Fair Work Ombudsman v ECJ Group Pty Ltd
[2025] FedCFamC2G 228
•21 February 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v ECJ Group Pty Ltd [2025] FedCFamC2G 228
File number(s): SYG 2053 of 2024 Judgment of: JUDGE LAING Date of judgment: 21 February 2025 Catchwords: INDUSTRIAL LAW – assessment of a pecuniary penalty for contravention of s 716(5) of the Fair Work Act 2009 (Cth) – liability conceded – question of appropriate penalty to be imposed – penalty determined Legislation: Fair Work Act 2009 (Cth) ss 90, 539, 545, 546 & 716 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 [2018] FCAFC 97; (2018) 264 FCR 155
Fair Work Ombudsman v Althaus Homes Pty Ltd [2021] FCCA 126
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: 44 Date of last submission/s: 29 January 2025 Date of hearing: Determined on the papers Place: Sydney Solicitor for the Applicant: Ms K Ruhl of Fair Work Ombudsman For the Respondent: Mr E Jamieson (with leave) ORDERS
SYG 2053 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: ECJ GROUP PTY LTD (ACN 160 839 967)
Respondent
ORDER MADE BY:
JUDGE LAING
DATE OF ORDER:
21 FEBRUARY 2025
BY CONSENT, THE COURT DECLARES THAT:
1.ECJ Group Pty Ltd contravened s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with the Compliance Notice given to it on 1 December 2023.
BY CONSENT, THE COURT ORDERS THAT:
2.Pursuant to s 545(1) of the FW Act, within 60 days of these orders being made, the Respondent pay to Mr Beau Morris’s nominated superannuation fund the amount of $802.38 in respect of superannuation payable in respect of the amount paid to Mr Morris on 27 September 2024.
3.Pursuant to s 546(1) of the FW Act, within 28 days of this order, ECJ Group Pty Ltd pay a pecuniary penalty to the Commonwealth for the contravention declared at order 1.
4.The parties have liberty to apply.
THE COURT FURTHER ORDERS THAT:
5.The quantum of penalty referred to in order 3 be fixed in the amount of $9,250.
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:
The applicant (FWO) seeks a declaration that the respondent (ECJ Group) contravened s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with a compliance notice (Compliance Notice). The FWO also seeks an order that ECJ Group make a payment to a nominated superannuation fund, imposition of a pecuniary penalty and associated orders. The parties agree that the declaration should be made as well as payment to the nominated superannuation fund. The FWO has made submissions regarding the quantum of penalty said to be appropriate in the present case.
PROCEDURAL HISTORY
The FWO commenced these proceedings through an Application and Statement of Claim filed on 27 August 2024.
On 27 September 2024, orders were made (inter alia) granting leave to Mr Evan Jamieson, the director of ECJ Group, to represent ECJ Group for the purposes of entering into a Statement of Agreed Facts with the FWO.
A Statement of Agreed Facts was filed on 25 October 2024 (SOAF). Submissions and evidence have been filed by the FWO. The parties have sought that the matter be determined on the papers.
BACKGROUND
The following is taken from the SOAF.
In or around 3 March 2023, Fair Work Inspector (FWI) Crisford (FWI Crisford) commenced an investigation into ECJ Group (Investigation).
Based on information obtained during the investigation, FWI Crisford formed a belief that:
(a)ECJ Group employed Mr Beau Morris (Employee) as a full-time employee between 18 May 2018 to 23 September 2022 (Employment Period);
(b)the Electrical, Electronic and Communications Contracting Award 2020 (Award) covered and applied to the Employee’s employment with ECJ Group during the Employment Period;
(c)the Employee was, under the Award:
(i)an apprentice from 18 May 2018 to 30 June 2022; and
(ii)entitled to be classified as an electrical worker grade 5 (EWG5) from 1 July 2022 to 23 September 2022;
(iii)entitled pursuant to cl 16.2 of the Award, between 1 July 2022 to 23 September 2022, to be paid the minimum weekly rate for a full-time EWG5 employee of $940.90 (Minimum Rate Entitlement);
(d)The Employee was not paid by ECJ Group for seven weeks’ full-time work between 8 August 2022 and 23 September 2022 (Period); and
(e)upon the termination of his employment with ECJ Group on 23 September 2022 (Termination Date), the Employee had accrued but untaken annual leave for which he was not paid anything by ECJ Group.
