Fair Work Ombudsman v Auspac Hospitality Management Pty Ltd

[2019] FCCA 3489

FEDERAL CIRCUIT COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v AUSPAC HOSPITALITY MANAGEMENT PTY LTD & ANOR [2019] FCCA 3489

Catchwords:
INDUSTRIAL LAW – Application for imposition of pecuniary penalties – consideration of penalty – non-payment of award entitlements – where single employee was underpaid – adverse action – threats to terminate employment where query made as to pay rates – employment terminated – misrepresentation as to binding effect of industrial award.

Legislation:

Crimes Act 1912 (Cth), s.4AA

Fair Work Act 2009 (Cth), ss.44, 45, 90, 117, 323(1), 340, 345, 535(1), 536(1), 536(2)(b), 539(2), 550(1), 557(1)

Fair Work Regulations 2009 (Cth), regs.3.33(2), 3.33(3), 3.46(2), 3.46(5)
Hospitality Industry (General) Award 2010, cll.13.1, 20.1, 26.1, 32.1, 32.3, 33.3, 33.3, 34.1

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
Construction, Forestry, Mining and Energy Union v Australian Building and Construction Commissioner (Non-Indemnification Personal Payment Case) (2018) 280 IR 28
Fair Work Ombudsman v Golden Vision Food and Beverage Services Pty Ltd & Anor (No. 2) [2016] FCCA 1721
Fair Work Ombudsman v Golden Vision Food and Beverage Services Pty Ltd & Anor [2017] FCCA 534
Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557
Fair Work Ombudsman v Total Project Marketing Pty Ltd (in Liquidation) & Ors [2014] FCCA 451
Pearce v The Queen [1998] HCA 57
Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153

Applicant: FAIR WORK OMBUDSMAN

First Respondent: AUSPAC HOSPITALITY MANAGEMENT PTY LTD

Second Respondent: JIA NING WANG

File Number: BRG 1278 of 2018

Judgment of: Judge Jarrett

Hearing date: 15 October 2019

Date of Last Submission: 15 October 2019

Delivered at: Brisbane

Delivered on: 3 December 2019

REPRESENTATION

Counsel for the Applicant: Mr Finnegan

Solicitors for the Applicant: Office of the Fair Work Ombudsman

Counsel for the Respondents: Mr Fronis

Solicitors for the Respondents: Aston Lawyers

ORDERS

THE COURT DECLARES THAT:

(1)The First Respondent contravened each of the following civil penalty provisions of the Fair Work Act 2009 (Cth):

(a)section 45 of the Fair Work Act 2009 (Cth), by failing to pay casual loading pursuant to clause 13.1 of the Hospitality Industry (General) Award 2010 to Xiaozhen Peng, Van Ederen, Wing Hei Sin, Mikaela Thomson and Leah Pupkin;

(b)section 45 of the Fair Work Act 2009 (Cth), by failing to pay Saturday penalties pursuant to clause 32.1 of the Hospitality Industry (General) Award 2010 to Wing Hei Sin, Mikaela Thomson and Leah Pupkin;

(c)section 45 of the Fair Work Act 2009 (Cth), by failing to pay Sunday penalties pursuant to clause 32.1 of the Hospitality Industry (General) Award 2010 to Wing Hei Sin and Leah Pupkin;

(d)section 45 of the Fair Work Act 2009 (Cth), by failing to pay evening penalties pursuant to clause 32.3 of the Hospitality Industry (General) Award 2010 to Wing Hei Sin, Mikaela Thomson, Leah Pupkin, Huiping Ao, Jessica Shearing, Chao and Tristan Hiebler;

(e)section 535(1) of the Fair Work Act 2009 (Cth), by failing to make and keep employee records as prescribed by the Fair Work Regulations 2009 (Cth);

(f)section 536(1) of the Fair Work Act 2009 (Cth), by failing to give employees payslips within one working day of payment;

(g)section 536(2)(b) of the Fair Work Act 2009 (Cth), by failing provide details of superannuation contributions in payslips as required by regulation 3.46(5) of the Fair Work Regulations 2009 (Cth); and

(h)section 536(2)(b) of the Fair Work Act 2009 (Cth), by failing provide details of deductions made from employees’ wages in payslips as required by regulation 3.46(2) of the Fair Work Regulations 2009 (Cth).

(2)The Second Respondent was involved in each of the First Respondent’s contraventions occurring during the period from 14 March 2017 to 8 August 2017.

