Fair Work Ombudsman v Complete Windscreens (SA) Pty Ltd
[2016] FCA 621
•1 June 2016
FEDERAL COURT OF AUSTRALIA
Fair Work Ombudsman v Complete Windscreens (SA) Pty Ltd [2016] FCA 621
File number: SAD 22 of 2015 Judge: BESANKO J Date of judgment: 1 June 2016 Catchwords: INDUSTRIAL LAW – whether company contravened Fair Work Act 2009 (Cth) – whether company contravened Workplace Relations Act 1996 (Cth) – whether company contravened Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) – whether company contravened Notional Agreement Preserving a State Award derived from the Vehicle Industry (South Australia) Repair Service and Retail Award [AN150167 – SA] – where alleged contraventions concern minimum wages, casual loading, overtime, meal breaks, meal allowances, Saturday penalties, annual leave, annual leave loading, personal leave, record keeping and pay slips – consideration of applicable industrial instrument
INDUSTRIAL LAW– whether director involved in company’s contravention – Workplace Relations Act 1996 (Cth) s 728 – Fair Work Act 2009 (Cth) s 550
Legislation: Evidence Act 1995 (Cth) ss 69, 140, 147
Fair Work Act 2009 (Cth) ss 14, 44, 45, 99, 535, 536, 545, 546, 550, 700, 701
Fair Work Regulations 2009 (Cth) Part 3-6, Div 3, Subdivs 1, 2
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) Sch 16 item 5
Federal Circuit Court Act 1999 (Cth) s 39
Workplace Relations Regulations 2006 (Cth) regs 19.4, 19.20, Chapter 2, Part 19, Divs 3, 6
Workplace Relations Act 1996 (Cth) ss 6, 182, 185, 204, 205, 719, 728, Part 3 Sch 8 items 31, 32, 33
Cases cited: Amcor Limited v Construction, Forestry, Mining & Energy Union and Others (2005) 222 CLR 241
Australasian Meat Industry Employees Union v Coles Supermarkets Australia Pty Ltd (1998) 80 IR 208
Browne v Dunn (1893) 6 R 67 (UKHL)
Burke v Corruption and Crime Commission [2012] WASCA 49; (2012) 289 ALR 150
CFMEU v Dyno Nobel Asia Pacific Limited [2005] AIRC 622
Director of The Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No 7) [2013] FCCA 1097
Fair Work Ombudsman v Al Hilfi [2012] FCA 1166
Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365
Giorgianni v The Queen (1985) 156 CLR 473
Jeisman v B & S Anderson Family Trust and J & M May Family Trust [2003] SAIRC 25
Jones v Dunkel (1959) 101 CLR 298
Kucks v CSR Limited (1996) 66 IR 182
Potter v Fair Work Ombudsman [2014] FCA 187
Reid v Kerr (1974) 9 SASR 36
Ware v O’Donnell Griffin (Television Services) Pty Ltd [1971] AR (NSW) 18
Wilkey, Wilkey and Luck v Ballingvale Pty Ltd [1995] SAIRC 77
Yorke and Another v Lucas (1985) 158 CLR 661
Dates of hearing: 7, 8, 9, 10 July 2015, 28, 29 September 2015 Registry: South Australia Division: Fair Work Division National Practice Area: Employment & Industrial Relations Category: Catchwords Number of paragraphs: 320 Counsel for the Applicant: Mr A Manos Solicitor for the Applicant: Fair Work Ombudsman Counsel for the Respondents: Mr R Manuel with Mr D Krips Solicitor for the Respondents: EMA Legal ORDERS
SAD 22 of 2015 BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: COMPLETE WINDSCREENS (SA) PTY LTD (ACN 090 479 324)
First Respondent
LINDSAY DEAN
Second Respondent
JUDGE:
BESANKO J
DATE OF ORDER:
1 June 2016
THE COURT ORDERS THAT:
1.The applicant file and serve within 10 days draft minutes of order reflecting the conclusions expressed in these reasons and setting out such other orders as the applicant contends should now be made.
2.The proceeding be adjourned to a date to be fixed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BESANKO J:
Introduction
This is a proceeding brought by the Fair Work Ombudsman (“FWO”) against Complete Windscreens (SA) Pty Ltd (ACN 090 479 324) (“Complete Windscreens”) and Mr Lindsay Dean. On 25 March 2013, the proceeding was commenced in the then Federal Magistrates Court of Australia and on 2 February 2015 the proceeding was transferred to this Court pursuant to s 39 of the Federal Circuit Court Act 1999 (Cth).
The FWO seeks declarations that, in relation to seven employees of Complete Windscreens, the company has contravened the following legislative provisions and awards:
(1)Section 182(1) (basic periodic rates of pay) of the Workplace Relations Act 1996 (Cth) (“WR Act”);
(2)Item 5 of Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (“Transitional Act”);
(3)Section 185(2) (casual loading) of the WR Act;
(4)Each of clauses 6.2 (breaks), 6.3 (overtime), 6.3.10 (meal allowance), 6.5 (Saturday rates), 7.1 (annual leave) and 7.2 (personal leave) of the Notional Agreement Preserving a State Award (“NAPSA”) derived from the Vehicle Industry (South Australia) Repair Service and Retail Award [AN150167 – SA] (“State Award”) (“Vehicle NAPSA”);
(5)Section 44(1) of the Fair Work Act 2009 (Cth) (“FW Act”) by contravening s 99 (personal leave) of the FW Act;
(6)Section 45 of the FW Act by contravening each of clauses 19.5(b) (meal allowance), 26.3 (meal breaks), 28.2 (overtime), 29.7(a) (annual leave), 33 (minimum weekly wages), 38.2 (Saturday work) and 41.1(b) (casual loading) of Vehicle Manufacturing Repair Service and Retail Award 2010 [MA000089] (“Modern Award”);
(7)Regulations 19.4 (records relating to employees) and 19.20 (pay slips) of the Workplace Relations Regulations 2006 (Cth) (“WR Regulations”); and
(8)Sections 535 (records relating to employees) and 536 (pay slips) of the FW Act.
The FWO also seeks declarations that Mr Lindsay Dean was involved in the contraventions by Complete Windscreens within s 728 of the WR Act and s 550 of the FW Act. Mr Lindsay Dean was at all material times the sole director and secretary of Complete Windscreens and he was a shareholder in the company.
In addition to the declarations which I have identified, the FWO seeks orders against Complete Windscreens that the company pay the amounts it should have paid to the employees and interest on those amounts. Those orders are sought pursuant to ss 719(6) and 719(7) of the WR Act and s 545(2) of the FW Act.
Finally, the FWO seeks orders against both Complete Windscreens and Mr Lindsay Dean that each of them pay pecuniary penalties in respect of each of the contraventions. Those orders are sought pursuant to s 719(1) of the WR Act and s 546 of the FW Act. On 10 July 2015, I made an order that the hearing proceed as to all issues other than the fixing of civil penalties, if that be appropriate.
The FWO also seeks other ancillary or consequential orders which need not be addressed at this stage in the reasons.
The basis of the FWO’s claim as set out in her Further Amended Statement of Claim (“FASOC”) is the alleged failure by Complete Windscreens to pay seven employees of the company their proper entitlements. The seven employees are Mr Gregory Shaw, Mr Matthew Mathews (formerly Mr Matthew Lamb), Mr Brian Flynn, Mr Thomas Moala, Mr Warren Priest, Mr Joseph Nakhoul and Mr Wiremu Waretini-Rewita. Each employee, other than Mr Waretini-Rewita, gave evidence in the proceeding. Mr Waretini‑Rewita did not give evidence. The claim in relation to him is limited to a period of five months approximately and relates to the failure to pay casual loading and casual overtime. I will address the FWO’s claim in relation to him at the end of these reasons.
The Parties
The FWO is appointed by the Governor-General by written instrument and is a Fair Work Inspector by the operation of s 701 of the FW Act. The FWO has standing to bring this proceeding.
Complete Windscreens is an incorporated body and an employer within s 6(1) of the WR Act and a national system employer within s 14 of the FW Act. The company operates a business in the State of South Australia of repairing and fitting windscreens to motor vehicles and tinting windows of motor vehicles, and the company’s principal place of business is located at 220 Main North Road, Prospect. There is an office and a workshop at that location. As I have said, Mr Lindsay Dean is and has been at all material times the sole director, sole secretary and a shareholder of Complete Windscreens. His brother, Haydn, and his mother, Coral, also work in the business.
The FWO’s Case
The FWO’s case is that the contraventions by Complete Windscreens and Mr Lindsay Dean took place over a number of years. The earliest date is November 2007, and the latest date is November 2011. The following is a summary of the way in which the FWO structured her case.
1. Minimum Wages (including unpaid work contraventions)
Period
Employee
First Pay Rate Period 29 November 2007 – 30 June 2009
Industrial Instrument: Australian Pay and Classification Scale (“APCS”) derived from the Vehicle Industry – Repair, Services and Retail Award 2002 [AP824308 – Fed] (“Federal APCS”)
Mr Flynn
Mr Moala
Mr Nakhoul
Second Pay Rate Period 1 July 2009 – 31 December 2009
Industrial Instrument: Federal APCS
As above
Third Pay Rate Period 1 January 2010 – 30 November 2011
Industrial Instrument: Modern Award
All employees other than Mr Waretini-Rewita
2. Casual Loading
Period
Employee
First Casual Loading Period 12 February 2009 – 30 June 2009
Industrial Instruments: Federal APCS and s 185(2) and (3) of the WR Act
Mr Moala
Second Casual Loading Period 1 July 2009 – 31 December 2009
Industrial Instruments: Federal APCS and s 185(2) and (3) of the WR Act
Mr Moala
Third Casual Loading Period 1 January 2010 – 30 November 2011
Industrial Instrument: Modern Award
Mr Mathews
Mr Moala
Mr Priest
Mr Waretini-Rewita
3. Overtime
Period
Employee
First Overtime Period 29 November 2007 – 30 June 2009
Industrial Instrument: Vehicle NAPSA
Mr Flynn
Mr Nakhoul
Second Overtime Period 1 July 2009 – 31 December 2009
Industrial Instrument: Vehicle NAPSA
Mr Flynn
Mr Nakhoul
Third Overtime Period 1 January 2010 – 30 November 2011
Industrial Instrument: Modern Award
Mr Flynn
Mr Mathews
Mr Nakhoul
Mr Priest
Mr Shaw
4. Meal Breaks
Period
Employee
First Meal Break Period 29 November 2007 – 30 June 2009
Industrial Instrument: Vehicle NAPSA
Mr Moala
Mr Nakhoul
Second Meal Break Period 1 July 2009 – 31 December 2009
Industrial Instrument: Vehicle NAPSA
As above
Third Meal Break Period 1 January 2010 – 30 November 2011
Industrial Instrument: Modern Award
Mr Mathews
Mr Moala
Mr Nakhoul
Mr Priest
Mr Shaw
5. Meal Allowances
Period
Employee
First Meal Allowance Period 29 November 2007 – 30 June 2009
Industrial Instrument: Vehicle NAPSA
Mr Moala
Mr Nakhoul
Second Meal Allowance Period 1 July 2009 – 31 December 2009
Industrial Instrument: Vehicle NAPSA
As above
Third Meal Allowance Period 1 January 2010 – 30 November 2011
Industrial Instrument: Modern Award
Mr Mathews
Mr Moala
Mr Nakhoul
Mr Priest
6. Saturday Penalty
Period
Employee
First Saturday Penalty Period 1 July 2009 – 31 December 2010
Industrial Instrument: Vehicle NAPSA
Mr Moala
Second Saturday Penalty Period 1 January 2010 – 30 November 2011
Industrial Instrument: Modern Award
Mr Mathews
Mr Moala
7. Annual Leave
Period
Employee
First Annual Leave Period 29 November 2007 – 30 June 2009
Industrial Instrument: Vehicle NAPSA
Mr Flynn
Second Annual Leave Period 1 July 2009 – 31 December 2009
Industrial Instrument: Vehicle NAPSA
Mr Flynn
Third Annual Leave Period 1 January 2010 – 30 November 2010
Industrial Instrument: Modern Award
Mr Flynn
8. Annual Leave Loading
Period
Employee
First Annual Leave Loading Period 29 November 2007 – 30 June 2009
Industrial Instrument: Vehicle NAPSA
Mr Flynn
Second Annual Leave Loading Period 1 July 2009 – 31 December 2009
Industrial Instrument: Vehicle NAPSA
Mr Flynn
Third Annual Leave Loading Period 1 January 2010 – 30 November 2011
Industrial Instrument: Modern Award
Mr Flynn
9. Personal Leave
Period
Employee
First Personal Leave Period 29 November 2007 – 30 June 2009
Industrial Instrument: Vehicle NAPSA
Mr Flynn
Second Personal Leave Period 1 July 2009 – 31 December 2009
Industrial Instrument: Vehicle NAPSA
Mr Flynn
Third Personal Leave Period 1 January 2010 – 30 November 2011
Industrial Instrument: s 99 of FW Act
Mr Flynn
The FWO’s case also includes allegations that Complete Windscreens did not make or keep records for the employees as required by law and did not issue pay slips to the employees as required by law. The following is a summary of the way the FWO structured this part of her case.
