Fair Work Ombudsman v Broome Helicopter Services Pty Ltd and Anor (No.2)
[2019] FCCA 2713
•27 September 2019 (and delivered by video link by Judge Street pursuant to s.75 of the Federal Circuit Court of Australia Act 1999 (Cth))
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v BROOME HELICOPTER SERVICES PTY LTD & ANOR (No.2) | [2019] FCCA 2713 |
| Catchwords: INDUSTRIAL LAW – Contraventions of Fair Work Act 2009 (Cth) – penalties to be imposed – factors for consideration. |
| Legislation: Fair Work Act 2009 (Cth), ss.3, 4, 44, 45, 323, 535, 536, 539, 545, 546, 547, 550, 557, 566, 567, 568, Air Pilots Award 2010 |
| Cases cited: Attorney-General v Tichy (1982) 30 SASR 84; (1982) 6 A Crim R 117 Fair Work Ombudsmanv Broome Helicopter Services & Anor [2017] FCCA 2364 Fair Work Ombudsman v Commercial and Residential Cleaning Group Pty Ltd [2017] FCCA 2838 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | BROOME HELICOPTER SERVICES PTY LTD |
| Second Respondent: | JOSEPH HANS CALANDRA |
| File Number: | PEG 396 of 2013 |
| Judgment of: | Judge Lucev |
| Hearing date: | 16 January 2018 |
| Date of Last Submission: | 16 January 2018 |
| Delivered at: | Perth via video link to Sydney |
| Delivered on: | 27 September 2019 (and delivered by video link by Judge Street pursuant to s.75 of the Federal Circuit Court of Australia Act 1999 (Cth)) |
REPRESENTATION
| Counsel for the Applicant: | Ms M Saraceni |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Counsel for the Respondents: | Dr J Henderson |
| Solicitors for the Respondents: | Kimberley & Pilbara Lawyers |
ORDERS
That for the contravention of s.45 of the Fair Work Act 2009 (Cth) (“FW Act”) in failing to pay the minimum rate of pay to two employees, Mr Thompson and Mr Sullivan, the following penalties be paid:
(a)by the first respondent - $4,950.00; and
(b)by the second respondent - $990.00.
That for the contraventions of ss.44 and 45 of the FW Act in the failure to pay annual leave and annual leave loading to two employees, Mr Thompson and Mr Sullivan, the following penalties be paid:
(a)by the first respondent - $4,950.00; and
(b)by the second respondent - $990.00.
That for the contravention of s.45 of the FW Act in failing to pay the accrued duty free days on termination to two employees, Mr Thompson and Mr Sullivan, the following penalties be paid:
(a)by the first respondent - $4,950.00; and
(b)by the second respondent - $990.00.
That for the contravention of s.45 of the FW Act in failing to pay an employee, Mr Sullivan, for mobile telephone calls, the following penalties be paid:
(a)by the first respondent - $3,300.00; and
(b)by the second respondent - $660.00.
That for the contravention of s.45 of the FW Act in failing to make rosters for employees seven days in advance, the following penalties be paid:
(a)by the first respondent - $3,300.00; and
(b)by the second respondent - $660.00.
That for the contravention of s.323 of the FW Act in failing to pay an employee, Mr Thompson, for the period of 21 to 31 March 2012, the following penalties be paid:
(a)by the first respondent - $3,300.00; and
(b)by the second respondent - $660.00.
That for the contravention of s.535 of the FW Act in failing to make records for annual leave, the following penalties be paid:
(a)by the first respondent - $3,300.00; and
(b)by the second respondent - $660.00.
That for the contravention of s.536 of the FW Act in failing to give payslips to employees within one day of payment, the following penalties be paid:
(a)by the first respondent - $3,300.00; and
(b)by the second respondent - $660.00.
That for the contravention of reg.3.44(1) of the Fair Work Regulations 2009 (Cth) in failing to ensure payslips were not misleading, the following penalties be paid
(a)by the first respondent - $2,200.00; and
(b)by the second respondent - $440.00.
That pursuant to s.546(3)(a) of the FW Act the penalties ordered to be paid by the first and second respondents be paid to the Consolidated Revenue Fund of the Commonwealth within 30 days.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 396 of 2013
| FAIR WORK OMBUDSMAN |
Applicant
And
| BROOME HELICOPTER SERVICE PTY LTD (ACN 105 421 814) |
First Respondent
| JOSEPH HANS CALANDRA |
Second Respondent
REASONS FOR JUDGMENT
Introduction
By judgment of this Court in Fair Work Ombudsmanv Broome Helicopter Services & Anor [2017] FCCA 2364 (“Liability Decision”) delivered on 28 September 2017, the first respondent Broome Helicopter Services Pty Ltd (“BHS”) and the second respondent Joseph Hans Calandra (“Mr Calandra”) (collectively “the Respondents”), were found to have engaged in a number of contraventions of the Fair Work Act 2009 (Cth) (“FW Act”) and the Air Pilots Award 2010 (“AP Award”).
The applicant, the Fair Work Ombudsman (“FW Ombudsman”), now seeks orders for the imposition of pecuniary penalties against each of the Respondents for the contraventions, or involvement in the contraventions.
Contraventions
On 18 October 2017 the parties agreed to the making of declarations and orders concerning the contraventions and the compensation to be paid to the two employees of BWS the subject of the contraventions, Michael John Thomson (“Mr Thomson”) and Guy David Sullivan (“Mr Sullivan”). The contraventions related to the failure of the Respondents to:
a)meet the required minimum rate of pay for ordinary hours worked;
b)pay any accrued but untaken annual leave and leave loading on termination of employment;
c)adhere to requirements of duty-free days, reimburse mobile telephone costs incurred during the course of business and having rosters made and issued to employees 7 days in advance as required by the AP Award; and
d)keep and maintain adequate or correct records of annual leave and to issue payslips.
Mr Calandra as sole director and chief pilot of BHS was held to be involved in each of the contraventions, by virtue of s.550 of the FW Act. In summary, the various contraventions of the AP Award resulted in BHS being found to have contravened:
a)section 44 of the FW Act in two instances;
b)section 45 of the FW Act in eight instances;
c)section 323 of the FW Act;
d)section 535 of the FW Act by virtue of breaching reg.3.36 of the Fair Work Regulations 2009 (Cth) (“FW Regulations”);
e)section 536(1) of the FW Act; and
f)regulation 3.44 of the FW Regulations.
The Court made orders on 18 October 2017 in the following terms:
1. The First Respondent pay the outstanding amount of
$10, 00.71 within 28 days of this order.
2. Pursuant to section 547 of the FW Act the First Respondent pay pre-judgment and post-judgment interest on the amounts to be calculated from the end date of each Michael Thomson and Guy Sullivan's employment, at the rates specified in clause 2.2 of the Practice Note GPN-INT, to be paid within 28 days of this order.
