Fair Work Ombudsman v EJ Group International Pty Ltd
[2017] FCCA 997
•16 May 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v EJ GROUP INTERNATIONAL PTY LTD & ANOR | [2017] FCCA 997 |
| Catchwords: INDUSTRIAL LAW – Application for imposition of pecuniary penalties. |
| Legislation: Fair Work Act 2009, ss. 45, 529(2), 535(1), 536(1), 539(1), 545(1), 550, 557 Fair Work Regulations 2009, rr. 3.36, 3.44 |
| Cases cited: Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | EJ GROUP INTERNATIONAL PTY LTD |
| Second Respondent: | MR IL KANG |
| File Number: | BRG 1008 of 2016 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 12 May 2017 |
| Date of Last Submission: | 12 May 2017 |
| Delivered at: | Brisbane |
| Delivered on: | 16 May 2017 |
REPRESENTATION
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| Solicitors for the Respondents: | So Dong Lawyers |
ORDERS
BY CONSENT THE COURT DECLARES THAT:
The first respondent contravened:
(a)s.45 of the Fair Work Act 2009 (Cth) by failing to pay the minimum rate of pay prescribed by cl.20.1 of the Restaurant Industry Award 2010;
(b)s.45 of the Fair Work Act 2009 (Cth), by failing pay the minimum casual loading prescribed by cl.13.1 of the Restaurant Industry Award 2010;
(c)s.45 of the Fair Work Act 2009 (Cth), by failing to pay the minimum Saturday penalty prescribed by cl.34.1 of the Restaurant Industry Award 2010;
(d)s.45 of the Fair Work Act 2009 (Cth), by failing to pay the minimum Sunday penalty prescribed by cl.34.1 of the Restaurant Industry Award 2010;
(e)s.45 of the Fair Work Act 2009 (Cth), by failing to pay the minimum overtime rates (Monday to Friday) prescribed by cl.33.2(a) of the Restaurant Industry Award 2010;
(f)s.45 of the Fair Work Act 2009 (Cth), by failing to pay the minimum overtime rates (Saturday) prescribed by cl.33.2(b) of the Restaurant Industry Award 2010;
(g)s.45 of the Fair Work Act 2009 (Cth), by failing to pay the minimum overtime rate (Sunday) prescribed by cl.33.2(c) of the Restaurant Industry Award 2010;
(h)subs.535(1) of the Fair Work Act 2009 (Cth), by failing to make and keep for seven years records as prescribed by reg.3.36(1) of the Fair Work Regulations;
(i)reg.3.44(1) of the Fair Work Regulations, by failing to ensure that the records it was required to keep were not false or misleading to its knowledge;
(j)reg.3.44(6) of the Fair Work Regulations, by making use of entries in employee records, knowing those records were false or misleading; and
(k)s.536(1) of the Fair Work Act 2009 (Cth), by failing to give pay slips within one working day of paying amounts to employees in relation to the performance of work.
The second respondent was, within the meaning of subs.550(2) of the Fair Work Act, involved in each of the contraventions of the First Respondent set out in paragraphs 1(a)to 1(g), 1(i)and 1(j) above.
THE COURT ORDERS THAT:
Pursuant to subs.546(1) of the Fair Work Act 2009 (Cth) the first respondent pay a penalty in the total amount of $100,000 in respect of the contraventions the subject of declaration 1 hereof.
Pursuant to s.546(1) of the Fair Work Act 2009 (Cth) the second respondent pay a total penalty of $16,250 in respect of the contraventions the subject of declaration 2 hereof.
The first and second respondents pay the pecuniary penalty amounts to the Commonwealth within 28 days.
Pursuant to s.545 of the Fair Work Act, the first respondent and the second respondent, jointly and severally, pay the sum of $8,853.567 to the Fair Work Ombudsman within 28 days of these orders, and that:
(a)the Fair Work Ombudsman will within 28 days of receipt of the outstanding underpayment, pay to Ms Hong and Mr Lee amounts set as follows:
Employee
Underpayment amount
Percentage of total
Hong
$3,683.35
41.60%
Lee
$5,170.21
58.40%
(b)in the event that the Fair Work Ombudsman receives part payment of the amount required by order (6) hereof, the money be distributed to Ms Hong and Mr Lee in accordance with the percentage of total underpayment outlined in the table above; and
(c)in the event that the Fair Work Ombudsman cannot locate either Ms Hong or Mr Lee, pay the applicable amount due to each person that cannot be located to the Commonwealth within a further 7 days.
