Fair Work Ombudsman v ASGBRIS Pty Ltd
[2020] FCCA 553
•13 March 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v ASGBRIS PTY LTD & ANOR | [2020] FCCA 553 |
| Catchwords: INDUSTRIAL LAW – Agreed failure by the First Respondent to comply with Compliance Notice issued in accordance with section 716 of the Fair Work Act 2009 (Cth) – Agreed involvement by the Second Respondent in the First Respondent’s failure to comply with the Compliance Notice – Appropriate civil penalties to be paid by the Respondents pursuant to section 546 of the Fair Work Act 2009 (Cth). |
| Legislation: Fair Work Act 2009 (Cth), ss.539, 546, 550, 716 Crimes Act 1914 (Cth), s.4AA Electrical, Electronic and Communications Contracting Award 2010, cl.26.1 |
| Cases cited: Fair Work Ombudsman v NSH North Pty Ltd [2017] FCA 1301 Re Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | ASGBRIS PTY LTD ACN 614 106 811 |
| Second Respondent: | STEPHEN FRANCIS WARD |
| File Number: | BRG 798 of 2019 |
| Judgment of: | Judge Tonkin |
| Hearing date: | 21 February 2020 |
| Date of Last Submission: | 21 February 2020 |
| Delivered at: | Brisbane |
| Delivered on: | 13 March 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Vincent |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| Solicitors for the Respondents: | Mr Carrick of Wheldon & Associates |
ORDERS
IT IS DECLARED THAT:
ASGBRIS contravened s.716 (5) of the Fair Work Act 2009 (Cth) by failing to comply with the Compliance Notice issued on 23 July 2019; and
Mr Stephen Ward was involved within the meaning of section 550(2) of the Fair Work Act 2009 (Cth) in ASGBRIS’ contravention of s.716 (5) of the Fair Work Act 2009 (Cth) by failing to comply with the Compliance Notice issued on 23 July 2019.
THE COURT ORDERS:
Pursuant to s. 546(1) of the Fair Work Act 2009 (Cth) ASGBRIS pay a pecuniary penalty of $7087.50 to the Consolidated Revenue Fund of the Commonwealth for committing the contravention set out in paragraph 1 above within 28 days of the date of this order.
Pursuant to s. 546(1) of the Fair Work Act 2009 (Cth) Stephen Ward pay a pecuniary penalty of $1417.50 to the Consolidated Revenue Fund of the Commonwealth for his involvement within the meaning of section 550 of the Fair Work Act 2009 (Cth) in ASGBRIS’ contravention as set out in paragraph 1 above within 28 days of the date of this order.
An order that the Fair Work Ombudsman have liberty to apply on 7 days’ notice in the event that any of the preceding orders are not complied with.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 798 of 2019
| FAIR WORK OMBUDSMAN |
Applicant
And
| ASGBRIS PTY LTD ACN 614 106 811 |
First Respondent
| STEPHEN FRANCIS WARD |
Second Respondent
REASONS FOR JUDGMENT
(As corrected)
Introduction
The First Respondent (“ASGBRIS”) operates a company selling and installing security and communications systems at Cooper’s Plains Queensland. The Second Respondent (“Stephen Francis Ward”) is the sole director of the First Respondent. By statement of claim filed on 16 September 2019 the applicant sought various declarations and orders against the First and Second Respondents.
A Compliance Notice issued to the First Respondent on 23 July 2019 pursuant to section 716 (2) of the Fair Work Act 2009 (Cth) (“the FW Act’) in relation to underpayments of entitlements to one named employee (“Ms Platz”). The First Respondent failed to comply with the Compliance Notice by the specified date being 20 August 2019.
The Compliance Notice related to contraventions by the First Respondent with respect to the Electrical Award under the provision of the National Employment Standards (NES). It is alleged in the statement of claim that the Second Respondent was involved in the management and supervision of the First Respondent company and was principally responsible for decision making on behalf of the First Respondent. It is further alleged that the Second Respondent was the person responsible for ensuring that the First Respondent complied with its legal obligations under the FW Act. Further it is alleged that the Second Respondent had actual knowledge of the First Respondent’s contraventions of the FW Act and was an intentional participant in the First Respondent’s contraventions of the FW Act.
Statement of Agreed Facts
On 17 January 2020 the parties filed an agreed statement of facts pursuant to section 191 of the Evidence Act 1995 (Cth) narrowing the issues between them. The remaining issue for determination by the Court was the appropriate civil penalty to be paid by the Respondents.
The parties agree as follows:
a)The applicant (Fair Work Ombudsman “FWO”) has standing and authority to bring these proceedings and seek orders under Part 4-1 Division 2 of the Fair Work Act 2009 (Cth) (“the FW Act”). Fair Work inspector Kirsty Ford is and was at all relevant times a Fair Work Inspector appointed by the FWO under section 700 of the FW Act.
b)At all relevant times ASGBRIS:
i)is and was a “constitutional corporation” within the meaning of section 12 of the FW Act;
ii)is and was a “national system employer” within the meaning of section 14 of the FW Act; and
iii)operated a business selling and installing security and communication systems trading as “Amentco Sunstate Group” or “Sunstate Security” located at 870 Boundary Road Cooper’s Plains Queensland.
c)At all relevant times Mr Stephen Ward was:
i)the director of ASGBRIS;
ii)a person responsible for the management of ASGBRIS; and
iii)a person responsible for ensuring that ASGBRIS complied with its legal obligations.
