Fair Work Ombudsman v Aussie Little Auction Houses Pty Ltd
[2010] FMCA 806
•21 September 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v AUSSIE LITTLE AUCTION HOUSES PTY LTD | [2010] FMCA 806 |
| INDUSTRIAL LAW – Contested contravention – underpayment of wages – underpayment of allowances – failure to provide wage slips – penalty. |
| Corporations Act 2001 Evidence Act 1995 Fair Work Act 2009 Workplace Relations Regulations 2006 Workplace Relations Act 1996 |
| Australian Opthalmic Supplies Pty Ltd v McAlary Smith [2008] FCAFC 8 Fair Work Ombudsman v McGrath & Anor [2010] FMCA 315 Giorgianni v The Queen (1985) 156 CLR 473 Kelly v Fitzpatrick [2007] FCA 1080 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 |
| Applicant: | FAIR WORK OMBUDSMAN |
| Respondent: | AUSSIE LITTLE AUCTION HOUSES PTY LTD |
| File Number: | BRG 960 of 2009 |
| Judgment of: | Burnett FM |
| Hearing date: | 17 September 2010 |
| Date of Last Submission: | 17 September 2010 |
| Delivered at: | Brisbane |
| Delivered on: | 21 September 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr A. James |
| Solicitors for the Applicant: | Ffrench Commercial Lawyers |
| Ms Allen, Director, appeared as the First Respondent |
| The Second Respondent appeared in person |
ORDERS
THE COURT DECLARES
That the First Respondent has breached:
(a)section 182(1) of the Workplace Relations Act 1996 (Cth);
(b)section 185(2) of the Workplace Relations Act 1996 (Cth); and
(c)section 836(2) of the Workplace Relations Act 1996 (Cth) and Regulation 19.20 of the Workplace Relations Regulations 2006.
That the Second Respondent has, pursuant to section 728(1) of the Workplace Relations Act 1996 (Cth) breached:
(a)section 182(1) of the Workplace Relations Act 1996 (Cth);
(b)section 185(2) of the Workplace Relations Act 1996 (Cth); and
(c)section 836(2) of the Workplace Relations Act 1996 (Cth) and Regulation 19.20 of the Workplace Relations Regulations 2006.
THE COURT ORDERS:
That the First Respondent pay a pecuniary penalty, pursuant to section 719(1) of the Workplace Relations Act 1996 (Cth) in respect to the contraventions at paragraph 1 above, as follows:
(a)$16,500 for a breach of section 182(1) of the Workplace Relations Act 1996 (Cth);
(b)$16,500 for a breach of section 185(2) of the Workplace Relations Act 1996 (Cth); and
(c)$16,500 for a breach of section 836(2) of the Workplace Relations Act 1996 (Cth) and Regulation 19.20 of the Workplace Relations Regulations 2006.
That the Second Respondent pay a pecuniary penalty pursuant to section 719(1) of the Workplace Relations Act 1996 (Cth), by way of section 728 of the Workplace Relations Act 1996 (Cth) in respect to his involvement in the contraventions at paragraph 2 above, as follows:
(a)$6,050 for a breach of section 182(1) of the Workplace Relations Act 1996 (Cth);
(b)$6,050 for a breach of section 185(2) of the Workplace Relations Act 1996 (Cth); and
(c)$6,050 for a breach of section 836(2) of the Workplace Relations Act 1996 (Cth) and Regulation 19.20 of the Workplace Relations Regulations 2006.
That the First Respondent pursuant to section 841 of the Workplace Relations Act 1996 (Cth) pay the penalty in paragraph 3 above to the Commonwealth Consolidated Revenue Fund.
That the Second Respondent pursuant to section 841 of the Workplace Relations Act 1996 (Cth) pay the penalty in paragraph 4 above to Ms Christine Leslie.
That the penalty payable by the First and Second Respondents be paid to the Commonwealth Consolidated Revenue Fund and Ms Christine Leslie within 28 days of the date of this order.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 960 of 2009
| FAIR WORK OMBUDSMAN |
Applicant
And
| AUSSIE LITTLE AUCTION HOUSES PTY LTD |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
Introduction
Between 28 November 2007 and 31 January 2009, Christine Ann Marie Lesley was employed by Aussie Little Auction Houses Pty Ltd. From that employment three contraventions of the Workplace Relations Act 1996 (the WR Act) are alleged to have occurred. Broadly, they concern the underpayment of wages in two respects. First, in respect of the primary entitlement and secondly, in respect of the loadings entitlement. The third contravention concerns a failure to provide wage slips. The applicant, the Workplace Ombudsman, prosecutes this application in respect of the alleged contraventions.
By way of background, the applicant is a Fair Work inspector, pursuant of section 701 of the Fair Work Act 2009, formerly known as the Workplace Ombudsman and has standing to bring this application, in its name, in relation to contraventions that occurred prior to the appeal to the WR Act. The first respondent, Aussie Little Auction Houses Pty Ltd, was a constitutional corporation, was capable of suing and being sued and was an employer for the purposes of the WR Act. It operated a retail fruit and vegetable and general store at the corner of Crane Road and Warrego Highway. It also undertook retail activities by way of auction, which will be discussed later.
The second respondent was at all material times a shareholder in the first respondent. Although it was alleged that his shareholding was 50 per cent and there was some evidence to support that contention, the second respondent maintained that he owned 99 per cent of the shares of the company. It is a matter of no moment in the context of the application. He was also an officer of the first respondent, as defined in the Corporations Act 2001, he being a person who makes, or participates in making decisions that affect the whole or a substantial part of the business of the corporation. He was not formerly appointed as a director, as such, but in any event satisfied the definition provided under the Corporations Act 2001.