THE COURT ORDERS THAT:

(1)The First Respondent pay a total pecuniary penalty of $75,000 in respect of each of the contraventions set out in declaration 1 hereof, such penalty to be paid to the Consolidated Revenue Fund of the Commonwealth within 28 days of these orders

(2)The Second Respondent pay a total pecuniary penalty of $38,808 in respect of each of the contraventions set out in declaration 1 hereof, such penalty to be paid to the Consolidated Revenue Fund of the Commonwealth within 28 days of these orders.

(3)Pursuant to s.545(1) of the Fair Work Act 2009 (Cth) the First Respondent will, within three months of the date of this order, provide for workplace relations compliance training on the following terms:

(a)the First Respondent must engage, at its own expense, a person or organisation with expertise in workplace relations and approved by the Applicant, to conduct the training;

(b)the training must relate to compliance with the Fair Work Act 2009 (Cth) and the Hospitality Industry (General) Award 2010 including the First Respondent’s obligations in respect of minimum wages, casual loading, penalty rates, personal leave and annual leave entitlements and record keeping;

(c)the training must be undertaken by:

(i)all persons employed or engaged by the First Respondent whose duties relate to the management of employees, the administration of payroll or the administration and compliance with Australian workplace laws; and

(ii)the Second Respondent if he continues to be employed by the First Respondent at the time the training is undertaken; and

(iii)within 30 days of completing the training the First Respondent must provide the Applicant, in writing, with a report specifying the date(s) on which the training was completed, the details of the delivery and content of the training and the names and positions of all persons who undertook the training.

(4)Pursuant to s.545(1) of the Fair Work Act 2009 (Cth) the First Respondent at its own expense, engage a third party with appropriate qualifications in accounting and workplace relations to undertake an audit of the First Respondent’s compliance with the Fair Work Act 2009 (Cth) and the Hospitality Industry (General) Award 2010 on the following terms:

(a)the Audit will be for the first accounting commencing after the making of the orders (Audit Period);

(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 by the First Respondent at any time during the Audit Period;

(d)the Audit will assess the First Respondent’s compliance with the following obligations according to each employee’s classification of work, type of employment and hours worked during the Audit Period:

(i)wages and entitlements under the Hospitality Industry (General) Award 2010; and

(ii)accrual and payment of entitlements under the National Employment Standards in 2−2 of the Fair Work Act 2009 (Cth);

(e)within 14 days of the Audit being completed, the First Respondent will rectify any contraventions identified in the Audit;

(f)within 30 days of the Audit 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;

(ii)a copy of the source materials used to audit the times worked by employees (including but not limited to rosters, time cards and time sheets) and the amounts paid to employees (including but not limited to pay slips and pay reports);

(iii)written details of any contraventions identified in the Audit; and

(iv)evidence of rectification by the First Respondent of any contravention(s) identified in the Audit.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 1278 of 2018

FAIR WORK OMBUDSMAN

Applicant

And

AUSPAC HOSPITALITY MANAGEMENT PTY LTD

First Respondent

JIA NING WANG

Second Respondent

REASONS FOR JUDGMENT

1.Jia Ning Wang is and was at the relevant times to these proceedings, responsible for the overall management of the affairs of a restaurant business known as Fire and Stone conducted by the first respondent, Auspac Hospitality Management Pty Ltd.  I have earlier recorded Mr Wang’s background and experience in reasons for decision delivered in two other matters involving the Fire and Stone restaurant on Moreton Island, namely Fair Work Ombudsman v Golden Vision Food and Beverage Services Pty Ltd & Anor (No.2) [2016] FCCA 1721 and Fair Work Ombudsman v Golden Vision Food and Beverage Services Pty Ltd & Anor [2017] FCCA 534.

2.Mr Wang is an experienced businessman, knowledgeable and experienced regarding the general application of industrial awards to employees.  He holds a masters level qualification in management.  He was familiar with the relevant award in this case – the Hospitality Industry (General) Award 2010. 

3.During the period 14 March, 2017 and 8 October, 2017 the first respondent employed a number of people, some of them temporary visa holders, to work in the Fire and Stone restaurant.  The period of each employee’s employment varied, but fell within that date range.  During that period the first respondent did not pay the employees all of the entitlements that accrued to them under the Award identified earlier.  Mr Wang was responsible for those omissions.

4.The applicant investigated the payment of entitlements to the relevant employees and these proceedings are the result of those investigations. 

5.Both respondents now agree that they have breached the Fair Work Act 2009 (Cth) in the respects that I have discussed more fully below. The respondents agree to the imposition of pecuniary penalties upon them for those contraventions. These reasons relate to the penalties that ought to be imposed upon the respondents for the admitted contraventions.

