Fair Work Ombudsman v China Bar Buffet (Epping) Pty Ltd
[2021] FCCA 1430
•25 June 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v CHINA BAR BUFFET (EPPING) PTY LTD & ORS | [2021] FCCA 1430 |
| Catchwords: INDUSTRIAL LAW – Contraventions of the Restaurant Industry Award 2010, Fair Work Act 2009 (Cth), Fair Work Regulations 2009 (Cth) – parties by consent seek declarations of contravention and imposition of pecuniary penalties within ranges agreed to by the parties – admitted contraventions of Fair Work Act 2009 (Cth) – failure of the first respondent to pay minimum rates of pay, overtime rates, Saturday, Sunday and public holiday rates, annual leave loading on termination, split shift allowances and superannuation contributions – failure to keep employee records – failure to give pay slips – making and keeping false or misleading records – whether penalties reflect need for general deterrence – the importance of specific deterrence – totality – declarations made by the court – penalty orders made. |
| Legislation: Fair Work Act 2009 (Cth), ss.45, 90(2), 535(1), 535(4), 536(2), 536(3), 546(1), 546(3), 550(1), 550(2), 557(1), 712, 718A(1) Fair Work Regulations (2009) (Cth), regs.3.44(1), 3.44(6) Restaurant Industry Award 2010, cl.20.1, 24.2, 30.2, 33.1, 34.1, 35.2(b) |
| Cases cited: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 Commonwealth of Australia v Director, Fair Work Building Industry Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 Fair Work Ombudsman v NSH North Pty Ltd (t/as New Shanghai Charlestown) [2017] FCA 1301 Fair Work Ombudsman v Offshore Marine Services Pty Ltd [2012] FCA 498 Inspectorate & Ors (2015) 258 CLR 482 Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | CHINA BAR BUFFET (EPPING) PTY LTD |
| Second Respondent: | SIAK KONG CHI |
| Third Respondent: | YING LEE |
| File Number: | MLG 775 of 2019 |
| Judgment of: | Judge Mercuri |
| Hearing date: | Considered on the papers |
| Date of Last Submission: | 9 September 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 25 June 2021 |
REPRESENTATION
| Solicitors for the applicant: | Fair Work Ombudsman |
| Solicitors for the respondents: | Lim Whalen & Co |
THE COURT DECLARES BY CONSENT THAT:
The First Respondent contravened the following civil remedy provisions:
(a)section 45 of the Fair Work Act 2009 (Cth) (‘FW Act’) by failing to pay its employee, Mr Yongli Li (‘Employee’) the minimum rates of pay for all ordinary hours worked as required by clause 20.1 of the Restaurant Industry Award 2010 (‘the Award’);
(b)section 45 of the FW Act by failing to pay the Employee for all overtime hours worked as required by clause 33.1 of the Award;
(c)section 45 of the FW Act by failing to pay the Employee Saturday penalty rates for all relevant hours worked as required by clause 34.1 of the Award;
(d)section 45 of the FW Act by failing to pay the Employee Sunday penalty rates for all relevant hours worked as required by clause 34.1 of the Award;
(e)section 45 of the FW Act by failing to pay the Employee public holiday penalty rates for all relevant hours worked as required by clause 34.1 of the Award;
(f)section 44 of the FW Act by failing to pay the Employee annual leave on termination of his employment as required by section 90(2) of the FW Act;
(g)section 45 of the FW Act by failing to pay the Employee annual leave loading on termination as required by clause 35.2(b) of the Award;
(h)section 45 of the FW Act by failing to pay the Employee split shift allowances as required by clause 24.2 of the Award;
(i)section 45 of the FW Act by failing to make superannuation contributions for the Employee’s benefit as required by clause 30.2 of the Award
(j)section 535(1) of the FW Act by failing to make and keep records for a period of 7 years in respect of the Employee’s employment status, leave entitlements and the termination of his employment;
(k)section 535(1) of the FW Act by failing to keep for a period of 7 years records of overtime hours worked by the Employee;
(l)section 536(2) of the FW Act by failing to provide the Employee payslips that included information prescribed by the FW Regulations;