It is also alleged that he had authority to speak on behalf of the first respondent in the matters with which I will deal in some detail shortly. He was, in addition, involved in the day-to-day running of the operation of the first respondent and provided directions to and supervised employees of the first respondent, including the relevant employee in this case.
As earlier noted, the relevant employee was Christine Ann Marie Lesley. She was employed between 28 November 2007 and 31 January 2009, allegedly in the capacity of a retail shop assistant on a casual basis. During that period of employment, it is contended that the employer, or the first respondent, whom I will refer to as the employer, was bound by the WR Act, including the Australian Fair Pay and Conditions Standard, being the standard.
Pursuant to section 172 of the Act, the standard provided key minimum entitlements of employment for the employee to whom it applied. Section 208(1) of that Act also provided the definition of the pre-form state wage instrument in section 178 of the Act. It provided that an award contained rate provisions which determined the employee’s basic periodic rate of pay. The preserved Australian pay classification scale had effect on and from 27 March 2006. Pursuant to section 204 of the Act, the minimum rates payable by the employer to its employees was set out in the Retail APCS, which was the APCS which derived from the Retail Industry Award – State 2004.
On about 2 February 2009, that is after the employee left her employment with the employer, she made a complaint to the Workplace Ombudsman regarding an underpayment of wages. An investigation followed and it was revealed during the investigation that during the period of her employment, the employee had been paid a flat rate of $12 per hour for each hour worked. Pursuant to section 182(1) of the Act, the employer was required to pay the employee a basic periodic rate of pay pursuant to the Retail APSC and, in addition, the employer was also required to pay her a casual loading.
Relevantly, the basic periodic rate under the Retail APCS varied from 28 November 2007 to 31 January 2009. Initially it was at $15.29 and was subsequently increased to $15.86 per hour. There was an additional 23 per cent casual loading on the amounts I have just identified. It follows that during the period of employment, the applicant contends that the employee was underpaid $17,218.73 by the employer and that underpayment was occasioned by the employer failing and/or neglecting to pay the employee in accordance with its requirement under section 182(1) and 185(2) of the Act.
In addition, the investigation revealed that the employer had failed to issue to the employee written pay slips relating to each payment period by the employer of the amount due to the employee for remuneration. That requirement exists pursuant to section 836(2) of the Act and Part 19.20 of the Workplace Relations Regulations 2006. It transpired that that omission continued through the entire period of the employee’s employment.
Concerning the second respondent’s involvement in the contraventions, that is the involvement of Francis Eamon Weston, the director, he was the person who personally employed the employee as a casual retail assistant. At all material times, he directed and supervised the employee in the performance of her day-to-day employment activities. He gave her instructions when to commence work and when to finish, he held himself out as being the operator and/or owner of the business, at least as the alter-ego of the business conducted by the first respondent. He was authorised by the director of the first respondent to speak on behalf of the matters relating to the employer’s conduct. He communicated with the Workplace Ombudsman and its inspector and made admissions and decisions on behalf of the employer that impacted, either adversely or otherwise, on the employer and its conduct of the case.
In addition to those matters, he also was instrumental in the employer’s failure and/or refusal to provide the employer’s documents to the Workplace Ombudsman in accordance with the requests that were made. Generally, it is alleged that he was uncooperative with and obstructive of the Workplace Ombudsman and its inspector in the investigation of the complaint concerning the employee. It follows, by reason of his intimate involvement in these matters that it is alleged that he was involved in the contraventions.
Admissions and Issues
At the outset the respondents did at least make a number of concessions. They were these:
a)First, the first respondent was the employer of the employee;
b)Second, that the issue for the first and second respondents related to whether or not the pay classification scale, being the Retail Industry Award, applied to the employee. The respondents contending that an arrangement was in place whereby the employee was to be paid in part by the respondent employer and in part by Centrelink;
c)Third, that if it was a case to which the award did apply, then it was conceded that there would be no issue taken with the calculations, but there was issue taken with the employee being a casual employee;
d)Next, concerning the contravention relating to the failure to provide wage slips, the respondents say that wage slips were offered but declined and in any event, the requirement was satisfied by the employer providing photocopies to the employee of wage records and that they were accepted by the employee in lieu of wage slips;
e)Further, it is contended by the respondents that there is an issue as to whether or not the second respondent was involved in the contraventions;
f)And finally, the respondents did take issue with the manner of investigation, claiming it was flawed. However, as was discussed during the course of the trial, this matter has no bearing upon this particular complaint.
Having regard to the matters that were raised by the respondents at the outset of the trial, the following issues appeared necessary for resolution at trial:
a)First, whether the retail industry award applied to the employee. This required a consideration of the nature of the business conducted by the employer and the duties performed by the employee;
b)Second, if the employee was covered; was she a casual or permanent employee;
c)Third, whether there was some arrangement with or entitlement to benefits by the employee from Centrelink to top up her pay;
d)Fourth, whether or not the provision of photocopies of the weekly wage records satisfy the statutory requirement containing the provision of wage payslips;
e)And fifth and finally, the role of the second respondent, and in particular, whether he was involved in the conduct. He maintained that he had delegated all management roles to the other director, Ms Allen. He contended that he was merely a consultant to Ms Allen in respect of the fruit and vegetable side of the employer’s business. Although, while not admitted that he was an officer of the company, he was conducting a horse training operation and an auction house at the business. He claims not to have been involved in any of the day to day running of other parts of the business, including the fruit and vegetables part of the business which appears to be a significant part of the complaint.