Background

6.The first respondent purchased the Fire and Stone restaurant business from its previous operator, Golden Vision Food and Beverage Services Pty Ltd in March, 2017.  Relevantly, the first respondent employed at least 16 employees to perform work in the restaurant during the period set out above.  During that period the first respondent underpaid nine particular employees a total of $2,239.61.

7.After conducting an investigation into the first respondent’s business, on 5 April, 2018 one of the applicant’s inspectors sent a “Findings of Contravention” letter to the first respondent’s director at the time, Ziheng Lu.  

8.On 26 April 2018, the first respondent commenced rectifying the identified underpayments, by paying some of the amounts owed to the relevant employees.  On 14 May, 2018 the first respondent paid the final amounts owed and fully rectified the underpayments.

9.Mr Wang was the manager of the restaurant business during the period I have set out above. He has been the subject of two previous proceedings in this Court (that I have also set out above), where he has been found to have contravened the Fair Work Act (as an accessory) and had pecuniary penalties ordered against him.

Contraventions

10.The first respondent and Mr Wang admit that the first respondent contravened eight civil remedy provisions of the Fair Work Act 2009 (Cth) during the period from 14 March, 2017 to 8 October, 2017 and that Mr Wang was involved in those contraventions. The relevant contraventions are:

a)s.45 of the Fair Work Act by failing to pay casual loading as required by clause 13.1 of the Hospitality Industry (General) Award 2010, resulting in five employees being underpaid a total of $519.69;

b)s.45 of the Fair Work Act by failing to pay Saturday penalty rates as required by clause 32.1 of the Hospitality Award, resulting in three employees being underpaid a total of $304.19;

c)s.45 of the Fair Work Act by failing to pay Sunday penalty rates as required by clause 32.1 of the Hospitality Award, resulting in two employees being underpaid a total of $851.05;

d)s.45 of the Fair Work Act by failing to pay evening penalty rates as required by clause 32.3 of the Hospitality Award, resulting in seven employees being underpaid a total of $564.68;

e)s.535(1) of the Fair Work Act by failing to keep records setting out the hours certain employees worked and the amount of casual loading and penalty rates that the employees were entitled to be paid, pursuant to regulations 3.33(2) and 3.33(3) of the Fair Work Regulations 2009 (Cth);

f)s.536(1) of the Fair Work Act by failing to issue payslips to certain employees within one working day of payment being made;

g)s.536(2)(b) of the Fair Work Act by failing to issue payslips including the name or name and number of the fund to which superannuation contributions were made with respect to 15 employees as required by reg.3.46(5) of the Fair Work Regulations; and

h)s.536(2)(b) of the Fair Work Act by failing to issue payslips including the name or name and number of the fund or account into which amounts deducted from employees’ wages were paid as required by reg. 3.46(2) of the Fair Work Regulations.

11.Each of the identified contraventions represents multiple failures on the part of the respondents to meet the obligations imposed by the Award, the Act and the Regulations.  There was a contravention each time the first respondent failed to pay an employee his or her entitlements pursuant to the Award, failed to issue a payslip within one day of payment, failed to include the required information on payslip and failed to keep the required employee records.  There are numerous contraventions of the eight separate obligations identified above. 

12.However, two or more contraventions of the Fair Work Act may, depending upon the particular circumstances of the case, attract the operation of s.557(1) of the Act. By that subsection the Court must treat multiple contraventions of certain civil penalty provisions of the Act as a single contravention if the contraventions are committed by the same person and they arose out of a course of conduct by that person.

13.Section 557(1) is engaged in this case. Each of the remuneration-related contraventions (the s.45 contraventions) involve multiple contraventions of a number of separate and distinct obligations created by the Award. The contraventions were committed by the same entity, namely the first respondent. If they arose out of the same course of conduct by the first respondent, they must be taken to constitute a single contravention of each separate and distinct Award created obligation. So too, the contraventions of each separate obligation under ss.535(1), 536(1) and 536(2)(b) of the Act.

14.However, as the decision in Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153 directs, s.557(1) does not operate so as to consolidate into a single contravention, multiple contraventions of s.45 (or s.44) of the Act where those contraventions are based upon breaches of different terms or obligations in an Award, as is the case here. Section 557(1) of the Act will operate to consolidate multiple contraventions of the same term or obligation in an Award, but it will not operate across different terms or obligations. The contraventions as I have identified them above take into account the operation of s.557(1) of the Act.

15.Both parties acknowledge that the authorities reveal that to the extent to which any two contraventions contain common elements it would be wrong to punish that person twice for the commission of the elements that are common: see Pearce v The Queen [1998] HCA 57 at [40]; Fair Work Ombudsman v Total Project Marketing Pty Ltd (in Liquidation) & Ors [2014] FCCA 451 at [84]. The parties, however, differ in the application of that principle in the present case.

