Fair Work Ombudsman v Carers Portland Inc
[2023] FedCFamC2G 620
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Carers Portland Inc [2023] FedCFamC2G 620
File number: MLG 1429 of 2022 Judgment of: JUDGE BLAKE Date of judgment: 20 July 2023 Catchwords: INDUSTRIAL LAW – Compliance Notice issued under section 716(5) of the Fair Work Act 2009 (Cth) (‘Act’) – whether Respondents failed to comply with the Compliance Notice – HELD that First Respondent failed to comply with the Compliance Notice and Second Respondent was involved in the contravention by the First Respondent.
INDUSTRIAL LAW – Compliance Notice issued under section 716(5) of the Act – where the Compliance Notice specified the Applicant had reasonable belief that an Award and the Act were contravened– where Compliance Notice not complied with – where Applicant commenced proceedings under section 716(5) of the Act only and then sought an order for compensation calculated on the basis that the Award and the Act had been contravened – where there was no finding that the Award or the Act had been contravened - where there is no causal connection between the contravention of section 716(5) of the Act and an award of compensation - HELD not appropriate to make compensation order.
Legislation: Fair Work Act 2009 (Cth) ss 44, 45, 50, 90, 90(2), 117, 117(2), 536, 536(1), 545, 545(2)(b), 546, 550, 550(2)(a), 550(2)(c), 700, 716, 716(1), 716(2), 716(3), 716(5), 716(6), 717
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 140, 141
Fast Food Industry Award 2010 clauses 12.9 and 17
Cases cited: Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (2011) 193 FCR 526
Dafallah v Fair Work Ombudsman [2014] FCA 328
Fair Work Ombudsman v Corporation Sun Pty Ltd [2020] FCCA 2849
Fair Work Ombudsman v Gothic Downs Pty Ltd [2022] FedCFamC2G 21
Fair Work Ombudsman v Joys Child Care Ltd & Anor (No 2) [2020] FCCA 2326
Fair Work Ombudsman v L.E.C Builders & Designers Pty Ltd(No 2) [2022] FedCFamC2G 326
George v Rockett (1990) 170 CLR 104
Hindu Society of Victoria (Australia) Inc v Fair Work Ombudsman [2016] FCCA 221
Potter v Fair Work Ombudsman [2014] FCA 187
Division: Division 2 General Federal Law Number of paragraphs: 60 Date of hearing: 8 May 2023 Place: Melbourne Counsel for the Applicant: Ms Pase Solicitor for the Applicant: Maddocks Lawyers Advocate for the Respondents: In Person Solicitor for the Respondents: None ORDERS
MLG 1429 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: THE CARERS PORTLAND INC (ABN 81 590 467 287)
First Respondent
THI HAI DUONG LUONG
Second Respondent
order made by:
JUDGE BLAKE
DATE OF ORDER:
20 JULY 2023
THE COURT DECLARES THAT:
1.The First Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (‘Act’) by failing to comply with the Compliance Notice given to the First Respondent by Fair Work Inspector Cox on 3 December 2021.
2.The Second Respondent was involved, within the meaning of section 550(2) of the Act, in the contravention by the First Respondent of section 716(5) of the Act.
THE COURT ORDERS THAT:
3.The matter be listed for hearing on 16 November 2023 at 10.30 am in respect of the following:
(a)what, if any, pecuniary penalty should be imposed on the Respondents for the contravention of section 716(5) of the Act; and
(b)whether the Court should make the alternative set of orders set out at paragraph [58] of the attached reasons for decision.
4.The Applicant file and serve any affidavit or other evidence that it proposes to rely on at hearing in Order 3 above by 19 October 2023.
5.The Respondents file and serve any affidavit or other evidence that they propose to rely on at the hearing in Order 3 above by 2 November 2023.
6.By 12.00 pm two business days prior to the hearing in Order 3 above, each party file and serve a written outline of submissions and bundle of authorities to be relied on.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE BLAKE:
This is an application by the Fair Work Ombudsman (‘Applicant’). The Applicant seeks orders and declarations against The Carers Portland Inc (‘First Respondent’) and Thi Hai Duong Luong (‘Ms Luong’). In short, the Applicant alleges that the First Respondent failed to comply with a Compliance Notice issued to it under section 716 of the Fair Work Act 2009 (Cth) (‘Act’) dated 3 December 2021. The Applicant alleges that Ms Luong was involved in the contravention by the First Respondent under section 550 of the Act. The Applicant seeks various declarations and orders set out in the Statement of Claim filed 27 June 2022 and in its Outline of Submissions filed 24 May 2023.
The Applicant was represented by its Counsel, Ms Pase. The Respondents did not engage legal representation. Ms Luong represented herself, and the First Respondent with leave of the Court.
The Applicant filed a Court Book in two parts. It relies on the Application and Statement of Claim filed 27 June 2022, the affidavit of Inspector Christine Maree Cox (‘Inspector Cox’) affirmed 24 March 2023, and its written Outline of Submissions filed 24 March 2023. Inspector Cox was cross-examined by Ms Luong.
The Respondents did not file any documents pursuant to orders made by the Court on 29 November 2022. The Respondents never filed any Response or Defence. The sole document filed by the Respondents is an affidavit filed by Ms Luong on 8 November 2022. Ms Luong relied on her affidavit. She also gave oral evidence at the hearing, and was cross-examined.
Ms Luong’s written and oral submissions before me were somewhat difficult to follow. That there may be difficulties understanding Ms Luong was an issue that was apparent to me in the lead up to trial, as the matter had been in my docket and case managed by me. I apprehended there may be a continuation of the communication difficulties at trial. For this reason, prior to trial, I had my associate contact the parties in writing, and offer Ms Luong the services of an interpreter. That offer was rejected by Ms Luong.
LEGISLATION
Section 716 of the Act deals with the issue of Compliance Notices, including, among other things, when such notices may be issued, how they are given and their required content.