Background Facts
These matters were covered principally by the employee, Ms Lesley, in her evidence to the court. She gave evidence that she is a woman of about 60 years of age. She has been employed through her life in various capacities, including 20 years service with the Commonwealth in its public service in various government departments, together with casual jobs in retail since 1989, most recent of which before this employment was employment at a service station.
She stated that she came to know the employer in this matter to be Aussie Little Auction Houses Pty Ltd, trading as Aussie Little Auction House and that the alter egos of that entity were Marian Allen and Francis Weston being the second respondent. They traded from premises which are somewhat of a landmark in the local area near Gatton, called Jumbo’s because of the red elephant placed outside the business premises.
At all times, Ms Lesley says that she knew that the employer was her employer because they were paying her wages. Mr Weston told her that he would be her boss, and what was required of her.
The business was one which sold fruit and vegetables, general grocery items such as soft drinks, chocolates, lollies, fresh bread and the like, and also included an auction business with the sale of second hand goods. It was a business which operated 7 days a week from 7.00am to 5.30pm when the business ceased trading on a daily basis.
She said that she came to be employed there because someone she knew asked if she was looking for part time work, to which she responded in the affirmative. She was then introduced to Ms Allen and Mr Weston. She said that on 27 November 2007 she spoke with Mr Weston and stated to him that she had been referred to him, and asked if he needed someone to work at their business. She says Mr Weston responded in the affirmative, and that she was immediately employed, there being no formal interview or any references required.
She says that at the time of that discussion, Mr Weston told her what he required, what hours he required of her, and that the employment would be casual, possibly Wednesdays, Thursdays, Fridays and maybe Saturday from 8.30am to 4.00pm. He said that Ms Allen wasn’t present at that time, but another employee, Ms Calen was.
As I have observed, she was offered casual employment immediately, which offer she accepted. At the time, she says she was told by Mr Weston that she would be paid $10 an hour, that being $12 per hour, less tax of $2, giving a net $10 in the hand. At that time, the employee did not question the wages, believing that that was normal for casual employment.
She first commenced her work on the morning of 28 November 2007, and at that time, believed that she was to be working in the fruit and vegetable section of the business assisting another woman who was there, having a day off. She says that she spent a short time there, but was soon transferred across to the second hand goods auction part of the business.
The business was described as an auction business, but in reality, from the evidence, it is apparent that it was, in fact, a second hand goods business. The goods were available for sale to members of the public, and were of a various range. Some goods were lotted. By that, I understood the evidence to be that small numbers of sundry items were collected together into a lot, and were available for purchase. Other items, such as second hand whitegoods and the like, were available to be purchased discretely.
At the time that the employee accepted the employment, she rang Centrelink at Ipswich, because at that time she was on the Newstart Allowance. She had been entitled to that allowance since leaving her previous employment at the BP station at Blacksoil.
She says that the employer was made aware that she was on Newstart about a fortnight after she started. She needed to complete a form for Centrelink, quoting the number of hours that she was doing and her gross rate of pay. She says that that information was received from Ms Allan who got the information from the wage book.
She acknowledges that she was not aware of any direct discussions, between the employer and Centrelink regarding that employment. She says she certainly never cited any paperwork or other correspondence in relation to those matters.
Although not a significant issue in the case, I also note that on the day that she was to start work, that being 28 November, she was initially due to start at 8.00am. However, that was set back to 9.00am because of her need to undertake a physiotherapy appointment for a back condition that she had. The matter of her back was something raised in the course of the trial, but I do not think bears upon this proceeding. I make that observation in passing.
In the course of her employment, the applicant’s duties varied depending upon where she was employed. As I have noted, she was initially employed principally in the auction side of the business, before later transferring to the fruit and vegetable side of the business.
In the auction side of the business, it was her job to set up the tables at the front of the premises every day of the week, including weekends and to put out all of the display goods for people to buy. That meant picking it up, sorting it out, and then packing it up at the end of the day and bringing it back inside. Inside the premises there was also a lot of furniture, lounges, kitchen cabinets, wardrobes, jewellery cabinets and other sorts of merchandise; everything from toilets to sinks. Her job there was to keep prices on it, label it, sort it, assist customers and take money at the counter in respect of transactions. These goods were available for sale on the premises by retail, although it is true that there were at least two auctions conducted on the premises during the course of her employment.
She was directed on a daily basis in respect to the performance of those duties by Francis Weston. She says that she was told by Francis Weston that she was to work from 8.30am to 4.00pm. Although originally her work days were to be just Wednesday, Thursday, and Friday, it soon extended to include Saturday and Sunday, before ultimately, the hours enlarged and the days she worked also increased. That particularly occurred once the other employee, Jenny Calen left, and she was taken into the fruit and vegetable part of the business.
So far as the fruit and vegetables side of the business was concerned, this meant going through all of the vegetables every morning in the refrigerated area, making sure they were still fresh and not marked, tired or limp looking, and replacing them with new stock if necessary. Stock was kept in the cold room, which was only small with no shelves. It required a lot of lifting, stacking of boxes, packing and unpacking. She noted that most of the cold stuffs needed to be repacked at the end of the day and put back in the cold room.
The fruit and vegetables task was undertaken during or between the period when she worked the second hand goods. Initially, this was mostly on weekends where Jenny Calen was on her days off, although it changed again later because of Jenny Calen’s termination of her employment.
Her rate of pay was $12 an hour, but that rate never changed during the course of her employment. It was mentioned to her that her pay was going to go up. This was mentioned to her by Mr Weston, but never happened. Towards the end of her employment, another casual employee started working there, and she was being paid at a higher rate. That alarmed the employee and caused her some disquiet.
The employee was also aware that the other employee, Jenny Calen, was being paid more than she was, although at the time she didn’t say anything, until it was pointed out to her that she was being paid the wrong amount.
