Fair Work Ombudsman v Bottcher
[2010] FMCA 956
•9 December 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v BOTTCHER & ANOR | [2010] FMCA 956 |
| INDUSTRIAL LAW – Application for civil penalty – breaches of the WR Act – applicable provisions – underpayments – breaches of freedom of association provisions – threat to dismiss – threat to injure in employment – breaches admitted – considerations as to penalty. |
| Workplace Relations Act 1996 (Cth), ss.719, 722, 728, 807, 841 Fair Work Act 2009 (Cth), s.701 Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) |
| Kelly v Fitzpatrick (2007) 166 IR 14 Mason v Harrington Corporation PtyLtd [2007] FMCA 7 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 Fair Work Ombudsman v Roselands Fruit Market Pty Ltd & Anor [2010] FMCA 599 Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCA FC 72 Ponzio v B & P Caelli Construction Pty Ltd (2007) 158 FCR 543 Smith v Prescott & Ors [2008] FMCA 1672 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | GISELA BOTTCHER |
| Second Respondent: | WOLFGANG BOTTCHER |
| File Number: | MLG 1315 of 2009 |
| Judgment of: | O’Sullivan FM |
| Hearing date: | 7 December 2010 |
| Date of Last Submission: | 7 December 2010 |
| Delivered at: | Melbourne |
| Delivered on: | 9 December 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr J. Kirkwood |
| Solicitors for the Applicant: | Fisher Cartwright Berriman |
| Counsel for the First and Second Respondent: | Ms J. MacLean |
| Solicitors for the First and Second Respondent: | Rigby Cooke |
UPON THE FINDINGS AND FACTS SET OUT AT ATTACHMENT A & B TO THESE REASONS THE COURT ORDERS:
Pursuant to sections 719(1) and 807(1)(a) of the WR Act, the Respondents pay a penalty of $18,480.00 in respect of the Underpayment Contraventions (as defined in the amended application) and the FOA Contraventions (as defined in the amended application).
Pursuant to section 807(1)(b) of the WR Act, the Respondents pay Adamopoulos compensation of $714.50.
Pursuant to section 841(a) of the WR Act, the Respondents pay the penalty to the Consolidated Revenue Fund of the Commonwealth.
Within 3 days of these orders being made, trust funds of $14,746.66 held by the Applicant’s solicitor on behalf of the Respondents are to be paid to the Consolidated Revenue Fund of the Commonwealth as part payment of the total penalty ordered against the Respondents.
The compensation amount of $714.50 (being the amount in paragraph 2) be paid within 30 days of the date of this Order.
The outstanding penalty amount of $3,733.34 (being the amount in paragraph 1 less the amount in paragraph 4 be paid by five monthly instalments of $746.66 commencing within 60 days of the date of this Order, or otherwise be stayed for a period of 6 months.
The proceedings be otherwise dismissed with no order for costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1315 of 2009
| FAIR WORK OMBUDSMAN |
Applicant
And
| GISELA BOTTCHER |
First Respondent
| WOLFGANG BOTTCHER |
Second Respondent
REASONS FOR JUDGMENT
Introduction
In these proceedings the Fair Work Ombudsman (“the applicant”) seeks a series of orders against Gisela Bottcher (“the first respondent”) and Wolfgang Bottcher (“the second respondent”) pursuant to s.719(1) and s.807 of the Workplace Relations Act 1996 (Cth) (“the WR Act”).
The proceedings were commenced in 2009 against the respondents who are married and involved in businesses where they engaged employees including apprentices. The applicant alleged the respondents had contravened the WR Act, underpaid employees and breached the freedom of association provisions of the WR Act.
The application was filed on 13 October 2009. This was followed by an amended application and statement of claim on 24 February 2010.
In the amended application filed on 24 February 2010 the following orders were sought:
“1.Declarations that the First Respondent contravened the transitional Award as set out in paragraphs 59, 61, 63, 65, 67, 69, 71, 73, 75 and 77 of the Amended statement of claim.
2.Declarations that the Second Respondent contravened the WR Act, pre-reform Award and transitional Award as set out in paragraphs 57 and 78 of the Amended statement of claim.
3.An order under section 719(1) of the WR Act that the First Respondent pay penalties in respect of the contraventions specified in paragraphs 59, 61, 63, 65, 67, 69, 71, 73, 75, 77 of the Amended statement of claim.
4.An order under section 719(1) of the WR Act that the Second Respondent pay penalties in respect of the contraventions specified in paragraphs 57 and 78 of the Amended statement of claim.
5.Declarations that the First Respondent contravened the WR Act as set our in paragraphs 94, 101, 106, 111, 116 of the Amended statement of claim.
6.Declarations that the Second Respondent contravened the WR Act as set out in paragraphs 94, 101, 106, 111 and 116 of the Amended statement of claim.
7.An order under section 807(1)(a) of the WR Act that the First Respondent pay penalties in respect of the contraventions of sections 792(1)(a), (b) and/or (c) specified in paragraphs 94, 101, 106, 111 and 116 of the Amended statement of claim.
8.An order under section 807(1)(a) of the WR Act that the Second Respondent pay penalties in respect of the contraventions of sections 792(1)(a), (b) and/or (c) specified in paragraphs 96, 103, 108, 113, 118 of the Amended statement of claim.
9.An order that the Respondents pay the penalties to the Consolidated Revenue Fund of the Commonwealth in accordance with section 841(a) of the WR Act.
10.An order under section 719(6) of the WR Act that the First Respondent pays to the respective employees the amounts set out in paragraph 81(b) of the Amended statement of claim.
11.An order under section 722 of the WR Act that the First Respondent pays to the respective employees interest on the amounts set out in paragraph 81(b) of the Amended statement of claim.
12.An order under section 807(1)(b) of the WR Act that the Respondents pay compensation to Adamopolous for damages suffered by him as a result of the contraventions of section 792(1)(a), (b) and/or (c) set out in paragraphs 94, 101 and 103 of the Amended statement of claim.
13. Any further order that the Court considers appropriate.”
After a response was filed[1] there were a number of directions hearings[2] and two mediations and the respondents now admit all the breaches alleged and, subject to the issue of the need to make declarations,[3] agree to the orders sought in the amended application.
[1] 17 March 2010
[2] 18 December 2009, 7 May 2010 and 9 July 2010
[3] see para 88
The parties filed a Statement of Agreed Facts on 14 May 2010 (Attachment A to these reasons) which dealt with all allegations in the amended application save for alleged breaches of the freedom of association provisions of the WR Act.[4]
[4] dated 12 May 2010
The parties filed a further Statement of Agreed Facts on 12 November 2010 (Attachment B to these reasons) that dealt with the remaining allegations in the amended application of breaches of the freedom of association provisions of the WR Act.
Finally, pursuant to orders made on 22 October 2010 the parties filed joint submissions on penalty on 30 November 2010.
At the penalty hearing on 7 December 2010 Counsel for the applicant tendered as Exhibits:
a)minutes of proposed orders which was marked as exhibit A1;[5]
[5] this was later amended by consent to provide for a timetable for the payment of the agreed penalty
b)statement of agreed facts filed 14 May 2010 (as at Attachment A) which was marked as exhibit A2;
c)statement of agreed facts filed 12 November 2010 (as at Attachment B) which was marked as exhibit A3; and
d)joint submissions on penalty which was marked as exhibit A4.
Counsel for the applicant asked the Court to make findings on the basis of exhibits A2 and A3, transversed the matters raised in the parties joint submissions and invited the Court to make orders in terms of exhibit A1. Counsel for the respondent adopted those submissions and also invited the Court to make orders as per exhibit A1.
Background
The respondents are married. The first respondent operates a tiling business (GB Studio Enterprises) and also a business known as Professional Protection Pty Ltd. The second respondent was the sole director of Cardock Pty Ltd (“Cardock”) which also conducted a tiling business.
The applicant alleged the first respondent had underpaid 10 former employees (including some engaged as apprentices) and that the second respondent was involved in the contraventions of the WR Act which arose as a result. It was also alleged there were underpayments (and as a result contraventions of the WR Act) in respect of 5 former employees of Cardock (“the underpayment allegations”).
The former employees the subject of the underpayment allegations were:
·Drew Hyman;
·Jesse Stenhouse;
·Andrew Lewis;
·Daniel Blanch;
·Joshua Kivlighon;
·Derek Lea;
·Luke Mollica;
·Benjamin Plymin;
·Shane Smith;
·Christopher West; and
·Brett Young.
In addition to the allegations of underpayments the applicant alleged the first and second respondents contravened or were involved in contravening the freedom of association provisions in Part 16 of the WR Act (“the freedom of association allegations”).
The freedom of association allegations concerned:
·Philip Adamopolous;
·Jesse Stenhouse;
·Drew Hyman; and
·Andrew Lewis.
Mr Adamopolous had been employed by the first respondent as an apprentice tiler from March 2007 as had Mr Hyman. Mr Stenhouse had been employed by the first respondent from January 2008. Mr Lewis had been employed in the second respondent’s business in 2006 and by the first respondent from 2006 to 2009.
The following summary, drawn from the Statement of Agreed Facts at Annexure B summarises the events in late 2007 and early 2008 which were the subject of the freedom of association allegations.
In late 2007 Adamopolous sought clarification from the first and second respondents about whether he was entitled to receive annual leave loading.
After this Adamopolous contacted the Workplace Infoline (which was run by the predecessor to the applicant) and was informed that he was entitled to annual leave loading under the WR Act.
On 14 January 2008 Adamopolous informed the first and second respondents that he had sought clarification from the Workplace Infoline and that he was entitled to receive annual leave loading.
On 17 January 2008, after making their own independent enquiries with the Workplace Infoline, the first and second respondents were informed, of the wages and allowances they were required to pay under the WR Act.
On 22 January 2008 the first and second respondents held a staff meeting at the first respondent's business premises. In addition to the first and second respondents, the attendees at the meeting were Adamopolous, Stenhouse, Hyman and Lewis.
In the course of that meeting the second respondent, amongst other things, told those employees that:
a)certain conditions of work would be removed or varied if those employees were to receive their entitlements under the WR Act. The conditions to be removed or varied were that those employees would:
i)have to drive themselves to the job site;
ii)have to supply their own tools; and
iii)have their breaks reduced to 15 minutes per day; and
b)the respondents could not afford to continue to employ certain employees (namely, Stenhouse and Adamopolous).
During the meeting on 22 January 2008 the first respondent terminated the employment of Adamopolous. At the meeting, the first respondent handed Adamopolous a completed Application for Approval to Cancel a Training Contract and asked him to sign it, which he did.
Also in the course of the meeting on 22 January 2008 the first and second respondent informed Stenhouse that they intended to terminate his employment. At the meeting, the first respondent (or in the alternative the second respondent) handed Stenhouse a completed Application for Approval to Cancel a Training Contract and asked him to sign it.