1. Record Keeping
Period
Employee
First Period 29 November 2007 – 30 June 2009
Industrial Instrument: WR Regulations reg 19.4 and Chapter 2, Part 19, Division 3
Mr Flynn
(overtime)
Second Period on and after 1 July 2009
Industrial Instrument: s 535 of FW Act and Part 3-6, Division 3, Subdivision 1 of the Fair Work Regulations 2009 (Cth) (“FW Regulations”)
Mr Shaw
(overtime)
2. Pay Slips
Period
Employee
First Period 29 November 2007 – 30 June 2009
Industrial Instrument: WR Regulations reg 19.20 and Chapter 2, Part 19, Division 6
Mr Flynn
Mr Shaw
(at least)
Second Period on and after 1 July 2009
Industrial Instrument: s 536 of FW Act and Part 3-6, Division 3, Subdivision 2 of FW Regulations
Some or all of the employees
Instrument Coverage and Classification Level
If one has regard only to the pleadings, the parties appear to be in dispute about one issue concerning instrument coverage and this is whether, as the FWO contends and the respondents deny, the Federal APCS applied to the relevant employees up to and including 31 December 2009. At the hearing, the respondents’ submissions ranged beyond that issue. As to the relevant classification level, the FWO contends, and the respondents deny, that the relevant classification for the employees was Level 1 for the first four weeks of their employment and thereafter, Level 3 for adult employees and Level 4 for junior employees.
The Relevant Instrument
For the periods indicated, Complete Windscreens and its employees were subject to the following legislation: the WR Act between 29 November 2007 to 30 June 2009; the WR Act as it continued to apply by reason of the Transitional Act between 1 July 2009 and 31 December 2009 (“the Bridging Period”); and the FW Act from 1 July 2009 to 30 November 2011.
From the pleadings, it seems to be common ground that from 27 March 2006 to 31 December 2009, Complete Windscreens was covered by the Vehicle NAPSA with respect to the terms and conditions of employment of the employees employed during that period. However, at the hearing that proposition was denied by the respondents. Complete Windscreens became a member of the Motor Trade Association of South Australia (“MTA (SA)”) on 24 October 2006 and the FWO contends, and as I have said, the respondents deny, that from 24 October 2006 to 31 December 2009 the company was covered by the Federal APCS with respect to the basic periodic rates of pay payable to the employees. In their respective pleadings, the respondents contend that the preserved APCS was not derived from the Federal Award, but was derived from the Vehicle NAPSA preserving the State Award. Again, from the pleadings, it seems to be common ground that on and after 1 January 2010, the Modern Award applied to Complete Windscreens and its employees. Again, that proposition was denied by the respondents at the hearing.
The FWO pleaded that Complete Windscreens was predominantly in the business of repairing and fitting windscreens and window tinting to motor vehicles. This allegation was denied by the respondents, which led a good deal of evidence about whether Complete Windscreens was predominantly in the business of repairing windscreens. As I will make clear, this is not the decisive point.
As I understood their final submissions, the respondents submitted that neither the Vehicle NAPSA nor the Modern Award applied to the relationship between Complete Windscreens and the employees. Despite the admissions in the pleadings, I will consider the submission on its merits.
The Vehicle NAPSA applied to every operation where the “undertaking is principally concerned with the selling, distributing, repairing, maintaining, towing, wrecking, servicing and/or parking of motor vehicles of all kinds, caravans, trailers or the like and equipment or parts or components thereof or the supply of running requirements for such vehicles and the like” (emphasis added). There are differences between the wording in the Vehicle NAPSA and the Modern Award, but they are not material for the purposes of the submission advanced by the respondents. The respondents submit that the undertaking of Complete Windscreens is not principally concerned with the repairing of windscreens. I think that factually that is correct, but it does not mean that the company does not fall within the coverage clauses.
The evidence of the various witnesses is summarised below. One of the employees, Mr Priest, gave evidence that it was only if the area of damage or cracking to a windscreen was the size of a 20 cent piece or less that the windscreen would be repaired rather than replaced. Another employee, Mr Flynn, agreed that repairs to windscreens, as distinct from replacing windscreens, was a fairly small part of the work he performed. The weight of the evidence in this case as referred to below is that windscreen repair as distinct from windscreen replacement was a minor part of the company’s business. I accept that only a small number of windscreens were repaired and that it was a small part of the company’s business. I also accept that if the extent to which the company repaired windscreens, in the sense described above, was the determining factor in terms of the coverage clauses of the Vehicle NAPSA and the Modern Award, then there would be force in the suggestion that the relevant industrial instruments were not engaged (CFMEU v Dyno Nobel Asia Pacific Limited [2005] AIRC 622).
It seems to me that the respondents’ submission is beside the point because fitting windscreens, tinting them and repairing them all fall within the concept of selling, repairing and/or servicing equipment or component parts of motor vehicles, that is to say, windscreens and car windows. Alternatively, in my opinion, replacing a windscreen in a motor vehicle can be properly viewed as repairing a vehicle. This conclusion applies as much to the coverage clause which engages the Federal APCS as it does to the coverage clauses in the Vehicle NAPSA and the Modern Award.
Prior to 27 March 2006, Complete Windscreens was covered by the State Award (i.e., Vehicle Industry (South Australia) Repair Service and Retail Award [AN150167 – SA]). On 27 March 2006, significant amendments to the WR Act came into operation. Their effect was to freeze all awards as at that date. The effect of that was that if an employer was not a respondent to an award as at 27 March 2006, it could not become a respondent to that pre‑reform award by virtue of employer association membership subsequent to 27 March 2006. The effect of items 31, 32 and 33 of Part 3 of Schedule 8 of the WR Act was that immediately after 27 March 2006, Complete Windscreens became bound by the Vehicle NAPSA with respect to the terms and conditions of the employees and with respect to wage rates and classifications. The Federal APCS applied for pay rates and classifications after Complete Windscreens joined MTA (SA) on 24 October 2006. The FWO’s contention, which I think is correct, is that an employer could come within the coverage provisions of an APCS if the coverage provision so provided.
Section 204(1) of the WR Act provided as follows:
The question whether the employment of a particular employee is covered by a particular APCS is to be determined by reference to the coverage provisions of the APCS.
As I have said, Complete Windscreens and the employees fell within the coverage provision of the Federal APCS.
Section 205(2)(c) of the WR Act sets out the manner of determining the applicable APCS where two or more potentially applied. It provided as follows:
Subject to paragraphs (a) and (b):
(i) a new APCS prevails over a preserved APCS; and
(ii)a preserved APCS that is derived from a pre-reform federal wage instrument prevails over a preserved APCS that is derived from a pre-reform non-federal wage instrument.
The pre-reform federal wage instrument is the Federal Award (i.e., Vehicle Industry – Repair, Services and Retail Award 2002 [AP824308 – Fed]), and the pre-reform non-federal award instrument is the State Award. The Federal APCS takes priority over the NAPSA APCS. It follows from this that from 24 October 2006 to 31 December 2009, Complete Windscreens was covered by the Federal APCS with respect to the basic periodic rates of pay payable to the employees.
The Classification Level
An element in the FWO’s case that the employees were not paid their proper entitlements is their proper classification under the Vehicle NAPSA and Federal APCS and the Modern Award. The FWO’s case is summarised in a schedule in paragraph 13 of her FASOC which is as follows:
Mr Flynn, Mr Nakhoul, Mr Priest and Mr Shaw were at all material times adult employees. Mr Mathews was born on 5 March 1992 and he worked for Complete Windscreens from 31 May 2010 to 8 July 2011. He was a junior employee during this period. Mr Moala was born on 3 March 1990 and he worked for Complete Windscreens from early 2009 to 19 October 2011. He was a junior employee until 2 March 2011. Mr Waretini-Rewita is said to have been a junior employee throughout the period of his employment by Complete Windscreens.
The principles governing the interpretation of industrial instruments were not in dispute. An industrial instrument is not to be interpreted narrowly or pedantically. If the terms of the instrument are clear and unambiguous, then the instrument is to be interpreted in accordance with its clear and unambiguous meaning. The persons who draft industrial instruments are likely to be of a practical bent of mind, and that is to be borne in mind when interpreting or construing the instrument as is the practical purpose the instrument was designed to achieve and the context in which it was made. A strict and literal interpretation of the provisions of an industrial instrument is to be avoided and the provisions are to be viewed broadly. Ordinary and well-understood words are to be given their ordinary and usual meaning and, where necessary, the surrounding circumstances of an industrial instrument should be considered. Where the provisions of an industrial instrument will reasonably admit of an interpretation or construction which will give effect to the intention of the persons drafting the industrial instrument, then that interpretation or construction should be adopted (Kucks v CSR Limited (1996) 66 IR 182; Amcor Limited v Construction, Forestry, Mining & Energy Union and Others (2005) 222 CLR 241; Australasian Meat Industry Employees Union v Coles Supermarkets Australia Pty Ltd (1998) 80 IR 208). Where the particular issue is whether an employee is engaged in a particular classification or class of work, then the Court takes a practical approach and will consider the aspect of the employee’s employment which is the principal or major or substantial aspect (Ware v O’Donnell Griffin (Television Services) Pty Ltd [1971] AR (NSW) 18; Director of The Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No 7) [2013] FCCA 1097 at [77]).
Subject to the matters I will mention, there are no significant differences between the Federal Award (adopted by the Federal APCS) and the Modern Award in terms of the classification level. As far as employees at Level 1 are concerned, the key concepts are a degree of training, and a level of expectation of the acquiring or the possession of skills relevant to the performance of routine duties, essentially of a manual nature and appropriate to the level of training. There is reference to the employees at this level exercising minimal judgment and working to defined procedures and under direct supervision. Level 2 is for better trained employees and employees who have completed up to three months structured training. Nevertheless, the description for Level 2 refers to employees who work under direct supervision, either individually or in a team environment. Level 3 is for better trained and more highly skilled employees than employees at Level 2 and is an employee who works with only general supervision of daily duties. An employee at Level 4 is better trained and more skilled than an employee at Level 3. The rates for juniors are a percentage of a Level 1 rate or a Level 4 rate.