It’s probably fair to say, at this stage, that I formed a view that the employee, Christine Lesley, was a credible witness, and I have no difficulty accepting anything she told me. She did not embellish her evidence in any way, and was quite straightforward in her delivery. Her explanations for such things as not taking up her under-payment of wages at an earlier time are entirely plausible, and founded in part upon her insecurity about her employment, particularly because of her back condition.
In any event, she stated she never mentioned or raised the issue of the underpayment to the employer because she knew that there was no way that she would get anything. She says she was constantly being told by Mr Weston and Ms Allen that the business was not profitable, and that the employees were being paid more than the directors who themselves were working 24 hours a day.
She noted that they made her feel bad about the fact that she was taking her pay, and sometimes, there were even delays in the payment of her on a regular weekly basis.
In any event, that matter changed once she terminated her employment and took matters to the Workplace Ombudsman.
Aside from that matter, when she was paid, she was paid cash in hand. She was never provided with a payslip. She says she never requested a payslip from the employer because she did not think it was necessary, because the hours were recorded in the pay book, which was copied for her so that she could forward copies to Centrelink, until Centrelink withdrew all benefits. The only thing that she ever specifically requested was a group certificate, which she never received. She noted, in response to a request for one, Ms Allen said, “what’s that?”
There was also a failure by the employer to pay superannuation. The explanation given for this omission was because she was told that she was a casual, and as a casual employee she had no entitlement. That matter is being examined by another authority.
The hours that she worked were recorded in the wage book which she filled out, and there is no issue with the hours that are recorded on her behalf.
Ms Allen recorded the gross tax and net amounts in the pay book, but nothing was ever signed for by the applicant, except at the end of the week to acknowledge the close of the pay week. In each week, she did work overtime, and was not paid anything in addition to her normal $12 per hour.
Furthermore, she did not receive any holiday or sick pay. Again ostensibly because she was employed on a casual basis.
Corroborative evidence in relation to these matters was also adduced from her co-worker, Jennifer Calen. Her affidavit came into evidence because it was not objected to, although arguably, it was largely irrelevant to most of the issues in this case, save and so far as it could be asserted that it was admissible under the coincidence rule provided for in section 98 of the Evidence Act 1995. In any event, I do not think there is any need to address the question of its admissibility by reason of the other findings which I have made. However, matters identified by Ms Calen are relevant to the matters of penalty, and have been considered in that context.
Award Coverage
Turning, then, to the issues that have to be resolved. First, the award coverage. Division 2 of part 7 of the Act prescribes as the wages entitlements in relation to basic rates of pay and casual loadings and forms part of the Australian Fair Pay and Condition Standard. Section 182 of the Act provides for a guarantee of APCS wages as a minimum. Section 178 of the Act defines an APCS as including a preserved APCS. Section 208(1) of the Act prescribes that if a pre-reformed wage instrument contains rate provisions determining one or more basic periodic rates are payable to employees, then from the reform commencement, this is to be taken to be a preserved APCS. Further, section 208(2) provides that a preserved APCS is derived from the pre-reform wage instrument.
The Retail Industry Awards dated 2004 was in force immediately prior to the reform commencement, and contains rate provisions determining basic periodic rates of pay payable to employees. Accordingly, by operation of section 208 of the WR Act, there was, at all material times, a preserved APCS derived from the retail award.
Section 204 of the Act prescribes when employment is covered by an APCS and relevantly provides that the question of whether the employment of a particular employee is covered by a particular APCS is to be determined by reference to the coverage provisions of the APCS.
The coverage provisions of the retail APCS are to be derived from the coverage provisions of the retail award and in this regard, the retail award provided at clause 1.4.1 in the following terms.
“This award applies to all employees and their respective employers engaged in the reception and/or preparation and/or hire and/or sale and/or delivery (excepting the employees engaged solely in the delivery of newspapers) and or installation of any goods and/or services by retail, and it applies to persons employed wholly or principally as a clerk as defined herein.”
Clause 1.7 provided that the award is legally binding on the employees and employers as prescribed in clause 1.4.
Significantly in this case, an employee is defined in clause 1.5.5 to mean and include “all persons for whom wage rates are prescribed by the Retail APCS”. In this regard, the Retail APCS prescribes minimum rates of wage to be paid to various classes of employees, one of which is a shop assistant. The Retail APCS defines the shop assistant in clause 5.1.1 in the following terms:
“(a) “Shop Assistant” (92.14%) means – an employee engaged in the reception, sale, or delivery by hand of any goods for sale by retail … wherever employed, and shall include … electrical goods and/or appliances salespersons … produce salespersons … storepersons, packers … all persons employed or engaged in selling, demonstrating or canvassing for or taking orders for goods for sale by retain … or in any duties in taking orders for goods for sale by retail … or in any duties in any way incidental thereto…”
The employer sought to make much of the nature of its business and the duties that were undertaken by the employee in order to demonstrate that the employee was not covered by the award.
While there are some questions about the specifics, the only time that there might be any question concerning the application of the award relates to the earlier period of employment when the employee was employed largely in the auction business. The Macquarie dictionary defines “retail” in these terms:
“(1) The sale of commodities to one household or ultimate consumers, usually in small quantities (opposed to wholesale) (2) Related to, connected with, or engaged in sale at retail….....(4) To sell at retail: to sell directly to the consumer.”
There is no question that the Little Aussie Auction sales satisfied the definition of retail sales. Mr Weston himself acknowledged these matters. The premises were available to the public to walk off the street and purchase items, whether they be lotted or otherwise.