During the period from 19 November 2018 to 3 February 2019 (“the employment period”) ASGBRIS employed Kathryn Platz (“Ms Platz”). During her employment period Ms Platz:
a)was engaged on a part time basis;
b)performed duties including assisting a tradesperson with duties relating to cable running, power tools and the installation and maintenance of security cameras;
c)was classified as a “Grade 2 Electrical Worker” under the Electrical, Electronic and Communications Contracting Award 2010 (“Electrical Award”);
d)was paid a flat rate of $20.70 for all hours of work;
e)was not paid overtime for work performed outside of ordinary hours;
f)was not paid when she took personal leave; and
g)when her employment was terminated on 3 February 2019:
i)was not paid her accrued annual leave or annual leave loading; and
ii)was not provided with notice of termination or payment in lieu of notice
During the employment period ASGBRIS was bound by the FW Act in respect of the employment of Ms Platz. The Electrical Award covered and applied to ASGBRIS in respect of the employment of Ms Platz.
On 9 April 2019 Inspector Ford commenced an investigation into ASGBRIS’ compliance with Commonwealth workplace laws in respect of the employment of Ms Platz.
After conducting an investigation Inspector Ford reasonably believed from about 16 July 20019 that ASGBRIS had contravened the following provisions of the National Employment Standards (NES) and the terms of the Electrical Award as it applied to Ms Platz:
a)Clause 26.1 of the Electrical Award by failing to pay Ms Platz the required overtime rate;
b)Section 99 of the FW Act (a provision of the NES) by failing to pay Ms Platz when she took a period of personal leave;
c)Subsection 90(2) of the FW Act (a provision of the NES) by failing to provide Ms Platz her accrued annual leave on termination of employment;
d)Clause 28.4 ( c) of the Electrical Award by failing to pay Ms Platz her accrued annual leave loading on termination of employment; and
e)Section 117 (2) (b) of the FW Act (a provision of the NES) by failing to provide notice of termination to Ms Platz or payment in lieu of notice.
On 23 July 2019 Inspector Ford gave ASGBRIS a Compliance Notice pursuant to section 716 of the FW Act by handing it personally to Mr Ward.
In accordance with section 716 (2) of the FW Act the Compliance Notice required ASGBRIS by 20 August 2019 to:
a)take specified action to remedy the direct effects of the contraventions set out in paragraph 11 above by identifying hours worked by and the amounts paid to Ms Platz; calculate amounts owing to Ms Platz; calculate superannuation payable in respect of Ms Platz; rectify any amounts owed and/or superannuation owed to Ms Platz and prepare a schedule of calculations and amounts paid to remedy any underpayment; and
b)produce reasonable evidence to the FWO of ASGBRIS’ compliance with the Compliance Notice by producing a copy of the schedule of calculations and underpayments and evidence that amounts owed had been paid to Ms Platz.
The Compliance Notice met the requirements set out in section 716 (3) of the FW Act.
ASGBRIS did not take the specified action set out in the Compliance Notice to remedy the direct effects of the contravention or produce any reasonable evidence to the FWO of compliance with the Compliance Notice by 20 August 2019.
ASGBRIS did not have a reasonable excuse for failing to comply with the Compliance Notice.
ASGBRIS has not given an undertaking under section 715 of the FW Act in relation to the contraventions in the Compliance Notice or made an application to an eligible Court for a review of the Compliance Notice under section 717 of the FW Act.
By reason of the matters set out above ASGBRIS failed to comply with the Compliance Notice and contravened subsection 716 (5) of the FW Act.
At all relevant times Mr Stephen Ward:
a)was the primary person responsible for ensuring that ASGBRIS complied with the Compliance Notice;
b)was the primary person with the capacity to ensure that ASGBRIS complied with the Compliance Notice;
c)had actual knowledge that the Compliance Notice was given to ASGBRIS including the requirement that ASGBRIS comply with the Compliance Notice within the timeframe specified;
d)had actual knowledge that ASGBRIS failed to comply with the Compliance Notice; and
e)was an intentional participant in ASGBRIS’ failure to comply with the Compliance Notice.
By reason of the matters set out above Mr Stephen Ward was involved within the meaning of section 550 (2) of the FW Act in ASGBRIS’ contravention of section 716 (5) of the FW Act and by reason of section 550 (1) of the FW Act is taken to have contravened section 716 (5) of the FW Act.
Rectification
On 4 November 2019 Mr Ward provided the FWO with:
a)ASGBRIS’ calculations of the hours worked by, and amounts paid to, and amounts owing to Ms Platz;
b)Evidence of ASGBRIS having made a payment of $1983.27 (less tax) to Ms Platz on 1 November 2019; and
c)evidence of ASGBRIS’ having made a payment of $188.41 to Ms Platz’s nominated superannuation fund on 1 November 2019.
On 13 November 2019 ASGBRIS provided the FWO with evidence of having paid $86.83 in interest to Ms Platz on 11 November 2019.