Section 716(5) of the Act is a civil remedy provision. It provides that ‘A person must not fail to comply with a notice given under this section’. A contravention of section 716(5) of the Act is to be proved by establishing that a Compliance Notice was given, and that there has been non-compliance. Actual proof of the underlying contraventions of a modern award is not required: see Hindu Society of Victoria (Australia) Inc v Fair Work Ombudsman [2016] FCCA 221 (‘Hindu’).
In so far as section 716(6) of the Act is concerned, there is not a statutory definition of ‘reasonable excuse’. A person who seeks to argue that he or she had a ‘reasonable excuse’ for non-compliance with a Compliance Notice bears the onus of proof: see Potter v Fair Work Ombudsman [2014] FCA 187 at [72].
There is then the question of what may constitute ‘reasonably believes’ for the purposes of section 716(1) of the Act. In George v Rockett (1990) 170 CLR 104 (‘Rockett’), the High Court identified features of the belief that may be reasonably held. In the factual context of that matter (which did not relate to section 716 of the Act) the High Court stated that:
[14]…The objective circumstances sufficient to show a reason to believe something need to point more clearly to the subject matter of the belief, but that is not to say that the objective circumstances must establish on the balance of probabilities that the subject matter in fact occurred or exists: the assent of belief is given on more slender evidence than proof. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture.
Section 550 of the Act deals with when a person is taken to be involved in a contravention of a civil remedy provision.
Section 546 of the Act sets out the powers of the Court to make orders with respect to the imposition of pecuniary penalties. Section 545 of the Act together with sections 140 and 141 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) deals with orders that can be made by the Court in a proceeding such as this.
Finally, section 717 of the Act sets out a mechanism in which a person who has been given a Compliance Notice may apply to the Court for a review of the Compliance Notice. No application to review the Compliance Notice was made in this case.
EVIDENCE AND FINDINGS
Applicant’s evidence
The evidence leading to the issuing of the Compliance Notice, and the events relating to it, is set out in the affidavit of Inspector Cox.
Ms Luong objected to the affidavit of Inspector Cox. The first objection was that Inspector Cox was based in Queensland, while the Respondents are in Victoria. That is not a basis to object to evidence, and I rejected it.
The second objection was that the affidavit of Inspector Cox was witnessed by Sherilynn Ding (‘Ms Ding’). As I understood the objection, Ms Luong asserted that Ms Ding was not authorised or permitted to witness the affidavit of Inspector Cox, and the affidavit should have been witnessed by the Department of Justice. On this second objection, Inspector Cox’s affidavit was affirmed on 24 March 2023. Inspector Cox’s affidavit records Ms Ding as being an Australian Legal Practitioner. As it happens, Ms Ding has sworn various affidavits in this proceeding, the last of which was sworn on 24 November 2022. In that affidavit, Ms Ding deposes under oath that she is a solicitor in the sole employ of the law firm Maddocks. Accordingly, Ms Ding is a person properly authorised and capable of witnessing an affidavit. The second objection of Ms Luong was also, therefore, rejected.
In her affidavit, Inspector Cox provides the following evidence:
(a)She is an inspector with the office of the Applicant, properly appointed under section 700 of the Act;
(b)On 30 July 2021 she received a request for assistance from Binh Tran (‘Ms Tran’) through Ms Tran’s sister;
(c)In around September 2021, she commenced an investigation into the First Respondent in relation to Ms Tran’s complaint, and was assisted in that investigation by Fair Work Officer Madeleine Wainwright;
(d)Ms Tran informed the officers of the Applicant that:
(i)her employment with the First Respondent was facilitated through atWork Australia Pty Ltd (‘atWork’);
(ii)she commenced work with the First Respondent on 4 January 2021;
(iii)in the middle of May, she was told by a representative of the First Respondent to stay home;
(iv)she was initially paid $20.00 per hour, then $20.06 per hour, then $20.21 per hour;
(v)she was not paid for work performed from 3 to 6 May 2021, and 11 to 13 May 2021;
(vi)she was employed as a kitchen hand, although she sometimes attended to customer service and cooking;
(vii)food produced at the café of the First Respondent was usually placed in containers for customers to take away;
(e)On 23 August 2021, the officers of the Applicant received an email containing a witness statement signed by Ms Tran on 22 August 2021, in which Ms Tran stated that:
(i)she was employed as a kitchen hand at the café operated by the First Respondent from 4 January 2021 to 13 May 2021;
(ii)her duties at the café included helping with preparing food, customer service and cleaning;
(iii)she was paid $20.06 per hour;
(iv)she was not provided with pay slips, and would be provided with a photo of a pay slip when she requested a payslip;
(v)her employment had been facilitated via atWork and the First Respondent received a subsidy in exchange for employing Ms Tran;
(vi)she worked 4 hours a day, 4 days a week and was paid fortnightly;
(vii)she had worked 16 hours between 3 and 6 May 2021, and 12 hours between 11 and 13 May 2021, for which she had not been paid;
(viii)she was not paid accrued but untaken annual leave at the end of her employment, and did not believe she was provided with notice of termination of her employment;
(f)On 24 August 2021, officers of the Applicant received records of Ms Tran including text messages, payslips, handwritten notes of hours and shifts worked. Also received by officers of the Applicant on that day were other documents including a DES Wage Subsidy Agreement;
(g)On 10 September 2021, officers of the Applicant received from Ms Tran bank statements for the period 3 May 2021 to 10 September 2021 showing payments apparently made by the Respondents as well as other records of hours worked;
(h)On 8 November 2021, Ms Tran spoke to the Applicant and confirmed her employment commenced on 4 January 2021, that she was not paid for the first week of her employment, and that despite the DES Wage Subsidy Agreement containing a start date of 25 November 2020, she had not been allowed by the Respondents to commence work until January 2021;
(i)On 8 November 2021, officers of the Applicant spoke to Nicole Stock from atWork by telephone. During that telephone call, Ms Stock said, among other things, that as far as she was aware, Ms Tran was a part-time kitchen hand, the First Respondent received a wage subsidy for employing Ms Tran, and the First Respondent only periodically provided payslips to atWork; and
(j)On 10 November 2021, the Applicant received an email from Ms Tran attaching bank statements for the period 29 December 2020 to 29 June 2021 with various notations.