3. Pursuant to section 545 of the FW Act, the First Respondent are to pay the outstanding amount plus interest to the Applicant. The Applicant will, within 14 days of receipt of payment, pay the monies as follows:
a) $5,219.15 plus interest to Michael Thomson; and
b) $5,281.56 plus interest to Guy Sullivan.
Evidence
For the purposes of this pecuniary penalty hearing, the FW Ombudsman relied upon:
a)the Application and Statement of Claim filed 20 December 2013;
b)the affidavits of:
i)Michael John Thomson affirmed 11 November 2014 (“First Thompson Affidavit”);
ii)Jacqualine Fay McArthur sworn on 13 November 2014 (“First McArthur Affidavit”);
iii)Guy David Sullivan affirmed 14 November 2014 (“First Sullivan Affidavit”);
iv)Jacqualine Fay McArthur sworn on 30 March 2015 (“Second McArthur Affidavit”);
v)Michael John Thomson affirmed 30 March 2015 (“Second Thompson Affidavit”);
vi)Guy David Sullivan affirmed 13 April 2015 (“Second Sullivan Affidavit”);
vii)Guy David Sullivan affirmed 31 October 2017 (“Third Sullivan Affidavit”);
viii)Michael John Thomson affirmed 2 November 2017 (“Third Thompson Affidavit”); and
ix)Jacqualine Fay McArthur sworn 2 November 2017 (“Third McArthur Affidavit”).
The Respondents relied upon:
a)each of the affidavits referred to at [6(b)] above;
b)the affidavit of Joseph Hans Calandra affirmed 18 February 2015 (“First Calandra Affidavit”); and
c)the affidavit of Joseph Hans Calandra affirmed 22 November 2017 (“Second Calandra Affidavit”).
Both parties filed a written outline of submissions, the FW Ombudsman on 6 December 2017 and the Respondents on 20 December 2017.
Jurisdiction and penalty provisions under the FW Act
This Court has jurisdiction to impose penalties for contraventions of the FW Act pursuant to ss.539(2) and 546 of the FW Act with s.539(2) of the FW Act prescribing the individual penalty for contraventions of civil remedy provisions, which are maximum penalties form compromising the benchmark, or ‘yardstick,’ against which the Court can assess where the Respondents contraventions sit when taken and balanced with all other factors: Mornington Inn v Jordan [2008] FCAFC 70; (2008) 168 FCR 383; (2008) 171 IR 455; (2008) 247 ALR 714; [2008] 60 AILR 100-883 at [41]-[46] per Stone and Buchanan JJ (“Mornington Inn”); Markarian v R [2005] HCA 25; (2005) 228 CLR 357; (2005) 79 ALJR 1048; (2005) 215 ALR 213 at [31] per Gleeson CJ , Gummow, Hayne and Callinan JJ.
The power of the Court to impose pecuniary penalties in respect of contraventions of the FW Act arises from s.546(1) of the FW Act, which provides that an eligible court may impose a pecuniary penalty where it is satisfied that a person has contravened a civil remedy provision. The Liability Decision, and the subsequent declarations, each respectively expressed a contravention of a civil remedy provision for which the Respondents are liable to pay a pecuniary penalty if the Court sees fit. These penalties are prescribed in the FW Act as a ‘penalty unit.’ While the maximum penalty may be applied to Mr Calandra, in the case of BHS, as a body corporate s.546(2) of the FW Act states the maximum penalty is to be five times that prescribed.
Section 4(1) of the FW Act provides that "penalty unit" has the same meaning as in the Crimes Act 1914 (Cth) (“Crimes Act”). Both parties agreed at the time the contraventions occurred the penalty unit was $110.00. The Court notes from 28 December 2012, the Crimes Legislation Amendment (Serious Drugs, Identify Crime and Other Measures) Act 2012 increased the amount of a penalty unit in s.4AA of the Crimes Act from $110 to $170. Though the application commencing these proceedings was not lodged until December 2013, the Court accepts Mr Thomson and Mr Sullivan both ceased employment in September 2012, and consistent with Murrihy v Betezy.com.au Pty Ltd(No 2) [2013] FCA 1146; (2013) 221 FCR 118; (2013) 66 AILR 102-078 at [6]-[28] per Jessup J the lower amount of the penalty unit ought to be applied to the contraventions in this case.
The Court’s approach to penalty
In written submissions both parties agreed with the Court’s approach to penalty as summarised in Fair Work Ombudsman v Commercial and Residential Cleaning Group Pty Ltd [2017] FCCA 2838 at [13] per Judge Lucev as follows:
The authorities establish that the appropriate penalties are to be determined as follows:
first, the Court identifies the separate contraventions involved. Each contravention of, in turn each separate obligation imposed by, the FW Act is a separate contravention of a civil remedy provision for the purposes of s.539(2) of the FW Act: Gibbs v The Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216; (1992) 42 IR 255; (1992) 34 AILR 369 at [25] per Gray J (“Gibbs”); McIver v Healey [2008] FCA 425; (2008) 60 AILR 100-850 at [16] per Marshall J;
second, the Court should consider whether the extent to which the contraventions so identified in the first step constitute a "course of conduct", and thus ought to be treated as a single contravention within the meaning and operation of s.557 of the FW Act: FW Act, s.557(1);
third, to the extent that two or more contraventions have common elements, the Court may take this into account in considering the appropriateness in all the circumstances of the quantum of penalty for the contraventions. That reflects the basic principle that a contravener should not be penalised more than once for what, in a practical sense, amounts to the same contravening conduct, such that the penalties imposed by the Court should be an appropriate but fair response to the contravention of statutory obligations: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560; (2008) 246 ALR 35; (2008) 60 AILR 100-809 at [46] per Graham J (“Australian Ophthalmic Supplies”);
fourth, the Court, having identified the relevant factors arising from the first three steps, must fix appropriate penalties for each contravention having regard to all of the circumstances of the case; and
fifth, having fixed appropriate penalties for the contraventions, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate and proportionate response to the contravening conduct: Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 at [30] per Tracey J (“Kelly”); Australian Ophthalmic Supplies at [23] per Gray J, [71] per Graham J and [102] per Buchanan J. The Court should apply an "instinctive synthesis" (often referred to in the applicable case law as the "totality principle'') in making this assessment: Australian Ophthalmic Supplies at [27] per Gray J and [55] and [78] per Graham J.
While the issue in these proceedings is the quantum of the penalty to be paid by the Respondents for the contraventions, the purpose behind imposition of a penalty by a Court in any circumstances should not be forgotten. Penalties are, and should be imposed, for the following purposes:
a)punishment, proportionate to the offence and according to prevailing standards;
b)personal or specific deterrence, assessing the risk of reoffending, and general deterrence, as a deterrent to others who might be likely to offend; and
c)rehabilitation:
Ponzio v B & P Caelli Constructions Pty Ltd and Ors [2007] FCAFC 65; (2007) 158 FCR 543; (2004) 162 IR 444; (2007) 59 AILR 100-669 (“Ponzio”) at [93] per Lander J.