16.The applicant argues that no further reduction in the number of contraventions in respect of the underpayment contraventions should be made.  The respondents, however, argue that there are common elements that operate between the separate contraventions that mean that the number of separately considered contraventions should be reduced. 

17.The respondents submitted that there are “a number of possible common elements which can be applied and there may be overlapping common elements (although of course some may supersede others in the sense that there can be overlapping common elements)”.  Those common elements were identified to be:

a)the single decision by the first respondent to leave Mr Wang in charge without adequate systems in place to ensure his compliance; and/or

b)inheriting the procedures and systems of the previous owner.

18.However, these are not matters that engage the relevant principle on the facts.  The first respondent relies upon an affidavit sworn by Peiyuan Xiang on 31 May, 2019.  Mr Xiang deposes that Mr Wang was temporarily in charge of the restaurant from 14 May, 2017 to 31 July, 2017 while Mr Xiang was on leave.  However:

a)the first respondent acquired the restaurant on or around 14 March, 2017 some two months before the period when Mr Wang was temporarily in charge;

b)employees were underpaid in periods before, during and after the period that Mr Wang was in charge; and

c)the record keeping and payslips contraventions occurred both before, during and after Mr Wang’s time in charge of the restaurant.

19.Thus, the eight remuneration-related contraventions and the record keeping contraventions did not only occur during the period that Mr Wang was in charge but also occurred during periods both before and after the period that Mr Wang was in charge.  That Mr Wang was in charge of the restaurant cannot be a common element with respect to all eight contraventions.

20.Whilst it seems to be undoubtedly true that the controlling mind of the first respondent made a decision to continue to use the systems and procedures already in place when it purchased the business, “inheriting the procedures and systems of the previous owner” is not a common element as the first respondent contends.  Each contravention was the product of the first respondent failing to discharge a particular obligation cast upon it by the Award, the Act or the Regulations.  It was incumbent upon the first respondent to ensure that its employees were paid correctly and the record keeping requirements of the Act and Regulations were observed.    That it failed to make appropriate enquires to ensure that it was discharging each of those obligations to each of its employees does not mean that the contraventions share common elements of culpability sufficient to impose one penalty for all of them as the respondents now contend.

21.Moreover, Mr Xiang’s affidavit suggests an awareness of the previous owner’s non-compliance with the Fair Work Act at the time when the first respondent started operating the restaurant. He says that “due to unfortunate lapses, that can only be explained by negligence, the underpayments occurred”. As the applicant submits, because of Mr Xiang’s and the first respondent’s apparent knowledge of the previous owner’s issues with compliance, the first respondent was on notice that it could not simply rely on the previous owner’s systems and procedures to ensure compliance with its obligations under the Award, the Act and the Regulations.

Consideration

22.Sections 539(2) and 546(2)(a) of the Fair Work Act prescribe maximum penalties that may be imposed by the Court for contraventions of civil remedy provisions, by reference to penalty units within the meaning of s.4AA of the Crimes Act 1912 (Cth). During the period in which the contravening conduct occurred, the value of a penalty unit was:

a)$180.00 prior to 1 July 2017; and

b)$210.00 on and after 1 July 2017. 

23.Save for the contravention of s.536(1), which occurred only in the period prior to 1 July, 2017 the remaining seven groups of contraventions in this matter occurred both prior to and after the value of the penalty unit increased on 1 July, 2017. In those circumstances and in respect of those contraventions which occurred both before and after the commencement of the increased penalty unit value, it is appropriate to apply the later penalty unit value, with the Court taking into account that the lower amount applied for part of the period: Fair Work Ombudsman v Grouped Property Services Pty Ltd (No.2) [2017] FCA 557.

24.On the basis of the above approach to grouping of contraventions and maximum penalties, the applicant submits that the applicable penalty unit value for the contravention of s.536(1) is $180.00 and that the applicable penalty unit value for the remaining contraventions is $210.00.

25.Thus, the total maximum penalties that could be imposed upon the first respondent is $373,500 and upon the second respondent is $74,700.

26.As has been set out before in many cases, a principal object of the Fair Work Act is the preservation of an effective safety net for employee entitlements and effective enforcement mechanisms. Compliance with minimum standards is vital to the fundamental objects of the Fair Work Act.