At paragraph [20] of her affidavit, Inspector Cox sets out how she came to form a reasonable belief that the First Respondent was in contravention of clauses 12.9 and 17 of the Fast Food Industry Award 2010 (‘Award’) and sections 90(2), 117(2) and 536(1) of the Act as follows:
20.By 3 December 2021, I formed the belief, based on my review and consideration of the information Officer Wainwright and I obtained during the investigation, including that set out at paragraphs 7 to 19 above, that
(a)TCPI employed Ms Tran between 4 January 2021 to 13 May 2021 (Employment Period) at its business, HCM Café;
(b)Ms Tran was a part-time employee;
(c)Ms Tran’s employment with TCPI was covered by the Fast Food Industry Award 2010 (Fast Food Award):
(d)Ms Tran’s employment was properly classified as a Fast Food Employee Level 1, as defined in Schedule B of the Fast Food Award;
(e) during the Employment Period, Ms Tran was not paid in accordance with the minimum rate set out in the Fast Food Award;
(f)Ms Tran was not paid for 28 hours that she worked between 3 May 2021 to 13 May 2021;
(g) during the Employment Period, Ms Tran accrued annual leave;
(h) upon termination of her employment, TCPI did not pay Ms Tran accrued but untaken annual leave and annual leave loading;
(i) Ms Tran was entitled to 1 week’s notice of termination or payment in lieu of notice;
(j) TCPI did not provide Ms Tran with 1 week’s notice of termination or payment in lieu of notice when terminating Ms Tran’s employment;
(k)TCPI therefore contravened the following terms of the Fast Food Award and the FW Act with respect to Ms Tran’s employment:
(i) clause 12.9 of the Fast Food Award;
(ii) clause 17 of the Fast Food Award;
(iii) section 90(2) of the FW Act;
(iv) section 117(2) of the FW Act; and
(v) section 536(1) of the FW Act.
Inspector Cox attached to her affidavit a decision record that summarises the matters she considered, and the approach she took when forming a belief as to whether there were contraventions by the Respondents of the Award and the Act. I have considered that document. In addition to the belief as to breaches of the Award and the Act by the Respondents, the document records a reasonable belief of a contravention by the Respondents of section 536 of the Act. Such contravention was not ultimately the subject of either the Compliance Notice or these proceedings.
The evidence given by Inspector Cox then discloses the following:
(a)She issued the Compliance Notice to the First Respondent on 3 December 2021. The Compliance Notice was given by express post and also by email to the Respondents on 6 December 2021;
(b)On 6 December 2021, Ms Luong sent an email to the Applicant that replied to the email sent on that same day. In that email, the Ms Luong, among other things, asserted that the Respondents had not done anything wrong and that she would see them in the ‘high court’;
(c)On 14 December 2021, the Applicant sent an email to Ms Luong reminding her of the obligations in the Compliance Notice;
(d)On 23 December 2021 the Applicant received a telephone call from Ms Luong who indicated, among other things, that she did not care about the Compliance Notice;
(e)On 6 January 2022, the Applicant telephoned Ms Luong. Ms Luong stated words to the effect that she would not be complying with the Compliance Notice;
(f)On 18 January 2022, the Applicant sent an email to Ms Luong attaching a letter entitled ‘Failure to comply with the Compliance Notice’ as well as an infringement notice;
(g)On 7 March 2022, the Applicant sent a letter to Ms Luong providing her with a final opportunity to comply with the Compliance Notice;
(h)As at the date of the swearing of the affidavit, Ms Luong has not taken any steps required by the Compliance Notice; and
(i)That a Company Search shows that the First Respondent holds the licenced business name for ‘HCM Café Fresh Q Lunch’, that the business is located in Dandenong, and that Ms Luong is the individual representative of the First Respondent.
Inspector Cox has set out in her affidavit calculations of the total amount of underpayments she considers are owed to Ms Tran as being $1,881.05. That is comprised of the various amounts set out at paragraph [44] of her affidavit. I reproduce below the table from paragraph [44] of Inspector Cox’s affidavit.
Entitlement Amount Underpayment of hourly rate $64.80 Non-payment of hourly rate $330.24 Annual leave and annual leave loading $527.69 Payment in lieu of notice $348.48 TOTAL $1,881.05
At paragraphs [38]-[43] of her affidavit, Inspector Cox has set out the basis for how she arrived at these above calculations.
Ms Luong cross-examined Inspector Cox. Much of the cross-examination was difficult to follow, and raised issues not relevant to the proceedings. No substantial or sustained challenge was made to the evidence contained in Inspector Cox’s affidavit, other than that Inspector Cox had not taken evidence provided by Ms Luong into account. In re-examination, Inspector Cox confirmed that she had taken certain evidence provided by Ms Luong on 24 August 2021 into account prior to forming her views, and issuing the Compliance Notice.
Respondent’s evidence
The affidavit of Ms Luong contains various attachments as follows:
(a)A wage record or payslip for Ms Tran covering the period 4 May 2021 to 17 May 2021;
(b)Page 1 of a document entitled ‘DES Employment Incentive Payment Agreement’;
(c)A record describing a payment of ‘-$500’ to Ms Tran;
(d)Pages 1 and 3 of a four page document entitled ‘Wage Subsidy Agreement’;
(e)A document entitled ‘Business Planning-Time Management’; and
(f)A document entitled ‘A letter of concern to FWO’ prepared by Ms Luong.
The document entitled ‘A letter of concern to FWO’ is difficult to follow. Doing the best I can to understand it, in that document, Ms Luong states, among other things:
(a)That the impact of the economy has caused hurt and she has tried to manage her business as best she can, however, the ‘FWC wont give up’;
(b)She is not willing to give up but is prepared to ‘forget forgive’ even though she has been unfairly treated;
(c)That she has been forced to shut her business;
(d)That she has been working hard to support workers in business and in the community;
(e)The ‘FWC’ will help people communicate, but in fact they hurt their own people;
(f)She has been targeted so others can get funding, and that she has not been treated fairly; and
(g)The ‘FWC’ have harmed her and damaged her business.