After Adamopoulos left the meeting, the first respondent, or in the alternative the second respondent, informed Stenhouse that his employment would not be terminated and advised him not to sign the Application for Approval to Cancel a Training Contract.
Admitted breaches
As noted above the parties filed two Statements of Agreed Facts on 14 May 2010 and 12 November 2010.
As is clear from Attachment A the respondents admit:
·the second respondent’s business breached s.182(1) of the WR Act by failing to pay the guaranteed basic periodic rate of pay under the Australian Fair Pay and Conditions Standard;
·the second respondent’s business also failed to pay weekly industry allowance, weekly tool allowance overtime, annual leave loading and daily travel allowance;
·the second respondent was involved in each of the contraventions;
·the first respondent failed to pay the minimum hourly rates applicable to apprentices, weekly industry allowance, weekly tool allowance, overtime rates, annual leave loading and daily travel allowance; and
·the second respondent was also involved in each of these contraventions.
As is also clear from Attachment B the respondents admit:
·the first respondent dismissed Adamopoulos for the prohibited reason he was entitled to the benefit of an industrial instrument for the purpose of s.792(1)(a) of the WR Act;
·they threatened to injure Adamopoulos, Stenhouse, Hyman and Lewis in their employment or threatened to alter their position in employment to their prejudice by threatening to remove conditions of employment for the purposes of s.792(1)(b) of the WR Act;
·the first respondent did this for the prohibited reason that Adamopoulos, Stenhouse, Hyman and Lewis were entitled to the benefit of an industrial instrument for the purpose of s.792(1)(b) of the WR Act;
·the second respondent aided, abetted and procured the abovementioned contraventions by the first respondent and was directly or indirectly knowingly concerned in these contraventions by the first respondent for the purposes of s.728 of the WR Act.
By virtue of the above matters and the agreed facts at Attachments A and B to these reasons the respondents agree:
a)the first respondent contravened the transitional Award in respect of the underpayment allegations as set out in the amended application;
b)the second respondent contravened the WR Act, the pre-reform Award and the transitional Award in respect of the underpayment allegations as set out in the amended application;
c)to the making of an order under section 719(1) of the WR Act that the first respondent pay penalties in respect of the underpayment allegations as set out in the amended application;
d)to the making of an order under section 719(1) that the second respondent pay penalties in respect of the underpayment allegations as set out in the amended application;
e)to the making of an order under section 841(a) of the WR Act that the respondents pay the penalties in respect of the underpayment allegations to Consolidated Revenue;
f)to the making of an order under section 719(6) of the WR Act that the first respondent pay to the respective employees the amounts set out in the amended application;
g)to the making of an order under section 722 of the WR Act that the first respondent pay to the respective employees interest on the amounts set out in the amended application;
h)the first respondent contravened the WR Act in respect of the freedom of association allegations as set out in the amended application;
i)the second respondent contravened the WR Act in respect of the freedom of association allegations as set out in the amended application;
j)to the making of an order under section 807(1)(a) of the WR Act that the first respondent pay penalties in respect of the freedom of association allegations as set out in the amended application;
k)to the making of an order under section 807(1)(a) of the WR Act that the second respondent pay penalties in respect of the freedom of association allegations as set out in the amended application;
l)to the making of an order under section 841(a) of the WR Act that the respondents pay penalties to the Consolidated Revenue Fund of the Commonwealth; and
m)to the making of an order under section 807(1)(b) of the WR Act that the respondents pay compensation to Adamopoulos for damage suffered by him as a result of the contraventions in respect of the freedom of association allegations.
The issue(s) that remains to be determined are the appropriate penalty that should be imposed for the admitted breaches on the respondents and whether the Court should make the orders sought by the parties.
The legal framework
As was noted in the parties submissions[6] these proceedings concern contraventions of the WR Act, the National Building and Construction Industry Award 2000 (the pre-reform Award[7]) and the transitional National Building and Construction Industry Award 2000 (the transitional Award[8]).
[6] see para 13-32 of exhibit A4
[7] see fn 3-5 exhibit A4
[8] see fn 9-10 exhibit A4
It was accepted the terms of those awards (and the applicable provisions contained therein) applied to the first respondent and the second respondent’s business[9] before and after the changes to the WR Act made by the Workplace Relations Amendment (Work Choices) Act 2005 took effect in March 2006.
[9] see paras 14-18 of exhibit A4
It was not disputed that the respondents were required to observe and comply with the rates of pay, allowances, overtime rates and provisions with respect to annual leave loading in those awards.[10] It was also accepted that the correct entitlements of the employees engaged by the respondents had been set out in Attachment A.
[10] see paras 14-18 in exhibit A4
On 1 July 2009 the WR Act was repealed by the provisions of the Fair Work Act 2009 (Cth). In respect of breaches occurring prior to 1 July 2009, s.11 of Schedule 2 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“T&C Act”) provides that the WR Act continues to apply on or after 1 July 2009 in relation to conduct that occurred before that date.
The Fair Work Ombudsman is a “Fair Work Inspector” pursuant to s.701 of the Fair Work Act 2009 (Cth) (“Fair Work Act”).
A Fair Work Inspector may bring proceedings relating to conduct that occurred before the repeal of the WR Act pursuant to subitem 13(1) of Part 3 to Schedule 18 of the T&C Act.
38.Section 719(1) of the WR Act enables a Court of competent jurisdiction (such as this Court) to impose a penalty in respect of a breach of an applicable provision by a person bound by the provision. “Applicable provision” is defined in s.717 to include a term of an award, collective agreement, and a term of the Australian Fair Pay and Conditions Standard.
Subsection 719(2) provides that where two or more breaches of an applicable provision are committed by the same person, and the breaches arose out of a course of conduct by the person, the breaches shall, for the purposes of s.719, be taken to constitute a single breach of the term.
40.Section 719(4)(a) prescribes the maximum penalty that may be imposed for a contravention by this Court to be, in the case of an individual, 60 penalty units and in the case of a body corporate, 300 penalty units.
41.Section 4(1) of the WR Act provides that “penalty unit” has the same meaning as in the Crimes Act 1914(Cth) (“the Crimes Act”). Section 4AA of the Crimes Act defines “penalty unit” to be $110 dollars. The maximum penalty that may be imposed by the Court for breach by the individuals in this case of an applicable provision is therefore $6,600.
Section 792(1) of the WR Act provides that:
“An employer must not, for a prohibited reason, or for reasons that include a prohibited reason, do or threaten to do any of the following:
(a)dismiss an employee;
(b)injure an employee in his or her employment;
(c)alter the position of an employee to the employee’s prejudice;
(d)refuse to employ another person as an employee;
(e)discriminate against another person in the terms or conditions on which the employer offers to employ the other person as an employee.”
The prohibited reasons for the purposes of section 792(1) are set out in section 793 of the WR Act and relevantly section 793 provides:
“(1)Conduct referred to section 792(1) or (5) is for a prohibited reason if it is carried out because the employee, independent contractor or other person concerned:
(i)is entitled to the benefit of an industrial instrument, an order of an industrial body or the Australian Fair Pay and Condition Standard; or
(j)has made or proposes to make an inquiry or complaint to a person or body having the capacity under an industrial law to seek:
(i) compliance with that law; or
(ii) the observance of a person’s rights under an industrial instrument.”
Section 792(4) of the WR Act provides:
“An employer does not contravene subsection (1) because of paragraph 793(1)(i) unless the entitlement described in that paragraph is the sole or dominant reason for the employer doing any of the things described in paragraphs (1)(a), (b), (c), (d) and (e) of this section.”
Section 792(2) of the WR Act provides that section 792(1) is a civil remedy provision. The applicant has standing to bring this proceeding pursuant to section 807 of the WR Act and to seek orders imposing pecuniary penalties in relation to contraventions of section 792 and orders requiring payment of compensation for damage suffered as a result of contraventions of section 792. In that regard, section 807 then provides:
“(1)The court, on application by an eligible person, may make one or more of the following orders in relation to a person (the defendant) who has contravened the civil remedy provision of this part:
(a)an order imposing a pecuniary penalty on the defendant;
(b)an order requiring the defendant to pay a specified amount to another person as compensation for damage suffered by the person as a result of the contravention;
(c)any other order that the court considers appropriate.”
Approach to penalty proceedings
In Fair Work Ombudsman v Roselands Fruit Market Pty Ltd & Anor [2010] FMCA 599 Driver FM summarised the approach the Court should follow in these sorts of proceedings at paragraphs 22 to 26 as follows:
“22.The first step for the Court is to identify the separate contraventions involved. Each breach of each separate obligation found in the AFPCS, the NAPSA is a separate contravention of a term of an applicable provision for the purposes of s.719.[11]
[11] Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 at 223; McIver v Healey [2008] FCA 425 at [16] (unreported, Federal Court of Australia, 7 April 2008, Marshall J).
23.However, s.719(2) provides for treating multiple breaches, involved in a course of conduct, as a single breach.
24.Secondly, to the extent that two or more contraventions have common elements, this should be taken into account in considering what is an appropriate penalty in all the circumstances for each contravention. The respondents should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to what the respondent did.[12] This task is distinct from and in addition to the final application of the “totality principle”.[13]
[12] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [46] (Graham J) (unreported, Full Court of the Federal Court of Australia, 20 February 2008, Gray, Graham and Buchanan JJ) (Merringtons).
[13] Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 at [41]-[46] (Stone and Buchanan JJ) (unreported, Full Court of the Federal Court of Australia, 7 May 2008, Gyles, Stone and Buchanan JJ) (Mornington Inn).
25.Thirdly, the Court will then consider an appropriate penalty to impose in respect of each course of conduct, having regard to all of the circumstances of the case.
26.Fourthly and finally, having fixed an appropriate penalty for each group of contraventions or course of conduct, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate response to the conduct which led to the breaches.[14] The Court should apply an “instinctive synthesis” in making this assessment.[15] This is what is known as an application of the “totality principle”.
[14] see Kelly v Fitzpatrick (2007) 166 IR 14 at [30] (Tracey J) (Kelly); Merringtons, supra at [23] (Gray J), [71] (Graham J) and [102] (Buchanan J).
[15] Merringtons, supra at [27] (Gray J) and [55] and [78] (Graham J).
There are also the factors relevant to the imposition of a penalty under the WR Act. These have been summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7, [26]-[59], as follows:
“a.the nature and extent of the conduct which led to the breaches;
b.the circumstances in which that conduct took place;
c.the nature and extent of any loss or damage sustained as a result of the breaches;
d.whether there had been similar previous conduct by the respondent;
e.whether the breaches were properly distinct or arose out of the one course of conduct;
f.the size of the business enterprise involved;
g.whether or not the breaches were deliberate;
h.whether senior management was involved in the breaches;
i.whether the party committing the breach had exhibited contrition;
j.whether the party committing the breach had taken corrective action;
k.whether the party committing the breach had cooperated with the enforcement authorities;
l.the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
m.the need for specific and general deterrence.”