In addition, the nature of the business was such that its presence and presentation and get up also afforded and reinforced the notion that the premises were open for retail sale. The fact that there were auctions conducted does not, to my mind, having regard to the number of auctions that were conducted, detract from the retail nature of the business. As the employee noted, goods were set up on display, they were priced. Even if items were not priced, the nature of the business was such as to constitute an invitation to treat, inviting offers from prospective purchasers. It was in no sense a wholesale operation.
Furthermore, and irrespective of the descriptor of the employer’s business, that is, as Little Aussie Auction Houses, it’s fair to say that the business was mainly retail, with there only being a small number of auctions, which, in any event, were open to the public at large.
Aside from those matters, the other duties which were undertaken by the employee during the course of her employment clearly conformed with the nature of duties which would be undertaken by a shop assistant within the meaning of the Retail APCS. For instance, the duties during her initial period of employment, insofar as they extended to other parts of the business, included displaying fruit, packing shelves and cleaning. They also included operating the till, although there was some debate about that matter, with Mr Weston saying he only saw the applicant operate the till on one or two occasions.
Perhaps at this time it is appropriate to make some observations about Mr Weston and his evidence generally. Let me say at the outset that he did not impress me. Mr Weston, for reasons which I will develop in a moment, was a witness who sought to distance himself as much as possible from the relevant events, at least insofar as it suited him. His evidence, generally, was most unsatisfactory. For instance, he had great difficulty in providing direct answers to questions, notwithstanding the asking of plain questions which ought to have invited simple and pointed answers.
On occasions when he did provide answers, it was obvious that his answers were in the nature of speeches and in the nature of spin. For instance, he was asked a question “Don’t part of the duties of the employee include maintaining stock on the shop floor?” Rather than simply answering, “Yes”, as he ultimately did, he could not resist the opportunity to make gratuitous remarks that several other employees also undertook that task. That style of answer was endemic of the evidence that he gave.
On other occasions, such as the occasion when being questioned about his observations concerning the employee using the till, it required some effort to ultimately have him concede that he could only have made observations about her use of the till, in limited circumstances, given that often times he was in another part of the premises.
Likewise, when he was questioned about payslips, he was very quick to distance himself from matters, noting that the issue of payslips, “Had nothing to do with me.” His concern, he noted, was seeing that workers were paid. As far as he was concerned, that was the end of his responsibility. That, of course, rather begs the question, paid what? As this case illustrates, payment itself is not necessarily the end of this matter.
Likewise, further questions of him in relation to payslips demonstrated a distinct desire, on his part, to abrogate himself from any responsibility in relation to these matters. Perhaps, that matter is best illustrated by his failure to produce documents to the Workplace Ombudsman following a request for production of documents. He was, for instance, required to produce all relevant documents and at trial gave evidence that there was indeed a Zion wage slip book. However, the book was never produced at trial. And again, was a matter in respect of which he contended he had no responsibility.
The same could be seen in respect of questions that he was asked concerning the employer’s employee. While he contested that she was employed on a casual basis, it took quite a degree of effort to extract any concession that he didn’t tell her that she was a full-time employee. Again, observing on his part that the matters had nothing to do with him.
I simply do not accept those matters. Insofar as his evidence was contrary to that of Ms Leslie, it is rejected. It is also rejected in respect of any other evidence which contradicts the applicant’s witnesses, including that of his business partner, Ms Allen. So far as her evidence was concerned I have at least formed the view that she was somewhat more forthright in her evidence and less inclined to place any spin on the matters in respect to which she gave evidence. At least insofar as the matters that she has deposed to, I have been prepared to accept and act upon it. I might note that many of the matters that she gave evidence of were in fact disadvantageous to the respondent’s case.
In terms of the duties which the employee undertook, it is clear also that the employee was also involved in lotting up and displaying auction goods, these were goods that were brought by Mr Weston to the premises to be offered for sale to members of the public. In her evidence she informed the court that the second hand goods were sourced by Mr Weston and he would sort through the goods identifying those of value that could be sold and she would be involved in displaying the goods on tables outside the business and pricing up of the goods in conformity with instructions given. These goods were available for purchase by members of the public without having to go through an auction process.
As I have noted, once she became involved in the fruit and vegetable business, the nature of her employment was more readily accepted by the respondents as falling within the description of retail work. Likewise, in respect of the watering of plants, and the nursery business.
In my view it is plain from the evidence that the employee was clearly fulfilling the duties of a retail employee and those duties were covered by the award. I accept that she was covered by the Retail Industry Award provision 8 of the APCS.
Casual or Permanent
The next question is whether or not she was a casual employee. The employee herself gave evidence of her being employed as a casual employee. There is in my view ample evidence to be found in the evidence of both the employee and Ms Allen, concerning that matter, as well as the circumstances of her employment. The applicant says that she was employed initially on a casual basis and so much was consistent with the terms and conditions of her employment, that is unspecified hours on unspecified days.
That position, of course, continued until circumstances of the business changed but in any event there are other factors which in my view corroborate that general conclusion. First, it was accepted by Ms Allen in her evidence that the employee was never paid holiday pay. Furthermore, she did not receive any accrued sick leave or other leave entitlements. That was because she was not entitled to that pay on the basis that she was a casual employee. It seems the only person who had any difficulty with her employment as a casual was Mr Weston., whose evidence, as earlier noted, I reject.
I am satisfied from the facts and circumstances, that the employee was indeed employed initially as a casual and that it was on that basis she was employed.
