Fair Work Ombudsman v Blue Sky Kids Land Pty Ltd (in liq) (No 3)
[2024] FCA 785
•18 July 2024
FEDERAL COURT OF AUSTRALIA
Fair Work Ombudsman v Blue Sky Kids Land Pty Ltd (in liq) (No 3) [2024] FCA 785
File number: NSD 1444 of 2019 Judgment of: KATZMANN J Date of judgment: 18 July 2024 Catchwords: INDUSTRIAL LAW – allegations of multiple contraventions of numerous civil remedy provisions of Fair Work Act 2009 (Cth) and Regulations by two related companies in the clothing trade — where company records woefully inadequate and parties in dispute as to which company employed one of affected employees, whether employer in whose name the retail business operated was her true employer, as Ombudsman contended or the company which imported the clothes, as respondents contended — where numerous notices to produce issued by Fair Work Inspector — where no pay slips were provided and no records produced to Ombudsman in response to various notices to produce showing the rates of remuneration; entitlements to loadings and penalty rates; and superannuation details, whether employer(s) failed to make or keep required records in contravention of s 535(1) or failed to keep records in a form accessible to an inspector, in contravention of s 535(2) — where certain payroll records not produced in answer to notices to produce but were annexed to affidavit of third respondent, whether employer(s) contravened s 712(3) by not producing the documents in response to the notice to produce — whether employer(s) contravened s 535(4) by making or keeping false or misleading records — whether employer(s) provided false or misleading records to inspector knowing them to be or reckless as to whether they were false or misleading, in contravention of s 718A(1) — whether employer(s) contravened s 535(2) by failing to include correct information in certain employee records in relation to hours of work and net wages — whether General Retail Award 2010 applied — whether employees casual employees or part-time employees — at what level were they employed — whether employer(s) contravened and therefore s 45 of the Act by failing to pay casual loadings, Saturday, Sunday and public holiday penalty rates, failing to pay overtime rates, failing to make superannuation contributions, failing to pay employees weekly, fortnightly or on a regular pay day and by failing to pay annual leave loading to one employee who had formerly been a full-time employee and had accrued but untaken annual leave when her period of full-time employment came to an end —where one employee’s hours were unilaterally reduced so that she was no longer employed full-time, whether her employer contravened National Employment Standards s 45 by failing to pay her accrued annual leave on termination and by failing to give her notice of termination or payment in lieu, and by failing to pay another employee at least monthly in contravention of s 323(1)(c)
INDUSTRIAL LAW — general protections — where, during course of Ombudsman’s investigation third respondent gave one employee an ultimatum to sign a contract of services agreeing to perform the same, or substantially the same, job as an independent contractor or resign from her employment , when it knew she had spoken to an inspector, whether employer took adverse action against her because she had exercised a workplace right by threatening to dismiss her, in contravention of s 340(1) —whether employer threatened to dismiss her in order to engage her as an independent contractor to perform the same, or substantially the same, work under a contract of services, in contravention of s 340(1)
INDUSTRIAL LAW — hindering or obstructing Fair Work Inspectors — where third respondent knew that inspectors had attended other stores and interviewed employees and knew that they were on their way to another and ordered employee to close store well before end of trading hours, whether he and employer contravened s 707A by intentionally hindering or obstructing inspectors in the performance of their functions or the exercise of their powers — where inspectors had served notice to produce all time records and documents showing or detailing hours worked by employees including start and finish times and fourth respondent ordered employee to remove and destroy timesheets held at the store in which she worked, whether she and employer also contravened s 707A
INDUSTRIAL LAW — where multiple contraventions of FW Act, whether contraventions occurring after commencement of Fair Work Amendment (Protecting Vulnerable Workers) Act on 15 September 2017 were “serious contraventions” as defined by s 557A(1) — where respondents had previously come to attention of workplace regulator and had been made aware of Award and FW Act — whether contraventions committed knowingly — whether contravening conduct part of a systematic pattern of conduct relating to one or more persons
INDUSTRIAL LAW — deemed liability of accessories — whether each of third and fourth respondents knowingly concerned in contraventions and is therefore taken to have committed the contraventions under s 550, including “serious contraventions” within the meaning of s 557A(1) — where third and fourth respondents found to have committed serious contraventions, whether third and fourth respondents committed serious contraventions within s 557A(5A) because they knew that the latter contraventions were serious contraventions
Legislation: Criminal Code Act 1995 (Cth) Pt 2.5
Evidence Act 1995 (Cth) s 140
Fair Work Act 2009 (Cth) ss 12, 14(1)(a), 44, 44(1), 45, 46, 61, 86, 90(2), 117, 323, 323(1), 340(1), 340(1)(a)(ii), 341(1)(b), 358, 360, 361, 535(1), 535(2), 535(4), 536(1), 536(2)(b), 547(2), 547(3), 550(2), 556C, 557A, 557A(5A), 557B, 557C, 707A, 709(b), 712, 712(3), 718A, 718A(5), 793, Sch 1 Pt 4 cl 24A
Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth)
Federal Court of Australia Act 1976 (Cth) ss 23, 37M
Fair Work Regulations 2009 (Cth) regs 3.32(e), 3.33(1)(a), 3.33(1)(b), 3.33(2), 3.34, 3.37(b), (c), (d) and (e)
Federal Court Rules 2011 (Cth) rr 16.08, 26.11
General Retail Industry Award 2010 cll 13.2, 17, 22.2, 23, 29.2, 29.4(b), 29.4(c), 29.4(d), 32.3
Cases cited: Adams v Director of the Fair Work Building Industry Inspectorate (2017) 258 FCR 257
Alam v National Australia Bank Limited (2021) 288 FCR 301
Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (Kiama Aged Care Centre Case) [2021] FCA 920
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
Australian Building and Construction Commissioner v Molina (202) 277 FCR 223
Australian Building Commissioner v Construction, Forestry, Mining, Maritime and Energy Union (Syme Library Case)(No 2) [2019] FCA 1555
Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (No 2) (1999) 95 FCR 302
Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (trading as Captain Cook College) (No 3) [2021] FCA 737; 154 ACSR 472
Australian Municipal, Administrative, Clerical and Services Union v Commissioner of Taxation [2022] FCA 1225
Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in liq) (2015) 235 FCR 181
Australian Securities and Investments Commission v Adler [2002] NSWSC 171; 41 ACSR 72; 20 ACLC 576; 168 FLR 253
Australian Securities and Investments Commission v Somerville (2009) 77 NSWLR 110
Banditt v The Queen (2005) 224 CLR 262
Basi v Namitha Nakul Pty Ltd [2022] FCA 712
BGC POS Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union [2019] FCA 74; 285 IR 43
Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500
Briginshaw v Briginshaw (1938) 60 CLR 336
Broadlex Services Pty Ltd v United Workers’ Union [2020] FCA 867; 296 IR 425
Browne v Dunn (1893) 6 R 67
Chong v CC Containers Pty Ltd (2015) 49 VR 402
Construction, Forestry, Mining and Energy Union v Clarke [2007] FCAFC 87; 164 IR 299
Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd (2010) 186 FCR 88
Currie v Dempsey (1967) 69 SR (NSW) 116 at 125; [1967] 2 NSWR 532
Darlaston v Parker (2010) 189 FCR 1
Dilosa v Latec Finance Pty Ltd (1966) 84 WN (Pt 1) (NSW) 557
Director of the Fair Work Building Industry Inspectorate v Robinson (2016) 241 FCR 338
EFEX Group Pty Ltd v Bennett [2024] FCAFC 35
EZY Accounting 123 Pty Ltd v Fair Work Ombudsman [2018] FCAFC 134; 360 ALR 261; 282 IR 86
Fair Work Ombudsman v Australian Workers’ Union [2017] FCA 528; 271 IR 139
Fair Work Ombudsman v Blue Sky Kids Land Pty Ltd (in liquidation) [2020] FCA 718
Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365
Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 3) [2023] FCA 201
Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liq) (No 4) [2021] FCA 1242
Fair Work Ombudsman v Hu (No 2) [2018] FCA 1034; 279 IR 162
Fair Work Ombudsman v IE Enterprises Pty Ltd [2020] FCA 848
Fair Work Ombudsman v Mai Pty Ltd [2016] FCCA 1481
Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (2011) 198 FCR 174
Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832
Fair Work Ombudsman v Sushi Bay Pty Ltd (in liq) (No 2) [2024] FCA 76
Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421
Gallagher v AAG Labour Services Pty Ltd [202] FCA 1753
Ghimire v Karriview Management Pty Ltd (No 2) [2019] FCA 1627; 290 IR 331
Giorgianni v The Queen (1985) 156 CLR 473
Gore v Australian Securities and Investments Commission (2017) 249 FCR 167
Hamzy v Tricon International Restaurants (2001) 115 FCR 78
Jones v Dunkel (1959) 101 CLR 298
Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361
Leighton Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union [2006] WASC 144; 154 IR 228
MKP Management Pty Ltd v Shire of Kalamunda [2020] WASCA 130; 285 A Crim R 1
Pereira v Director of PublicProsecutions [1988] HCA 57 at [11]; 35 A Crim R 382 at 385; 63 ALJR 1 at 3; 82 ALR 217
Productivity Partners Pty Ltd (t/as Captain Cook College) v Australian Competition and Consumer Commission (2023) 297 FCR 180
Qantas Airways Ltd v Transports Workers’ Union of Australia [2011] FCA 470; 280 ALR 503; 211 IR 1
R v Tannous (1987) 10 NSWLR 303
Registrar of Titles (WA) v Franzon (1975) 132 CLR 611
Retail and Fast Food Workers Union Incorporated v Tantex Holdings Pty Ltd [2020] FCA 1258; 299 IR 56
Romero v Auty (2000) 19 ACLC 206
s 707A(1) of the FW Act
Shop, Distributive and Allied Employees Associate v Prouds Jewellers Pty Ltd [2020] FWCFB 4864
Stuart v The Queen (1974) 134 CLR 426
Taikato v The Queen (1996) 186 CLR 454
Veeraragoo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1448
Western Australia v Burke (No 3) [2010] WASC 110
Workpac Pty Ltd v Rossato (2021) 271 CLR 456
Yorke v Lucas (1984) 158 CLR 661
Division: Fair Work Division Registry: New South Wales National Practice Area: Employment and Industrial Relations Number of paragraphs: 905 Date of last submission/s: 3 November 2023 Date of hearing: 16-20, 25-27 October 2023, 6 December 2023 Counsel for the Applicant: Mr M Seck with Ms C Bembrick and Ms B Byrnes Solicitor for the Applicant: Office of the Fair Work Ombudsman Counsel for the Third and Fourth Respondents: Mr G Gu appeared in person and for the fourth respondent ORDERS
NSD 1444 of 2019 BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: BLUE SKY KIDS LAND PTY LTD (ACN 108 233 709) (IN LIQUIDATION)
First Respondent
Q FAY TRADING COMPANY PTY LTD (ACN 147 861 569) (IN LIQUIDATION)
Second Respondent
GUO DONG GU (and another named in the Schedule)
Third Respondent
ORDER MADE BY:
KATZMANN J
DATE OF ORDER:
17 JULY 2024
THE COURT DECLARES THAT:
1.During various periods from 19 October 2015 until 9 June 2018 inclusive, the First Respondent contravened the following civil remedy provisions of the Fair Work Act 2009 (Cth) (FW Act) and the Fair Work Regulations 2009 (Cth) (FW Regulations) (all capitalised terms, not otherwise defined below are defined in the reasons for judgment and the glossary of select terms that follow).
