Fair Work Ombudsman v Chevron Island Tavern Pty Ltd
[2021] FCCA 1964
•18 August 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Fair Work Ombudsman v Chevron Island Tavern Pty Ltd [2021] FCCA 1964
File number(s): BRG 1048 of 2019 Judgment of: JUDGE JARRETT Date of judgment: 18 August 2021 Catchwords: INDUSTRIAL LAW – Commonwealth - compliance and enforcement – civil remedies – contravention – pecuniary penalty orders – amount of penalty. Legislation: Crimes Act 1914 (Cth), s.4AA
Fair Work Act 2009 (Cth), ss.539(2), 546(2), 716, 716(2), 716(4A), 716(4B), 716(5)
Fair Work Regulations 2009 (Cth), reg.4.01(A)
Hospitality Award 2010
Cases cited: Australian Building and Construction Commissioner v CFMMEU [2020] FCA 549
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
CFMMEU v ABCC (2018) 264 FCR 155
Commonwealth of Australia v Director of the FWBII (2015) 258 CLR 482
Fair Work Ombudsman v Blu Hornsby Pty Ltd & Anor [2016] FCCA 1150
Fair Work Ombudsman v Soma Kitchen Pty Ltd & Anor (No 2) [2020] FCCA 2583
Number of paragraphs: 25 Date of last submission/s: 18 August 2021 Date of hearing: 18 August 2021 Place: Brisbane Solicitor for the Applicant: Office of the Fair Work Ombudsman The Respondent: No appearance ORDERS
BRG 1048 of 2019 BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: CHEVRON ISLAND TAVERN PTY LTD
Respondent
ORDER MADE BY:
JUDGE JARRETT
DATE OF ORDER:
18 AUGUST 2021
BY CONSENT THE COURT DECLARES THAT:
1.The respondent, Chevron Island Tavern Pty Ltd (ACN 606 609 572) contravened s.716(5) of the Fair Work Act 2009 (Cth) by failing to comply with a notice served upon it pursuant to s.716(2) of the Fair Work Act 2009 (Cth) on 29 July, 2019.
BY CONSENT THE COURT ORDERS THAT:
2.Pursuant to s.545(1) of the Fair Work Act 2009 (Cth):
(a)the respondent complete the steps that were required by the notice referred to in declaration 1 hereof within 28 days of this order, by:
(i)paying the outstanding amount of $13,417.37 it was required to pay to the employees specified in the notice and producing evidence of payment to each of the employees to the applicant;
(ii)calculating all superannuation contributions required by clause 28.2 of the Hospitality Award 2010 on the outstanding entitlements referred in order 2(a) above and providing details of those calculations to the applicant;
(iii)distributing the amount ordered to be paid pursuant to order 2(a) above to the employees in accordance with the amounts set out below:
A.Amber Scadding: $3,827.06
B.Christopher Beck: $2,327.67
C.Marco Camilletti: $1,215.39
D.Amy Cuddihy: $1,052.17
E.Jessica Flynn: $4,785.30
F.Eimantas Nekrosius: $209.78
(b)in the event the respondent is unable to locate and pay any of the employees the amounts specified in order 2(a)(iii), the respondent shall pay the amounts due such employee into the Consolidated Revenue Fund of the Commonwealth, within a further seven days of the date for payment as required by order 2(a) hereof;
(c)within 28 days of receiving the amounts or any part of those amounts paid in accordance with 2(b), the applicant shall seek to locate and pay the amount received to the relevant employee;
(d)in the event that any of the employees cannot be located by the applicant within 180 days of this order, that any amounts paid in accordance with order 2(b) shall be retained by the Commonwealth of Australia; and
(e)within 60 days of this order, the respondent shall pay the superannuation entitlements calculated in accordance with order 2(a)(ii) above as required by clause 28.2 of the Hospitality Award 2010 and provide evidence of such payments to the applicant.
THE COURT FURTHER ORDERS THAT:
3.Pursuant to s.546(1) of the Fair Work Act 2009 (Cth), within 28 days of this order the respondent pay a pecuniary penalty of $18,000 to the Commonwealth with respect to the contravention the subject of declaration 1 hereof.
REASONS FOR JUDGMENT
JUDGE JARRETT:
Chevron Island Tavern Pty Ltd admits to contravening s.716(5) of the Fair Work Act 2009 (Cth) because it did not comply with a notice issued to it on 29 July, 2019 pursuant to s.716(2) of the Act. The notice required the respondent to pay entitlements to six employees in a total amount of $13,417.37 that were not paid to those employees when they ought to have been. Despite the notice, the respondent has not paid to those employees their underpaid entitlements.