Pursuant to s.547(2) of the Fair Work Act 2009 (Cth), the first respondent and the second respondent, jointly and severally, pay interest at the applicable pre-judgment rate on the outstanding underpayment.
Pursuant to s.545(1) of the Fair Work Act 2009 (Cth) requiring the Second Respondent, within 28 days of the date of the order, to:
(a)register with the Applicant’s “My Account” portal at and complete the profile including the Award options;
(b)provide to the Applicant his “My Account” registration number; and
(c)register with the Applicant’s Online Learning Centre at and complete all education courses designed for employers and provide the Applicant with evidence of completion of those courses within a further one month.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 1008 of 2016
| FAIR WORK OMBUDSMAN |
Applicant
And
| EJ GROUP INTERNATIONAL PTY LTD |
First Respondent
| DAI IL KANG |
Second Respondent
REASONS FOR JUDGMENT
In 2015 and 2016 EJ Group International Pty Ltd was the operator of the Sushi Kuni restaurant located at Bluewater Square Shopping Centre in Redcliffe, Queensland. The second respondent, Dai Kang is the sole director and shareholder of EJ Group. He is Korean by birth and does not speak English well.
By these proceedings the Fair Work Ombudsman seeks the imposition of pecuniary penalties upon EJ Group and Mr Kang for admitted contraventions of the Fair Work Act 2009 (Cth) and the Fair Work Regulations 2009 (Cth). The parties have agreed upon a written statement of facts that was filed on 13 February, 2017.
EJ Group admits that in respect of two specified employees, it:
a)contravened the Restaurant Industry Award 2010 by failing to pay minimum rates of pay, casual loading, weekend penalties and overtime penalties;
b)contravened the Fair Work Act by failing to keep records of annual leave entitlements and failing to issue pay slips; and
c)contravened the Fair Work Regulations by keeping false or misleading records, and providing those false and misleading records to the Fair Work Ombudsman.
Mr Kang admits that he was involved in EJ Group’s contraventions for the purposes of s.550 of the Fair Work Act.
Background
In July, 2015 the Fair Work Ombudsman received two separate requests for assistance from employees of Ballina One Sushi Pty Ltd (now in liquidation), the operator of the Sushi Kuni restaurant in Ballina. Mr Kang was also only director and shareholder of Ballina One Sushi Pty Ltd. The requests for assistance alleged that Ballina One was underpaying employees and had failed to issue pay slips to those employees.
On 21 July, 2015 the Fair Work Ombudsman sent an email to Mr Kang in both English and Korean, in his capacity as the director of Ballina One and operator of the Ballina Sushi Kuni, attaching one of the requests for assistance and containing a list of hyperlinks to information published by the Fair Work Ombudsman. The information included material published by the Fair Work Ombudsman on:
a)minimum pay rates, including a hyperlink to the Fair Work Ombudsman’s Pay Calculator which would help find the relevant award and calculate specific rates;
b)penalty rates, allowances and overtime, including information that penalty rates were payable on weekends and/or when employees were working overtime; and
c)pay slips, including that pay slips had to be given to employees within one working day of paying them and the information required to be included on those pay slips.
On 27 July, 2015 the two requests for assistance were withdrawn after the employees indicated they had independently resolved those matters with Ballina One.
On 25 August, 2015 the Fair Work Ombudsman conducted a site visit to the Ballina Sushi Kuni as part of a Regional Audit Campaign. During the site visit, Fair Work Inspectors spoke with Mr Kang about the Restaurant Industry Award and showed to him a copy of the Restaurant Industry Award 2010 Pay Guide published by the Fair Work Ombudsman. The Pay Guide lists the various minimum rates of pay under the Restaurant Industry Award in table format. The inspectors provided Mr Kang with a point of reference should there be any doubt about applicable minimum rates of pay.