One point of difference between the Federal Award and the Modern Award is that, in the case of the Modern Award, “Windscreen fitter and/or repairer” appears under the heading, “Classifications contained within Level 4 R4”, whereas in the case of the Federal Award, windscreen fitter and repairer is said to be pre-existing award classification for both Level 3 and Level 4. This is an important matter in favour of the approach taken by the FWO because the general criteria which I have summarised raise questions of degree which are not otherwise easy to resolve. The identification of a particular position or class of work offers practical guidance. The FWO’s approach of classifying employees after an initial period of employment at Level 3 rather than Level 4 (as they could have been) would appear to operate in favour of the respondents, at least as far as the Modern Award is concerned.
In terms of how the employees should be classified under the industrial instruments, the parties emphasised different considerations.
The FWO emphasised the fact that all the employees – other than Mr Mathews who was a window tinter and, therefore, spent most of his time in the company’s workshop – were travelling by themselves from job to job at a very early stage in their employment. In other words, their training by others had been completed and they were carrying out their employment duties without supervision or at least direct supervision.
The respondents emphasised the following matters:
(1)whether the employee was good at his job or average or below average;
(2)whether the employee could be trusted to work on more complex jobs such as those involving modern luxury vehicles;
(3)whether the employee could be trusted to perform jobs for crash repairers; and
(4)the number of jobs the employee could carry out in a day.
The respondents contend that there were differences between the employees as to these matters and the FWO’s “one size fits all approach” of allowing one month at Level 1 and then classifying the adult employees at Level 3, was erroneous. I accept that there would have been differences between the employees in terms of the matters the respondents identified. However, I do not think that the respondents’ approach is the correct one.
All the employees, other than Mr Mathews, gave evidence that they were on the road by themselves doing jobs involving the replacing of windscreens within a month or months of commencing employment. That, to my mind, is the critical matter because by then whatever training by others they received was over and they were working unsupervised or, at most, subject to general supervision. They had moved from Level 1, and Level 2 was not appropriate because they did not work under direct supervision, either individually or in a team environment.
As far as the adult employees are concerned, the issue is in fact quite straightforward in the case of Mr Flynn, Mr Nakhoul and Mr Shaw. Each of them had commenced employment with the company well before the start of the relevant period for each of them. In Mr Nakhoul’s case, it was over a year before and, in the case of Mr Flynn and Mr Shaw, it was many years. They were clearly employees at (at least) Level 3 at the start of the relevant periods. The same may be said of Mr Moala when he became an adult employee in March 2011. The critical matter is that their initial period of training was over and they were working by themselves as mobile windscreen repairers or fitters and not under the direct supervision of any other person.
The other adult employee is Mr Priest. He said that he was out on the road by himself after a month or two. Having regard to the evidence of a number of other employees, I think it is appropriate to interpret his rather general evidence as meaning that after about a month he was out on the road by himself, and the approach of the FWO in classifying him at Level 1 for the first month of his employment and thereafter at Level 3 is correct.
A different approach is required for those starting as a junior employee. There are no material differences between the Federal Award and the Modern Award. There were, on the evidence in this case, no material differences between the training and duties of junior employees engaged in windscreen fitting, repairing and tinting and adult employees performing the same functions. The Awards provided for indicative positions at the various levels, but they did not contain criteria for each relevant level as they did in the case of adult employees. I have considered the various indicative positions set out in the Awards and I agree with the FWO’s submission that the nearest indicative positions to the position occupied by the junior employees were “Assembler, accessories” and “Automotive parts, salesperson”. Both those positions result in a classification of a percentage of Level 4 total rate. In the case of the junior employees, as with the adult employees, it is appropriate to allow a one month period at Level 1. Thereafter the appropriate classification for the junior employees is a percentage of the Level 4 rate based on the age of the person.
I accept the FWO’s case as to the applicable industrial instruments and the classification levels for the employees.
Background
The following background is not in dispute.
Mr Lindsay Dean and Mr Haydn Dean established Complete Windscreens in 1976. The company was one of the first specialist windscreen fitting businesses in South Australia. Before the establishment of Complete Windscreens, vehicle windscreens were generally repaired or replaced by motor mechanics. Mr Lindsay Dean and his brother saw an opportunity for a specialist windscreen fitting business after returning from Darwin following Cyclone Tracy. In or about 1993, a company, which had to that point supplied windscreens to Complete Windscreens, ceased manufacturing operations in South Australia. For reasons which I need not relate, Complete Windscreens had difficulties finding a reliable windscreen manufacturer and the company made the decision to commence a glass and windscreen manufacturing operation at Largs Bay. The factory was built and Complete Windscreens manufactured windscreens and other glass products in the factory until 1999. At about this time, the company experienced financial difficulties. It was unable to repay the loan it owed to its bank and it was placed into receivership. There were changes in the ownership of the company, but again, it is not necessary for me to relate the details. The company was subsequently repurchased by Mr Lindsay Dean and Mr Haydn Dean. Between 2006 and 2011, the company employed an average of 20 employees at any one time. In June 2015, the company employed approximately 15 windscreen fitters and two window tinters.
Mr Lindsay Dean said that the main type of work done by the company is the fitting of windscreens. The company also provides a window tinting service. Mr Lindsay Dean said that the company also does some window fitting in the housing industry, “however this is only a small part of the business”. Mr Lindsay Dean said that approximately 50% of the company’s business was retail, that is to say, doing work for private clients at their homes or work-places, and approximately 50% was trade, that is to say, work for crash repairers, car yards and wreckers. The difficulties encountered in fitting a windscreen to a vehicle depends on the work required and the type of vehicle. Mr Lindsay Dean said that some windscreens are more difficult to fit than others and that the degree of difficulty can depend on the type of technology in the vehicle. For example, it may be more difficult to remove a windscreen from a vehicle which has rain sensors and European models may present more difficulties than Australian models.
Mr Lindsay Dean said that the work done for crash repairers was the most difficult and always required the most experienced windscreen fitters. The difficulty with the work results from the fact that windscreens or windows are to be removed from damaged vehicles and it is important that the vehicle is not damaged when the windscreen or window is refitted to the vehicle. In addition, the work also involves removing side windows which are generally more difficult than windscreens. A windscreen fitter must have tools and the tools are mostly cutting tools, as well as tools to remove urethane sealant and to reapply the sealant. Mr Lindsay Dean said that fitting windscreens to large vehicles such as trucks and inserting windows into vans can be difficult and may require two people and the use of power tools. Mr Lindsay Dean said that he considered that it is very important that difficult jobs are given to his most qualified and experienced employees because if that is not done, there is a risk that a vehicle will be damaged. Mr Lindsay Dean gave an example of a recent event when a windscreen was not correctly fitted to a motor car and water leaked into the car and into the car’s computer causing approximately $10,000 worth of damage.
The Witnesses
The FWO called Mr Shaw, Mr Mathews, Mr Flynn, Mr Moala, Mr Priest and Mr Nakhoul as witnesses. The Court made orders before the trial that the parties reduce the evidence‑in‑chief of their witnesses into affidavit form. In addition, in the case of a number of witnesses, there were affidavits in reply. Each of the six employees who gave evidence swore or affirmed an affidavit in chief and an affidavit in reply and that formed the witnesses’ evidence-in-chief at trial.
Two matters loomed large in the cross-examination of the employee witnesses.
First, the company kept a day book which recorded a list of the jobs for a particular day, including the name and address of the relevant customer and, by their initials next to the name and address of the relevant customer, the employee of the company designated to perform the job. Mr Lindsay Dean produced extracts from the company day book for the period between 7 July 2010 and 24 August 2010 as well as the period between 20 April 2011 and 23 August 2011. Often the text in the day book was illegible or difficult to read.
Secondly, the company installed GPS devices in all of its utility vehicles progressively from February 2010 to November 2012. The GPS device records inter alia the time and location of the vehicle each time the ignition is turned on and off and these records can be extracted. Mr Lindsay Dean produced the GPS records for the vehicles operated by each of the employees the subject of these proceedings (other than Mr Mathews and Mr Waretini‑Rewita who were not provided with a vehicle) from 2010 onwards. These GPS records total over 2,000 pages. In addition, on the final day of the trial, counsel for the respondents told me that the GPS records initially produced were deficient in that they did not include the records for the period between 8 August 2011 to 26 August 2011 and I accepted an additional volume of documents containing the GPS records for this period.
The accuracy of the GPS records is disputed by the applicant. A number of the employees gave evidence of examples of times when they believed their GPS devices had been inaccurate. For example, Mr Flynn recalled an occasion at some time in 2011 when he received a printout of his vehicle’s GPS records which showed that his vehicle had been on Port Road that day when in fact Mr Flynn had actually been attending to jobs in the hills. Mr Shaw recalled an occasion in around 2009 when Mr Lindsay Dean showed him a computer screen with his vehicle’s GPS location displayed. The computer screen showed a street map and indicated that Mr Shaw’s vehicle was located at the intersection of Port Road and Findon Road when it was in fact many kilometres away at the Complete Windscreens workshop.
The applicant also submits that there are a number of self-evident deficiencies in the GPS records themselves. The applicant points to examples of where the entries are simply blank or where they are nonsensical such as a circumstance where the vehicle had moved but the odometer reading had not changed or where the vehicle ignition had been turned off in one street but next turned on in a completely different street.
The respondents submit that a GPS is a well-known and accepted technology and that I should presume that the GPS records were produced as a result of the GPS devices (s 147 of the Evidence Act 1995 (Cth)).
The respondents called Mr Darren Husson as a witness. Mr Husson is the Business Development Manager of Vhetec Pty Ltd, the company that installed the GPS devices in the company’s vehicles. Mr Husson gave evidence about how the GPS devices work. He said that at two minute intervals the GPS devices automatically record the date, time, current location, ignition status (on or off) and the vehicles velocity at that time. He said that the GPS positioning data is accurate to within 5 metres. Mr Husson was cross-examined by counsel for the FWO. I think what emerged from Mr Husson’s evidence in cross-examination is that when the devices malfunction, it generally means that they do not work at all rather than that they yield incorrect information. The FWO submitted that Mr Husson’s evidence about the GPS devices should be ignored because he had no tertiary qualifications relevant to the GPS devices and did not purport to give evidence as an expert. I do not accept that submission and I accept the substance of Mr Husson’s evidence.
I think that the GPS records can be relied upon as being generally accurate. It is apparent that there may be some instances when the GPS devices have recorded information that is plainly wrong, but on the whole I am prepared to accept that the GPS records are sufficiently precise to provide an indication as to the location of the vehicles at particular times.
I turn now to consider the purpose and effect of the evidence comprising the GPS records and the evidence about the entries in the company’s day book. Whilst a substantial volume of GPS records covering a number of years were produced, the employee witnesses were only cross-examined about the location of their vehicles during one or more days between 8 to 12 August 2011 (and, in the case of Mr Priest, two days in April 2011). I will refer to some particular examples when examining the evidence of the employee witnesses.
As I understood it, the respondents sought to rely on the GPS evidence to show that the employees were not as busy as they claimed and that they had and took numerous opportunities to have breaks during the course of the day. They also sought to rely on the GPS evidence to undermine or rebut the evidence of the employees as to the hours they worked.