While one may consider the exercise of discretion by the Court to impose a penalty as broad and unfettered, fundamentally any penalty imposed by a Court must be proportionate to the gravity of the contravening conduct: Attorney-General v Tichy (1982) 30 SASR 84; (1982) 6 A Crim R 117 at 92 per Wells J; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2011] FCA 810; (2011) 63 AILR 101-406 at [25] per Gilmour J. Instinctively, the grouping of contraventions is the initial response to ensuring a proportionate penalty is imposed, the consideration of the factors the Court finds relevant in the circumstances is then required.
Grouping of Contraventions
FW Ombudsman Submissions
The FW Ombudsman made the following submissions opposing the grouping of the contraventions:
a)the Respondents' failure to pay the minimum rate of pay to Mr Thomson and failure to pay the minimum rate of pay to Mr Sullivan arose out of separate courses of conduct;
b)Mr Thomson was employed by the Respondents initially as a helicopter pilot but eventually as an operations manager under a salary or "package of entitlements;"
c)the conduct by the Respondents in underpaying Mr Thomson overall, when comparing the salary he received to what he would have received if he was correctly paid his award entitlements, constituted one course of conduct;
d)Mr Sullivan was employed as a helicopter pilot and paid an hourly rate and the conduct by the Respondents in underpaying Mr Sullivan on an hourly basis constituted one course of conduct;
e)the failure to pay annual leave and annual leave loading on termination; and the failure to pay accrued duty free days on termination to each of Mr Thomson and Mr Sullivan arose out of separate courses of conduct and separate decisions by the Respondents;
f)applying Rowe v Capital Territory Health Commission (1982) 1 IR 133; (1982) 62 FLR 383; (1982) 39 ALR 39; ALR at 65 per Keely J (“Rowe”), Mr Thomson and Mr Sullivan began their employment at different times and were affected by different decisions as to the manner in which they would be treated by the Respondents;
g)unlike in Seymour v Stawell Timber Industries Pty Ltd (1985) 9 FCR 241; (1985) 13 IR 289; (1985) 70 ALR 391(“Stawell Timber”), the decisions to terminate the employment of each of Mr Thomson and Mr Sullivan were not a single act, but separate decisions by the Respondents to not pay annual leave and annual loading on termination, and arose out of separate courses of conduct and constituted separate contraventions.
The FW Ombudsman sought separate penalties for each of the following:
a)contravention of s.45 of the FW Act for failure to pay the minimum rate of pay to Mr Thomson under the AP Award;
b)contravention of s.45 of the FW Act for failure to pay the minimum rate of pay under the AP Award to Mr Sullivan;
c)contravention of ss.44 and 45 of the FW Act for failure to pay annual leave and annual leave loading on termination to Mr Thomson;
d)contravention of ss.44 and 45 of the FW Act for failure to pay annual leave and annual leave loading on termination to Mr Sullivan;
e)contravention of s.45 of the FW Act for failure to pay for accrued duty free days on termination under the AP Award to Mr Thomson;
f)contravention of s.45 of the FW Act for failure to pay for accrued duty free days on termination under the AP Award to Mr Sullivan;
g)contravention of s.45 of the FW Act for failure to pay Mr Sullivan for mobile phone calls pursuant to the AP Award;
h)contravention of s.45 of the FW Act for failure to make rosters 7 days in advance pursuant to the AP Award;
i)contravention of s.323 of the FW Act for failure to pay Mr Thomson in full from 21 March 2012 to 31 March 2012;
j)contravention of s.535 of the FW Act for failure to make records relating to annual leave ;
k)contravention of s.536 of the FW Act for failure to give pay slips within one working day of payment; and
l)contravention of regulation 3.44(1) of the FW Regulations for failing to ensure that the purported "pay slips" were not false or misleading.
Respondent Submissions
In seeking to have a number of contraventions grouped together as a single course of conduct the Respondents submitted:
a)Mr Thomson and Mr Sullivan were engaged by BHS for the first time at the start of the 2012 season and both left permanently at or towards the end of the 2012 season;
b)for the purposes of determining whether the failure of BHS to pay minimum wage to Mr Thomson and Mr Sullivan was a single course of conduct the Court should consider that their engagement was at effectively the same time, being the earliest possible date for each of them at the start of the 2012 season;
c)the identified failure to pay minimum rates of pay to Mr Thomson and Mr Sullivan can be said to arise from the same flawed decision-making process, namely BHS:
i)were mistaken as to the minimum rate of pay that applied to single engine helicopter pilots;
ii)were mistaken as to whether the minimum rate of pay that applied to single engine helicopter pilots should be paid consistently for all hours worked when engaged in loading duties; and
iii)had a flawed system for tracking the actual number of hours worked by each pilot;
d)a decision by an employer to pay the incorrect hourly base rate can be a single course of conduct even where there are a significant number of contraventions flowing from it: Fair Work Ombudsman v Praglowski [2010] FMCA 621; (2010) 200 IR 406;
e)Mr Calandra understood that the manner of Mr Sullivan's departure without notice allowed for BHS to offset annual leave entitlements against the notice period, and Mr Sullivan was not paid any entitlement;
f)the terminations of Mr Thomson and Mr Sullivan were at the end of the 2012 Season, and arose out of substantially similar conduct and complaints by two employees that had also been housemates, and were known to be social buddies;
g)Mr Thomson and Mr Sullivan's collective behaviour led to the breakdown of relations between the employer and each employee, and that it was the hostility between employer and employees that gave rise to the employer's mistaken approach to the payment of termination entitlements;
h)Mr Calandra deposes to his inability to print off the business roster without assistance when asked by the Fair Work Ombudsman; and
i)Mr Calandra has expressed sincere regret for the inadequate records, and has deposed to the subsequent rectification of recordkeeping, that being that from June 2015 BHS engaged a new accounting and bookkeeping service to ensure that it would comply with payroll and record keeping practices that would meet the requisite standards in the future.
The Respondents suggested the Court consider grouping items together, so as to better reflect the gravity of the Respondents errors, as follows:
a)group [16(a)-(b)] above together as a single source of conduct
b)group [16(c)-(f)] above as a single course of conduct;
c)contravention of s.45 of the FW Act for failure to pay Mr Sullivan for mobile phone calls pursuant to the AP Award;
d)contravention of s.45 of the FW Act for failure to make rosters 7 days in advance pursuant to the AP Award;
e)contravention of s.323 of the FW Act for failure to pay Mr Thomson in full from 21 March 2012 to 31 March 2012; and
f)group [16(j)-(l)] above as a single course of conduct.