(a)s 45 of the FW Act, by failing to pay each of Xibing Cen, Xing Yang, Tzu Fong Yu and Jin Zhang (the Employees) the minimum rate of pay in contravention of cl 17 of the General Retail Industry Award 2010 (Award);
(b)s 45 of the FW Act by failing to pay each of the Employees casual loadings, in contravention of cl 13.2 of the Award;
(c)s 45 of the FW Act by failing to pay each of the Employees Saturday penalty rates, in contravention of cl 29.4(b) of the Award;
(d)s 45 of the FW Act by failing to pay each of the Employees Sunday penalty rates, in contravention of cl 29.4(c) of the Award;
(e)s 45 of the FW Act by failing to pay each of Xibing Cen, Xing Yang and Jin Zhang public holiday penalty rates, in contravention of cl 29.4(d) of the Award;
(f)s 45 of the FW Act by failing to pay Xibing Cen and Tzu Fong Yu overtime rates, in contravention of cl 29.2 of the Award;
(g)s 45 of the FW Act by failing to pay superannuation contributions on behalf of each of the Employees, in contravention of cl 22.2 of the Award;
(h)s 45 of the FW Act, by failing to pay each of the Employees weekly, fortnightly or on a regular pay day, in contravention of cl 23 of the Award;
(i)s 44(1) of the FW Act by failing to pay Xing Yang her accrued untaken annual leave entitlements, in contravention of s 90(2) of the Act;
(j)s 44(1) of the FW Act by failing to give Xing Yang notice of termination or payment in lieu, when her full-time employment was terminated on 18 October 2015, contrary to s 117 of the Act;
(k)s 323(1) of the FW Act, by failing to pay Xibing Cen at least monthly in June and July 2017;
(l)s 340(1)(a)(ii) of the FW Act, by threatening to dismiss Jin Zhang from her employment because, or for reasons which included that, she exercised a workplace right to participate in an interview with a Fair Work Inspector;
(m)s 358 of the FW Act, by threatening to dismiss Jin Zhang from her employment, in order to engage her as an independent contractor to perform the same, or substantially the same, work under a contract for services;
(n)s 535(1) of the FW Act, by failing to:
(i)make and keep for seven years records of the rate of remuneration paid to each of the Employees, as prescribed by reg 3.33(1)(a);
(ii)make and keep for seven years records that specify the basis on which it became liable to make superannuation contributions to the Employees, including a record of any election made by the employees as to the funds to which contributions were to be made and the date of any relevant election, as prescribed by reg 3.37(1)(e);
(iii)make and keep for seven years records of the gross and net amounts paid to Xing Yang for the period from May 2011 to December 2012 inclusive, as prescribed by reg 3.33(1)(b);
(iv)make or keep records of the entitlement to casual loading for each of the Employees, as prescribed by reg 3.33(3)(c);
(v)make and keep records of the entitlement to Saturday, Sunday and public holiday penalty rates of each of the Employees, as prescribed by reg 3.33(3)(d);
(vi)apart from the Xing Yang Timesheets, make and keep records of the hours worked by Xing Yang for the period from 19 October 2015 to 26 June 2016, as prescribed by reg 3.33(2);
(vii)apart from the Tzu Fong Yu Timesheets, keep records for seven years of the hours worked by Tzu Fong Yu, as prescribed by reg 3.33(2);
(viii)make or keep records of the overtime hours worked by each of Xibing Cen and Tzu Fong Yu or the times they started and finished working overtime hours, as prescribed by reg 3.34;
(o)s 535(4) of the FW Act, by making or keeping the following employment details forms, payroll documents and timesheets, knowing them to be false or misleading: the Xing Yang Employment Details Form 1, Xing Yang Employment Details Form 2, Xing Yang Payroll Register Document, Xibing Cen Payroll Register Document 1, Xibing Cen Payroll Register Document 2, the Xibing Cen Timesheets 2 and the Jin Zhang Payroll Register Document 1;
(p)s 535(2) of the FW Act, by failing to include the following information in employee records:
(i)the correct date on which Xing Yang’s employment began, as prescribed by reg 3.32(e);
(ii)the correct net amounts paid to Xing Yang in the period from 6 February 2017 to 11 June 2017, as prescribed by reg 3.33(1)(b);
(iii)the correct net amounts paid to Xibing Cen in the period from 27 November 2017 to 24 December 2017, as prescribed by reg 3.33(1)(b);
(iv)the correct net amounts paid to Jin Zhang in the period from 7 August 2017 to 26 November 2017, and from 18 December 2017 to 7 January 2018, as prescribed by reg 3.33(1)(b); and
(v)the correct hours worked by Xibing Cen in the period from 11 December 2017 to 28 January 2018, as prescribed by reg 3.33(2).
(q)s 536(1) of the FW Act, by failing to give pay slips to each of the Employees in the form prescribed by the FW Regulations or which included the information prescribed by the Regulations, within one day of making payment to them in relation to the performance of work or at all;
(r)s 707A of the FW Act, in that on 18 January 2018 it intentionally hindered or obstructed Fair Work Inspectors Stuart Liljeqvist and Dale Woods in the exercise of their powers or functions, when it directed that BSKL’s Woden store be closed;
(s)s 707A of the FW Act, in that it intentionally obstructed Fair Work Inspector Liljeqvist in the exercise of his powers or functions, when in January 2018 it directed Tzu Fong Yu to destroy the Woden Timesheets;
(t)s 712(3) of the FW Act, by failing to produce the Xing Yang Timesheets and the Xing Yang Payroll Register Documents 2, in compliance with the First BSKL NTP issued by Fair Work Inspector Liljeqvist on 23 January 2018;
(u)s 712(3) of the FW Act, by failing to produce the Xibing Cen Timesheets 3, the Tzu Fong Yu Payroll Register Document and the Jin Zhang Timesheets 2 (to the extent that they related to periods after 1 December 2017), in compliance with the Second BSKL NTP issued by Fair Work Inspector Liljeqvist on 23 January 2018;
(v)s 712(3) of the FW Act, by failing to produce the Jin Zhang Timesheets 2 in compliance with the Third BSKL NTP issued by Fair Work Inspector Liljeqvist on 12 June 2018;
(w)s 712(3) of the FW Act, by failing to produce the Tzu Fong Yu Timesheets and the Tzu Fong Yu Payroll Register Document in compliance with the Fourth BSKL NTP issued by Fair Work Inspector Liljeqvist on 12 June 2018;
(x) s 712(3) of the FW Act, by failing to produce the Xibing Cen Timesheets 3 in compliance with the Fifth BSKL NTP issued by Fair Work Inspector Liljeqvist on 21 June 2018;
(y)s 718A of the FW Act, in that it produced each of the following documents to Fair Work Inspector Liljeqvist, who was exercising powers or performing functions under the FW Act, knowing, or being reckless as to whether, each of the documents was false or misleading: the Xing Yang Employment Details Form 1, the Xing Yang Employment Details Form 2, the Xing Yang Payroll Register Document, the Xibing Cen Payroll Register Document 1, the Xibing Cen Payroll Register Document 2, the Xibing Cen Timesheets 2, the North Rocks Timesheets and the Jin Zhang Timesheets.
2.Each of the First Respondent’s contraventions set out in declarations 1(a), (n) and (q), insofar as they occurred on or after 15 September 2017 were serious contraventions within the meaning of s 557A of the FW Act.
3.The Second Respondent contravened ss 535(4) and 718A of the FW Act, in that on 12 March 2018, in response to the First Q Fay NTP, it produced each of the Jin Zhang Payroll Register Document 1 and the Baulkham Hills Timesheets to Fair Work Inspector Liljeqvist, when they were false or misleading and when it knew, or was reckless as to whether, they were false or misleading.
4.The Third Respondent:
(a)contravened s 707A of the FW Act by intentionally hindering or obstructing Fair Work Inspectors Stuart Liljeqvist and Dale Woods on 18 January 2018 in the exercise of their powers or functions, when, knowing the inspectors were proposing to visit the Woden store, he directed Tzu Fong Yu to close the store well before the end of trading hours;
(b)was involved, within the meaning of s 550(2) of the FW Act, in the First Respondent’s contraventions as set out in 1(a), (b), (c), (d), (e), (f), (g), (j), (k), (l), (m), (n), (o), (p), (q), (t), (u), (v), (w), (x) and (y) above; and
(c)was involved, within the meaning of s 557A(5A) of the FW Act, in the First Respondent’s serious contraventions as set out in 1(a), (n) and (q) above and 2 above; and
(d)was involved, within the meaning of s 550(2) of the FW Act, in the Second Respondent’s contraventions set out in 3 above.
5.The Fourth Respondent:
(a)contravened s 707A of the FW Act, in that in January 2018 she intentionally obstructed Fair Work Inspector Stuart Liljeqvist in the exercise of his powers or functions by directing Tzu Fong Yu to destroy the Woden Timesheets; and
(b)was involved, within the meaning of s 550(2) of the FW Act, in the First Respondent’s contraventions as set out in 1 (b), (c), (d), (e) and (f) above.
THE COURT ORDERS THAT:
6.By 4pm on 1 August 2024, the applicant file and serve short minutes of order giving effect to the reasons for judgment.
7.The applicant file any affidavits on the question of pecuniary penalties by 4pm on 29 August 2024, together with an outline of submissions and any variation to the proposed form of orders in relation to superannuation.
8.The respondents file any affidavit(s) on the question of pecuniary penalties by 4pm on 26 September 2024, together with an outline of their submissions in response to those filed by the applicant.
9.No outline of submissions may exceed 30 pages without the leave of the Court.
10.The question of orders in relation to superannuation and penalties be listed for hearing on a date to be fixed.
11.There be liberty to apply on two (2) days’ notice with respect to the timetabling orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
INTRODUCTION
[1]
THE EVIDENCE
[13]
UNCONTENTIOUS FACTS
[25]
The investigation and production of documents
[33]
Earlier investigations
[42]
THE LIABILITY OF THE EMPLOYERS
[58]
PROOF
[61]
TWO PRELIMINARY QUESTIONS
[69]
Who employed Tzu Fong Yu and Jin Zhang?
[69]
Tzu Fong Yu
[72]
Jin Zhang
[99]
In what category were the Employees employed?
[129]
Xing Yang
[141]
Xibing Cen, Tzu Fong Yu and Jin Zhang
[153]
FAILURE TO COMPLY WITH NOTICES TO PRODUCE
[169]
The legislative requirements
[170]
The facts
[171]
The allegations
[185]
Consideration
[189]
THE RECORD-KEEPING AND PAY SLIP CONTRAVENTIONS
[205]
Failure to make or keep records
[205]
The legislative framework
[205]
Some background
[208]
The allegations
[211]
The first allegation – failure to make or keep records relating to rates of remuneration, Saturday, Sunday and public holiday penalty rates and superannuation contributions
[220]
The evidence
[220]
Consideration
[224]
The second allegation – Ms Yang – failure to record gross and net amounts
[234]
The third allegation – failure to make or keep records of hours worked by Xing Yang
[241]
The fourth allegation – failure to keep for seven years records of hours worked by Tzu Fong Yu
[244]
The fifth allegation – failure to make or keep records of the number of overtime hours worked by Xibing Cen and Tzu Fong Yu or the time they started and finished working overtime hours
[246]
The sixth allegation – failure to make or keep records or to keep them in a form accessible to an inspector
[247]
Pay slip contraventions
[254]
The legislative framework
[254]
The allegations
[258]
Evidence and consideration
[259]
Making or keeping false or misleading records in contravention of s 535(4) of the FW Act
[263]
Providing false information and false documents to a Fair Work Inspector in contravention of s 718A(1) of the FW Act
[263]
The legislation
[264]
The allegations
[266]
Xing Yang Employment Details Form 1 and the Xing Yang Employment Details Form 2 – incorrect start dates
[273]
Xing Yang Employment Details Form 1
[279]
Xing Yang Employment Details Form 2
[286]
Findings
[288]
Xing Yang
[289]
Xibing Cen Payroll Register Document 1 (XCPRD 1) and Xibing Cen Payroll Register Document 2 (XCPRD 2) – incorrect net pay
[304]
Xibing Cen Timesheets 2 – incorrect hours
[317]
The allegations
[318]
The evidence
[319]
Jin Zhang
[353]
North Rocks Timesheets, Baulkham Hills Timesheets and Jin Zhang Timesheets – incorrect hours worked by Jin Zhang in the period from 27 November 2017 to 28 January 2018
[364]
Failure to include information in employee records in contravention of s 535(2)(b) of the FW Act
[378]
THE ALLEGED AWARD CONTRAVENTIONS
[390]
The evidence
[392]
Xibing Cen
[393]
Xing Yang
[403]
Tzu Fong Yu
[414]
Jin Zhang
[424]
The evidence
[449]
Mr Smith’s assumptions and conclusions
[451]
General matters
[451]
Xibing Cen
[455]
Xing Yang
[459]
Tzu Fong Yu
[464]
Ms Zhang
[468]
Should the assumptions and conclusions be accepted?