On 26 November 2019 the FWO informed ASGBRIS that it had not complied with the Compliance Notice because of the following errors with the ASGBRIS calculations:
a)an ordinary hourly rate of $20.48 had been used when the applicable minimum hourly rate for a Grade 2 worker under the Electrical Award was $20.70;
b)no payment had been made to Ms Platz for personal leave taken on 12 December 2019 as required by section 99 of the FW Act.
c)in most instances, overtime had been applied after 9 ordinary hours per day when clauses 24 and 26 and the Electrical Award required that it be paid for all work in excess of 8 ordinary hours per day.
On 17 December 2019 ASGBRIS provided the FWO with:
a)ASGBRIS’ further calculations of the hours worked by, amounts paid to, and amounts owing to Ms Platz;
b)Evidence of ASGBRIS having made payment of:
i)$886.79 (less tax) to Ms Platz on 3 December 2019;
ii)$134.09 to Ms Platz on 12 December 2019;
iii)$265.67 to Ms Platz on 16 December 2019;
iv)$27.20 to Ms Platz on 17 December 2019;
c)Evidence of ASGBRIS having made payment of:
i)$84.25 to Ms Platz’s nominated superannuation fund on 3 December 2019;
ii)$12.74 to Ms Platz’s nominated superannuation fund on 12 December 2019;
iii)$25.24 to Ms Platz’s nominated superannuation fund on 16 December 2019;
iv)$2.58 to Ms Platz’s nominated superannuation fund on 17 December 2019;
On 17 December 2019 ASGBRIS provided the FWO with evidence of having paid $64.85 and $1.87 in interest to Ms Platz on 16 and 17 December 2019 respectively.
By the actions referred to above ASGBRIS has taken the action required by the Compliance Notice and rectified the amounts owing to Ms Platz and in accordance with section 547 of the FW Act paid interest to Ms Platz on the amounts owing.
Declarations and Orders
By consent the parties seek the following declarations:
a)ASGBRIS contravened s.716 (5) of the Fair Work Act 2009 (Cth) by failing to comply with the Compliance Notice; and
b)Mr Stephen Ward was involved within the meaning of section 550(2) of the FW Act in ASGBRIS contravened s.716 (5) of the Fair Work Act 2009 (Cth) by failing to comply with the Compliance Notice.
By consent the parties seek the following orders:
a)Pursuant to s. 546(1) of the Fair Work Act 2009 (Cth) ASGBRIS pay a pecuniary penalty of -------------- to the Consolidated Revenue Fund of the Commonwealth for committing the contravention set out in paragraph 37 (a) above within 28 days of the date of this order; and
b)Pursuant to s. 546(1) of the Fair Work Act 2009 (Cth) Stephen Ward pay a pecuniary penalty of ------------- to the Consolidated Revenue Fund of the Commonwealth for his involvement within the meaning of section 550 of the FW Act in ASGBRIS contravention as set out in paragraph 37 (b) within 28 days of the date of this order; and
c)an order that the FWO have liberty to apply on 7 days’ notice in the event that any of the preceding orders are not complied with.
Approach to penalty
The Respondents have contravened s.716 (5) of the Fair Work Act 2009 (Cth) by failing to comply with the Compliance Notice. Civil remedies may be sought in relation to a contravention of a civil remedy provision.[1] The FW Act sets out the maximum penalties that may be imposed by the Court for each contravention.[2] Section 12 of the FW Act provides that “penalty unit” has the same meaning as section 4AA of the Crimes Act 1914 (Cth). The penalty unit amount at the time of the contravention was $210. Under subsections 539(2) and 546(2)(a) of the FW Act, the maximum penalties that the Court may impose on ASGBRIS and Mr Ward for their admitted contraventions of section 716(5) of the FW Act are $31,500 and $6,300 respectively.[3]
[1]Section 716 of the FW Act specifies that it is a civil remedy provision
[2] Section 546(2) of the FW Act limits the maximum penalty amounts to the penalty units referred to in section 539(2), and provides that the maximum penalty payable by a body corporate will be five times the number of penalty units prescribed for an individual.
[3] These amounts are calculated based on the penalty unit amount of $210 which applied at the time of the contravention. Section 12 of the FW Act provides that “penalty unit” has the same meaning as section 4AA of the Crimes Act 1912 (Cth).
The Court has a broad discretion to assess the appropriate penalty. In Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 (24 May 2017) Katzmann J at [387] said:
“[387] Civil penalties, like sentences for criminal offences, are fixed by a process of “instinctive synthesis”, that is to say, after taking “due account” of all the relevant factors (which may pull in opposite directions), a court will conclude that a particular penalty should be imposed: See Wong v The Queen [2001] HCA 64; (2001) 207 CLR 584 at [76]; Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 at 374; TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 190; (2012) 210 FCR 277 at [145]. Relevant factors …. include: the nature and extent of the contravening conduct and the circumstances in which it took place, whether the conduct was deliberate, whether senior management was involved, whether the contraventions are truly distinct or arose out of the one course of conduct, the nature and extent of loss or damage, whether the contravener has previously engaged in similar conduct, the size of the business enterprise, and the existence and extent of any contrition, corrective action, and cooperation with the regulator: See, for example, Kelly v Fitzpatrick [2007] FCA 1080 (Tracey J) at [14].