By reason of the facts outlined above, FWI Crisford formed a reasonable belief for the purposes of s 716(1) of the FW Act that ECJ Group contravened the following terms of the Award:
(a)cl 16.2 of the Award, by failing to pay the Employee his full-time Minimum Rate Entitlement; and
(b)s 90(2) of the FW Act, by failing to pay the Employee his untaken accrued annual leave at the end of his employment.
(together, the Contraventions).
On 1 December 2023, FWI Crisford served the Compliance Notice upon ECJ Group by post and email.
The Compliance Notice required ECJ Group to:
(a)take the following action by 5 January 2024 to remedy the direct effects of the Contraventions (Specified Action):
(i)calculate and pay the outstanding entitlements owed to the Employee in respect of the Contraventions;
(ii)make a record of the information and amounts referred to in (a)(i); and
(iii)calculate and pay to the Employee’s chosen superannuation fund any additional superannuation contributions required to be paid by cl 19.2 of the Award in respect of the amounts referred to in (a)(i).
(b)produce the following reasonable evidence to the FWO of its compliance with the Compliance Notice, by 12 January 2024 (Reasonable Evidence):
(i)a copy of the schedule of calculations and payment; and
(ii)proof that the amount owed had been paid to the Employee.
ECJ Group failed, without reasonable excuse, to:
(a)take the Specified Action set out in the Compliance Notice by 5 January 2024; and
(b)produce the Reasonable Evidence by 12 January 2024.
ECJ Group therefore failed to comply with the Compliance Notice in contravention of s 716(5) of the FW Act.
If ECJ Group had taken the Specified Action to remedy the direct effects of the Contraventions, ECJ Group would have calculated and paid to the Employee $19,693.47 (gross) (Underpayment) comprising amounts associated with:
(a)7 weeks (266 hours) worked during the Period; and
(b)the Employee’s accrued but untaken annual leave owing at the termination date.
On 27 September 2024, ECJ Group made a payment of $19,963.47 to the Employee to rectify the amounts owed under the Compliance Notice.
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 $46,950.
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].
PENALTY
Material relied upon
The FWO relied upon:
(a)the Application and Statement of Claim;
(b)an affidavit of Kate Elizabeth Ruhl, affirmed 2 September 2024 (Ruhl Affidavit);
(c)an affidavit of Craig Neal Crisford, sworn 28 November 2024 (Crisford Affidavit);
(d)an affidavit of Nicholas Martin Kelly, sworn 29 November 2024 (Kelly Affidavit); and
(e)the SOAF.
No evidence was filed on behalf of ECJ Group.
Circumstances surrounding the contravention and extent of loss
The circumstances surrounding the contravention are set out in some detail by reference to the SOAF above.
As set out above, ECJ Group accepts that it failed to comply with the Compliance Notice. This was in circumstances where ECJ Group admits that if it had complied with the Compliance Notice, it would have paid to the Employee $19,693.47.
ECJ Group has not provided any evidence regarding the circumstances in which the contravention was said to have occurred. There are indications in correspondence with the FWO that it was contended by Mr Jamieson that the situation took place in a context where the liquidity of the business had been affected by COVID and builders not paying monies owed: Kelly Affidavit, Annexures NMK-9 and NMK-15. Whilst the contravention may well have taken place in circumstances where the business was affected by difficulties, I am not in a position to assess this in the absence of evidence, of any detail, to that effect.
FWO submitted, by reference to the evidence, that:
(a)Mr Jamieson has been on notice of the allegations of underpayments, and agreed there was an underpayment, since at least 31 May 2023 (Crisford Affidavit at [6]-[7]);
(b)on two occasions, on 31 May 2023 and 27 July 2023, Mr Jamieson made promises to rectify the monies owed to the Employee (Crisford Affidavit at [6] and [9]);
(c)despite those promises to the FWO, Mr Jamieson was then unresponsive to 14 attempts to contact him by the FWO between 31 July 2023 and 1 December 2023 (Crisford Affidavit at [11]);
(d)after a prior compliance notice was withdrawn and the Compliance Notice was issued on 1 December 2023, Mr Jamieson remained unresponsive to the FWO’s further attempts to contact him between January and May 2024 (Crisford Affidavit at [12]-[14]);
(e)the FWO conducted its own assessment of the amounts owing under the Compliance Notice and provided ECJ a final opportunity to rectify these amounts (Kelly Affidavit at [6]); and
(f)only after receiving no meaningful response from either ECJ Group or Mr Jamieson to the Compliance Notice, despite numerous attempts at contact, did the FWO commence proceedings on 27 August 2024.
I accept, based upon the FWO’s unchallenged evidence, that the above circumstances surrounded the contravention of s 716(5) of the FW Act.