The Centrelink Arrangement
Next is the arrangement with Centrelink. Mr Weston maintained that he believed that the employee was getting a top up from Centrelink on the hourly rate of $12 an hour, which was being paid by the employer to the employee. In my view, the basis for his belief on this matter is somewhat curious. He appears to have relied solely upon the employee’s alleged representation in relation to this matter, without any paperwork from Centrelink following up on that matter. For instance, one would have expected as a minimum, Centrelink to want to inquire of an employer what the actual rate was so that Centrelink could effect the calculation of how much top up was to be provided, if indeed such an arrangement was in place.
In any event, Mr Weston, whose evidence I have, in any event, rejected, by his conduct never sought to obtain independent or professional advice in relation to the applicable award, arguably seeking to keep himself ignorant of these matters. But notwithstanding that, Mr Pereira who is a manager of the Ipswich office of Centrelink gave evidence in response to a request from the applicant. He noted a receipt of advice from the applicant requesting advice regarding Centrelink procedures. He noted in particular, receiving correspondence from the applicant on the date of 25 August 2010, addressed in these terms:
“We”
that is the applicant,
“are now seeking specific information regarding Ms Lesley’s Centrelink file in response to affidavit evidence from Ms Lesley’s former employer, Mr Francis Weston. Mr Weston has provided evidence that he entered into an arrangement with Ms Lesley with the approval of Centrelink, that she would receive a top up from Centrelink of the difference between what Ms Lesley was paid and what she was legally entitled to under the Workplace Relations Act.”
It was noted that Ms Lesley denied any such arrangement. Mr Pereira who is the relevant manager, responded by a letter of 31 August 2010 noting that he had examined Ms Lesley’s Centrelink records and established that during the relevant period, she was not entitled to receive a “subsidised/supported wage scheme administered by Centrelink”. It follows from the evidence that clearly there was no such arrangement in place which is entirely consistent with the evidence given by the employee.
Her evidence was simply that, following taking up employment with the employer, she was required to keep Centrelink informed for the purpose of phasing out other benefits to which she was entitled. There was certainly no question that she was to have her wage topped up to meet any award wage in the manner which is contended by the employer and that there was certainly no arrangement to that effect and I find that to be the case.
Pay Slips
Next is the question of the respondent’s failure to provide wage slips or pay slips. By operation of section 836(2) of the Act and the regulations, there is a requirement upon employers to issue pay slips to those employees at such times and pertaining such particulars as are prescribed. Regulations 19.20 and 19.21 of the regulations set out the relevant matters.
Relevantly, however, the evidence was that the employee, at her request was only provided with photocopies of the wage books. A copy of which can be found as annexure MMK2 to the affidavit of Melissa Marie King filed 9 July 2010. In broad terms, the contention by the respondents was that there was never a request on the part of the respondent for a wage slip, with her only ever requesting copies of her wages records for production to Centrelink and that she was perfectly content with the receipt of those documents. That, of course, is no answer to the statutory requirement to provide those documents.
However, it could conceivably be that the wage records satisfy the regulatory requirements set out in the regulations. It follows that a close examination of the wage book is required. When one looks to the contents of pay slips as required by regulation 19.21, there are three matters which are critical, among others, for a pay slip to satisfy the definition. First, the pay slip must specify the date on which the payment, to which the payslip relates, was made. Second, it must specify the period to which the payslip relates and if the employee is paid at an hourly rate, the ordinary hourly rate.
By reference to the pay slips (and it does not particularly matter which one is looked to, but for the purposes of this exercise I have looked at the payslip for the week ending 25 June 2008) it can be seen that there is an omission in respect of those three items in the wage record. It follows that even though the employee may have signed something, at least as a receipt of pay, the wage record itself is deficient in that it does not identify the date to which the payment of the payslip relates. Nor does it specifically identify the period to which the payslip relates or the hourly rate.
While particulars of those matters might be distilled from an examination of the wage record, that distillation does not, in my view, satisfy the requirements of regulation 19.21. Which requires it to be formally expressed in a document, in a manner comprehensible by the employee. It follows that there was a failure to provide the employee with a payslip and accordingly there has been a contravention of that provision.
Mr Weston’s Involvement
Next then, was the involvement of the second respondent in the contraventions by the first respondent. The court’s power to order a person other than an employer to pay a pecuniary penalty is contained in section 728 of the WR Act. As was considered by Smith FM in Fair Work Ombudsman v McGrath & Anor [2010] FMCA 315 at paragraph 19, so far as these matters are concerned, two questions arise in terms of accessory or liability. The first, in my view, relates to whether or not any direct knowledge can be established of these matters on the part of Weston, or alternatively if there is no direct knowledge, whether the circumstances themselves are sufficiently deliberate as to indicate a deliberate abstinence from obtaining knowledge, inviting a wilful blindness determination in accordance with the views expressed by High Court in Giorgianni v The Queen (1985) 156 CLR 473.
In order to demonstrate accessorial liability under section 728 of the Act, it is necessary to show that the person had knowledge of the essential facts constituting the contravention or was knowingly concerned in the contravention and was an intentional participant in the contravention based on actual, not constructive, knowledge of the essential facts constituting the contravention. Although, as earlier noted, there may be some abrogation of the general rule in respect of constructed knowledge if wilful blindness can be demonstrated. It is not necessary, of course, to demonstrate that the person knew the matters in question constituted a contravention.
The employee deposes that she spoke to Mr Weston to see whether she was able to get employment at the business and upon being employed by the employer, Mr Weston informed her that he was her boss and that he would tell her what was required of her. Mr Weston told her what hours she would work and that she was employed as a casual. He also told her that she would be paid $12 per hour, from which $2 would be deducted in tax and she was directed to perform many of her daily duties by Weston himself. Indeed, in terms of her rate of pay, Weston informed her that her rate of pay was to be increased and when the employee queried that with the other director, Ms Allen, it was Ms Allen who referred the employee back to Mr Weston.
