Fair Work Ombudsman v Eagle Tours Pty Limited
[2019] FCCA 2099
•1 August 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v EAGLE TOURS PTY LIMITED | [2019] FCCA 2099 |
| Catchwords: INDUSTRIAL LAW – Breaches of a civil remedy provision of the Fair Work Act 2009 – imposition of pecuniary penalties – relevant considerations. |
| Legislation: Fair Work Act 2009, ss.45, 539, 546, 557 Crimes Act 1914, s.4AA |
| Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 |
| Applicant: | FAIR WORK OMBUDSMAN |
| Respondent: | EAGLE TOURS PTY LIMITED |
| File Number: | SYG 49 of 2016 |
| Judgment of: | Judge Cameron |
| Hearing date: | 6 March 2018 |
| Date of Last Submission: | 6 March 2018 |
| Delivered at: | Sydney |
| Delivered on: | 1 August 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms R.L. Gall |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| Counsel for the Respondent: | Mr I. Taylor SC and Ms J. Curtin |
| Solicitors for the Respondent: | Clyde & Co |
ORDERS
The Respondent pay a pecuniary penalty of $89,250 for its contraventions of the Fair Work Act 2009 declared by the Court on 29 May 2017.
The Respondent pay the pecuniary penalty to the Consolidated Revenue Fund of the Commonwealth within 28 days of these orders.
The Applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders is not complied with.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 49 of 2016
| FAIR WORK OMBUDSMAN |
Applicant
And
| EAGLE TOURS PTY LIMITED |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
The respondent (“Eagle Tours”) operated a bus hire and coach charter service. In 2009 it was contracted to provide a shuttle bus service to Transport Sydney Trains (“Sydney Trains”).
The applicant (“Ombudsman”) commenced this proceeding on 11 January 2016, alleging that Eagle Tours had contravened the Fair Work Act 2009 (“FW Act”) by failing to pay casual loading rates and overtime and penalty rates to four of its former bus drivers (“Drivers”) in accordance with the Passenger Vehicle Transportation Award 2010 (“Modern Award”). The Ombudsman alleged that the Modern Award applied because the Drivers were employees of Eagle Tours, not independent contractors as three of them had, at times, been characterised.
The matter was listed for a separate hearing on the question of contraventions which was to commence on 29 May 2017. However, on the first day consent orders were submitted which led to the Court declaring that Eagle Tours had contravened s.45 of the FW Act by virtue of contraventions of:
a)cl.10.5(c) of the Modern Award (casual loading) in the amount of $13,387.42;
b)cl.23.1 of the Modern Award (overtime) in the amount of $7,461.32;
c)cl.23.2 of the Modern Award (Saturday penalties) in the amount of $6,106.10;
d)cl.23.2 of the Modern Award (Sunday penalties) in the amount of $11,113.50;
e)cl.23.4 of the Modern Award (Public holiday penalties) in the amount of $4,530.77; and
f)cl.23.5 of the Modern Award (early and late work penalties) in the amount of $3,413.53.
It was declared that the contraventions resulted in an aggregate underpayment of $46,012.64 comprised of the following amounts for each bus driver for the identified periods of time:
Drivers Assessment period Total underpayment (gross) Bruno Malvaso 15.11.12 to 15.05.13 $9,104.25 Dusko Kojadinovic 01.08.13 to 05.02.14 $12,966.22 Saman Hameed 15.11.12 to 15.05.13 $8,219.17 01.08.13 to 29.01.14 $7,740.90 Slobodan Malisic 30.07.13 to 03.02.14 $7,982.10
By consent, the Court also ordered:
1.Pursuant to sub-section 545(2)(b) of the FW Act that the Respondent pay to the Four Drivers the following amounts within 28 days of the date of the order:
(a) $7,560.28 to Mr Malvaso;
(b) $12,966.22 to Mr Kojadinovic;
(c) $13,116.73 to Mr Hameed; and
(d) $7,982.10 to Mr Malisic.
2.Pursuant to sub-section 559(2) of the FW Act, that in the event that any of the Four Drivers listed in order 1 above cannot be located within 28 days of the orders, the Respondent pay the applicable amount due to that employee to the Commonwealth within a further seven days.
3.Pursuant to sub-section 545(1) of the FW Act that the Respondent will, within 30 days of the date of this order:
(a)display a notice in the office of the premises of the Respondent that can be easily viewed by all employees and any bus drivers purportedly engaged as independent contractors (“Workplace Notice”); and
(b)place the Workplace Notice in the glove compartment of each of its passenger vehicles, and after having done so, use its best endeavours to ensure that the Workplace Notice remains in each of its passenger vehicles.
4.The Workplace Notice must contain:
(a)the Fair Work Ombudsman’s Fact Sheet titled ‘Contractors and Employees – what’s the difference’;
(b)information on the minimum rates of pay, casual loading and penalty rates under the Modern Award; and
(c)information on how to contact the Fair Work Ombudsman.
5.The Respondent will provide proof of the display and placement of the Workplace Notice to the Applicant within 14 days of display.
6.The Workplace Notice must be displayed and placed in accordance with Order 5 by the Respondent continuously for a period of one year from the date of this Order.
7.Pursuant to sub-section 545(1) of the FW Act, the Respondent will, at its own expense, engage an independent third party with expertise in workplace relations to undertake an audit of its compliance with the FW Act and the Modern Award on the following terms:
(a)the audit period will be from 1 July 2015 to 1 December 2015;
(b)the Respondent will engage the independent third party to conduct the audit within 30 days of the date of this order;
(c)the Respondent will use its best endeavours to have the audit completed within 60 days of the date of this order;
(d)the audit will apply to all bus drivers engaged by the Respondent, including but not limited to, those purportedly engaged as independent contractors;
(e)the audit will assess the Respondent’s compliance with each bus driver’s classification of work, categories of employment and hours worked during the audit period;
(f)within 30 days of the audit being completed, the Respondent will provide to the Applicant:
(i) a copy of the audit report which will include a statement of the methodology used in the audit; and
(ii) written details of any contraventions identified in the audit, the steps the Respondent will take to rectify any identified contravention(s), and the date by when the rectification will occur.
…
These reasons are concerned with the penalties to be imposed on Eagle Tours for its admitted contraventions of the FW Act.
RELEVANT LEGISLATION
Section 539 of the FW Act provides that s.45 is a civil remedy provision. At the relevant time, ss.539(2) and 546(2) of the FW Act provided that the maximum pecuniary penalty for a corporation’s contravention of s.45 of the FW Act was 300 penalty units. Until 27 December 2012 a penalty unit was worth $110. In the period 28 December 2012 to 30 July 2015 a penalty unit was worth $170: s.4AA Crimes Act 1914.
STATEMENT OF AGREED FACTS
The parties filed a statement of agreed facts (“SOAF”) on 17 November 2017. Its terms have been reproduced in annexure A to these reasons. However, for a better understanding of the relevant facts, parts of it are reproduced below.
Facts concerning employment of the Drivers
The parties agreed that:
17.On and from 1 January 2010, the Respondent was covered by the Modern Award in respect to the employment of the Bus Drivers.
…
19.At all relevant times the Respondent was required to comply with the Modern Award in respect of the employment of the Bus Drivers including complying with clauses 10.5, 23.1, 23.2, 23.4 and 23.5.
20.During the Assessment Periods, each of the Bus Drivers performed casual work for the Respondent within the meaning of clause 10.5 of the Modern Award.
…
24.Each of the following persons (collectively the Bus Drivers) performed work for the Respondent:
(a) Bruno Malvaso;
(b) Dusko Kojadinovic;
(c) Saman Hameed; and
(d) Slobodan Malisic.
25.The Bus Drivers were engaged as follows:
(a)Mr Malvaso as an employee for the period 15 November 2012 to 15 May 2013;
(b)Mr Kojadinovic as an independent contractor for the period 1 August 2013 to 5 February 2014;
(c)Mr Hameed as an employee for the period 15 November 2012 to 15 May 2013 and as an independent contractor for the period 1 August 2013 to 29 January 2014; and
(d)Mr Malisic as an independent contractor for the period 30 July 2013 to 3 February 2014.