[473]
Xing Yang
[482]
Ms Cen
[488]
Ms Yu
[500]
Ms Zhang
[510]
The application of the Award
[541]
In what classification(s) were the Employees employed during the Assessed Employment Periods?
[544]
The Award contraventions
[556]
Failure to pay minimum weekly wage in contravention of clause 17 of the Retail Award
[556]
Failure to pay casual loading in contravention of clause 13.2 of the Retail Award
[562]
Failure to pay Saturday penalty rate in contravention of cl 29.4(b) of the Award
[567]
Failure to pay the Sunday penalty rate in contravention of cl 29.4(c) of the Award
[571]
Failure to pay the public holiday penalty rate in contravention of clause 29.4(d) of the Retail Award
[578]
Failure to pay overtime rates in contravention of clause 29.2 of the Retail Award
[588]
Failure to make superannuation contributions on behalf of the employees in contravention of cl 22 of the Retail Award
[601]
Failure to pay the Employees weekly or fortnightly or on a regularly pay day
[606]
Failure to pay annual leave loading
[613]
ALLEGED CONTRAVENTIONS OF THE NATIONAL EMPLOYMENT STANDARDS
[615]
Failure to pay Xing Yang in lieu of notice of termination in contravention of s 117(2) of the FW Act
[617]
Failure to pay Xing Yang accrued annual leave and annual leave loading on termination of employment in contravention of s 90(2) of the FW Act
[631]
FAILURE TO PAY XIBING CEN AT LEAST MONTHLY
[637]
THE GENERAL PROTECTIONS ALLEGATIONS
[642]
Alleged contravention of s 340(1) by threatening to dismiss Ms Zhang if she did not sign an independent contractor agreement
[643]
The legislation
[643]
The allegations
[651]
The evidence
[654]
Consideration
[663]
Alleged contravention of s 358 by threatening to dismiss Ms Zhang if she did not enter into an independent contractor agreement
[672]
The legislation
[672]
The allegation
[673]
Consideration
[674]
HINDERING OR OBSTRUCTING FAIR WORK INSPECTORS IN CONTRAVENTION OF S 707A OF THE FW ACT
[687]
The legislation
[687]
Closure of the Woden Store on 18 January 2018
[708]
The allegations
[709]
The evidence
[710]
Consideration
[726]
Conclusion
[733]
Destruction of electronic and paper employee records at the Woden Store in January 2018
[734]
The allegations
[734]
The evidence
[739]
Conclusion
[749]
SERIOUS CONTRAVENTIONS
[756]
The legislative provisions
[756]
The allegations
[770]
Consideration
[772]
The contraventions of s 45 regarding failure to pay minimum wages
[772]
The contraventions of s 535(1) regarding failure to keep records
[790]
The contraventions of s 536(1) regarding failure to issue pay slips
[790]
Conclusion
[793]
ACCESSORIAL LIABILITY
[794]
The legislative provisions
[794]
General principles
[796]
The liability of Mr Gu
[808]
The allegations
[808]
Consideration
[815]
The record-keeping and pay slip contraventions
[815]
The Award contraventions
[821]
The contravention of s 323 (failing to pay Xibing Cen at least monthly for a period in 2017)
[848]
The contraventions of s 340(2)(a)(ii) (threat to dismiss Jin Zhang for participating in an interview with FW inspectors) and s 358 (threat to dismiss Ms Zhang in order to engage her as an independent contractor on the same, or substantially the same terms)
[849]
The contraventions of s 712(3) (failure to comply with the notices to produce)
[852]
The contraventions of s 535(4) and s 718A (making or keeping false or misleading records and producing to FWI Liljeqvist documents known to be false or misleading)
[854]
The serious contraventions of ss 45, 535(1) and 536(1)
[859]
The liability of Ms Fei Yang
[864]
The allegations
[864]
Consideration
[868]
The Award contraventions
[868]
The serious contraventions (s 557A)
[890]
CONCLUSION
[892]
RELIEF
[893]
Declarations
[894]
Rectification/compensation
[895]
Other orders
[905]
SCHEDULE A
[]
SCHEDULE B
[]
GLOSSARY OF SELECT TERMS
[]
KATZMANN J:
INTRODUCTION
Guo Dong Gu (also known as Nathan Gu) (Mr Gu) and Fei Rong Yang (also known as Fay Yang) (Fei Yang) are directors of two related companies, Blue Sky Kids Land Pty Ltd (BSKL) and Q Fay Trading Company Pty Ltd (Q Fay) (together, the Employers). They are also husband and wife. BSKL operated a number of children’s clothing stores. Q Fay imported children’s clothing from the People’s Republic of China to supply to the BSKL stores. Fei Yang is the sole shareholder of BSKL and she and Mr Gu are the sole shareholders of Q Fay.
On 6 September 2019 the Fair Work Ombudsman filed an originating application and statement of claim in which applying for relief arising out of numerous alleged contraventions of various civil remedy provisions of the Fair Work Act 2009 (Cth) (FW Act) and the Fair Work Regulations 2009 (Cth) (FW Regulations). Unless otherwise indicated, the references to those provisions were operative throughout the periods the subject of the proceeding.
The allegations include contraventions of various provisions of the General Retail Industry Award 2010 (Award) and the National Employment Standards laid down in the FW Act; failing to make and keep employee records of the kind prescribed by the FW Regulations; making and keeping false or misleading employee records; failing to issue pay slips; intentionally obstructing Fair Work Inspectors; producing to a Fair Work Inspector documents that were known to be false or misleading; threatening to dismiss an employee for exercising her right to participate in an interview with a Fair Work Inspector; and/or to engage her under a contract for services to undertake the same or substantially the same work. Mr Gu and his wife are said to be liable, together with the relevant company, for the alleged contraventions.
On 13 March 2020, a little over six months after the proceeding was commenced, the Employers resolved to go into voluntary liquidation. On 25 May 2020 I granted the Ombudsman leave to proceed against them under s 500(2) of the Corporations Act 2001 (Cth): Fair Work Ombudsman v Blue Sky Kids Land Pty Ltd (in liquidation) [2020] FCA 718.
The claim largely concerns the wages paid to, and the records (or lack thereof) relating to the employment of, four women who worked in one or more of the BSKL stores over disparate periods of time from 30 July 2012 in one case to 9 June 2018 in another (the Employees). Nevertheless, the documentary evidence upon which the Ombudsman relies is voluminous. The Court Book consists of in excess of 7,000 pages. There is also a Supplementary Court Book of nearly 1,000 pages and a Further Supplementary Court Book of more than 600 pages. Documents were not always organised in a logical order. Navigating this material has not been easy.
The Employees are: Xibing Cen, who had been employed as a bookkeeper in China (known as “Bing”); Jin Zhang (known as “Sery”), who was a maths teacher in China; Tzu Fong Yu (known as “Serene”), who holds a diploma in accounting and worked as a secretary in Taiwan; and Xing Yang, who had worked for an insurance company in China.
Before the Employers went into liquidation, they filed defences in which they made a number of admissions. At that time they were legally represented. The liquidator did not appear and has taken no interest in the proceeding. Mr Gu and Fei Yang were represented by Ying Zhang of Ren Zhou Lawyers from 9 October 2019 until 17 April 2020 and by Jingyi Li of Yingke LawFirm from 25 November 2021 until 26 September 2023. Otherwise they had no legal representation.
Mr Gu and Fei Yang initially raised the penalty privilege. Accordingly the evidence was taken in two tranches. After the Ombudsman’s evidence was adduced, the hearing was adjourned and Mr Gu and Fei Yang were given the opportunity to amend their defences and file evidence. They availed themselves of that opportunity and an amended defence was filed for both of them on 24 December 2021. That was prepared by the respondents’ then solicitor, Jingyi Li. Later, Mr Gu and Fei Yang filed a further amended defence in response to the Second Further Amended Statement of Claim, which was filed on 16 June 2023 which was also prepared by Jingyi Li. On 6 December 2023 the Ombudsman was granted leave to file a Third Further Amended Statement of Claim, which essentially removed certain allegations and orders and reduced the amount of certain claims. Mr Gu did not object. None of the respondents sought to amend their defences further.
In the Further Amended Defence, Mr Gu and Fei Yang made a number of admissions to allegations concerning the conduct of the Employers. By that time, the Employers were in liquidation and Mr Gu and Fei Yang had no authority make admissions that could bind them. As they were intimately involved with the running of the two companies and the operation of the business, however, and were the only directors of both Employers at the time the conduct occurred, their admissions are still relevant.
Mr Gu appeared throughout the hearing in person, assisted by a Mandarin interpreter. Fei Yang did not appear. With the leave of the Court Mr Gu appeared for her, too. He cross‑examined some of the Ombudsman’s witnesses and made relatively brief oral closing submissions, which were largely unhelpful. He addressed none of the contraventions, focusing only on particular aspects of the Employees’ evidence. During his submissions he twice asked for an adjournment, including to obtain additional evidence, but I declined to accede to his request as he was given some eight and a half months in total to file his evidence, after the Ombudsman had consented to multiple extensions of the original 13-week period for the respondents to file their evidence after the first tranche of hearing dates and he had been in possession of the Ombudsman’s opening submissions for more than three years and the Ombudsman’s detailed and inaptly named “outline” of closing submissions for nearly seven weeks. When I fixed the additional dates for submissions on 27 October 2023 (after the Ombudsman had all but concluded her oral argument) I asked Mr Gu whether the proposed dates of 6 and 7 December 2023 would be a problem for him. While he responded, unhelpfully, that he did not yet know, I adjourned the remainder of the case for hearing on those dates, informing Mr Gu of my view that such a lengthy adjournment would give him plenty of time to get across the Ombudsman’s submissions and the opportunity to seek advice if he so desired. I informed him that it was my expectation that he would be ready to address the Court on his responses to the Ombudsman’s submissions. I asked him whether he understood what I was saying. He said he did.
Of course the Court has the power to adjourn a proceeding at any time. But s 37M of the Federal Court of Australia Act 1976 (Cth) (FCA Act) imposes an obligation on the Court to exercise the power in the way that best promotes the overarching purpose of the civil practice and procedure rules. That purpose is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. It includes a number of objectives which would be defeated by the provision of yet a further adjournment. Those objectives are the just determination of all proceedings before the Court; the efficient use of the judicial and administrative resources available for the purposes of the Court; the efficient disposal of the Court’s overall caseload; the disposal of all proceedings in a timely manner; and the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute. I did not think that granting him the adjournment he requested would be the best way to promote the overarching purpose — far from it.
I have tried to avoid unnecessary repetition in this judgment. Some of the evidence, however, is relevant to several allegations and some of the alleged contraventions have common elements. Consequently, a certain amount of repetition is unavoidable and a certain amount is desirable for the sake of clarity.
THE EVIDENCE
The Ombudsman read affidavits from each of the Employees; from Stuart Liljeqvist; Ying Zheng; Karnee Mitchell; Rebecca Cummings, Dale Woods; Peter Smith; Quentin Bai; and Zhaukun Du. At all relevant times Messrs Liljeqvist, Woods and Ms Zheng, Ms Mitchell and Ms Cummings were Fair Work Inspectors. Mr Smith is the Assistant Team Leader in the Calculations Team of the Office of the Fair Work Ombudsman (FWO). Mr Du and Mr Bai are both certified Mandarin Chinese translators. Mr Bai translated Ms Yu’s affidavit to her. Mr Du translated WeChat messages, various documents, and audio recordings.
Of those witnesses, only the Employees were required for cross-examination. A good deal of their evidence was not challenged and the cross-examination was largely ineffectual.
In addition, the Ombudsman called Xiaoying (Zoey) Jin, who was employed at the BSKL stores in Belconnen and Woden from about the middle of December 2017 to around 28 February 2018. She was also cross-examined.
I am satisfied that all the Ombudsman’s witnesses were endeavouring to give an honest account of their experiences. Unless otherwise indicated, I accept that they gave truthful and reliable evidence, to the best of their recollections. In several respects, they corroborated each other. I regard this as significant since there was no suggestion that they had colluded with each other to give false evidence. Indeed, as far as I can tell there was no evidence that they had even met.
