Fair Work Ombudsman v Chatime Australia Pty Ltd (No 3)
[2023] FedCFamC2G 1075
•23 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Chatime Australia Pty Ltd (No 3) [2023] FedCFamC2G 1075
File number(s): SYG 3321 of 2019 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 23 November 2023 Catchwords: INDUSTRIAL LAW – whether additional declarations should be made on the basis of earlier reasons in which it was concluded that the second respondent was a person involved in the first respondent’s contraventions of an award – no additional declarations should be made. Cases cited: Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2) [2023] FedCFamC2G 712 Division: Fair Work Number of paragraphs: 13 Date of hearing: 21 November 2023 Place: Sydney Counsel for the Applicant: Mr J Darams and Mr M Harker Solicitor for the Applicant: Office of the Fair Work Ombudsman Counsel for the Respondents: Mr D Mahendra Solicitor for the Respondents: Cowell Clarke Commercial Lawyers ORDERS
SYG 3321 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: CHATIME AUSTRALIA PTY LTD (ACN 136 677 453)
First Respondent
CHEN ZHAO
Second Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
23 NOVEMBER 2023
THE COURT ORDERS THAT:
1.The applicant’s application for the making of additional declarations is dismissed.
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
INTRODUCTION
On 11 August 2023 I published reasons for judgment (earlier reasons) in which I concluded that the second respondent, Mr Zhao, had knowledge of the essential elements of some of the first respondent’s (Chatime’s) contraventions of the Fast Food Industry Award 2010 (Award).[1] I listed the matter for directions on 31 August 2023 to make orders giving effect to the earlier reasons, and to make directions in relation to penalty.
[1] Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2) [2023] FedCFamC2G 712
At the directions hearing on 31 August 2023 counsel for the applicant (FWO) indicated that the FWO wished to submit that, given the reasoning I applied in the earlier reasons (earlier reasoning), I should also find Mr Zhao was a person involved in contraventions in addition to those in which I had concluded Mr Zhao was involved (additional contraventions). The additional contraventions are those identified in paragraphs 1(f), (g), and (h) of the declaration I made on 17 March 2023.
At the conclusion of the directions hearing I made the following declarations, which gave effect to the earlier reasons:
1.The Second Respondent was involved, within the meaning of section 550(1) of the Fair Work Act 2009 (FW Act), in the First Respondent’s contravention of section 45 of FW Act when the First Respondent failed to pay casual loadings as required by clause 13.2 of the Fast Food Award to the 12 Casual Employees listed in Schedule 4 of the Court’s orders made on 17 March 2023 (17 March Orders).
2.The Second Respondent was involved, within the meaning of section 550(1) of the FW Act, in the of the First Respondent’s contravention of section 45 of FW Act when the First Respondent failed to pay the Saturday loading required by clause 25.5(b) of the Fast Food Award to the 130 Employees listed in Schedule 5 of the 17 March Orders.
3.The Second Respondent was involved, within the meaning of section 550(1) of the FW Act, in the of the First Respondent’s contravention of section 45 of FW Act when the First Respondent failed to pay the Sunday loading required by clause 25.5(c) of the Fast Food Award to the 122 Employees listed in Schedule 6 of the 17 March Orders.
I also ordered that the parties file and serve written submissions in relation to whether, given the earlier reasoning, additional declarations should be made; and I listed the matter for hearing. The parties filed written submissions and, on 21 November 2023, I heard oral submissions.
The parties accept I have power to make additional declarations if, given the earlier reasoning, I ought to find that Mr Zhao was a person involved in the additional contraventions. The parties disagree about whether, given the earlier reasoning, I should find that Mr Zhao was a person involved in the additional contraventions.
Before I consider the parties’ competing contentions, it will be necessary to set out the essential elements of the earlier reasoning.
EARLIER REASONING
The earlier reasoning comprises the following elements:
(a)For Mr Zhao to be liable as a person involved in the contraventions identified in the declaration made on 17 March 2023, it is necessary to show, first, that he knew of the conduct that constituted the contraventions (namely, Chatime implementing Cost Model B); and, second, he knew of the existence of each term of the Award Chatime contravened.[2]
[2] Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2) [2023] FedCFamC2G 712, [37]
(b)At the meeting of 12 September 2013 Mr Chen presented to Mr Zhao, Ms Qian, Mr Wang, and Ms Ferrao two costing models – Costing Model A and Costing Model B – that referred to “award” rates Chatime may pay.[3]
[3] Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2) [2023] FedCFamC2G 712, [8(a)]
(c)Also at the meeting of 12 September 2013:[4]
[4] Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2) [2023] FedCFamC2G 712, [40]
(i)Mr Zhao read the slides and, therefore, was aware of the use of “award” where the word appeared in the slides; and he was also aware of other words which appear to relate to an award;
(ii)Mr Chen did not refer to the Award by name;
(iii)Mr Zhao did not understand or fully appreciate exactly what an award is, or the ramifications for non-compliance with an award; but this does not mean he had no understanding of what an award is, or that he had no understanding of the ramifications for non-compliance with an award;
(iv)Mr Zhao did not spend a lot of time on the slides Mr Chen presented; and
(v)Mr Zhao believed that what Mr Chen had presented was correct; and Mr Zhao did not believe that one of the alternatives Mr Chen presented, namely, Costing Model B, was non-compliant with legal requirements.