26.During the Assessment Periods, each of the Bus Drivers performed duties in the State of New South Wales including:
(a)driving a passenger bus vehicle with a carrying capacity of less than 25 passengers (a bus with 24 seats or less) and transporting TST [Transport Sydney Trains] crew on circuitous routes between fixed terminals; and
(b)cleaning the vehicles.
Bruno Malvaso
27.Mr Malvaso was born on 10 August 1951 in Italy. He worked for the Respondent as a casual bus driver from about mid-November 2009 to August 2013.
28.Mr Malvaso worked under his Tax File Number (TFN) for his entire employment with the Respondent.
29. Mr Malvaso worked 12 hours per shift, from 6am to 6pm.
Slobodan Malisic
30.Mr Malisic was born on 12 October 1961 in Montenegro. He worked for the Respondent as a casual bus driver from on or about 19 August 2012 to 6 August 2014.
31.On 19 August 2012, when Mr Malisic began working for the Respondent, he was paid under an Australian Business Number (ABN). From about 11 March 2014, Mr Malisic worked under his TFN until the end of his employment with the Respondent.
32.Mr Malisic worked 12 hours per shift, either from 6am to 6pm or 6pm to 6am. When he first started working for the Respondent, he worked Thursday to Sunday. After he had been working for the Respondent for about one year, Mr Malisic requested he work only on weekdays. The Respondent agreed and changed his days so that he worked four days a week only on weekdays.
Dusko Kojadinovic
33.Mr Kojadinovic was born on 2 April 1956 in Bosnia. He moved to Australia in 1996. He worked for the Respondent as a casual bus driver from 8 December 2012 to on or around 3 March 2015.
34.In December 2012, when Mr Kojadinovic began working for the Respondent, he was paid under an ABN. He worked under an ABN until 7 March 2014.
35.In about March 2014, Mr Kojadinovic asked Ms Savic if he could switch to working under his TFN, which he was allowed to do, and did, until the end of his employment with the Respondent.
36.Mr Kojadinovic worked 12 hours per shift, either from 6am to 6pm or 6pm to 6am.
Saman Hameed
37.Mr Hameed was born on 20 March 1973 in Kirkuk, Iraq. Mr Hameed worked for the Respondent from 23 August 2009 to 29 August 2011, stopped working for the Respondent from 29 August 2011 to 25 February 2012, and then returned to working for the Respondent from 26 February 2012 to 5 February 2014.
38.In August 2009, when Mr Hameed began working for the Respondent, he was paid under an ABN.
39.From around 28 June 2012, Mr Hameed was paid under his TFN. From about 5 June 2013, Mr Hameed was paid under an ABN.
40.Mr Hameed worked 12 hours per shift, either from 6am to 6pm or 6pm to 6am. When he first started working for the Respondent, he worked predominantly four or five days per week, sometimes six days per week.
…
58.In about March and April 2015, the Respondent made partial back-payments to Mr Malvaso and Mr Hameed for underpayments occurring in the 15 November 2012 to 15 May 2013 Assessment Period.
...
60.On 19 December 2014, Fair Work Inspector David Dixon (FWI Dixon) sent a letter titled 'Letter of Caution' to the Respondent regarding Kiro Jovceski and Mark Clarke. As a result of that correspondence, the Respondent rectified underpayments to Kiro Jovceski of $26,669.54 and to Mark Clarke of $13,272.48. …
APPLICANT’S EVIDENCE
The Drivers
In addition to the SOAF, the Ombudsman relied on selected paragraphs of the Drivers’ affidavits in chief. Relevantly, each deposed (and it was agreed between the parties) that they had worked 12-hour shifts commencing at either 6am or 6pm and were paid a flat hourly rate regardless of the time or day worked. It was agreed that flat rate had been $22 per hour.
In this matter the abbreviations ABN (Australian Business Number) and TFN (Tax File Number) were used respectively to denote that a driver rendered Eagle Tours with tax invoices and remitted GST or had PAYG tax deducted from his earnings.
The Drivers’ evidence indicated that Messrs Kojadinovic, Hameed and Malisic had initially been engaged on ABNs but changed to TFNs and that Mr Hameed later returned to working under to an ABN. Mr Malvaso had always been employed using his TFN. Messrs Kojadinovic, Hameed and Malisic deposed that requests for pay rises were refused and Mr Malvaso deposed that his pay was so low he found it difficult to pay his bills.
Ms Vi-Lay Liu
Ms Liu is a Fair Work Inspector. In her affidavit affirmed 27 November 2017 FWI Liu deposed to various matters relating to the Ombudsman’s investigation of Eagle Tours. Some of these matters are set out in the SOAF at paras.59, 60, 63-64, 67-77, and 91.
Relevantly for present purposes, FWI Liu deposed to the following events:
a)on 19 December 2014 the Ombudsman issued a “Letter of Caution” to Eagle Tours, requiring it to rectify underpayments to two of its drivers;
b)on 9 February 2015 FWI Liu called Mr Savic and advised him that the Ombudsman was investigating complaints made by five further drivers, including Messrs Kojadinovic, Hameed and Malisic;
c)on 16 February 2015 FWI Liu advised Mr Savic that the Ombudsman had received complaints from Mr Malvaso and another driver;
d)later on 16 February 2015 Eagle Tours’ solicitors wrote to FWI Liu advising that Eagle Tours had taken various steps since the issuing of the Letter of Caution to ensure that its employees were accurately paid. Those steps included seeking advice on, and the provision of, further employment and contractor agreements;
e)on 5 March 2015 FWI Liu sent an email to Eagle Tours asking for various documents for the purposes of her investigation;
f)on 31 March 2015 Eagle Tours provided the Ombudsman with a number of documents, including a summary of the hours worked and amounts paid in respect of periods during which Messrs Hameed and Malvaso were engaged as employees;
g)on 1 September 2015 FWI Liu issued a Notice to Produce Records or Documents (“NTP”) to Eagle Tours seeking production of documents relating to the engagement of the Drivers;
h)on 30 September 2015 Eagle Tours produced a bundle of documents in response to the NTP, including a further set of documents setting out the hours worked and/or amounts paid to the Drivers;
i)on 9 October 2015 FWI Liu wrote to Eagle Tours setting out categories of documents which she considered had not been produced to the Ombudsman as required by the NTP. She also noted that the two sets of hours and wages documents provided, in March and September, for Mr Hameed and Mr Malvaso were different and sought an explanation for the discrepancy;
j)on 16 October 2015 the Ombudsman received an email from Eagle Tours’ solicitors indicating that they were taking instructions and expected to revert shortly about the alleged discrepancies. However, FWI Liu did not receive any further correspondence on the matter; and
k)on 27 October 2015 the Ombudsman sent a Findings of Contraventions letter to Eagle Tours. In that letter the Ombudsman stated that she had concluded that Messrs Kojadinovic, Hameed and Malisic had been employees, rather than independent contractors, and underpaid as consequence. The letter also stated:
On 16 [recte: 26] May 2015, I notified you that the FWO’s preliminary view was that the nature of the engagement between Eagle Tours and selected bus drivers including Saman Hameed, Dusko Kojadinovic and Slobodan Malisic (Misclassified Drivers) was that of a contract of employment, that is, an employer/
employee relationship. This preliminary view was based on the evidence received from the Misclassified Drivers through recorded interviews and your submissions received on 31 March 2015.
In that email of 26 May 2015 the Ombudsman had set out her reasons for having formed the view that those drivers had always been employees and invited such submissions on that “preliminary determination” as Eagle Tours might wish to make.
FWI Liu deposed that she had reviewed exhibit SS-1 to the affidavit of Slavica Savic filed on 21 October 2016. Mrs Savic and her husband are the directors of Eagle Tours. FWI Liu deposed that based on her review of the affidavit and exhibit SS-1, the following documents contained in the exhibit had not been produced in response to the NTP although, in her view, they fell within the categories of documents requested:
Documents in exhibit SS-1
Description
Category in NTP
Tabs 3, 8 and 11
Paperwork completed by Messrs Malisic, Kojadinovic and Hameed before they started performing work for Eagle Tours.