Numerous documents were exhibited to FWI Liljeqvist’s first affidavit affirmed on 30 September 2020. They included file notes of conversations conducted with Mr Gu and staff during or following staff visits. I was initially concerned about relying on Mr Gu’s statements to the Fair Work Inspectors. Neither the file notes nor the affidavit itself indicate that an interpreter was used during the conversations or that the parties to the conversations had any difficulty understanding each other. On reflection, however, my initial concerns were allayed. Mr Gu has lived in Australia and carried on business here for a number of years. It was evident from the interactions in the courtroom that he had some capacity to communicate in English, although an interpreter was provided and used during the hearing. At case management hearings he appeared in person without an interpreter, although he made it clear that he did not always understand everything that was being said. FWI Liljeqvist’s affidavit was served on Mr Gu when he had legal representation. While he required the Employees for cross-examination, he did not require any of the inspectors. In those circumstances, it seems to me he must be taken not to have had any issue with anything they said, including their accounts of what he told them.
Three affidavits were filed for the respondents. They were an affidavits from Mr Gu affirmed on 25 August 2022, Weihong Tan affirmed on 26 August 2022 and a certified interpreter, Jing Sun, who translated Mr Gu’s affidavit into Mandarin. Ms Tan claimed to have been employed by BSKL in or around November 2016 until around March 2019 at the Baulkham Hills store and occasionally at the North Rocks and Penrith locations. The Ombudsman objected to certain parts of the Tan affidavit and I struck out paragraphs 12 and 13. Mr Gu claimed never to have seen the affidavit and declined to rely on it.
The Ombudsman also read affidavits affirmed by Antonio Fiorenza on 20 October 2023, 24 October 2023, and 27 October 2023. The second merely showed that the supplementary court book had been served on the respondents’ former solicitors when they were still on the record. The third contained up-to-date company searches and information potentially relevant to the utility of making orders for compensation. In the first, Mr Fiorenza deposed that on the day before the affidavit was affirmed he called Jenny Li of YingKe Law Firm asking her “to confirm whether” Ms Sun failed to annex to her affidavit Chinese language versions of the Gu and Tan affidavits in light of the fact that the Sun affidavit purported to exhibit both original and translated affidavits of both Mr Gu and Ms Tan. Ms Li informed Mr Fiorenza both orally and in writing by email the same day that no Chinese language versions of either affidavit existed and that each was translated to its deponent by Ms Sun from the English. She said that the representation in the Sun affidavit that there were Chinese language versions of the two affidavits was the result of “a grammatical error/confusion”.
Mr Gu was extensively cross-examined. I take into account that he was giving evidence through an interpreter. Even so, he was a most unsatisfactory witness. He frequently offered non-responsive answers. Some of his answers were argumentative. Some were confusing. Some were internally inconsistent. Some were difficult to believe, if not incredible. Some, I am satisfied, were dishonest. I agree with the Ombudsman’s characterisation of his overall presentation as that of “an evasive, dissembling and unreliable witness, who sought to improvise his evidence in a manner that he believed assisted the respondents’ case”. I came to the conclusion that I could place no reliance on anything he said unless it was against interest or there was independent evidence to support it.
No evidence was adduced from Fei Yang and no explanation was proffered for the absence of evidence from her. In these circumstances the Ombudsman invited the Court to draw inferences that nothing she could say would have assisted the respondents’ case, to more readily accept the evidence of her witnesses which she would have been in a position to contradict, and to more comfortably draw inferences from that evidence. In Jones v Dunkel (1959) 101 CLR 298 the High Court held that these inferences may be drawn if the necessary conditions for their operation are made out, as they are here. As Heydon, Crennan and Bell JJ explained in Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at [63] (footnotes omitted):
The rule in Jones v Dunkel is that the unexplained failure by a party to call a witness may in appropriate circumstances support an inference that the uncalled evidence would not have assisted the party’s case. That is particularly so where it is the party which is the uncalled witness. The failure to call a witness may also permit the court to draw, with greater confidence, any inference unfavourable to the party that failed to call the witness, if that uncalled witness appears to be in a position to cast light on whether the inference should be drawn. These principles have been extended from instances where a witness has not been called at all to instances where a witness has been called but not questioned on particular topics. Where counsel for a party has refrained from asking a witness whom that party has called particular questions on an issue, the court will be less likely to draw inferences favourable to that party from other evidence in relation to that issue.
These principles apply to all proceedings, including proceedings such as this in which civil penalties are claimed: see Adams v Director of the Fair Work Building Industry Inspectorate (2017) 258 FCR 257 at [147] (North, Dowsett and Rares JJ) and the other cases referred to there. Reliance on the penalty privilege does not prevent the Court from drawing such an inference. In any case, here the filing by Mr Gu and Ms Yang of the Further Amended Defence constitutes a waiver of the penalty privilege they previously invoked. The privilege against self-incrimination does not assist the respondents, as that privilege can only be claimed by a witness and then only under oath or affirmation: Chong v CC Containers Pty Ltd (2015) 49 VR 402 at [236] (Redlich, Santamaria and Kyrou JJA).
I discussed these principles at length in Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liq) (No 4) [2021] FCA 1242 at [222]–[232]. It is unnecessary to say anything more about them here. One matter I mentioned, however, does bear repeating. That concerns the significance of the failure to adduce evidence where the absent witness is a party. In Foot & Thai at [232] I referred to the remarks of Street J in Dilosa v Latec Finance Pty Ltd (1966) 84 WN (Pt 1) (NSW) 557 at 582, cited with approval by Santow J in Australian Securities and Investments Commission v Adler [2002] NSWSC 171; 41 ACSR 72; 20 ACLC 576; 168 FLR 253 at [448] (appeal dismissed in Adler v Australian Securities and Investment Commission [2003] NSWCA 131; 21 ACLC 1810; 46 ACSR 504; 179 FLR 1 per Giles JA, Mason P and Beazley JA) and by the High Court in Kuhl at [63]. In Dilosa at 582 Street J said:
The inference which a Court can properly draw in the absence of a witness, where such absence is not satisfactorily accounted for, is that nothing which this witness could say would assist the case of the party who would normally have been expected to have called that witness. The significance of this inference differs according to the closeness of the relationship of the absent witness with the party against whom the inference is sought to be propounded. Where the absent witness is a party himself then considerable importance may well attach to the inference.
The evidence adduced by the Ombudsman indicates that Fei Yang managed the Blue Sky Kids business, was involved in the hiring of the Employees, informed them of their pay rates, and is said to have played a critical role in a number of the alleged contraventions. In those circumstances, her failure to give evidence, unexplained as it was, is undoubtedly significant. Consequently, I accept the Ombudsman’s invitation. I do infer that nothing Fei Yang could say would have assisted the respondents’ case and I have greater confidence than I might otherwise have had about the reliability of the accounts given by the Employees such that inferences in the Ombudsman’s favour can more comfortably be drawn.
UNCONTENTIOUS FACTS
BSKL was registered on 4 March 2004. At all material times it has been a company incorporated under the provisions of the Corporations Act 2001 (Cth); a “constitutional corporation” within the meaning of s 12 of the FW Act; a “national system employer” within the meaning of s 14(1)(a) of the FW Act; and an entity that operated a business from stores that sold children’s clothing to consumers, which traded under the name “Blue Sky Kids Land” (the business).
Q Fay is and was at all material times:
(a)a company incorporated under the provisions of the Corporations Act and registered since 14 December 2010;
(b)a “constitutional corporation” within the meaning of s 12 of the FW Act;
(c)a “national system employer” within the meaning of s 14(1)(a) of the FW Act; and
(d)an entity that operated a business importing children’s clothing stock from the People’s Republic of China, to supply to the BSKL Stores.
Mr Gu has been a director of BSKL from 1 February 2011. Ms Yang has been a director of BSKL since 14 February 2006. Since 14 December 2010, Mr Gu has also been a director of Q Fay and, since 1 July 2012, one of two directors of Q Fay together with Ms Yang. The evidence establishes that both were intimately involved in the running of the business of the two companies.
At all material times, BSKL operated the business from a number of shops in New South Wales. Those shops were situated in the Charlestown Square shopping centre in Charlestown; Westfield Hurstville; Westfield Kotara; Stockland Merrylands; the North Rocks shopping centre; Westfield Parramatta; Rouse Hill Town Centre; and the Westfield shopping centre in Tuggerah (together, the BSKL stores). In their Further Amended Defence, Mr Gu and Fei Yang also admitted that at all material times BSKL operated its business at Stockland Baulkham Hills; Westfield Belconnen; Westfield Hornsby; Westfield Liverpool; Westfield Mt Druitt; Westfield Penrith; Stockland Shellharbour; and Westfield Woden. Additionally they admitted that at all material times BSKL operated an office in Villawood from which it administered the BSKL business and managed the inventory for the business (the Villawood warehouse).
For at least the periods of time set out in the table below (Assessed Employment Periods), Xing Yang, Xibing Cen and Jin Zhang and Tzu Fong Yu were employed in the listed locations:
Employee Assessed Employment Period(s) Location Ms Xing Yang 19 October 2015 to 11 June 2017 Charlestown store Ms Xibing Cen 14 May 2016 to 9 June 2018 Tuggerah store Ms Jin Zhang 26 August 2016 to 12 February 2018 Parramatta, Hurstville, and Merrylands stores North Rocks, Baulkham Hills, Parramatta, Hurstville, and Merrylands stores and, on one occasion, Penrith Ms Tzu Fong Yu 10 February 2017 to 15 September 2017
24 January 2018 to 27 February 2018
Woden store
Xing Yang, Xibing Cen and Tzu Fong Yu were all employed by BSKL. The respondents admit that Jin Zhang was employed by Q Fay but that is contentious.
Each of the Employees worked alone.
During the Assessed Employment Period, each of the Employees performed all of following duties on at least one occasion. They opened and closed the stores. They sold children’s clothing, accessories and shoes. They displayed and replenished stock on the shelves of the stores in which they worked. They recorded sales and compiled a daily sales report. They cleaned. They ordered stock from the Villawood warehouse. And they banked the stores’ takings, as necessary.
The investigation and production of documents
During the period from 29 November 2017 to 19 November 2018 the Ombudsman carried out an investigation of BSKL to determine its compliance with the FW Act and Regulations (the investigation). The investigation included visits to Blue Sky Kids Land branded stores and interviews of employees and Mr Gu.
The investigation was triggered by a complaint made by Xing Yang about her pay and conditions. Ms Yang’s first job after she arrived in Australia was with BSKL. She deposed that she knew the rate of pay was too low, but she took it anyway because she needed a job; she, was not aware of what the proper pay rates were in Australia; and she knew that it was common for other Chinese people to receive similar rates in other jobs. She said that she realised she was being underpaid when she saw in the news that another business had been underpaying people. WeChat messages exchanges between Ms Yang and Mr Gu annexed to Ms Yang’s affidavit (annexure XY-10) are telling. They include the following (as translated):
23 October 2017 12:38 PM
A: As an employee working here for six years, I've been working hard. Our Company never sent me simple greetings when I got ill. I feel so disappointed. I think I deserve a salary of $11/hour due to my high working efficiency and attitude for so many years.
…
Nathan: … All of our shops should have been closed if we strictly observe the law …
At this time the minimum hourly rate of pay was $20.88.
FWI Liljeqvist had primary carriage of the investigation. At various times he was assisted by Fair Work Inspectors Brownell, Cummings, Woods, Mitchell, and Zheng. FWI Zheng is a native Mandarin speaker who is fluent in both Mandarin and Cantonese.
During the investigation, Fair Work Inspectors “considered” Blue Sky Kids Land branded stores in Baulkham Hills, Belconnen, Charlestown, Hornsby, Hurstville, Kotara, Liverpool, Merrylands, Mount Druitt, North Rocks, Parramatta, Penrith, Shellharbour, Rouse Hill, Tuggerah and Woden and conducted 15 site visits to a number of those stores. Those visits occurred in January and February 2018. They also visited the Villawood warehouse. At the site visits they spoke to employees and Mr Gu, inspected records, downloaded documents, and took photographs. A proposed site visit to the Woden store on 18 January 2018 was thwarted in circumstances the Ombudsman alleges amount to hindering and obstructing inspectors in the performance of their functions or the exercise of their powers in contravention of s 707A(1) of the FW Act.