This summary was adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14. While the summary is a convenient checklist, it does not prescribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion.
In Australian Ophthalmic Supplies Pty Ltd v Mc Alary-Smith [2008] FCAFC 8 Buchanan J after referring to the decision in Kelly v Fitzpatrick (2007) 166 IR 14 said at [9]:
“9.Checklists of this kind can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations…”
Considerations
The parties agreed the relevant considerations when fixing penalties in this case include:
a)the nature and extent of the offending conduct;
b)the circumstances in which the conduct took place;
c)the nature and extent of any loss or damage;
d)any similar previous conduct;
e)whether the breaches were properly distinct or arose out of one course of conduct;
f)the size of the respondents undertaking;
g)the deliberateness of the breach;
h)the involvement of senior management;
i)the respondents contrition, corrective action and cooperation with the enforcement authorities;
j)ensuring compliance with minimum standards;
k)deterrence.[16]
[16] see para 48 of exhibit A4, submissions filed 30 November 2010
The nature and extent of the offending conduct
The Statements of Agreed Facts at Attachment A and B set out the background to and nature of the unlawful conduct (eg. the background and contraventions).
The parties in submissions said of this factor:
“51.The underpayment contraventions represent a failure to provide certain basic and important wages and allowances under the transitional Award or pre-reform Award and WR Act. The nature of the contraventions displays a disregard for the Respondents’ statutory obligations. However, there is no evidence to suggest that the Respondents deliberately sought to deprive employees of their lawful entitlements prior to 17 January 2008.
52.The FOA contraventions represent a failure to understand employees’ rights to assert their entitlement to the benefits of an industrial instrument without threat of dismissal, or injury to, or prejudicial alteration of their employment. The nature of the FOA contraventions represented a deliberate attempt to avoid the Respondents’ statutory obligations and punish or threaten employees asserting their rights to the benefit of an industrial instrument.
53.The underpayment contraventions affected five employees employed by Cardock and 10 employees employed by the First Respondent, resulting in underpayments to 11 employees altogether.[17]
[17] Four of the five employees employed by Cardock were also employed by the First Respondent.
54.The First Respondent and Second Respondent received a benefit from the underpayments and continued to receive that benefit until those amounts were paid in full on 15 October 2010. However, the Respondents state that delay in paying the underpayments was as a result of the First and Second Respondents’ financial hardship.
55.The FOA contraventions affected four employees employed by the First Respondent, resulting in those four employees being threatened with injury and/or prejudicial alteration of their employment for a prohibited reason, and one employee being dismissed for a prohibited reason.”
The Court accepts the nature and extent of the admitted conduct in relation to the underpayment contraventions does display “a disregard” of their statutory obligations. Moreover, the admissions made with respect to the freedom of association contraventions evidence a “failure to understand employees rights” under the WR Act.
The circumstances in which the conduct took place
The parties in submissions said in relation to this factor:
“56.The employees affected include apprentices, qualified tilers and trade labourers. The employees of Cardock were employed, on and after 27 March 2006, for periods ranging from 1 month to 2 months. The employees of the First Respondent were employed for periods ranging from 2 months to 3 years.
57.There is no evidence to suggest that any of the employees were particularly well versed in industrial and employment matters, or the exercise of their rights under relevant industrial instruments.
58.There is also no evidence to suggest that the First and Second Respondents were particularly well versed in industrial and employment matters. However, there is evidence that the First and Second Respondents sought advice to try and understand their obligations in order to comply with them.[18]”
[18] See paragraph 16 of the SoAF filed 12 November 2010.
The conduct, which the respondents admit, in relation to the underpayment allegations occurred across both businesses over an extended period. The circumstances in which the admitted conduct, in relation to the freedom of association allegations occurred clearly offend the protections afforded to employees under the WR Act.
The nature and extent of any loss or damage
The parties submissions on this factor were:
“59.The underpayments in this case can be regarded as significant with a total underpayment of $46,163.85 ($3,116.49 in respect of Cardock’s contraventions and $43,047.36 in respect of the First Respondent’s contraventions) affecting 11 employees.
60.The employees of Cardock were underpaid between $302.09 over a 1 month period and $901.71 over a 2 month period. The employees of the First Respondent were underpaid between $1,145.11 over a two month period and $14,826.67 over a 3 year period. These are significant amounts of money for employees who are reliant on minimum wages.
61.The FOA contraventions caused one employee to suffer loss and damage as a result of being dismissed. The loss suffered amounted to 3 weeks’ of his usual salary ($1,018.50), less an amount of $304 that was paid in lieu of notice of termination, totalling $714.50. This is a significant amount of money for an employee reliant on minimum wages and represents a significant hardship. The employee mitigated his loss by obtaining employment 3 weeks after the date of termination.
62.Further, if carried out, the Respondents' threat at the meeting on 22 January 2008 that the employees would have to drive themselves to the job sites if they were to receive their Award entitlements, would have resulted in at least one of the employees (Hyman) losing their job with the First Respondent because of his consequential inability to get to and from the work sites due to him not having a driver’s licence or a car.[19]”
[19] See paragraph 4(b) of the Affidavit of Drew David Steven Hyman.
The parties submissions on this factor clearly and cogently essayed the nature of extent of the loss or damage occasioned by the respondents conduct.
Any similar previous conduct
There was no evidence of any similar provisions conduct by the respondents.
Whether the breaches were properly distinct or arose out of one course of conduct
As Attachment A and exhibit A4 makes clear the parties agreed the respondents had the benefit of s.719(2) in relation to repeated breaches and:
“78.…the First Respondent's underpayment contraventions fall into 6 distinct groups:
(a) failure to pay minimum hourly rates;
(b) failure to pay an industry allowance;
(c) failure to pay a tooling allowance;
(d) failure to pay overtime;
(e) failure to pay travel allowance; and
(f) failure to pay annual leave loading.
79.Further, the Applicant and Second Respondent agree that Cardock's underpayment contraventions fall into 6 distinct groups:
(a) failure to pay minimum hourly rates;
(b) failure to pay an industry allowance;
(c) failure to pay a tooling allowance;
(d) failure to pay overtime;
(e) failure to pay travel allowance; and
(f) failure to pay annual leave loading...”[20]
[20] Statement of Agreed Facts at Attachment A
In relation to the admissions of the freedom of association allegations and by reason of the matters set out at Attachment B the parties position was:
“43.The Applicant and Respondents agree that the First Respondent’s FOA contraventions fall into 2 distinct groups:
(a)dismissal for a prohibited reason; and
(b)threat to injure and/or prejudicially alter for a prohibited reason.”[21]
[21] Statement of Agreed Facts at Attachment B
The parties submitted as follows:
“64.The underpayment contraventions did not arise from the one transaction or course of conduct. The employees were employed at different times and some of the employees were paid different amounts when employed at the same time at the same level.[22]
[22] see paragraphs 29-31 and 45-47 of the Statement of Agreed Facts filed 14 May 2010
65.The Respondents have already obtained an advantage from components of the contravening conduct being characterised as part of a course of conduct by reason of subsection 719(2) of the WR Act, thereby minimising the number of contraventions that can be penalised.
66.There is no subsection 719(2) equivalent in respect of the FOA contraventions; however, the FOA contraventions arose out of two distinct transactions or courses of conduct, both occurring at the meeting on 22 January 2008. One transaction involved the dismissal of an employee and the other transaction involved the threat to injure and/or prejudicially alter four employees' employment.”
The parties submissions and position before the Court acknowledged there were common elements involved in relation to the conduct involved in the underpayment and freedom of association allegations.
In relation to the admitted conduct concerning the underpayment allegations I accept the respondents are entitled to the benefit of s.719(2) of the WR Act in respect of multiple breaches of the same term of the relevant industrial instruments.
The size of the respondents undertaking
The parties submissions on this issue were at paragraphs 67-71 of the joint submissions filed on 29 November 2010 which provided:
“67.Cardock was at all material times between 27 March 2006 and 15 May 2006 (inclusive) incorporated under the Corporations Act 2001 (Cth).[23] The Second Respondent was the sole director and secretary of Cardock.[24]
[23] see paragraph 16 of the Statement of Agreed Facts filed 14 May 2010
[24] see paragraph 18 of the Statement of Agreed Facts filed 14 May 2010
68.The First Respondent is and was at all material times on and from 16 May 2006 the owner of a tiling business trading under the name of “GB Studio Enterprises.”[25]
[25] see paragraph 17 of the Statement of Agreed Facts filed 14 May 2010
69.The Applicant accepts that both Cardock and the First Respondent's business were small and unsophisticated operations. The size and financial resources of a contravener are factors that can be considered in the Court's consideration of penalty, along with the other factors which are relevant.[26] However, an employer's obligation to adhere to industrial instruments and pay minimum entitlements arises regardless of their size and financial position.
[26] see Olsen v Sterling Crown Pty Ltd [2008] FMCA 1392 at [63] per Lucev FM
70.The apparent small size of the businesses and lack of dedicated human resources personnel is not a particularly relevant matter on the question of penalty. No reduction should be afforded to the Respondents because of this.[27]
[27] see Cotis v MacPherson (2007) 169 IR 30 at [16] (Driver FM) (Cotis) and Kelly, supra at [28]
71.The Respondents’ Statements of Financial Affairs are set out at attachments A and B of the SoAF filed 14 May 2010. It is clear from the Statements of Financial Affairs that the Respondents have limited financial resources upon whom the imposition of a large penalty would be oppressive. In determining the appropriate penalty it is necessary to have regard to the capacity of the parties to bear the penalty.[28]
[28]see ACCC v ABB Transmission and Distribution Limited (No. 2) [2002] 190 ALR 169, at 181 per Finkelstein J
Whilst it is accepted the respondents had “small and unsophisticated operations” it is correct that an employer’s obligation to adhere to industrial instruments and pay minimum entitlements arises regardless of their size and financial position.
The size of the respondents businesses do not absolve them of their legal responsibility to comply with the law in relation to the employment of their employees. (see Workplace Ombudsman v Saya Cleaning Pty Ltd [2009] FMCA 38 and Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at [27] to [29])
The deliberateness of the breach
In relation to this factor the parties submitted:
“72.There is no evidence to suggest that the Respondents deliberately sought to deprive employees of their lawful entitlements prior to 17 January 2008.
73.The Respondents were up until 17 January 2008, ignorant as to ascertaining and complying with their obligations as employers.
74.The Respondents, on their own initiative, sought advice about the correct wages and allowances payable under the transitional Award on 17 January 2008.[29] However, the underpayments continued for five employees until July 2008.