[388] In contrast to the criminal law, however, where, in sentencing, retribution and rehabilitation are also relevant, the primary, if not the only, purpose of a civil penalty is to promote the public interest in compliance with the law. This is achieved by imposing penalties that are sufficiently high to deter the wrongdoer from engaging in similar conduct in the future (specific deterrence) and to deter others who might be tempted to contravene (general deterrence). The penalty for each contravention or course of conduct is to be no more and no less than is necessary for that purpose: See Commonwealth v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate [2015] HCA 46, (2015) 90 ALJR 113, 255 IR 87, 326 ALR 476 (Commonwealth v FWBII) at [55] (French CJ, Kiefel, Bell, Nettle and Gordon JJ).”
In Fair Work Ombudsman v NSH North Pty Ltd [2017] FCA 1301 at [36], Bromwich J summarised the approach to be taken when determining an appropriate penalty:
(1) Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2) Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3) Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
(4) Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5) Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: See Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23]. [71] and [102].”
In this matter there is only a single contravention of a civil remedy provision by each Respondent. I accept the applicant’s submission that the steps relating to the course of conduct or common elements do not apply and as a result only the first, fourth and fifth steps are relevant to this matter.
In Carr v CEPU [2007] FMCA 1526 though the matter concerned circumstances where the parties agreed on penalty the principles set out in that matter are applicable. The Court said at [6]:
(a) the Court bears the ultimate responsibility for penalty, is not bound by the parties agreement and must consider for itself what constitutes an appropriate penalty;
(b) determining the quantum of an appropriate penalty is not an exact science and within a permissible range a particular figure is not necessarily more appropriate than another figure;
(c ) promoting settlement of litigation (particularly lengthy litigation) is in the public interest and where the parties agree on facts and penalty they may present a statement of agreed facts including a view as to the effect of those facts and submissions on penalty;
(d) the view of the regulatory body is relevant particularly where the view concerns matters within the regulator’s expertise but not determinative of penalty;
(e ) in determining an appropriate penalty the Court will examine all the circumstances including an agreed statement of facts and if appropriate may act on that statement; and
(f) …….
Contraventions and Admissions
By reason of the matters set out in paragraphs 15 to 17 above the First Respondent contravened subsection 716 (5) of the FW Act. The First Respondent admits that it contravened subsection 716 (5) of the FW Act by failing to comply with the Compliance Notice.
By reason of the matters set out in paragraphs 19 above the Second Respondent was involved within the meaning of section 550 (2) of the FW Act in the First Respondent’s contravention of section 716 (5) of the FW Act and by reason of section 550 (1) of the FW Act is taken to have contravened section 716 (5) of the FW Act. The Second Respondent admits that he was involved in, within the meaning of section 550 (2) of the FW Act, the contravention of the First Respondent.
Evidence on Penalty
The applicant filed submissions on penalty on 14 February 2020 relying on the application filed on 16 September 2019, the Statement of Agreed Facts filed on 17 January 2020 and the affidavit of Sarah Allen affirmed on 16 January 2020.
The respondent filed submissions on 17 February 2020 and relied on the agreed statement of facts filed 17 January 2020, the affidavit of Stephen Ward filed 24 January 2020, the affidavit of Adam McKay filed 24 January 2020 and the affidavit of Tyson Brown filed 23 January 2020. Further brief oral submissions were made by the parties on 21 February 2020.
Applicant’s submissions
The adopt the applicant’s submissions that the power of a Fair Work Inspector to issue a Compliance Notice was introduced into the FW Act to provide a mechanism for dealing with non – compliance with minimum entitlements under the FW Act as an alternative to commencing litigation for each underlying contravention. The Courts have recognised that Compliance Notices provide a mechanism for the efficient and cost effective rectification of identified contraventions under the FW Act including underpayments to employees: see Fair Work Ombudsman v Nobrace Centre Pty Limited & Anor (No 2) (Nobrace) [2019] FCCA 2144 at [19] per Blake J; Fair Work Ombudsman v Blu Hornsby Pty Limited [2016] FCCA 1150 at [29] per Smith J. Should a person fail to comply with a Compliance Notice section 539 (2) of the FW Act allows a Fair Work Inspector to bring civil remedy proceedings against that person and seek appropriate orders to remedy the contravention, including pecuniary penalties under section 546 of the FW Act. Had the Respondents complied with the Notice the applicant would have been prevented from bringing civil remedy proceedings against the Respondents in respect of the underlying contraventions under section 716 (4A) of the FW Act and the Respondents would not be taken to have admitted or contravened the civil remedy provisions in respect of the underlying contraventions pursuant to section 716 (4B) of the FW Act. The FW Act sets out the maximum penalties that may be imposed by the Court for each contravention. The maximum penalty payable by a body corporate is five times the number of penalty units prescribed for an individual in this case 30 penalty units for an individual.
Factors relevant to penalty
In Re Trade Practices Commission v CSR Ltd (1991) ATPR 41-076, French CJ discussed deterrence as the primary purpose of civil penalties as follows:
"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." [4]
[4] Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate & Anor [2015] HCA 46 (Commonwealth v FWBII) at [55] citing Trade Practices Commission v CSR Ltd (1991) ATPR ¶41-076 at 52,152; [1990] FCA 521 at [40].