27.The first respondent purchased the restaurant from its previous operator, Golden Vision Food and Beverage Services Pty Ltd and began operating it in March, 2017. However, some eight months earlier in July, 2016 this Court handed down its decision in the first Golden Vision proceeding, including declarations that Golden Vision and Mr Wang (by reason of s.550 of the Fair Work Act) had contravened the Act by failing to pay casual loading, Saturday penalty rates, Sunday penalty rates and evening loading in accordance with the Hospitality Award and by failing to keep employee records and issue payslips within one day of payment. That is to say, those proceedings dealt with contraventions of the Act which were of the same nature as those presently under consideration.

28.Further, on 21 March, 2017 about one week after the first respondent commenced operating the restaurant, this Court handed down its decision in the second Golden Vision proceeding, including declarations that Golden Vision and Mr Wang (by reason of s.550 of the FW Act) had contravened the Act by failing to pay Saturday penalty rates, Sunday penalty rates and evening loading in accordance with the Hospitality Award.

29.The earlier proceedings against Golden Vision and Mr Wang ought to have put the first respondent on notice that careful attention needed to be paid to ensure that employees at the restaurant were paid appropriately and that the necessary records were being kept.  Mr Wang was certainly on notice about those matters and he was the person the first respondent charged with managing the restaurant at the relevant time.  His knowledge was the first respondent’s knowledge. 

30.Mr Wang seeks to explain some of the contraventions by reference to overlooking increases to minimum wages and applying the wrong award.  However, as the applicant submits, given that Mr Wang had twice been before the Court for failing to properly pay employees of the same restaurant the same types of basic entitlements, his explanation only serves to highlight Mr Wang’s gross disregard of those requirements.

31.The non-compliance highlighted by the present contraventions is inexcusable. The first respondent was on notice of its obligations as a result of Mr Wang’s previous interactions with the applicant. Whilst the first respondent was not itself involved in the previous proceedings Mr Xiang knew of them and it has admitted that Mr Wang was, on its behalf, responsible for making decisions in relation to wage-setting and payment of employees and that Mr Wang was “in charge” during Mr Xiang’s absence from May to July, 2017. The first respondent is clearly fixed with Mr Wang’s conduct.

32.Mr Xiang’s evidence is that “It was always the intention to ensure compliance, especially given the previous owner of the restaurant, Golden Vision, had issues with such compliance.” Mr Xiang says that the first respondent directed Mr Wang to ensure each employee was paid correctly. Yet despite this instruction and its asserted intention to comply, there is no evidence that the first respondent introduced any systems, processes or other procedures to ensure that employees were paid correctly and to avoid repeating the contraventions committed by Golden Vision. Clearly such systems were necessary because Mr Wang had, by then, admitted to contravening the Fair Work Act on numerous occasions in the past. There is no evidence of the first respondent taking any steps to understand how the previous compliance issues had arisen or to mitigate the risk of reoccurrence. To blithely put faith in Mr Wang’s ability to ensure compliance by giving such a direction without more was at the very least reckless. I accept the applicant’s submission that in light of its knowledge of the prior proceedings, to place Mr Wang in charge of ensuring employee entitlements are met without also putting in place systems to ensure and monitor compliance was conduct falling considerably short of its obligations as an employer.

33.The underpayments in issue are relatively modest (totalling $2,239.61) and were spread amongst several employees as follows:

a)casual loading: five of the employees were underpaid a total of $519.69, being 12% of their casual loading entitlement;

b)Saturday penalty rates: three of the employees were underpaid a total of $304.19, being 10% of their Saturday penalty rates entitlement;

c)Sunday penalty rates: two of the employees were underpaid a total of $851.05, being 44% of their Sunday penalty rates entitlement; and

d)evening penalty rates: seven of the employees were underpaid a total of $564.68, being 100% of their evening penalty rates entitlement.

34.Mr Wang’s evidence is that some of the underpayments came about because “there was an increase in the minimum wage and due to an oversight, this was accidently not taken into account in the payment of casual loadings”.  But that explanation cannot be accepted because, for example, there were underpayments of casual loading during the period between 8 May, 2017 and 2 July, 2017 which was before the relevant increase in the minimum hourly wage applied.

35.Some of the contraventions relate to Saturday penalty rates and Sunday penalty rates. Mr Wang’s evidence with respect to those under payments was that “The underpayments of Saturday and Sunday penalty rates were my fault and was unintentional. I completely intended to pay the employees their full entitlement.”  But Mr Wang has not explained how the underpayments of these penalty rates were “unintentional” given that he intended to pay the employees their full entitlements.

36.As the applicant points out, in the statement of agreed facts filed in this application, Mr Wang has admitted that he had “actual knowledge of the factual matters” and was an “intentional participant” in those events which comprise the contraventions admitted by the first respondent.  Moreover, Mr Wang has twice been found to have contravened the Hospitality Award with respect to underpayment of Saturday and Sunday penalty rates as I have set out above.  Mr Wang plainly had actual knowledge that penalty rates applied for Saturday and Sunday work.