Category 4: “All policy documents relating to the provision and use of ... equipment in the course of performing shuttle bus services for Sydney Trains”.
Tabs 4, 10 and 14
Workbooks for Messrs Malisic, Kojadinovic and Hameed.
Category 3: “All documents recording time worked by Saman Hameed ... Dusko Kojadinovic and Slobodan Malisic”.
Tab 13
SMS between Mr Hameed and Mrs Savic regarding Mr Hameed moving back to working on an ABN.
Category 8: “All documents recording any communication ... in relation to the engagement of independent contractors”.
Tabs 15, 16, 17 and 18
Final pay summaries for Messrs Kojadinovic, Hameed, Malisic and Malvaso.
Category 3: “All documents recording time worked by Saman Hameed, Bruno Malvaso, Dusko Kojadinovic and Slobodan Malisic”.
Tabs 19, 20, 21 and 22
Roster books for Messrs Kojadinovic, Hameed, Malisic and Malvaso.
Category 3: “All documents recording time worked by Saman Hameed, Bruno Malvaso, Dusko Kojadinovic and Slobodan Malisic including ... rosters”.
RESPONDENT’S EVIDENCE
Mr Borivoje Savic
Pre Sydney Trains period
Mr Savic and his wife are the directors of Eagle Tours.
Mr Savic deposed that Eagle Tours were a small, family-run business which he and his wife had started in 1999. They operated the business from their home and did not employ any administrative or office staff.
Mr Savic deposed that he and his wife were both employed in other industries before they starting Eagle Tours, he had been a fitter and turner and his wife had been a nurse. Neither of them had any experience in accounting, human resources or the bus and coach industry.
Mr Savic deposed that when he started the business he spoke to other coach operators about what he needed to do and was referred to an accountant. The accountant gave him some advice about how to establish the business but did not tell him anything about what he needed to do when engaging drivers.
Mr Savic deposed that he initially operated the business as an owner-driver performing charter work. After about a year, when he started to receive more work than he could do on his own, he subcontracted some of the work to other coach operators. Mr Savic deposed that he found the arrangement unsatisfactory for a number of reasons and sought the advice of other operators in the industry about how they managed their work. Through these conversations, he learnt that other operators engaged drivers directly to perform their bus driving work and paid the drivers a flat hourly rate. The operators he spoke to also told him that they each had their own list of drivers whom they would use when work came up and who were usually on a number of different coach operators’ lists. Mr Savic deposed that he understood from these discussions that it was standard practice to pay drivers an agreed flat rate for the hours they worked. As none of the operators mentioned an award, he was not aware that there was one and so was unaware of the requirement to pay minimum rates, overtime, loadings and penalty rates. He was also unaware of the requirements around taking breaks.
Mr Savic deposed that he purchased two more coaches and when there was work he would go to a list of drivers and engage them for that day, paying them a flat hourly rate for the work they performed. He deposed that all the drivers were paid against an invoice as contractors on an ABN and were also engaged by other companies to perform driving work. Mr Savic deposed that, according to his understanding at the time, every big coach operator in Sydney operated in the same way and engaged drivers under the same conditions as Eagle Tours. He deposed that to the best of his knowledge, coach operators in the industry still did so.
Mr Savic deposed that by 2009, before the contract with Sydney Trains started, he had four coaches doing charter work and used a variety of drivers.
Contract with Sydney Trains
In 2009 Eagle Tours won a tender to provide bus services to Sydney Trains for regular staff transport work (“Shuttle Services Work”). Upon wining the tender, the Shuttle Services Work immediately became, and remained, the largest part of Eagle Tours’ business.
Mr Savic deposed that the Shuttle Services Work comprised a 24 hour per day, seven day per week shuttle service for Sydney Trains staff. The service operated between Sydney Trains maintenance centres and nearby railway stations and was provided at four sites: Hornsby (since 2009), Flemington (or Lidcombe) (since 2009), Auburn (since 2013) and Leppington (since 2014).
Mr Savic deposed that Eagle Tours’ contract with Sydney Trains required it to operate the Shuttle Services Work along specified routes determined by Sydney Trains. If a specified route could not be used, for example because of road works or an accident, Sydney Trains would specify an alternative route.
Mr Savic deposed that the contract between Eagle Tours and Sydney Trains also included the following requirements:
a)drivers were required to respond to calls for a pick-up. Sydney Trains provided the sim cards for the phones used to take these calls;
b)drivers were required to wear Eagle Tours branded uniforms and Sydney Trains branded high visibility safety vests;
c)Sydney Trains provided inductions for each driver;
d)drivers were required to follow the Sydney Trains Code of Conduct;
e)Sydney Trains required Eagle Tours to comply with rulings made by Roads and Maritime Services and the Ministry of Transport, including break requirements; and
f)break times were set by Sydney Trains.
Mr Savic deposed that the drivers were also given direct instructions from Sydney Trains’ management and Sydney Trains were aware that Eagle Tours’ vehicles were washed and cleaned on Sydney Trains’ premises. Sydney Trains also provided reference letters for the drivers on request.
Engagement of drivers for the Shuttle Services Work
Mr Savic deposed that Eagle Tours had not performed any kind of shuttle work prior to winning the tender with Sydney Trains.
Mr Savic deposed that having won the tender, Eagle Tours had to find more drivers to perform the work. Eagle Tours had a list of drivers who had previously approached it for work and others contacted it once it became known that it had the Sydney Trains contract. Eagle Tours had never advertised for drivers and all the drivers it had engaged had approached it.
All the drivers he initially engaged had prior experience. However, as time went by, he started using drivers who had not previously worked in the industry.
Mr Savic deposed that most of the drivers he initially contacted had an ABN which they also used if they drove for others. These drivers told him that they wanted to work on their ABNs. Mr Savic deposed that he encouraged those who did not have an ABN to get one, as he believed that they would be able to claim better tax deductions as a contractor than as an employee. He deposed in this regard that he was advised by Eagle Tours’ then-accountant that Eagle Tours would have to deduct tax if drivers were engaged on a TFN while, if they were on an ABN, the company would have to pay an invoiced amount, including GST. He was not told that the former scenario attracted minimum payment obligations.
Mr Savic deposed that, ultimately, he left it to each driver to decide how they wished to be engaged. Most drivers preferred to be on an ABN, some preferred to be on a TFN and some shifted between one and the other. Mr Savic deposed that while changing from one to another was discouraged because it created more paperwork, the drivers were nevertheless allowed to do so.
Mr Savic deposed that he treated the drivers the same regardless of which option they chose – they were all paid a flat rate of $22 per hour. He knew that $22 was the going rate as he had spoken to other operators in the industry. He offered work on that basis and each driver agreed to work for that rate.
Mr Savic deposed that he did not understand that the drivers who were engaged to perform regular shuttle work had to be treated differently from the drivers who were engaged to perform charter work. He did not know that there was a requirement to offer different terms to the drivers who drove regularly for Eagle Tours doing the Shuttle Services Work.
Mr Savic also deposed that before he was contacted by the Ombudsman in mid-2014, he was not aware of any significance being attached to whether a driver worked on an ABN or a TFN other than that Eagle Tours had to treat the driver differently for tax purposes.
Mr Savic deposed that if he had been aware that there was an award or other legal requirement to pay overtime, shift or penalty rates, or aware of the requirements around taking breaks, he would never have rostered the work on the basis of 12-hour shifts. He deposed that Eagle Tours had subsequently moved to three 8-hour shifts per day.
Investigations by the Ombudsman
Mr Savic deposed that he was first contacted by the Ombudsman on 28 July 2014 when he was advised that three drivers had lodged complaints against Eagle Tours. The investigation was later expanded to include an additional two complaints from two other drivers. Mr Savic deposed that two of the drivers were engaged under TFNs while the other three were engaged under ABNs.
On 19 December 2014, following the Ombudsman’s investigation, Eagle Tours were issued with a Letter of Caution. Mr Savic deposed that in the Letter of Caution, the Ombudsman expressed the view that Eagle Tours had underpaid the drivers who were engaged under TFNs. In relation to the drivers who were engaged under ABNs, no findings were made that they were required to be paid in accordance with the Modern Award.