FWI Zheng interpreted where necessary during some of the site visits. On other occasions, when speaking to staff who required an interpreter, the inspectors would use the services of the Translating and Interpreter Service.
When the investigation began, FWI Liljeqvist intended to investigate possible underpayments of all BSKL employees. As the investigation progressed, however, due either to a lack of records or inconsistent records, he decided to limit the investigation to those employees who were willing to assist. They were the Employees. They assisted the Ombudsman by participating in recorded interviews and providing information, records and documents.
FWI Liljeqvist issued multiple notices to produce on BSKL and Q Fay and on other entities during the course of the investigation.
On or around 9 November 2018, FWI Cummings issued a “Findings of contravention” letter (Contravention Letter) to BSKL. Ten days later she sent BSKL two revised pages of the Contravention Letter to reflect additional calculations by the FWO of annual leave, annual leave loading and payment in lieu of notice owing to Xing Yang. On 5 August 2019, FWI Liljeqvist sent BSKL a further revised Contravention Letter to reflect minor corrections to the calculations by the FWO.
Earlier investigations
The investigation with which this proceedings concerned was not the first time BSKL or Mr Gu had come to the attention of the regulator.
FWI Liljeqvist discussed the previous “interactions” in his first affidavit.
The first “interaction” occurred nearly 20 years ago. On 19 September 2006 the Office of Workplace Services (the predecessor of the FWO) began to undertake a “targeted audit” of the Penrith store. That day Workplace Inspector (WI) Helen Yuen visited the store and apparently spoke to some person or persons but was unable to speak to Mr Gu. Her notes from the visit record, amongst other things, that the store had two to three employees and that various records, including pay slips, were kept.
The nature and purpose of the audit was explained in a letter to Mr Gu from WI Yuen:
Review of businesses by the Office of Workplace Services (OWS)
The role of the OWS is to ensure that the rights and obligations of both workers and employers are understood and enforced fairly under the Workplace Relations Act 1996 (the Act).
The Act requires employers to keep accurate and complete time and wages records and to issue pay slips to each worker. The record keeping and pay slip requirements are designed to ensure that workers receive their correct wages and conditions.
Commencing 27 September 2006, the Act allows the issuing of Infringement Notices to impose a monetary penalty on an employer for failing to meet their time and wages records and pay slip obligations. Initially the amount of the infringement notice penalty will be $55.00 for an individual and $275.00 for a body corporate, as an alternative to initiating court proceedings.
The Act gives OWS Workplace Inspectors the power to inspect and copy time and wages records. In the event that employers fail to comply with these requirements penalties may be applied.
As you may be aware, the OWS has been undertaking an initial review of businesses in shopping centres to ensure employers are keeping time and wages records and issuing pay slips as required by the Act.
Unfortunately you were not available when I visited your business today. Please find attached information materials relating to the time and wages records and pay slip obligations of employers covered by the Act.
Please forward time and wages records and a copy of a sample pay slip for the last pay period to me for all employees by close of business Wednesday, 27 September 2006 …
In the event that your business is found not to be complying with your obligations, you will be asked to rectify the matter voluntarily. If voluntary compliance is not achieved the OWS may undertake further compliance orientated actions to ensure the requirements of the Act are met. If serious or wilful breaches of the Act are uncovered at the time of the audit, the OWS will investigate further.
Information on employers’ time and wages records and pay slip obligations is available at You may also contact the WorkChoices Infoline on 1300 363 264 for further information about your rights and responsibilities.
Further information about the campaign can be obtained from the OWS on 1300 724 200.
In response to the audit, Mr Gu provided the OWS with copies of records and pay slips. Three documents only are annexed to FWI Liljeqvist’s affidavit. They relate to one employee, Li Juan, who, according to those documents, started work only eight days before the audit.
On 27 October 2006, WI Yuen, sent Mr Gu a fax stating (without alteration):
Thank you for talking to me earlier today in regards to your record keeping and payslips. They appear to be meeting the regulations in regards to record keeping. However, you will need to update your records to show the following:
* The Industrial instrument by which the employees receive their entitlements. This needs to be filled out in the records in the section where it says “Name of award(s)/agreement(2) / NAPSA.” For your company, this needs to be completed with “Shop Employees (State) Award”
You also need to name the superannuation fund in which you pay superannuation to on both the payslip and employment records.
The same day WI Yuen followed up the fax with a phone call. In the report of her investigation, which appears behind tab 41 in FWI Liljeqvist’s first affidavit, she noted (without alteration):
Contacted employer today and asked whether he just completed the templates I had given him, or whether he actually use them, he said he had only opened the shop and penrith in June 2006 and was downloading the sheets from the Internet and using them as he found them very good. I trust that this is correct.
Indicated that he needs to put the Award in his records, however would fax more information in regards to it. Also will fax over the voluntary compliance advice.
On 3 November 2006, WI Yuen telephoned Mr Gu again. Her note of that event reads as follows:
Called employer Nathan Gu to see if he understood my fax and to discuss. Gave further explanation & requested he fax back the voluntary undertaking. He said he would send it back today or Monday.
On 6 November 2006, Mr Gu entered into a “compliance undertaking” with the OWS. The undertaking provided that from the next pay period BSKL would issue pay slips to all employees and keep employment records for all employees in accordance with the requirements of the Workplace Relations Act 1996 (Cth) (WR Act) and the Workplace Relations Regulations 2006 (Cth).
The next contact Mr Gu had with a workplace regulator occurred in 2011. By then the FW Act had been passed, the WR Act had been repealed, and the FWO had replaced the OWS. In about April 2011 the Ombudsman received a complaint from Lai Kai (Lisa) Wong alleging that she had been employed for a three-hour trial at the BSKL store in Burwood and had not been paid for the time worked. On 12 April 2011 the Ombudsman wrote to BSKL informing the company of the complaint, the role of the Ombudsman and what the company might expect if a contravention of workplace laws were identified. The letter also included the following information:
Where to find further information
If you are unsure if the issues raised relate to a lawful entitlement, please call the Fair Work Infoline on 13 13 94. Further Information can also be accessed NOTICE
From 1 January 2010 employers should be aware of changes to the national workplace regulations system under the Fair Work Act 2009. From this date, the National Employment Standards (NES) and modern awards come into effect. The NES are a set of 10 minimum standards of employment, and apply to all employees in the national system, regardless of any industrial instrument or contracts of employment.
In association with the NES, modern awards will make up a new safety net for employees. Modern awards will apply to employees based on particular industries or occupations. Employers to make sure they are aware of their rights and obligations under the Fair Work Act 2009 by contacting the Fair Work Infoline on 13 13 94, or visiting you have any queries prior to the Fair Work Inspector contacting you, please contact the Fair Work Ombudsman on 13 13 94 or visit >
An Assisted Voluntary Resolution process failed to resolve the complaint and the directors of BSKL were informed that the complaint would be referred to a Fair Work Inspector to consider whether there should be a full investigation.
On 18 October 2011 a Fair Work Inspector gave notice to “the proper officer” of BSKL to produce documents and records relating to Ms Wong and advised that the records were required for the purpose of:
•Determining whether the Act is being or has been complied with, specifically:
section 44 (compliance with the National Employment Standards;
section 45 (compliance with a Modern Award);
section 50 (compliance with an Enterprise Agreement;
section 535 (compliance with employer obligations in relation to employee records)
section 536 (compliance with employer obligations in relation to pay slips)
•Determining whether a fair work instrument, namely the [MA000004] General Retail Industry Award 2010 is being or has been complied with.
•Determining whether a provision of the Fair Work Regulations 2009 pursuant to the Fair Work Act 2009 (Cth), namely Part 3-6, Division 3, Subdivision 1,2.
The investigation was terminated, however, owing to a lack of evidence that BSKL had made an offer of employment to Ms Wong.
About six months later, on 12 April 2012, the Ombudsman received a similar complaint from Xiuyan (Vicki) Yang who alleged that she had not been paid for three days work at the Parramatta store. On 16 May 2012 FWI Marcel Smithers had a telephone conversation with Mr Gu and he followed it up with an email in which he asked Mr Gu by close of business the following day to provide evidence, such as timesheets he alleged were available, to determine the actual hours worked. He also informed Mr Gu that s 323 of the FW Act requires employers to pay employees in full and in money in relation to the performance of work. and that:
The minimum rates for a Casual Employee G1 General Retail Employee is currently $21.25 per hour for an Adult.
The next day FWI Smithers emailed Mr Gu acknowledging receipt of certain documents and informing Mr Gu of the following:
It is my understanding that the time performed on 26 March (which is not detailed as time worked on your timesheet) was an unpaid trial engagement. Please note that under s.323 of the Fair Work Act 2009 all work performed by an employee must be paid in monies, in full and at least monthly. There is no such thing as unpaid trial work. Please refer to the Fact Sheet – Internships, Vocational Placements & Unpaid Work should you require further information.
As advised the minimum rate of payment is $21.25 per hour. It appears that the quantum amount outstanding is $456.88 gross (21.5 hours). You will need to make this payment, less applicable taxation, to Vicki (Xiuyuan) Yang by electronic funds transfer. If you do not have her bank account details, I can obtain these upon your request.
Once you have made the payment, you will need to provide to me a copy of the Electronic Funds Transfer Receipt as proof of payment as soon as possible. This will finalise the matter and the Fair Work Ombudsman will not take any further action.
The matter was resolved on 28 May 2012 after Mr Gu (albeit somewhat grudgingly) provided a cheque for the specified outstanding amount.
THE LIABILITY OF THE EMPLOYERS
Section 793 of the FW Act attributes conduct by an officer, employee or agent of a corporation to the corporation itself, provided the conduct in question falls within the scope of their actual or apparent authority. It also facilitates proof of knowledge, intention, opinion, belief, purpose and other matters where the state of mind of the body corporate needs to be established. It provides:
Liability of bodies corporate
Conduct of a body corporate
(1) Any conduct engaged in on behalf of a body corporate:
(a)by an officer, employee or agent (an official) of the body within the scope of his or her actual or apparent authority; or
(b)by any other person at the direction or with the consent or agreement (whether express or implied) of an official of the body, if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the official;
is taken, for the purposes of this Act and the procedural rules, to have been engaged in also by the body.
State of mind of a body corporate
(2)If, for the purposes of this Act or the procedural rules, it is necessary to establish the state of mind of a body corporate in relation to particular conduct, it is enough to show:
(a)that the conduct was engaged in by a person referred to in paragraph (1)(a) or (b); and
(b)that the person had that state of mind.
Meaning of state of mind
(3)The state of mind of a person includes:
(a) the knowledge, intention, opinion, belief or purpose of the person; and
(b) the person’s reasons for the intention, opinion, belief or purpose.
…
(5)In this section, employee has its ordinary meaning.
The effect of s 793 is that the conduct and state of mind of an official, employee or agent is attributed to the body corporate: Director of the Fair Work Building Industry Inspectorate v Robinson (2016) 241 FCR 338 at [48]–[50] (Charlesworth J).
Thus, if Mr Gu and/or Fei Yang engaged in the conduct the subject of the contraventions and the conduct was within the scope of their actual or apparent authority, BSKL and, where relevant, Q Fay, also engaged in that conduct, and the state of mind of one or both of them is taken to be the state of mind of BSKL or Q Fay, as the case may be.
PROOF
Generally speaking the burden of proof rests with the Ombudsman. As this is a civil matter, the standard of proof is the balance of probabilities or, put another way, “to the reasonable satisfaction of the tribunal”: Briginshaw v Briginshaw (1938) 60 CLR 336 at 361–362 (Dixon J). In determining whether the burden has been discharged, the Court is required to take into account the nature of the cause of action or defence; the nature of the subject matter of the proceeding; and the gravity of the matters alleged: Evidence Act 1995 (Cth), s 140. As Dixon J explained in Briginshaw at 362, “[t]he seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the [resolution of that question]”. Here, the consequences of adverse findings are serious, in that they expose the respondents to the risk of civil penalties. In these circumstances, the satisfaction of the Court “should not be produced by inexact proofs, indefinite testimony, or indirect inferences”: Briginshaw at 362.