The applicant submitted that the Courts have recognised the following factors as potentially relevant to the imposition of a penalty in an industrial regulatory context:
a)the nature and extent of the conduct which led to the contraventions;
b)the circumstances in which that conduct took place;
c)the nature and extent of any loss or damage sustained as a result of the contraventions
d)whether there has been similar previous conduct by the respondent;
e)whether the contraventions were properly distinct or arose out of the one course of conduct;
f)the size of the business enterprise involved;
g)whether or not the contraventions were deliberate;
h)whether senior management was involved in the contraventions;
i)whether the party committing the contraventions has exhibited contrition;
j)whether the party committing the contraventions has taken corrective action;
k)whether the party committing the contraventions has co-operated with the enforcement authorities;
l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
m)the need for specific and general deterrence.[5]
[5] see Mason v Harrington Corporation Pty Ltd [2007] FMCA 7; Kelly v Fitzpatrick (2007) 166 IR 14 (at [14]); Stuart- Mahoney v Construction, Forestry, Mining and Energy Union (2008) 177 IR 61 (at [40]) and John Holland Pty Ltd v Maritime Union of Australia (No 2) (2010) 192 IR 431 (at [27]) and McDonald (at [15]) and Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 3) [2011] FCA 579 (at [20]).
Each of the above considerations “has the potential to have both an ameliorative and aggravating impact in the course of the instinctive synthesis.”[6] The relevant considerations do not prescribe nor restrict the matters the Court may take into account in the exercise of the Court’s discretion.[7]
[6] Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) (2015) 234 FCR 451 at [91]
7 Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 at [11]; Australian Opthalmic Supplies Pty Ltd v McAlary- Smith [2008] FCAFC 8 at [91] per Buchanan J
The applicant contends that on 23 July 2019, FWI Ford personally handed a copy of the Compliance Notice to Mr Ward, ASGBRIS’ most senior manager and the person responsible for ensuring it complied with its legal obligations. Despite being given ample time and multiple opportunities by the FWO to comply with the Compliance Notice and avoid this litigation, ASGBRIS failed to comply. Rather than taking steps to cause ASGBRIS to comply with the Compliance Notice (a) when assistance was offered by FWI Ford, Mr Ward requested that she not contact him again unless it was to advise him of the process for making a complaint against her or of any court dates; and (b) despite subsequently being reminded by Fair Work Inspector Sarah Allen of the requirement to comply with the Compliance Notice or apply to the Federal Court of Federal Circuit Court to seek a review of the Compliance Notice, Mr Ward continued to obfuscate and avoid ASGBRIS’ legal obligation to comply with the statutory notice.[8] The applicant contends that the First and Second Respondents only took the action required by the Compliance Notice after the FWO was forced to commence proceedings.
[8] Fair Work Ombudsman v Absynthe Restaurant Pty Ltd & Anor [2015] FCCA 58 at [43]
The applicant submits that as a result of ASGBRIS’ failure to comply with the Compliance Notice (a) the FWO was required to bring proceedings seeking orders to remedy the contraventions; and (b) Ms Platz did not receive the full benefit of the action that ASGBRIS was required to take, or the full $3,763.79 owing to her, for a period of nearly four months after the Compliance Notice required it.[9] The applicant submits that the legislature has set penalties for non-compliance because a failure to comply will cause an inspector such as the FWO to spend time and public funds, and will cause the Court to spend time and public funds, dealing with civil remedy proceedings where the inspector and the Court would otherwise not need to have been involved had compliance occurred.
[9] SOAF at [20] – [24] it was not until 17 December 2019 that ASGBRIS took all the action required by the Compliance Notice making a series of payments totalling $3,763.79 (less tax) to Ms Platz
The applicant contends that the size and financial circumstances of an employer do not exculpate contraventions of workplace laws.[10] Regardless of the size of the business or its financial position, the FWO submits that an employer cannot be absolved of its obligations to comply with workplace laws.[11] I accept that submission. I accept that the First and Second Respondents have not adduced evidence of not having the financial means to meet any penalty imposed on them.
[10] Kelly at [28]; Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at [27].
[11] Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815 at [10]
I agree that the Second Respondent knew that any failure to comply with the Compliance Notice may result in the imposition of penalties of up to $31,500 in respect of ASGBRIS and $6,300 in respect of Mr Ward, and as the most senior manager and sole director, it was incumbent on him to ensure that ASGBRIS complied with its legal obligations. Further Mr Ward was on notice that the applicant may commence proceedings seeking civil penalties and orders for compliance.
Corrective action and cooperation with authorities
The applicant acknowledged that ASGBRIS and Mr Ward have cooperated by:
a)admitting the contraventions and signing the SOAF, thereby saving the Court’s time and resources associated with a contested liability hearing; and
b)taking the action required by the Compliance Notice, even if belatedly and only after the commencement of these proceedings by the FWO.
It is submitted that a discount of 20 per cent is appropriate in the circumstances. I accept that submission.