I gave Ms Luong the opportunity to give evidence from the witness box, notwithstanding that she had not filed an affidavit. Much of her oral evidence was also difficult to follow. Most of it was not relevant to the issues before the Court. I endeavoured to direct Ms Luong to the issues that were relevant. Following some exchanges with her, I ascertained from her that there were three reasons why she had not complied with the Compliance Notice. These were as follows. First, she was in hospital for one week during September 2021, and was unable to respond to correspondence or deal with matters. Second, she had never received the Compliance Notice. Third, she had paid Ms Tran all of her entitlements, and she never dismissed Ms Tran. She was ordered to close the business during the lockdowns in Victoria as required by the Victorian Government.
Ms Luong did not produce any corroborating evidence to support her statement (given for the first time in the witness box) that she had been in hospital in September 2021, and that her stay in hospital prevented her from responding to the Compliance Notice. Notwithstanding that, even if the Court were to accept that Ms Luong was in hospital for one week in September 2021, it does not explain her non-compliance with the Compliance Notice. The Compliance Notice was issued some months after Ms Luong was released from hospital on 3 December 2021. Ms Luong’s stay in hospital, therefore, does not provide an explanation for non-compliance with the Compliance Notice.
Ms Luong also gave evidence (for the first time in the witness box) that she had not received the Compliance Notice of 3 December 2021. The inference she appears to ask the Court to draw is that she could not comply with a Compliance Notice she never received. That evidence needs to be considered in light of the following:
(a)Inspector Cox gave evidence that the Compliance Notice was sent by Express Post to the First Respondent’s place of business address. Inspector Cox annexed a copy of the Express Post register to her affidavit. Inspector Cox was not challenged on this evidence in cross-examination, nor was she challenged on her evidence that a copy of the Compliance Notice was sent by email to the Respondents;
(b)On 6 December 2021, a copy of the Compliance Notice was sent by email to the Respondents at the email address ‘[email protected]’ (‘gmail address’). The gmail address:
(i)is one of the email contact addresses for the First Respondent listed on the Wage Subsidy Agreement, annexed to Ms Luong’s affidavit;
(ii)was used by Ms Luong to send an email to the Applicant’s office on 24 August 2021;
(iii)was used by Ms Luong to send an email to the Applicant’s office on 6 December 2021 at 11:42am. This email sent by Ms Luong is a direct reply to the email from the Applicant’s office that attaches the Compliance Notice. Nothing in the email from Ms Luong indicates that she has not received the Compliance Notice. Instead, Ms Luong asserts that she has not done anything wrong, and that she will present her case at Court. This email chain, and its contents are significant and weighty pieces of evidence that prove the Respondents received the Compliance Notice;
(iv)was used by Ms Luong to send an email to the Applicant’s office on 18 January 2022 in response to a notice that she received concerning the Respondents failure to comply with the Compliance Notice;
(c)As I understood Ms Luong’s evidence during cross-examination, she eventually admitted to receipt of the electronic version of the Compliance Notice, but not the paper version. Even if I misunderstood that evidence, however, Ms Luong’s answers to questions as to whether she received the Compliance Notice were not convincing, and do not overcome the fact that she replied directly to the email sent by the Applicant that attached the Compliance Notice.
When the above evidence is considered, I find that the Respondents did receive a copy of the Compliance Notice of 3 December 2021.
Ms Luong was taken to the terms of the Compliance Notice, in particular, the details of the alleged contraventions of the Act and the Award set out at paragraph [6] on page 2 of the Compliance Notice. Ms Luong did not produce any evidence that indicates the Respondents took the steps required by the Compliance Notice. Ms Luong did not produce any evidence of her own wage calculations, or any other evidence to counter the detailed calculations the Applicant produced, or the underlying source documents (payslips, bank statements) produced by the Applicant on which its calculations were based. In the circumstances, Ms Luong’s assertion under oath that she paid all entitlements owed to Ms Tran amounts to little more than a general assertion, uncorroborated by supporting evidence. I do not accept Ms Luong’s evidence that Ms Tran was paid all of her entitlements.
Ms Luong appeared to assert under oath that the Respondents had not terminated the employment of Ms Tran. I do not accept that evidence. The evidence shows that Ms Tran was told by the Respondents not to come to work in May 2021. Ms Luong effectively agrees with this when she blames the lockdown for what occurred. Critically, there is no evidence that Ms Tran was ever invited back to work following the cessation of any lockdown. The weight of the evidence shows that the employment relationship appeared to end when the Respondents told Ms Tran not to attend for work. The relationship never resumed.
Finally, in closing submissions, Ms Luong appeared to contend that Ms Tran was not an employee. Ms Luong failed to raise this matter in her affidavit. It contradicts other evidence given by Ms Luong that Ms Tran was paid her employment entitlements. There is also other evidence before the Court that provides a basis for the Court to be satisfied that Ms Tran was an employee of the First Respondent. That evidence includes the following:
(a)The pay record annexed to Ms Luong’s affidavit is a document prepared by the First Respondent. It records that Ms Luong was paid by the First Respondent ‘SALARY & WAGE’ and superannuation contributions for the period of 4 May 2021 to 17 May 2021, and that annual leave and personal/carer’s leave was accrued on her behalf. Other records produced by the Applicant show similar treatment by the Respondents of employee entitlements paid or owed to Ms Tran;
(b)The ‘DES Employment Incentive Payment Agreement’ records ‘employment’ details, including HCM Café Fresh Q Lunch as the employing company. It also records Binh Tran as an ‘employee’ and records that Ms Tran’s job title is ‘Kitchen Hand’;
(c)The Wage Subsidy Agreement lists HCM Café Fresh Q Lunch as being the employer, and Ms Luong as being the contact name for the employer, and records the wage payable for a Kitchen Hand; and
(d)Other evidence collected by Inspector Cox during the investigation strongly suggests an employment relationship between Ms Tran and the First Respondent.