(m)regulation 3.44(1) of the Fair Work Regulations 2009 (Cth) (‘FW Regulations’) by keeping records in respect of the Employee’s commencement date that it knew were false or misleading;
(n)regulation 3.44(1) of the FW Regulations by keeping records in respect of the Employee’s rate of remuneration that it knew were false or misleading;
(o)regulation 3.44(1) of the FW Regulations by keeping records in respect of gross amounts paid to the Employee that it knew were false or misleading;
(p)regulation 3.44(1) of the FW Regulations by keeping records in respect of deductions made from gross amounts paid to the Employee that it knew were false or misleading;
(q)regulation 3.44(1) of the FW Regulations by keeping records in respect of overtime hours worked by the Employ that it knew were false or misleading;
(r)regulation 3.44(6) of the FW Regulations by making use of an entry in an employee record it was required to keep while knowing the entry was false or misleading;
(s)section 535(4) of the FW Act by keeping records for the purposes of the section in respect of overtime hours worked that it knew were false or misleading;
(t)section 535(4) of the FW Act by keeping records for the purposes of the section in respect of rate of remuneration paid that it knew were false or misleading;
(u)section 535(4) of the FW Act by keeping records for the purposes of the section in respect of gross amounts paid that it knew were false or misleading;
(v)section 536(3) of the FW Act by giving payslips to its employees for the purposes of the section that it knew were false or misleading;
(w)section 718A(1)(a) of the FW Act by giving information and producing documents to the Applicant, exercising powers or performing functions under or in connection with a law of the commonwealth, in respect of hours of work that it knew, or was reckless as to whether, the information and/or documents were false or misleading;
(x)section 718A(1)(a) of the FW Act by producing documents to the Applicant, exercising powers or performing functions under or in connection with a law of the Commonwealth, in respect of ordinary rates of pay that it knew, or was reckless as to whether, the documents were false or misleading; and
(y)section 718A(1)(a) of the FW Act by producing documents to the Applicant, exercising powers or performing functions under or in connection with a law of the Commonwealth, in respect of penalty rates that it knew, or was reckless as to whether, the documents were false or misleading.
The Second Respondent was involved in, within the meaning of section 550(1) of the FW Act, the contraventions committed by the First Respondent as set out in paragraphs (1)(a) to (v) above.
The Third Respondent was involved in, within the meaning of section 550(1) of the FW Act, the contraventions committed by the First Respondent as set out at paragraphs (1)(r) to (y) above.
THE COURT ORDERS:
The First Respondent pay a total penalty of $249,000 pursuant to section 546(1) of the FW Act for its contraventions set out at paragraph 1 above.
The Second Respondent pay a total penalty of $41,250 pursuant to section 546(1) of the FW Act for his involvement in the contraventions set out at paragraphs 1(a) to (v) above.
The Third Respondent pay a total penalty of $19,500 pursuant to section 546(1) of the FW Act for her involvement in the contraventions set out at paragraphs 1(r) to (y) above.
The First Respondent, Second Respondent and Third Respondent, pursuant to section 546(3) of the FW Act, pay their respective penalty amounts to the Consolidated Revenue Fund of the Commonwealth within 90 days of the Court’s order.
The Applicant has liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 775 of 2019
| FAIR WORK OMBUDSMAN |
Applicant
And
| CHINA BAR BUFFET (EPPING) PTY LTD |
First Respondent
| SIAK KONG CHI |
Second Respondent
| YING LEE |
Third Respondent
REASONS FOR JUDGMENT
Introduction
By this application, the parties by consent seek various declarations of contravention, the imposition of pecuniary penalties within a range proposed by consent of the parties and various consequential orders.
The respondents seek that penalties at the bottom of that range be imposed.
