Fair Work Ombudsman v Eagle trading as Eagletech Engineering
[2024] FedCFamC2G 1123
•5 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Eagle trading as Eagletech Engineering [2024] FedCFamC2G 1123
File number(s): SYG 1542 of 2024 Judgment of: JUDGE LAING Date of judgment: 5 November 2024 Catchwords: INDUSTRIAL LAW – assessment of a pecuniary penalty for contravention of s 716(5) of the Fair Work Act 2009 (Cth) – liability conceded – dispute regarding appropriate penalty to be imposed – penalty determined Legislation: Fair Work Act 2009 (Cth) ss 90, 539, 546 & 716
Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth)
Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 399 ALR 599
Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97; (2018) 264 FCR 155
Fair Work Ombudsman v Althaus Homes Pty Ltd [2021] FCCA 126
Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815
Fair Work Ombudsman v Haider Pty Ltd & Anor [2015] FCCA 2113
Fair Work Ombudsman v Jaycee Trading Pty Ltd & Anor (No.2) [2013] FCCA 2128
Fair Work Ombudsman v Matcraft Pty Ltd [2021] FCCA 272
Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor (No.2) [2019] FCCA 2144
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301; (2017) 275 IR 148
Fair Work Ombudsman v Sun Sea Equity Pty Ltd [2021] FCCA 104
Fair Work Ombudsman v Tester [2021] FCCA 771
Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290; (2016) 68 AILR 102–690
Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7
Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70; (2008) 168 FCR 383
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543
Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076
Division: Fair Work Number of paragraphs: 53 Date of last submission/s: 21 October 2024 Date of hearing: Determined on the papers Place: Sydney Solicitor for the Applicant: Norton Rose Fulbright Australia Counsel for the Respondent: Mr A Guy Solicitor for the Respondent: Keypoint Law ORDERS
SYG 1542 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: CHRISTOPHER JUSTIN EAGLE TRADING AS EAGLETECH ENGINEERING
Respondent
ORDER MADE BY:
JUDGE LAING
DATE OF ORDER:
5 NOVEMBER 2024
THE COURT DECLARES THAT:
1.The Respondent contravened s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with the compliance notice given to the Respondent on 31 August 2023 (Compliance Notice).
THE COURT ORDERS THAT:
2.Pursuant to s 546(1) of the FW Act, the Respondent pay a pecuniary penalty of $3,756 to the Commonwealth, for the contravention of s 716(5) of the FW Act by failing to comply with the Compliance Notice, within 28 days of this order.
3.The Applicant has liberty to apply in the event the orders are not complied with.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE LAING:
INTRODUCTION
The Fair Work Ombudsman (FWO) seeks a declaration that the respondent (Mr Eagle) contravened s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with a compliance notice (Compliance Notice), as well as imposition of a pecuniary penalty. The parties agree that the declaration should be made and a pecuniary penalty imposed. The parties disagree regarding the appropriate quantum of penalty.
PROCEDURAL HISTORY
The FWO commenced these proceedings through an Application and Statement of Claim filed on 9 July 2024.
Prior to the first court date, the parties proposed procedural orders by consent. Those orders provided for the filing of a Statement of Agreed Facts, as well as evidence and submissions on the question of penalties. Those orders were made on 9 August 2024.
The Statement of Agreed Facts was filed on 11 September 2024. An amended version was filed on 19 September 2024 (ASOAF).
STATEMENT OF AGREED FACTS
The following background is taken from the ASOAF. The parties have also agreed a Statement of Agreed Calculations (SOAC) for the purposes of these proceedings.
In or around April 2023, Fair Work Inspector (FWI) Sue-Ann Feltus (FWI Feltus) commenced an investigation into Mr Eagle’s conduct (Investigation).
