Fair Work Ombudsman v Chilis (Shellharbour) Pty Ltd

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FEDERAL MAGISTRATES COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v CHILIS (SHELLHARBOUR) PTY LTD & ORS [2010] FMCA 718
INDUSTRIAL LAW – Contravention of civil remedy provisions of the Workplace Relations Act and Regulations – failure to pay annual leave entitlements on termination of employment – failure to pay employee for time worked – respondent companies placed in voluntary administration – admission of contravention by Group General Manager – liability to penalties established.

Workplace Relations Act 1996, ss.4(1), 6(1), 167(1A), 717, 718, 719, 722, 728

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, ss.11(1), 13(1)

Australian Competition & Consumer Commission v Giraffe World Australia Pty Ltd [1999] FCA 1161
Australian Competition & Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Cotis (Office of Workplace Services) v Pow Juice Pty Ltd [2007] FMCA 140
CPSU v Telstra Corporation Limited (2001) 108 IR 228
Flattery v Italian Eatery t/as Zeffirelli's Pizza Restaurant [2007] FMCA 9
Forge v ASIC (2004) 52 ACSR 1
Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216
Kelly v Fitzpatrick (2007) 166 IR 14
Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurants and Bars [2007] FMCA 7
McIver v Healy [2008] FCA 425
Ponzio v B&P Caelli Constructions Pty Ltd (2007) 158 FCR 543
Rural Press Limited v Australian Competition & Consumer Commission [2002] FCAFC 213
Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550
Yorke v Lucas [1985] HCA 65
Applicant: FAIR WORK OMBUDSMAN
First Respondent: CHILIS (SHELLHARBOUR) PTY LTD ACN 109 095 865
Second Respondent: CHILIS (PENRITH) PTY LTD
ACN 106 193 846
Third Respondent GAVIN REYNOLDS
File Number: SYG 1549 of 2009
Judgment of: Lloyd-Jones FM
Hearing dates: 22 February 2010 and 3 June 2010
Delivered at: Sydney
Delivered on: 17 September 2010

REPRESENTATION

Counsel for the Applicant: Mr O’Neil at the first liability hearing
Mr Michael Selinger (solicitor) at final hearing
Solicitors for the Applicant: Holding Redlich Lawyers
Counsel for the Respondents: Mr C. Bolger

DECLARATIONS

  1. The First Respondent has:

    (a)Breached cl.17 of the Australian Workplace Agreement (AWA) between the First Respondent and Ms Tenika Setter (Setter AWA) by failing to pay Ms Setter for time worked; and

    (b)Breached cl.5(c) of the Setter AWA by failing to advise Ms Setter of her core hours of employment and provide her with a minimum of 20 hours of paid work per fortnight.

  2. The Second Respondent has breached cl. 5(c) of the AWA between the Second Respondent and Ms Natasha Foster (Foster AWA) by failing to advise Ms Foster of her core hours of employment and provide her with a minimum of 20 hours of paid work per fortnight.

  3. The Third Respondent has, by operation of s.728 of the Workplace Relations Act 1996, breached clause 28(g) of:

    (a)     The AWA between Restaurant Services Group Pty Ltd (RSG) and Bianca Sorrenti (Sorrenti AWA) by failing to pay Ms Sorrenti accrued and untaken annual leave on termination…

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Details
Case
[2010] FMCA 718
Decision Date

CaseChat Overview and Summary

The Fair Work Ombudsman initiated proceedings against Chilis (Shellharbour) Pty Ltd and others for alleged breaches of workplace entitlements under the Workplace Relations Act 1996. The case was primarily against the company and Mr. Reynolds, its Group General Manager, who admitted to being involved in the contravention of awards. The dispute centred on the non-payment of wages and entitlements to employees, specifically Ms. Tenika Setter and Ms. Natasha Foster. The court was tasked with determining the liability of the respondents and the appropriate penalties and compensations to be imposed.

The central legal issues before the court were the admissibility of the evidence provided by the Fair Work Ombudsman and the extent of the liability of the respondents for the non-payment of entitlements. Mr. Reynolds' admissions under s.728 of the Workplace Relations Act played a significant role in the proceedings, effectively dispensing with the need for a hearing on liability and the calling of evidence from witnesses. The court also had to consider the factors indicative of contrition, corrective action, and cooperation with authorities, as discussed in Australian Ophthalmic Supplies. The liability for payment of entitlements was attributed to the employer, RSG, and not to Mr. Reynolds as an employee. The court noted Mr. Reynolds' efforts to address the payment issues, including referring employees to appropriate departments for resolution.