37.Mr Wang offers another explanation for the underpayment of evening penalty rates. His evidence is that “I was under the impression that the evening penalty rates commenced at 10pm as indicated in the Restaurant Award. However I should have been applying the Hospitality Award where the evening penalty rates commence at 7pm.” His reference to the Restaurant Industry Award 2010 is inexplicable given that he was clearly aware that the Hospitality Award was the relevant Award. As the applicant points out, in paragraph 10 of his affidavit filed on 16 January, 2017 in the second Golden Vision proceeding, Mr Wang says that “what I have done specifically to improve practices and improve compliance…” is to have “ensured that each employee is being employed under the minimum conditions as stated in the Hospitality Industry General Award 2010”.

38.I do not accept Mr Wang’s assertion that the underpayment contraventions for which he was responsible were unintentional.  Whilst I am not satisfied that they were deliberate, his conduct was so reckless as to represent a complete disregard for the employees entitlements.  He plainly did not care whether the correct rates were being paid.

39.The first respondent’s failure to provide payslips within one day of payment is significant in the context of the employees being underpaid and should not be viewed merely as an administrative failure.  Rather, it has consequences for employees, limiting their ability to monitor and pursue their legal entitlements.  The problem is not just theoretical.  One of the affected employees, Ms Thomson, gave evidence that she did not receive payslips for around the first two weeks of her employment with the first respondent and that she was “confused about the amount of pay that I received in my bank account, as it was less than I expected, but I could not check if I was being paid properly without a payslip.”   Ms Thomson only received payslips after she requested them, and felt “frustrated” at having to request payslips from the first respondent each week, when they should simply have been provided to her.

40.These are significant contraventions.  The first respondent’s failure to keep records of the hours worked by its employees relevant to these proceedings and the amount of remuneration to which they were entitled compounds the gravity of the underpayments themselves.   The record keeping and pay slip provisions of the Act and Regulations create a framework by which compliance can be monitored.  If those matters are compromised, so too is the ability of both employees and the applicant to monitor and if necessary enforce compliance with the remuneration obligations under the relevant industrial instruments and the Act.

41.Further, by issuing payslips which did not include the name or name and number of the fund to which the relevant employees’ superannuation contributions were made, monitoring and compliance is again compromised.  Mr Wang’s evidence was that “we pay all superannuation to ATO’s Super Stream and then ATO will pay each employee’s Super Company accordingly, therefore our pay slip does not include the “name, name or number of any fund” to which the payments were made.”  

42.But that approach is not in accordance with the Act, or according to the evidence before me.  According to the evidence before me, a system known as SuperStream is operated by the Australian Taxation Office.  The ATO describes SuperStream as follows:

SuperStream is the way businesses must pay employee superannuation guarantee contributions to super funds. With SuperStream, money and data are sent electronically in a standard format.”  

43.As such, the first respondent could not have paid the employees’ superannuation to SuperStream, as it is not a superannuation fund. Superstream does however require the employer to collect the relevant superannuation from their employees, including the Australian Business Number of the employee’s superannuation fund.

44.Additionally, the ATO does has a service to which superannuation payments can be made, called the Small Business Superannuation Clearing House. The ATO describes this service as follows: 

The Small Business Superannuation Clearing House (SBSCH) is a free service you can use to make Super Guarantee (SG) contributions. Eligible businesses are those with 19 or fewer employees or an annual turnover of less than $10 million… Your business can pay your SG contributions as a single electronic payment to the SBSCH… The SBSCH will then distribute the payments to each employee’s superfund… The SBSCH is SuperStream compliant.  

45.In the case of either system offered by the ATO, the employer must provide to the ATO the details of the superannuation fund to which a payment should be made for a particular employee.  I accept the applicant’s submission that whether or not the first respondent paid the superannuation contributions to the relevant employees’ superannuation funds directly, or used a service provided by the ATO to do so, the obligation on the first respondent was to include the name or name and number of the superannuation fund to which the contributions would be made on its employees’ payslips.

46.The principal object of pecuniary penalties under s.546 of the Fair Work Act is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at [116].

47.A pecuniary penalty for a contravention of the Fair Work Act must be fixed with a view to ensuring that the penalty is not to be regarded by the offender or others as an acceptable cost of doing business. It is important to send a message that contraventions of the Act are serious and not acceptable: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68 at [98]. Retribution, denunciation and rehabilitation have no part to play: Construction, Forestry, Mining and Energy Union v Australian Building and Construction Commissioner (Non-Indemnification Personal Payment Case) (2018) 280 IR 28 at [19]. The amount of the penalty must, however, remain proportionate to the conduct concerned: The Non-Indemnification Personal Payment Case at [22].