Based on information obtained during the Investigation, FWI Feltus formed a reasonable belief that:
(a)Mr Eagle employed Nathan O’Regan (Mr O’Regan) as a full-time employee between 1 January 2019 and 10 March 2023 (Employment Period);
(b)Mr Eagle’s business was in a “Manufacturing and Associated Industry and Occupation” in accordance with cls 4.1 and 4.8(a)(iii) and (iv) of:
(i)the Manufacturing and Associated Industries and Occupations Award 2010 (2010 Award), a modern award under the FW Act, from 1 January 2019 to 26 May 2020; and
(ii)the Manufacturing and Associated Industries and Occupations Award 2020 (2020 Award), a modern award under the FW Act, from 27 May 2020 to 10 March 2023;
(together, the Award);
(c)Mr O’Regan was covered by the classifications in the Award at all relevant times during the Employment Period as follows:
(i)Mr O’Regan was employed as a first year adult apprentice in accordance with cls 15 and 26 of the 2010 Award between 1 January 2019 and 31 December 2019;
(ii)Mr O’Regan was employed as a second year adult apprentice in accordance with:
(A)cls 15 and 26 of the 2010 Award between 1 January 2020 and 26 May 2020; and
(B)cls 12 and 21 of the 2020 Award between 27 May 2020 and 31 December 2020;
(iii)Mr O’Regan was employed as a third year adult apprentice in accordance with cls 12 and 21 of the 2020 Award between 1 January 2021 and 31 December 2021;
(iv)Mr O’Regan was employed as a fourth year adult apprentice in accordance with cls 12 and 21 of the 2020 Award from 1 January 2022 to 28 October 2022; and
(v)the C10 classification under Schedule A.3.1 of the 2020 Award applied to Mr O’Regan between 29 October 2022 and 10 March 2023;
(d)the Award therefore covered and applied to Mr Eagle in respect of his employment of Mr O’Regan;
(e)during the period from 3 April 2019 to 9 June 2020, Mr Eagle did not pay Mr O’Regan at all for 17 fortnightly periods specified in the SOAC;
(f)Mr Eagle did not pay Mr O’Regan the applicable minimum hourly rate that was payable under the Award for ordinary hours worked:
(i)between 3 April 2019 and 26 May 2020 (Contravention Period 1); and
(ii)between 27 May 2020 and 9 June 2020 (Contravention Period 2);
(together, the Contravention Periods); and
(g)when Mr O’Regan’s employment with Mr Eagle ended, Mr Eagle did not pay Mr O’Regan for accrued untaken paid annual leave at his base rate of pay in accordance with cl 34.3 of the 2020 Award and annual leave loading in accordance with cl 34.4 of the 2020 Award.
By reason of the facts outlined above, FWI Feltus formed a reasonable belief for the purposes of s 716(1) of the FW Act that Mr Eagle contravened the following terms of the Award and the National Employment Standards in respect of Mr O’Regan’s employment:
(a)cl 26.2 and 25.6 of the 2010 Award, and from 12 February 2020 cls 27.2 and 26.6 of the 2010 Award, by failing to pay Mr O’Regan the applicable minimum ordinary hourly rate for Mr O’Regan’s classification under the 2010 Award during Contravention Period 1;
(b)cl 22.2 and 21.6 of the 2020 Award by failing to pay Mr O’Regan the applicable minimum ordinary hourly rate for Mr O’Regan’s classification under the 2020 Award during Contravention Period 2; and
(c)s 90(2) of the FW Act by failing to pay Mr O’Regan for his accrued untaken paid annual leave at the end of his employment (Annual Leave Contravention);
(together, the Contraventions).
On 31 August 2023, Mr Eagle was personally served with the Compliance Notice.