Consideration
In circumstances where two or more contraventions have been found, depending upon the particular circumstances, it may attract the operation of the course of conduct provisions contained in s.557 of the FW Act. However, there is no course of conduct when there is a contravention of different obligations: Rocky Holdings Pty Limited v Fair Work Ombudsman [2014] FCAFC 62 at [17]-[18] and [23]-[24]; Fair Work Ombudsman v Lu's Healthcare Pty Ltd (No. 2) [2016] FCCA 506 at [27]-[34] per Judge O'Sullivan.
Alternative to the statutory provision is the ‘common element’ principle developed by the courts whereby it is also open to the court to group separate contraventions together where the contraventions may be said to overlap with each other or involve the potential punishment of a respondent for the same or substantially similar conduct: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; [2008] FCAFC 8(“Australian Ophthalmic”) at [46] per Graham J and [93] per Buchanan J. Multiple contraventions of different obligations will be seen as arising out of a single course of conduct only if there are "common elements" to the acts or omissions which led to the contraventions: Fair Work Ombudsman v Offshore Marine Services Pty Ltd [2012] FCA 498; (2012) 219 IR 435 at [7] and [23]-[26] per Gilmour J.
In Fair Work Ombudsman v Kentwood Industries Pty Ltd (No. 3) [2011] FCA 579 (“Kentwood (No. 3)”), the Federal Court held (at [10] per McKerracher J) that one of the four steps in determining an appropriate penalty was:
“…… to the extent that two or more contraventions have common elements, this may be taken into account when considering what is an appropriate penalty 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 the respondents’ actions.”
Both the FW Ombudsman and the Respondents sought to rely upon Rowe. In Rowe the Federal Court was not prepared to find that the two breaches had arisen out of a course of conduct, and noted that the breaches in respect of the two nurses had arisen out of separate decisions, one in 1979 and one sometime later in 1981. The Federal Court further clarified that any other breaches which arose in respect of nurses enrolled in 1980 would have been treated as one course of conduct. It can be implied that any other contraventions which flowed from the same decision in relation to a rate of pay would have been considered to be a single course of conduct. In Stawell Timber at 267 per Gray J the Federal Court found that breaches with respect to certain apprentices arose from a single act by the respondent in purporting to dismiss a number of its employees; and therefore were properly described as a single course of conduct.
In the Court’s view it is appropriate to group, using the paragraph numbers at [16] above, (a) and (b) being the contraventions for failing to pay the minimum rate of pay, (c) and (d) being the contraventions for failing to pay annual leave and annual leave loading on termination, and (e) and (f) being the failure to pay for accrued duty free day on termination. The contraventions are otherwise separate contraventions, that is in respect of different matters and it is not appropriate that they be grouped.
In light of the conclusions reached above, the maximum penalty for each contravention is set out in the table below.
| Provision Contravened | Conduct | Maximum penalty | |
| BHS | Mr Calandra | ||
| FW Act s. 45 | Failure to pay minimum rate of pay to Michael Thomson | $33,000 | $6,600 |
| Failure to pay minimum rate of pay to Guy Sullivan | |||
| FW Act ss.44 and 45 | Failure to pay annual leave and annual leave loading to Michael Thomson | $33,000 | $6,600 |
| Failure to pay annual leave and annual leave loading to Guy Sullivan | |||
| FW Act s.45 | Failure to pay for accrued duty free days on termination to Michael Thomson | $33,000 | |
| Failure to pay for accrued duty free days on termination to Guy Sullivan | |||
| FW Act s.45 | Failure to pay Mr Sullivan for mobile telephone calls | $33,000 | $6,600 |
| FW Act s.45 | Failure to make rosters seven day in advance | $33,000 | $6,600 |
| FW Act s.323 | Failure to pay Michel Thomson between 21-31 March 2012 | $33,000 | $6,600 |
| FW Act s.535 | Failure to make records relating to annual leave | $16,500 | $3,300 |
| FW Act s.536 | Failure to give payslips within one day of payment | $16,500 | $3,300 |
| FW Regulations reg.3.44(1) | Failure to ensure payslips were not misleading | $11,000 | $2,200 |
Penalty- factors for consideration
The factors the Court may consider when determining the quantum of a penalty was summarised in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 at [26]-[55] per Mowbray FM (“Harrington Corporation”), and approved by Tracey J in Kelly v Fitzpatrick[2007] FCA 1080; (2007) 166 IR 14 at [14] as follows:
a)the nature and extent of the conduct which led to the contraventions;
b)the circumstances of the conduct (including deliberate defiance or disregard of Commonwealth workplace relations legislation);
c)the consequences of the contravening conduct;
d)the objects of Commonwealth workplace relations legislation;
e)whether the contraventions are distinct or arise from a single course of conduct;
f)deterrence, both general and specific;
g)relevant record of civil penalty contraventions;
h)the involvement of senior management and the size and financial resources of the contravener;
i)co-operation with regulatory authorities (if any);
j)the contravener's contrition (if any);
k)the size of, and any recent increases to, the prescribed penalty; and
l)the totality principle.
These factors are by no means fixed: Australian Ophthalmic Supplies v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560; (2008) 246 ALR 35; (2008) 60 AILR 100-809 at [91] per Buchanan J; Workplace Ombudsman v Golden Maple Pty Ltd [2009] FMCA 664; (2009) 186 IR 211 at [11] per Lucev FM, and they do not limit what the Court can take into account or the weight and relevance of any factors when exercising the discretion: Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 at [11] per Gyles J; Australian Ophthalmic Supplies at [91] per Buchanan J. Courts should be wary of using these factors as a checklist, as doing so risks transforming the process of ‘instinctive synthesis’ into the rigid application of a catalogue of matters to be checked off: Australian Building & Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977; (2010) 199 IR 373 (“ABCC”) at [10] per Barker J.