48.General deterrence is a significant factor in this proceeding. There is a need to send a message to employers in the hospitality industry that employees must be provided with their correct entitlements and that accurate and complete employee records and payslips are not optional. This case illustrates that despite the same business (albeit with a different owner) having been dealt with on two prior occasions for the very same contraventions of the Fair Work Act that are now before the Court, the same contraventions are repeated by a new owner of that business.

49.The applicant submits that the penalties to be imposed in this matter should be sufficiently high to impress upon other employers the importance of complying with the legal obligations owed to their employees.  I accept that submission.  There is a need for penalties to be set at a level which puts a price on contraventions that is sufficiently high to ensure that the penalties for non-compliance are not seen merely as a cost of doing business.

50.Specific deterrence is directed to ensure that a contravener is not prepared to embark upon the risk of engaging in the same contravening conduct in the future.  I accept that the need for specific deterrence is significant in this proceeding, both with respect to the first respondent and Mr Wang.

51.There is little evidence of specific steps which the first respondent has taken to prevent future contraventions of the Act.  Indeed, I accept the applicant’s submission that the first respondent’s response to her investigation is concerning.  The evidence about that is aptly summarised by the applicant as follows:

(a) on 16 October 2017 – that Auspac “… has been made aware that you require it to keep a record of roster, time sheet and clock in / clock out record, it will keep these record from now…”;

(b) on 10 January 2018 – that Auspac’s “payroll procedures were updated with the new correct rates which were paid from the week commencing 12 June 2017” (with employees being back paid with respect to casual loading as a result);

(c) on 8 April 2018 – that “the evening rates that we currently use are from the restaurant award (MA000119). Are we under this award or are we under the hospitality award that you have indicated (MA000009)?”; 

(d) on 17 April 2018 – that “We have already put a new system in place so that we can avoid these mistakes in the future”;

(e) on 30 April 2018 – that “… upon your advice Auspac is now applying the Hospitality Industry General Award 2010 to its employees working at the Fire and Stone Restaurant” and that “I am instructed that as a priority our client is looking to invest in a new Human Resources Management system, which will include access to an advice line and an audit upon commencement”;   and

(f) on 14 May 2018 – that “All of our current systems have now been updated and we are sure that this mistake will not happen in the future”.    

63. It is of concern that, despite being formally notified on 30 November 2017, that the FWO was investigating alleged contraventions of the Hospitality Award,  Auspac advised over four months later, on 8 April 2018, that it was currently using evening rates from the “restaurant award.”   It is also of concern that on 17 April 2018, Auspac advised that it had put a “new system in place” but on 30 April 2018 appeared to contradict this by advising that it was “looking to invest in a new Human Resources Management system.” It is therefore unclear whether or not Auspac has implemented new systems to promote future compliance and if so, Auspac has not provided any details of this in its evidence in this proceeding.

64. Ms Thomson also raised concerns with Auspac with respect to whether she should be paid evening loading in or around June 2017 by asking Alex Thomassen (a supervisor at the Restaurant ) if she “should be paid evening penalty rates”. Mr Thomassen responded with words to the effect of “I’ll talk to Ryan [Mr Xiang]” but Ms Thomson never received a response to her enquiry,  suggesting that Auspac did not give it proper consideration despite again being put on notice regarding it.

52.There is no evidence that the first respondent has ceased to operate the restaurant. It is continuing to employee people and will do so into the future. I accept that it is therefore at risk of contravening the Act again unless the penalty represents a sufficient deterrent from future contraventions.

53.However, as the statement of agree facts makes clear, the first respondent is willing to accept orders relating to workplace training and audit. It must be the case that the reason the applicant seeks such orders is to reduce the likelihood of the first respondent repeating the contraventions or others like it. The respondent argues that if the Court is going to make orders on that basis then this ought to result in a deduction in relation to the penalty. To do otherwise would tend to indicate a lack of confidence in the effectiveness of the training and audit orders proposed by the applicant and therefore tend to indicate those orders ought not be made. If those orders tend to be effective in preventing further breaches they must necessarily tend to significantly diminish the significance of specific deterrence. The first respondent’s argument has merit. The cost for training and audits cast upon the first respondent by the agreed orders represents an addition financial impost upon it which will add to the deterrent effect of those orders.