The Compliance Notice required Mr Eagle to:
(a)take the following specified action to remedy the direct effects of the Contraventions, by 28 September 2023 (Specified Action):
(i)in respect of the contraventions referred to in paragraphs 8(a) and 8(b) above (together, the Minimum Rate Contraventions):
(A)identify the number of hours that Mr O’Regan worked during the Contravention Periods in respect of which he was entitled to be paid the applicable minimum rate under the Award;
(B)identify the amount Mr Eagle paid to Mr O’Regan during the Contravention Periods in respect of the entitlement;
(C)calculate the amount Mr Eagle should have paid to Mr O’Regan in respect of the entitlement for the hours worked during the Contravention Periods, and identify the applicable rates of pay within the Contravention Periods and the period during which each rate applied;
(D)make payment to Mr O’Regan of the difference between the amount paid and the amount that should have been paid; and
(E)calculate and pay additional superannuation contributions required by cl 31.2 of the 2020 Award in respect of the amount required to be paid to Mr O’Regan as a result of the steps above;
(ii)in respect of the Annual Leave Contravention:
(A)identify the number of hours of accrued untaken paid annual leave at the end of Mr O’Regan’s employment in respect of which he was entitled to be paid in accordance with s 90(2) of the FW Act;
(B)identify the amount Mr Eagle paid to Mr O’Regan at the end of his employment in respect of the entitlement;
(C)calculate the amount Mr Eagle should have paid to Mr O’Regan at the end of his employment in respect of the entitlement, and identify the applicable rate of pay; and
(D)make a payment to Mr O’Regan of the difference between the amount paid and the amount that should have been paid;
(b)make a record of the information and the amounts for Mr O’Regan referred to above (Underpayment Rectification Information); and
(c)produce the following reasonable evidence to the FWO of Mr Eagle’s compliance with the Compliance Notice, by 5 October 2023:
(i)a schedule that set out the Underpayment Rectification Information for Mr O’Regan, and the additional superannuation contributions calculated and paid to Mr O’Regan’s applicable superannuation fund; and
(ii)proof that full payment had been made to Mr O’Regan and his applicable superannuation fund.
The FWO contacted Mr Eagle on the following occasions to remind him that the Compliance Notice needed to be complied with by 28 September 2023, with evidence of compliance provided by 5 October 2023:
(a)On 1 September 2023, FWI Feltus attempted to telephone Mr Eagle at his mobile number and got no answer. FWI Feltus left Mr Eagle a voicemail message which said words to the following effect:
(i)FWI Feltus identified herself and explained that she was calling in relation to the Compliance Notice; and
(ii)FWI Feltus requested that Mr Eagle call her back on an identified number.
(b)On 12 September 2023, Senior Notice Assistance Officer Thomas Parbery (SNAO Parbery) emailed Mr Eagle a reminder that the Compliance Notice needed to be complied with by 28 September 2023, with evidence of compliance provided by 5 October 2023. The email stated that a failure to comply with the Compliance Notice would be likely to lead to legal action and court ordered penalties.
(c)On 21 September 2023, SNAO Parbery attempted to telephone Mr Eagle at his mobile number and got no answer. SNAO Parbery left Mr Eagle a voicemail message in which SNAO Parbery referred to:
(i)the Compliance Notice;
(ii)the date by which payment needed to be made pursuant to the Compliance Notice; and
(iii)the date by which evidence needed to be provided of compliance with the Compliance Notice.
(d)On 21 September 2023, SNAO Parbery telephoned Mr Eagle at his business number, spoke to an identified person and had a conversation with that person which included words to the following effect:
(i)SNAO Parbery asked to speak with Mr Eagle;
(ii)SNAO Parbery was advised that Mr Eagle was not available;
(iii)SNAO Parbery left a message for Mr Eagle to call him regarding the Compliance Notice; and
(iv)the identified person took down SNAO Parbery’s number and agreed to pass on the message to Mr Eagle.
(e)On 21 September 2023, SNAO Parbery emailed Mr Eagle a reminder that the Compliance Notice needed to be complied with by 28 September 2023. The email stated that a failure to comply with the Compliance Notice was a contravention under s 716(5) of the FW Act and provided information regarding potential consequences.
Mr Eagle failed to:
(a)take the Specified Action set out in the Compliance Notice by 28 September 2023 or at all; and
(b)produce reasonable evidence to the FWO of compliance with the Compliance Notice by 5 October 2023 or at all.
Mr Eagle therefore failed to comply with the Compliance Notice in contravention of s 716(5) of the FW Act.
During the Contravention Periods:
(a)Mr O’Regan’s classification under the Award, ordinary hours worked, minimum weekly rate entitlement and entitlement to be paid was as set out in specified parts of a table annexed to the ASOF; and
(b)Mr Eagle did not make payments to Mr O’Regan in accordance with his entitlement to be paid the applicable minimum rate under the Award.