During their site visit to the Ballina Sushi Kuni on 25 August, 2015 the inspectors requested to see Ballina One’s time and wage records, but Mr Kang could not immediately produce them. It was agreed that he would produce them the next day. The evidence is that the inspectors cautioned Mr Kang against creating records if he did not have any to provide to them, to ensure that the records he provided to the inspectors were correct and that it was an offence to provide false or misleading records to a Fair Work Inspector.
The inspectors called in to the Ballina One Sushi store the next day and were given the records that they had requested the previous day.
On 29 February, 2016 Mr Kang participated in an electronically recorded interview with Fair Work Inspectors. During that interview Mr Kang admitted that in response to the request from inspectors to see Ballina One’s time and wage records, he had created and then provided the Fair Work Ombudsman with records that were incorrect.
On 14 June, 2016 the Fair Work Ombudsman sent a “Findings of Contravention Letter” to Ballina One and Mr Kang. The letter outlined that the Fair Work Ombudsman’s audit of Ballina One found underpayment and record keeping contraventions of the Fair Work Act and Fair Work Regulations, including underpayments of $42,673.37 to five employees.
On 27 October, 2016 the Fair Work Ombudsman commenced proceedings against Mr Kang regarding his involvement, within the meaning of s.550(1) of the Fair Work Act, in alleged contraventions of the Fair Work Act and the Fair Work Regulations by Ballina One. The alleged contraventions included underpayments to three employees and the provision of false or misleading records to the Fair Work Ombudsman in August, 2015. Those contraventions are the subject of separate proceedings in this Court that were heard at the same time as the present proceedings. I have delivered separate reasons in relation to those matters. The relevance of the Fair Work Ombudsman’s dealings with Mr Kang in relation to the Ballina Store will become apparent later in these reasons.
Between 1 December, 2015 and 23 March, 2016 EJ Group operated the Redcliffe Sushi Kuni. Mr Kang was the sole director and shareholder of EJ Group and was its controlling mind. He was responsible for its operations including:
a)the engagement of employees;
b)setting and payment of wages and conditions; and
c)for record keeping.
During the same period EJ Group employed Yoonhee Hong and Dong-Geon Lee to work at the Redcliffe Sushi Kuni. Ms Hong was engaged on a casual basis, and held a subclass 572 (vocational education and training sector) visa. Mr Lee was engaged on a full-time basis and held a subclass 417 (working holiday) visa.
Ms Hong and Mr Lee regularly worked between 10-12 hours per day and, despite being informed at the time of their engagement that they would be paid $17.79 per hour, were eventually informed and paid $120 per day during their first two weeks and $160 per day thereafter.
On 16 March, 2016 the Fair Work Ombudsman received requests for assistance from each of Ms Hong and Mr Lee alleging they were being underpaid and that they had not received pay slips.
On 4 April, 2016 the Fair Work Ombudsman emailed EJ Group and Mr Kang about the requests for assistance and requested EJ Group provide the Fair Work Ombudsman with employee records for Ms Hong and Mr Lee, including timesheets and wage records so the issues could be investigated.
On 15 April, 2016 EJ Group provided the Fair Work Ombudsman with employee records for both employees via email. However, the time and wage records provided were a fabrication and not a true reflection of the hours worked by Ms Hong or the amounts paid to her. The records incorrectly recorded a reduced number of hours worked by Ms Hong and a higher hourly rate of pay for her.
On 9 August, 2016 the Fair Work Ombudsman sent a “Findings of Contravention Letter” to EJ Group and Mr Kang. The letter outlined that the Fair Work Ombudsman’s investigation found underpayment and record keeping contraventions of the Fair Work Act and Fair Work Regulations, including underpayments of $9,307.48 to Ms Hong and Mr Lee.