Nature, extent and circumstances of the contravening conduct (including loss)
FW Ombudsman’s Submissions
The FW Ombudsman made a number of submissions on behalf of Mr Thomson and Mr Sullivan:
a)Mr Thomson raised the issue of receiving a rate of pay below the award rate with Mr Calandra on several occasions, but this did not lead to an increase in his rate of pay up to the award rate, but he accepted the rate he was paid because it was ‘extremely competitive as a pilot’ and he was "just glad to have a job;"
b)the Court noted in the Liability Decision at [65] per Judge Lucev that the differing advice about pay rates given at different times to Mr Thomson and Mr Calandra was a matter for penalty, however the differing advice given is not material to penalty in this matter since, by Mr Calandra’s own evidence, the employees were receiving below the advised award rates;
c)notwithstanding the Court's finding that Mr Sullivan was not employed as a question of law when he first came to Broome, Mr Sullivan was under the impression that he was employed and was prepared to accept a one off payment of only $300 for his first three weeks of employment;
d)accepting that Mr Sullivan was not employed in the first three weeks of his employment, the payment of $300 was merely the first in a series of flat, irregular payments which were clearly insufficient to meet minimum entitlements under the AP Award, and Mr Sullivan experienced some degree of anxiety and uncertainty about his working conditions and how he would pay for basic living expenses such as food and rent;
e)uncertainty about pay was compounded by uncertainty about work and days off through the absence of rosters, such that Mr Sullivan would work unless told otherwise by Mr Calandra, but could also be called in at short notice by him;
f)to add to the anxiety over pay and hours of work, overall Mr Sullivan felt that his job was "under threat' the entire time he worked for the BHS and he was regularly reminded by the Mr Calandra that he was on probation and Mr Sullivan perceived that he was "ridiculed and bullied" during the flight test on 6 April 2012 and on all of his flights with Mr Calandra;
g)as a result of being underpaid while working for BHS, Mr Thomson needed to take a second job as a taxi driver to pay for his basic living expenses, and while it was probably not the wisest course of action, Mr Thomson felt that he had no other choice if he wanted to survive and pay off his debts;
h)Mr Sullivan also needed to work a second job to pay for daily living expenses while working for BHS, and was not paid any superannuation during his employment;
i)Mr Thomson has suffered stress and anxiety as a result of being underpaid, the proceedings and encounters with the Mr Calandra since the proceedings began; and
j)in addition to the anxiety and uncertainty already set out above, Mr Sullivan suffered emotional distress and disappointment due to the sheer contrast between his expectations of being a helicopter pilot and the reality of his underpayment and treatment by the Respondents.
Respondent’s Submissions
The Respondents submitted that:
a)the employee's joy in their job does not mitigate the contraventions of the Respondents, but is raised to note the absence of aggravating factors, such as might be found where menial, physical labour is obtained for below minimum wage;
b)neither employee was vulnerable, they were young Australasian males who had English as their first language, were residents of Australia independently of their employment, and had alternative employment options. Both employees were qualified helicopter pilots and capable of seeking assistance to resolve disputes with their employer and elected not to do so;
c)the total loss to Mr Thomson during the period of his employment, arising from the underpayment of his wages, was $2,351.49. The wage he was being paid was still sufficient to maintain a reasonable lifestyle, and did not leave him on the bread line;
d)it is outrageous for a pilot to assert that he was working nights as a taxi driver during his down time, and Mr Thomson has not previously mentioned such work in his earlier affidavits. If Mr Thomson's was working night shifts as a taxi driver he recklessly endangered his passengers, and would likely have been terminated immediately if it had been known to the Respondents at the time;
e)a comparison between the timesheets kept by Mr Thomson and Mr Sullivan highlights the latter's inadequate attention to detail. His insistence that his falsification of duty times on the spreadsheet was at the Mr Calandra’s instruction is clearly at odds with the only written evidence produced to the Court: an email from Mr Calandra to Mr Sullivan which clearly instructs Mr Sullivan not to make block 9 - 5 entries;
f)Mr Sullivan's stress arose not from the failure of the Respondents to meet their obligations, but from Mr Sullivan's increasing awareness that he was an unsatisfactory employee;
g)there is no supporting evidence of the emotional harm that Mr Sullivan 'believes' he still suffers, the evidence before the Court does not suggest he has lost his ability to speak up when he believes something is not right given he successfully complained to the FW Ombudsman within a month of his termination date and his multiple affidavits and his testimony in Court were all eloquent expressions of his views on what is right and wrong; and
h)whether Mr Calandra is still chief pilot, and whether BHS are operating under their own Air Operators Certificate, information in the Third McArthur Affidavit, are irrelevant to the decision before the Court, which relates to quantum of penalties for breaches of the FW Act in 2012;
i)the balance of evidence, specifically the Second Calandra Affidavit, is that the contraventions were not intentional, particularly with regards to the underpayment of minimum wage, where:
(i)Mr Calandra had found the transition to the Modern Award confusing and he spent a lot of time on the phone to Fair Work;
(ii)on 4 April 2012 he contacted Fair Work and was told that the minimum rate of pay for a single engine helicopter pilot was $18.30 per hour, which was different from the $18.34 an hour supplied from a wage calculator that he had used on line;
(iii)Mr Calandra encouraged Mr Thomson to contact Fair Work himself and see what they told him, but that Mr Thomson was subsequently given a Captain rate, which did not appear to apply, although no better alternative option was readily identified;
ii)he believed that paying Mr Thomson on the basis of a 38 hour week at the net rate of $16.52 per hour was higher than the correct rate under the AP Award scale; and
iii)Mr Calandra believed that paying Mr Sullivan $16.35 per hour against the hours submitted by Mr Sullivan on his pilot duty times was the correct rate under the AP Award and as Mr Sullivan did not record his duty times correctly he was paid on the basis of a daily rate, being $500 for 4 days per week, and $750 for five days per week.
j)attempts were subsequently made by the Respondents to rectify underpayments:
i)on 25 September 2012 Mr Thomson received a net figure of $700 said to be a reconciliation of amounts; and
ii)on 15 October 2012, after the termination of Mr Sullivan's employment, his hours and wages were reconciled and a payment was made to him in the amount of $3,242.28 for unpaid wages.
Consideration
Much of what was put by the parties in relation to the nature and extent of the conduct in circumstances was not emotive, irrelevant and not particularly helpful. The Court notes that under payments of award and entitlements, and non-compliance with award conditions for the benefit of employees, are always serious, but there are obviously degrees of seriousness. Furthermore, as this Court and the Federal Court have now observed on many occasions, arguably more serious is the failure to make, record and provide proper payslips as it can make enforcement of entitlements difficult. That said, the under payments in this case are not significant, and did not occur for a lengthy period of time. Further, there are no significant aggravating factors, as Mr Thompson as Mr Sullivan were not, despite their obvious desire to be helicopter pilots, in a category of person who might otherwise be considered vulnerable or likely to be exploited by an unscrupulous employer.
The incorrect information given in relation to salary and wages is relevant to the issue of penalty, because BHS having made inquiries of a government funded and provided advice service, was not able to be told exactly what was payable. That said, the difference in the amounts was minimal and there was nothing to prevent BHS from paying at least the lower of the amounts suggested by the Fair Work Infoline.
Mr Calandra’s conduct towards Mr Sullivan was related to Mr Sullivan’s performance of his duties, and does not appear to have had any direct connection to the subject matter of the contraventions. As the Court observed during the penalty hearing Mr Calandra may have adopted this “robust” approach (which some might characterise as bullying) no matter what Mr Sullivan was being paid.
In the Court’s view there is no evidence to indicate that the conduct of Mr Calandra towards Mr Sullivan during his period of employment (which was his probationary period) would have been any different if he had been paid, or been being paid, the correct minimum rate. It may however have affected the making of payment of annual leave and annual leave loading on termination.
