Fair Work Ombudsman v Andary

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Andary [2021] FedCFamC2G 296

File number(s): ADG 341 of 2020
Judgment of: JUDGE BROWN
Date of judgment: 24 November 2021
Catchwords: INDUSTRIAL LAW – Fair work - underpayment of one employee – Compliance Notice – penalty hearing – where the respondent has not participated in proceedings - calculation of penalty – first time offender – intuitive synthesis.
Legislation: Crimes Act 1914 (Cth) s 4AA.
Fair Work Act 2009 (Cth) ss 3, 539, 546, 557, 682, 701, 706, 712, 716.
Fast Food Industry Act 2010.
Federal Circuit Court Rules 2001 (Cth) rr 13.03A, 13.03B.
Cases cited:

Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCA 8.
Blandy v Coverdale NT Pty Ltd [2008] FCA 1533.
Fair Work Ombudsman v Corporation Sun Pty Ltd [2020] FCCA 2849.
Fair Work Ombudsman v Darna Pty Ltd [2015] FCCA 709.
Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 3) [2011] FCA 579.
Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151.

Fair Work Ombudsman v Matcraft Pty Ltd & Ors [2021] FCCA 272.

Kelly v Fitzpatrick [2007] FCA 1080.
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7.

Minister for Immigration & Citizenship v Li (2013) 249 CLR 332.
Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412.
Division: Division 2 General Federal Law
Number of paragraphs: 82
Date of hearing: 25 October 2021
Place: Adelaide
Counsel for the Applicant: Mr Simeon
Solicitor for the Applicant: Office of the Fair Work Ombudsman
Counsel for the Respondent: No Appearance
Solicitor for the Respondent: No Appearance

ORDERS

ADG 341 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

ZIAD ANDARY

Respondent

ORDER MADE BY:

JUDGE BROWN

DATE OF ORDER:

24 NOVEMBER 2021

THE COURT FINDS THAT:

1.The respondent, Ziad Andary (hereinafter referred to as “the respondent”) has contravened section 716(5) of the Fair Work Act 2009 (Cth) (hereinafter referred to as “the Act”) by failing to comply with the Compliance Notice issued by the applicant, the Fair Work Ombudsman (hereinafter referred to as “the applicant”) on or about 25 May 2020.

THE COURT ORDERS THAT:

2.The first respondent pay a total penalty of $3,500.00 pursuant to subsection 546(1) of the Act for his contraventions set out in order (1) above.

3.Pursuant to section 546(3) of the Act, that the pecuniary penalty ordered to be paid by the respondent in order (2) above are paid to the Commonwealth within twenty-eight (28) days of the date of this order.

4.The applicant has liberty to apply.

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to…

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Details
Case
[2021] FedCFamC2G 296
Decision Date

CaseChat Overview and Summary

In this case, the Fair Work Ombudsman sought a penalty against Mr Andary for underpaying an employee. The matter was heard in the Federal Circuit Court of Australia, where the respondent, Mr Andary, did not participate in the proceedings. The court was required to determine the appropriate penalty for Mr Andary's failure to comply with the Fair Work Act 2009, particularly in light of his non-cooperation with the authorities and his status as a first-time offender.

The court considered various factors in determining the penalty, including the seriousness of the breach, Mr Andary's lack of cooperation, and the need to deter future breaches. The court emphasised that the size of the business should not be a mitigating factor, as all employers, regardless of size, are obligated to adhere to industrial instruments. The court concluded that an appropriate penalty would be $3,500. This penalty, while less than what the Fair Work Ombudsman had sought, was deemed sufficient to achieve general deterrence and to send a strong message about the importance of compliance with industrial laws.

