FEDERAL COURT OF AUSTRALIA
Fair Work Ombudsman v Eastern Colour Pty Ltd (No 3) [2016] FCA 186
File number: QUD 376 of 2010 Judge: COLLIER J Date of judgment: 3 March 2016 Catchwords: INDUSTRIAL LAW – assessment of penalty – imposition of penalties on the respondents following contraventions of Workplace Relations Act 1996 (Cth) – factors relevant to determining penalty – where first, second and third respondents constitute one entity – failure to pay overtime – failure to pay penalty rates – whether multiple contraventions treated as single contravention – whether conventions arose out of one scheme – not penalising respondents more than once for same conduct – family companies – vulnerable employees – need for general and specific deterrence – totality principle Legislation: Workplace Relations Act 1996 (Cth) ss 182, 182(1), 182(2), 719, 719(1), 719(2), 728, 841 Cases cited: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476; [2015] HCA 46
Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 2) [2010] FCA 1156
Fair Work Ombudsman v Eastern Colour Pty Ltd [2011] FCA 803
Fair Work Ombudsman v Eastern Colour Pty Ltd (No 2) [2014] FCA 55
Date of hearing: 13 May 2014 Date of last submissions: 29 January 2016 Registry: Queensland Division: Fair Work Division National Practice Area: Employment & Industrial Relations Category: Catchwords Number of paragraphs: 26 Counsel for the Applicant: Mr J Phillips SC with Mr C Murdoch Solicitor for the Applicant: Fair Work Ombudsman Counsel for the First, Second, Third and Fourth Respondents: Mr WL Friend QC with Mr M Costello Solicitor for the First, Second, Third and Fourth Respondents: McKays Solicitors ORDERS
QUD 376 of 2010 BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: EASTERN COLOUR PTY LTD (ACN 001 852 071)
First Respondent
SB EMPLOYMENTS PTY LTD (ACN 117 006 596)
Second Respondent
NB EMPLOYMENTS PTY LTD (ACN 117 059 319)
Third Respondent
LOUISA BARONIO
Fourth Respondent
JUDGE:
COLLIER J
DATE OF ORDER:
3 MARCH 2016
THE COURT ORDERS THAT:
1.The first, second and third respondents pay a total penalty of $50,000 pursuant to s 719(1) of the Workplace Relations Act 1996 (Cth) within thirty days of the date of this order to the Commonwealth Consolidated Revenue Fund.
2.The fourth respondent pay a penalty of $10,000 pursuant to s 719(1) of the Workplace Relations Act 1996 (Cth) within thirty days of the date of this order to the Commonwealth Consolidated Revenue Fund.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
COLLIER J:
In Fair Work Ombudsman v Eastern Colour Pty Ltd (No 2) [2014] FCA 55 I found that the Fair Work Ombudsman (the FWO) had substantiated its claim that the first respondent was the employer of relevant workers (employees) at a farm at 244…
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- Case
- [2016] FCA 186
- Decision Date
CaseChat Overview and Summary
The central legal issues before the court included whether the multiple contraventions should be treated as a single contravention, given that the respondents constituted a single entity, and whether the penalties imposed should reflect the totality of the respondents’ conduct. The court had to balance the need for specific and general deterrence, the totality principle, and the fact that the contraventions arose from two distinct forms of conduct regarding overtime and penalty rates.
Justice Mortimer concluded that while the contraventions arose from a scheme designed to circumvent legislative obligations, they were not so egregious as to warrant the maximum penalties. The court found that the appropriate penalties should be determined by considering the totality of the respondents' conduct, the substantial coincidence of identity between the first, second, and third respondents, and the need for deterrence. The court imposed penalties of $50,000 on the first, second, and third respondents, and $10,000 on the fourth respondent, totalling $60,000. These penalties represented 50-80% of the maximum penalties that could be imposed if each contravention was considered separately.
The court's final orders required the first, second, and third respondents to pay a total penalty of $50,000, and the fourth respondent to pay a penalty of $10,000, both payable within thirty days to the Commonwealth Consolidated Revenue Fund. The penalties were intended to provide both specific and general deterrence while ensuring that the respondents were not penalised more than once for their conduct.
Orders
Orders of the court
1. The first, second and third respondents pay a total penalty of $50,000 pursuant to s 719(1) of the Workplace Relations Act 1996 (Cth) within thirty days of the date of this order to the Commonwealth Consolidated Revenue Fund.
2. The fourth respondent pay a penalty of $10,000 pursuant to s 719(1) of the Workplace Relations Act 1996 (Cth) within thirty days of the date of this order to the Commonwealth Consolidated Revenue Fund.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Relevantly, the respondents submit, in summary:·The arrangement put in place to allow the employees to work in excess of 40 hours should they so wish was unremarkable in the circumstances of this case. This is relevant to the assessment of the gravity of the conduct of the respondents.·The respondents sought advice as to the best approach to comply with their obligations under the WR Act and the NAPSA, and to still make additional work available to persons who wanted it. While the advice they received was wrong, it is clear that the conduct of the respondents did not constitute a blatant contravention.·The respondents have paid the employees all outstanding entitlements.·No prior conduct consistent with the contraventions has been alleged.·Each of the contraventions constitutes a single course of conduct for the purpose of s 719(2). It follows that there are five primary contraventions by the first respondent in respect of which the second, third and fourth respondents were involved.·The Court should consider whether the five contraventions should be regarded as one because they arose from one scheme.·Although the fourth respondent was a senior manager, the first respondent was a family owned business without discernible tiers of management.·There is no requirement for specific deterrence in the circumstances of this case.·This is not a case that calls for a penalty that will promote general deterrence.·The Court should be cautious to ensure that the respondents are not punished multiple times, and should take into account the considerations of cumulation and concurrence as well as totality. Accordingly, a separate penalty for the contravention by the second and third respondents would be disproportionate.·In the circumstances the conduct of the respondents is at the low end of the range, warranting orders to the following effect: 10% of the maximum penalty in relation to the first respondent, no penalty or no more than 5% of the maximum penalty in relation to the second and third respondents, and 5-10% of the maximum penalty in relation to the fourth respondent.Consideration Relevant factors to consider in the imposition of a penalty under the WR Act have been substantially settled for some time. An overriding principle is that there is no prescribed checklist to which the Court should adhere in the exercise of its discretion: Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 at [11]; Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 2) [2010] FCA 1156 at [231]. As McKerracher J observed in Kentwood Industries at [231]:The task of the Court is to fix penalties which pay appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations. In Kentwood Industries at [230] however, McKerracher J helpfully reprised the following non-exhaustive list of factors potentially relevant to the imposition of a penalty under the WR Act:(a) the nature and extent of the conduct which led to the contraventions;(b) the circumstances in which that conduct took place;(c)the nature and extent of any loss or damage sustained as a result of the contraventions;(d)whether there has been similar previous conduct by the respondent;(e)whether the contraventions were properly distinct or arose out of the one course of conduct;(f) the size of the business enterprise involved;(g) whether or not the contraventions were deliberate;(h) whether senior management was involved in the contraventions;(i) whether the party committing the contraventions has exhibited contrition;(j)whether the party committing the contraventions has taken corrective action;(k)whether the party committing the contraventions has co-operated with the enforcement authorities;(l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and(m)the need for specific and general deterrence (see Kelly v Fitzpatrick (2007) 166 IR 14 at [14] applying Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at [26]-[29]; Stuart-Mahoney v CFMEU (2008) 177 IR 61 and John Holland Pty Ltd v Maritime Union of Australia (No 2) (2010) 192 IR 431 per Graham J at [27]).