The applicant submitted that a failure to comply with a Notice properly issued is serious. In Fair Work Ombudsman v VS Investment Group Pty Ltd, Judge Jarrett observed:
"The failure to comply with a notice properly issued by the Applicant in the course of its investigations and the discharge of its statutory functions is serious. Recipients of such notices should be left under no misapprehension about their obligations to comply with those notices."[12]
[12] FWO v VS Investment Group Pty Ltd [2013] FCCA 208 at [51]
Ordering penalties at a meaningful level for a compliance notice breach allows a Court to show that there are serious consequences for failing to comply with a compliance notice. In so doing, the Court will deter other parties from failing to comply with compliance notices. I agree.
The applicant submitted that specific deterrence is directed to ensuring that a contravener is not prepared to embark upon the risk of engaging in the same contravening conduct in the future.[13] It is submitted that the there is a need in this matter for specific deterrence given that Mr Ward remains the director of ASGBRIS and continues to employ people to perform similar work to that performed by Ms Platz and Mr Ward is also the director of S&K Ward Property Pty Ltd and Sharepoint Consulting Pty Ltd. The applicant contends that Mr Ward had previous interactions with the FWO in 2017 when a request for assistance was made by a former employee of ASGBRIS relating to the non-payment for a period of sick leave and non-payment of accrued annual leave on termination of employment. See affidavit of Sarah Allen at SEA – 1 Tab 15 at [24].
[13] Fair Work Ombudsman v AJR Nominees Pty Ltd (No 2) [2014] FCA 128 at [50]
The applicant submits that general deterrence is an important factor in these proceedings. The penalty imposed should be significant enough to deter others who might be tempted to contravene the FW Act by failing to comply with Notices issued by the FWO. It is submitted that general deterrence must serve a purpose such that the penalty is not seen by others as “the cost of doing business.” To be useful a penalty “should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like – minded persons or organisations.”[14]
[14] Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [93]
The applicant submitted that the appropriate penalties were as follows:
Respondent Contravention Maximum Penalty Suggested Penalty Discount Penalty Amount ASGBRIS s.715(5) $31,500 40% 20% $10,080 Mr Ward s.715(5) $6,300 40% 20% $2,016
The penalties reflect the seriousness of the Respondents conducted and according to the applicant should not be reduced on the basis of totality.
During oral submissions the applicant submitted that the penalty sought by the applicant was appropriate in the circumstances given the second respondent’s knowledge of the requirement to comply with the Compliance Notice. He submitted that the second respondent’s failure to comply with the Notice was a deliberate act on his part. He referred to an email exchange between the applicant and respondent deposed to by Sarah Allen and annexed to her affidavit filed on 16 January 2020 as follows:
Following the issuing of the Compliance Notice on 23 July 2019 the FW Inspector emailed Mr Ward on 29 July 2019 advising that the calculations Mr Ward had provided by email on 23 July 2019 “have not been completed in accordance with the Compliance Notice” due to the fact that the Second Respondent disputed that Ms Platz should be classified as a Grade 2 Electrical Worker. The FW Inspector advised the Second Respondent regarding the basis for Ms Platz’s classification.
On 31 July 2019 Mr Ward responded by email that he wanted to submit a formal complaint against the FW Inspector regarding her conduct of the matter. Further he advised “please do not communicate with me again except to advise method to lodge formal complaint and advise of court dates.” (Exhibit SEA – 1 Tab 7 pp.71)
On 15 August 2019 the FW Inspector advised Mr Ward regarding the role of the FWO, the investigation findings, the process for review and advice that compliance with the Notice was due on 20 August 2019 (Exhibit SEA – 1 Tab 6 pp.47 – 49) On 15 August 2019 Mr Ward responded via email confirming that he received “previous emails on phone and attachments were not delivered.” He stated “I will apply to the Federal Court to have the pending Compliance Notice reviewed as we have not committed the contravention set out in the Compliance Notice. I will apply to FOI at FWO for the information not yet disclosed. Is it correct that I can resubmit my complaint and request for review after 20 August 2019.” (Exhibit SEA – 1 Tab 7 pp.67)
On 22 August 2019 the FW Inspector forwarded Mr Ward an email attaching correspondence in relation to non – compliance with the Compliance Notice. Mr Ward responded within an hour and a half indicating that “it has always been the intention of my company to compensate Ms Platz the correct entitlement. Unfortunately she has been misclassified as a Grade 2 Electricial Worker. Once she has been classified correctly I can pay her entitlements in full. Please advise how I remedy this mistake by FWO.” (Exhibit SEA – 1 Tab 9 pp.83) It was apparent that the Second Respondent continued to dispute Ms Platz’s classification as a Grade 2 Electrical Worker.
The FW Inspector responded via email on the same day that “compliance can be achieved by calculating and paying monies owed to Ms Platz following the steps of the Compliance Notice or alternatively if you have further evidence to support your dispute regarding the classification determined this should be provided so that it can be resolved.” She then set out the process for disputing a Compliance Notice and advised “if we have not received a reasonable excuse for non – compliance within 7 days the FWO may commence legal action….” (Exhibit SEA – 1 Tab 9 pp.82)
On 23 August 2019 Mr Ward responded via email noting he did not have legal advice and continuing to dispute Ms Platz’s classification as a Grade 2 Electrical Worker. (Exhibit SEA – 1 Tab 9 pp.81)
The applicant submitted that no steps were taken to lodge a reasonable excuse for non – compliance nor any steps to request a review by an eligible Court prior to 22 August 2019. I accept that submission. On 16 September 2019 the applicant commenced proceedings. Thereafter the Second Respondent attempted to comply with the Notice as requested on 4 November 2019. There were errors in the calculations submitted by the Second Respondent. The applicant submitted that “despite the relatively small scope” required of the Respondent’s to rectify any underpayment to the employee by paying her those amounts nothing was done until 17 December 2019 and only after the applicant had commenced proceedings. The applicant argued that the non - compliance was serious and deliberate on the Second Respondent’s part and that Ms Platz did not receive her proper entitlements for several months.