At the time Mr O’Regan’s employment with Mr Eagle ended:
(a)cl 34.3 of the 2020 Award:
(i)noted that where an employee is receiving over-award payments such that the employee’s base rate of pay is higher than the rate specified under the 2020 Award, the employee is entitled to receive the higher rate while on a period of paid annual leave; and
(ii)provided that, instead of the “base rate of pay” as referred to in s 90(1) of the FW Act, before going on annual leave, an employee under the 2020 Award must be paid the wages they would have received in respect of the ordinary hours the employee would have worked had the employee not been on leave during the relevant period; and
(b)cl 34.4 of the 2020 Award provided that:
(i)during a period of annual leave an employee must also be paid a loading calculated on the wage prescribed by cl 34.3 of the 2020 Award; and
(ii)an employee who would have worked on day work only had they not been on leave must be paid a loading equal to 17.5% of the wages prescribed in cl 34.3 or the relevant weekend penalty rates, whichever is the greater but not both;
(c)Mr O’Regan was only working on day work for Mr Eagle;
(d)Mr O’Regan was not working on weekends;
(e)Mr O’Regan’s accrued untaken paid annual leave entitlement was 288.32 hours;
(f)Mr O’Regan was not paid any amount by Mr Eagle for accrued untaken paid annual leave;
(g)Mr O’Regan’s hourly rate of pay from Mr Eagle for ordinary hours of work was $36.33 per hour; and
(h)Mr O’Regan was entitled to leave loading of 17.5% on annual leave under cl 34.4(b) of the 2020 Award.
If Mr Eagle had taken the Specified Action to remedy the direct effects of the Contraventions, Mr Eagle would have calculated and paid to Mr O’Regan:
(a)$23,766.72 in respect of the Minimum Rate Contraventions; and
(b)$12,307.87 in respect of the Annual Leave Contravention.
The FWO contacted Mr Eagle on the following occasions regarding Mr Eagle’s failure to comply with the Compliance Notice:
(a)On 6 October 2023, FWI Feltus attempted to telephone Mr Eagle at his mobile number and got no answer. FWI Feltus left Mr Eagle a voicemail message which said words to the following effect:
(i)FWI Feltus identified herself and explained that she was calling in relation to the Compliance Notice;
(ii)FWI Feltus stated that Mr Eagle was not compliant with the Compliance Notice and needed to contact her urgently as Mr Eagle may be liable to court action and a penalty; and
(iii)FWI Feltus requested that Mr Eagle call her back on a specified number.
(b)On 6 October 2023, FWI Feltus attempted to telephone Mr Eagle at his business number, but got no answer and was not able to leave a voicemail message.
(c)On 6 October 2023, FWI Feltus emailed Mr Eagle attaching a copy of a “Failure to Comply” letter (Failure to Comply Letter). The Failure to Comply Letter provided Mr Eagle with a further 7 days to advise the FWO if Mr Eagle had a reasonable excuse for not complying with the Compliance Notice.
(d)On 6 October 2023, FWI Feltus sent Mr Eagle a copy of the Failure to Comply Letter by Express Post. The letter was delivered to Mr Eagle on 12 October 2023.
PRINCIPLES
The principles regarding imposition of penalties were considered by the High Court in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 399 ALR 599 (Pattinson). There, it was stated that “the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act” at [9] per Kiefel CJ, Gageler J (as his Honour then was), Keane, Gordon, Steward and Gleeson JJ. The “real task” of the Court was therefore described as “fixing the penalty which it considers fairly and reasonably to be appropriate to protect the public interest from future contraventions of the Act” (at [71]).
A number of potentially relevant considerations have been identified in cases such as Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076 at [42]; Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97; (2018) 264 FCR 155 at [20] and Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7. However, it is to be borne in mind that such recitations of potentially relevant considerations are not to be used as if they “were a legal checklist”: Pattinson at [19]. The Court’s task is to determine the appropriate penalty or penalties by reference to the particular circumstances of each case.