The respondents provided by way of written submissions two documents which are relevant to these contentions. The first was a document with the title “GPS Analysis & Submissions”. These submissions deal only with particular days between the period 8 to 12 August 2011. The submissions refer to each witness in turn and purport to summarise:
2.1 The authorised jobs assigned to and performed by the claimant employees on each of the subject days together with time spent performing those jobs (‘Assigned Jobs’); and
2.2 The time spent on each of the subject days wholly unrelated to any of the claimant employees’ assigned employment duties (‘Unrelated Activities’).
I understand the reference to “subject days” to mean selected days between the period 8 to 12 August 2011 which were the subject of cross-examination.
The document then refers to the GPS records and day book and contains submissions about the time each employee spent with respect to “Assigned Jobs” and “Unrelated Activities” each day. For example, the respondents made the following submissions concerning Mr Nakhoul’s movements on 8 August 2011:
8 August 2011
31.The Day Book indicates that Mr Nakhoul performed twelve Assigned Jobs at 8 locations on 8 August 2011:
No. Job no. Customer Suburb Job Type Duration 1. 24 Australian Crash West Hindmarsh Remove Liberty cargo glass 2. 63 Australian Crash West Hindmarsh Remove BMW rear screen 28 mins 3. 30 Cash Sale Woodcroft Charade windscreen supply/fit 4 mins (cancelled) 4. 15 Midcoast Crash Lonsdale Fiesta tailgate fit back in 20 mins 5. 20 Triumph Rover Spares Lonsdale Supply/fit windscreens 6. 21 Triumph Rover Spares Lonsdale Install 4 windows 70 mins 7. 74 Claridge Crash Unley Park Install Rav4 ¼ glass 8. 85 Claridge Crash Unley Park Remove Falcon rear screen 9. 86 Claridge Crash Unley Park Remove Subaru Cargo Glass 35 mins 10. 72 City Truck Dismantlers Gepps Cross Supply/fit CH Mack windscreen 35 mins 11. 76 Cash Sale – ‘Mike’ Ingle Farm Supply/fit lexus windscreen 21 mins 12. 55 Budget Rent-A-Truck Marleston Supply/fit Rosa Bus Windscreen 16 mins Total: 229 mins 32. The Day Book and GPS records indicate that Mr Nakhoul engaged in the following Unrelated Activities on 8 August 2011:
No. Location Arrival Departure Evidence Reference Duration 1. Dudley Park 08:10 08:28 Journeys 1 & 2, Page 1, R7 18 mins 2. Beverley 08:42 08:44 Journeys 2 & 3, Page 1, R7 2 mins 3. Woodville Park 08:46 08:55 Journeys 3 & 4, Page 1, R7 11 mins 4. Lonsdale 12:14 12:20 Journeys 5 & 6, Page 2, R7 6 mins 5. Woodcroft 12:33 12:53 Journey 6, page 2, R7 & Journey 1, page 3, R7 20 mins Total: 57 mins 33. The Court should find that Mr Nakhoul was able to, and did, avail himself of well in excess of one hours in total for personal activities unrelated to his employment this day.
34.The Respondents emphasise that the period of 57 minutes does not capture any of the travel time expended in relation to any of Mr Nakhoul’s Unrelated Activities on this day.
The other relevant document provided by way of written submission is titled “Summary Analysis ‑ 8 August 2011 to 26 August 2011”. This document was provided to the Court at the same time as the additional volume of GPS records for the period between 8 August 2011 and 26 August 2011. The document is two pages and purports to summarise the GPS records for this 8 August 2011 to 26 August 2011 period. For each employee witness with a vehicle it states the average period each day in which the employee took no Assigned Jobs (in all cases this was more than two hours) as well as highlighting any days that the employee apparently arrived to work late or finished work early. This document was not the subject of detailed oral submissions.
Leaving aside the matters referred to by the FWO (which I have already addressed), in considering the GPS records and the evidence about the company’s day book, I am not prepared to look beyond the records and material to which I was specifically referred to by counsel. Those records and material relate to 8, 9, 10, 11 and 12 August 2011 which were the topic of cross-examination and for which express submissions were made by counsel; the dates in April that Mr Priest was cross-examined about; and, to a lesser extent, the other dates between 8 August 2011 to 26 August 2011 which were the subject of the “Summary Analysis” written submissions.
It is convenient as well at this point to outline how the respondents sought to deploy the GPS evidence and my approach to it.
First, the respondents submit that the GPS evidence shows that the employees were not as busy as they claimed and took breaks of at least 30 minutes before 1 pm or at 1 pm each day. If the GPS records and day books show significant periods of time where the employee had no assigned jobs prior to 1 pm each day, it might provide some evidence to support the argument that they had the opportunity for a lunch break over this time, at least for those specific days to which I was referred. The evidence is capable of raising a doubt about whether the employees were as busy as they claimed. The evidence is capable of corroborating the evidence of Mr Timothy Lee (which I detail below at [65]) about the use of the PGI lunchroom. For reasons set out later, I am not satisfied that the FWO has proved that the employees did not have a meal break of at least 30 minutes duration before or at 1 pm each day.
Secondly, and at least by implication, the respondents submit that the evidence supports an argument that the employees took total breaks of at least one hour each day (that is an additional 30 minutes in addition to a 30 minute lunch break). I do not think that the GPS evidence supports this conclusion. The GPS evidence from the particular dates which I have been specifically referred to is only a small sample and is not necessarily representative of each employee’s working pattern each day. Further, the absence of an “Assigned Job” in the day book or the presence of an “Unrelated Activity” on the GPS records does not necessarily lead to the inference that that time was available for a break, or indeed that a break was actually taken. The employees often had credible explanations for the periods of time that the respondents suggested to them were breaks such as that they were performing non-paying tasks or were working on a particularly difficult job. Even if they were not doing that, as I will explain, the employees were still “on call” during this time and could not be considered to have had a properly structured break.
Finally, the respondents submit that the GPS evidence indicates that some employees actually worked less hours than what they were paid to work. For example, although employees were paid to work 8 am to 5 pm, they did not actually work these hours. As a result, the employees cannot now be entitled to further payment such as casual loading because they were, in effect, overpaid in the first place.
This argument cannot be sustained for at least three reasons. First, it cannot be inferred that the GPS evidence which was for a limited period represented the position for the whole of the periods which are in issue in this case. For example, the business of the company no doubt fluctuated, and I accept that at times the employees would have been very busy. Secondly, the absence of an “Assigned Job” does not mean that an employee was not working. When they were not at the workshop, the employees were at all times on the road and on call and there is nothing to suggest they were not. Thirdly, and more fundamentally, Complete Windscreens has proceeded on the basis that the employees worked certain hours and it is not open to it to go behind what it has done. The company’s records show the employees working certain hours, at least to the extent there are records and the company itself, through its agent, EMA Consulting, said on 13 October 2011 in a letter to the FWO that the employees’ normal hours of work were from 8 am to 5 pm.
The FWO called two other witnesses. Ms Brodie Janelle Smith is a Fair Work Inspector and she gave evidence of the FWO’s investigation in 2011 and, in particular, the records she obtained from the company which are relevant to the employees’ employment by the company. Her affidavit was tendered and she was not required for cross-examination. The other witness was Mr James Klousia who holds various positions within the FWO. Based on various assumptions which he identifies, he provided a calculation of the amounts which the FWO contends should have been but were not paid to the employees. He was cross‑examined briefly by the respondents’ counsel and he confirmed that the accuracy of his calculations depended on the correctness of his assumptions.
The respondents called evidence from Mr Lindsay Dean and Mr Haydn Dean. Ms Coral Dean was not called as a witness. Since the company was established, she has worked as an administration or office manager. However, by July 2015 she had ceased doing any work for the company. Mr Lindsay Dean gave evidence explaining the reasons Ms Coral Dean was not called to give evidence. The FWO did not submit that any adverse inference should be drawn from the fact that Ms Coral Dean did not give evidence and, in those circumstances, it is sufficient for me to say that Ms Coral Dean is 82 years of age and has some health issues. The respondents also called evidence from Mr Husson to whom I have already referred.
The final witness for the respondents was Mr Timothy Lee who is the Regional Manager of Protection Glass Industries Pty Ltd (“PGI”). PGI supplies windscreens and windows to the company. On a number of occasions, an employee of the company was required to travel to PGI’s premises in Beverley to collect windscreens or windows for use in a job. Mr Lee gave evidence about, among other things, the use of PGI’s lunchroom by one or more of the employees. I should say that Mr Lee’s affidavit was served late and the respondents needed leave before they could rely on it. An unsworn affidavit containing some of the evidence set out in Mr Lee’s sworn affidavit had been sent to the FWO shortly before the commencement of the trial (i.e., that part of it dealing with the use of PGI’s lunchroom). However, the matter thereafter languished and Mr Lee’s sworn affidavit was not served until after the employees had given evidence. The respondents’ solicitor filed an affidavit explaining that this conduct was due to him and not the respondents. On the one hand, Mr Lee’s evidence was relevant and was not advanced in a timely fashion because of the omission of the respondents’ solicitor and not the respondents. Furthermore, the respondents face pecuniary penalties if the contraventions are made out. On the other hand, not all of the allegations in Mr Lee’s evidence were put to the employee witnesses (Browne v Dunn (1893) 6 R 67 (UKHL); Heydon JD, Cross on Evidence (10th ed, LexisNexis Butterworths) pp 605-616). I asked the FWO whether it sought the recall of the employees so that they could deal with the allegations (Reid v Kerr (1974) 9 SASR 367). She did not wish to pursue that course. I decided that it was in the interests of justice to allow Mr Lee to give evidence of a number of matters in his affidavit and that I would take into account the failure to put some matters to the employee witnesses in assessing the evidence (Burke v Corruption and Crime Commission [2012] WASCA 49; (2012) 289 ALR 150 at [177]-[192] per Buss JA with whom Martin CJ and Mazza JA agreed).
The FWO submitted that I should draw a Jones v Dunkel ((1959) 101 CLR 298) inference from the respondents’ failure to call Mr Peter Bruce. It seems that Mr Bruce worked for the company during part of the relevant period and that he was stationed in the company’s offices. It was submitted that he would have had some knowledge of whether Mr Lindsay Dean and Mr Haydn Dean pressed the employees to keep working rather than taking a break. As I will explain, I am prepared to accept that from time to time the employees were told to keep working when the company was particularly busy. I do not think that the absence of Mr Bruce from the witness box is of particular significance in this case.
The FWO’s Case
The Relevant Obligations
A broad description of the relevant obligations and their source is as follows:
(1)Minimum wages and unpaid work
Mr Flynn was not paid the minimum hourly rate for ordinary hours worked being a contravention of s 182(1) of the WR Act and s 45 of the FW Act. This failure had a “flow-on” effect in terms of the annual leave, annual leave loading and personal leave paid to Mr Flynn. These items only involve Mr Flynn.
The unpaid work raises the lunch break and other breaks issue. It concerns five of the employees (it does not concern Mr Flynn and Mr Waretini-Rewita) and it was described by the FWO as a key feature of the case and the most egregious contravention. The relevant employees were not paid for one hour for each weekday they worked on the basis that they had a break or breaks for one hour. The FWO’s case was that they did not have such a break or breaks.
(2)Meal break contraventions
These contraventions and the unpaid work contraventions revolve around the issue of whether breaks and, in particular, lunch breaks were taken. They call for a more detailed explanation than the other alleged contraventions.