[29] see paragraph 85 of the Amended Statement of Claim
75.In the circumstances, the deliberateness of the Respondents’ breaches should be confined to the period from January 2008 to July 2008.”
Whilst the respondents may not have deliberately sought to deprive employees of their lawful entitlements the contraventions evidence a reckless disregard for their statutory obligations.
The involvement of senior management
Not surprisingly given the agreed facts the parties in submissions acknowledged there was no evidence to suggest that the respondents were anything other than jointly responsible for the employment and dismissal of employees.
The respondent’s contrition, corrective action and cooperation with the enforcement authorities
This is an important factor. In submissions the parties addressed this factor as follows:
“80.This factor involves three related, yet separate elements. Each of them has resonance in this case.
81.There is evidence of contrition shown by various admissions made by the Respondents in respect of the contraventions. Although some of these admissions were coupled with a prolonged failure to take corrective action, the delay can be attributed to financial hardship suffered by the Respondents.
82.During the investigation, the First Respondent admitted that she did not rectify the contraventions when alerted to them by an employee and Wageline advice but decided to wait until the employee made a complaint before taking any corrective action.[30] The First Respondent did however admit that she would back pay the employee.[31] Further, during the investigation, the Second Respondent confirmed that the First Respondent was still not paying employees in accordance with the transitional Award.[32]
[30] see questions 152 and 153 of page 31 of Annexure A of the Affidavit of Tina Annette Debevc
[31] see the First Respondent’s answer to question 153 of page 31 of Annexure A of the Debevc Affidavit
[32] see questions 159 and 160 of page 80 of Annexure B of the Debevc Affidavit
83.The Respondents admitted the underpayment contraventions (but not the FOA contraventions) and agreed to pay the employees the underpayments in May 2010. The underpayment amounts were not paid until 15 October 2010 as a result of financial hardship suffered by the Respondents.[33]
[33] see para 83 of the Statement of Agreed Facts dated 14 May 2010 and para 47 of the Statement of Agreed Facts filed 12 November 2010
84.Although the Respondents signed the SoAF on 12 May 2010 to admit to the underpayment contraventions, they did not sign a SoAF admitting to the FOA contraventions until 11 November 2010.
85.The Respondents have now admitted the FOA contraventions and, despite financial hardship, have agreed to pay Adamopolous the amount owed to him as set out in the Amended Application, less an amount of $304 that was paid in lieu of notice of termination. This reveals a level of contrition and demonstrates a readiness on the part of the Respondents to accept responsibility. This also eliminates the need for the parties to prepare for a contested liability hearing with respect to the FOA contraventions.
86.During the investigation, the First Respondent provided records in compliance with a Notice to Produce Documents.[34]”
[34] see para 35 of the Debevc Affidavit
I accept there has been co-operation by the respondents, full admissions and evidence of contrition on their part of all which demonstrates “a readiness to accept responsibility.”
Ensuring compliance with minimum standards
As the parties acknowledged this is also an important factor in this case. In submissions the relevance of this factor was properly summarised as follows:
“87.This is an important consideration in the present case. One of the principal objects of the WR Act has been the maintenance of an effective safety net, and effective enforcement mechanisms.
88.The substantial penalties set by the legislature for breaches of such minimum entitlements (and an employee’s right to request them without the threat of reprisal) reinforce the importance placed on compliance with minimum standards.”
This Court said in Smith v Prescott & Ors [2008] FMCA 1672 at [38]:
“38.The threats the second respondent has accepted responsibility for, strike at the heart of the legislative scheme of the WR Act. It is important that all employees, particularly young employees be protected from conduct that infringes the protections embodied in the freedom of association provisions of the WR Act.”
Deterrence
Finally there is the important issue of deterrence, both specific and general in this case. As the parties acknowledged in submissions:
“90.General deterrence is an important factor in circumstances where an employer has failed to pay minimum entitlements to its employees. General deterrence is also an important factor in circumstances where an employer has attempted to avoid their statutory obligations by threatening or dismissing an employee. The law should mark its disapproval of the conduct in question, and set a penalty which serves as a warning to others.[35]
[35] see paragraph [26] of Kelly, supra, and the cases cited therein see also Ponzio v B & P Caelli Construction Pty Ltd (2007) 158 FCR 543 at 559-60 [93] (Lander J).
91.As for specific deterrence, the Respondents should understand that failing to comply with minimum obligations, or threatening or dismissing employees because they have entitlements under an industrial instrument will not be tolerated. Moreover, they should not be left with the impression that it is for them to decide how much to pay an employee. The Respondents failed to rectify the underpayments when they were alerted to their obligations. However, the deliberateness of the Respondents’ breaches can be confined to the period from January 2008 to July 2008. There is a need for specific deterrence, however the Respondent states that the need for specific deterrence should be reduced because the Business has ceased operating and the Respondents no longer employ any employees.
92.There is also a need to send a message to the community at large, and small employers particularly, that the correct entitlements for employees must be paid and that steps must be taken by employers (of all sizes) to ascertain and comply with minimum entitlements, as opposed to ignoring those obligations. Compliance should not be seen as the bastion of the large employer, with human resources staff and advisory consultants (accountants, consultants, lawyers) behind them. However, penalties for general deterrence should not be such as to crush the persons upon whom the penalty is imposed, or be used to make those persons a scapegoat.[36]”
[36] Fair Work Ombudsman v Meleha Newaz Pty Ltd & Anor [2010] FMCA 422 at [65] per Burnett FM.
In Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [93] Lander J said:
“93 There are three purposes at least for imposing a penalty: punishment; deterrence; and rehabilitation. The punishment must be proportionate to the offence and in accordance with the prevailing standards of punishment: R v Hunter(1984) 36 SASR 101 at 103. Therefore the circumstances of the offence or contravention are especially important. The penalty must recognise the need for deterrence, both personal and general. In regard to personal deterrence, an assessment must be made of the risk of re-offending. In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts(1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson(1975) 11 SASR 217. In some cases, although hardly in this type of contravention, rehabilitation is an important factor.”
Having regard to the need for specific and general deterrence in this case, and without imposing a crushing penalty, there is the need to deter the sort of conduct involved in this case.
Agreed contraventions
The parties accepted that the maximum penalty that could be imposed on the respondents for the admitted contraventions by the first respondent was $85,000 and the maximum penalty that could be imposed on the second respondent was also $132,000.[37] These were made up as follows:
[37] see paras 44-47 of joint submissions marked exhibit A4
“44.The maximum penalty that the Court could impose on the First Respondent is $85,800, constituted as follows:
(a)one contravention of clause 18.3.1 of the transitional Award (minimum hourly rates for non-apprentices);
(b)one contravention of clause 20.6.2 of the transitional Award (minimum hourly rates for apprentices);
(c)one contravention of clause 24.1.1 of the transitional Award (weekly industry allowance);
(d)one contravention of clause 24.3.1 of the transitional Award (weekly tool allowance);
(e)one contravention of clause 29.1 of the transitional Award (overtime rates);
(f)one contravention of clause 32.7.2 of the transitional Award (annual leave loading);
(g)one contravention of clause 38.1.1 of the transitional Award (daily travel allowance for non-apprentices);
(h)one contravention of clause 38.12 of the transitional Award (daily travel allowance for apprentices);
(i)one contravention of section 792(1)(a) of the WR Act (dismissing an employee for a prohibited reason); and
(j)four contraventions of section 792(1)(b) and/or (c) of the WR Act (threatening to injure and/or prejudicially alter four employees' positions in employment for a prohibited reason).
45.The maximum penalty that the Court could impose on the Second Respondent is $132,000, constituted as follows:
(a)one contravention of subsection 182(1) of the WR Act (minimum hourly rates);
(b)one contravention of clause 24.1.1 of the pre-reform Award (weekly industry allowance);
(c)one contravention of clause 24.3.1 of the pre-reform Award (weekly tool allowance);
(d)one contravention of clause 29.1 of the pre-reform Award (overtime rates);
(e)one contravention of clause 32.7.2 of the pre-reform Award (annual leave loading);
(f)one contravention of clause 38.1.1 of the pre-reform Award (daily travel allowance for non-apprentices);
(g)one contravention of clause 38.12 of the pre-reform Award (daily travel allowance for apprentices)
(h)one contravention of clause 18.3.1 of the transitional Award (minimum hourly rates for non-apprentices);
(i)one contravention of clause 20.6.2 of the transitional Award (minimum hourly rates for apprentices);
(j)one contravention of clause 24.1.1 of the transitional Award (weekly industry allowance);
(k)one contravention of clause 24.3.1 of the transitional Award (weekly tool allowance);
(l)one contravention of clause 29.1 of the transitional Award (overtime rates);
(m)one contravention of clause 32.7.2 of the transitional Award (annual leave loading);
(n)one contravention of clause 38.1.1 of the transitional Award (daily travel allowance for non-apprentices);
(o)one contravention of clause 38.12 of the transitional Award (daily travel allowance for apprentices);
(p)one contravention of section 792(1)(a) of the WR Act (dismissing an employee for a prohibited reason); and
(q)four contraventions of section 792(1)(b) and/or (c) of the WR Act (threatening to injure and/or prejudicially alter four employees' positions in employment for a prohibited reason).”
However, and as noted earlier given the agreed facts and the application of the relevant provisions of the WR Act, the parties asked the Court to accept the contraventions in this matter should be treated as follows:
“93.The parties agree that the First Respondent’s underpayment contraventions fall into the following 6 distinct groups:
a)failure to pay minimum hourly rates;
b)failure to pay an industry allowance;
c)failure to pay a tool allowance;
d)failure to pay overtime;
e)failure to pay travel allowance; and
f)failure to pay annual leave loading.
94.The parties further agree that Cardock’s underpayment contraventions fall into the following 6 distinct groups:
a)failure to pay minimum hourly rates;
b)failure to pay an industry allowance;
c)failure to pay a tool allowance;
d)failure to pay overtime;
e)failure to pay travel allowance; and
f)failure to pay annual leave loading.
95.The parties also agree that the First Respondent’s FOA contraventions fall into the following 2 distinct groups:
a)dismissing an employee for a prohibited reason; and
b)threatening to injure and/or prejudicially alter an employee’s employment for a prohibited reason.
96. Accordingly, the parties agree that:
a)the First Respondent's underpayment contraventions and FOA contraventions fall into 8 distinct groups; and
b)by reason of the Second Respondent's involvement in the First Respondent's underpayment contraventions, the First Respondent's FOA contraventions and Cardock's underpayment contraventions, that the Second Respondent's contraventions fall into 14 distinct groups.”
The position of the parties in relation to the underpayment contraventions was:
“83.The Respondents have admitted the underpayment contraventions at mediation stage and have agreed to pay the employees the underpayment amounts set out in the Amended Application. However, the underpayment amounts have not yet been paid at the time of signing this Statement.