The parties have filed an Agreed Statement of Facts (‘ASOF’) and a Further Agreed Statement of Facts (‘FASOF’).[1] I do not propose to set out the matters set out in the ASOF and the FASOF in detail but have had regard to the matters contained in each of those documents.
[1] Statement of agreed facts filed by the parties on 23 August 2019; see also further statement of agreed facts filed by the parties on 18 March 2020.
The contraventions arose from the employment by the first respondent of one of its employees, Mr Yongli Li (‘the Employee’). The second respondent was at all relevant times, the sole director of the first respondent. The third respondent was at all relevant times the book keeper of the first respondent responsible, among other things, for payroll duties.
As stated, the first respondent has conceded that it contravened various provisions of the Fair Work Act 2009 (‘FW Act’), the Fair Work Regulations (2009) (‘FW Regulations’) and the Restaurant Industry Award 2010 (Cth) (‘the Award’) in relation to the Employee’s employment. The second and third respondents have each conceded that they were involved in these contraventions for the purposes of section 550(1) of the FW Act and are therefore taken to have contravened the relevant provisions.
In summary, the contraventions to the extent that they relate to the first respondent include a:
a)failure to pay the Employee minimum rates of pay, overtime rates, penalties for Saturday, Sunday and public holidays, annual leave loading on termination, split shift allowances and superannuation contributions as required by the Award and in contravention of section 45 of the FW Act;
b)failure to pay the Employee his annual leave entitlements on termination as required by the FW Act and in contravention of section 45 of the FW Act;
c)failure to keep employee records in relation to the Employee as required by the FW Regulations and in contravention of section 535(1) of the FW Act;
d)failure to provide the Employee pay slips in contravention of section 536(2) of the FW Act;
e)making and keeping false and or misleading records in relation to the Employee in contravention of reg 3.44(1) of the FW Regulations;
f)making use of false or misleading records relating to the employee by providing these to the Fair Work Ombudsman in the course of its investigation in contravention of reg 3.44(6);
g)making and keeping false or misleading employee records in contravention of s 535(4) of the FW Act;
h)giving false or misleading pay slips to employees in contravention of s 536(3) of the FW Act;
i)giving false or misleading information and documents to the Fair Work Ombudsman during the course of its investigation in contravention of section 718A(1) of the FW Act.
The second respondent admits to being involved in, within the meaning of section 550(2) of the FW Act, the contraventions summarised at paragraphs 6(a) to (h) above. The third respondent admits to being involved in, within the meaning of section 550(2) of the FW Act, the contraventions summarised at paragraphs 6(f) to (i) above.
The parties have also, by consent, jointly recommended to the Court the relief set out at section G of the FASOF.
Background
It is common ground that:[2]
[2] See statement of agreed facts filed by the parties on 23 August 2019.
a)at all relevant times, the first respondent operated China Bar Signature and China Bar Express in Epping Victoria;
b)at all relevant times the second respondent was;
i)the sole director of China Bar;
ii)aware that the Award applied to the first respondent and its employees at each of these establishments;
iii)responsible for the overall management of these establishments;
iv)involved in the production of correspondence to the Fair Work Ombudsman producing documents in response to compulsory notices issued pursuant to section 712 of the FW Act;
c)from about January 2017, the third respondent took over the payroll functions for the first respondent and the third respondent sent correspondence to the Fair Work Ombudsman (or was copied into such correspondence sent by the second respondent to the Fair Work Ombudsman) in response to compulsory notices issued pursuant to section 712 of the FW Act; and
d)the Employee was employed by the first respondent at China Bar Signature in Epping between 23 February 2015 and 18 June 2017, during which time:
i)he was working under a Temporary Work (Skilled) (subclass 457) visa;
ii)he worked six days per week, 10 hours per day, other than for a two week period in November 2016 when he only worked weekends;
iii)he was paid a flat weekly rate of between $700 and $1,060;
e)as a result, the Employee was underpaid $69,321.90 during his employment;
f)the first respondent ultimately rectified the underpayment in full;
g)during the Fair Work Ombudsman’s investigation, the first respondent kept and used records regarding the Employee’s employment that it knew were false and misleading and produced such records to the Fair Work Ombudsman pursuant to Notices to Produce issued by the Fair Work Ombudsman.