The Vehicle NAPSA provides that meal breaks will be for a period of not less than 30 minutes and not more than 60 minutes. Subject to exceptions not material in the circumstances of this case, an employee will not be required to work for more than five hours without a break for a meal. The Modern Award is in similar terms and provides that an employee must not be required to work for more than five hours without a break for a meal.
The Vehicle NAPSA provides that an employee will be paid at the rate of time and one half for all time worked:
(a)where the employee is required to work beyond five hours without a break for a meal; or
(b) during meal breaks and thereafter until a meal break is allowed.
The Modern Award provides that an employee working beyond five hours must be paid at the rate of time and one half until they receive a break.
Neither party suggested that the differences in the text of the Vehicle NAPSA and the Modern Award led to any difference in the interpretation of the two Awards in this case.
The company’s defence to the alleged meal break contraventions was that the employees were told to take a 30 minute meal break within the first five hours of their service each day, both in an induction manual and given to them verbally, and that they had an opportunity to do so and that they took such a break on some or all of the days in the relevant period.
The FWO submitted that the effect of the provisions in the two Awards dealing with meal breaks was that there was an obligation on the employer to ensure that the employees had meal breaks. In the alternative, the FWO submitted that the employer was required to direct its employees to have meal breaks. In the further alternative, the FWO submitted that whether the obligation was met depended on whether the employees in fact had meal breaks.
It seems to me, having regard to the terms of the Awards, that the issue is whether an employee has been required by his or her employer to work beyond the five hour period without taking a meal break and whether that has happened will depend on the facts of the particular case. The issue may arise in an almost infinite range of circumstances depending on the instructions or absence of instructions from the employer, the type of work carried out by the employee and the place where the work is carried out. I will come to consider these factors later in these reasons. It is sufficient to say at this point that the employees in this case (other than Mr Mathews) were for the most part carrying out their duties on the road and by themselves.
There is limited case law on an employer’s obligation with respect to meal breaks. I was referred to Wilkey, Wilkey and Luck v Ballingvale Pty Ltd [1995] SAIRC 77 (“Wilkey”), and Jeisman v B & S Anderson Family Trust and J & M May Family Trust [2003] SAIRC 25 (“Jeisman”).
In Wilkey, the employees worked in a store with customers coming and going throughout the day. The relevant award provided that the employees shall be allowed a meal break. In that case, the Industrial Magistrate found that the employees were expected by their employer to take meal breaks. The important point made by the Industrial Magistrate was that, although the stores were not always busy, and although there was often a “clear” 30 minutes where an employee could take a meal break, the fact was that the employees were always “on call”, that is to say, if a customer came into the store the employees were expected to attend to their needs. In those circumstances, it could not be said that the employees were allowed a 30 minute meal break. The FWO submits that this is a similar case in that even if the employees on the road had the opportunity from time to time to take a meal break, the fact is they were always on call.
In Jeisman, although the employee who was an apprentice hairdresser working in a hairdressing salon was never told not to take an evening meal break, the fact was that she was always busy in the evenings and did not take an evening meal break. In those circumstances, the Industrial Magistrate found that the employee was entitled to be paid for the extra time she worked on late night trading days because the employer had not been proactive in ensuring meal breaks were in fact taken.
(3)Casual loading
Casual employees were entitled to be paid a casual loading. The WR Act prescribed a guaranteed casual loading of 25% of the basic periodic rate of pay and cl 41.1(b) of the Modern Award provided for a casual loading where the amount of the casual loading depended on when the work was performed and whether it was part of ordinary hours or overtime.
(4)Overtime
Employees were entitled to be paid overtime. This obligation was imposed by cl 6.3 of the Vehicle NAPSA and cl 28.2 of the Modern Award. The quantum of overtime depended on when it was performed: Sunday (double time), Public Holiday (double time and-a-half), not the aforesaid but beyond ordinary hours (time and-a-half for the first three hours and double time thereafter).
(5)Meal allowance contraventions
Employees who were required, without being given notice the previous day, to work more than one and-a-half hours overtime were entitled to a meal or a meal allowance. This obligation was imposed by cl 6.3.10 of the Vehicle NAPSA and cl 19.5(b) of the Modern Award.
(6)Saturday penalty contraventions
Employees who worked some of their ordinary hours on a Saturday were entitled to be paid at the rate of time and-a-half for such work. This obligation was imposed by cl 6.5 of the Vehicle NAPSA and cl 38.2 of the Modern Award.
(7)Annual leave
Before going on annual leave, employees were entitled to receive the wages they would have received in respect of the ordinary time they would have worked had they not been on annual leave during the relevant period. This obligation was imposed by cl 7.1 of the Vehicle NAPSA and cl 29.7(a) of the Modern Award.
(8)Annual leave loading
In addition to the annual leave referred to above, the same provisions required the payment of an annual leave loading of 17.5%.
(9)Personal leave contraventions
Employees were entitled to personal leave when they were too sick to work without reduction of pay, which should be at least their guaranteed basic periodic rate of pay. This obligation was imposed by cl 7.2 of the Vehicle NAPSA and s 99 of the FW Act.
The Evidence of the Employees
I turn now to examine the evidence of the various employees. For convenience, and to make these reasons easier to follow, I express some conclusions about the witness at the end of my summary of their evidence. I stress that I have reached these conclusions having considered all of the evidence.
Mr Shaw
The relevant period for Mr Shaw is 27 January 2011 to 18 August 2011. By relevant period, I mean the period to which the FWO allegations relate and the period of assessment for the purposes of Mr Klousia’s calculations of underpayments and non-payments. During the relevant period, Mr Shaw was an adult full time employee and the claims in relation to him relate to a failure to pay overtime and meal breaks. The evidence Mr Klousia had available to him for the relevant period was the evidence of Mr Shaw.
Mr Shaw was born on 4 July 1970 and he was employed by Complete Windscreens between March 1995 and September 2013. In March 1995, Mr Shaw did a two week training course at the company through the then Commonwealth Employment Service and he was then offered employment by the company as a trainee windscreen fitter. Mr Shaw said that there are no formal qualifications in South Australia for a windscreen fitter and repairer. He also said that he did not sign a written contract of employment with the company.
Mr Shaw said that no-one in management at the company told him what award or agreement applied to his employment or advised him of his classification level. He said that he did not receive an occupational health and safety checklist when he commenced working for the company. He did not have any formal induction or structured training when he started his employment. Mr Shaw said that he never received a Complete Windscreens induction manual. He learnt his job through “on-the-job” training and, as far as he was aware, that was how all new employees of the company learnt the job. He said that in order to learn the job he went out on the road with an experienced worker from the company for two weeks and learnt what he did. He said that once he secured his employment, he did another two weeks on the road with an experienced worker. After that he was on the road by himself.
Mr Shaw said that he was never given any written policies or procedures during his employment by the company. He is not aware of any other new employees receiving any policies or procedures.
Mr Shaw said that at various times during his employment by the company, he raised with management the question of lunch breaks and the applicable award. Generally, these conversations were with Mr Lindsay Dean or Mr Haydn Dean. Mr Shaw recalls being told on one occasion that if he was not happy at the company, he could leave.
Mr Shaw described the business of Complete Windscreens as involving removing, refitting and repairing and installing windscreens and glass to motor vehicles. The company’s clients were crash repairers, car yards and members of the general public. In addition to these operations, the company did window tinting for vehicles, homes and businesses. Mr Shaw said that a small part of the company’s business was fitting glass to houses. He said that he was involved in the windscreen fitting side of the business and not the tinting side.
Mr Shaw said that when he started with the company in 1995, Mr Lindsay Dean was, what Mr Shaw called, the director of windscreen fitting. That meant that he was in charge of all windscreen fitting Australia wide. From 1 July 2013, Mr Haydn Dean has been the director of the business. Mr Shaw described Mr Lindsay Dean and Mr Haydn Dean as managers of the business. Their mother, Ms Coral Dean, attends to the administrative and office side of the business. Mr Shaw said that there was another person employed in the office at the company and that was Mr Peter Bruce. Mr Bruce started with the company in late 2010.
Mr Shaw described Mr Lindsay Dean’s tasks as managing the daily operations of the business, including answering the telephone, booking in jobs and allocating jobs to the employees. He described Mr Lindsay Dean’s role as very “hands on” and he said that Mr Haydn Dean was there to take Mr Lindsay Dean’s role when needed. He said Mr Bruce’s tasks included monitoring the activities of windscreen fitters on the road by use of the information generated by the GPS and answering the telephones if Mr Lindsay Dean did not get to the telephone first.
Mr Shaw said that during his employment, the company generally employed 20 to 25 people. There were four to five people in the office, three to four tinters, and the rest were windscreen fitters. There was one person who did the glass work for houses.
Mr Shaw said that between 1995 and 2013, he was a mobile windscreen fitter and that that required him to travel to various locations in Adelaide to remove and install vehicle windscreens. He would be given his jobs at the start of each work day in the form of invoices which set out the job type and customer details. Mr Shaw said that the only jobs that were documented in the invoices and in the company’s day book were the paying jobs. He said that there were other non-paying jobs for him to do in between the paying jobs, such as collecting materials including glass, obtaining parts and what he described as other miscellaneous tasks for the business. He said that the company’s day books did not record every job that each windscreen fitter would do in a day. Mr Shaw said “this is because Lindsay and Haydn would usually write the jobs in when they were on the phone and sometimes we would swap our allocated jobs around depending on our locations and how long jobs were taking. The day books do not show that often after attending a job and assessing it, we needed to go and pick up parts in order to complete the job”.
Mr Shaw said that usually the business had about one-third of the day’s work booked in the day before, and that thereafter the business received telephone calls about further jobs during the course of the day. For the pre-booked jobs, the paperwork was usually ready. Mr Shaw said that he was usually given five or six jobs to start with and that at the completion of these jobs, he called the office of the company to get further instructions about the next lot of jobs he was to perform. From time to time, Mr Shaw was required to visit the premises of PGI to pick up glass and bring it back to the company’s workshop. Mr Shaw said that he could do anywhere between 4 and 16 jobs in a day, although on average he did 10 to 12 jobs a day. Mr Shaw said there was no limit on the type or size of vehicle that the company worked on and that it took work on buses, trucks, trains, cars and marine vessels.
The company provided Mr Shaw with a Toyota HiLux for the purposes of his work. He took this vehicle home at night for most of the time that he worked at the company. In about December 2011, Mr Haydn Dean told Mr Shaw that he was no longer allowed to take the work car home at the end of the day. He had to leave it overnight at the company’s office and workshop.
Mr Shaw said that he bought his own tools and that he spent approximately $1,000 or more a year on tools. He was not reimbursed for these amounts by the company. The company did supply the disposable blades to cut off urethane (the glue that holds the glass on) and material such as the glass and glues. They also supplied Windex for cleaning the glass.
Mr Shaw said that he usually started work at about 8 am. On occasions, he was late for work and may have started as late as 8.30 am. Mr Shaw said that he was a sole parent and he had to wait for the bus that picked up his daughter to take her to school. He said that he was paid from the time he started work. He said that he usually finished work at 5 pm or 6 pm depending on the time he finished his jobs for the day. He said that on a regular basis he was not free before 6 pm. Mr Shaw estimated that he worked 45 to 50 hours most weeks throughout his employment with Complete Windscreens. Mr Shaw said that on occasions he started work at 7 am and whether this occurred depended on the needs of the customer.