84.Taking these matters into account, the Applicant and Respondents agree that 20-40% of the maximum penalty that can be imposed for each contravention or group of contraventions is an appropriate range for the underpayment contraventions.”[38]
[38] Attachment A
Therefore the position of the parties put in light of the admissions by the respondents in relation to the freedom of association allegations was:
“45.…treating the Respondents as jointly and severally liable with respect to the First Respondent’s FOA contraventions, the maximum penalty that can be imposed on the Respondents for the 2 FOA contraventions of the First Respondent is $13,000 (2 times the maximum $6,600 per contravention).
46.Combined with the maximum penalty that can be imposed on the Respondents for the 6 underpayment contraventions of the First Respondent ($39,600) and the maximum penalty that can be imposed on the Second Respondent for the 6 underpayment contraventions of Cardock Pty Ltd ($39,600), the total maximum penalty that can be imposed on the Respondents is $92,400.”[39]
[39] Attachment B
The parties submissions addressed how the agreed penalty, which was recommended by the body responsible for enforcing the WR Act, had been arrived at:
“98.Any consideration of the relevant factors in this case calls for a penalty. However, the financial resources of the Respondents indicates that any penalty should not be unduly onerous.
99.By reason of the First and Second Respondents’ relationship as wife and husband, the Applicant accepts that it is appropriate to approach the question of penalties on the basis that the Respondents are jointly and severally liable.
100.The parties submit that a total penalty of $18,480 should be imposed on the Respondents in relation to the admitted contraventions of the WR Act, the pre-reform Award and the transitional Award. This penalty represents 20% of the total maximum penalty that could be imposed on the Respondents (jointly and severally) in respect of the 14 groups of contraventions.”
This position was informed by the respondents having:
·admitted the freedom of association allegations;
·agreed to pay Adamopolous compensation in the amount of $714.50;
·made full payment of the underpayments that were owing; and
·made an up-front payment in the sum of $14,000 towards the total amount of the penalty that may be imposed by the Court.
The position of the parties was this revealed a level of contrition and demonstrated a readiness on the part of the respondents to accept responsibility.
Taking all the above matters into account, the applicant and respondents agreed that 20% of the maximum penalty ($92,400) that can be imposed for the contraventions, or a total quantum of $18,480 is an appropriate penalty for the admissions made in relation to the underpayment and freedom of association allegations.
In relation to the parties agreed position in NW Frozen Foods Pty Ltd v ACCC (1996) 71 FCR 285 the Federal Court noted that there is a public interest in promoting settlement of litigation and to this end parties may present to the Court joint submissions as to the recommended penalty to be imposed.
There is also the decision in Wells v Locarno Management Pty Ltd [2008] FCA 1034 at 23 where Jessup J said:
“The predictability involved in the resolution of penal proceedings in accordance with a pre-trial agreement reached by the parties is something which should as a matter of public policy be regarded as beneficial.”
I accept as was said in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at paragraph [53] that:
“…
(iii)There is a public interest in promoting settlement of litigation…
…
(vi)Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court’s view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range.” (emphasis added)
Notwithstanding the position(s) in Attachments A and B on declarations, at the penalty hearing Counsel for each of the parties invited the Court to make orders in terms of exhibit A1. As the Full Court notes in Stuart v Construction, Forestry and Mining Energy Union [2010] FCAFC 65 at paragraph 92, declarations of contraventions are necessary to set out the foundation of the pecuniary penalty. Counsel for the parties were ad idem that orders in terms of exhibit A1 including notations recording the parties admissions in relation to the underpayment and freedom of association allegations meant declarations were unnecessary. Given the agreed facts at Annexure A and B to these reasons I am satisfied they sufficiently evidence the basis for the pecuniary penalty imposed and orders will be made on that basis.[40]
[40] see also Fair Work Ombudsman v Transport Workers Union of Australia [2010] FCA 768 and James v Planiac International Pty Ltd & Ors (No.2) [2010] FMCA 845 where orders by way of penalty are made
Conclusion
Having regard to the matters set out above, the admitted breaches making up the admitted underpayment and freedom of association allegations are serious.
The respondents engaged in conduct which included dismissing, threatening to dismiss or threatening to alter an employee’s position to their prejudice all reasons which are prohibited under the freedom of association provisions of the WR Act. The respondents also underpaid employees, some of who were engaged as apprentices, as compared to their entitlements under the WR Act.
As the submissions of the parties set out earlier makes clear the parties have put an agreed position to the Court on the appropriate penalties in light of the agreed facts and contraventions.
In this matter whilst the agreed penalties are certainly at the lower end of the permissible range “the resolution of penal proceedings in accordance with a pre trial agreement…is something which should as a matter of public policy be regarded as beneficial.”[41]
[41] see para 86
Whilst the submissions of the parties did not address the penalty for each contravention where the maximum penalty for 14 contraventions is $92,400, the authorities indicate “it will not be useful to investigate whether the Court would have arrived at that precise figure” if the aggregate penalty arrived is within the permissible range.[42]
[42] see para 87
Balancing the factors set out above, in my view, penalties for each of the breaches by the respondents should be assessed at a mid range at $2,500 per underpayment breach and towards the higher end at $5,300 for the freedom of association contraventions making $40,600 in total.
Taking into account amongst other things the fulsome co-operation of the respondents, their contrition and the resolution of the matter by way of penalty hearing and all the circumstances of the case there could be further discounts of between 30-50% for this and the application of the totality principle.
Given this I consider that the individual penalties are within the permissible range and the aggregate penalty indicated above is appropriate for the whole of the contravening conduct engaged in by the respondents.
Finally there will be orders requiring the respondents to pay the sums mentioned into the Consolidated Revenue Fund in the terms agreed to by the parties.[43]
[43] an amended exhibit A1 was filed with the Court after the close of submissions by consent which provided for additional time to make the payments and it is appropriate that be included in the orders to be made
Therefore, as the Court:
·is directed by the relevant authorities to consider what is appropriate in all the circumstances of this case;[44] and
[44] see Construction Forestry Mining & Energy Union v Coal & Allied Operations Pty Ltd (No.2) (1999) 94 IR 231
·in its discretion in relation to penalty is not fettered by a checklist of mandatory criteria;[45] and
[45] see Australian Ophthalmic Supplies Pty Limited v McAlary-Smith [2008] FCAFC 8
·notes the parties have filed the Statements of Agreed Facts (at Attachment A & B) and agreed on penalties which are within the permissible range for each offence[46]; and
[46] see Ponzio v B & P Caellli Constructions Pty Ltd (2007) 158 FCR 543
·is satisfied the aggregate penalties for the whole of the contravening conduct are appropriate; and
·is satisfied the agreed penalties are just and appropriate[47] and it is proper to make the orders sought;
[47] Ibid
there will be orders as set out at the beginning of these reasons for decision.
I certify that the preceding ninety-eight (98) paragraphs are a true copy of the reasons for judgment of O’Sullivan FM
Date: 9 December 2010
Attachment A
IN THE FEDERAL MAGISTRATES COURT File number: MLG1315/2009
OF AUSTRALIA
REGISTRY: MELBOURNE
FAIR WORK OMBUDSMAN
Applicant
GISELA BOTTCHER
First Respondent
WOLFGANG BOTTCHER
Second Respondent
STATEMENT OF AGREED FACTS
INTRODUCTION
On 13 October 2009 the Applicant filed an Application and Statement of Claim in this Court (Application) in respect of the First and Second Respondents in which the Applicant alleged that the First Respondent contravened the freedom of association provisions contained in Part 16 of the Workplace Relations Act 1996 (Cth) (WR Act) and that the Second Respondent was involved in those alleged contraventions (FOA allegations).
On 24 February 2010 the Applicant filed an Amended Application and Amended Statement of Claim in this Court (Amended Application) in respect of the First and Second Respondents in which it was further alleged that the First Respondent underpaid 10 former employees and that the Second Respondent was involved in those underpayments and in underpayments in respect of 5 former employees of Cardock Pty Ltd (Cardock) (underpayment allegations).
On 17 March 2010 the First and Second Respondents filed a Response and Defence (Response) in respect of the Amended Application in which the Respondents denied the FOA allegations and did not admit to the underpayment allegations.
On 24 March 2010 the Applicant and the Respondents agreed to negotiate a Statement of Agreed Facts with respect to the underpayment allegations only.
The Applicant is seeking:
(a)declarations that the First Respondent contravened the transitional National Building and Construction Industry Award 2000 (transitional Award) in respect of the underpayment allegations as set out in the Amended Application;
(b)declarations that the Second Respondent contravened the WR Act, the pre-reform National Building and Construction Industry Award 2000 (pre-reform Award) and the transitional Award in respect of the underpayment allegations as set out in the Amended Application;
(c)an order under section 719(1) of the WR Act that the First Respondent pay penalties in respect of the underpayment allegations as set out in the Amended Application;
(d)an order under section 719(1) of the WR Act that the Second Respondent pay penalties in respect of the underpayment allegations as set out in the Amended Application;
(e)declarations that the First Respondent contravened the WR Act in respect of the FOA allegations as set out in the Amended Application;
(f)declarations that the Second Respondent contravened the WR Act in respect of the FOA allegations as set out in the Amended Application;
(g)an order under section 807(1)(a) of the WR Act that the First Respondent pay penalties in respect of the FOA allegations as set out in the Amended Application;
(h)an order under section 807(1)(a) of the WR Act that the Second Respondent pay penalties in respect of the FOA allegations as set out in the Amended Application;
(i)an order under section 841(a) of the WR Act that the Respondents pay the penalties to the Consolidated Revenue Fund of the Commonwealth;
(j)an order under section 719(6) of the WR Act that the First Respondent pay to the respective employees the amounts set out in the Amended Application;
(k)an order under section 722 of the WR Act that the First Respondent pay to the respective employees interest on the amounts set out in the Amended Application; and
(l)an order under section 807(1)(b) of the WR Act that the Respondents pay compensation to Adampolous for damage suffered by him as a result of the contraventions in respect of the FOA allegations as set out in the Amended Application.
The Respondents agree to:
(a)the making of declarations that the First Respondent contravened the transitional Award in respect of the underpayment allegations as set out in the Amended Application;
(b)the making of declarations that the Second Respondent contravened the WR Act, the pre-reform Award and the transitional Award in respect of the underpayment allegations as set out in the Amended Application;
(c)the making of an order under section 719(1) of the WR Act that the First Respondent pay penalties in respect of the underpayment allegations as set out in the Amended Application;
(d)the making of an order under section 719(1) of the WR Act that the Second Respondent pay penalties in respect of the underpayment allegations as set out in the Amended Application;
(e)the making of an order under section 841(a) of the WR Act that the Respondents pay the penalties in respect of the underpayment allegations to the Consolidated Revenue Fund of the Commonwealth;
(f)the making of an order under section 719(6) of the WR Act that the First Respondent pay to the respective employees the amounts set out in the Amended Application; and
(g)the making of an order under section 722 of the WR Act that the First Respondent pay to the respective employees interest on the amounts set out in the Amended Application.