Penalties
The parties have jointly submitted an agreed penalty range. As held in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate & Ors (2015) 258 CLR 482 (‘Commonwealth v FWBII’), it is open to the parties to a proceeding such as this to agree on facts and remedies and therefore propose agreed penalties to the court. Of course, it is ultimately up to the court to be satisfied that the submitted penalties and other orders are an appropriate response to the admitted contraventions. As stated by the plurality in Commonwealth v FWBII, where the court is satisfied that the submitted penalties are within the ‘permissible range’ the court should not depart from the penalties proposed by the parties merely because it may have disposed of the matter by reference to some other figure.[3]
[3] (2015) 258 CLR 482 At [48] per French CJ, Kiefel, Bell, Nettle and Gordon JJ.
In the present case, the parties have jointly submitted that aggregate penalties ought to be imposed within the following ranges:
a)in respect of the first respondent – within the range of $225,000 to $273,000;
b)in respect of the second respondent – within the range of $37,000 to $45,500; and
c)in respect of the third respondent – within the range of $19,500 to $23,000.
Whilst the respondents each consent to an aggregate penalty within those ranges, they submit that the penalty ought to be imposed at the lower end of the nominated ranges.
Determining an appropriate penalty
It is well settled that in determining an appropriate penalty:
a)the court needs to identify each separate contravention;
b)regard is to be had to section 557(1) of the FW Act which allows for the treatment of multiple contraventions of the same civil remedy provision which results from a single course of conduct by the same person as a single contravention;
c)where two or more contraventions have common elements, this can be taken into account in determining what penalty is appropriate;
d)the court must have regard to all of the circumstances of the case; and
e)having fixed an appropriate penalty for each contravention, the Court must consider the totality principle to ‘ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary.’[4]
[4] Fair Work Ombudsman v NSH North Pty Ltd (t/as New Shanghai Charlestown) [2017] FCA 1301at [36]; Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [23] (per Gray J), [71] (per Graham J) and [102] (per Buchanan J).
Applicant’s submissions
It is submitted for the applicant,[5] that the respondents are entitled to the benefit of section 557 of the FW Act in respect of repeated contraventions of each relevant provision. Similarly, although some of the contraventions occurred over two distinct employment periods, which could technically take those breaches outside of the operation of section 557(1), in the particular circumstances of this case, it is submitted for the applicant that the contraventions over the two employment periods ought to be treated as a single course of conduct for the purposes of section 557(1).
[5] Applicant’s written submissions filed 20 March 2020.
Similarly, it is submitted that multiple contraventions ought to be treated as arising out of a single course of conduct in circumstances where there are ‘common elements’.[6] In this case it is submitted that the contraventions relating to the failure to pay annual leave on termination and the failure to pay annual leave loading on termination, have common elements and therefore have significant overlap. The Fair Work Ombudsman therefore does not seek separate penalties in relation to each of these contraventions.
[6] Fair Work Ombudsman v Offshore Marine Services Pty Ltd [2012] FCA 498 at [7] and [23]-[26].
On this basis it is submitted that the maximum penalties which the court could apply is therefore:
a)$660,000 for the first respondent’s contraventions;
b)$119,400 for the second respondent’s contraventions; and
c)$42,000 for the third respondent’s contraventions.
In circumstances where the penalty unit value has increased over the relevant period from $170 to $210, it is appropriate for the court to have regard to the fact that a lower penalty applied for part of the period during which the contravention occurred.[7]
[7] Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 at [401].
In Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 (‘Kelly’), Tracey J adopted the ‘non-exhaustive range of considerations to which regard may be had in determining whether particular conduct calls for the imposition of a penalty, and if it does the amount of the penalty’ set out by Mowbray Federal Magistrate (as he then was) in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7. Relevantly, they were:
·the nature and extent of the conduct which led to the breaches;
·the circumstances in which that conduct took place;
·the nature and extent of any loss or damage sustained as a result of the breaches;
·whether there had been similar previous conduct by the respondent;
·whether the breaches were properly distinct or arose out of the one course of conduct;
·the size of the business enterprise involved;
·whether or not the breaches were deliberate;
·whether senior management was involved in the breaches;
·whether the party committing the breach had exhibited contrition;
·whether the party committing the breach had taken corrective action;
·whether the party committing the breach had cooperated with the enforcement authorities;
·the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
·the need for specific and general deterrence.[8]
[8] Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [14].
In this case:
a)as stated above, the underpayments amounted to $69,321.90 and arose in the context of the first respondent paying the Employee a flat weekly rate, rather than in accordance with the Award and the FW Act;
b)the underpayment accrued over a period of just over a year and a half and related to only one employee;
c)the underpayments have entirely been rectified by the first respondent although this does not diminish the loss suffered by the Employee who did not have the benefit of this sum as and when it became payable leading the Employee and his family to face economic challenges;
d)the Employee was employed in one of the lowest classifications under the Award and was a foreign national and as such was arguably vulnerable to unlawful practices;
e)in this context the record keeping contraventions are of particular concern, given that the first respondent not only failed to keep accurate records, but in fact made and kept records that were false and misleading;
f)indeed, these false and misleading records were then provided to the Fair Work Ombudsman – this in and of itself is a serious contravention;
g)there is no previous findings made against the respondents in relation to contraventions of workplace laws;
h)the first respondent is no longer conducting the business in which the Employee was employed and itself no longer has any direct employees;
i)the second respondent was the sole director of the first respondent, and the third respondent was the first respondent’s bookkeeper;
j)as to contrition and cooperation with the authorities, the second and third respondents have each expressed contrition and have cooperated with the applicant in this matter and the first respondent has fully rectified the underpayment. The applicant submits that a 20% discount on the maximum penalty ought be applied having regard to this factor;
k)there is no evidence before the court as to the respondents’ financial position, particularly in relation to the first and third respondents. In any event, this has limited weight in the circumstances as financial means alone does not excuse a person who contravenes a penalty provision;
l)it is submitted for the applicant that it is open to the court to conclude on the evidence that the admitted contraventions were deliberate. The respondents take issue with this and I deal with this submission in more detail below;
m)it is submitted for the applicant that:
i)the respondents’ contraventions struck at one of the very objects of the FW Act, namely to ensure a guaranteed safety net of minimum terms and conditions of employment;
ii)the failure to maintain accurate records makes it more difficult to enforce the minimum standards prescribed by awards, the FW Act and the FW Regulations;
and these factors are therefore relevant in determining an appropriate penalty;
n)as to deterrence:
i)the first respondent operates in the restaurant industry which has consistently been recognised as notorious for underpayment of employees, particular vulnerable overseas workers and therefore general deterrence in the restaurant industry remains a critical factor;
ii)moreover, it was further submitted for the applicant that general deterrence is also a relevant consideration in relation to the third respondent to ensure that employees who perform payroll or human resource functions put their responsibility to comply with the law above their own interests, including their own job security);
iii)the applicant concedes that the first respondent is no longer employing staff, however, notes that whilst the first respondent remains registered, specific deterrence remains a relevant consideration in relation to the first respondent;
iv)similarly in relation to the second respondent, it is submitted for the applicant that he is the current director of 41 other companies many of which operate in the hospitality sector and therefore specific deterrence remains as relevant factor in relation to the second respondent;
v)as to the third respondent, on the evidence before the court, the applicant submits that there is a need to ensure that the third respondent complies with Australian workplace laws in the event that she continues to work in a similar role now and in the future.