In some instances, however, the burden of proof shifts to the employer: see FW Act, ss 361 and 557C. Section 361 is only relevant in relation to the general protections allegations and is discussed in that context. In short, it creates a presumption that action taken for a prohibited reason was taken for that reason if such an allegation is made and the presumption is not rebutted. Section 557C, however, is relevant to numerous contraventions so it is appropriate to refer to it now.
Section 557C was inserted into the Act by the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth) (Protecting Vulnerable Workers Amendment Act), which commenced on 15 September 2017. It applies to all contraventions alleged to have occurred on or after that date: FW Act Sch 1 Pt 4 cl 24A. Section 557C shifts the burden of proof from the applicant (here the Ombudsman) to the employer where the employer fails to comply with record-keeping or pay slip requirements in the FW Act or Regulations. It reflects a legislative policy that an employer should not be able to take advantage of its wrongdoing to defeat a claim that it has underpaid its employees: Gallagher v AAG Labour Services Pty Ltd [2020] FCA 1753 at [18].
Section 557C relevantly reads as follows:
Presumption where records not provided
(1)If:
(a)in proceedings relating to a contravention by an employer of a civil remedy provision referred to in subsection (3), an applicant makes an allegation in relation to a matter; and
(b)the employer was required:
(i)by subsection 535(1) or (2) to make and keep a record; or
(ii)by regulations made for the purposes of subsection 535(3) to make available for inspection a record; or
(iii)by subsection 536(1) or (2) to give a pay slip;
in relation to the matter; and
(c) the employer failed to comply with the requirement;
the employer has the burden of disproving the allegation.
(2)Subsection (1) does not apply if the employer provides a reasonable excuse as to why there has not been compliance with subsection 557C(1)(b).
(3)The civil remedy provisions are the following:
(a)subsection 44(1) (which deals with contraventions of the National Employment Standards);
(b)subsection 45 (which deals with contraventions of modern awards);
…
(g)subsection 323(1) (which deals with methods and frequency of payment;
(h)subsection 323(3) (which deals with methods of payment specified in modern awards or enterprise agreements);
…
(j)any other civil remedy provisions prescribed by the regulations.
As Colvin J explained in Ghimire v Karriview Management Pty Ltd (No 2) [2019] FCA 1627; 290 IR 331 at [14], it is the legal, not merely the evidential, burden of proof which shifts to the employer:
Section 557C provides for more than an evidentiary burden on the defaulting employer when it comes to an absence of records. It is not a mere reversal of the evidentiary onus. Further, it is not a provision, for example, that operates to deem a matter to be proved in the absence of evidence to the contrary. In such cases, an issue may arise as to whether the obligation is to adduce some evidence which raises a genuine issue as to whether the matter occurred or whether the burden of disproving the matter falls on the party who disputes the matter. Rather, s 557C states expressly that the defaulting employer bears the burden of disproving the allegation. It is a provision concerned with the overall burden of proof.
Thus, as his Honour went on to say at [16], if the evidence adduced by the employer is insufficient to disprove the allegation on the balance of probabilities, then the effect of s 557C is that the claim must be upheld.
In their Amended Defence, the Employers pleaded that they “reserve[d] its right to rely upon s.557C and a reasonable excuse for any failure to provide pay slips for Ms Xibing Cen and … Ms Jin Zhang” (at [46]). Since the Employers did not exercise that right and there is, in any event, no material before the Court capable of disclosing a reasonable excuse, they carry the burden of disproving the allegation.
For these reasons, it is convenient to deal first with the record–keeping and pay slip contraventions. Before doing so, however, I should address two preliminary questions.
TWO PRELIMINARY QUESTIONS
Who employed Tzu Fong Yu and Jin Zhang?
In Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (2011) 198 FCR 174 Buchanan J held that the question of which of two corporations was the employer of employees involves a search for “substance and reality” (at [57]) and that, in order to answer that question, it is necessary to decide which of the two had the right to recruit and dismiss them, what work they had to perform, and who should perform it (at [50], [68], [98]). Ramsey was concerned with whether a labour hire company set up by the respondent was the true employer. His Honour found that it was not because it bore none of the characteristics of an employer (at [98]). The position here is different because it is common ground in present case that both BSKL and Q Fay were employers of labour. I accept, however, that in deciding which is the employer it is necessary to consider which of the two corporations exercised control over the employees in question, which of them paid their wages, and which of them had the right to discipline them: see Ramsey at [49]–[56]).
That is not a simple question in a case such as this where the potential employers have common directors and failed to keep adequate records.
In their joint defence the Employers admitted that Q Fay employed Ms Zhang and denied that either of them employed Ms Yu. In their Further Amended Defence filed on 16 June 2023, however, Mr Gu and Fei Yang admitted that BSKL employed Ms Yu. The Ombudsman submits that both Ms Zhang and Ms Fong Yu were employed by BSKL.
Tzu Fong Yu
In the Amended Defence the Employers pleaded that they did not know and could not admit that Ms Yu worked at the Woden store at least for part of the Assessed Employment Period and denied that she was employed by either of them.
In their Further Amended Defence, however, Mr Gu and Fei Yang admitted she worked for BSKL and Mr Gu also gave evidence to that effect in his affidavit. As he was one of the controlling minds of both Employers at the relevant time, I find that at all material times Ms Yu was employed by BSKL.
The question of who employed Ms Zhang is more complicated.
Before addressing this question, however, it is convenient at this point to say something about the position initially taken by the respondents about the identity of Ms Yu’s employer, which the Ombudsman described as “the Woden store fiction”.
On 16 January 2018, during a conversation with the Fair Work Inspectors at a café near the Parramatta store following the site visit, Mr Gu told the inspectors that BSKL is the company that pays the wages but that:
[The Canberra store is] in a different arrangement. [T]here is a contract with the workers in this store where they will buy and sell clothes at a wholesale price from Q Fay. Judy and Daisy are the managers. I arrange and pay for the lease and fit out of the store. The workers may then get back any profits they make after paying the wholesale cost of the stock.
No such contract was proffered in evidence. There was no probative evidence to support it and powerful evidence to contradict it. It was a lie.
The First and Second BSKL NTPs were served personally on Mr Gu during the site visit to the Villawood warehouse on 23 January 2018. As will be seen, the Second BSKL NTP required the production of all records relating to BSKL employees for the duration of the assessed period.
In her first affidavit Ms Yu deposed that in or around early February 2018, Fei Yang telephoned her, saying words to the following effect:
If Fair Work come into the store, tell them that Daisy is your boss and that you have nothing, no sources. There is no Head Office in Sydney and we just do our own business in Canberra.
In her second affidavit, Ms Yu deposed that while reading through her evidence on or about 17 October 2021 (the day before the hearing started), she checked her voice messages from early 2018 on the WeChat app on her mobile phone and found two voice messages from Fay (Fei Yang). The second of these I refer to later in these reasons in the context of the Ombudsman’s allegations that BSKL and Fei Yang contravened s 707A of the FW Act by directing the destruction of timesheets. The first is also significant. It was left on 23 January 2018, the same day the First and Second BSKL NTPs were served on Mr Gu. Audio files of both messages were exhibited to the affidavit together with an English translation. The English translation reads (without alteration):
Fei:If someone happens to come and check, first, you should tell them who you are, (telling them) you are a citizen, and you did nothing wrong. There’s nothing wrong, OK? Then if they ask you anything about the company, you should basically and in principle say that you have no idea of anything (about the company). If they ask how the roster is arranged, tell them someone in Canberra will send notices about the working time, that Daisy who used to work here would send text messages about working time to your number. Then the most important question is about wages, for wages ....When asked about wages, tell them your wages have nothing to do with the Sydney headquarter, that you do your own accounting independently, that the wages are not fixed, sometimes... Because the workers in Canberra generally answered like this, and we have told them to talk like this. Even though you are responsible for your own profits and losses and do your independent accounting, they may still ask how your wages are calculated and who does the calculation. (Answer them:) How do I know? As for who did the calculation, it was Daisy, the Daisy who worked here before. (If they ask) where Daisy is. (Tell them) Daisy has returned to Mainland China. (If they ask) who does the calculation now, (tell them) “I don’t know; this is my first day at work. I don’t know. We calculate once every three or four weeks sometimes, and it’s not the time yet. I don’t know.” Are you clear now? There are mainly two principles; first, your Canberra store is independent and has nothing to do with us (Sydney headquarter), and you are responsible for your own profits and losses. You get paid more if the business is good, less if the business is not as good. You (the Canberra store) pays the wages, but the lowest will not be less than $20. This is the first principle. The second principle is that you work a day or two (per week) (or it could mean: you have only worked there for one or two days), you are not familiar with the people in the company. If they ask you whether you know the manager or boss, tell them that you know them, that they come occasionally, and you met them once, but that you don’t know anything else about the company. (Answer them) that you don’t know anything, understand? Generally speaking, they won’t check the Canberra store a second time after one visit, but I am telling you this just in case. Remember, the less you say, the better; if they ask you, simply answer “I don’t know”, for everything.
It is obvious that if this were the truth, it would be unnecessary to tell Ms Yu about what to say. And the 53 voice messages annexed to Ms Yu’s second affidavit are inconsistent with it. Fei Yang was instructing Ms Yu to lie to the FW inspectors.
Xing Yang said that Fei Yang spoke to employees nearly every day on WeChat, informing them of discounts, new arrivals, sales prices, and how to set up displays. When Xing Yang’s hours were unilaterally reduced upon the closure of the Kotara store in October 2015, it was Fei Yang to whom she complained and Fei Yang told her “I cut your hours”.
It was Fei Yang who interviewed Tzu Fong Yu for the job at the Woden store. She described Xing Yang in her affidavit as one of her two bosses, the other being Mr Gu. She deposed that she spoke to both of them many times on the phone about her employment conditions including pay, hours and leave, and regularly communicated with them through WeChat groups. It was Fei Yang who interviewed her for the job and Fei Yang who advised her of her hours and pay rates. When she wanted to take a holiday, she discussed it with Fei Yang and it was Fei Yang who authorised it. When she was injured and needed time to recuperate, it was Fei Yang whom she informed. When she was ready to return to work, it was Fei Yang she contacted and Fei Yang who arranged for her return. It was Fei Yang who informed her that the Woden store was closing. And it was Fei Yang who directed Tzu Fong Yu to destroy timesheets.
Ms Zhang, too, deposed that “Fay” was the manager of BSKL and was known generally as the manager. When Jin Zhang inquired about the possibility of employment with BSKL, she was given her phone number and called her. It was Fei Yang who hired her, Fei Yang who told her what she would be paid, and Fei Yang who directed her when, where and how to work. It was Fei Yang who sent her the roster each week. When she was running late for work, it was Fei Yang she contacted. It was Fei Yang who told her that her hourly rate would be increased to $12 in August 2017. When she thought there was an error in her pay and when she decided to reject Mr Gu’s ultimatum, in February 2018, it was Fei Yang whom she informed. In a voice message a few days later, Fei Yang referred to Ms Zhang as having worked for her.
Ms Zhang’s evidence was supported by a number of WeChat messages annexed to her affidavit.
As this evidence was credible and uncontradicted, I am satisfied that Fei Yang knew the terms and conditions of employment of all four Employees. Whether or not she set the pay rates, she certainly knew what they were, because the uncontradicted evidence of the Employees, which I accepted, was that in each case it was she who told them what they would be paid, both at the time they started work for BSKL and during the course of their employment. And there was contemporaneous evidence to show that she knew what they were paid. She also knew at all relevant times that their hours and days of work were not reasonably predictable because the evidence shows that none were fixed at the commencement of their employment (save for the period in which Xing Yang was a full-time employee) and she knew that their hours and days of work varied from week to week because she was the person who determined the hours and fixed the weekly rosters, albeit that she sanctioned alterations from time to time. For the same reason she was also aware that they worked Saturdays, Sundays and public holidays as required. Moreover, she knew that they did not receive loadings, overtime rates or penalty rates for weekend or public holiday work because the rate she told them they would receive both at the outset of their employment during the Assessed Employment Periods was a flat hourly rate, regardless of the number of hours, the day of the week or whether they worked public holidays. As she generally knew their hours of work from week to week, she must have known from time to time that they worked beyond the number of hours designated in the Award as ordinary hours.
