misleading.
The First Respondent made use of the entries in the Company Time Records for the Employees by producing them to Inspector Millington on 21 July 2014 and to Inspector Okno on 7 October 2014.
The Company Time Records contained false and misleading entries to the effect that they did not accurately record the hours worked by the Employees.
The Respondents admit that when the Second Respondent (on behalf of the First Respondent) produced the Company Time Records to Inspector Okno on 21 July and 7 October 2014, the Respondents knew that the Company Time Records did not accurately record the hours worked by the Employees.
By reason of the matters set out at paragraphs 67 to 70 above, the First Respondent made use of entries in employees records made and kept by the First Respondent pursuant to the FW Regulations, knowing that the entry was false or misleading, and in doing so, contravened regulation 3.44(6) of the FW Regulations by producing the Company Time Records to the Applicant on 21 July and 7 October 2014.
INVOLVEMENT OF THE SECOND RESPONDENT
The Second Respondent undertook training and received industry materials concerning the First Respondent’s employment obligations including:
(a)on 28 August 2007, the Second Respondent undertook a 9 day face to face 7-Eleven Franchisee Training programme;
(b)on 7 April 2011 and 7 October 2011, the Second Respondent completed online training modules conducted by 7 Eleven Head Office;
(c)from at least 2011 the Second Respondent had a copy of the 7-Eleven Franchise Systems Manual which included material concerning minimum rates, pay rates, industrial legal requirements and paperwork obligations;
(d)from at least 2011, the First and Second Respondent received 7-Eleven Circulars which contained information relating to payroll reporting, the Modern Award and record keeping obligations.
The training and industrial materials covered (among other things):
(a) the National Employment Standards under the FW Act;
(b) types of employment;
(c) award conditions (including leave entitlements);
(d) the application of the Modern Award;
(e) rates of pay;
(f) timesheets and record keeping obligations under the FW Act; and
(g) payroll.
By reason of the matters agreed in paragraphs 72 to 73 above, the Second Respondent had knowledge of the following matters:
(a)the Modern Award applied to the Employees’ employment;
(b)there existed statutory minimum entitlements relating to the Employees;
(c)the First Respondent was required to pay the minimum rates to the Employees under the Modern Award for:
(i) Monday to Friday work;
(ii) Saturday, Sunday and Public Holiday work; and
(iii) overtime work.
(d)the First Respondent was required to keep records of:
(i) the gross and net amounts paid;
(ii) overtime worked; and
(iii) hours worked.
(e)the employment of the Employees;
(f)the amounts paid to each Employee; and
(g)the hours worked by each Employee at the Blacktown Store.
The Second Respondent:
(a)had actual knowledge of the First Respondent’s failure to comply with the Modern Award;
(b)knew of, and all times had access to, the Company Time Records;
(c)was involved (within the meaning of section 550(2)(c) of the FW Act) in each of the First Respondent’s contraventions, as set out in paragraph 3(a) above; and
(d)by virtue of section 550(1) of the FW Act, is taken to have committed those contraventions.
THE INVESTIGATION
The Applicant advised the First Respondent of its investigation into the Employees’ complaints (Investigation) on 27 June 2014 when Inspector Millington attended the Blacktown Store to give the Second Respondent a copy of a Notice to Produce Records or Documents (NTP).
On 3 July 2014 the Second Respondent made a telephone call to Inspector Millington to request an extension to respond to the NTP given his personal circumstances, stating that some documents had been provided to 7-Eleven Head Officer and also that he was moving that weekend. Inspector Millington advised that although she could not grant an extension of the NTP, she would issue a ‘Failure to Comply’ notice, which would give him 7 days to respond. She also asked that he provide any documents which he did have even if it was not all of the documents requested.
On 10 July 2014, the Second Respondent emailed Inspector Millington to again request an extension to respond to the NTP as he was relocating his personal and registered business address and did not have access to the relevant documents.
On 11 July 2014, Inspector Millington sent the Second Respondent an email, indicating that she was unable to provide an extension to the NTP and would issue a ‘Failure to Comply’ letter, which would provide the Second Respondent an additional 7 days to provide the requested documents to the Applicant.
On 14 July 2014, the Applicant sent the First Respondent a letter titled “Failure to comply with a Notice to produce records or documents”, advising the First Respondent that it had not provided records required by the NTP on 27 June 2014 within the time required. The letter advised the Second Respondent that he had until 21 July 2014 to comply or provide a reasonable excuse for failing to comply with the NTP.
On 21 July 2014, the Second Respondent sent a letter to Inspector Millington, describing the circumstances surrounding the termination of the Employees. Under cover of this letter, the Second Respondent provided some of the documents required to be produced by the NTP, including copies of the Payroll Records.
Also on 21 July 2014, the Applicant sent a letter to the Second Respondent offering him an opportunity to participate in a recorded interview.