MAXIMUM PENALTY
Pursuant to ss 539(2) and 546(2)(a) of the FW Act, the maximum penalty that the Court may impose is $9,390 for contravention by Mr Eagle of s 716(5) of the FW Act. Although the maximum number of penalty units has increased, that increase is inapplicable to the present case, taking into account the transitional provisions in the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth).
It has been held that the maximum, whilst a relevant consideration, does not constrain the exercise of discretion under s 546 beyond requiring “some reasonable relationship between the theoretical maximum and the final penalty imposed”: Pattinson at [10]. This “relationship is established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose of s 546: the deterrence of future contraventions of a like kind by the contravenor and by others”: Pattinson at [10].
PENALTIES
Material relied upon
The FWO relied upon:
(a)the Application and Statement of Claim;
(b)the ASOAF; and
(c)an Affidavit of FWI Sue-Ann Feltus affirmed on 19 September 2024 (Feltus Affidavit).
Mr Eagle relied upon an affidavit that he affirmed on 4 October 2024 (Eagle Affidavit).
Circumstances surrounding the contravention and subsequent action
The circumstances surrounding the contravention are set out in some detail by reference to the ASOAF above.
As set out above, Mr Eagle accepts that he failed to comply with the Compliance Notice served upon him on 31 August 2023. This was in circumstances where Mr Eagle admits that if he had complied with the Compliance Notice, he would have paid to Mr O’Regan $36,074.59 in respect of his unpaid entitlements, being:
(a)$23,766.72 in respect of Mr O’Regan’s minimum rates under the Award; and
(b)$12,307.87 in respect of Mr O’Regan’s annual leave entitlements.
In his affidavit, Mr Eagle gives the following reasons for not complying with the Compliance Notice:
(a)a compliance and an infringement notice dated 2 June 2023 was issued to him by the FWO (2 June Notice): Eagle Affidavit at [19].
(b)he paid an amount required under the 2 June Notice on 1 October 2023: Eagle Affidavit at [20].
(c)he mistakenly believed that contact from the FWO in respect of non-compliance with the 31 August 2023 Compliance Notice was in fact in respect of the 2 June Notice and the associated infringement notice, which had been paid: Eagle Affidavit at [22]-[24]; and
(d)this occurred in a context where Mr Eagle was experiencing stress associated with divorce proceedings and issues with his business “not going well”: Eagle Affidavit at [25].
In reply submissions, the FWO submitted that Mr Eagle’s “confusion” is not a mitigating factor nor an excuse for non-compliance, and should be given little weight. The FWO noted that the asserted confusion was sustained despite personal service of the Compliance Notice on 31 August 2023 and the various correspondence that the FWO had engaged in subsequently. The FWO submitted that any confusion did not explain why Mr Eagle had not taken the action required by the Compliance Notice where that action was the same as that required by the 2 June Notice. Further, the FWO submitted that any confusion would have been dispelled by the FWO’s 4 March 2024 correspondence. Despite this, Mr Eagle only commenced taking the action required by the Compliance Notice 7 months later on 4 October 2024.
I accept that there may have been some confusion on the part of Mr Eagle regarding the Compliance Notice. This is noting the effect of his evidence, which has not been the subject of cross examination. This is also supported, to some extent, by the correspondence between Mr Eagle and the FWO in October 2023 and February to March 2024.
However, I accept the FWO’s submission that other features of this case limit the weight that ought to be placed upon Mr Eagle’s explanation. The Compliance Notice set out in some detail what was required of Mr Eagle. Mr Eagle has not satisfactorily explained why he did not realise that further action had been required of him. This is notwithstanding the difficulties in his personal life that I accept he was experiencing at the time. Further, Mr Eagle acknowledged at least by March 2024 that additional action was required. Despite this, he does not appear to have taken substantial action towards his obligations under the Compliance Notice until several months later (after these proceedings had been commenced).