Now, Mr Weston at least confirmed that he was largely the alter ego of the business, although it is one that he conducted with Ms Allen, she being a minor a shareholder, at least on his version of events. He did not challenge his involvement in interviewing Ms Lesley, although the parties differ in respect of the detail of interview. Where they depart, I accept the evidence of Lesley, for reasons that I have earlier articulated.
It is quite plain from the evidence that Mr Weston was very much involved in running the business, and in particular, with the employment practices related to the business. For instance, he made any number of observations that he was involved in those matters, although on many occasions, particularly during cross-examination, he sought to distance himself as much as he possibly could by saying these matters were not within his “department”.
However, to that end, I reject his efforts to distance himself from the business, and particularly, from his involvement in the operation of the business.
A number of matters are pivotal to my conclusion on that point. First, the business was a small business. It was a business operated by he and his de facto Ms Allen. Mr Weston himself claimed that he had a 99 per cent shareholding in the business. Even if it was not 99 per cent, it was plain from his evidence that he was largely responsible for a $200,000 loan to the business, or at least, if it was not a loan, then the paid up capital was something approaching $200,000, in respect of which Mr Weston was the principle source of funds.
It was plain from his evidence that all of his personal wealth and liabilities were tied up in the business, that he attended the business on a daily basis, and, as I’ve earlier noted, he employed the employee and other employees in the business.
Against that background, it is to me inconceivable that he would not have been intimately involved in the business’s operation in terms of his knowledge of such matters as the payment of wages, and accordingly he also had his obligations in respect of knowledge of the appropriate wages to be paid. I certainly reject his evidence whereby he seeks to distance himself from the operation of the business as a mere contrivance for the purpose of the litigation. I am satisfied that he had full knowledge of the fact that the business was not paying the employees their rightful entitlements. That much, if anything, is evident by reason of the fact that the various employees were being paid different rates. Furthermore, that he was fully aware that the business was not affording employees wage slips.
Mr Weston sought to rely upon his ignorance of the regulations in that regard, and fell back upon his experience as a business operator in New Zealand. Neither explanation is, in my view, satisfactory. I am satisfied that this is not a case of wilful blindness as has been advanced on behalf of the applicant, but rather a case of where when the evidence is closely examined, the weight overwhelmingly demonstrates that Mr Weston had actual knowledge of the contraventions that were being effected by the business, and he was involved in the business’s contraventions as its alter ego.
In any event, if I were wrong on that matter, in my view, this is one case that can be seen to fall within the very few cases whereby his knowledge could be construed by his wilful blindness. It could give rise to the same conclusion. In that regard, the instances of wilful blindness relate solely to the question of Mr Weston informing himself of the appropriate regulations.
In this instance, the application of awards in Australia are well known. It is, in my view, simply not contendable that he could have had no knowledge that there would have been an award obligation. Any failure to consider that matter, in my view, is one which involves an intention to avoid searching for information of which any reasonable person ought to have been aware, or would be aware applies and which is readily available.
It follows that he was knowingly concerned in the contraventions by the employer, and he too is liable for those contraventions.
Conclusion on Contravention
I am satisfied that declarations ought be made in these terms: first that the first respondent has breached section 182(1) of the Act. Second, it has breached section 185(2) of the Act and third, that it has breached section 836 of the Act and Regulation and 19 of the Workplace Relations Regulations 2006.
Further, I think it is appropriate to make declarations and orders declaring that the second respondent has, pursuant to section 728(1) of the Act, had been involved in a contravention of section 182(1) of the Act, section 185(2) of the Act, and section 836(2) of the Act, and regulation 19 of the regulations.
Penalty
The next matter is the question of penalty. Pursuant to section 719(4)(a) and (b) of the Act, the maximum penalty a court can order per breach, if the person is an individual, is 60 penalty units, or $6600, or if the person is a body corporate, 300 penalty units, or $33,000.
Where two or more breaches of an applicable provision are committed by the same person and the breaches arose out of a course of conduct, then the breaches could be taken to constitute a single breach.
In this instance, I am not satisfied that, at least so far as the breaches of section 182(1) and 185(2) are concerned, it could be said to arise out of a single course of conduct given the period of time that the employee was employed. It can be seen that breaches have occurred on differing occasions. So it follows, in my view, that it is appropriate to deal with each of the three breaches discretely.
In terms of the factors relevant to determination of penalty, the objects set out in section 3 of the Act, particularly include providing an economically sustainable safety net of minimum wages and conditions for those whose employment is regulated by the Act; ensuring compliance with minimum standards, industrial instruments and bargaining processes by providing effective means for the investigation and enforcement of employee entitlements; and ensuring that awards provide a minimum safety net for award-reliant employees.
These objects emphasise the importance of minimum standards, including wages and enforcement of those standards. That is further reflected in the magnitude of the penalties which have been fixed for these breaches. For instance, in the case of a body corporate, that is 300 penalty units, or $33,000 for each contravention, and 60 penalty units, or $6600 for a contravention by an individual.
These matters have been explored in many cases, the most relevant of which is the decision of Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 which has helpfully identified a number of considerations; a non-exhaustive list of considerations that may be considered.
So far as are relevant to this case; first, the circumstances, nature and extent of the conduct which led to the contraventions. I earlier addressed many of these matters in my reasons, but in addition to the matters that I have addressed, it perhaps needs to be emphasised that for the respondent, it was contended that the contraventions arose out of ignorance, particularly because of their experience as business operators in New Zealand.
However, as I earlier noted, I don’t accept that as being a cogent excuse. The existence of awards is well known in Australia, and although I’m not certain of the position in New Zealand, the respondents have been in Australia for some time, and it is encumbent upon all responsible employers to ascertain their employment obligations.