I am not satisfied, however, that Fei Yang knew that the Award applied and, although the Ombudsman pleaded that she either knew or was wilfully blind to the application of the Award to BSKL and the Employees, the Ombudsman did not submit that she knew that the Award applied or was wilfully blind to its application. It is true that the letter dated 2 December 2011 from FWI Martiskin was addressed to her and that it referred to the Award and the need for employers to ensure that they were aware of the rights and obligations set out in the FW Act and modern awards. If I were satisfied that Fei Yang had read the letter or that the letter was read to her or that its contents were drawn to her attention at any time before the end of the Assessed Employment Periods, in all likelihood I would have found that she had the requisite knowledge. But when Mr Gu’s attention was drawn to the document in cross‑examination, he said it was “100% impossible” that his wife received the document because it was sent to the Burwood shop and they were not in the shop. He agreed that it was possible that he would have read the letter, but not his wife, because “she couldn’t, because she couldn’t understand it”. The cross-examiner did not take the matter any further. He made no attempt to ascertain or establish that Fei Yang could read English, whether through Mr Gu or otherwise, or to prove that Mr Gu had drawn the letter or its contents to the attention of his wife. The evidence from the Employees was that all communications between them and Mr Gu and Ms Yang were in Mandarin Chinese. Although there was evidence that she visited the stores on occasions, there is no evidence to suggest that she interacted with any customers on those occasions.
Nevertheless, for the reasons given in [882], I am satisfied that Fei Yang was a knowing participant in the contraventions of s 45 which relate to the failure to pay casual loadings, overtime rates, and Saturday, Sunday and public holiday penalty rates. They are, respectively, the contraventions of cll 13.2; 29.2(c) and 29.4 That evidence demonstrates that Fei Yang knew the essential elements of those clauses. With respect to cl 13.2, they are that the employee is a casual employee and that she is not paid an additional 25% above the ordinary hourly rate. Knowledge of the essential elements of cl 29.2 for casual employees is demonstrated by knowledge that employees worked outside the ordinary span of hours, in excess of 38 ordinary hours per week or in excess of 11 hours on one day of the week and in excess of nine hours on any other day of the week. Knowledge of the essential elements of cl 29.4 is demonstrated by knowledge of any of the following: that employees worked after 6pm on a weekday; that they worked on a Saturday or Sunday and/or on a public holiday, and that they were not paid extra for it.
Since Fei Yang knew that the Employees’ hours or work were not reasonably predictable and knew that they were paid flat rates, she had knowledge of the essential elements of cl 13.2. Since she generally fixed the rosters and was a member of the relevant WeChat groups on which the rosters were posted, she knew the hours and the days the Employees worked, which means that she would have known when they worked excess hours, when they worked on weekends and when they worked on public holidays. The evidence also indicates that she knew that BSKL Employees were paid flat rates which is sufficient to establish that she knew they were not paid casual loadings, overtime rates, Saturday, Sunday or public holiday penalty rates. Consequently, she knew the essential elements of cll 29.2 and 29.4.
I would add that Fei Yang’s direction to Ms Yu to destroy the timesheets for the Woden store, knowing that the FW Inspectors would wish to see them, indicates a consciousness of wrongdoing. As the timesheets would show the hours and days worked, they would also show when overtime, Saturday, Sunday and public holiday rates were payable and they would also show the irregular pattern of work. As I mentioned earlier, I am of the opinion that it is unnecessary to prove that an employer or an alleged accessory knows of the applicable award to sustain an allegation that a particular clause of the Award has been contravened. It is not an essential element of the contraventions of any of the clauses in question.
On the other hand, while I am satisfied that Fei Yang knew at all relevant times that the rates of pay were low, the evidence is insufficient to establish that she knew the minimum prescribed rates and, if she did not know the minimum prescribed rates she could not have known that the rates BSKL paid were below the minimum prescribed rates. In the absence of evidence that the correspondence from the Ombudsman had come to her attention, there is insufficient evidence to infer that she was a knowing participant in the contraventions of cl 17.
Nor is there any evidence, or at least sufficient evidence, to establish that Fei Yang knew at the relevant times that no superannuation contributions were made to a superannuation fund, as required by cl 22.2 or that she knew the Employees were not paid weekly or fortnightly on a regular pay day, as required by cl 23. Certainly, the Ombudsman did not point to any.
It follows that I am satisfied that Fei Yang was knowingly concerned in the contraventions by BSKL of s 45 of the Award by failing to pay casual loadings, Saturday, Sunday and public holiday penalty rates, but not otherwise.
The serious contraventions (s 557A)
The remaining question is her liability for the serious contraventions.
Although there is no doubt that Fei Yang knew the Employees’ wages were low, for the reasons given above, I am not satisfied that she knew that BSKL failed to pay minimum rates contrary to cl 17 of the Award. It follows that I am not satisfied that she was involved in the serious contraventions committed by BSKL.
CONCLUSION
It follows from the above findings that, with a few exceptions, the Ombudsman has made out her case. I now turn to consider the question of relief.
RELIEF
The Ombudsman seeks declarations reflecting the findings; orders rectifying the underpayments to compensate the Employees (with interest); orders that superannuation contributions be made on their behalf to their nominated superannuation funds; and pecuniary penalties. An order was made on 5 June 2020 that the question of liability be heard separately from, and before, the hearing of any other. That said, given that I have accepted Mr Smith’s evidence which supports the making of compensation orders in the amounts the Ombudsman sought, there is no apparent reason why the Employees should have to wait any longer to be compensated. Consequently, I propose to indicate the orders I am minded to make and will enter them within 14 days of the publication of judgment unless during that time either party can show cause why they should not be made.
Declarations
To the extent that the Ombudsman has made out her case, I will make declarations substantially in the form, or to the effect of, those sought by the Ombudsman. Section 23 of the FCA Act gives the Court the power to do so and nothing in the FW Act limits that power or restricts its exercise. The conditions which must generally be satisfied before the power is exercised have been satisfied here: see Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437–8 (Gibbs J). I agree with the Ombudsman that there is utility in granting declaratory relief. As Wheelahan J observed in Australian Building Commissioner v Construction, Forestry, Mining, Maritime and Energy Union (Syme Library Case) (No 2) [2019] FCA 1555 at [78], declarations are a convenient way to capture the Court’s findings and a more effective one than the publication of the reasons alone. Furthermore, it is appropriate to mark the Court’s disapproval of the respondents’ conduct in this way: Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832 at [7] (White J).
Rectification/compensation
The Court may make any order it considers appropriate if it is satisfied that a person has contravened a civil remedy provision (FW Act, s 545(1)), including an order for compensation for loss suffered because of a contravention: FW Act, s 545(2)(b). The power conferred by s 545(1) is a broad one, “constrained only by limitations that are strictly required by the language and purpose of the section”: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at [103] (Keane, Nettle and Gordon JJ, Gageler J agreeing at [51]).
The power is wide enough to capture both economic and non-economic loss and there is no doubt that the Court may order both the principal (the employer) and the accessories (those persons found to have been involved in the employer’s contraventions) to pay compensation: see, for example, Veeraragoo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1448 at [42]‑[52] (Colvin J) and the cases cited there and Fair Work Ombudsman v IE Enterprises Pty Ltd [2020] FCA 848 at [24] (Anderson J).
It is appropriate to make such orders. Mr Gu and Fei Yang were intimately involved in the Award contraventions. BSKL is only liable because of their conduct. BSKL remains in liquidation, so it is unlikely that the Employees will obtain full, if any, recompense from it. As the Ombudsman submitted, orders of this kind are commonly made in these circumstances.
The Ombudsman applied for interest on the amounts of the underpayments. The Court is obliged to include an amount of interest on any sum ordered to be paid, unless good cause is shown to the contrary: FW Act, s 547(2). None was shown here. In making an award of interest the Court is required to take into account the period between the day the cause of action arose and the day the order is made: FW Act, s 547(3).
The orders the Ombudsman seeks are orders to the effect that:
(1)within 28 days of the Court’s orders, BSKL, Mr Gu and Fei Yang, jointly and severally, pay to the Ombudsman the sum of $118,987.12, being the total amount the Employees were underpaid as a result of the contraventions of s 45 of the FW Act, excluding the contraventions relating to superannuation, and an additional amount of $12,933.30 reflecting the amounts that should have been paid to Xing Yang for accrued untaken annual leave and payment in lieu of notice, plus interest;
(2)within 14 days of receipt of the above sum, the Ombudsman pay the following amounts as compensation plus interest:
(a)$28,131.96 to Xibing Cen;
(b)$43,903.77 to Xing Yang;
(c)$14,744.43 to Tzu Fong Yu; and
(d)$45,140.26 to Jin Zhang;
unless the Ombudsman is unable to locate any of them, in which case she should pay the amount(s) to the Commonwealth within 7 days thereafter.
(3)within 28 days of the Court’s orders, BSKL, Mr Gu and Fei Yang, jointly and severally, make superannuation contributions on behalf of Xibing Cen; Xing Yang and Tzu Fong Yu to their nominated superannuation funds:
(a)in the amount of $6,986.41 made up as follows:
(i)$2,252,42 for the benefit of Xibing Cen;
(ii)$3,381.34 for the benefit of Xing Yang;
(iii)$1,262.65 for the benefit of Tzu Fong Yu;
(b)in relation to the ordinary time earnings component of those sums referred to in (2) above, being the amounts of the underpayments excluding superannuation, at the superannuation guarantee charge rate prescribed by applicable superannuation legislation currently in force; and or in the amount of any relevant superannuation guarantee charge under the Superannuation Guarantee (Administration) Act 1992 (Cth).
(4)within 28 days of the Court’s orders, BSKL make superannuation contributions on behalf of Xing Yang to her nominated superannuation fund on the sum of $12,933.30 at the prescribed rate and/or in the amount of any relevant superannuation guarantee charge under the Superannuation Guarantee (Administration) Act 1992 (Cth);
The effect of the proposed orders in (1), (2) and (3) above is that, if BSKL has insufficient funds to pay the money, Mr Gu and/or Fei Yang must do so.
As is customary interest will be calculated at the rates referred to in cl 2.2 of the Interest on Judgments Practice Note (GPN-INT), which can be found on the Court’s website, and for the sake of clarity I will include the amounts, rather than the interest rates, in the orders. While I have had regard to the periods during which the amounts have been outstanding, I am disposed to award interest on the amounts of the underpayments from the last day each of the Employees worked for BSKL.
As the sums in (1), (2), (3) and (4) above reflect the amounts Mr Smith concluded the Employees should have been paid and I have accepted his conclusions, I am minded to make orders that BSKL and Mr Gu pay the total sum of the underpayments to the Ombudsman for payment out to the Employees. Since I have not found that Fei Yang was involved in the contraventions of s 45 relating to the failure to pay minimum rates or superannuation, I cannot order that she be jointly and severally liable with the other respondents to pay the total sum. I also have concerns about proposed orders (3) and (4).
I am not minded to make proposed order (3) above because it is undesirably vague in circumstances where the respondents are unrepresented. I require the Ombudsman to quantify the amount. Nor am I minded to make order (4). The Ombudsman should make an election. If the contribution is to be at the prescribed rate, that rate should be identified and, if it is to be in a lump sum, the amount should be calculated and the method of calculation exposed.
Within 14 days, the Ombudsman should file short minutes of orders giving effect to these reasons.
Other orders
That leaves the question of pecuniary penalties. The Ombudsman should file any affidavits going to this question within 28 days, together with an outline of her submissions. Mr Gu and Fei Yang should have a further 28 days to file any affidavit(s) on the question within 28 days thereafter, together with an outline of their submissions. The hearing will take place at the earliest convenient time thereafter.