Mr Eagle’s evidence is that he has now paid Mr O’Regan $36,074.59 in respect of his unpaid entitlements. Written submissions filed by Mr Eagle indicated that the outstanding action required of Mr Eagle in relation to the Compliance Notice concerned calculation of Mr O’Regan’s superannuation entitlements and interest. Shortly before the hearing of this matter, the FWO were advised that Mr Eagle has also made payment in respect of superannuation owing to Mr O’Regan on the payment for the Annual Leave Contravention. In consequence of the payments made by Mr Eagle, the FWO now only seeks a declaration, imposition of a penalty and associated orders.
I accept the FWO’s submission that Mr Eagle’s delay in making these payments lessens, to some extent, their strength in his favour. Their force is also tempered by the fact that Mr O’Regan, who was employed as an apprentice, was without those entitlements for considerable periods of time.
However, the payments that have been made by Mr Eagle count in his favour in considering the appropriate penalty to be imposed. They have been given weight in my assessment of this.
I also take into account Mr Eagle’s expressions of remorse and contrition.
Finally, I give some weight in Mr Eagle’s favour to steps he has taken towards future compliance with his obligations. Mr Eagle’s evidence is that in this regard (Eagle Affidavit at [28]) he has:
(a)“undertaken the responsibility” of accounts and payroll and improved his awareness of his responsibilities under the FW Act;
(b)enrolled in a Certificate III in Business course at TAFE; and
(c)invested in upgraded payroll software and systems.
Whilst it remains to be seen whether these systems and actions will result in compliance in the future, I accept that Mr Eagle is taking steps he believes will support compliance with his obligations. It will be his responsibility to ensure that sufficient oversight and care accompanies such steps so as to ensure their effectiveness.
Nature and extent of loss
Although amounts owing to Mr O’Regan have now been paid, Mr O’Regan was without those funds for a considerable period of time.
The FWO also submitted, and I accept, that the non-compliance with the Compliance Notice has resulted in the FWO instituting proceedings at the cost of public funds. Failure to comply with a compliance notice undermines the public benefit of the compliance regime provided for under the FW Act, including the ability to avoid litigation and its associated costs. It is appropriate to take into account the wasted time and public resources used to enforce compliance in determining penalty: Fair Work Ombudsman v Jaycee Trading Pty Ltd & Anor (No.2) [2013] FCCA 2128 at [9] (Judge Emmett).
As I have found above, I place some weight upon the corrective action taken in relation to the payments made to Mr O’Regan. I also accept that allowance ought to be made for Mr O’Regan’s cooperation with the FWO in relation to these proceedings. His entry into the ASOAF and admissions regarding liability have avoided the need for the parties and the Court to incur the time and expense associated with a contested hearing in relation to those matters.
I accept that this action may well have been taken, as was submitted by the FWO, in acceptance of “the inevitable”: see Fair Work Ombudsman v Matcraft Pty Ltd [2021] FCCA 272 at [78] (Judge Kendall); Fair Work Ombudsman v Sun Sea Equity Pty Ltd [2021] FCCA 104 at [23] (Judge Jarrett); and Fair Work Ombudsman v Haider Pty Ltd & Anor [2015] FCCA 2113 at [20] (Judge Vasta). However, Mr Eagle’s action resulting in the conservation of public resources is a matter that ought to be taken into account.
The need to ensure compliance with minimum standards
The FWO submitted that a failure to comply with a statutory notice is serious. Failure to comply undermines the FW Act’s enforcement framework and the safety net of entitlements it is designed to protect: Fair Work Ombudsman v Tester [2021] FCCA 771 at [27] (Judge Jarrett). The efficacy of statutory notices would be hindered or made redundant if the recipients perceive that failure to comply will not carry meaningful consequences: Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor (No.2) [2019] FCCA 2144 (Judge Blake) at [40].
I accept these submissions and have taken them into account in determining the appropriate penalty.
Size of the business
Size of a business does not excuse non-compliance with obligations under the FW Act: Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815 at [10] (Judge Jarrett).