The court also addressed the issue of where the penalty should be paid. Given that the Fair Work Ombudsman had funded the prosecution, it was appropriate for the penalty to be paid to the Commonwealth. The court's final orders included the imposition of a penalty of $3,500 payable to the Commonwealth and the expression of significant disapproval of Mr Andary's conduct, intended as a personal deterrence against future breaches.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

In these circumstances, I adopt the comments of Driver FM in Rajagopalan v BM Sydney Building Materials Pty Ltd as follows:Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to the Court’s consideration of penalty.[26][26] Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at [27] (Driver FM).CONCLUSIONS It has been said that the task of sentencing is one of the hardest judicial tasks, as it requires the synthesis of competing considerations to arrive at a penalty, which is just and appropriate. Necessarily it is a process of intuitive synthesis. It is useful to think of it in terms of percentages, but sentencing is not a purely arithmetical process. The penalty to be imposed must be proportionate to the gravity of the offending. This provides a high water mark in respect of the range of the penalty to be imposed before turning to any subjective factors which tend to mitigate the objective assessment of the offending. In my assessment, an appropriate penalty for the respondent is one of $3,500.00. This is a significant sum, in my view. I take into account that the respondent is a first offender. However there has been no cooperation with authorities and the case has been protracted as a consequence. At the same time, the breach represents a failure of the Compliance Notice system to achieve its objectives. As such, a message must be sent to small cottage-type industries of the importance of prompt and complete rectification of any breaches of the industrial safety net. The penalty imposed, in my view, is of sufficient moment to achieve the desired degree of general deterrence required. This will render the respondent liable to a penalty slightly less than that sought by the FWO, but the penalty in question cannot be regarded, in my view, as being either token or trivial, albeit I have limited information about the respondent’s financial circumstances. Importantly, as indicated above, I consider the penalty to be of sufficient magnitude to provide general deterrence. Pursuant to section 546(3) of the Act, the court may order the payment of any penalty imposed to be paid to the Commonwealth; a particular organisation; or a particular person. In this case, the FWO seeks that the penalties be paid to the Commonwealth. Given the prosecution has been funded by the FWO, it is obviously appropriate that this course should be adopted. For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.

Ratio Decidendi

Legal Principle Established

Mr Andary ceased trading as The Valley Pizza shortly after the issue of the Compliance Notice allegedly became known to him. Given that he has taken no part in the subsequent proceedings, it is unknown to me whether he has any plans to return to business in the fast food industry. In these circumstances, the need for specific deterrence does not loom large. However, the court must point out to Mr Andary its significant disapproval of his conduct to act as a personal deterrence from him being cavalier in respect of his obligations as an employer, if he ever considers resuming some form of similar enterprise in future.Contrition, corrective action and cooperation with authorities The most concrete manner in which Mr Andary could have expressed contrition for underpaying Mr Roberts would have been to pay his entitlements promptly. There has been no corrective action, or acknowledgement of the action before the court whatsoever. In addition, the evidence indicates that Mr Andary has tried to hinder rather than cooperate with the enforcement process. He dissolved the relevant partnership. He has changed address. He has never attended court. In these circumstances, it was necessary for the FWO to seek a default judgment, leading to a public authority incurring more expense in the furtherance of it’s compliance role. In these circumstances, it is not tenable for the court to consider any discount on the penalty to be imposed on account of the respondent’s cooperation.Size of business and capacity to pay I have not been provided with any evidence regarding Mr Andary’s financial circumstances other than The Valley Pizza has ceased to trade. In addition, I do not know whether the business was impacted by the current pandemic crisis. On balance, it is more likely than not the respondent operated a small business which had limited cash flow. However, it is well established that is no excuse for an offender to rely on the fact that they are the operator of a small business. To the contrary, the court must bear in mind that small businesses, of one form or another, represent a large component of employers in this country. Such small businesses, in areas like the fast food industry, very often employ, members of the community who must be considered vulnerable, such as a young people with limited skills, sometimes from a non-English speaking backgrounds. In these circumstances, I adopt the comments of Driver FM in Rajagopalan v BM Sydney Building Materials Pty Ltd as follows:Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to the Court’s consideration of penalty.[26][26] Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at [27] (Driver FM).CONCLUSIONS It has been said that the task of sentencing is one of the hardest judicial tasks, as it requires the synthesis of competing considerations to arrive at a penalty, which is just and appropriate. Necessarily it is a process of intuitive synthesis. It is useful to think of it in terms of percentages, but sentencing is not a purely arithmetical process.