The parties agree to the making of orders 1 and 2 set out at the commencement of these reasons. Although the respondent also agrees to the imposition of a pecuniary penalty for the contravention, there is no agreement as to the amount of that penalty. The applicant has appeared before me this morning represented by a legal representative. The respondent has not appeared, although a director has appeared with a view to seeking leave to appear for the company. I refused that leave because the application was made late and has not been filed and is not supported by any material. Notwithstanding that I did hear submissions from the representative as to what might be said on the company’s behalf if leave had been granted.
BACKGROUND
The facts of the matter are set out in a statement of agreed facts filed on 10 May, 2021.
At relevant times the respondent operated a licensed venue trading as Chevron Tavern at Tweed Heads, New South Wales. From December, 2018 the applicant commenced an investigation into the respondent’s compliance with the Act. The investigation was prompted by a request for assistance made to the applicant from one of the respondent’s employees.
Based on information obtained during the investigation, including information that was provided by the respondent, a fair work inspector formed a belief that the respondent had contravened the provisions of the Hospitality Award 2010 by not meeting the entitlements of six employees to casual loading, overtime, and weekend, public holiday, evening and night penalties. Based upon that belief and pursuant to s.716(2) of the Act, on 29 July, 2019 the fair work inspector gave the respondent a notice requiring it to do certain things. The notice set out the fair work inspector’s belief that the respondent had contravened terms of the Award in relation to the six identified employees. Specifically, the notice required that by 30 August, 2019 the respondent:
(a)remedy the direct effects of the contraventions by taking specified action to make a payment to each of the six identified employees in respect of each employees underpaid entitlements;
(b)calculate and pay any additional superannuation contributions required to be paid to each of the employees;
(c)prepare a schedule of payments outlining the amounts, including superannuation, paid to each of the employees; and
(d)produce reasonable evidence to the applicant of the respondent’s compliance with the notice and evidence that the amounts owing to the relevant employees had been paid.
The total amount required to be paid by the notice was $13,417.37.
However, the respondent did not take the action specified in the notice or produce evidence to the applicant of calculations or payments by 30 August, 2019 or at all.
The failure to comply with the requirements of the notice was a contravention of s.716(5) of the Act.
CONSIDERATION OF PENALTY
As I have remarked in other reasons concerning the imposition of pecuniary penalties for contraventions of the Fair Work Act, deterrence, both specific and general, is the “principal and indeed only” objective of pecuniary penalties under the Fair Work Act: Commonwealth of Australia v Director of the FWBII (2015) 258 CLR 482 at 506 [55]; CFMMEU v ABCC (2018) 264 FCR 155 at 167 [19]; Australian Building and Construction Commissioner v CFMMEU [2020] FCA 549 at [26]. Retribution, denunciation and rehabilitation have no part to play.
The penalty in this case must be set at a level such that it would be likely to act as a deterrent, preventing similar contraventions by like-minded persons. It must have the necessary “sting or burden” to secure “the specific and general deterrent effects that are the raison d’être of its imposition”: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at [116].
Subsections 539(2) and 546(2) of the Act, along with reg.4.01(A) of the Fair Work Regulations 2009 (Cth), prescribe maximum penalties that may be imposed for contraventions of civil remedy provisions, by reference to penalty units within the meaning of s.4AA of the Crimes Act 1914 (Cth).
In this matter, there is a single contravention of s.716(5) of the Act by the respondent. The maximum penalty that the Court may impose on the respondent in respect of the contravention is $31,500.
The power of a fair work inspector to issue a compliance notice was introduced into the Fair Work Act to provide a mechanism for dealing with non-compliance with minimum entitlements in the Act as an alternative to commencing litigation for each underlying contravention of an obligation. If a person complies with a compliance notice, no civil remedy proceedings can be brought against the person for the contravention or contraventions to which it relates: s.716(4A) of the Act. If the person complies with the requirements of a compliance notice, they are not taken to have admitted or been found to have contravened the civil remedy provision of an underlying contravention alleged in the notice: s.716(4B) of the Act.
Compliance notices provide a mechanism for the efficient and cost-effective rectification of identified contraventions of the Act, including underpayments to employees. They are an important part of the armoury of fair work inspectors in fulfilling their functions: Fair Work Ombudsman v Blu Hornsby Pty Ltd & Anor [2016] FCCA 1150 at [29].