The size and financial circumstances of a respondent may, however, be relevant in determining penalty where appropriate evidence is put forward. This needs to be weighed against the need for general deterrence, which is a consideration of greater force: see Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70; (2008) 168 FCR 383 at [69] (Stone and Buchanan JJ); Fair Work Ombudsman v Althaus Homes Pty Ltd [2021] FCCA 126 at [35] (Jarrett J), Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301; (2017) 275 IR 148 at [105]-[106] (Bromwich J).
Mr Eagle is a sole trader. In his affidavit, he has expressed that the business moved premises in March 2024 and that it took around 6 months for the business to return to an operational state, during which the business was without any “real income” (Eagle Affidavit at [8]). Mr Eagle has also annexed to his affidavit bank statements for the periods starting 1 November 2023 and ending 31 July 2024. Those statements show, inter alia, limited closing balances.
However, I accept the FWO’s submission that the statements show limited context in relation to the financial circumstances of Mr Eagle. This is in circumstances where Mr Eagle has not given evidence that this is the only bank account for the business, limited information has been provided regarding the “financial pipeline” of the business, no further financial documentation has been provided, and at least some of the entries have no apparent relationship to Mr Eagle’s business. Although Mr Eagle states in his affidavit that a significant fine would put the business under “financial stress” (Eagle Affidavit at [31]), limited information in this regard has been provided. I accept the FWO’s submission that it has not been demonstrated that the proposed penalties would be relevantly crushing or oppressive.
Deterrence
It has been repeatedly emphasised in penalty cases that general deterrence must serve a purpose that ensures any penalty imposed is not seen as “the cost of doing business”: see for example Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290; (2016) 68 AILR 102–690 at [27] (Flick J). A penalty should therefore “be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like-minded persons or organisations”: Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [93] (Lander J).
The FWO has submitted a report titled “Fair Work Ombudsman Industry Profile and FWO Interactions - Manufacturing” (Industry Report) summarising data for the period July 2018 to June 2023 regarding compliance with workplace laws in the manufacturing industry (Industry): Annexure SF-3 to the Feltus Affidavit. Among other things, the Industry Report shows that from July 2018 to June 2023:
(a)a total of 12% of the contraventions in the Industry concerned wages and conditions; and
(b)the FWO issued a total of 105 compliance notices to employers in the Industry for financial year 2022-2023, being 4.4% of all compliance notices issued by the FWO.
I accept the significant role that the need for general deterrence plays in determining penalties. The penalty imposed in this matter should be sufficiently high to impress upon those in positions of responsibility the importance of complying with their legal obligations, and in particular the need to comply with statutory notices from the FWO.
I also accept that there is some need for specific deterrence in this case. This is in circumstances where Mr Eagle, as a sole trader, remains responsible for the overall operation, management and control of his business. This is despite having demonstrated some level of disregard for his obligations as an employer under Commonwealth workplace laws.
Determination of penalty
By reference to matters considered above, the FWO submits that a penalty of $5,070 would be appropriate. This is submitted to be noting that:
(a)the FWO has sought a penalty of 60% of the maximum penalty; and
(b)an appropriate discount in respect of corrective action, cooperation and contrition is 10%.
On balance, however, I consider that the quantum of penalty proposed by Mr Eagle is more appropriate in the particular circumstances of this case. Mr Eagle proposes a penalty of $3,756, being 50% of the maximum penalty, with a further discount of 10% of the maximum penalty for cooperation. This is taking into account, in particular:
(a)the payments that have now been made to Mr O’Regan;
(b)Mr Eagle’s expression of remorse, which is supported by his action in making the payments;
(c)Mr Eagle’s efforts in educating himself on business management and better payroll systems to avoid future compliance issues; and
(d)Mr Eagle’s actions to minimise the public cost of these proceedings, through entering into the ASOAF and consenting to the matter being determined on the papers.
Should Mr Eagle find himself before the Court again for non-compliance with his obligations, a different view of the appropriate penalty may well be taken.
CONCLUSION
For the foregoing reasons, I will make orders requiring that Mr Eagle pay a pecuniary penalty in the amount of $3,756, as well as associated orders that have been sought by the FWO.
I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Laing. Associate:
Dated: 5 November 2024
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