Mr Shaw said that he also worked on Saturdays. He started at 8 am on a Saturday and ended when he finished his work. This might be as early as 12 noon or as late as 3 pm. Mr Shaw was paid for the work he performed on Saturdays at time and-a-half and this was the rate of pay he received regardless of when he finished. He was never paid double time for work on Saturdays.
Mr Shaw said that he was paid at the rate of $21.62 per hour and that this was his rate of pay for approximately two to four years between at least 2009 and 2013 with no pay rises. He asked Mr Lindsay Dean and Ms Coral Dean about the possibility of obtaining a pay rise, but was not successful.
Mr Shaw was paid his weekly salary in cash until sometime in 2011. He could not be any more specific than to say that at some stage in 2011, the company began paying his salary by the electronic transfer of funds into his bank account.
Mr Shaw claims that he was not paid for all the hours he worked for the company. He said that the company deducted one full hour per day from his pay for lunch breaks that he never had. He said that his standard working week was Monday to Friday from 8 am to 5 pm and that he was paid for 40 hours per week even though he had done 45 hours in the week. He said that at one point during the course of his employment, Mr Lindsay Dean, in response to a question from Mr Shaw about the deduction of the five hours every week, said that this had been done because the company paid him a higher rate of pay to make up for the fact that he did not get a lunch break. Mr Shaw said that he tried to negotiate with Lindsay, Haydn and Coral Dean about this matter, but he had no success. Mr Shaw said that prior to 2003, he kept a time book for his work each day at the company, but that he stopped doing that in approximately 2003.
In relation to overtime, Mr Shaw said that he was paid overtime for work before 8 am and after 5 pm Monday to Friday, and for all work on Saturdays. If Mr Shaw worked overtime, he received one and-a-half times his normal rate.
Mr Shaw said that he often worked beyond 5 pm. He said that three or four times a week on a regular basis he ended up working until 6 pm. He said that on occasion if he did something extra for the company, he was paid in cash for that work by Mr Lindsay Dean and that these hours and the cash payments were not recorded on his pay slips. Mr Shaw said that he was paid to 5 pm and that he was not paid if it took him an hour to return to the workshop at the end of the day. Mr Shaw referred to the pre-drawn time books which the company has used since November 2011, “once the FWO started getting involved”.
Mr Shaw said that Ms Coral Dean dealt with the payroll tasks at the company and that before 2011 Ms Coral Dean arranged all of the pays herself. He said that he did not regularly receive his pay slips from the company and that there was usually a gap of four to six weeks between being paid and getting his pay slips. Mr Shaw said that the effect of withholding the pay slips was that it was difficult for him to remember what hours he actually worked. This meant it was difficult to challenge what he had been paid.
Mr Shaw said that in the last year of his employment, Complete Windscreens paid him for 38 hours per week at the ordinary rate and two hours at time and-a-half (i.e., as overtime).
With respect to lunch breaks, Mr Shaw said that the company expected him to work through his lunch breaks even though payment for that hour each day was withheld by the company. He said that when he started with the company in 1995, Mr Lindsay Dean said to him words to the effect of “a lunch break is a screwdriver in one hand and a hot dog in the other”. On more than one occasion, Mr Lindsay Dean said to him words to the effect of “your lunch break is the time it takes between driving from one job to another”.
Mr Shaw said that he generally worked and ate at the same time, meaning that he ate while driving or whilst on site at a job working on a car. He said that at times he made a quick stop to buy lunch and that at times he was nearly always caught out and told to get back to work. He would receive a telephone call from Mr Lindsay Dean or Mr Haydn Dean or Mr Bruce asking him why he had stopped. He said that this happened approximately three to four times a week. Mr Shaw said that at times he left the car running while he bought his lunch because this would not alert those in the company’s office that the vehicle had stopped. He then ate whilst he was driving. Mr Shaw said that at times when he had attempted to take a break, he had either been told directly that he could not have a break, or just loaded up with work to make taking a break impossible. Sometimes if he was back at the workshop, Mr Shaw was allowed to go across the road to Hungry Jacks. Mr Shaw said that on occasions when he asked Mr Lindsay Dean or Mr Haydn Dean whether he could take a break, he was told that he could not or he was given another job to do. He said that he always received the same answer from Mr Lindsay Dean when he asked about lunch breaks and that was words to the effect of “You do not get a lunch break here. That is part of working here. You do not get a lunch break”. Mr Shaw said that he never received a break of at least 30 consecutive minutes during a working day at the company. He said that he certainly never received a break of an hour a day.
Mr Shaw said that by the time he left his employment with the company, all of its vehicles contained a GPS device and that the company used this device to locate each individual windscreen fitter. The GPS was only a locating device or tracking system and it was not a navigation system which could be used by the driver. It cannot be seen in the vehicle. Mr Shaw said that a GPS device was installed in his vehicle sometime in 2009 and that he was not told when it was installed. Mr Shaw said that he would regularly receive calls from Mr Lindsay Dean or Mr Haydn Dean or Mr Bruce, and more rarely Ms Coral Dean, if they did not believe that he was working. Mr Shaw said that he did not think the GPS was always accurate and he gave examples of the inaccuracy of the GPS, including the occasion in 2009 referred to at [46].
Mr Shaw lodged a complaint with the FWO in July 2011. His main complaint about his employment was having to work nine hours per day without a break and the company then deducting an hour each day from his pay for lunch breaks that he did not take. He found it difficult to work without taking a break. Mr Shaw said that after the FWO became involved, the company tried to create lunch break waivers and contracts. In September or October 2012, he was presented with what he described as an out of date contract to sign by Mr Haydn Dean. I note that in this document, Mr Shaw’s employment was said to be covered by the Modern Award and his classification is said to be Level 3. In September 2012, the management at the company asked Mr Shaw to sign a lunch break waiver document, but he declined to do so.
It is convenient at this point to refer to a matter which were raised in the cross-examination of Mr Shaw and, indeed, in the cross-examination of all employee witnesses. The matter involves what was said by the respondents to be a number of similarities in the text of the affidavits of the employee witnesses. As I understood it, the suggestion of the respondents was not so much that the employees had put their heads together, but that the FWO had put words in their mouths. There are similarities in the text of the affidavits and those similarities are summarised in a two page schedule handed up by the respondents during their closing submissions. I think that the most likely explanation for the similarities is as follows. None of the employees has attained a high level of education. The FWO would have known what information needed to be elicited from the employees and probably did so by question and answer using fairly standard questions linked to topics she had identified. I do not think that there was anything sinister in this, but at the same time, I need to bear the similarities in mind.
Mr Shaw was cross-examined by reference to the GPS records and the company’s day book about his movements on 8 and 10 August 2011. It was established that he did four jobs on 8 August 2011 and there was a substantial period of time on 10 August 2011 when he was not engaged on any jobs.
There is reason to approach Mr Shaw’s evidence with caution. First, there was an interruption in Mr Shaw’s employment by Complete Windscreens after the company had dismissed him for stealing. It seems that that occurred in 1995 and that he was re-employed by the company within the year. His account was that he gave away property of his employer which he thought was rubbish. It is not possible on the evidence to gauge the seriousness of this incident. Secondly, Mr Shaw was doing some jobs on his own behalf and for reward which could have been done by the company. Thirdly, Mr Shaw tried to block the GPS device in his vehicle with a piece of lead and eventually he removed the GPS device from the vehicle. Fourthly, Mr Shaw said that he would purchase the glass which he needed for private jobs from PGI. Mr Shaw said that he did not collect glass he used for private jobs from PGI during ordinary business hours. Instead, Mr Lee would leave the glass outside of PGI’s premises and Mr Shaw would collect it outside ordinary business hours. Mr Shaw denied that he would have a break of 45 minutes approximately three times per week at Mr Lee’s premises. As I have said, the respondents called Mr Lee to give evidence and he contradicted Mr Shaw’s evidence. He said that Mr Shaw did come to PGI’s premises during normal business hours in a Complete Windscreens vehicle and purchased PGI’s products for himself and not for Complete Windscreens. He said that he never arranged with Mr Shaw to leave products out for him. I accept Mr Lee’s evidence in preference to that of Mr Shaw. Finally, the respondents submit that Mr Shaw threatened Mr Nakhoul with consequences if the latter withdrew his complaint against Complete Windscreens. The evidence is not very clear, but it seems that Mr Shaw approached Mr Nakhoul at about the time Mr Nakhoul went back to Complete Windscreens and told him something along the lines that if he withdrew his complaint he might go to gaol.
Mr Mathews
The relevant period for Mr Mathews is 31 May 2010 to 7 July 2011. Mr Mathews was a junior throughout his employment by Complete Windscreens. He was employed as a casual until 29 December 2010 and a full time employee thereafter. The claims made in relation to him related to casual loading and casual overtime, overtime, Saturday penalties, meal breaks, meal allowances and unpaid work. The evidence Mr Klousia had available to him were time books showing start and finish times for the period from 27 January 2011 to 29 June 2011, and a payroll history for the period from 2 June 2010 to 13 July 2011.
Mr Mathews was born on 5 March 1992 and he was employed by Complete Windscreens from 31 May 2010 to 8 July 2011. He changed his surname from Lamb to Mathews in May 2012. Mr Mathews was employed as a trainee window tinter and his hours of work were 8 am to 5 pm Monday to Friday and every second Saturday 8 am to 12 noon. He did not sign a contract of employment with the company. The only thing he signed at the commencement of his employment was a tax file number declaration form and that was the only paperwork he received during his employment by the company. He did not sign any documents to suggest that he was a trainee or an apprentice. Mr Mathews never received an employee induction manual or occupational health and safety checklist during his employment by Complete Windscreens. In November 2010 he received a letter from the company that advised him that he was a casual on $12 per hour. He said that he had similar letters from the company when his hourly rate as a casual was increased to $18, and when he became a full time employee. Mr Mathews said that he was never told what award or agreement covered him nor was he advised of his classification level.
Mr Mathews had no formal induction or structured training and he was not given any written policies or procedures. His training was “on-the-job” training from the other tinters. Mr Mathews said that it took him about three to four months to feel confident enough to do a tinting job properly and without any assistance. Most of his work was done in the workshop, although there were some mobile tinting jobs he did on the road. After about two to three months, he said he was doing jobs on the road by himself.
He acknowledged that the records also showed Mr Flynn working less than 40 hours per week. He explained this in the following way:
So is it your understanding that, no matter how many hours per week Mr Flynn worked, the records would always show 40 hours per week?---No.
Mr Haydn Dean said that Mr Flynn would tell Ms Coral Dean the amount which he deserved, “[H]e regulated it”.
I find the suggestion that Mr Flynn nominated the amount he was entitled to and the payroll company was responsible for the hours and hourly rate completely implausible. The precise figures he was paid would be one reason to reject that suggestion.
Mr Haydn Dean was at times very argumentative in cross-examination. The following is an example:
What other alternative is there?---Well, it’s quite simple. In the previous four days of court case, on page 279 of the transcript where you took over getting evidence, in lines 19 to 25, and you suggested that – well, you didn’t suggest, you said that Brian Flynn was not on a – and his wife were not on a carer’s pension, if you care to ring 132717, quote his name, including his middle name, George, give his date of birth and where he lives, they will tell you he is. They will tell you the current amount that he’s allowed to earn per fortnight – not week, but per fortnight. They will also allow you the fact that that figure must not be overstepped, for want of a better term, and that they would amortise that over three months. Three months. So let’s say he earned $600 one week – and he did, by the way – you will find in all your stuff that – you will find that he did earn something more than that – then he had to break it down, so that in a three-month period he got underneath this magical figure that he wasn’t allowed to earn. Now, how did that come about in 2008? It probably surprises nobody that I can’t remember, including yourself.