When these matters are considered, Ms Luong’s submission that Ms Tran was not an employee of the First Respondent is rejected. The evidence before the Court is, and I find, that Ms Tran was an employee of the First Respondent.
CONCLUSIONS
Having regard to all the evidence above, I find as follows:
(a)Ms Tran was employed by the First Respondent;
(b)Inspector Cox formed a reasonable belief that the First Respondent had contravened a provision of the National Employment Standards (‘NES’) (being sections 90 and 117 of the Act), and section 12.9 of the Award. The belief was reasonably held;
(c)The Compliance Notice was issued to and received by the Respondents;
(d)The Compliance Notice complied with the terms of subsections (2) and (3) of section 716 of the Act;
(e)The Compliance Notice required the Respondents to take certain steps by 10 January 2022;
(f)The Respondents did not take the steps required by the Compliance Notice within the relevant time frame; and
(g)The Respondents do not have any reasonable excuse for failing to comply with the terms of the Compliance Notice as contemplated by section 716(6) of the Act.
As a consequence of the findings I have made above, I am satisfied that the First Respondent has contravened section 716(5) of the Act.
ACCESSORIAL LIABILITY OF MS LUONG
Ms Luong is nominated as the representative of the First Respondent. During her evidence, Ms Luong confirmed that she was a director, principal, Chief Executive Officer and owner of the First Respondent, and that she owned the business. The evidence before me discloses that Ms Luong represented the First Respondent in all of its dealings with the Applicant. She also represented the First Respondent in this Court. It is clear from all the evidence that she made the decision to engage Ms Tran, and I infer given the apparent size of the business, made decisions in relation to what Ms Tran was to be paid, whether Ms Tran attended for work, and when she did not attend for work. There was a practical connection between her actions and the contravention. She knew the Compliance Notice was issued. She knew it had to be complied with. As the person with management control of the First Respondent she did not comply with the Compliance Notice. It is apparent from all of this, and I find, that she was involved in the contravention by the First Respondent within the meaning of section 550(2)(a) and (c) of the Act.
THE ORDERS SOUGHT
The Applicant sought orders and declarations as set out in its Outline of Submissions (which largely, but not identically, reflected the orders sought in the Statement of Claim). The orders sought as set out in the Outline of Submissions are as follows:
The FWO seeks the following declarations.
1.A declaration that the First Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with the compliance notice given to the First Respondent by Fair Work Inspector Cox (FWI Cox) on 3 December 2021 and pursuant to section 716 of the failing to comply with a compliance notice (Compliance Notice).
2.A declaration that the Second Respondent was involved, within the meaning of section 550(2) of the FW Act, in the contravention by the First Respondent of section 716(5) of the FW Act in paragraph 1 above.
The FWO seeks the following orders.
3.Pursuant to section 545(2)(b) of the FW Act, the First Respondent take the steps that were required by the Compliance [Notice] within 28 days from the date of this order, by:
(a) paying the amount of $1,881.05 to Ms Binh Tran;
4.Pursuant to section 545(1) of the FW Act, the First Respondent take the steps that were required by the Compliance within 28 days from the date of this order, by:
(a)calculating and paying into Ms Tran’s nominated superannuation fund any additional superannuation contributions required to be paid on the outstanding entitlements referred to in paragraph 3(a) above (as required by clause 21.2 of the Award); and
(b)preparing and producing to the Applicant, a schedule outlining its calculations of the outstanding entitlements and additional superannuation contributions required to be paid to Ms Tran and providing proof that the outstanding entitlements and additional superannuation contributions were rectified as set out in paragraphs 3(a) and 4(a) above.
5.Pursuant to section 547(2) of the FW Act, the First Respondent pay to Ms Tran interest on the amounts owed to her pursuant to paragraph 3(a) above within 28 days of the date of this order.
6. Pursuant to section 546(1) of the FW Act:
(a)the First Respondent pay a pecuniary penalty to the Commonwealth for the contravention set out in paragraph 1 above; and
(b)the Second Respondent pay a pecuniary penalty to the Commonwealth for her involvement (within the meaning of section 550(2) of the FW Act) in the contravention pleaded in paragraph 2 above.
7. Such further orders as the Court considers appropriate.
I am not presently concerned with proposed order six above as I intend to set the matter down for a separate hearing on penalty. I am also not presently concerned about proposed orders one and two, which are the usual declarations sought in a matter such as this. I am concerned about proposed order three. Proposed order three asks the Court to make an order that the First Respondent take the steps that were required by the Compliance Notice, and within 28 days from the date of the order, pay the amount of $1,881.05 directly to Ms Tran.
Whether an order is able to be made in the form of proposed order three was not dealt with by the Applicant in its written Outline of Submissions. The submission was only articulated for the first time orally during the hearing.
Ms Pase for the Applicant put the argument in the following way:
Your Honour, finally, I just turn to the court’s power to make an order for compensation to be paid to Ms Tran which is sought in the orders. This is a proceeding, your Honour, where the Fair Work ombudsman is seeking an order that a specific amount be paid to Ms Tran to rectify the contraventions the subject of the compliance notice. So rather than seeking orders in effect seeking that the compliance notice be complied with, Inspector Cox has done those calculations, has formed a view of what is owed to Ms Tran and is seeking a specific order in that amount. And, your Honour, as I explained, that amount is $2 different to the one in the statement of claim. The starting point for this, your Honour, is section 539, subsection (2) of the Fair Work Act, which identifies the persons who are entitled to apply to this court and to the Federal Court for orders in relation to a contravention, or a proposed contravention of a civil penalty provision. It provides:
For each civil remedy provision, the persons referred to in column 2 of the item may, subject to sections 540 and 544 and subdivision B, apply to the courts referred to in column 3 of the item for orders in relation to a contravention or proposed contravention of the provision, including the maximum penalty referred to in column 4 of the item.