The outstanding matters to be determined by the Court are:
(a)the quantum of the penalties to be imposed on the First and Second Respondents in respect of the underpayment allegations as set out in the Amended Application;
(b)the making of declarations that the First Respondent contravened the WR Act in respect of the FOA allegations as set out in the Amended Application;
(c)the making of declarations that the Second Respondent contravened the WR Act in respect of the FOA allegations as set out in the Amended Application;
(d)the making of an order under section 807(1)(a) of the WR Act that the First Respondent pay penalties in respect of the FOA allegations as set out in the Amended Application;
(e)the making of an order under section 807(1)(a) of the WR Act that the Second Respondent pay penalties in respect of the FOA allegations as set out in the Amended Application;
(f)the making of an order under section 841(a) of the WR Act that the Respondents pay the penalties in respect of the FOA allegations to the Consolidated Revenue Fund of the Commonwealth;
(g)the making of an order under section 807(1)(b) of the WR Act that the Respondents pay compensation to Adampolous for damage suffered by him as a result of the contraventions in respect of the FOA allegations as set out in the Amended Application.
ADMITTED CONTRAVENTIONS
On the basis of the facts set out in the Amended Application, the Second Respondent admits to Cardock contravening each of the following applicable provisions in respect of the former employees of Cardock (as alleged in the Amended Application):
(a)section 182 of the WR Act (minimum hourly rates contained in the Australian Pay Classification Scale, as derived from clauses 18.1.1 and 20.6.2 of the pre-reform Award);
(b)clause 29.1 of the pre-reform Award (overtime);
(c)clauses 38.1.1 and 38.12 of the pre-reform Award (travel allowance);
(d)clause 24.1.1 of the pre-reform Award (industry allowance);
(e)clause 24.3.1 of the pre-reform Award (tool allowance); and
(f)clause 32.7.2 of the pre-reform Award (annual leave loading).
The Second Respondent admits to his involvement, within the meaning of section 728 of the WR Act, in Cardock's contraventions of the applicable provisions in respect of the underpayment allegations.
On the basis of the facts set out in the Amended Application, the First Respondent admits to contravening each of the following applicable provisions in respect of the former employees of the First Respondent (as alleged in the Amended Application):
(a)clauses 18.3.1 and 20.6.2 of the transitional Award (minimum hourly rates);
(b)clause 29.1 of the transitional Award (overtime);
(c)clauses 38.1.1 and 38.12 of the transitional Award (travel allowance);
(d)clause 24.1.1 of the transitional Award (industrial allowance);
(e)clause 24.3.1 of the transitional Award (tool allowance); and
(f)clause 32.7.2 of the transitional Award (annual leave loading).
The Second Respondent admits to his involvement, within the meaning of section 728 of the WR Act, in the First Respondent's contraventions of the applicable provisions in respect of the underpayment allegations.
The Respondents admit that the contraventions of the WR Act, the pre-reform Award and the transitional Award resulted in underpayments to the employees (see details below) totalling $46,163.85 ($3,116.49 in respect of Cardock's contraventions and $43,047.36 in respect of the First Respondent's contraventions).
THE PARTIES
The Applicant is and has been since 1 July 2009:
(a)appointed by the Governor General by written instrument to the office of Fair Work Ombudsman, pursuant to section 687 of the Fair Work Act 2009 (Cth) (FW Act);
(b)a Fair Work Inspector pursuant to section 701 of the FW Act; and
(c)a person with standing and authority to bring these proceedings pursuant to:
(i)section 807 of the Workplace Relations Act 1996 (Cth) (WR Act) as continued in force by virtue of Item 11 of Schedule 2 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act);
(ii)section 718(1) of the WR Act as continued in force by virtue of Item 11 of Schedule 2 of the Transitional Act; and
(iii)sub-item 13(1) of Part 3 of Schedule 18 of the Transitional Act.
Pursuant to sub-item 11(1) of Part 3 of Schedule 2 of the Transitional Act, the WR Act continues to apply, on and after 1 July 2009 (WR Act repeal day), in relation to conduct that occurred before the WR Act repeal day.
The application made by the Applicant in this proceeding is an application which, before the WR Act repeal day, could have been made or continued by a workplace inspector under the authority given to a workplace inspector by section 807 of the WR Act.
Cardock was at all material times between 27 March 2006 and 15 May 2006 (inclusive):
(a)duly incorporated under the Corporations Act 2001 (Cth);
(b)conducting a tiling business from the principal place of 45 Witternberg Avenue Frankston in the State of Victoria (Principal Place of Business); and
(c)an employer within the meaning of section 6 of the WR Act.
The First Respondent (Gisela Bottcher):
(a)is and was at all material times on and from 16 May 2006:
(i)the owner of a tiling business trading under the name of “GB Studio Enterprises”
(ii)a person registered as carrying on a tiling business named “GB Studio Enterprises” (ABN 74 182 156 159) (Business);
(iii)conducting business from the Principal Place of Business;
(iv)(until 1 July 2009) an employer within the meaning of section 858 of the WR Act;
(v)subject to the operation of section 792 in Part 16 of the WR Act by reason of section 881 of the WR Act; and
(b)runs a business operated by Profishional Protection Pty Ltd (ACN 102 660 435) and estimates her average weekly income from this business to be $130.00 per week. A Statement of Financial Affairs of the First Respondent is attached marked "A".
The Second Respondent (Wolfgang Bottcher):
(a)is and was at all relevant times:
(i)the sole director of Cardock;
(ii)the secretary of Cardock;
(iii)acting as the directing mind and will of Cardock in the tiling business;
(iv)responsible for the employment of employees of Cardock;
(v)an employee or agent of the First Respondent and acting in that capacity within the scope of his actual or ostensible authority;
(vi)involved in the day-to-day operation of the Business;
(vii)jointly responsible with the First Respondent for the employment and dismissal of employees in the Business; and
(b)is self employed and recently commenced operating a new business as a sole trader, 'The Grout Doktor' (ABN 32 848 387 516). The Second Respondent's weekly income from this business is variable and he estimates his average weekly income to be about $300.00 per week. A Statement of Financial Affairs of the First Respondent is attached marked "B".
THE EMPLOYEES
Drew Hyman
On 9 March 2007 Hyman commenced employment with the First Respondent.
At all relevant times during his employment with the First Respondent, Hyman was employed as a first year apprentice tiler within the definition of Junior Labour, Victoria, Carpenter and/or joiner, fibrous plasterer, plasterer and tilelayer in clause 20.6.2 of the transitional Award and entitled to a specified percentage of the wage of a qualified tiler within the definition of Construction Worker Level 3 (CW3) in clause 18.1.1 of the transitional Award.
Hyman was paid a flat rate of $8 per hour for all hours worked from 9 March 2007 until 19 February 2008.
Jesse Stenhouse
On or around 14 January 2008 Stenhouse commenced employment with the First Respondent.
At all relevant times during his employment with the First Respondent, Stenhouse was employed as a first year apprentice tiler within the definition of Junior Labour, Victoria, Carpenter and/or joiner, fibrous plasterer, plasterer and tilelayer in clause 20.6.2 of the transitional Award and entitled to a specified percentage of the wage of a qualified tiler within the definition of CW3 in clause 18.1.1 of the transitional Award.
Stenhouse was paid:
(a)a flat rate of $8 per hour for all hours worked from 14 January 2008 until 4 July 2008; and
(b)at least in accordance with the transitional Award from 26 July 2008 until 18 September 2008.
Andrew Lewis
Lewis was employed by:
(a)Cardock between 27 March 2006 and 15 May 2006; and
(b)the First Respondent between 16 May 2006 and around May or June 2009.
At all relevant times during his employment with Cardock, Lewis was employed as a second year apprentice tiler within the definition of Junior Labour, Victoria, Carpenter and/or joiner, fibrous plasterer, plasterer and tilelayer in clause 20.6.2 of the pre-reform Award and entitled to a specified percentage of the wage of a qualified tiler within the definition of CW3 in clause 18.1.1 of the pre-reform Award.
During his employment with the First Respondent, Lewis was employed as:
(a)a second year apprentice tiler between 16 May 2006 and 9 January 2007;
(b)a third year apprentice tiler between 10 January 2007 and 9 January 2008; and
(c)a fourth year apprentice tiler between 10 January 2008 and 9 January 2009,
within the definition of Junior Labour, Victoria, Carpenter and/or joiner, fibrous plasterer, plasterer and tilelayer in clause 20.6.2 of the transitional Award and entitled to a specified percentage of the wage of a qualified tiler within the definition of CW3 in clause 18.1.1 of the transitional Award.
(d)a qualified tiler between 10 January 2009 and mid-2009 within the definition of CW3 in clause 18.1.1 of the transitional Award by reason of falling within the old wage group classification of "Tilelayer (Vic)" as contained in clause 18.1.2 of the transitional Award.
Lewis was paid:
(a)a flat rate of $10 per hour for all hours worked from 27 March 2006 until 12 January 2007;
(b)a flat rate of $12 per hour for all hours worked from 13 January 2007 until 21 December 2007;
(c)a flat rate of $14 per hour for all hours worked from 22 December 2007 until 4 July 2008;
(d)a flat rate of $14.771 per hour for all hours worked from 5 July 2008 until 11 July 2008; and
(e)at least in accordance with the transitional Award from 12 July 2008 until at least 19 September 2008;
Daniel Blanch
Blanch was employed by:
(a)Cardock between 27 March 2006 and 15 May 2006; and
(b)the First Respondent between 16 May 2006 and 17 August 2007.
At all relevant times during his employment with Cardock and the First Respondent, Blanch was employed on a full time basis as a qualified tiler within the definition of CW3 in clause 18.1.1 of the pre reform Award and the transitional Award, respectively, by reason of falling within the old wage group classification of "Tilelayer (Vic)" as contained in clause 18.1.2 of the pre reform Award and the transitional Award, respectively.
Blanch was paid:
(a)a flat rate of $17 per hour for all hours worked from 27 March 2006 until 16 February 2007; and
(b)a flat rate of $19 per hour for all hours worked from 17 February 2007 until 17 August 2007.
Joshua Kivlighon
Kivlighon was employed by the First Respondent between 8 March 2008 and 18 September 2008.
Between 8 March 2008 and 20 March 2008 during his employment with the First Respondent, Kivlighon was employed on a full time basis as a trades labourer within the definition of Construction Worker Level 1(d) (CW1(d)) in clause 18.1.1 of the transitional Award by reason of falling within the old wage group classification of "Trades Labourer" as contained in clause 18.1.2 of the transitional Award.