The Contraventions
In these proceedings, EJ Group admits that it contravened:
a)failing to pay the minimum rate (cl.20.1 of the Restaurant Award);
b)failing to pay casual loading (cl.13.1 of the Restaurant Award);
c)failing to pay the minimum Saturday penalty (cl.34.1 of the Restaurant Award);
d)failing to pay the minimum Sunday penalty (cl.34.1 of the Restaurant Award);
e)failing to pay the minimum overtime rate of pay for overtime worked on Monday to Friday (cl.33.2(a) of the Restaurant Award);
f)failing to pay the minimum overtime rate of pay for overtime worked on a Saturday (cl.33.2(b) of the Restaurant Award);
g)failing to pay the minimum overtime rate of pay for overtime worked on a Sunday (cl.33.2(c) of the Restaurant Award);
h)failing to make and keep records of annual leave entitlements (subsection 535(1) of the Fair Work Act);
i)keeping records which were false or misleading to its knowledge (subregulation 3.44(1) of the Fair Work Regulations);
j)making use of entries in employee records which were false or misleading to its knowledge (subregulation 3.44(6) of the Fair Work Regulations); and
k)failing to issue pay slips within one working of paying employees (subsection 536(1) of the Fair Work Act).
Mr Kang admits that he was involved in each of EJ Group’s contraventions, except the contraventions regarding the failure to make and keep records and misuse pays slip at subparagraphs 23(h) and 23(k) (for which no involvement was alleged by the Fair Work Ombudsman).
Paying the employees a flat rate without regard to the rates of remuneration set out in the Restaurant Industry Award or to the various loadings and other entitlements set out in that Award contravened the Fair Work Act in that each time EJ Group did not pay an employee the minimum hourly rate of pay to which he or she was entitled under the Award, or any loading to which he or she was entitled, EJ Group contravened a term of the Award. Section 45 of the Fair Work Act provides that a person must not contravene a term of a modern award. The Restaurant Industry Award is a modern award for the purpose of the Fair Work Act.
Section 45 of the Fair Work Act is a civil penalty provision as defined in that Act: s.539(1) of the Fair Work Act. The Court may impose a penalty upon a party who is found to have contravened a civil penalty provision and specifically s.45 of the Act: ss.529(2) and 545(1) of the Fair Work Act.
So as to determine what, if any, pecuniary penalty ought to be imposed upon the respondents it is necessary to identify each of the separate contraventions that have been committed.
Here the contraventions involve the failure by EJ Group to pay to the two employees concerned their entitlements to even a basic minimum wage. The breaches are numerous because each time an employee was entitled to be paid the basic rate of pay or one of the relevant loadings identified above, there was a contravention of the Act. Each breach of an obligation provided for in an industrial instrument is a separate contravention of that industrial instrument and consequently s.45 of the Fair Work Act. Accordingly, there are many contraventions involved in this case. The total number has not been quantified in the evidence.
However, s.557 of the Fair Work Act provides:
557. Course of Conduct
(1) For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:
(a) the contraventions are committed by the same person; and
(b) the contraventions arose out of a course of conduct by the person.
Section 557(1) is engaged in this case. Each of the numerous contraventions of the Restaurant Industry Award is a contravention of s.45 of the Act. The contraventions were committed by the same person, namely EJ Group. If they arose out of the same course of conduct, they must be taken to constitute a single contravention. That is the legislatively mandated outcome. However, as the decision in Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153 directs, s.557(1) operates on contraventions which occur when a term of an Award is contravened through the operation of s.45 of the Act. The contravention occurs when a term of a modern award is contravened. The effect of s.557(1) in relation to contraventions of s.45 is that two or more contraventions of a term of a modern award are taken to constitute a single contravention, but contraventions of disparate provisions of the Award are not to be treated as a single contravention of s.45 of the Act.
The declarations agreed upon by the parties treat the multiple contraventions of each separate obligation in the Award as a single contravention. There are nine declarations relating to nine specific obligations arising from the award. That approach is consistent with Rocky Holdings (above).
I do accept that it is not appropriate to further group any of the contraventions as each contravention arose from the breach of a distinct and separate obligation provided by a term of the Award. The respondents did not contend to the contrary. However, all of the “underpayment contraventions” as the Fair Work Ombudsman describes them, arise from a course of conduct – namely the decision by EJ Group to pay a flat rate of pay. The consequence of that course of action was for EJ Group to not comply with the Award requirements as alleged in these proceedings. Even though the various contraventions of the Award provisions cannot be treated as one contravention for the purposes of s.557(1) of the Fair Work Act, they can nonetheless be treated as having some commonality and involving the same culpability. It is important that the respondent not be punished for the same conduct more than once.
