Fair Work Ombudsman v Complete Windscreens (SA) Pty Ltd

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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…
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Details
Case
[2016] FCA 621
Decision Date

CaseChat Overview and Summary

In the matter of Fair Work Ombudsman v Complete Windscreens (SA) Pty Ltd, the Fair Work Ombudsman (FWO) brought an action against Complete Windscreens (SA) Pty Ltd for alleged contraventions of the Fair Work Act 2009 (Cth), the Workplace Relations Act 1996 (Cth), the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), and a Notional Agreement Preserving a State Award derived from the Vehicle Industry (South Australia) Repair Service and Retail Award [AN150167 – SA]. The contraventions alleged related to minimum wages, casual loading, overtime, meal breaks, meal allowances, Saturday penalties, annual leave, annual leave loading, personal leave, record-keeping, and pay slips.

The court was required to determine whether Complete Windscreens had contravened the aforementioned industrial laws. The specific legal issues included whether the company contravened the minimum wage provisions, failed to pay casual loading and overtime, did not provide meal breaks and meal allowances, neglected to pay Saturday penalties, did not provide annual leave and annual leave loading, failed to provide personal leave, did not maintain proper records, and did not issue pay slips. Additionally, the court had to assess if any director of the company was involved in the contravention of these laws.

In its decision, the court found that Complete Windscreens had indeed contravened the industrial laws. The court held that the company failed to pay minimum wages, casual loading, overtime, meal breaks, meal allowances, Saturday penalties, annual leave, annual leave loading, and personal leave. Furthermore, the court determined that the company did not maintain proper records and did not issue pay slips. The court found that the company's director was not involved in the contravention of these laws.

The court ordered the FWO 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. The proceeding was adjourned to a date to be fixed.

Orders

Orders of the court

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.

Background

Background to the litigation

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

Evidence

Evidence Before The Court

A broad description of the relevant obligations and their source is as follows:(1)Minimum wages and unpaid workMr 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 contraventionsThese 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 loadingCasual 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)OvertimeEmployees 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 contraventionsEmployees 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 contraventionsEmployees 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 leaveBefore 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 loadingIn 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 contraventionsEmployees 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

Decision

Reasons for decision

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.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.