Lewis:- Failure to pay base hourly rates, allowances, overtime & annual leave loading
By reason of the matters set out above, the First Respondent was obliged to pay Lewis:
(a)a base hourly rates of
(i)$8.48 (inclusive of a weekly special allowance of $7.70) until 30 November 2006;
(ii)$8.88 (inclusive of a weekly special allowance of $7.70) until 9 January 2007;
(iii)$12.11 (inclusive of a weekly special allowance of $7.70) until 30 September 2007;
(iv)$12.31 (inclusive of a weekly special allowance of $7.70) until 9 January 2008;
(v)$14.77 (inclusive of a weekly special allowance of $7.70) until 30 September 2008;
(vi)$15.29 (inclusive of a weekly special allowance of $7.70) until 9 January 2009; and
(vii)$18.87 (inclusive of tool, industry and special allowances and follow the job loading) from 10 January 2009 thereafter;
(b)overtime at the rates of:
(i)time and a half for the first two hours on any one day; and
(ii)double time thereafter,
for work beyond an employee’s ordinary time of work;
(c)allowances made up of:
(i)weekly tool allowance of:
(1)$23.30 up to 30 November 2006;
(2)$24.20 from 1 December 2006 to 30 September 2007;
(3)$24.70 from 1 October 2007 to 30 September 2008; and
(4)$25.80 from 1 October 2008 to 9 January 2009;
(ii)weekly industry allowance of:
(1)$21.70 up to 30 November 2006;
(2)$22.70 from 1 December 2006 to 30 September 2007;
(3)$23.10 from 1 October 2007 to 30 September 2008;
(4)$23.90 from 1 October 2008 to 9 January 2009;
(iii)daily travel allowance of:
(1)$12.16 up to 6 November 2006;
(2)$13.09 from 7 November 2006 to 9 January 2007;
(3)$13.86 from 10 January 2007 to 9 January 2008;
(4)$14.63 from 10 January 2008 to 30 September 2008;
(5)$15.68 from 1 October 2008 to 9 January 2009; and
(6)$16.50 from 10 January 2009 thereafter; and
(d)annual leave loading of 17.5% when taking annual leave;
THE UNDERPAYMENTS
By reason of the matters set out above, the employees were entitled to be paid:
(a)by Cardock the respective totals as follows:
(i)Lewis $2,863.92 gross;
(ii)Plymin $1,951.63 gross;
(iii)Blanch $4,477.34 gross;
(iv)Smith $4,829.71 gross;
(v)West $4,643.43 gross;
(b)by the First Respondent the respective totals as follows:
(i)Stenhouse $11,141.10 gross;
(ii)Hyman $19,249.46 gross;
(iii)Mollica $4,199.95 gross;
(iv)Smith $31,329.53 gross;
(v)West $25,372.49 gross;
(vi)Young $3,902.91 gross;
(vii)Kivlighon $7,952.05 gross;
(viii)Lea $6,564.58 gross;
(ix)Blanch $61,092.74 gross;
(x)Lewis $73,970.67 gross;
During the employees' respective employment:
(a)Cardock paid the employees the totals as set out below:
(i)Lewis $2,410.00 gross;
(ii)Plymin $1,649.54 gross;
(iii)Blanch $3,910.0 gross;
(iv)Smith $3,928.00 gross;
(v)West $3,752.00 gross;
(b)the First Respondent paid the employees the totals as set out below:
(i)Stenhouse $9,748.84 gross;
(ii)Hyman $15,689.00 gross;
(iii)Mollica $3,868.00 gross;
(iv)Smith $25,008.00 gross;
(v)West $20,346.66 gross;
(vi)Young $2,757.80 gross;
(vii)Kivlighon $7,557.42 gross;
(viii)Lea $4,761.00gross;
(ix)Blanch $52,847.80 gross;
(x)Lewis $59,144.00 gross;
By reason of the matters set out above:
(a)Cardock underpaid the respective employees the following amounts:
(i)Lewis $453.92 gross;
(ii)Plymin $302.09 gross;
(iii)Blanch $567.34 gross;
(iv)Smith $901.71 gross;
(v)West $891.43 gross;
(b)the First Respondent underpaid the respective employees the following amounts:
(i)Stenhouse $1,392.66 gross;
(ii)Hyman $3,560.46 gross;
(iii)Mollica $331.95 gross;
(iv)Smith $6,321.53 gross;
(v)West $5,025.83 gross;
(vi)Young $1,145.11 gross;
(vii)Kivlighon $394.63 gross;
(viii)Lea $1,803.58 gross;
(ix)Blanch $8,244.94 gross;
(x)Lewis $14,826.67 gross;
AGREEMENT ON PENALTY
Grouping of contraventions
The Respondents contravened the applicable provisions with respect to the underpayment allegations on multiple occasions with respect to multiple employees. However, subsection 719(2) of the WR Act provides for treating multiple contraventions of the same applicable provision as a single contravention.
Further, to the extent that two or more contraventions have common elements, this should be taken into account in considering what is an appropriate penalty in all the circumstances for each contravention.
Some of the underpayment contraventions have common elements and this should be taken into account in considering an appropriate penalty to ensure that the Respondents are not punished more than once for the same or substantially similar conduct.
Accordingly, the Applicant and Respondents agree that the First Respondent's underpayment contraventions fall into 6 distinct groups:
(a)failure to pay minimum hourly rates;
(b)failure to pay an industry allowance;
(c)failure to pay a tooling allowance;
(d)failure to pay overtime;
(e)failure to pay travel allowance; and
(f)failure to pay annual leave loading.
Further, the Applicant and Second Respondent agree that Cardock's underpayment contraventions fall into 6 distinct groups:
(a)failure to pay minimum hourly rates;
(b)failure to pay an industry allowance;
(c)failure to pay a tooling allowance;
(d)failure to pay overtime;
(e)failure to pay travel allowance; and
(f)failure to pay annual leave loading.
By reason of the First and Second Respondents' relationship as wife and husband, it is appropriate to approach the question of penalties with respect to the First Respondent's underpayment contraventions on the basis that they are jointly and severally liable. To do otherwise could lead to "double-counting" of the penalties for the wrongdoing and require a difficult and unnecessary exercise of apportionment of responsibility[48].
[48] cf: Canturi & Anor v Sita Coaches & Ors (2002) 116 FCR 276 at [85], [95]-[96] per Ryan J.
Accordingly, treating the Respondents as jointly and severally liable with respect to the First Respondent's underpayment contraventions, the maximum penalty that can be imposed on the Respondents for the 6 contraventions of the First Respondent is $39,600 (6 times the maximum $6,600 per contravention).
Only the Second Respondent is liable for penalties with respect to Cardock's underpayment contraventions. Accordingly, the maximum penalty that can be imposed on the Second Respondent for the 6 contraventions of Cardock is $39,600 (6 times the maximum $6,600 per contravention).
Penalty range
The Respondents have admitted the underpayment contraventions at mediation stage and have agreed to pay the employees the underpayment amounts set out in the Amended Application. However, the underpayment amounts have not yet been paid at the time of signing this Statement.
Taking these matters into account, the Applicant and Respondents agree that 20-40% of the maximum penalty that can be imposed for each contravention or group of contraventions is an appropriate range for the underpayment contraventions.
The Applicant and Respondents will each make submissions on the factors relevant to penalty at an appropriate time in the proceedings.
DATED: May 2010
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Attachment B
IN THE FEDERAL MAGISTRATES COURT File number: MLG1315/2009
OF AUSTRALIA
REGISTRY: MELBOURNE
FAIR WORK OMBUDSMAN
Applicant
GISELA BOTTCHER
First Respondent
WOLFGANG BOTTCHER
Second Respondent
STATEMENT OF AGREED FACTS
INTRODUCTION
On 14 May 2010 the parties filed a Statement of Agreed Facts (SoAF), dated 12 May 2010, in this Court in respect of the First and Second Respondents' admissions of the allegations that the First Respondent underpaid 10 former employees and that the Second Respondent was involved in those underpayments and in underpayments in respect of 5 former employees of Cardock Pty Ltd (underpayment allegations).
On or about the 20 September 2010 the Applicant and the Respondents agreed to negotiate a SoAF with respect to the allegations that the First Respondent contravened the freedom of association provisions contained in Part 16 of the Workplace Relations Act 1996 (Cth) (WR Act) and that the Second Respondent was involved in those alleged contraventions (FOA allegations).
The parties refer to the matters set out at paragraph 5 of the SoAF dated 12 May 2010 and, in addition to the matters referred to at paragraph 6 of the SoAF dated 12 May 2010, the Respondents now also agree to:
(a)the making of declarations that the First Respondent contravened the WR Act in respect of the FOA allegations as set out in the Amended Application;
(b)the making of declarations that the Second Respondent contravened the WR Act in respect of the FOA allegations as set out in the Amended Application;
(c)the making of an order under section 807(1)(a) of the WR Act that the First Respondent pay penalties in respect of the FOA allegations as set out in the Amended Application;
(d)the making of an order under section 807(1)(a) of the WR Act that the Second Respondent pay penalties in respect of the FOA allegations as set out in the Amended Application;
(e)the making of an order under section 841(a) of the WR Act that the Respondents pay the penalties to the Consolidated Revenue Fund of the Commonwealth; and
(f)the making of an order under section 807(1)(b) of the WR Act that the Respondents pay compensation to Adamopolous for damage suffered by him as a result of the contraventions in respect of the FOA allegations as set out in paragraph 26 herein.
In substitution of the matters referred to in paragraph 7 of the SoAF dated 12 May 2010, the only outstanding matter to be determined by the Court is the making of the declarations and orders sought in the attached Consent Orders.
ADMITTED CONTRAVENTIONS
On the basis of the facts set out in the Amended Application, the First Respondent admits to contravening each of the following applicable provisions in respect of the former employees (as alleged in the Amended Application):
(a)section 792(1)(a) of the WR Act; and
(b)section 792(1)(b) of the WR Act; and/or
(c)section 792(1)(c) of the WR Act.
The Second Respondent admits to his involvement, within the meaning of section 728 of the WR Act, in the First Respondent’s contraventions of the applicable provisions in respect of the FOA allegations.
The Respondents admit that the contravention of section 792(1)(a) resulted in Adamopolous suffering a loss of three weeks of his usual salary, less an amount of $304 that was paid in lieu of notice of termination, resulting in a total loss of $714.50.
THE EMPLOYEES
Philip Adamopolous
On or around 7 March 2007 Adamopolous commenced employment with the First Respondent.