Well, I suggested to you---?---That’s one suggestion.
---Mr Dean, that there were two alternatives; either Mr Flynn suggested it, on your evidence, or Mr Flynn negotiated it with Complete Windscreens. You said, no, it wasn’t either of those. Well, what was it?---You just weren’t listening the last two minutes, with our chat, were you?
So you’re saying – how did what – how is what you’ve just said an explanation for arriving at a number of $331.25 or some of these other odd figures? How is that an explanation?---Are you the only person in the room that didn’t understand that? Okay. Let’s go back over it again. This is my suggestion, and I cannot remember the exact – what was said and what wasn’t said on that day. However, at times, Brian had to get his earnings below a certain figure. Otherwise, his wife would either lose or lose part of her carer’s pension for Matthew Flynn. That was incredibly important to that family, more so than Brian working. Brian working was just – that was transient. Having a carer’s pension for Matthew for the rest of his life – that is akin to a person, an educated person – an educated person in Elizabeth Downs – that was akin to having – or having discovered an oil well in their backyard. Very important that they not mess with that.
Mr Haydn Dean admitted to pointing out to Mr Flynn that he may face “charges” of $30,000 if he persisted with his claim, having regard to the company’s GPS records and his arrangements about the maximum amount he could earn. He said:
MR MANOS: Sorry, the $30,000 charge – why did you raise that with Mr Flynn?---The $30,000 come – result of him bragging what Greg Shaw was going to get him – Greg Shaw, in this action against Complete Windscreens, was going to get him. I said, “It could cost that or more if you run foul of the Australian Taxation Office and Centrelink,” or whatever it’s called now.
Mr Haydn Dean agreed that he had presented documents to Mr Flynn, Mr Shaw and Mr Priest for signature.
Mr Haydn Dean was not a satisfactory witness. Subject to the last matter mentioned in this paragraph, I do not accept his evidence except where it is corroborated by evidence I do accept. I do not accept his evidence that the employees were given the induction manual. The employees said that they did not and it seems to me unlikely that if they were, all of the checklists would have been lost. Nor do I accept Mr Haydn Dean’s evidence that during induction, or at any other time, the employees were told that they should take a 30 minute meal break and other breaks totalling 30 minutes. I do not accept his evidence about how long employees were supervised after they commenced their employment. I prefer the evidence of the employees on this point. Whilst I am prepared to accept that he had some contact with a government department, I am not satisfied that it was to the extent he indicated.
Mr Darren Husson
I have already outlined the relevant evidence given by Mr Husson (at [49]).
Mr Lee
I have already mentioned some of the evidence given by Mr Lee (at [65], [97] and [144]). The thrust of Mr Lee’s evidence is that Mr Shaw would typically use the lunchroom at the PGI premises for anywhere between 10 and 45 minutes at a time and that he would not infrequently do this several times in one day. Mr Lee said that other employees of Complete Windscreens and, in particular, Mr Nakhoul, Mr Flynn, Mr Moala and Mr Priest, made similar use of the PGI lunchroom for similar periods of time as did Mr Shaw. Mr Lee could not recall how many times each employee used the lunchroom, but he said that he personally observed each of the abovenamed gentlemen doing so on a number of occasions.
I have considered Mr Lee’s evidence carefully and I have taken into account the fact that some of the matters he gave evidence about were not put, or not clearly put, to the employees. I have also taken into account the fact that his company has an ongoing supplier and customer relationship with Complete Windscreens. His evidence is very general and I would not accept it as being precise in terms of the length of the lunch breaks. Subject to that, I accept the substance of his evidence.
The Issues
Lunch Breaks and a One Hour Break Each Day
The company paid the employees on the basis that on each day they had a break of one hour or breaks totalling one hour. The company’s case is that each employee had a 30 minute meal break before 1 pm or at 1 pm each day and, if that is correct, then it did not underpay them for 30 minutes work each day and furthermore, the FWO’s case about meal break contraventions (i.e., the failure to pay time and-a-half) is not made out. The company’s case is that each employee had other breaks during each day totalling 30 minutes. If that is correct, then the company did not underpay each employee for one hour’s work (including the meal break of 30 minutes) each day.
The onus is on the FWO to make out the allegations that constitute her case. The allegations must be established on the balance of probabilities, but in deciding whether the allegations are made out on the balance of probabilities, the Court is to take into account the gravity of the matters alleged (Evidence Act s 140). In this case, the contraventions are of civil remedy provisions and could lead to the imposition of pecuniary penalties.
The starting point is what the employees were told when they were first employed by the company. None of the employees entered into a written contract of employment with the company. Each of the employees was told of their hours of employment with the company by Mr Lindsay Dean or Mr Haydn Dean or both of them. Each of them said that they were not given any instructions about lunch breaks or other breaks, either orally or in writing at the commencement of their employment with the company and, as I have said, I accept that evidence in preference to the evidence of Mr Lindsay Dean and Mr Haydn Dean.
The employees would have assumed that they would have been entitled to take a lunch break and, in fact, the FWO’s case was that when they sought to take a lunch break each of them was discouraged from doing so by the management of the company, either by direct comments to that effect, or by the management using the GPS to check their location and then contacting them and directing them to proceed to the next job. I think the company was a demanding employer and would have been concerned, at least from time to time, that some employees were not working quickly enough or hard enough. Some of the company’s customers would have been demanding in terms of wanting their jobs done as soon as possible, and the company would have been very busy from time to time. I accept that on occasions, having seen by use of the GPS that an employee’s vehicle had stopped, management would have contacted the employee and told him to proceed to the next job quickly and have lunch afterwards. I also accept that, on occasions when the company was busy, management may well have made statements about not taking lunch breaks attributed to them by some of the employees. However, for the reasons which follow, I am not satisfied that the FWO has proved on the balance of probabilities, and having regard to the gravity of the matters alleged, that the employees did not have a meal break of at least 30 minutes duration before or at 1 pm each day.
First, the FWO’s case is stronger if the employees were as busy as they suggested. However, I doubt that they were, at least all of the time. I find that the company’s day book was generally accurate insofar as it showed the company’s jobs for which it was paid. I accept that there might have been times when jobs were exchanged between employees and that there were non-paying jobs such as collecting materials which were not recorded in the day book. As I have said, I also accept that the GPS was generally accurate, although there may have been occasions when it yielded incorrect information. Furthermore, there was a close correspondence between the jobs in the day book and the locations shown by the GPS. This point cannot be taken too far because the GPS evidence I am prepared to take into account is for a very limited period. However, it does raise a doubt in my mind as to whether the employees were as busy as some of them claimed to be.
Secondly, Mr Lee’s evidence is significant. It is to the effect that PGI’s lunchroom was used by the employees, other than Mr Mathews, to have lunch for reasonable periods.
Thirdly, each of the employees admitted to varying degrees that they had a lunch break on occasions. Mr Mathews admitted that he had a lunch break for at least half an hour approximately 25% of the time. Mr Flynn admitted that he had a lunch break on occasions. Mr Moala seemed to agree in cross-examination that he took lunch breaks, or at least that he was not under pressure not to take a lunch break. Mr Priest said that roughly he had “one lunch hour each three weeks”. Mr Nakhoul said that if he stopped for lunch on the road, he usually only stopped for about 15 to 20 minutes maximum in a day as he had too much work to get through in a day. I accept that this evidence in express terms only goes so far, but it is significant in undermining any absolute proposition that the employees never had a lunch break.
I accept that there may be cases where there is evidence of occasions where employees had a lunch break which might be considered de minimis and not such as to undermine a conclusion that the employees did not take lunch breaks. However, I do not think that is this case on the evidence. I also accept that there may be cases involving a period of time where one can say with a reasonable degree of certainty that employees had a lunch break or did not have a lunch break for part of that time, for example, employees did not have a lunch break for 50% of the days between date X and date Y. I note that the translation of such a conclusion into a declaration was not the subject of submissions. In any event, the difficulty in this case is that one cannot reach a conclusion with a reasonable degree of certainty and to my mind that is fatal.
I have reached the conclusion that the FWO has not established its case on the balance of probabilities. This conclusion means that the FWO’s case that Complete Windscreens contravened the relevant awards because the employees were not provided with or took a 30 minute meal break before or at 1 pm fails. Further, the FWO’s case that Complete Windscreens contravened the relevant awards by not paying the employees at the rate of time and-a-half after 1 pm fails because I am not satisfied that the employees were not provided with or took a 30 minute meal break before or at 1 pm.
That conclusion does not dispose of the issue concerning breaks. The employees were paid on the basis that in a normal working day of 8 am to 5 pm, they had breaks totalling one hour. That is to say, they were paid on the basis of the period between their start and finish times minus one hour for breaks. As I have said, I am not satisfied that the employees were not provided with or did not take lunch breaks of 30 minutes. The company’s case was that employees were told when they were employed that they should take other breaks during the day totalling 30 minutes. As I have said, I do not accept this evidence from Mr Lindsay Dean and Mr Haydn Dean. Furthermore, it was not put to any of the employees that they took structured breaks totalling 30 minutes. While I accept that there were times when they were not busy whether on the road or in the company’s workshop and had nothing to do and either did nothing or attended to their own affairs, I do not think there was anything in the nature of properly structured breaks. By structured breaks I mean breaks at a fixed time each day and in circumstances where the employee was off duty and considered off duty by Complete Windscreens. Perhaps the former circumstance, that is, fixed times each day, may not need to be present in a case where the employees are on the road, but the latter circumstance certainly does. There is nothing in the evidence which I accept to indicate that there were circumstances where the employees were off duty and considered off duty by Complete Windscreens for breaks (in addition to the lunch break of 30 minutes) adding up to 30 minutes each day. I note Mr Lee’s evidence about the use of the PGI lunchroom by Mr Shaw and the other employees, except Mr Mathews. His estimate of 10 to 45 minutes is just that, an estimate. As I have said, it is important in that it is a factor that leads me to conclude that the FWO has not established her case about 30 minute lunch breaks. It is reliable to a point, but it does not lead me to conclude that the employees regularly took a lunch break of 45 minutes.
I find that the employees were not paid for 30 minutes work each day. For example, for an employee who worked Monday to Friday from 8 am to 5 pm, that meant that the employee was not paid for an additional two hours and 30 minutes per week.
Mr Flynn
The FWO has made out its case in relation to Mr Flynn. The assessment period is 29 November 2007 to 30 November 2011. The records in relation to Mr Flynn are a timesheet for the period from 5 December 2007 to 30 November 2011, and the payroll register for Mr Flynn for the periods 5 December 2007 to 26 January 2011, and 24 August 2011 to 23 November 2011. The timesheets show normal hours and other entitlements for part of the period from 5 December 2007 to 30 November 2011. The payroll register shows information about Mr Flynn’s earnings each week, the deductions made (for example, PAYG withholding tax), employer contributions for superannuation and Mr Flynn’s net pay. It shows the hours worked for which Mr Flynn was paid, the hours for sick or personal leave and annual leave and leave loading for which Mr Flynn was paid. The payroll register shows that Mr Flynn was paid at a rate of $12.50 per hour. I will identify a couple of examples. For the week involving payment to 5 December 2007 with a pay date of 6 December 2007, Mr Flynn was paid earnings for 40 hours work at $12.50 per hour being $500 gross and tax of $67 was withheld resulting in a net pay of $433. For the week involving payment to 19 December 2007 and a pay date of 20 December 2007, Mr Flynn was paid earnings for 34 hours at $12.50 per hour being $425 and paid sick or personal leave for 3 hours at $12.50 per hour being $37.50 and making a total of $462.50. Tax of $60.50 was withheld resulting in a net pay of $402. For the week involving payment to 23 January 2008 and a pay date of 24 January 2008, Mr Flynn was paid earnings for 32 hours at $12.50 per hour being $400, annual leave for eight hours at $12.50 per hour being $100 and leave loading at 17.5% of $12.50 being (for eight hours) $17.50 being a total of $517.50. After tax of $67.50 was deducted, his net pay was $450.