(d)Costing Model A described four classes of amounts Chatime would be required to pay if it were to adopt Costing Model A, these being the “minimum award rate of $17.98”, the “uniform allowance” of $1.25 per shift, the “casual rate” of 23%, and the “weekend penalty (Saturday & Sunday)”; and the description in Costing Model A of each class of amounts unmistakably referred to the respective term of the Award that required these amounts to be paid.[5] Costing Model B, on the other hand, omitted two of the four classes of amounts, these being the “casual rate” of 23%, and the “weekend penalty (Saturday & Sunday)”[6].
(e)Mr Zhao recalled that, at the meeting of 12 September 2013, he favoured Costing Model B over Costing Model A. This implied that Mr Zhao acquired sufficient knowledge of the contents of each of Costing Model A and Costing Model B to enable him to understand the differences between the costing models, to assess their relative merits, and ultimately decide, or join in the decision, that Chatime proceed with Costing Model B.[7]
(f)Given (a)-(e), Mr Zhao had knowledge of the terms of the Award that required the payment of the four classes of amounts referred to in Costing Model A, two of which, namely, the “casual rate” of 23%, and the “weekend penalty (Saturday & Sunday)”, were not included in Costing Model B.[8]
(g)By deciding, or joining in the decision, that Chatime implement Costing Model B, rather than Costing Model A, Mr Zhao knew that he had decided, or that he had joined in the decision, to commit Chatime to paying employees the minimum award rates and a uniform allowance, which were amounts Chatime had not previously paid; but he also decided, or joined in the decision, not to commit Chatime to pay employees the “casual rate”, or the “weekend penalty (Saturday & Sunday)” rates Costing Model A identifies payable under the award. That decision necessarily constitutes knowledge on the part of Mr Zhao that Chatime had committed not to comply with those provisions of the Award that obliged Chatime to pay its employees casual rates and weekend penalty rates.[9]
[5] Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2) [2023] FedCFamC2G 712, [43], [44]
[6] Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2) [2023] FedCFamC2G 712, [46], [47]
[7] Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2) [2023] FedCFamC2G 712, [10], [11]
[8] Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2) [2023] FedCFamC2G 712, [45], [48]
[9] Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2) [2023] FedCFamC2G 712, [48]
PARTIES’ SUBMISSIONS
The starting point of the FWO’s submissions is the fact that Costing Model A did not include three classes of amounts that Chatime was required to pay under the Award which were included in one of the other slides Mr Chen presented at the meeting of 12 September 2013, namely, the slide headed “Factsheet: award rate” (Slide).[10] The three amounts were the public holiday rate, the 9:00 pm – midnight loading rate, and the after midnight loading rate (Additional Rates). The FWO submits that the Slide’s descriptions of the Additional Rates unmistakably referred to the terms of the Award that required that these amounts be paid; and that, given my finding that Mr Zhao had read all the slides Mr Chen presented, Mr Zhao became aware of the Additional Rates, and the terms of the Award that required them to be paid. The FWO further relies on the admissions Mr Zhao made in his defence that he knew at the time of the meeting that Chatime’s employees were required to work from 9pm to midnight on weekdays, after midnight on weekdays, and on public holidays.
[10] CB1624
Counsel for Mr Zhao, on the other hand, submits that, although there is no dispute that Costing Model A did not include descriptions of the Additional Rates, it is not apparent from a comparison of the Slide and Costing Model A that Costing Model A did not include the Additional Rates. Counsel for Mr Zhao further submitted that in any event it was not put to Mr Zhao that he was aware of the Additional Rates, or that he knew the Additional Rates were not included in Costing Model A.
DETERMINATION
The FWO’s submissions overlook an essential element of the earlier reasoning; and that is my finding that Mr Zhao’s decision to favour Costing Model B over Costing Model A implied that Mr Zhao acquired sufficient knowledge of the contents of each of Costing Model A and Costing Model B to enable him to understand the differences between the costing models, assess their relative merits, and ultimately decide, or join in the decision, that Chatime proceed with Costing Model B. It is Mr Zhao’s having considered whether to prefer, and deciding to prefer, Costing Model B over Costing Model A, that formed the basis of my concluding that Mr Zhao acquired sufficient knowledge of the contents of each of Costing Model A and Costing Model B and, therefore, knowledge of the absence from Costing Model B of two classes of amount that were included in Costing Model A.
There is no equivalent set of findings in relation to the Slide. That is, there is no finding on the basis of which I could infer that Mr Zhao considered the contents of the Slide when determining whether Chatime should implement Costing Plan A or Costing Plan B. It is therefore not open, given the earlier reasoning, to find that Mr Zhao knew of the Additional Rates and, therefore, that by deciding, or joining in the decision, that Chatime implement Costing Model B, rather than Costing Model A, Mr Zhao knew that he would be committing Chatime to a course of action that would involve it not paying the Additional Rates.
The absence of any equivalent set of findings in relation to the Slide is not an oversight. The evidence I set out in the earlier reasons about what occurred at the meeting of 12 September 2013 is largely directed to Mr Chen presenting two costing models – Costing Model A and Costing Model B – for consideration by Mr Zhao and others, and to Mr Zhao joining in the decision that Chatime adopt Costing Model B, rather than Costing Model A.[11] The evidence is not capable of supporting a finding that, in determining which of Costing Model A or Costing Model B Mr Zhao should commit Chatime to adopt, Mr Zhao considered the information contained in the Slide.
[11] Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2) [2023] FedCFamC2G 712, [7(c)], [8], [9], [10], [11], [14]
DISPOSITION
I will order that the application for the making of additional declarations be dismissed.
I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 23 November 2023
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