In my view it is appropriate to impose a significant penalty upon the respondents in respect of the contravention relating to the failure to pay the minimum rate and a lesser penalty in respect of the other underpayment contraventions.
The maximum penalties the Court may impose in respect of the civil remedy provisions contravened by EJ Group and Mr Kang are:
a)$54,000 (300 penalty units) for EJ Group and $10,800 (60 penalty units) for Mr Kang in respect of contraventions of s.45 of the Fair Work Act;
b)$27,000 (150 penalty units) for EJ Group in respect of contraventions of ss.535(1) and 536(1) of the Fair Work Act; and
c)$18,000 (100 penalty units) for EJ Group and $3,600 (20 penalty units) for Mr Kang in respect of contraventions of regs. 3.44(1) and 3.44(6) of the Fair Work Regulations.
Accordingly, the total maximum penalties that may be imposed are $360,000 for EJ Group and $61,200 for Mr Kang.
Consideration of Penalty
The contraventions involving the underpayment of minimum rates and penalty loadings came about because EJ Group paid flat daily rates to Ms Hong and Mr Lee of between $120-$160 per day, including on weekends. As Ms Hong and Mr Lee routinely worked between 10-12 hours per day, the amounts paid to them were far below even the minimum wages and penalties contained in the Restaurant Award.
Given the daily rates paid, at times EJ Group paid the employees between $10 and $13.33 dollars for each hour worked. For an Introductory level employee under the Restaurant Award, the minimum wage was between $16.87 and $17.29 during the relevant employment periods.
The total underpayment by EJ Group to Ms Hong and Mr Lee was $9,858.13 (representing approximately between 32% and 35% of their minimum entitlements during the Contravention Period).
The record keeping contraventions relate to EJ Group’s failure to make and keep employment records that specified Mr Lee’s annual leave entitlements. That is information required to be recorded by s.535(1) of the Fair Work Act and reg.3.36(1) of the Fair Work Regulations.
EJ Group also failed to issue pay slips to Ms Hong and Mr Lee.
The contraventions of regs.3.44(1) and 3.44(6) of the Fair Work Regulations arose from EJ Group keeping false or misleading records, and the subsequent provision of those records to the Fair Work Ombudsman, following a request for those records so as to enable the Fair Work Ombudsman to investigate Ms Hong and Mr Lee’s requests for assistance. The EJ Group time and wage records that were provided to the fair Work Ombudsman were false and misleading because they recorded Ms Hong was working a less number of hours and being paid higher hourly rates than she in fact worked or was paid. It was necessary for the Fair Work Ombudsman to obtain and rely upon contemporaneous records kept by Ms Hong and Mr Lee as evidence of their hours of work and their bank statements to cross-check the amounts paid to the employees. By that means, it became apparent that the time and wage records were incorrect.
Mr Kang, as the controlling mind and person responsible for EJ Group’s operations including the engagement of employees, setting and payment of wages and conditions and record keeping, admits to being involved, within the meaning of s.550 of the Fair Work Act, in the contraventions of EJ Group.
The Fair Work Ombudsman submits that Mr Kang’s involvement in the contraventions is serious because, as a result of the Fair Work Ombudsman’s August, 2015 audit of Ballina One, Mr Kang had been provided with information by the Fair Work Ombudsman on, and had clear knowledge about, minimum entitlements under the Restaurant Award and record keeping obligations under the Fair Work Act and Fair Work Regulations.
For largely the same reasons, the Fair Work Ombudsman submits that EJ Group’s conduct was equally as serious because it operated through Mr Kang. His knowledge was the knowledge of EJ Group. I accept that submission.
Despite Mr Kang being aware that EJ Group was required to comply with Commonwealth workplace laws, he did not take any steps to ensure that Ms Hong and Mr Lee’s rates of pay complied with the minimums in the Restaurant Award.