On 27 August 2014, Inspector Okno, on behalf of the Applicant, sent an email to the Second Respondent seeking documentation in relation to the hours worked and payments made to the Employees.
On 28 August 2014, the Second Respondent sent an email to Inspector Onko indicating that he had produced the documents which he had available to him at the time due to the movement in premises, however, he stated that he would work toward producing any of the missing documents.
On 28 August 2014, Inspector Okno (on behalf of the Applicant) sent a letter to the Second Respondent offering him a second opportunity to participate in a recorded interview.
As set out at paragraphs 61 and 62 above, on 21 July and 7 October 2014 the Second Respondent (on behalf of the First Respondent) produced the Company Time Records to Inspector Okno.
On 31 October 2014, the Applicant sent a letter to the First and Second Respondents, which (among other things):
(a)advised that there were significant differences between the number of hours shown in the Company Time Records and the number of hours in the Payroll Records;
(b)set out a full list of the documents the Applicant had been required to review and analyse in order to consider whether the First Respondent had contravened the FW Act; and
(c)offered the Second Respondent a third opportunity to participate in a recorded interview.
On 19 November 2014, the Second Respondent, emailed the Applicant to state that he was not willing to participate in an interview without consent of his solicitor. The Second Repsondent advised the Applicant that he had tried to contact his solicitor but that his solicitor was on holidays and would be returning by the end of the month. Further, the Second Respondent stated that he was planning to take leave from 27 November 2014 until January 2015 for his sister’s wedding.
On 24 November 2015, the Applicant sent a letter to the Respondents in reply to the Second Respondent’s email of 19 November 2014 which, among other things:
(a)explained that the offers of interview to the Respondents have been made to ascertain whether the Respondent wished to provide further information which may assist in the investigation;
(b)confirmed that the Respondent had not accepted the offers of interview;
(c)recommended that the Second Respondent remain available during his leave and provide contact details during this time as the investigation was continuing;
(d)noted that there had been some contact from a representative but that the FWO needed to confirm that they were authorised to act on behalf of the respondents and requested that the Second Respondent or the representative confirm their instructions to act in writing by 27 November 2014;
(e)advised that the Applicant was assessing the information gathered to date and would finalise its assessment unless he provided a response or any further information; and
(f)advised that once the investigation had been completed, the Applicant would advise the Respondents of any determinations and actions to be taken by the Respondents and confirming that pending the outcome of the investigation the FWO may consider enforcement action.
On 27 November 2014, the Second Respondent emailed the Applicant, providing the contact details of his legal representative.
On 5 February 2015, the Applicant sent a letter to the Respondents’ representative setting out the findings made in respect of the contraventions, titled “Findings of Contravention” advising the First and Second Respondents of the outcome of its Investigation.
On 25 February 2015, the Respondents’ representative sent a letter to the Applicant, which, among other things, requested that the Applicant withdraw its findings made as a result of the Investigation.
On 6 March 2015, the Applicant sent a letter to the First and Second Respondents, advising that it did not agree to withdraw the findings and making a fourth and final offer of interview to the Second Respondent.
On 12 March 2015, the Second Respondent advised that he was willing to participate in a recorded interview.
On 31 March 2015 the Second Respondent voluntarily participated in an interview with Fair Work Inspector Cordell Jackson of approximately 4.5 hours duration (Inspector Jackson).
On 5 May 2015 the Applicant sent letters to each of the First and Second Respondents advising them that the Applicant intended to commence proceedings in respect of the Admitted Contraventions and setting out the Applicant’s approach to conduct of proceedings and early resolution of disputes.
Following those letters the Second Respondent contacted the Applicant by telephone on 8 May 2015 and by email on 12 May 2015, and advised them that he intended to make the payment of the underpayments in instalments.
On 12 May 2015, the Second Respondent sent an email to the Applicant (via Ms Teresa Dwight) advising that the Respondents:
(a)had paid $20,000 that day to the Applicant on account of the Employees’ unpaid entitlements, attaching a receipt; and
(b)would make the remaining payment in two instalments of $14,647.35, in the months of June and July 2015.
On 12 June 2015 these proceedings were commenced.
On 18 June 2015, the Second Respondent made a payment of $10,000 in respect of the Employees’ unpaid entitlements.
On 29 June 2015, the solicitor for the Respondents advised the Applicant that the Second Respondent would make the final instalment in respect of the Employees’ unpaid entitlements as soon as possible. Further, that the Respondent would admit the matters alleged in the Statement of Claim and agree to the relief sought, and proceed directly to a hearing in respect of penalties.
On 1 July 2015, the Second Respondent made a further payment of $9,002 to the Applicant in respect of the Employees’ unpaid entitlements. The Respondents will provide evidence of the remittance to the Australian Taxation Office of the remaining $10,599.98 of the total underpayment of $49,426.17 prior to the penalty hearing in this matter.
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