I am conscious that these events occurred in a somewhat impoverished part of rural Queensland and to some extent I formed the view that the employee involved was also vulnerable by reason of her personal circumstances. In terms of the nature and extent of any loss sustained as a result of the breach, the evidence is that the underpayment totalled $17,218.73. That sum has never been repaid. There has never been any restitution to the employee in respect of that sum, and I am mindful that, absent of any appropriate penalty in this case, the employee is unlikely to be paid. That is because the employer is in the process of being delisted. It is insolvent and the only prospect of the employee being paid is in respect of any penalty that may be levied upon or imposed upon the second respondent.
In terms of whether there has been previous conduct by the respondent, there are allegations concerning another employee, that is Ms Cowan. Those allegations, of course, have not been formally tested, but I am conscious that they are there and they accord with the complaints I heard from the employee.
Whether the breaches were properly distinct or arose out of the one course of conduct, there are three discrete contraventions. The first relates to the general underpayment. The second relates to an underpayment in respect of overtime entitlements which arose from time to time. And third, in respect to the failure to provide pay slips. In my view they are discrete and ought to be considered discretely.
Next is the size of the enterprise involved. In this case the first respondent has ceased trading. That matter, however, should not be of any great moment for as Tracey J noted in Kelly v Fitzpatrick [2007] FCA 1080 whether they are large corporate employers, or small businesses each have an obligation to meet minimum employment standards and their employees rightly. There is an expectation this will occur. When it does not, it will normally be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction must be imposed in a meaningful level.
I am conscious that in this instance it is unlikely that the penalty will ever be recovered from the employer, but I think it is important that, at least for the purposes of deterrence, an appropriate penalty be imposed. In this instance I am satisfied the breaches were deliberate in the sense that, irrespective of my findings of the involvement of the second respondent, there clearly was a failure by the employer to ascertain its award obligations. Award obligations are well understood by all employers throughout Australia. This is not something new and any failure to undertake such an elementary investigation is deliberate and can only be construed as deliberate.
In this instance, senior management was involved as the alter ego of the company and was personally guilty of the contraventions.
In terms of whether there has been any demonstrated contrition for reasons I have earlier noted, I consider there has been none. First there has been a failure to make any meaningful reparation to the employee. The respondents are not entitled to any discount on penalty on the basis that they contested the application. This is particularly so in circumstances where I think they ought reasonably have considered an early plea.
Next, there has been little cooperation by either party with the enforcement authorities. This is a factor which again tells against the respondents. In particular, I note the failure by them to cooperate in terms of the production of documents. I expressly have in mind the wage slips which we were told at trial existed, but which were never produced, either to the Workplace Ombudsman or to the Court.
Next is the need to ensure compliance with minimum standards by provision of effective means for investigation and enforcement of employee entitlements. That matter is addressed generally.
Next is a need for specific and general deterrence. There is a need in this case for specific deterrence having regard for the circumstances in which contraventions occurred. It is, as I earlier noted, important that employers recognise their obligations. So too should those who are involved in the management of employers. In particular, those who are involved in the management of employees need to recognise that they cannot hide behind the corporate veil. Legislation is designed to capture them and in many instances, irrespective of contrived attempts to deny knowledge of facts, evidence of the circumstances will always defeat such contrivance. It follows that, in my view, the penalty ought to reflect the need for specific deterrence of those who seek particularly to assume that approach.
In terms of the totality principle I am mindful of the obligations to ensure that the penalties imposed are individually appropriate and collectively suitable such that they are appropriate for the total convening conduct involved consistent with the observations of the Full Court expressed in Australian Opthalmic Supplies Pty Ltd v McAlary Smith [2008] FCAFC 8.
In the circumstances, I am of the view that the following penalties are appropriate. In respect of the first respondent for the breach of section 182(1) of the Act, I impose a penalty of 150 penalty units.
In respect of the second contravention for breach of section 185(2) of the Act, I impose a penalty of penalty of 150 penalty units.
In respect of the third contravention, being a contravention of section 836(2) of the Act, I impose a penalty of 150 penalty units.
That in sum totals $16,500 in respect of each of the three contraventions, totalling $49,500. Having regard to the penalties, individually and collectively, I think that is an appropriate penalty.
As far as the second respondent is concerned, for the breach of section 182(1) breach, I impose a penalty of 55 penalty units.
In respect of section 185(2) of breach, I impose a penalty of 55 penalty units.
And in respect of section 836 contravention and Regulation 19.20 of the Regulations breach, I impose a penalty of 55 penalty units.
There is just a little over $6,000 per contravention giving a total of $18,150. Having regard to each of those matters collectively and individually, and in particular having regard to the specific deterrence factor I identified earlier, I think that that is the appropriate penalty. This is a high range offence having regard to its circumstances.
In particular, I also propose to make an award pursuant to section 841B that the penalties which are recovered be paid to the employee. Hopefully that will afford at least some element of restitution. In making that observation, I note that that will only barely cover the under payment of wages and will not deal with the interest on wages which she has been denied by reasons of the contraventions.
I did not intend to make any orders for time to pay and I will make it payable within 28 days. In making that observation I should note that the respondent requested time to pay. I took that into account when assessing the penalty and his individual financial circumstances as provided to me by him in the course of his submissions when he was invited to deal with the antecedents, but in my view, given the nature of the order I propose it is appropriate that the payment be made forthwith. If the second respond cannot make payment it is a matter he can negotiate with his creditors.
I certify that the preceding one hundred and twenty (120) paragraphs are a true copy of the reasons for judgment of Burnett FM
Date: 21 October 2010
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