Having regard to the totality of these factors, the applicant submits that a penalty within the following ranges would be appropriate:
·first respondent - $225,000 to $273,000;
·second respondent - $37,000 to $45,000; and
·third respondent - $19,500 to $23,000.
Respondents’ submissions
In response,[9] the respondents submit that the following additional factors ought to also be taken into account by the court in determining appropriate penalties within the range consented to.
Specific deterrence
[9] Respondents’ outline of submissions filed 12 June 2020.
As to specific deterrence, the second respondent concedes that he remains involved in various food and beverage businesses and that this is a relevant factor in determining penalty. However, he further submits that his involvement in these proceedings has been a ‘wake-up’ call which has already impacted the way in which he operates to ensure compliance.[10]
[10] Respondents’ outline of submissions filed 12 June 2020 paragraph 5.
Moreover, it is submitted that the first respondent does not currently employ staff and has no intention of doing so.[11] Hence, it is submitted that specific deterrence is not relevant in relation to the first respondent.
[11] Respondents’ outline of submissions filed 12 June 2020 paragraph 6.
Similarly, it is submitted that in relation to the third respondent, she no longer has responsibility for payroll and will not in the future, so again, specific deterrence is not relevant for her.[12]
Financial circumstances
[12] Respondents’ outline of submissions filed 12 June 2020 paragraph 7.
As to the financial circumstances of the respondents, the second respondent has filed an affidavit in which he states that the first respondent’s finances are dire, and that it has operated at a loss.[13] Moreover, he himself owns no assets other than two family cars, he lives in his father in law’s house, supports two teenage children and his retired mother. It is submitted, therefore, that the penalty should not be so high as to be oppressive.[14]
Deliberateness
[13] See second respondent’s affidavit affirmed and filed on 12 June 2021.
[14] Respondents’ outline of submissions filed 12 June 2020 paragraph 17.
As to deliberateness, it is conceded for the respondents that the agreed facts and contraventions demonstrate knowing involvement by the second respondent in the first respondent’s contraventions.[15] However, it is submitted that the court ought not to draw an inference that there has been any knowing involvement by the second or third respondent in any deliberate intent to disguise underpayments on the face of the agreed documents (which is denied in any event).[16] This is particularly so in circumstances where this matter has resolved on a consent basis and in circumstances where no such deliberate intent has been agreed. There is much force to this submission.
[15] Respondents’ outline of submissions filed 12 June 2020 paragraph 18.
[16] Respondents’ outline of submissions filed 12 June 2020 paragraph 19.
The respondents have conceded that they made and kept false and misleading records including in relation to the Employee.[17] In their written submissions, the respondents seem to be suggesting that whilst they have conceded this point, the court should not impute to them, or particularly to the second and third respondent any intention to disguise underpayments to employees. It was submitted for the respondents that they provided documents to the Fair Work Ombudsman as requested and did not fully understand their obligations at the time of doing so. Moreover, it is submitted that part of the difficulty arose because of the second respondent’s poor English. And further, it was submitted that the third respondent was not senior management and in the circumstances in which she took over the payroll function in 2017, she ought not to be imputed with any intention to disguise underpayments to employees.[18]
[17] Respondents’ outline of submissions filed 12 June 2020 paragraph 23.
[18] Respondents’ outline of submissions filed 12 June 2020 paragraphs 23 to 26.
I accept that the third respondent was asked to take on an additional responsibility for which she had not been trained and did what she was effectively told. However, the evidence put forward by the second and third respondents does not explain why false and misleading records were kept in the first place. Moreover, it is concerning that an employer and a director of an employer, in particular, as well as an employee responsible for payroll functions, would not inherently understand that it was inappropriate, if not unlawful, to not only create and maintain false and misleading records, but to provide them to a regulator in the context of an underpayment claim. So much would appear to be self-evident without the need for formal legal advice. I therefore give limited weight to the submissions made in this regard as a basis for imposing penalties at the lower end of the agreed scale.