On 9 February 2015 Mr Savic was advised by FWI Liu that the Ombudsman was investigating Eagle Tours. Mr Savic deposed that around this time he sought and obtained legal advice on the question whether the drivers who were engaged as contractors were in an employment relationship. In about February or March 2015 Eagle Tours’ solicitors and senior counsel started working on new contracts so that the drivers who were engaged as contractors would enter into a formal contract confirming the nature of their engagement. Mr Savic deposed that the contracts were finalised in about April or May and were signed by most of the drivers in June and July 2015. The contracts were also forwarded to the Ombudsman for review. Mr Savic deposed that because the Ombudsman never commented on the contracts, he believed even more that there was no issue with the way he was operating the business by engaging contractors.
Mr Savic deposed that his belief was bolstered by correspondence received from the Australian Tax Office (“ATO”) relating to a complaint for unpaid compulsory superannuation guarantee contributions. The complaint had been lodged by one of Eagle Tours’ contractors. Mr Savic deposed that in correspondence dated 27 March 2015 the ATO advised him that it had completed its investigation and had decided to take no action. He took this to mean that the ATO was satisfied that Eagle Tours had done nothing unlawful in treating drivers engaged on ABNs as not having been employees.
In relation to the partial backpayments which were made to Mr Malvaso and Mr Hameed in about March and April 2015, referred to at para.58 of the SOAF, Mr Savic deposed that the amounts paid were based on calculations conducted by Eagle Tours by reference to the Modern Award. At the time those payments were made, he believed them to be the full amounts outstanding. However, when this proceeding was commenced the Ombudsman claimed that those backpayments had been insufficient. Mr Savic deposed that he understood the differences arose primarily from differences in methodology, including the hours to which hours the casual loading should be applied and how much of the meal breaks should be unpaid.
Mr Savic deposed that Eagle Tours did not deliberately or intentionally contravene the minimum employment requirements under the Modern Award. He deposed that if he had known about the Modern Award and believed that those on ABNs were to be treated as employees, he would have rostered the drivers quite differently. He deposed that the net result of his lack of knowledge had cost Eagle Tours a lot of money as it had been forced to make substantial backpayments that would not have been required if he had rostered differently.
As for the “Final Pay Summaries” which were included in exhibit SS-1 to his wife’s affidavit which FWI Liu deposed had not been produced in response to the NTP, Mr Savic deposed that those documents were not in existence when the NTP was issued on 30 September 2016. He deposed that they had been created for the purposes of the proceeding.
Current business
Mr Savic deposed that Eagle Tours remained a small business. The company owned five coaches and six minibuses, although the coaches were all for sale as they were running at a loss. Mr Savic deposed that if he could he would sell the minibuses too and shut the business down completely. However, Eagle Tours were contracted to Sydney Trains and could not breach that contract without paying a substantial penalty.
CONSIDERATION
The question of penalty is to be determined as follows:
a)the Court is to identify the separate contraventions involved. Each contravention of a separate obligation in the Modern Award, FW Act and Fair Work Regulations 2009 is a separate contravention: Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 at 223; Kelly v Fitzpatrick (2007) 166 IR 14 at 17 [11]; McIver v Healey [2008] FCA 425 at [16]; Fair Work Ombudsman v Lohr [2018] FCA 5.
b)the Court should consider whether contraventions resulting from any particular courses of conduct should be treated as a single contravention under section 557(1) of the FW Act (“course of conduct”);
c)to the extent that two or more contraventions have common elements, this should be taken into account when considering an appropriate penalty for those contraventions: Johnson v The Queen (2004) 78 ALJR 616 at [4]-[5]; Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151 at [61] - [63]. A contravener should not be penalised twice for what is, in substance, the same conduct. This is distinct from the totality principle: Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at 396 – 398 [41]-[46] (per Stone and Buchanan JJ) (the “grouping principle”);
d)the Court should determine an appropriate penalty to impose in respect of each contravention (whether a single contravention, a course of conduct or group of contraventions) having regard to all of the circumstances of the case; and
e)having fixed an appropriate penalty for each contravention or group of contraventions, the Court should consider the aggregate penalty to determine whether it is an appropriate response to the contravening conduct: Kelly v Fitzpatrick at 21 - 22 [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560, (the “totality principle”).
As Tracey J said in Kelly v Fitzpatrick at 18-19 [14], in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Mowbray FM identified “a non-exhaustive range of considerations to which regard may be had in determining whether particular conduct calls for the imposition of a penalty, and if it does the amount of the penalty”. Justice Tracey adopted those considerations, describing them as follows:
· The nature and extent of the conduct which led to the breaches.
· The circumstances in which that conduct took place.
· The nature and extent of any loss or damage sustained as a result of the breaches.
· Whether there had been similar previous conduct by the respondent.
· Whether the breaches were properly distinct or arose out of the one course of conduct.
· The size of the business enterprise involved.
· Whether or not the breaches were deliberate.
· Whether senior management was involved in the breaches.
· Whether the party committing the breach had exhibited contrition.
· Whether the party committing the breach had taken corrective action.
· Whether the party committing the breach had cooperated with the enforcement authorities.
· The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
· The need for specific and general deterrence.
Considerations relevant to this case are:
a)the nature and extent of the conduct which led to the breaches and the circumstances in which the conduct took place;
b)whether the breaches were properly distinct or arose out of the one course of conduct;
c)whether any of the contraventions should be grouped together;
d)the nature and extent of any loss or damage sustained as a result of the breaches;
e)whether there had been similar previous conduct by the respondent;
f)whether the breaches were deliberate;
g)the size of the business enterprise involved;
h)contrition, corrective action and co-operation with the enforcement authorities;
i)compliance with minimum standards; and
j)the need for specific and general deterrence.
Nature and extent of the conduct which led to the breaches and the circumstances in which the conduct took place
The relevant conduct was the underpayment of the Drivers through being paid a flat hourly rate for their work without regard to the requirements of the Modern Award or to whether the Modern Award governed their engagements. Each was paid less than his due by being paid a flat hourly rate regardless of the number of hours worked in one shift or when those hours were worked and regardless of the requirements of the Modern Award even when one or more of the Drivers was expressly engaged as an employee rather than as a contractor.
Moreover, the pay rate was low and Eagle Tours would not increase it despite requests. The inappropriateness of the rate paid is demonstrated by the parties’ agreement as to the amount the Drivers were underpaid even after backpayments were made soon after the Ombudsman’s intervention.
Eagle Tours submitted that its approach to the payment of the Drivers had been a mistake based on advice Mr Savic had received from other employers in the industry. It was submitted that Mr Savic had not known of the existence of the Modern Award and had not understood that what Eagle Tours were doing was wrong. It was argued that the decision to pay a flat hourly rate arose out of a failure to obtain advice and was not a deliberate contravention of award requirements. Eagle Tours also submitted that its lack of interest in whether the Drivers were engaged as employees or contractors was the product of disinterest. The burden of the argument was that it had not engaged Messrs Malisic, Kojadinovic and Hameed as contractors in order to side-step the Modern Award.
The failures were material and unfair to employees who, given their persistence in jobs with which they were not happy, suggests a degree of workforce vulnerability on their part. As will be considered in more detail later, the reasons given by Eagle Tours for ostensibly believing that their practices were proper were insufficient to the task.
Were the breaches were properly distinct or arose out of the one course of conduct?
The contraventions which the parties agreed Eagle Tours had committed were set out earlier at [3], being breaches of cls.10.5(c), 23.1, 23.2, .23.2, .23.4 and 23.5 of the Modern Award. Each of those breaches was a contravention of s.45 of the FW Act.
It was accepted that the matter was to be determined on the basis that there had been six contraventions.
Whether any of the contraventions should be grouped together
The parties agreed that there were six contraventions and that no further grouping of the relevant conduct was required.