In the present case, the notice concerned underpayments owed to six employees on the basis of a fair work inspector’s belief that the respondent had contravened various terms of the Hospitality Award. The applicant calculated the underpayment amounts owing to each of the employees in respect of the contraventions and those amounts were identified in the notice. The notice gave the respondent the opportunity to rectify the underpayments, but it elected not to do so.
Moreover, the evidence shows that prior to commencing these proceedings, the applicant attempted to engage with the respondent on numerous occasions and provided the respondent with ample opportunity to meet the requirements of the notice or otherwise engage with the applicant in respect of the issues identified in the notice. The notice was clear and its terms and the consequences of failing to meet its terms or to otherwise engage with the applicant were clearly spelt out. Notwithstanding that and subsequent follow-ups by the applicant, the respondent has chosen not to comply with terms of the notice.
I accept the applicant’s submission that the respondent’s failure to comply with the notice is a deliberate disregard for its obligations as an employer and as a recipient of such a notice under the Fair Work Act. It is a direct and express challenge to the applicant’s authority as a regulator of Commonwealth workplace laws.
The respondent’s disregard of the notice and of the applicant’s authority undermines the purpose of the enforcement framework and the safety net of entitlements established by the Fair Work Act. The importance of a fair work inspector’s power to issue compliance notices and compliance with such notices should not be underestimated or understated. If observed by a recipient, the notice procedure is an effective way to bring non-compliant behaviour to the attention of an employer, provides an opportunity for that behaviour to be remedied and avoids the need for litigation or the imposition of any penalties. A failure to observe or engage in that process should bring about penalties for non-compliance that are set at a level which demonstrates that there are serious consequences for failing to comply with a compliance notice. The need to deter such behaviour in the future, both generally and more specifically by this respondent, is obvious.
Moreover, the failure to comply with a statutory notice gives rise to a public loss and results in the frustration of the statutory purpose behind s.716 of the Act. As was explained in Fair Work Ombudsman v Soma Kitchen Pty Ltd & Anor (No 2) [2020] FCCA 2583 at [39]:
… the purpose of s.716 is to provide an alternative to litigation. That is, it is designed to prevent litigation. Litigation is timely and expensive. It is also not controversial that Court resources are limited and this Court actively promotes alternative resolution methods in order to reduce unnecessary expenditure. Here, that purpose has been systematically undermined.
Despite directions having been made some time ago now for the preparation of this penalty hearing, the respondent has not taken the opportunity to put any evidence before the court about its financial position. The person who appears or has attempted to appear for the company this morning says that he has brought documents to court but bringing documents to court is not compliance with the Court’s directions. There is no explanation as to the opportunity provided to the respondent to put evidence on about its financial position have not been taken up before now.
There is similarly no evidence to suggest that the respondent has taken any steps to rectify the non- compliance with the notice or to meet the entitlements the subject of the notice. The respondent has not put any evidence before the Court regarding contrition or corrective action, or which is otherwise relevant to the assessment of penalty.
The respondent has cooperated in these proceedings to some extent by making admissions and saving time and resources associated with a contested liability hearing. The cooperation is, however, inconsistent with the respondent’s lack of response to the compliance notice and suggests that the admissions that have now been made are nothing more than an acknowledgment of the inevitable outcome of these proceedings by the respondent.
Further, the respondent’s engagement in these proceedings, in my assessment, has been grudging. The evidence shows that after the commencement of these proceedings, the applicant corresponded with the respondent on four separate occasions, invited the respondent to engage in the proceedings and offered to resolve the matter by way of a statement of agreed facts. Such an agreement was only made earlier this year, some 17 months after the proceedings were commenced. I accept the applicant’s submission that had the respondent taken these opportunities to resolve the matter, it would have saved significant time and resources, thereby reducing unnecessary expenditure on behalf of the applicant and the public at large through this Court. The respondent elected not to take these opportunities.
PENALTY
Taking in to account those matters, I consider that a penalty of $18,000 is a reasonable response to the offending conduct in this case. It marks the disapproval of the Court of the respondent’s behaviour, its failure to respond in a timely way, or at all, to the compliance notice and in my view sends a message to employers like the respondent that such behaviour will not be tolerated.
There will be orders accordingly.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jarrett delivered on 18 August, 2021. Associate:
Dated: 24 August 2021
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