Respondent’s submissions
The Respondent’s took no issue with the agreed Statement of Facts nor the applicant’s submissions as to the law and the applicable process under the FW Act. The Respondent’s argued that since proceedings were commenced the requirements specified in the Compliance Notice have been met by correctly calculating the employee’s entitlements and making payment of the wages owing together with associated superannuation and interest. The only remaining issue was the amount of the pecuniary penalty to be imposed on the First and Second Respondents.
The First Respondent admitted to a breach of subsection 716 (5) of the FW Act. The Second Respondent admitted that he was involved within the meaning of subsection 550 (2) of the FW Act in the First Respondent’s contravention of subsection 716 (5) of the FW Act. The Second Respondent argued that as the sole director of the First Respondent he typically works long hours more than 60 hours per week. He asserted when he hired Ms Platz his intention was that she would be employed as a trainee. This was the first occasion he had hired a person as a trainee. Her employment was terminated prior to the First Respondent being able to take advice from his contact at the Registered Training Organisation or enter into a formal training agreement.[15]
[15] Affidavit of Stephen Ward filed on 24 January 2020 at [16]
The Second Respondent contends that initially he disagreed with the applicant’s determination that Ms Platz was employed as a Grade 2 Electrical Worker under the relevant award and “voiced his concerns with the applicant’s determination on multiple occasions.”[16]
[16] Referred to in the affidavit of Sarah Allen and set out above
The Respondents accept that the loss sustained by Ms Platz was a delay in receipt of her proper entitlements due and owing to her in the amount of $3610.24 inclusive of wages, superannuation benefits, personal and annual leave. The Respondents confirm that $3610.24 plus interest of $155.55 has been paid to Ms Platz or on her behalf.
The Respondents deny any previous similar conduct on their part and confirm that the Respondent have not previously received a Compliance Notice. With respect to the applicant’s contention that in April 2017 there was a complaint made about similar conduct on the Respondent’s part no formal complaint or investigation occurred and the Second Respondent denies there was money owing to a complainant by the First Respondent.
The First Respondent continues to trade as a small – medium enterprise currently employing 19 staff (excluding the Second Respondent). The First Respondent currently employs four trainees and apprentices and has been a regular training employer providing opportunities to individuals seeking to obtain qualifications in the security and telecommunications sector.[17] The Respondents contend that a significant penalty could jeopardise the First Respondent’s ability to continue to employ and train staff.
[17] Affidavit of Stephen Ward at [29] and affidavit of Tyson Browning at [3] and [5]
The Respondents contend that they made an attempt to comply with the Compliance Notice on 23 July 2019 however failed to correctly calculate the wages owing to Ms Platz. I reject that submission. The Second Respondent from the outset disputed Ms Platz’s classification as a Grade 2 Electrical Worker.
The Second Respondent deposed in his affidavit that it was his intention to seek a review of the Compliance Notice in an eligible court however he was under the belief that “his requests in that regard to the applicant would commence the process.”[18] He said “while the Second Respondent’s belief may not have been reasonable given the information provided by the applicant, the Second Respondent was communicating with the applicant and evidenced an intention to seek a review although no such intention was acted upon in time.
[18] Affidavit of Stephen Ward at [18]
There is no dispute that the Second Respondent as director of the First Respondent was responsible for the First Respondent’s compliance with its legal obligations. The Second Respondent denied that it was his intention not to pay Ms Platz her proper entitlements.
The Second Respondent and his wife (an employee of the First Respondent) have completed online training courses provided by the Fair Work Ombudsman and have taken corrective action as set out in the applicant’s submissions including making early payment of interest to Ms Platz.
The Respondents conceded there is a need to ensure compliance with minimum standards by provision of an effective means for investigation of employee entitlements. Further the Respondents accept there is a need for a penalty that addresses specific and general deterrence. They submit that the appropriate penalty is:
a)A pecuniary penalty of $5906.25 for the First Respondent; and
b)A pecuniary penalty of $1181.25 for the Second Respondent;
representing 25% of the maximum penalty for a body corporate respectively with a further 20% discount.
The Respondents relied on the decision of Judge Jarrett in Fair Work Ombudsman v Absynthe Restaurant Pty Ltd & Anor [2015] FCCA 58 where his Honour observed at [35] that the worker in that case was underpaid $4195.25 and he did not receive that money until five months after these proceedings were commenced (having been out of pocket for two years). The Court rejected claims by the Respondents that the evidence demonstrated the Second Respondent was confused because he had access to both financial and legal advice in respect of the Compliance Notices [31] to [33]. The Court ordered the First Respondent to pay a penalty of $12,750 and the Second Respondent to pay a penalty of $2550 [50].