The Court ought not to take into account in assessing penalty the expectations of the pilots in becoming helicopter pilots, other than to the extent that they were sure that they would, or expected to, be paid, and were entitled to be paid, award rates of pay.
The nature, circumstance of the contravening conduct are not of the most serious kind, or anywhere approaching the most serious kind. The circumstances are at the lower, to possibly, middle-end of the scale of seriousness in relation to this factor.
Similar Previous Conduct
FW Ombudsman’s Submissions
The FW Ombudsman made the following submissions regarding similar previous conduct:
a)around April 2012, Ms Rebecca Ludgate made a complaint to the FW Ombudsman in relation to being underpaid during her employment, the complaint was resolved by agreement with Mr Calandra;
b)around May 2012, Mr Gregory Mitchat made a complaint to the FW Ombudsman about being underpaid in his employment, again rectified by Mr Calandra; and
c)the prior complaints against the Respondents to the FW Ombudsman are relevant to penalty and show that the Respondents were put on notice of their obligations under the AP Award.
Respondent’s Submissions
In response the Respondents submitted that:
a)the matter was resolved with Ms Ludgate, further the amount of the hourly rate complained of was significantly less than the amounts paid to the employees in these proceedings, and it is not reasonable to infer that the Respondents had repeated their earlier conduct in respect of Ms Ludgate without attempts to correct the conduct;
b)details of the Mitchat complaint are not in evidence;
c)the order requiring BHS to pay $10,00.71 to the FW Ombudsman was paid on 6 November 2017, nine days before due;
d)other complaints referred to in the Third McArthur Affidavit provide no information or outcome thus it should be inferred they do not assist the FW Ombudsman’s case;
e)BHS was surveyed by the FW Ombudsman in 2013 and it was determined BHS was complying with the AP Award and paying above the minimum rate of pay; and
f)this pattern of improving behaviour and attempted co-operation strongly mitigates in favour of a lower-end penalty, particularly considering that no complaint against BHS has been made since 2013.
Consideration
In ABCC at [47] per Barker J the applicable principles when considering prior conduct were summarised as follows:
(1) Similar prior relevant conduct may be taken into account in assessing penalty, but it cannot be given such weight as to lead to the imposition of a penalty that is disproportionate to the gravity of the instant contravention: Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465 (Veen), Mason CJ, Brennan, Dawson and Toohey JJ at 477.
(2) Similar previous conduct may demonstrate that a respondent has a history of engaging in the particular conduct in question, that the penalties previously imposed were insufficient to deter the respondent from re-engaging in that conduct and that the respondent has failed to take adequate steps to prevent further contraventions Veen at 477; Mahoney at [44]; Temple v Powell [2008] FCA 714; (2008) 169 FCR 169 (Temple) at [64].
(3) A respondent is not to be punished again for the prior conduct. Prior conduct may diminish leniency by reason of good character, having an upward affect on penalty, albeit within the proper limits indicated by the circumstances of the immediately contravening conduct: The Queen v McInerney (1986) 42 SASR 111 (McInerney), King CJ at 113.
(4) The effect of prior contravening conduct is more cogent if it has been the subject of conviction. If not, the prior conduct is still relevant but perhaps of less weight: McInerney, King CJ at 113 and Cox J at 124; Williams v CFMEU (No 2) [2009] FCA 548 (Williams (No 2)), Jessup J at [26]-[28].
(5) Whether previous misconduct is relevant to fixing a penalty is a question of logic: Temple at [63].
(6) Conduct of a different character does not assist: Leighton Contractors Pty Ltd v CFMEU [2006] WASC 317; (2006) 164 IR 375 (Leighton Contractors) at [67]; Mahoney at [44].
(7) The quality of the conduct and its relevance to the industrial behaviour which the instant legislation seeks to address is determinative, not whether the prior conduct arose under different legislation or different provisions of the instant legislation: Mahoney at [46]; Williams (No 2) at [16]-[17].
(8) Prior relevant conduct includes prior relevant conduct of officials from other branches of the union: Williams (No 2) at [19]-[25].
Insofar as the FW Ombudsman relied upon prior conduct of BHS in relation to other matters, the Court must be not careful to impose a sanction in respect to matters which have not ever resulted in contravention proceedings being brought, and which may or may not have resulted in a contravention or contraventions being found if they were the subject of contravention proceedings. That said, it is relevant to observe that complaints to the FW Ombudsman might, as here, have put BHS and Mr Calandra on notice of their obligations under the AP Award.
There is no evidence that either BHS or Mr Calandra have a record of relevant prior contraventions, and they are entitled to be considered, and to be treated as, first time contraveners for penalty purposes. Ordinarily, that would entitle them to some discount on penalty (absent other significant aggravating features).
Involvement of senior management and size and resources of contravenor
FW Ombudsman’s Submissions
The FW Ombudsman submitted as follows:
a)Mr Calandra was, at all times, the sole decision-maker in relation to the pay and conditions of Mr Sullivan and Mr Thomson during their employment, and the Court found, that he was involved in all BHS’s contraventions pursuant to s.550 of the FW Act;
b)Mr Calandra’s history and conduct strongly suggests he was not acting in good faith or mistaken as he was put on notice by previous complaints about the need to pay minimum entitlements under the AP Award to employees under the FW Act; and
c)he deliberately underpaid Mr Sullivan and Mr Thomson, has demonstrated a history of misleading record-keeping practices, and deliberately engaged in non-compliant practices, including but not limited to the areas of record-keeping , providing rosters in advance and providing pay slips.
Respondent’s Submissions
The Respondent’s submitted the management of the BHS was a single person functioning as chief pilot and as manager, with limited support from an accounts officer who only attended one day per week, and in such circumstances, the involvement of that single person is inevitable in any breach, and neither strengthens the case for, nor mitigates against, the imposition of penalties.
Consideration
The only management that BHS had was Mr Calandra, and it was therefore inevitable that senior management would be involved in these contraventions. Thus, while senior management of BHS were involved, it is not factor which, in the circumstances, carries with it significant weight in terms of assessing the quantum of penalty.
The Court notes that BHS is a small business, and is essentially managed by one person, and employs a handful of employees. Whilst that does not excuse the contraventions, it does arguably partly explain why they occurred, and the size of the business is a factor to be taken into account when imposing penalty: see the various Federal Court authorities referred to in Fair Work Ombudsmanv MMP Management Services Pty Ltd & Anor [2012] FMCA 207; (2012) 219 IR 397 (“MMP Management”) at [39]-[51] per Lucev FM and Fair Work Ombudsman v Ultra Tune Australia Pty Ltd [2012] FMCA 560; (2012) 225 IR 326 at [40]-[47] per Lucev FM. More recently, the Federal Court has held that the financial circumstances of a respondent may be a relevant consideration in determining an appropriate penalty and whether the size of that penalty is meaningful: Hansen v Mt Martha Community Learning Centre Inc. (No 2) [2015] FCA 1283 at [5] per Jessup J.