The contraventions were committed in relation to two employees, both of whom were of Korean nationality and were visas holders. The employees’ duties also meant that for the majority of their employment periods they were each properly classified in the lowest classification of the Restaurant Award.
I accept the Fair Work Ombudsman’s submission that EJ Group and Mr Kang’s contraventions are serious. The nature and extent of the conduct warrants the imposition of meaningful penalties as the conduct, committed in the circumstances outlined above, involved:
a)contraventions of minimum standards of the most fundamental kind, being the payment of minimum wages and penalties;
b)the production of false and misleading records to the Fair Work Ombudsman in its role as a regulator;
c)occurred in circumstances where both Mr Kang, and through him EJ Group, had knowledge of the Restaurant Award and minimum rates of pay; and
d)a failure to make and keep records and issue pay slips.
The contraventions regarding EJ Group keeping and making use of false or misleading records occurred in circumstances where Mr Kang had previously been cautioned by the Fair Work Ombudsman on 25 August, 2015 to ensure records he kept and provided to the Fair Work Ombudsman were correct, and that it was an offence to provide false or misleading records to Fair Work Inspectors.
Despite the previous caution EJ Group provided the Fair Work Ombudsman with records which incorrectly recorded higher hourly rates of pay and a lesser number hours of work for Ms Hong.
The parties agree that for the relevant period EJ Group failed to pay Ms Hong and Mr Lee a total of $9,858.13. Of the underpayment, $8,853.56 remains outstanding over one year after the underpayment contraventions occurred. EJ Group and Mr Hong, through their solicitor, informs the Court that they have placed their solicitors in funds sufficient to discharge the underpaid amounts. No mention was made of any interest that might have accrued on the underpaid amounts. Despite those funds being available, it seems that the underpayment amounts are yet to be rectified.
The loss incurred by Ms Hong and Mr Lee was substantial, particularly having regard to the fact that there are only two employees and the contravention period is under four months.
It is well established that the size and financial circumstances of the Respondents do not exculpate breaches of workplaces laws. Small businesses have the same obligation as larger employers to meet minimum employment standards.
The evidence before me from EJ Group is that it is in parlous financial circumstances. It no longer operates the shop involved in these proceedings. Mr Kang similarly claims that he is in difficult financial circumstances and has returned to his previous occupation as a tradesman. I take those matters into account.
In my view, there can be no doubt that EJ Group’s contraventions were deliberate. Mr Kang’s actions were also deliberate. Neither EJ Group nor Mr Kang contend to the contrary.
Mr Kang took no steps to ensure that Ms Hong or Mr Lee were paid correctly or that EJ Group otherwise complied with its workplace obligations despite being aware of those obligations as a result of his interaction with the Fair Work Ombudsman during the Ballina One audit.
Further, Mr Kang was experienced in business matters. At the relevant time, he was the sole director, and in some instances sole shareholder, of at least four corporate entities. Additionally, Mr Kang has held directorships with corporations from as early as March, 2006.
In the circumstances, EJ Group’s failure and Mr Kang’s failure to ensure, Ms Hong and Mr Lee were paid their minimum entitlements was a deliberate decision to disregard the minimum rates stipulated by the Restaurant Award.
The deliberateness of the record keeping and pay slip contraventions is emphasised by the fact that similar allegations were made in the request for assistance attached to the Fair Work Ombudsman Assistance Email and during the audit of Ballina One. Despite Mr Kang resolving the issue with the employee of Ballina One who initially made the allegation, and being aware of employer’s obligations as a result of his interaction with the Fair Work Ombudsman during the Ballina One audit, Mr Kang took no steps to ensure that EJ Group was providing Ms Hong and Mr Lee with pay slips as required by the Fair Work Act.
The provision of incorrect EJ Group time and wage records by EJ Group, in response to a request by the Fair Work Ombudsman for EJ Group’s employee records, was deliberate and particularly serious.