Nature and extent of any loss or damage sustained as a result of the breaches
The underpayments were quantified earlier in these reasons. The significance of the underpayments principally lies in Mr Malvaso’s evidence that he found it difficult to pay bills when working for Eagle Tours. The other practical reality of the underpayments was that to earn them the Drivers worked long, and according to the evidence tiring, hours which limited their ability to enjoy the time they were not at work or to do other, remunerative work.
Eagle Tours submitted that it did not seek out the Drivers for employment and was candid with them about what they were to be paid. So much can be accepted but those facts are of little or no consequence. To argue, as Eagle Tours did, that the Drivers knew the terms and rates upon which they were to be engaged, and nevertheless chose to accept the work on that basis, attempts to make the Drivers as responsible for their underpayments as Eagle Tours, which was an interesting but anachronistic resort to Victorian laissez-faire capitalism. The Drivers bore no responsibility for having accepted terms which should never have been offered to them. Moreover, the significance of their acceptance of those terms is entirely unclear in the absence of evidence that their decisions were informed ones and, also, were not dictated by necessity and lack of reasonable alternatives.
Has there been similar previous conduct by the respondent?
According to the SOAF, in addition to the backpayments it made to the Drivers, Eagle Tours also made backpayments to two other of its bus drivers, a Mr Jovceski and a Mr Clarke. According to the Letter of Caution dated 19 December 2014, Mr Jovceski had commenced work with Eagle Tours in August 2013 and Mr Clarke had worked for Eagle Tours from December 2011 until July 2013. The Letter of Caution alleged they had both been paid a flat $22 per hour for their work. The most relevant detail to note is that the employment of Messrs Jovceski and Clarke at Eagle Tours overlapped with that of the Drivers.
According to FWI Liu’s file note of a meeting on 4 March 2015, Eagle Tours had also made a backpayment to a further employee, a Mr Pandurevic. However, other than recording in the SOAF that Mr Pandurevic had been one of the employees who had made complaints about Eagle Tours to the Ombudsman between May 2014 and July 2015, no further details of the reasons for this payment were brought to the Court’s attention. In the circumstances it will be assumed that Mr Pandurevic was underpaid in the same way and during the same period as the Drivers.
These facts do not persuade me that Eagle Tours engaged in similar previous conduct. The evidence indicates that the underpayment of Messrs Jovceski, Clarke and Pandurevic was of the same nature as the Drivers’ underpayments and occurred at the same time. That is to say, it was part of the same course of conduct which is the subject of this proceeding and not similar previous conduct which would be an aggravating factor in the setting of a penalty.
Were the breaches deliberate?
All the relevant actions were intentional and not accidental. They were, for present purposes, deliberate.
Mr Savic’s evidence was that he and Eagle Tours had no subjective intention of contravening the Modern Award. A partial explanation for the conduct in question was provided by Mr Savic’s account of the start of the business and it is perhaps not surprising that Eagle Tours thought it could continue to engage drivers as contractors as it had originally done.
However, no explanation was given concerning why Eagle Tours, whose directors had been a fitter and turner in Mr Savic’s case and a nurse in Mrs Savic’s case, did not turn their minds to the possibility that an award might apply to, at least, drivers engaged as employees. It can be inferred from their previous employments that Mr and Mrs Savic were not entirely unaware of the existence of awards and although Mr Savic’s evidence, that before starting Eagle Tours neither he nor his wife had any experience of employing workers can be accepted, they had their own experience as employees to take into account when employing others.
I am not persuaded that Eagle Tours did not appreciate that at least some of the contravening conduct ran the risk of breaching an award. If so, the conclusion must be that it was nevertheless willing to run that risk
The size of the business enterprise involved
Eagle Tours’ evidence was that it was a small company run by a husband and wife team and the other evidence did not suggest that anyone else was involved in managing the company. An enterprise with large resources may generally have no excuse for failing to inform itself of the requirements of industrial laws and instruments relevant to its fields of endeavour but the smallness of an enterprise is insufficient, alone, to adequately explain or excuse equivalent ignorance. No evidence was adduced to suggest that the size of the Eagle Tours’ operation imposed any material limitation on its ability to inform itself of its obligations or to act in accordance with them.
Contrition, corrective action and co-operation with the enforcement authorities
The Ombudsman’s position was that Mr Savic’s greatest regret seemed to have been the cost of his actions to him and to Eagle Tours, submitting that he had exhibited no contrition or remorse and had sought to shift blame to others. She argued that Eagle Tours’ position had been that no change to its business model was required and that in fact the only change to its business practices had been to amend its rosters and display the notices which was a condition of the settlement of the contravention allegations. It was also observed, amongst other things, that Eagle Tours had not produced to the Ombudsman all the documents that were subsequently made available in this proceeding and did not concede its contraventions until it reached the steps of the Court.
Eagle Tours, on the other hand, pointed out that it had taken the steps requested in the Letter of Caution referred to earlier, made backpayments to Messrs Jovceski, Clarke and Pandurevic as well as to the Drivers, sought legal advice as to its operations and provided to the Ombudsman for review forms of contract it proposed to be used for contract drivers. It also submitted that the documents to which the Ombudsman had referred had either been produced slightly late, did not fall within the scope of the NTP or had not existed at that time.
I accept that once the Letter of Caution was served, Eagle Tours reviewed the Drivers’ entitlements and obtained legal advice on its practices and also set about correcting its underpayments, albeit that it did not concede the final elements of the Drivers’ entitlements until the first day of the earlier part of this trial. In that regard, I note that in March 2015 Eagle Tours’ solicitors wrote a long submission to the Ombudsman arguing why, relevantly, Messrs Malisic, Kojadinovic and Hameed were at various times contractors and not employees.
Mr Savic has deposed to having believed that his solicitors’ submissions to the Ombudsman were correct but did not identify the basis of that belief or whether it was reasonable for him to have held it other than to say that the ATO had advised in March 2015, for its own purposes, according to its own tests and well before the Ombudsman had finished her investigation, that it had decided to take no action. For instance, Mr Savic did not state that he had been advised by his solicitors that Messrs Malisic, Kojadinovic and Hameed had indeed at various times provided their services to Eagle Tours as contractors. Absent evidence to that effect, which one might expect to have been adduced if such advice had been given, I am not prepared to infer that he was so advised or that his understanding was more sophisticated than it had been at the commencement of the business. Absent evidence to the effect that Eagle Tours had an informed basis to believe that Messrs Malisic, Kojadinovic and Hameed had been contractors, I conclude that it did not have good reason to persist in its contest of that allegation until the steps of the Court.
Of all the documents which the Ombudsman complains were not produced when required, only one, an SMS, it appears from the table annexed to Eagle Tours’ written submissions, should have been produced but was not. The other documents which were not produced have not been shown by the Ombudsman, who bore the relevant onus, to have been ones which should have been provided in response to the NTP. FWI Liu’s expression of opinion that they should have been is insufficient for this purpose as the Ombudsman implicitly conceded in addresses.
It is perhaps inappropriate to expect a corporate respondent, as distinct from a natural person, to express contrition. In ACE Insurance Ltd v Trifunovski (No 2) (2012) 215 IR 206 Perram J said, in comments which were not in issue on the subsequent appeal:
It is not clear to me how an artificial construct such as a corporation can experience the complex human emotion of contrition made up, as it is, of an amalgam of distinctly human emotions such as regret, shame and sympathy. I do not doubt that a corporation may exhibit signs of regret but it is too much to expect that such an artificial construct can be meaningfully contrite.
For civil penalty cases involving corporations it would be more coherent to ask only whether the corporation has changed its behaviour. Nothing more can be expected; a person who does not literally or physically exist may not wear sackcloth. (at 228-229 [113]-[114])
However, it should be recorded that in Fair Work Ombudsman v Jetstar AirwaysLtd [2014] FCA 33 at [36]-[37], Buchanan J approached the issue differently and concluded that the absence of expressions of contrition by corporate respondents meant that no occasion arose to consider, on the basis of such expressions, any discounting of a penalty that was otherwise appropriate.