The court ruled that Chilis (Shellharbour) Pty Ltd and the other respondents were liable for the unpaid wages and penalties. Mr. Reynolds admitted his involvement in the contraventions, which was a significant factor in the decision. The court acknowledged his admissions as a form of contrition and noted his efforts to resolve the payment issues, though these were ultimately unsuccessful due to the company's financial difficulties. The court ordered Chilis (Shellharbour) Pty Ltd to pay the unpaid wages to Ms. Setter and Ms. Foster, along with interest, and imposed substantial penalties for the breaches of awards. Mr. Reynolds was also ordered to pay a penalty for his involvement in the contraventions.

The court made specific orders for the payment of wages, interest, and penalties within a specified timeframe. Chilis (Shellharbour) Pty Ltd and the other respondents were required to pay the unpaid wages and interest to the affected employees within 28 days. The penalties were to be paid to the Commonwealth of Australia within the same period. This decision underscores the importance of compliance with workplace entitlements and the consequences for non-compliance, including personal liability for those in managerial positions.

Orders

Orders of the court

1.

The First Respondent pay to Ms Tenika Setter pursuant to s.719(5) of the Workplace Relations Act 1996, the sum of $232.94 for unpaid wages.

2.

Pursuant to s.722 of the Workplace Relations Act 1996 that interest at a rate of 10% be paid by the First Respondent to Ms Setter.

3.

The First Respondent pay a penalty of $33,000.00 pursuant to s.719(1) of the Workplace Relations Act 1996 with respect to the First Respondent’s breaches of the Setter AWA.

4.

The Second Respondent pay to Ms Natasha Foster pursuant to s.719(5) of the Workplace Relations Act 1996, the sum of $1,682.64 for unpaid wages.

5.

Pursuant to s.722 of the Workplace Relations Act 1996 that interest at a rate of 10% be paid by the Second Respondent to Ms Foster.

6.

The Second Respondent pay a penalty of $33,000.00 pursuant to s.719(1) of the Workplace Relations Act 1996 with respect to the Second Respondent’s breaches of the Foster AWA.

7.

The Third Respondent pay a penalty of $600.00 pursuant to s.719(1) of the Workplace Relations Act 1996, by way of s.728 of the Act, for his involvement in the breach of cl.28(g) of the Sorrenti AWA and the Brogan AWA.

8.

Orders 1, 2, 4 and 5 be paid within 28 days.

9.

The penalties payable under orders 3, 6 and 7 are to be paid to the Commonwealth of Australia within 28 days.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

It is noted that Mr Reynolds admitted the breaches resulting in the requirement for a hearing on liability being dispensed with and the necessity for the calling of evidence from witnesses at a hearing was not required. Further, Mr Reynolds has accepted and agreed to a statement of facts which has avoided the need for a calling of witnesses for cross-examination. In Australian Ophthalmic Supplies (supra) per Gray J at [15] – [17] His Honour discusses matters that may be taken into account when looking at “contrition” exhibited by corporate respondents or employers including the payment of amounts owing to affected employees, admissions of the case against relevant respondents and taking measures to ensure future compliance. Clearly, the liability for the payment of entitlements rests with RSG as the employer and not with Mr Reynolds who is an employee. In respect of corrective action, Mr Reynolds referred Mr Brogan to Mr White for the approval of his annual leave and Ms Sorrenti to the pay-roll and Human Resources Manager for the payment of her entitlements. The activities of 4 February 2008 show that Mr Reynolds actively pursued the “owners” in respect of the payment of staff entitlements, such as superannuation. The ability to take further directive action was thwarted by RSG being placed into voluntary administration. h) Contrition, corrective action, cooperation with authorities Proceedings in this matter were filed on 29 June 2009. Mr Reynolds did not initially participate in the proceedings but became involved after the Applicant filed its evidence in September 2009. At the liability hearing of this matter on 22 February 2010, Mr Reynolds admitted to his involvement pursuant to s.728 of the WR Act in the contravention of cl.28(g) of the Sorrenti AWA and cl.28(g) of the Brogan AWA. Mr Reynolds, in his Statement filed on 19 April 2010, states that he was sorry that Ms Sorrenti and Mr Brogan were not paid their entitlements (at [42]). This is the only evidence of contrition before the Court. The Applicant has put significant time and resources into pursuing this matter, only to have Mr Reynolds admit to the contraventions “on the doorstep of the Court”. The admissions were made at the last possible opportunity before the liability hearing. Mr Reynolds accepts that there is a need to ensure that employees are paid their entitlements. This is a factor in consideration for general deterrence. However, such considerations must be tempered by the fact that Mr Reynolds was the employer and was not responsible for the decision of RSG not to pay the annual leave. Mr Reynolds has admitted to be knowingly concerned in the contravention of RSG in his position as Group General Manager of that company. The failures of RSG to pay these entitlements arise from the financial position of RSG and the decision by its directors. Mr Reynolds does not hide behind RSG’s financial failures but states that this is the reason provided by Messrs Noor and White as to why termination payments were not being approved.