In any event, as pointed out by the applicant, section 718A(1) of the FW Act provides that a person must not provide a document to the Fair Work Ombudsman if the person knows the document to be false or misleading or is reckless as to whether it is false or misleading. Moreover, it is submitted for the applicant that intention is not required to establish a contravention of section 718A.[19] All that is required is that the respondents provided documents which they knew were false or misleading and in this case, the respondents admit they provided documents in response to the Notice to Produce which they knew did not include accurate pay and hours records.
[19] Applicant’s outline of submissions filed 2 September 2020 paragraph 10.
In all of the circumstances, the court gives little weight to the respondent’s submissions at [23] and [24].[20]
[20] Respondents’ outline of submissions filed 12 June 2020.
In relation to the third respondent, the applicant submits that irrespective of her intention, she was responsible for payroll and as such should be expected to perform these roles lawfully. There is much force to these submissions.[21]
Totality
[21] Applicant’s outline of submissions filed 2 September 2020 paragraph 24.
It is submitted for the respondents that when regard is had to the totality principle, penalties at the upper end of the agreed scale are not warranted in this case for the following reasons:
a)this is not a case of a repeat offender;
b)the respondents have fully cooperated and implemented lasting change;
c)there is a real question as to the proper basis for proceedings against the third respondent.[22]
[22] Respondents’ outline of submissions filed 12 June 2020 paragraphs 29 to 30.
It is submitted for the applicant that penalties within the agreed range are appropriate having regard to:
a)the need for general deterrence;
b)the importance of specific deterrence particularly given the second respondent’s ongoing role in numerous other companies;
c)the seriousness of the admitted conducting, including particularly the repeated creation and provision of false or misleading documents which were relevant to the underpayment claims;
d)the cooperation of the Respondents with the Fair Work Ombudsman during the Fair Work Ombudsman’s investigation and these proceedings, including the rectification of the underpayment and the admissions made;
e)the importance of making and keeping accurate employee records and providing proper payslips to employees in compliance with workplace laws.
Consideration
I am satisfied having regard to the submissions made by the parties that penalties within the agreed range are appropriate having regard to the factors identified in Kelly and discussed above.
In relation to the third respondent, I am also satisfied that a penalty at the lower end of the agreed scale is appropriate. In particular, in coming to this view, I have had regard to the fact that the third respondent was asked to take on the payroll function when this had not historically been part of her duties, was not provided with any additional training to help her in undertaking those duties and has fully cooperated with the applicant in these proceedings and shown appropriate contrition.
Moreover, she has given evidence, which I accept, that she will not undertake these functions in future. In all of those circumstances I find that a penalty in the sum of $19,500 for an employee who was effectively directed to take on additional responsibilities but not provided with any training to support her in her new duties, strikes the right balance. It is sufficient to act as both a specific and general deterrent whilst not being oppressive. It also reflects the fact that there is no suggestion that the third respondent profited in any way, either directly or indirectly from the underpayments and other contraventions.
As to the first respondent and second respondent, I find that a penalty in the mid-range of the agreed scale strikes the right balance of all of the factors enumerated above. Namely, in the case of the first respondent, a penalty of $249,000 and in the case of the second respondent a penalty of $41,250.
In the case of the second respondent, such a penalty strikes the right balance having regard to the fact that the first respondent not only failed to provide the Employee with his entitlements, and failed to maintain accurate records which would have assisted in the investigation phase, but actually maintained records which the second respondent, as the directing mind and will of the first respondent, knew were false and misleading.
These penalties appropriately balance the various relevant considerations and give due weight to the relative seniority of the second and third respondents, the contrition shown by the respondents, and the fact that the underpayments have been fully rectified.
Conclusion
For each of these reasons, I make the orders set out at the commencement of these written reasons.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Judge Mercuri
Associate:
Date: 25 June 2021
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