In this case the Ombudsman argued that Eagle Tours had not changed its business practices in any material way. However, it was not suggested that Eagle Tours were still contravening any industrial law or instrument and so this argument does not take the matter any further. It might be though that it has expressed contrition in the very manner suggested by Perram J as the only meaningful one. As to the backpayments, no discount is appropriate for the late discharge of an existing obligation and simple compliance with the law does not justify a discount on penalty but in this case Eagle Tours has gone further than that, as agreed in the conditions by which the contravention allegations were settled. That does, to my mind, express contrition in a very practical way.
The ultimate acceptance of error and the settlement of the contravention allegations also merits some allowance in the penalties to be imposed although not a large one as it came so late. Discounts for co-operation are not allowed simply because enforcement proceedings have been made less complicated and less expensive by appropriate concessions. The benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice: Mornington Inn Pty Ltd v Jordan at 405 [76] per Stone and Buchanan JJ. I consider those criteria to be met in this case and will allow a discount of 15%.
Compliance with minimum standards
The practical significance of compliance with minimum standards set in industrial laws and instruments may vary with the circumstances. In this case the importance of minimum standards went beyond the parties.
I note that Mr Savic deposed that if he had been aware of the obligation to pay the Drivers overtime and penalty rates he would have rostered them in 8-hour shifts rather than in 12-hour shifts. I accept the Ombudsman’s submission that the hours worked by the Drivers were unhealthy and unsafe and that there is a link between fatigue and poor road safety. In the particular circumstances of this case, the contraventions and the failure to comply with the minimum standards set by the Modern Award led not only to underpayments and poor social outcomes for the Drivers, but also put the Drivers and their passengers, as well as other road users, at increased risk of injury or death through fatigue.
The need for specific and general deterrence
The Ombudsman submitted that there was a need for general deterrence in this case because Mr Savic’s evidence was that he simply followed the industry’s standard practice and engaged drivers as contractors because others in the industry did and had advised him to do similarly. She submitted that there was a need to deter other businesses from underpaying their employees as Eagle Tours had. I accept that the penalties to be imposed should contain an element for general deterrence to discourage other businesses from believing that all bus drivers may be hired as contractors regardless of the true nature of their engagement.
As to specific deterrence, the Ombudsman said that there was no evidence that Eagle Tours had made any change to its business practices other than alterations to its roster cycle. However, there was no evidence that it needed to. Moreover, the actions taken in the three year period after the service of the Letter of Caution indicate that Eagle Tours, having been made clearly aware of its responsibilities, and was discharging them, albeit in stages. I do not believe that a large component for specific deterrence is warranted.
PENALTIES
Based on a penalty unit being valued at $170, which it was for most of the period in issue, the maximum penalty for each of Eagle Tours’ contraventions is $51,000 and for all in aggregate $306,000.
I note that the Ombudsman suggests that penalties totalling between $142,800 and $173,400 would be appropriate and that Eagle Tours suggested penalties in the order of 30% of the maximum which would total $91,800 if the $170 penalty unit were to be applied across the board.
In determining the penalties to be imposed I have had regard to the principle of proportionality, the purposes of sentencing and the task of instinctive synthesis of various factors into a single result which were discussed by Barker J in Australian Building & Construction Commissioner v Construction, Forestry, Mining & Energy Union (No 2) (2010) 199 IR 373 at 376 [4]-[7]. I have also had regard to the fact that until 28 December 2012, the value of a penalty unit was $110, rather than $170 as it was at the end of the period of contraventions: Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 at [396]–[401]. I consider the appropriate penalties to be:
| Provision(s) contravened | Contravention | Gross Penalty | 15% Discount | Net penalty |
| Section 45 of the FW Act | Failure to pay casual loading under cl 10.5(c) of the Modern Award | $15,000 | $2,250 | $12,750 |
| Section 45 of the FW Act | Failure to pay overtime under cl 23.1 of the Modern Award | $20,000 | $3,000 | $17,000 |
| Section 45 of the FW Act | Failure to pay Saturday penalties under cl 23.2 of the Modern Award | $20,000 | $3,000 | $17,000 |
| Section 45 of the FW Act | Failure to pay Sunday penalties under cl 23.2 of the Modern Award | $20,000 | $3,000 | $17,000 |
| Section 45 of the FW Act | Failure to pay public holiday penalties under cl.23.4 of the Modern Award | $15,000 | $2,250 | $12,750 |
| Section 45 of the FW Act | Failure to pay early and late work penalties under cl 23.5 of the Modern Award | $15,000 | $2,250 | $12,750 |
| TOTAL | $105,000.00 | $15,750.00 | $89,250.00 |
The penalties total $89,250. I believe that such a total is just and appropriate.
That amount is to be paid to the Commonwealth within twenty-eight days.
I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of Judge Cameron
Date: 1 August 2019
STATEMENT OF AGREED FACTS
INTRODUCTION
This Statement of Agreed Facts is an agreed document between the Applicant and the Respondent and is made for the purposes of section 191 of the Evidence Act 1995 (Cth).
PROCEEDINGS
On 12 January 2016, the Applicant filed an Application and Statement of Claim in this Court against the Respondent in respect of various contraventions of section 45 of the Fair Work Act 2009 (Cth) (FW Act) arising from breaches of the Passenger Vehicle Transportation Award 2010 (Modern Award) in respect of four employees who were employed by the Respondent as bus drivers (collectively, the Bus Drivers).
On 21 March 2016 the Applicant filed an Amended Statement of Claim.
On 29 March 2016 the Respondent filed a Defence.
On 15 July 2016 the Applicant filed its affidavits in chief.
On 21 October 2016 the Respondent filed its affidavits.
0n 15 November 2016 the Respondent filed its expert affidavit.
On 6 March 2017 the Respondent filed its supplementary affidavits.
On 10 April 2017 the Applicant filed its affidavits in reply.
On 18 April 2017 the Applicant filed its outline of submissions.
On 10 May 2017 the Applicant filed a Further Amended Statement of Claim and the Respondent filed its outline of submissions.
On 19 May 2017 the Respondent filed an Amended Defence.
The matter was listed for a hearing of five days on the question of liability to commence on 29 May 2017. On the first day of the hearing, the Applicant and Respondent engaged in settlement discussions which resulted in the Court making orders and declarations on 29 May 2017.
ADMITTED CONTRAVENTIONS
Pursuant to agreed consent orders submitted to the Court on 29 May 2017, the Court made declarations that the Respondent had contravened s 45 of the FW Act (a civil remedy provision) by breaching:
a)clause 10.5(c) of the Modern Award (casual loading);
b)clause 23.1 of the Modern Award (overtime);
c)clause 23.2 of the Modern Award (Saturday penalties);
d)clause 23.2 of the Modern Award (Sunday penalties);
e)clause 23.4 of the Modern Award (Public holiday penalties); and
f)clause 23.5 of the Modern Award (early and late work penalties);
(Court's Declarations).
The underpayment contraventions set out in paragraph 14 resulted in the Bus Drivers being underpaid by the Respondent an aggregate amount of $46,012.64 which was comprised of the following amounts for each bus driver for the identified periods of time (the identified periods of time are collectively referred to as the Assessment Periods):
| Employee | Assessment Period | Entitlement | Paid | Underpayment | ||||||||||
| Bruno Malvaso | 15 November 2012 to 15 May 2013 | $29,960.25 | $20,856.00 | $9,104.25 | ||||||||||
| Dusko Kojadinovic | 1 August 2013 to 5 February 2014 | $41,786.22 | $28,820.00 | $12,966.22 | ||||||||||
| Saman Hameed | 15 November 2012 to 15 May 2013 | $35, 147.17 | $26,928.00 | $8,219.17 | ||||||||||
| 1 August 2013 to 29 January 2014 | $34,193.70 | $26,452.80 | $7,740.90 | |||||||||||
| Slobodan Malisic | 30 July 2013 to 3 February 2014 | $37,022.10 | $29,040.00 | $7,982.10 | ||||||||||
LEGISLATION AND APPLICABLE INSTRUMENTS
At all relevant times, the Respondent was required to comply with the FW Act in respect of the employment of the Bus Drivers.
On and from 1 January 2010, the Respondent was covered by the Modern Award in respect to the employment of the Bus Drivers.