54.Mr Wang was ordered to pay pecuniary penalties of $3,500 and $20,366 respectively in each of the proceedings I have identified earlier. Not all of his contraventions were of the same nature as those in this case, but many were. He was no doubt aware of the Fair Work Act and the way in which it operated at the times relevant to the present proceedings. Notwithstanding that, Mr Wang continued to be engaged in contraventions of the Fair Work Act of the same nature as those the subject of the previous proceedings.

55.Mr Wang is currently a director of three other companies: A and Q Feng Pty Ltd, Apex Training and Recruitment Pty Ltd and Yuan Tong Generations Pty Ltd. The likelihood is that he is involved in employing people.

56.The respondents cooperated by corresponding with the applicant during her investigation.  The underpayment in this case was modest and has been quickly rectified by the first respondent. The respondents have admitted the contraventions by way of a statement of agreed facts soon after the proceeding was commenced.  By doing so they have spared the applicant and the public the costs of a liability hearing.

57.The evidence about the financial circumstances of the first respondent are succinctly summarised in the respondents’ written submissions.  Mr Xiang puts into evidence the first respondent’s 2017 and 2018 tax returns. In 2017 the first respondent had a loss of $22,006. There were $18,067 in assets and $48,371 in liabilities. The first respondent did not pay tax. In FY 2018 the first respondent sustained a loss of $9,790.  There were assets in the amount of $85,746 and liabilities in the amount of $125,840. Based on these figures, the first respondent argues that it is not a very wealthy company and is currently funding itself through debt.

The Penalties

58.Having regard to the matters I have discussed above, and making due allowance for the respondents’ cooperation with the applicant and in these proceedings, it seems to me that in respect of the first respondent the penalties set out in Annexure A are, prima facie, appropriate.  I have reduced the penalties by applying a discount to take into account the first respondent’s cooperation and contrition. 

59.The total penalty for the first respondent is $91,800.  However, the penalty requires further reduction to take account of the totality of the penalty and the circumstances I have recounted when dealing with specific deterrence.  In my view, an appropriate response to the offending conduct overall is an aggregate penalty of $75,000.

60.In respect of Mr Wang penalties which reflect a higher percentage of the maximum penalty available are, in my view, appropriate given his repeated contraventions of the Act. I have, however, reduced the penalties by applying a discount of 20% to take into account his cooperation with the applicant and in these proceedings. The total penalty for the second respondent is $38,808. As I have said, the percentage of the maximum penalty for Mr Wang is different to the percentage for the first respondent.

61.I am not satisfied that the total penalty for Mr Wang requires further reduction to take account of the totality of the penalty and its effect upon him.  The aggregate penalty represents an appropriate response to his offending conduct.

62.Accordingly, I make the orders set out at the commencement of these reasons.

I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of Judge Jarrett

Associate: 

Date:  3 December, 2019

ANNEXURE A

First Respondent (Auspac Hospitality Management Pty Ltd)

No	FW Act provision	Under-payment amount	Total employees affected	Maximum penalty	Total penalty
1	Section 45 – casual loading	$519.69	5	$63,000.00	$15,750.00
2	Section 45 – Saturday penalty rates	$304.19	3	$63,000.00	$15,750.00
3	Section 45 – Sunday penalty rates	$851.05	2	$63,000.00	$15,750.00
4	Section 45 – evening penalty rates	$564.68	7	$63,000.00	$15,750.00
5	Section 535(1) – employee records prescribed by the FW Regulations	N/A	9	$31,500.00	$10,080.00
6	Section 536(1) – payslips within one day of payment *pre 1 July 2017	N/A	9	$27,000.00	$8,640.00
7	Section 536(2) – payslips required superannuation information	N/A	15	$31,500.00	$5,040.00
8	Section 536(2) – payslips required deductions information	N/A	16	$31,500.00	$5,040.00
Total penalty	$373,500.00	$91,800.00

Second Respondent (Jia Ning Wang)

No	FW Act provision	Maximum penalty	Total penalty
1	Section 45 – casual loading	$12,600.00	$7,056.00
2	Section 45 – Saturday penalty rates	$12,600.00	$7,056.00
3	Section 45 – Sunday penalty rates	$12,600.00	$7,056.00
4	Section 45 – evening penalty rates	$12,600.00	$7,056.00
5	Section 535(1) – employee records prescribed by the FW Regulations	$6,300.00	$3,528.00
6	Section 536(1) – payslips within one day of payment *pre 1 July 2017	$5,400.00	$3,024.00
7	Section 536(2) – payslips required superannuation information	$6,300.00	$2,016.00
8	Section 536(2) – payslips required deductions information	$6,300.00	$2,016.00
Total penalty	$74,700.00	$38,808.00