In the case of a contravention of section 716, subsection (5) of the Fair Work Act, only inspectors can apply to the court for orders in respect of a contravention, and the word “inspector” is defined in section 12 of the Fair Work Act and we say that that has been met in this case. Subsection 539, subsection (2) is subject to sections 540 and 544 of the Fair Work Act. Section 540 of the Fair Work Act applies a limitation to the circumstances in which an employee, employer, employee organisation or employer organisation may apply for an order in relation to a contravention or proposed contravention of a civil remedy provision, and that limitation is that the employee or employer, or a member of the employee organisation or the employer organisation is affected by the contravention, or will be affected by the proposed contravention. Next, there is section 545 of the Fair Work Act of which subsection (1) provides that a Federal Court or this court:
…may make an order the court considers appropriate if the court is satisfied that a person has contravened or proposes to contravene a civil remedy provision.
Subsection 545, subsection (2) provides that the orders of the Federal Court or this court may make include an order awarding compensation for loss that a person has suffered because of the contravention. Your Honour, we say that the text of these provisions is broad enough to permit the Fair Work ombudsman to apply to this court for an order awarding compensation for loss that a person has suffered because of a contravention of a civil remedy provision, and for this court to make an order awarding compensation in relation to a person who has suffered the loss, but who is not a party to the proceeding. There are at least two matters which support this construction. The first is that the authority section 539, subsection (2) of the Fair Work Act confers on the ombudsman to apply for orders is not subject to the limitation that section 540 places on employees, employers, employee organisations or employer organisations, namely, that the ombudsman be affected by the contravention, or will be affected by a proposed contravention.
The second matter is the text of section 545(2) of the Act itself, which authorises the Federal Court or this court to make an order awarding compensation for loss that a person has suffered because of the contravention. The use of the indefinite article implies that the person in relation to whom an order for compensation may be made need not be a person who has applied for such order. This, as the Fair Work ombudsman submits, is to be contrasted with provisions in other Acts. So, for example, section 82 of the Competition and Consumer Act which confers a right of action for the recovery of compensation on the person who suffers loss or damage by conduct engaged in contravention of a relevant provision of that Act. Your Honour - - -
HIS HONOUR: Has anyone made such an order before? Is there any authority?
MS PASE: I have not been able to find any authority for those orders. I can seek instructions from the ombudsman itself.
HIS HONOUR: Well, I understand the way you put the argument about the text, but it’s an unusual situation where the court makes an order for the benefit of a person who’s not party to the proceeding.
MS PASE: Yes, your Honour, but in circumstances in this where the court is able to make any orders that it sees appropriate – and we would argue that in this circumstance the respondents to this proceeding have not taken any steps to comply with the notice. Indeed, there is a carte blanche refusal or denial of the underlying contraventions of the notice. There is a concern, your Honour, that if an order is made simply that the calculations be done in accordance with the compliance notice, that in this case that will not be undertaken. And for the benefit of Ms Tran, who has been waiting for this money for two years, your Honour, we would suggest that it is highly appropriate for the court to make an order specifying the amount that is owed to Ms Tran, in circumstances where Inspector Cox has gone through and done the calculations and provided that evidence to the court on which the court can make the order.
HIS HONOUR: Ms Tran couldn’t enforce such an order. If the payment is not made, Ms Tran couldn’t enforce the order.
MS PASE: No, that’s right, your Honour.
The Respondents were unrepresented and did not make any submissions on the power of the Court to make the order sought by the Applicant.
Section 545(1) of the Act permits the Court to ‘make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision’. Subsection 545(2) sets out examples of orders the Court may make. Subsection 545(2)(b) of the Act provides that the Court may make an order awarding compensation for loss that a person has suffered because of the ‘contravention’.
I have considered closely whether I should make an order for compensation in the terms sought in this matter. I have ultimately concluded it is not appropriate for me to do so for the reasons that follow.
The Applicant seeks an order for compensation equivalent to what it says is the failure by the Respondents to comply with the Award and the NES. This proceeding is not a proceeding concerned, however, with whether the Award or the NES has been contravened. It is not a proceeding commenced under section 44 of the Act (contravention of the NES) or section 45 of the Act (contravention of a modern award). The Applicant could have commenced such a case but elected not to do so. This is a proceeding concerning the contravention of section 716(5) of the Act. No contravention of section 44 or section 45 of the Act has been established.
In her affidavit, the Inspector has set out how she has calculated the amount of compensation. The foundation of those calculations is, however, built on shifting sands. The Applicant has not proved that the Award or the NES has been contravened. Indeed, there is not any direct evidence that the Award or the NES has been contravened. The highest the evidence gets is that the Inspector formed a reasonable belief that there has been a contravention of the Award and the NES. The evidence rises no higher than that. How it is appropriate for the Court to award compensation based on alleged and unproved contraventions of the Award and the NES is not explained.
Where compensation is to be awarded, the Court must ensure that there is an appropriate causal connection between the contravention and the loss claimed: see Dafallah v Fair Work Ombudsman [2014] FCA 328 (Mortimer J) at [159] referring to Barker J in Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (2011) 193 FCR 526 at [423]. There is not a causal connection in this matter. The contravention in this case is a contravention of section 716(5) of the Act. That is, the failure of the Respondents to comply with the Compliance Notice issued under section 716(1) of the Act (which Notice was itself based only on the reasonable belief of the Inspector that there had been a contravention of the Award and the NES). The contravention before the Court is not a finding that the Respondents have breached the Award or the NES. There is no causal connection between the contravention of the civil penalty provision at issue in this case, and the compensation claimed.
There is then the content of the Compliance Notice. The Compliance Notice before me contains the following:
Details of the contraventions
6.The Employer, between 4 January 2021 and 20 May 2021 (Period), contravened clauses of the Award (as in force at the time of the contraventions) and the NES set out in the table below.