Contrition, corrective action and co-operation
FW Ombudsman’s Submissions
The FW Ombudsman submitted that:
a)the Respondents rectified the underpayments, including pre-judgment interest by payment to the FW Ombudsman, to the Applicant on 6 November 2017; and
b)the Respondents demonstrated only a minimal level of cooperation with the FW Ombudsman's investigation prior to the commencement of these proceedings.
Respondent’s Submissions
The Respondent’s submitted that:
a)the amount ordered by the Court, was paid in full, ahead of the deadline to do so;
b)Mr Calandra chose to use the opportunity of a further affidavit to apologise unreservedly for his errors and express his remorse, and did not draw upon subsequent events to prolong hostilities with the two employees, but focussed on putting an end to this dispute and moving forwards;
c)a lack of apology earlier arose from the personal hostility between an employer and two former employees that had left in aggravated circumstances, and it would be unreasonable to interpret the lack of apology as a lack of remorse for a genuine mistake;
d)prior to November 2012 the Respondents were co-operating with the FW Ombudsman to resolve matters quickly and expeditiously, however the behaviour of the employees prior to their termination, coupled with the unfortunate disregard of the FW Ombudsman's investigator when the Respondents attempted to explain the CASA regulations was partly responsible for their changed attitude to the FW Ombudsman;
e)Mr Calandra now accepts that he allowed the stress of the CASA investigations to affect his management of these proceedings, but by 2013 he was fully co-operative with the later investigations.
Consideration
Preparedness to cooperate has been considered evidence of contrition and thus been considered as mitigation of a penalty: Ponzio [99] per Lander J and [165] per Jessup J; Fair Work Ombudsman v Drivecam Pty Ltd & Ors [2011] FMCA 600; (2011) 208 IR 79 at [77] per Emmett FM. Although there may not be complete compliance and co-operation with investigations, a willingness to facilitate the course of justice in the proceedings has in some cases warranted some reduction in the overall penalty imposed: MMP Management at [62] per Lucev FM; Olsen v Sterling Crown Pty Ltd (2008) 177 IR 337; [2008] FMCA 1392 at [78] per Lucev FM.
In this case there is evidence, which is unchallenged, of the contrition of BHS and Mr Calandra, which must be given appropriate weight. Further, some credit must be given also for the fact that it would appear that corrective action with respect to matters which might have given rise to these contraventions, at least in part, has been taken. Finally, with respect to cooperation it is fair to observe that the cooperation of the Respondents waxed and waned during the course of events leading to these proceedings, and during these proceedings, but there was some evidence of some cooperation and some endeavour to resolve the issues on the part of the Respondents. Overall, this factor indicates that a penalty in the lower to mid-range is appropriate.
Compliance with minimum standards
The Fair Work Ombudsman, referring to s.3(b) of the FW Act expressing the objects of the FW Act to include the need to ensure a guaranteed safety net of fair and enforceable minimum terms and conditions, submitted that the maintenance of the safety net is pertinent to the competitive market for junior pilots in the aviation industry, in which employment costs are a significant outlay and form the basis for price competition. The Respondents made no submissions on this factor. It would appear implicit in the Respondent’s failure to make any submissions in relation to this factor that there is an acceptance by them of non-compliance with minimum standards as a consequence of the contraventions.
The oft-cited quote when referring to a consideration of compliance with minimum standards is that in Kentwood (No. 3) at [36] per McKerracher:
In imposing a penalty against the respondents, it is necessary for the court to set the penalty in a range that reinforces the fundamental importance of compliance with the employment standards enshrined in Commonwealth workplace laws.
The Court accepts the approach outlined in Kentwood (No. 3) cited above, which reflects the importance of compliance with minimum standards, and the importance of imposing a penalty reflecting the necessity for compliance with the provisions of the FW Act and industrial instruments made under the FW Act.
Deterrence
FW Ombudsman’s Submissions
With regard to both general and specific deterrence the FW Ombudsman submitted that:
a)there is a need for general deterrence due to the competitive market and high barriers for junior pilots seeking to enter the aviation industry, and on top of the financial debts that junior pilots have incurred in obtaining their licence and insurance, they are desperate to simply have a job in order to build flying hours, leaving them vulnerable to exploitation and being underpaid by employers;
b)the occupational profile report for pilots prepared by the Strategic Research, Analysis and Reporting noted the following about the aviation industry:
i)wages are the industry's second largest expense;
ii)wages have fallen as a share of industry revenue over the past five years as industry operators have attempted to reduce costs due to falling demand from the mining division;
iii)average course fees for flying schools are high at $74,728;
iv)the average age for pilots is 44 years;
v)larger airlines tend to attract pilots from smaller airlines through incentives, while smaller firms tend to attract new employees to train as pilots; and
vi)83.3% of employing businesses in the air and space transport industry were small businesses (1-19 employees) as at 30 June 2016;
c)penalties should be high enough to deter other employers from engaging in similar conduct to the Respondents and breaching the FW Act;
d)there is a significant need for specific deterrence in this matter in view of:
i)the history and previous conduct of Mr Calandra;
ii)the conduct of the Respondents throughout the employment of Mr Sullivan and Mr Thomson and the FW Ombudsman's investigation; and
iii)as far as the FW Ombudsman is aware, the Respondents are still operating the business and continuing to engage employees and have failed to provide any evidence or specific details, including with respect to rates of pay, rosters, record-keeping and pay slips, about the nature of the changes to ensure that these contraventions do not occur again.
Respondent’s Submissions
The Respondent’s made the following submissions:
a)the information attached to the Third McArthur Affidavit is not particularly comprehensive, and does not provide any in depth analysis of the aviation industry;
b)the Respondents were not guilty of exploitation, rather they made genuine mistakes arising out of a discrete set of circumstances that have subsequently been corrected. They have displayed a pattern of corrective behaviour over a period of years, and although they made mistakes on more than one occasion, they were not the same mistakes;
c)the nature of the industry makes it equally important to facilitate employers who are ready, willing, and able to give new pilots a chance, just as Mr Calandra was willing to give Mr Sullivan a chance despite his having failed his check flight on more than one occasion. Mr Calandra persevered and encouraged him to continue trying, notwithstanding that there were other junior pilots also struggling to find work; and
d)requests the Court to disregard the incomplete and inaccurate account of protracted proceedings with CASA. The evidence simply does not support a finding by this Court that Mr Calandra has misled the Court when he asserts that he holds himself to high safety standards.
Consideration
The role of general deterrence in determining the appropriate penalty is best illustrated by the comments in Ponzio at [93] per Lander J:
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 circumstances where the Respondents are still engaged in business specific deterrence may be a significant factor. In Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union [2008] FCAFC 170; (2008) 171 FCR 357; (2008) 177 IR 243 at [37] per Gray J, the Federal Court observed that :
Specific deterrence focuses on the party on whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future. Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur.