For the purposes of the Transitional Provisions outlined at Schedule A of the Modern Award, the award-based transitional instrument which covered the work performed by the Bus Drivers and applied to the Respondent prior to the operation of the Modern Award was the Transport Industry - Motor Bus Drivers and Conductors (State) Award (NSW).
At all relevant times the Respondent was required to comply with the Modern Award in respect of the employment of the Bus Drivers including complying with clauses 10.5, 23.1, 23.2, 23.4 and 23.5.
During the Assessment Periods, each of the Bus Drivers performed casual work for the Respondent within the meaning of clause 10.5 of the Modern Award.
During the Assessment Periods, the Bus Drivers were classified as Grade 3 in accordance with clause B.3 of Schedule B of the Modern Award.
THE PARTIES
The Applicant is and was at all material times:
a)appointed by the Governor-General by written instrument to the office of the Fair Work Ombudsman, pursuant to sub-section 687(1) of the Fair Work Act 2009 (Cth) (FW Act);
b)a Fair Work Inspector pursuant to section 701 of the FW Act; and
c)a person with standing to bring these proceedings in accordance with sub section 539(2) of the FW Act.
The Respondent was at all material times:
a)a company incorporated under the provisions of the Corporations Act 2001 (Cth);
b)able to be sued in and by its corporate name;
c)a constitutional corporation within the meaning of section 12 of the FW Act;
d)a national system employer within the meaning of section 14 of the FW Act;
e)the operator of professional coach charter services; and
f)a company that is contracted by Transport Sydney Trains (TST) to provide shuttle bus services to transfer TST crew (maintenance and employees) between maintenance centres and specified stations on designated routes (TST Contract).
THE BUS DRIVERS
Each of the following persons (collectively the Bus Drivers) performed work for the Respondent:
a)Bruno Malvaso;
b)Dusko Kojadinovic;
c)Saman Hameed; and
d)Slobodan Malisic.
The Bus Drivers were engaged as follows:
a)Mr Malvaso as an employee for the period 15 November 2012 to 15 May 2013;
b)Mr Kojadinovic as an independent contractor for the period 1 August 2013 to 5 February 2014;
c)Mr Hameed as an employee for the period 15 November 2012 to 15 May 2013 and as an independent contractor for the period 1 August 2013 to 29 January 2014; and
d)Mr Malisic as an independent contractor for the period 30 July 2013 to 3 February 2014.
During the Assessment Periods, each of the Bus Drivers performed duties in the State of New South Wales including:
a)driving a passenger bus vehicle with a carrying capacity of less than 25 passengers (a bus with 24 seats or less) and transporting TST crew on circuitous routes between fixed terminals; and
b)cleaning the vehicles.
Bruno Malvaso
Mr Malvaso was born on 10 August 1951 in Italy. He worked for the Respondent as a casual bus driver from about mid-November 2009 to August 2013.
Mr Malvaso worked under his Tax File Number (TFN) for his entire employment with the Respondent.
Mr Malvaso worked 12 hours per shift, from 6am to 6pm.
Slobodan Malisic
Mr Malisic was born on 12 October 1961 in Montenegro. He worked for the Respondent as a casual bus driver from on or about 19 August 2012 to 6 August 2014.
On 19 August 2012, when Mr Malisic began working for the Respondent, he was paid under an Australian Business Number (ABN). From about 11 March 2014, Mr Malisic worked under his TFN until the end of his employment with the Respondent.
Mr Malisic worked 12 hours per shift, either from 6am to 6pm or 6pm to 6am. When he first started working for the Respondent, he worked Thursday to Sunday. After he had been working for the Respondent for about one year, Mr Malisic requested he work only on weekdays. The Respondent agreed and changed his days so that he worked four days a week only on weekdays.
Dusko Kojadinovic
Mr Kojadinovic was born on 2 April 1956 in Bosnia. He moved to Australia in 1996. He worked for the Respondent as a casual bus driver from 8 December 2012 to on or around 3 March 2015.
In December 2012, when Mr Kojadinovic began working for the Respondent, he was paid under an ABN. He worked under an ABN until 7 March 2014.
In about March 2014, Mr Kojadinovic asked Mrs Savic if he could switch to working under his TFN, which he was allowed to do, and did, until the end of his employment with the Respondent.
Mr Kojadinovic worked 12 hours per shift, either from 6am to 6pm or 6pm to 6am.
Saman Hameed
Mr Hameed was born on 20 March 1973 in Kirkuk, Iraq. Mr Hameed worked for the Respondent from 23 August 2009 to 29 August 2011, stopped working for the Respondent from 29 August 2011 to 25 February 2012, and then returned to working for the Respondent from 26 February 2012 to 5 February 2014.
In August 2009, when Mr Hameed began working for the Respondent, he was paid under an ABN.
From around 28 June 2012, Mr Hameed was paid under his TFN. From about 5 June 2013, Mr Hameed was paid under an ABN.
Mr Hameed worked 12 hours per shift, either from 6am to 6pm or 6pm to 6am. When he first started working for the Respondent, he worked predominantly four or five days per week, sometimes six days per week.
RATES PAID BY THE RESPONDENT
During the Assessment Periods, the Bus Drivers were paid a flat hourly rate of pay regardless of the time or day worked.
The Bus Drivers were paid the following flat hourly rates of pay:
a)Mr Hameed and Mr Malvaso were paid $22 per hour for all hours worked during the period 15 November 2012 to 15 May 2013; and
b)Mr Hameed, Mr Kojadinovic and Mr Malisic were paid $22 per hour (inclusive of GST) for all hours worked during the period 30 July 2013 to 5 February 2014.
MINIMUM CASUAL RATES UNDER THE MODERN AWARD
Pursuant to clause 14.1 of the Modern Award (as amended by the Transitional Provisions at Schedule A of the Modern Award), the minimum rates of pay required to be paid by the Respondent to Grade 3 employees during the Assessment Periods were:
a)From 1 July 2012 - $19.33 per hour; and
b)From 1 July 2013 - $19.47 per hour (minimum rate).
The minimum casual rates of pay payable to the Bus Drivers during the Assessment Periods were:
a)From 1 July 2012 - $24.13 per hour; and
b)From 1 July 2013 - $24.32 per hour (minimum casual rate).
UNDERPAYMENT CONTRAVENTIONS
Paragraphs 46 to 57 reflect the Court's Declarations.
Contravention 1 - failure to pay casual loading (clause 10.5 of the Modern Award)
The Respondent failed to pay the Bus Drivers their applicable entitlements under clause 10.5 of the Modern Award throughout the Assessment Periods resulting in an aggregate underpayment of $13,387.42 in respect of those entitlements.
The Respondent breached clause 10.5 of the Modern Award and thereby contravened section 45 of the FW Act.
Contravention 2 - failure to pay overtime (clause 23.1 of the Modern Award)
The Respondent failed to pay the Bus Drivers their applicable entitlements under clause 23.1 of the Modern Award throughout the Assessment Periods resulting in an aggregate underpayment of $7,461.32 in respect of those entitlements.
The Respondent breached clause 23.1 of the Modern Award and thereby contravened section 45 of the FW Act.
Contravention 3 - failure to pay Saturday penalties (clause 23.2 of the Modern Award)
The Respondent failed to pay the Bus Drivers their applicable entitlements under clause 23.2 (Saturday) of the Modern Award throughout the Assessment Periods resulting in an aggregate underpayment of $6,106.10 in respect of those entitlements.
The Respondent breached clause 23.2 of the Modern Award and thereby contravened section 45 of the FW Act.
Contravention 4 - failure to pay Sunday penalties (clause 23.2 of the Modern Award)
The Respondent failed to pay the Bus Drivers their applicable entitlements under clause 23.2 (Sunday) of the Modern Award throughout the Assessment Periods resulting in an aggregate underpayment of $11,113.50 in respect of those entitlements.
The Respondent breached clause 23.2 of the Modern Award and thereby contravened section 45 of the FW Act.
Contravention 5 - failure to pay public holiday penalties (clause 23.4 of the Modern Award)
The Respondent failed to pay the Bus Drivers their applicable entitlements under clause 23.4 of the Modern Award throughout the Assessment Periods resulting in an aggregate underpayment of $4,530.77 in respect of those entitlements.