Despite previous cautions by Fair Work Inspectors on 25 August, 2015 not to create records in response to requests for documents, and being cautioned that it was an offence to provide false or misleading records, EJ Group nonetheless provided the Fair Work Ombudsman with time and wage records that were materially false. They recorded EJ Group complying with the Restaurant Award by paying Ms Hong rates as high as $28 per hour, when she was in fact paid much less. The contraventions are especially egregious because Mr Kang sought to deliberately deceive the Fair Work Inspectors by causing the production of the false records.
During the investigation of EJ Group, Mr Kang authorised the provision of the incorrect time and wage records to the Fair Work Ombudsman. The provision of those records was an attempt to subvert the Fair Work Ombudsman’s investigation. It resulted in the Fair Work Ombudsman expending additional resources investigating the complaints to ascertain the truth.
However, during the proceedings, Mr Kang and EJ Group co-operated and admitted liability for all contraventions. The Fair Work Ombudsman recommends a penalty discount of 10 percent on that basis.
The contraventions in this case represent a significant departure from the minimum standards expected of employees. Basic minimum prescribed entitlements were not paid and basic information in the form of pay slips were not provided to employees. That deprived these employees of their basic entitlements and also of the means of checking if they had received their basic entitlements.
I accept the Fair Work Ombudsman’s submission that there is a continuing need to send a message to the community and to employers, that employees must be provided with the correct entitlements, whether under an award or the relevant legislation, and that accurate employment records and pay slips are not optional features of employment. The evidence shows that the restaurant industry in which Mr Kang operated is an industry in which non-compliance with minimum standards is common. The evidence before me shows that the Fair Work Ombudsman’s research reveals that:
a)the Restaurant Industry accounted for 11% of all disputes lodged with the Fair Work Ombudsman between July 2013 to June 2016, which is the highest of all industries from which dispute forms were received;
b)during the Fair Work Ombudsman’s 2015 National Hospitality Industry Campaign – Restaurants, Cafés and Catering the Fair Work Ombudsman conducted 1,066 compliance activities and found 615 (58%) businesses to be in contravention; and
c)the restaurant industry represented a significant proportion of compliance outcomes in the 2015 – 2016 financial year – with 35% of all Compliance Notices, 19% Letters of Caution, 27% Infringement Notices issued and 34% of all Fair Work Ombudsman litigation relating to the restaurant industry.
I take those matters into account.
In my view the appropriate penalties (including a 10% discount for cooperation in these proceedings) for each of the contraventions by the first respondent in this case are:
Penalty (% of maximum) Penalty Failure to pay minimum rates 50% $27,000 Failure to pay casual loading 30% $16,200 Failure to pay Saturday penalties 30% $16,200 Failure to pay Sunday penalties 30% $16,200 Failure to pay overtime (Monday to Friday) 30% $16,200 Failure to pay overtime (Saturday) $0 Failure to pay overtime (Sunday) $0 Failure to make and keep records 50% $13,500 Keeping false or misleading records 70% $12,600 Making use of false or misleading records 70% $12,600 Failure to issue pay slips 50% $13,500 $144,000
The total penalty of $144,000 is not, however, an appropriate response to the offending involved in this case. Whilst the contraventions are serious and involve deliberate conduct on the part of first respondent an appropriate response is a total penalty of $100,000.
Appropriate penalties for each of the contraventions for which Mr Kang is taken to have committed are:
Penalty (% of maximum) Penalty Failure to pay minimum rates 50% $5,400 Failure to pay casual loading 30% $3,240 Failure to pay Saturday penalties 30% $3,240 Failure to pay Sunday penalties 30% $3,240 Failure to pay overtime (Monday to Friday) 30% $3,240 Failure to pay overtime (Saturday) $0 Failure to pay overtime (Sunday) $0 Keeping false or misleading records 70% $2,520 Making use of false or misleading records 70% $2,520 $23,400
Again, I do not consider that the total penalty of $23,400 is an appropriate response to the offending involved in this case. Whilst Mr Kang’s conduct was both serious and deliberate an appropriate response is a total penalty of $16,250.00.
I make the orders set out at the commencement of these reasons.
I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 16 May, 2017.
Date: 16 May, 2017
Key Legal Topics
Areas of Law
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Employment Law
Legal Concepts
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Penalty
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Remedies
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Statutory Construction
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