It is quite clear from the company’s records that Mr Flynn was paid at the rate of $12.50 per hour and that payments for overtime and leave loading were calculated according to that rate. The hourly rate that he should have been paid ranged from $14.77 per hour as at 29 November 2007 to $16.57 per hour as at 30 November 2011. The company’s defence and that of Mr Lindsay Dean to the alleged underpayment of Mr Flynn was a denial that the Federal APCS applied. For reasons I have given, I reject that defence. Significantly, both the company and Mr Lindsay Dean admitted in their respective Defences that from 29 November 2007 to 30 November 2011 the company employed Mr Flynn as a permanent full time employee and paid him $12.50 per hour.
As I have said, there was evidence from Mr Lindsay Dean that Mr Flynn did not want to earn more than $500 per week because of the effect that might have on benefits he or his family were receiving in relation to a sick child. That did not form the basis of any submission by the respondents’ counsel in closing submissions and put on that basis, plainly, any such argument would have to be rejected. In September 2012, the company wished to convey that Mr Flynn agreed in April 2007 to work a maximum of 25 hours for a week for which he would be paid $500 equating to $20 per hour. The need for the arrangement was said to be Mr Flynn’s need to attend to a child with special needs. Such an arrangement is improbable and is not consistent with the company’s records. The evidence of Mr Lindsay Dean and Mr Haydn Dean concerning the suggested arrangement was unimpressive. The respondents’ counsel did not rely on such an arrangement in his closing submissions.
The argument that was put by the respondents in closing submissions was that, by reason of the GPS evidence, I could not be satisfied that Mr Flynn worked the hours he claimed and that he was underpaid. I reject that submission for the reasons I have given.
Record Keeping and Pay Slips
Record Keeping
Under the WR Act and the WR Regulations, an employer is required to make and then keep for a continuous period of seven years from the date of entry certain records in relation to the employment of each of its employees. Those records include a record of the number of overtime hours worked by an employee during each day and when the employee started and ceased working overtime hours (WR Regulations (regs 19.1, 19.4 19.9)). A similar regime applies (and applied) under the FW Act (s 535) and FW Regulations (reg 3.34).
The thrust of the applicant’s closing submissions was that the company did not keep the required records for overtime worked by Mr Flynn, Mr Shaw and Mr Waretini-Rewita.
As I have said, the applicant served Notices to Produce on the company in 2011. The first notice is dated 23 August 2011 and the second notice is dated 21 November 2011. Both were issued under s 712 of the FW Act. The notices led to the production of records, but none of the records produced meet the description of records required in relation to overtime worked by the three employees to whom I have referred. I infer that the company did not have such records.
I accept that Mr Flynn did on occasions work overtime. That was his evidence and is established by the records which the company did produce. I accept that Mr Waretini-Rewita did on occasions work overtime. Although Mr Waretini-Rewita did not give evidence, the fact that on occasions he worked overtime is established by the records the company did produce. Although I approach Mr Shaw’s evidence with caution, I accept that he did on occasions work overtime.
I hold that the company did not keep the required records for overtime worked by Mr Flynn, Mr Shaw and Mr Waretini-Rewita.
Pay Slips
Under the WR Regulations, an employer must issue pay slips to employees to whom they pay remuneration. The pay slips must record specified information and must be issued within one day of the payment to which the pay slip relates being made to the employee (WR Regulations, regs 19.20, 19.21). A similar regime applies under the FW Act (s 536) and FW Regulations (regs 3.45 and 3.46).
The thrust of the applicant’s closing submissions was that the company failed to give or issue the relevant employees a pay slip within one working day of paying remuneration to an employee.
There is a good deal of evidence from a number of employees (Mr Shaw [89], Mr Mathews [106], Mr Flynn [128], Mr Moala [158] and Mr Nakhoul [2076]) that they were not issued with a pay slip within one working day of receiving their pay. The cross-examiner did not challenge this evidence and I accept it. As I have said, Mr Lindsay Dean’s evidence on the topic of pay slips was unimpressive ([252]).
I hold that the company did not issue or give pay slips to employees within one working day of paying them their wages.
Other Contraventions
I wish to hear the parties in relation to meal allowances. Leaving that to one side, and subject to any recalculations necessary because of my conclusions in relation to the 30 minute lunch break, the other contraventions are made out.
The Involvement of Mr Lindsay Dean
The relevant sections are s 728 of the WR Act and s 550 of the FW Act. For the purposes of the issues in this case, there are no material differences between the two sections. The FWO alleges that Mr Lindsay Dean aided, abetted, counselled or procured the contraventions by the company (para (a)) or had been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contraventions by the company (para (c)). The decisions of the High Court have established that to be held liable under sections of this nature, a person must have had knowledge of the essential facts constituting the contravention (Yorke and Another v Lucas (1985) 158 CLR 661 at 670 per Mason ACJ, Wilson, Deane and Dawson JJ), and although knowledge may include wilful blindness, it does not include recklessness or negligence (Giorgianni v The Queen (1985) 156 CLR 473 at 506-507 per Wilson, Deane and Dawson JJ).
A particular issue which has arisen in the context of alleged involvement in the contravention of industrial instruments such as awards is whether the alleged accessory must know of the provisions of the instrument before he or she can be held liable. In Potter v Fair Work Ombudsman [2014] FCA 187 (“Potter”), Cowdroy J who was considering a contravention constituted by an underpayment of wages decided that the alleged accessory must have known that the Clerical NAPSA applied to the employees before she could be held liable. Otherwise, his Honour said, a director might be held liable even though he honestly believed the relevant award did not apply (at [81]). In Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 (“Devine Marine Group”), the applicant’s case was that the alleged accessory had been involved in contraventions by a company involving a failure to pay applicable minimum hourly rates and Saturday penalty rates and Sunday penalty rates. White J considered the authorities, including the decision in Potter and my decision in Fair Work Ombudsman v Al Hilfi [2012] FCA 1166 and held that before the alleged accessory in that case could be held liable, it needed to be shown that he knew that there is an award which was applicable and which prescribed minimum rates or entitlements (at [188]). The FWO suggested that there was a difference between the approach in Potter and the approach in Devine Marine Group. I do not need to address this submission because it was common ground between the parties, and I think it is correct that, taking the meal breaks as an example, the FWO must prove that Mr Lindsay Dean knew that the relevant employees were governed by an industrial award and that the award stipulated minimum meal breaks and that the meal breaks actually provided were less than stipulated under the award before he is held liable under s 728 of the WR Act and s 550 of the FW Act.
Mr Lindsay Dean was the sole director and secretary of the company from 10 October 2006 until the end of the relevant period on 30 November 2011. Sometimes alone (Mr Moala, Mr Priest) and sometimes with his brother Haydn (Mr Flynn, Mr Nakhoul) he interviewed potential employees. His brother, Haydn, and his mother, Coral, were also involved in the business. For part of the relevant period, there was a Mr Peter Bruce employed in the office and an administrative or office person who worked under the direction of Ms Coral Dean.
Mr Lindsay Dean was the primary person who took the bookings and allocated the jobs. He was often the person in management who the employees approached when they had issues about the terms and conditions of their employment (for example, Mr Shaw, Mr Mathews, Mr Flynn, Mr Priest). The weight of the evidence is that Mr Lindsay Dean managed the business both at a general level and at a “hands on” level. Mr Haydn Dean had a role to play, but it was subordinate to his brother, Lindsay.
Mr Lindsay Dean would have had a detailed knowledge of the workings of the company. That finding is subject to two qualifications. First, as I have said, I accept that Mr Haydn Dean was the person who made such inquiries as were made about the applicability of industrial instruments, including awards to the company’s employees. Secondly, so far as the evidence goes, it was Ms Coral Dean who was in charge of pays, time books and payroll functions. She was the one who had an intimate knowledge of these matters.
I have found that the alleged contraventions for the underpayment for a 30 minute meal break and the failure to pay an hourly rate at time and-one-half after 1 pm against the company are not made out. Mr Lindsay Dean could not have been involved in contraventions that did not take place. However, I find that he was involved in the underpayment of the employees for 30 minutes of other breaks. As I have said, these additional 30 minutes’ worth of breaks each day which he said the employees were entitled to were not structured breaks and he must have known that the employees were not being paid for that time.
I find that Mr Lindsay Dean was involved in the contraventions by the company associated with its employment of Mr Flynn. Mr Lindsay Dean was aware of the amount the company was paying Mr Flynn and the amount the company was paying other windscreen fitters and of the difference between the two. Indeed, his defence to the allegation of the low hourly rate paid to Mr Flynn over a number of years was that it was justified by reference to what Mr Flynn wanted for his own reasons. That, as I have said, is no defence.
With respect to whether Mr Lindsay Dean was involved in the company’s record keeping contravention, I am not satisfied that he was. In order to be liable, he needs to know of (among other matters) the records the company did or did not keep with respect to the overtime worked by the three employees. As sole director and company secretary, he ought to have been aware, but I am not satisfied that he was, having regard to the fact that the evidence suggests that Ms Coral Dean carried out the record keeping functions at the company.
With respect to whether Mr Lindsay Dean was involved in the company’s pay slip contraventions, I am satisfied that he was. The position differs from the record keeping contraventions because, in the case of the pay slip contraventions, I think Mr Lindsay Dean was aware of the company’s practice or conduct with respect to the issuing or giving of pay slips, as I have found it to be. As is clear from what I have said above ([252]), Mr Lindsay Dean purported to give evidence of the company’s practice with respect to the provision of pay slips which, although I do not accept the evidence, shows that he knew what in fact was happening.
In addition, I find that Mr Lindsay Dean was involved in the contraventions by the company constituted by the company’s failure to pay two hours’ overtime where an employee worked a 40 hour week. Mr Lindsay Dean would have been aware of the contents of the induction manual and that clearly stated that normal hours were 38 hours and there were two hours of paid overtime per week.
As to the remaining contraventions, I am not satisfied that Mr Lindsay Dean was sufficiently aware of the company’s payment arrangements to have been involved in the contraventions.
Mr Waretini-Rewita
The respondents admitted that Mr Waretini-Rewita was employed as a casual employee from 10 February 2011 to 25 July 2011 and paid at the rate of $15 per hour. The claims made in relation to him relate to casual loading and casual overtime and those claims are established by the company records and Mr Klousia’s calculations which were not challenged. The fact that Mr Waretini‑Rewita did not give evidence does not mean that the claims have not been established.
Conclusions
My findings and conclusions are set out in these reasons. I will give the FWO the opportunity to file and serve within 10 days draft minutes of order reflecting the conclusions expressed in these reasons and setting out such other orders as the applicant contends should now be made. I will adjourn further consideration of the proceeding to a date to be fixed.
I certify that the preceding three hundred and twenty (320) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. Associate:
Dated: 1 June 2016
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