The Respondent breached clause 23.4 of the Modern Award and thereby contravened section 45 of the FW Act.
Contravention 6 - failure to pay penalties for early and fate hours worked (clause 23.5 of the Modern Award)
The Respondent failed to pay the Bus Drivers their applicable entitlements under clause 23.5 of the Modern Award throughout the Assessment Periods resulting in an aggregate underpayment of $3,413.53 in respect of those entitlements.
The Respondent breached clause 23.5 of the Modern Award and thereby contravened section 45 of the FW Act.
Partial back-payments made by the Respondent
In about March and April 2015, the Respondent made partial back-payments to Mr Malvaso and Mr Hameed for underpayments occurring in the 15 November 2012 to 15 May 2013 Assessment Period.
PRIOR COMPLAINT HISTORY
From May 2014 to July 2015, the Applicant received 12 workplace complaint forms, in addition to the four Bus Drivers, from the following individuals who were working, or had worked, for the Respondent:
a)Kiro Jovceski;
b)Slavoljub Pandurevic;
c)Dragmtim Tisic;
d)Mark Clarke;
e)Risto Mihajlovic;
f)Daroslav Krpic;
g)Susilo Singgih;
h)Geoffrey Connell;
i)Alexander McDonald;
j)Robert Willett;
k)Milorad Filipovic; and
l)Mario Cesar.
On 19 December 2014, Fair Work Inspector David Dixon (FWI Dixon) sent a letter titled 'Letter of Caution' to the Respondent regarding Kiro Jovceski and Mark Clarke. As a result of that correspondence, the Respondent rectified underpayments to Kiro Jovceski of $26,669.54 and to Mark Clarke of $13,272.48. The Letter of Caution states that: “In relation to Dragmtim Tisic, Risto Mihajlovic and Daroslav Krpic the FWO is not able to make a determination on the status of their engagement due to the conflicting evidence provided by parties during the course of the investigation.”
On 17 December 2015, Fair Work Inspector Vi-Lay Liu (FWI Liu) sent letters to the following five individuals, notifying them that the Applicant would not be taking any further action in relation to their complaints:
a)Dragmtim Tisic;
b)Risto Mihajlovic;
c)Daroslav Krpic;
d)Susilo Singgih; and
e)Milorad Filipovic.
The following five individuals ultimately withdrew their complaints from the Applicant:
a)Geoffrey Connell;
b)Alexander McDonald;
c)Robert Willett;
d)Mario Cesar; and
e)Slavoljub Pandurevic.
INVESTIGATION
On 9 February 2015, FWI Liu called Mr Savic to notify him that the FWO had commenced an investigation of the Respondent. An email was issued by FWI Liu to the Respondent the same day.
On 4 March 2015, FWI Liu met with Mr Savic and the Respondent's lawyers to discuss the investigation. At the meeting, FWI Liu was informed that the Respondent wished to take a proactive and conciliatory approach to resolution of the complaints and since the Letter of Caution had been issued the Respondent had undertaken the following compliance steps:
a)Issuing pay slips to all employees;
b)Two lots of monthly instalments for underpayments identified in the Letter of Caution had been made to Mark Clarke and Kiro Jovceski with the third and final instalments still to occur in accordance with the timetable;
c)A full review was being undertaken in respect of possible underpayments to other employees and was currently in progress;
d)Ensuring minimum award wages and conditions were being met for drivers that were employees; and
e)Preparing and keeping employee records pursuant to the FW Act.
FWI Liu was also informed at the meeting on 4 March 2015 that the Respondent had identified and rectified underpayments for the following drivers that were engaged as casual employees, as follows:
a)Slavolijub Pandurevic; and
b)Dusko Kojadinovic.
FWI Liu was also informed at the meeting on 4 March 2015 that an underpayment had been identified for Slobodan Malisic which would be rectified.
On 5 March 2015, FWI Liu sent the Respondent, via its lawyers, a list of documents which the Applicant sought that would assist FWI Liu in progressing the investigation.
On 31 March 2015, the Respondent, via its lawyers, provided a number of documents to FWI Liu in response to the request on 5 March 2015.
In about March and April 2015 the Respondent rectified underpayments it had identified for the Bus Drivers.
On 4 June 2015, the Respondent's lawyers met with FWI Liu and Senior Fair Work Inspector Sundar Rajagopalan to discuss the investigation.
On 1 September 2015, FWI Liu issued a Notice to Produce Records and Documents (Notice to Produce) to the Respondent with a time for compliance by 16 September 2015.
On 17 September 2015 the Respondent, via its lawyers, requested by email to FWI Liu an extension until 30 September 2015 for the time to comply with the Notice to Produce.
On 21 September 2015, FWI Liu sent a letter to the Respondent's lawyers regarding the Respondent's request that the records/documents be provided by 30 September 2017.
On 30 September 2015 the Respondent, via its lawyers, produced a number of documents in response to the Notice to Produce.
On 9 October 2015 FWI Liu sent a letter to the Respondent, via its lawyers, setting out the categories of the Notice to Produce for which she considered documents had not been produced.
On 16 October 2015 the Respondent, via its lawyers, provided a final response to FWI Liu regarding the Notice to Produce, producing further documents and responding to the categories in the letter dated 9 October 2015.
On 27 October 2015, the Applicant issued a Findings of Contravention letter to the Respondent.
On 4 December 2015, the Applicant notified the Respondent's lawyers by letter of the Applicant's intention to commence proceedings on or after 10 December 2015.
On 12 January 2016, the Applicant commenced this proceeding against the Respondent.
COMPLIANCE WITH COURT ORDERS
On or around 26 June 2017, the Respondent made payments to each of the Bus Drivers in accordance with the orders made by the Court on 29 May 2017.
From about 28 June 2017, the Respondent displayed a workplace notice and provided proof of the display of the workplace notice to the Applicant in satisfaction of orders 3, 4 and 5 made by the Court on 29 May 2017.
On 10 July 2017, the Applicant sent the Respondent an email regarding the workplace notice.
On 24 July 2017, the Respondent provided evidence to the Applicant of an updated workplace notice containing the applicable rates effective from 1 July 2017.
On or around 28 June 2017, the Respondent engaged Nick Read, a specialist employment law barrister and an independent third party with expertise in workplace relations to undertake an audit of the Respondent's compliance with the FW Act and the Modern Award on the terms stipulated by order 7 of the Court's orders of 29 May 2017.
On or around 27 July 2017, Mr Read informed Mr Savic that he would require an additional 30 days to complete the audit. Mr Savic and his solicitors sought clarification as to why further time was needed to complete the audit and on 1 August 2017 Mr Read advised Mr Savic that he was overseas and could not complete the audit until 23 August 2017.
On or around 2 August 2017, Mr Savic engaged Daniel O'Sullivan a specialist employment law barrister and an independent third party with expertise in workplace relations to undertake and complete the audit of the Respondent's compliance with the FW Act and the Modern Award on the terms stipulated by order 7 of the Court's orders of 29 May 2017.
Mr Savic engaged Mr O'Sullivan as he was informed by Mr O'Sullivan that the audit could be started that day and completed within about a week.
The audit report was completed on 4 September 2017.
On 4 October 2017, the Respondent, via its lawyers, requested the Applicant's consent to extend the time for the Respondent to comply with order 7(f) of the Court's orders of 29 May 2017 by three weeks to 25 October 2017, as the Respondent's director, Bob Savic, was not well and further time was needed to comply with the Court's orders.
The Applicant agreed to extend the time for the Respondent to comply with order 7(f) of the Court's orders to 25 October 2017.
On 25 October 2017, the Respondent provided a copy of the audit report to the Applicant and informed the Applicant that it would pay any amounts identified as underpayments in the audit report on a without admission and without prejudice basis as the Respondent did not agree with all of the findings in the audit report, including the finding that superannuation was also payable.
Key Legal Topics
Areas of Law
-
Employment Law
Legal Concepts
-
Breach
-
Penalty
-
Remedies
1
11
3