I certify that the preceding nine hundred and five (905) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Katzmann. Associate:
Dated: 18 July 2024
SCHEDULE A
Table 1 Table 2 Table 3 Table 4 Table 5 Dates Jin Zhang worked according to the North Rocks Timesheets Dates Jin Zhang did not work according to the North Rocks Timesheets Dates Jin Zhang worked according to the Baulkham Hills Timesheets Dates that Jin Zhang did not work according to the Jin Zhang Timesheets Dates Jin Zhang worked according to the Jin Zhang Timesheets 8 December 2017 17 December 2017 9 November 2017 31 August 2016 17 September 2016 12 December 2017 24 December 2017 13 November 2017 2 September 2016 25 September 2016 26 December 2017 30 December 2017 17 November 2017 3 September 2016 2 October 2016 4 January 2018 2 January 2018 19 November 2017 18 September 2016 9 October 2016 9 January 2018 6 January 2018 20 November 2017 11 November 2016 22 October 2016 12 January 2018 27 January 2018 24 November 2017 12 November 2016 2 May 2017 16 January 2018 26 November 2017 13 November 2016 18 May 2017 19 January 2018 27 November 2017 2 December 2016 20 June 2017 23 January 2018 1 December 2017 13 February 2017 25 June 2017 2 December 2017 19 March 2017 1 July 2017 29 December 2017 26 March 2017 11 July 2017 4 January 2018 26 April 2017 2 August 2017 7 January 2018 27 April 2017 10 August 2017 19 January 2018 30 April 2017 1 October 2017 2 February 2018 21 May 2017 4 November 2017 9 February 2018 19 June 2017 9 November 2017 26 June 2017 13 November 2017 14 July 2017 17 November 2017 15 July 2017 18 November 2017 16 July 2017 20 November 2017 6 August 2017 24 November 2017 12 August 2017 26 November 2017 26 August 2017 27 November 2017 10 November 2017 1 December 2017 14 November 2017 2 December 2017 21 November 2017 10 December 2017 31 December 2017 29 December 2017 14 January 2018 4 January 2018 20 January 2018 7 January 2018 3 February 2018 19 January 2018 10 February 2018 2 February 2018 9 February 2018
SCHEDULE B
Table 1 Table 2 Table 3 Dates Jin Zhang worked at the North Rocks Store according to the North Rocks Timesheets Dates Jin worked at the Baulkham Hills Store according to the Jin Zhang Timesheets Dates Jin Zhang worked at the Baulkham Hills Store according to the Baulkham Hills Timesheets 30 November 2017 19 July 2017 19 July 2017 7 December 2017 26 July 2017 26 July 2017 14 December 2017 6 September 2017 6 September 2017 21 December 2017 10 September 2017 10 September 2017 10 January 2018 13 September 2017 13 September 2017 11 January 2018 20 September 2017 17 September 2017 17 January 2018 24 September 2017 20 September 2017 18 January 2018 27 September 2017 24 September 2017 24 January 2018 28 September 2017 27 September 2017 25 January 2018 29 September 2017 28 September 2017 3 October 2017 29 September 2017 4 October 2017 3 October 2017 5 October 2017 4 October 2017 6 October 2017 5 October 2017 9 October 2017 6 October 2017 10 October 2017 9 October 2017 11 October 2017 10 October 2017 12 October 2017 11 October 2017 13 October 2017 12 October 2017 17 October 2017 13 October 2017 18 October 2017 17 October 2017 19 October 2017 18 October 2017 20 October 2017 19 October 2017 21 October 2017 20 October 2017 22 October 2017 21 October 2017 23 October 2017 22 October 2017 24 October 2017 23 October 2017 25 October 2017 24 October 2017 26 October 2017 25 October 2017 27 October 2017 26 October 2017 28 October 2017 27 October 2017 1 November 2017 28 October 2017 3 November 2017 1 November 2017 7 November 2017 3 November 2017 8 November 2017 7 November 2017 11 November 2017 8 November 2017 15 November 2017 11 November 2017 22 November 2017 15 November 2017 25 November 2017 22 November 2017 29 November 2017 25 November 2017 4 December 2017 29 November 2017 5 December 2017 4 December 2017 6 December 2017 5 December 2017 13 December 2017 6 December 2017 15 December 2017 13 December 2017 17 December 2017 15 December 2017 20 December 2017 17 December 2017 22 December 2017 20 December 2017 24 December 2017 22 December 2017 27 December 2017 24 December 2017 28 December 2017 27 December 2017 30 December 2017 28 December 2017 2 January 2018 30 December 2017 6 January 2018 2 January 2018 27 January 2018 6 January 2018 27 January 2018 GLOSSARY OF SELECT TERMS
Assessed Employment Periods
Minimum periods of time the four employees, the subjects of these proceedings, were employed by the Corporate Respondents. Also, the periods of time for which the FWO assessed those employees’ entitlements.
Baulkham Hills Timesheets
Timesheets for the period from 3 July 2017 to 25 February 2018 for the Baulkham Hills Store produced by Q FAY in response to the First Q FAY NTP on 12 March 2018
Belconnen Store
Shop premises in Belconnen, ACT from which BSKL operated the Business
BSKL
Blue Sky Kids Land Pty Ltd, the first respondent
BSKL stores
Shop premises from which BSKL operated the Blue Sky Kids Land business
BSKL WeChat Group
The WeChat group entitled “ACT/NEW BSKL”
Employees
The four employees the subject of many of the pleaded contraventions: Xibing Cen, Xing Yang, Jin Zhang and Tzu Fong Yu.
Employer
BSKL or, in the alternative, Q Fay.
Fei Yang
The Fourth Respondent, Fei Rong Yang (also known as “Fay”)
Fifth BSKL NTP
Fifth notice to produce requesting documents relating to Xibing Cen for the period from 1 May 2016 to 10 June 2018 issued to BSKL on 21 June 2018
First BSKL NTP
Notice to produce records or documents relating to Xing Yang for the period 1 May 2011 to 30 June 2017, issued to BSKL on 23 January 2018
First Q Fay NTP
Notice to produce records or documents relating to all employees for the period from 1 July 2017 to 21 February 2018, issued to Q Fay on 21 February 2018
Fourth BSKL NTP
Notice to produce records or documents relating to Tzu Fong Yu for two periods: from 1 February 2017 to 30 September 2017 and from 1 January 2018 to 28 February 2018 issued to BSKL on 12 June 2018
FWO
The Office of the Fair Work Ombudsman
Gu documents
Documents exhibited to the Gu affidavit filed on 25 August 2022 that were not produced in response to the NTPs, namely: the Xing Yang Timesheets; Xibing Cen Timesheets 3; Jin Zhang Timesheets 2; Tzu Fong Yu Timesheets; Xing Yang Payroll Register Documents 2; and the Tzu Fong Yu Payroll Register Document.
Jin Zhang Employment Details Form
A form containing employee details for Jin Zhang produced by BSKL on 29 June 2018 in respect to the Third BSKL NTP and the Fourth BSKL NTP.
Jin Zhang PAYG Documents
PAYG summaries for Jin Zhang for the years ending 2017 and 2018 (which were made and kept by the Employer), provided to the FWO by Mr Gu and Ms Fei Yang under the cover of an affidavit of Mr Gu dated 25 August 2022.
Jin Zhang Payroll Register Document 1
Payroll register documents for the period from 3 July 2017 to 25 February 2018 for Jin Zhang produced by Q FAY in response to the First Q FAY NTP on 12 March 2018.
Jin Zhang Payroll Register Document 2
Payroll register document for Jin Zhang for the period from 22 August 2016 to 18 February 2018 produced by BSKL on 29 June 2018 in respect to the Third BSKL NTP and the Fourth BSKL NTP.
Jin Zhang Timesheets
Timesheets showing the hours Jin Zhang purportedly worked for the period from 29 August 2016 to 18 February 2018 produced by BSKL on 29 June 2018 in respect to the Third BSKL NTP and the Fourth BSKL NTP
Jin Zhang Timesheets 2
Annotated timesheets for Jin Zhang for the period from 29 August 2016 to 14 January 2018 (which were made and kept by the Employer), provided to the FWO by Mr Gu and Ms Fei Yang under the cover of an affidavit of Mr Gu dated 25 August 2022.
North Rocks Timesheets
Timesheets for the period 27 November 2017 to 28 January 2018 for the North Rocks Store produced by BSKL to the First BSKL NTP and Second BSKL NTP on or around 8 February 2018.
OWS
Office of Workplace Services
Protecting Vulnerable Workers Amendment Act
Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth)
Second BSKL NTP
Notice to produce records or documents for all employees for the period 1 December 2017 to 23 January 2018, issued to BSKL on 23 January 2018.
Second Q Fay NTP
Notice to produce records or documents relating to Jin Zhang for the period 1 August 2016 to 15 February 2018, issued to Q Fay on 12 June 2018.
Third BSKL NTP
Notice to produce documents relating to Jin Zhang for the period 1 August 2016 to 15 February 2018, issued to BSKL on 12 June 2018
Tzu Fong Yu Payroll Register Document
A payroll register document for Tzu Fong Yu for the period from 6 February 2017 to 28 February 2018 (which were made and kept by the Employer), provided to the FWO by Mr Gu and Ms Fei Yang under the cover of an affidavit of Mr Gu dated 25 August 2022.
Tzu Fong Yu Timesheets
Annotated timesheets for Tzu Fong Yu for the period from 6 February 2017 to 17 September 2017 (which were made and kept by the Employer), provided to the FWO by Mr Gu and Ms Fei Yang under the cover of an affidavit of Mr Gu dated 25 August 2022
Villawood warehouse
The Employer’s head office located at Unit 2, 17A Birmingham Avenue, Villawood, NSW.
Woden Timesheets
Employee records retained at the Woden store until sometime in January 2018, being soft copies of timesheets, which were stored on a computer located at the Woden store, and hard copies of the electronic timesheets which were retained at the Woden Store)
Xibing Cen Employment Details Form
A form containing employee details for Xibing Cen produced by BSKL on 4 July 2018 in response to the Fifth BSKL NTP.
Xibing Cen PAYG Documents
PAYG summaries for Xibing Cen for the years ending 2017 and 2018 (which were made and kept by the Employer), provided to the FWO by Mr Gu and Ms Fei Yang under the cover of an affidavit of Mr Gu dated 25 August 2022
Xibing Cen Payroll Register Document 1
A payroll register document for Xibing Cen for the period from 27 November 2017 to 28 January 2018 produced by BSKL on or around 8 February 2018 in response to the First BSKL NTP and Second BSKL NTP.
Xibing Cen Payroll Register Document 2
A payroll register forms for Xibing Cen for the period 2 May 2016 to 10 June 2018 produced by BSKL on 4 July 2018 in response to the Fifth BSKL NTP.
Xibing Cen Timesheets 1
Timesheets for the period 27 November to 28 January 2018 for the Tuggerah Store which show the hours that Xibing Cen worked for that period produced by BSKL on or around 8 February 2018 in response to the First BSKL NTP and Second BSKL NTP.
Xibing Cen Timesheets 2
Timesheets for Xibing Cen for the period 2 May 2016 to 10 June 2018 produced by BSKL on 4 July 2018 in response to the Fifth BSKL NTP.
Xibing Cen Timesheets 3
Annotated timesheets for Xibing Cen for the period from 9 May 2016 to 21 January 2018 (which were made and kept by the Employer), provided to the FWO by Mr Gu and Ms Fei Yang under the cover of an affidavit of Mr Gu dated 25 August 2022.
Xing Yang Employment Details Form 1
A form containing employee details for Xing Yang produced by BSKL on or around 8 February 2018 in response to the First BSKL NTP and Second BSKL NTP.
Xing Yang Employment Details Form 2
An Employment Details Form for Xing Yang produced by BSKL on 15 May 2018 in response to a letter from FWI Liljeqvist sent on 28 March 2018 (as pleaded in paragraph 24 of the 2FASOC).
Xing Yang Payroll Register Document
A payroll register document for Xing Yang for the period from 27 June 2016 to 18 June 2017 produced by BSKL on or around 8 February 2018 in response to the First BSKL NTP and Second BSKL NTP.
Xing Yang Payroll Register Documents 2
Payroll register documents for Xing Yang for the period from 27 June 2015 to 26 June 2016 and from 27 June 2016 to 26 June 2017 (which were made and kept by the Employer), provided to the FWO by Mr Gu and Ms Fei Yang under the cover of an affidavit of Mr Gu dated 25 August 2022.
Xing Yang Timesheets
Annotated timesheets for Xing Yang for the period from 19 June 2016 to 11 June 2017 (which were made and kept by the Employer), provided to the FWO by Mr Gu and Ms Fei Yang under the cover of an affidavit of Mr Gu dated 25 August 2022
SCHEDULE OF PARTIES
NSD 1444 of 2019 Respondents
Fourth Respondent:
FEI RONG YANG
3
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