No Clause Details of contravention (a) Clause 12.9
of the AwardPart-time Minimum Wage contravention
failing to pay Binh Tran (Employee) 1/38th of the prescribed weekly rate in clause 12.9 in respect of ordinary hours worked, including:
Unpaid trail from 4 January 2021;
Underpayment of hourly rate for the entire Period; and
Not paid for time worked between 3 May 2021 to 13 May 2021
(Part-time Minimum Wage entitlement)No Section Details of NES contraventions (b) Section 90(2) FW Act Payment of Annual Leave on Termination contravention
Failing to pay the Employee the full amount that would have been payable to her had she taken the accrued but untaken annual leave owing to her when her employment ended on 13 May 2021, being:
The full amount of payment for annual leave that was accrued to her; and
The full amount of payment for annual leave loading of 17.5% payable under clause 28.3 (a) of the Award
(Annual Leave on Termination Entitlement)(c) Section 117(2) FW Act Payment in lieu of notice contravention
Failing to pay the Employee the full amount of payment in lieu of providing notice of at least the amount the employer would have been liable to pay her at the full rate of pay for the hours she would have worked had the employment continued until the end of the minimum period of notice (1 week)
(Payment in Lieu of Notice Entitlement)Required action under this Compliance Notice
7.In accordance with section 716(2) of the FW Act, I require you by 10 January 2022 to:
Step 1 – calculate and rectify underpayments
(a) in respect of the contravention referred to in row (a) of the table above:
(i)in respect of the Employee employed by the Employer as a Fast Food Employee Level 1 who was not paid (but was required by the Award to be paid) the Entitlement that is the subject of the contravention – the Entitlement is found in the ‘Details of Contravention’ column of the table above
(ii)in respect of the Employee:
1.identify the number of hours the Employee worked during the Period in respect of which the Entitlement was required to be paid by the Award (Hours)
2.identify the amount the Employer paid to the Employee during the Period in respect of the Entitlement (having regard to the Hours)
3.calculate the amount the Employer should have paid to the Employee during the Period in respect of the Entitlement (having regard to the Hours)
4.make a payment to the Employee of the difference between the amount referred to in (2) and the amount referred to in (3) immediately above
5.make a record of the information and amounts referred to in (1) to (3) and the amount of the payment referred to in (4) immediately above (Underpayment Rectification Information)
(b) in respect of the contravention referred to in row (b) of the table above:
(i)in respect of the Employee:
1.identify the number of hours of annual leave that was accrued to the Employee when their employment ended
2.calculate the full amount the Employee should have been paid for the hours of accrued annual leave when their employment ended
3.calculate the full amount the Employee should have been paid for annual leave loading under clause 28.3 (a) of the Award
4.make a payment to the Employee of the sum of the amounts referred to in (2) and (3) immediately above
5.make a record of the information and amounts referred to in (1) to (3) and the amount of the payment referred to in (4) immediately above (Underpayment Rectification Information)
(c) in respect of the contravention referred to in row (c) of the table above:
(ii)in respect of the Employee:
1.identify the minimum period of notice the Employer was required to provide to the Employee when the Employer terminated their employment without notice of termination
2.calculate the full amount the Employee should have been paid for payment in lieu of notice
3.make a payment to the Employee of the amount referred to in (2) above
4.make a record of the information and amounts referred to in (1) to (2) and the amount of the payment referred to in (3) immediately above (Underpayment Rectification Information)
Step 2 – Superannuation
(d)calculate additional superannuation contributions required by clause 21.2 of the Award in respect of the amounts required to be paid to the Employee as a result of Step 1
(e)in relation to the Employee who is owed such additional superannuation contributions, pay such additional superannuation contributions to the chosen Superannuation Fund of the Employee.
Reasonable evidence of steps taken to comply with this Compliance Notice
8.In accordance with section 716(2) of the FW Act, I require you to produce the following reasonable evidence of your compliance with the actions specified in paragraph 7 above:
(a) a schedule that sets out:
(i)in relation to the Employee, and in respect of each contravention that concerns the Employee, the Underpayment Rectification Information
(ii)in relation to the Employee, the additional superannuation contributions calculated for the Employee and paid to the Employee’s Superannuation Fund in accordance with Step 2
(b)proof that full payment has been made to the Employee identified in Step 1 of the payments required to be made by Step 1 and Step 2, such as a bank transfer showing the transfer of funds to the employee and their Superannuation Fund, or a copy of the employee’s payroll records showing the payments.
9.The evidence referred to above must be provided to the Fair Work Ombudsman by 17 January 2022 by email to [email protected] or by post to GPO Box 9887, Sydney NSW 2001
The order sought by the Applicant is that the First Respondent ‘take the steps that were required by the Compliance [Notice] within 28 days from the date of this order, by…paying the amount of $1,881.05 to Ms Binh Tran’. The Compliance Notice, however, says no such thing. It does not require any specific amount to be paid to Ms Bin Tran. Rather, the Compliance Notice requires the First Respondent to, inter alia:
(a)identify the number of hours worked by the employee;
(b)identify amounts paid to the employee;
(c)calculate the amounts the employee should have been paid; and
(d)make a payment to the employee of the difference in the amounts, and make a record of the information and amounts.
The curious position therefore advanced by the Applicant, is that I should make an order to the effect that the First Respondent pay a specific amount required by the Compliance Notice, when the Compliance Notice did not specify such an amount.
In relation to the matters above, I observe in passing that the step outlined and required to be taken at paragraph [47](d) above is arguably premature at the time the notice is issued. The Compliance Notice is issued on the reasonable belief of an inspector, not a finding of contravention of the relevant award or NES. A person responding to the Compliance Notice with the information at its disposal may come to the view after taking steps at paragraph [47] (a) – (c) above that, for a variety of reasons, an employee has been properly and lawfully paid what they are owed. In that case, no payment as required by step (d) would appear to be necessary.