The Court need not expand further than to say the need for specific and general deterrence are inherently relevant when imposing a civil penalty: Harrington Corporation at [51]-[55] per Mowbray FM; Ponzio at [93] per Lander J. One looks no further than the general purpose of any penalty imposed by the law being primarily if not wholly protective in promoting the public interest in compliance and to put a price on a contravention that is sufficiently high to deter repetition: The Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482; (2015) 90 ALJR 113; (2015) 255 IR 87; (2015) 326 ALR 476; (2015) 67 AILR 102-494 at [55] per French CJ, Kiefel, Bell, Nettle and Gordon JJ.
In relation to general deterrence the Court notes that there is no evidence of a widespread problem of underpayments of pilots in the aviation industry notwithstanding what was put by the FWO as to the over-supply of helicopter pilots. There is nothing in the FWO’s one page analysis report which would suggest that there is any significant problem in the aviation industry (or that part of it which might be characterised as the helicopter aviation sub-industry) which requires significant general deterrence, and insofar as this is a case of a failure to pay award entitlements it appears to be specific to BHS and in large part the fault of the Mr Calandra’s failure to properly implement and monitor proper payroll systems and records. In general terms, a measure of general deterrence might be said to be appropriate in relation to employers generally, so as to serve as a further warning to employers generally that employees ought not to be underpaid. Thus, in this case there is a need for general deterrence so as to reinforce the necessity for compliance with the provisions of an award such as the AP Award, and the keeping and maintenance of proper workplace records.
In relation to specific deterrence that is not a factor which in this case carried much weight in the Court’s view. That is because the unchallenged evidence is that the Respondents are contrite, and have taken corrective action, with the consequence that further contraventions of this kind are in the Court’s view unlikely.
Consideration of penalty for each contravention
The Court considers that the penalty to be imposed for the contraventions of ss.44 and 45 of the FW Act, that is the failure to pay and failure to comply with the award with respect to rosters, are all very much, in the circumstances set out above, at the low to middle end of the penalty range which might be imposed. Having regard to the relatively small amounts involved, and the fact that the Respondents’ are first time contraveners for the purposes of penalty proceedings, and the evidence of contrition and corrective action, the Court considers that the appropriate penalty is 15 per cent of the maximum for the contraventions of ss.44 and 45 of the FW Act in relation to the failure to pay the minimum rate of pay, annual leave and annual leave loading and accrued duty free days on termination. The contraventions of s.45 of the FW Act in failing to pay Mr Sullivan’s phone calls and the failure to pay Mr Thompson for a short period in March 2012, and the failure to make rosters seven days in advance, are, in the Court’s view slightly less serious than the failure to pay the minimum rate of pay, annual leave and annual leave loading and accrued duty free days on termination, and will therefore attract a penalty of ten per cent of the maximum for the contraventions. The record keeping contraventions pursuant to ss.535 and 536 of the FW Act, and reg.3.44(1) of the FW Regulations also fall at the lower to middle end of the penalty range, and affected by the same factors with respect to the Respondents’ as previously set out, but given the nature of these contraventions, the Court considers that they ought to attract a penalty of 20 per cent of the maximum penalty.
It follows that the penalties to be imposed are as follows:
a)for the contravention of s.45 of the FW Act in failing to pay the minimum rate of pay to Mr Thompson and Mr Sullivan:
i)for BHS - $4,950.00; and
ii)for Mr Calandra - $990.00.
b)for the contraventions of ss.44 and 45 of the FW Act in relation to the failure to pay annual leave and annual leave loading to Mr Thompson and Mr Sullivan:
i)for BHS - $4,950.00; and
ii)for Mr Calandra - $990.00.
c)for the contravention of s.45 of the FW Act in failing to pay for accrued duty free days on termination for Mr Thompson and Mr Sullivan:
i)for BHS - $4,950.00; and
ii)for Mr Calandra - $ 990.00.
d)for the contravention of s.45 of the FW Act in failing to pay for Mr Sullivan for mobile telephone calls:
i)for BHS - $3,300.00; and
ii)for Mr Calandra - $660.00.
e)for the contravention of s.45 of the FW Act in failing to make rosters seven days in advance:
i)for BHS - $3,300.00; and
ii)for Mr Calandra - $660.00.
f)for the contravention of s.323 of the FW Act in failing to pay Mr Thompson for a period of March 2012:
i)for BHS - $3,300.00; and
ii)for Mr Calandra - $660.00.
g)for the contravention of s.535 of the FW Act in failing to pay make records relating to annual leave:
i)for BHS - $3,300.00; and
ii)for Mr Calandra - $660.00.
h)for the contravention of s.536 of the FW Act in the failure to give payslips within one day of payment:
i)for BHS - $3,300.00; and
ii)for Mr Calandra - $660.00.
i)for the contravention of reg.3.44(1) of FW Regulations in failing to ensure payslips were not misleading :
i)for BHS - $2,200.00; and
ii)for Mr Calandra - $440.00.
It follows that the penalties assessed for the contraventions (prior to consideration of the totality principle) are as follows:
a)for BHS - $33,550.00; and
b)for Mr Calandra - $6,710.00.
The totality principle
The totality principle requires the Court, once it has made a judicial evaluation of what it considers to be an appropriate aggregate penalty, to examine one final time, the aggregate penalty in order to determine whether it appears wrong: Mornington Inn at [42]-[43] and [91] per Stone and Buchanan JJ; Australian Ophthalmic Supplies at [27]-[28] per Gray J and [78] per Graham J. The penalty imposed must not be crushing or oppressive, but it must nevertheless be proportionate to the seriousness of the conduct engaged in: Fair Work Ombudsman v Promoting U Pty Ltd & Anor [2012] FMCA 58 at [52]-[54] per Burchardt FM. Specifically, where it is necessary to impose a civil penalty it ought to be fixed at a level which ensures that the penalty cannot be regarded simply as part of an acceptable or usual cost of doing business: Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249; (2012) ATPR 42-387 at [62]-[63] per Keane CJ, Finn and Gilmour JJ.
The Court has reviewed and considered the aggregate penalties of $33,550.00 for BHS and $6,710.00 for Mr Calandra, and considers the penalties are proportionate to the seriousness of the conduct engaged in, and are not otherwise crushing or oppressive. For that reason, there will be no adjustment to the aggregate penalty under the totality principle.
Conclusion and orders
The Court has concluded for the contraventions by BHS and Mr Calandra are to be subject of penalties in the amounts set out above (totalling $33,550.00 for BHS and $6,710.00 for Mr Calandra) and there will be orders accordingly.
These Reasons for Judgment have been delivered by Judge Street pursuant to s.75 of the Federal Circuit Court of Australia Act 1999 (Cth).
I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of Judge Lucev
Deputy Associate:
Date: 27 September 2019
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