During oral submissions the Respondents submitted that although the Second Respondent understood its legal obligations, Mr Ward misunderstood the process and did not seek legal advice regarding filing any application for review of the determination of the FW Ombudsman. He submitted that he worked very long hours and his conduct was not deliberate or intentional. Once proceedings had commenced the Second Respondent took all necessary steps to comply with the Notice though some of his calculations were in error. These were readily rectified. The Respondents have been operating their business for some 23 years and this was the first time they had been served with a Compliance Notice.
Reply
The applicant conceded there was no evidence against the Respondents of any previous failure to comply with a Compliance Notice. However it was submitted that the Court could take into account the Respondents previous “involvement” with the applicant but this would be a matter of weight for the Court.
Consideration of penalties
I accept that the contraventions in this matter represent a failure by the First and Second Respondent to provide an employee her basic entitlements under workplace relations legislation. I agree with Jarrett J who said in Fair Work Ombudsman v Bedington [2012] FMCA 1133 at [70] that “the purpose of the legislation is to provide a safety net which ensures adequate minimum entitlements to employees particularly those who are vulnerable or on low income roles. The legislation is designed to provide an even playing field for all employers with regard to employment costs….the contraventions of fundamental entitlements undermine the workplace relations regime as a whole and demonstrate a disregard for (the employers) statutory obligations…”
I accept that the Respondents conduct was serious. The loss of entitlements to someone in Ms Platz’s position was significant. She was employed on a part time basis at a flat rate of $20.70 for all work undertaken. She was not paid overtime for work performed outside ordinary hours. She was not paid for personal leave taken, she was not paid her accrued annual leave or leave loading, she was not provided with notice of termination or payment in lieu of notice and she was terminated on 3 February 2019.
The Respondents failed to pay Ms Platz a total amount of $3610.24 inclusive of wages, superannuation benefits, personal and annual leave. Ms Platz did not receive the full benefit of her entitlements until final payments of $1313.75 (less tax) were made between 3 and 17 December 2019 (a period of some 10 months). In addition the Respondents paid interest of $64.85 and $1.87 to Ms Platz on 16 and 17 December 2019 respectively.
I accept that the dispute between the applicant and Respondents initially related to Ms Platz’s employment classification and continued prior to the serving of the Compliance Notice. The Respondents did not seek legal advice regarding Ms Platz’s proper entitlements and at one point refused to communicate with the applicant regarding the matter.
Once served with the Compliance Notice on 23 July 2019 the Respondents failed to comply by the due date. The Second Respondent was the person responsible for ensuring that the First Respondent complied with its legal obligations under the FW Act and admits that he had no reasonable excuse for non – compliance.
I accept that once proceedings commenced on 16 September 2019 the Respondents demonstrated contrition acting appropriately in co-operating with FW authorities. The Second Respondent engaged in discussions with the applicant and made a series of payment to Ms Platz though some errors occurred in the calculations. It is not suggested that payments were deliberately delayed in this process. The Respondents have admitted the contraventions, taken corrective action to remedy non – compliance, agreeing to a statement of facts and raising no defence. The only issue for the Court to determine was the appropriate pecuniary penalty.
Though it was asserted that the Second Respondent had dealings with the FWO in April 2017 I place little weight on that given that the Respondents had never been served with a Compliance Notice in the past. The Respondents submitted that a significant penalty could jeopardise the continuation of the business however no evidence was adduced regarding the business’ current financial circumstances. I reject that submission.
The business is a small to medium sized business requiring him to work long hours. I take into account that the Respondents have continued to operate the business for 23 years currently employing 19 staff. The business has been a regular training employer providing opportunities to individuals seeking to obtain qualifications in the security and telecommunications sector. There is no evidence that the Respondents have previously contravened the provisions of the FW Act. The Respondents relied on evidence from two current employees who described ASGBRIS as a “good employer.” I accept that evidence.
I accept that as the Respondents continue to trade there is a need for specific deterrence. There is also a need for general deterrence to ensure compliance with minimum standards and enforcement of employee entitlements. It is necessary to send a message to others that a significant pecuniary penalty will be imposed for non – compliance.
Conclusion and Penalty
The maximum penalty for a Body Corporate is $31,500 and for an Individual is $6,300. The applicant contends that the appropriate penalty for ASGBRIS is $10,080 and for the Second Respondent $2016 being 40% of the maximum penalty with a discount of 20% applied.
The Respondents contend that the appropriate penalty for ASGBRIS is $5906.25 and for the Second Respondent $1181.25 being 25% of the maximum penalty with a discount of 25%.
I am satisfied that the appropriate penalty for ASGBRIS is $7087.50 and for the Second Respondent $1417.50 being 30% of the maximum penalty with a discount of 25%.
I certify that the preceding eighty-five (85) paragraphs are a true copy of the reasons for judgment of Judge Tonkin
Date: 13 March 2020
Corrections
1. 2nd paragraph 5 renumbered to paragraph 5 (a).
2. 1st paragraph 6 renumbered to paragraph 5 (b).
3. 1st paragraph 6 (a), (b) and (c) renumbered to paragraph 5 (b) (i), (ii) and (iii).
4. End certification paragraph number updated.
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