At all relevant times during his employment with the First Respondent, Adamopolous was employed as an apprentice tiler within the definition of the Junior Labour, Victoria, Carpenter and/or joiner, fibrous plasterer, plasterer and tilelayer in clause 20.6.2 of the transitional National Building and Construction Industry Award 2000 (transitional Award) and entitled to a specific percentage of the wage of a qualified tiler within the definition of Construction Worker Level 3 (CW3) in clause 18.1.1 of the transitional Award.
Jesse Stenhouse
The parties refer to the matters set out at paragraphs 22-24 of the SoAF dated 12 May 2010.
Drew Hyman
The parties refer to the matters set out at paragraphs 19-21 of the SoAF dated 12 May 2010.
Andrew Lewis
The parties refer to the matters set out at paragraphs 25-28 of the SoAF dated 12 May 2010.
CONDUCT DIRECTED AT RELEVANT EMPLOYEES
In or around December 2007 Adamopolous sought clarification from the First and Second Respondents about whether he was entitled to receive annual leave loading.
In or around January 2008 Adamopolous contacted the Workplace Infoline and was informed that he was entitled to annual leave loading of 17.5%.
On 14 January 2008 Adamopolous informed the First and Second Respondents that he had sought clarification from the Workplace Infoline and that he was entitled to receive annual leave loading.
On 17 January 2008, after making their own independent enquiries with the Workplace Infoline, the First and Second Respondents were informed, by way of an email from the Workplace Authority, of the wages and allowances payable under the Award.
On 22 January 2008 the First and Second Respondents held a staff meeting at the First Respondent's Principal Place of Business. In addition to the First and Second Respondents, the attendees at the meeting were Adamopolous, Stenhouse, Hyman and Lewis (Relevant Employees).
In the course of the staff meeting on 22 January 2008 the Second Respondent, amongst other things, told the Relevant Employees that:
(a)certain conditions of work would be removed or varied if the Relevant Employees were to receive their Award entitlements. The conditions to be removed or varied were that the Relevant Employees would:
(i)have to drive themselves to the job site;
(ii)have to supply their own tools; and
(iii)have their breaks reduced to 15 minutes per day; and
(b)the Business could not afford to continue to employ certain employees (namely, Stenhouse and Adamopolous).
In the course of the staff meeting on 22 January 2008 the First Respondent terminated the employment of Adamopolous. At the meeting, the First Respondent handed Adamopolous a completed Application for Approval to Cancel a Training Contract and asked him to sign it, which he did.
In the course of the staff meeting on 22 January 2008 the First and Second Respondent informed Stenhouse that they intended to terminate his employment. At the meeting, the First Respondent, or in the alternative the Second Respondent, handed Stenhouse a completed Application for Approval to Cancel a Training Contract and asked him to sign it.
In the course of the staff meeting on 22 January 2008, after Adamopoulos left the meeting, the First Respondent, or in the alternative the Second Respondent, informed Stenhouse that his employment would not be terminated and advised him not to sign the Application for Approval to Cancel a Training Contract.
CONTRAVENTIONS BY THE FIRST RESPONDENT
Dismissal – Adamopolous
By reason of the matters set out at paragraph 6 of the Amended Statement of Claim:
(a)the Second Respondent's conduct set out in paragraph 18(b) herein was conduct engaged in by an employee or agent of the First Respondent within the scope of his actual or apparent authority;
(b)the Second Respondent's conduct set out in paragraph 18(b) herein was conduct of an agent of the First Respondent acting within the scope of his ostensible authority; and
(c)the Second Respondent's state of mind in relation to the conduct set out in paragraph 18(b) herein is taken to have been the state of mind of the First Respondent in relation to that conduct.
By reason of the matters set out at paragraph 22 herein and by the conduct alleged at paragraph 19 the First Respondent dismissed Adamopolous.
The First Respondent dismissed Adamopolous for the prohibited reason that Adamopolous was entitled to the benefit of the transitional Award. This intent can be inferred from the matters set out at paragraphs 13 and 15 to 21 herein.
In the premises, the First Respondent contravened section 792(1)(a) of the WR Act.
As a result of the contravention of section 792(1)(a) of the WR Act Adamopolous suffered loss and damage. Adamopolous was provided with $304 as payment in lieu of notice on 1 February 2008. Adamopolous commenced employment with a new employer on 13 February 2008, three weeks after his employment was terminated by the First Respondent. Accordingly, he suffered a loss of three weeks of his usual salary less an amount of $304 that was paid in lieu of notice. At the time his employment was terminated by the First Respondent, Adamopolous's weekly salary was $280.35. At that time he was also entitled to weekly payments of $23.10 with respect to an Industry Allowance, $24.20 with respect to a Tool Allowance, and $11.55 with respect to a Travel Allowance. Accordingly, Adamopolous suffered a loss of $714.50.
Threat to injure or prejudicially alter position in employment – Adamopolous
By reason of the matters set out at paragraph 6 of the Amended Statement of Claim:
(a)the Second Respondent's conduct set out in paragraph 18 herein was conduct engaged in by an employee or agent of the First Respondent within the scope of his actual or apparent authority;
(b)the Second Respondent's conduct set out in paragraph 18 herein was conduct of an agent of the First Respondent acting within the scope of his ostensible authority; and
(c)the Second Respondent's state of mind in relation to the conduct set out in paragraph 18 herein is taken to have been the state of mind of the First Respondent in relation to that conduct.
Further or in the alternative to paragraphs 22 to 26 herein, by reason of the matters set out at paragraph 27 herein and by the conduct alleged at paragraph 18 herein, the First Respondent threatened to injure Adamopolous in his employment, alternatively threatened to prejudicially alter his position in employment, by threatening to remove conditions of employment.
The First Respondent engaged in the conduct alleged in paragraph 28 herein for the prohibited reason that Adamopolous was entitled to the benefit of the transitional Award. This intent can be inferred from the matters set out at paragraphs 13, 15 to 16 and 18 herein.
In the premises, the First Respondent contravened section 792(1)(b) and/or (c) of the WR Act.
Threat to injure or prejudicially alter position in employment – Stenhouse
By reason of the matters set out at paragraph 27 herein and by the conduct alleged at paragraph 18 herein, the First Respondent threatened to injure Stenhouse in his employment, alternatively threatened to prejudicially alter his position in employment, by threatening to remove conditions of employment.
The First Respondent engaged in the conduct alleged in paragraph 31 herein for the prohibited reason that Stenhouse was entitled to the benefit of the transitional Award. This intent can be inferred from the matters set out at paragraphs 13, 15 to 16 and 18 herein.
In the premises, the First Respondent contravened section 792(1)(b) and/or (c) of the WR Act.
Threat to injure or prejudicially alter position in employment – Hyman
By reason of the matters set out at paragraph 27 herein and by the conduct alleged at paragraph 18 herein, the First Respondent threatened to injure Hyman in his employment, alternatively threatened to prejudicially alter his position in employment, by threatening to remove conditions of employment.
The First Respondent engaged in the conduct alleged in paragraph 34 herein for the prohibited reason that Hyman was entitled to the benefit of the transitional Award. This intent can be inferred from the matters set out at paragraphs 13, 15 to 16 and 18 herein.
In the premises, the First Respondent contravened section 792(1)(b) and/or (c) of the WR Act.
Threat to injure or prejudicially alter position in employment – Lewis
By reason of the matters set out at paragraph 27 herein and by the conduct alleged at paragraph 18 herein, the First Respondent threatened to injure Lewis in his employment, alternatively threatened to prejudicially alter his position in employment, by threatening to remove conditions of employment.
The First Respondent engaged in the conduct alleged in paragraph 37 herein for the prohibited reason that Lewis was entitled to the benefit of the transitional Award. This intent can be inferred from the matters set out at paragraphs 13, 15 to 16 and 18 herein.
In the premises, the First Respondent contravened section 792(1)(b) and/or (c) of the WR Act.
INVOLVEMENT OF THE SECOND RESPONDENT
By the conduct alleged in the above paragraphs, the Second Respondent:
(a)aided, abetted and procured the contraventions by the First Respondent referred to in the above paragraphs; and/or
(b)was by his acts and omissions directly or indirectly knowingly concerned in the contraventions by the First Respondent referred to in the above paragraphs.
By reason of the above and section 728 of the WR Act, the Second Respondent:
(a)was involved in the contraventions by the First Respondent referred to in the above paragraphs; and
(b)is treated as having himself contravened sections 792(1)(a), (b) and/or (c) of the WR Act.
AGREEMENT ON PENALTY
Grouping of contraventions
The contraventions of sections 792(1)(b) and/or (c) with regard to all employees concerned have common elements and this should be taken into account in considering an appropriate penalty to ensure that the Respondents are not punished more than once for the same or substantially similar conduct.
The Applicant and Respondents agree that the First Respondent's FOA contraventions fall into 2 distinct groups:
(a)dismissal for a prohibited reason; and
(b)threat to injure and/or prejudicially alter for a prohibited reason.
By reason of the First and Second Respondents' relationship as wife and husband, it is appropriate to approach the question of penalties with respect to the First Respondent's FOA contraventions on the basis that they are jointly and severally liable. To do otherwise could lead to "double-counting" of the penalties for the wrongdoing and require a difficult and unnecessary exercise of apportionment of responsibility[49].
[49] cf: Canturi & Anor v Sita Coaches & Ors (2002) 116 FCR 276 at [85], [95]-[96] per Ryan J.
Accordingly, treating the Respondents as jointly and severally liable with respect to the First Respondent's FOA contraventions, the maximum penalty that can be imposed on the Respondents for the 2 FOA contraventions of the First Respondent is $13,200 (2 times the maximum $6,600 per contravention).
Combined with the maximum penalty that can be imposed on the Respondents for the 6 underpayment contraventions of the First Respondent ($39,600) and the maximum penalty that can be imposed on the Second Respondent for the 6 underpayment contraventions of Cardock Pty Ltd ($39,600)[50], the total maximum penalty that can be imposed on the Respondents is $92,400.
[50] See paragraphs 81 and 82 of the SoAF dated 12 May 2010.
Quantum of penalty
The Respondents have:
(a)admitted the FOA contraventions;
(b)agreed to pay Adamopolous the compensation amount owed to him as set out in paragraph 26 herein;
(c)on 15 October 2010 made full payment of the underpayment amounts; and
(d)made an up-front payment in the sum of $14,000 towards the total amount of the penalty that may be imposed by the Court.
This reveals a level of contrition and demonstrates a readiness on the part of the Respondents to accept responsibility.
Taking these matters into account, the Applicant and Respondents agree that 20% of the maximum penalty that can be imposed for each contravention or group of contraventions, or a total quantum of $18,400, is an appropriate penalty for the underpayment and FOA contraventions.
The parties will file joint written submissions on the factors relevant to penalty prior to the hearing in this matter.
DATE: 11 November 2010
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