Although the FWO accepts that ECJ Group has now fully rectified the Underpayment (SOAF at [18]), it observes that this only occurred:
(a)on 27 September 2024, nearly 10 months after the Compliance Notice was issued;
(b)even longer after Mr Jamieson first admitted to the FWO that the Employee had been underpaid on 31 May 2023; and
(c)only after these proceedings were commenced.
ECJ Group has admitted through the SOAF that it does not have a reasonable excuse for non-compliance with the Compliance Notice.
The FWO submits that ECJ Group’s failure to comply with the Compliance Notice demonstrates a disregard for its obligations under the FW Act and the authority of the FWO as a regulator of Commonwealth workplace laws. The FWO further observes that both the FWO and the Court have been required to spend time and public resources in dealing with these proceedings that would not have been required had compliance occurred.
I accept that some level of disregard was shown by ECJ Group in its dealings with the FWO and, in particular, through its non-responsiveness over significant periods to attempts by the FWO to engage with the company. I also accept that there have been costs associated with ECJ Group’s action, including public cost, on account of the non-compliance. However, I acknowledge that the extent of the cost has, to some extent, been limited by the approach taken by ECJ Group after the commencement of proceedings, including through making payment to the Employee and making prompt concessions through entry into the SOAF.
I have taken these matters into account in determining penalty.
Size and financial circumstances of the business
The size and financial circumstances of a respondent may 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). Size of a business does not excuse non-compliance with obligations under the FW Act: Fair Work Ombudsman v Althaus Homes Pty Ltd [2021] FCCA 126 at [35] (Jarrett J).
In the present case, the evidence does not establish the size of ECJ’s business or its financial circumstances in any detail. As set out above, there are some indications in Mr Jamieson’s communications with the FWO that the business has experienced financial difficulties. However, no evidence has been provided on behalf of ECJ Group to this effect.
Cooperation, contrition and corrective action
ECJ Group has filed no affidavit making expressions of contrition. However, this is in circumstances where it has no legal representative in these proceedings and appears to have sought to cooperate substantially with the FWO in bringing these proceedings to a close. There is substance to the adage that, sometimes, actions speak louder than words.
The FWO acknowledges that ECJ Group has cooperated with the FWO in these proceedings by making full admissions through the SOAF. ECJ Group has also made a payment of $19,693.47 in rectification of the Underpayment. This is accepted by the FWO as demonstrating a degree of acceptance of wrongdoing. The FWO acknowledges that this has also saved time and resources associated with a contested liability hearing.
The FWO submits that a discount of “not more than 20%” should be applied on account of ECJ Group’s actions towards cooperation, contrition and corrective action. I prefer to consider the question of penalty in this matter holistically, rather than by reference to such a percentage. This is in circumstances where there is potential overlap between the considerations that may inform the Court’s reasoning under a number of headings.
That said, for the reasons given below, I have accepted that an appropriate penalty falls within a range articulated by the FWO by reference to (inter alia) the percentage proposed.
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).
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. ECJ remains registered with Mr Jamieson as the sole director: Kelly Affidavit at [29] and Annexure NMK-18. There is evidence of Mr Jamieson admitting that he knowingly prioritised other debts of ECJ Group above payment of the Employee’s entitlements as the latter were perceived not to help the business move forward and he knew the Employee had another job and money coming in: Kelly Affidavit at [17] and Annexure NMK-9.
Determination of penalty
The FWO submits that a penalty in the following range would be appropriate:
I agree. The range proposed is at the lower end of the range of potential penalties. This is appropriate, having regard to the following:
(a)there is no suggestion of any antecedent breaches of the FW Act;
(b)the FWO accepts that full rectification has been made, save as for a limited additional payment for superannuation that ECJ Group does not dispute is outstanding and ought to be paid; and
(c)ECJ Group has cooperated early with the FWO in these proceedings, entering promptly into the SOAF and therefore enabling these proceedings to be efficiently determined at limited public cost.
Having regard to the above, I consider that a penalty in the mid-range of what has been proposed by the FWO (applying the 20% discount column of the table) is appropriate.
CONCLUSION
For the foregoing reasons, I will make orders requiring that ECJ Group pay a pecuniary penalty in the amount of $9,250, as well as associated orders that have been sought.
The parties seek, by consent, a related order requiring that an amount be paid, pursuant to s 545(1) of the FW Act, to the Employee’s nominated superannuation fund. In circumstances where the parties are in agreement both in relation to the amount said to be owed and the order proposed, I am willing to make the order sought.
I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Laing. Associate:
Dated: 21 February 2025
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