I observe that the Court has previously been prepared to make orders of the type now sought by the Applicant in this case. It does not appear, however, that the issues that I have identified were raised with the Court in those matters. In Fair Work Ombudsman v Corporation Sun Pty Ltd [2020] FCCA 2849, the Court made an order under section 545 of the Act that the first respondent pay $11,000 to the Consolidated Revenue Fund, to be distributed to 11 employees. The respondents did not file any materials in the lead up to the hearing. In Fair Work Ombudsman v L.E.C Builders and Designers Pty Ltd (No 2) [2022] FedCFamC2G 326, the Court made an order under section 545 of the Act that the first respondent pay $22,054.50 as compensation for the loss suffered by the employee because of the contravention of section 716(5) of the Act. That order was made in circumstances where the Court entered judgement in default, the respondents did not file submissions on the question of penalty or the form or content of any final orders, and the Court determined the matter on the papers. Accordingly, these decisions provide no guidance on this issues I have identified in this matter.
In a proceeding for a contravention of section 716(5) of the Act, proof of the underlying breaches of an award or the NES is not required. This principle is commonly applied in this Court: see by way of example, Hindu at [26], or more recently, Fair Work Ombudsman v Gothic Downs Pty Ltd [2022] FedCFam2CG 21 at [13], and has been applied in this matter. It is not appropriate to order compensation equivalent to alleged breaches of an award or the NES where the nature of the proceeding, and its conduct means there is no requirement to prove the underlying contraventions.
It is often stated in this Court that the issuing of a Compliance Notice is a means that enables efficient rectification of underpayments of wages and entitlements. The Applicant made that submission this case. In Fair Work Ombudsman v Joys Child Care Ltd & Anor (No 2) [2020] FCCA 2326, Judge Altobelli expressed it in the following way at paragraph [11]:
[11]A compliance notice issued pursuant to section 716 of the FW Act provides an important statutory mechanism for a Fair Work Inspector to deal with non-compliance with minimum entitlements in the FW Act, as an alternative to commencing litigation for each underlying contravention of an entitlement. The compliance notice framework creates an opportunity for a person to whom it is served to rectify the matters set out in the notice and gain protection from civil remedy proceedings in respect of the underlying contravention(s), thus encouraging efficient and cost effective rectification of contraventions and payment of outstanding employee entitlements. Section 717 of the FW Act also provides a clear mechanism for a recipient of the notice to seek a review of the notice.
(footnotes omitted)
The propositions above are easily enough accepted where compliance with the Compliance Notice occurs. Where compliance with a Compliance Notice occurs, the system may work to produce an efficient rectification of underpayments of wages and entitlements.
There are of course many instances where a respondent does not comply with a Compliance Notice. Litigation then ensues, and is not avoided. At that point, the Applicant as a regulator has a choice. The Applicant can choose to initiate proceedings for failure to comply with the Compliance Notice pursuant to subsection 716(5), as is the case here. Alternatively, the Applicant can choose to commence proceedings for contraventions of the Act or industrial instruments under sections 44, 45 and 50 of the Act.
If the Applicant elects to commence proceedings for a contravention of subsection 716(5) of the Act (as is the case here), it gains the advantage of certain features pertinent to this cause of action. One feature is that a Compliance Notice may be issued on the basis that an inspector ‘reasonably believes that a person has contravened’ a provision of, among other things, the NES, award or enterprise agreement. An inspector does not need to be satisfied that a contravention of the NES, an award, or an enterprise agreement has occurred. Another feature is that proof of the underlying breaches of an award, enterprise agreement or the NES is not required to succeed in an application under section 716(5) of the Act. Alternatively to the above, the Applicant can commence proceedings alleging breach of an award, an enterprise agreement or the NES. In such cases, it is incumbent on the Applicant to commence proceedings under section 44, 45 or section 50 of the Act, and prove the actual breach of the relevant instrument or the NES.
The Act expressly sets out a pathway for pursuing contraventions of an award, an enterprise agreement or the NES. It would undermine the integrity of these provisions of the Act if, effectively, compensation could be obtained for contraventions of awards, enterprise agreements or the NES in a proceeding commenced under section 716(5) of the Act, without having to prove the contraventions. The legislature could not have intended such a result.
In light of the above findings, I will not make proposed order three.
I asked the Applicant during the proceeding to submit an alternative set of proposed orders. The Applicant proposed the following orders in substitution for proposed order three:
3.Pursuant to section 545(1) of the FW Act, the First Respondent take the steps required by the Compliance Notice by:
(a)calculating and paying to Binh Tran the outstanding amounts as set out in the Compliance Notice; and
(b)preparing and producing to the Applicant a schedule outlining the outstanding amounts to Ms Tran and providing proof that these amounts have been paid.
4.Pursuant to section 545(1) of the FW Act, the First Respondent take the steps that were required by the Compliance within 28 days from the date of this order, by:
(a)calculating and paying into Ms Tran’s nominated superannuation fund any additional superannuation contributions required to be paid on the outstanding entitlements referred to in paragraph 3(a) above (as required by clause 21.2 of the Award); and
(b)preparing and producing to the Applicant, a schedule outlining its calculations of the outstanding entitlements and additional superannuation contributions required to be paid to Ms Tran and providing proof that the outstanding entitlements and additional superannuation contributions were rectified as set out in paragraphs 3(a) and 4(a) above.
5.Pursuant to section 547(2) of the FW Act, the First Respondent pay to Ms Tran interest on the amounts owed to her pursuant to paragraph 3(a) above within 28 days of the date of this order.
I have reservations about making the alternative set of proposed orders in light of the various matters I have considered above. The Compliance Notice does not specify any ‘outstanding amounts’. What it does is require the Respondents to take a series of steps to, among other things, identify amounts that may be owed under the relevant instrument, identify amounts paid to the employee during the relevant period, and then make a payment to the employee of any difference.
DISPOSITION
The Applicant submitted the alternative orders to my Chambers after the hearing without having the opportunity to make submissions on them. In light of that, I will make the declarations sought by the Applicant and I will make orders programming the matter for hearing on penalty. I will permit the Applicant to address me on why I should make the alternative set of orders it has sent through to my Chambers when the matter returns before me for a hearing on penalty.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Blake. Associate:
Dated: 20 July 2023
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