Fair Work Ombudsman v ESR Group Pty Ltd
[2024] FedCFamC2G 1311
•29 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v ESR Group Pty Ltd [2024] FedCFamC2G 1311
File number(s): SYG 722 of 2023 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 29 November 2024 Catchwords: INDUSTRIAL LAW - admitted contraventions of s 716(5) and s 536(1) of the Fair Work Act 2009 (Cth) – declarations and orders made to give effect to admitted contraventions – assessment of pecuniary penalties. Legislation: Crimes Act 1914 (Cth), s 4AA
Evidence Act 1995 (Cth), s 191
Fair Work Act 2009 (Cth), ss 12, 90(2), 99, 536(1), 539, 545(1), 546(1),(2), 547(2), 550, 557(1),(2), 700, 716(2),(5), 793(1)
Vehicle Repair, Services and Retail Award 2020, cl 16.2, cl 21.2, cl 29.4
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563
Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Contin v The Queen [2012] VSCA 247
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301
Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492
Fair Work Ombudsman v VS Investment Group Pty Ltd & Anor [2013] FCCA 208
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70
Royer v The State of Western Australia [2009] WASCA 139
R v Holder & Johnston [1983] 3 NSWLR 245
Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd [1980] FCA 47; (1980) 44 FLR 149; (1980) ATPR 40-161
Division: Fair Work Number of paragraphs: 85 Date of hearing: 27 March 2024 Place: Sydney Solicitor for the Applicant: Ms F Parekh of Office of the Fair Work Ombudsman Solicitor for the Respondents: Mr A Sahay of Thornton + King Pty Ltd
Table of Corrections 11 December 2024 In paragraph 3 of the Orders, “paragraph 1” has been replaced with “sub paragraphs 1(a) and (b)”.
In paragraph 11 of the Orders,
(i) “and” was added at the end of subparagraph (b);
(ii) “(c) pay a pecuniary penalty of $5,394.60 for his involvement in the contravention referred to in declaration 1(c); and” was deleted;
(iii) “d” was replaced with “c”.
The words “the sole director of ESR”, which appeared in paragraph 1 of the reasons for judgment, have been replaced with the words “the manager of ESR”. ORDERS
SYG 722 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: ESR GROUP PTY LTD (ACN 164 780 830)
First Respondent
PAUL SILVESTRO
Second Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
29 NOVEMBER 2024
THE COURT DECLARES THAT:
1.The first respondent contravened s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with:
(a)the compliance notice given to the first respondent on 10 August 2021 pursuant to s 716(2) of the FW Act;
(b)the compliance notice given to the first respondent on 27 January 2022 pursuant to s 716(2) of the FW Act; and
(c)the compliance notice given to the first respondent on 11 August 2022 pursuant to s 716(2) of the FW Act.
2.The first respondent contravened s 536(1) of the FW Act by failing to provide to each of its four employees (Employees), Mr Andrew Stannard, Mr Charalambos Aristodimou, Mr Craig McNeill, and Mr Geoffrey Loader pay slips within one working day of paying amounts to them in relation to the performance of work during the periods identified in the following table.
Employee Period Mr Stannard 19 November 2020 to 29 January 2021;
12 February 2021 to 12 March 2021Mr McNeill 4 October 2021 to 1 December 2021 Mr Aristodimou 5 May 2021 to about 2 July 2021 Mr Loader 1 November 2020 to 24 December 2020
3.The second respondent was involved, within the meaning of s 550(2) of the FW Act, in the first respondent’s contraventions of s 716(5) of the FW Act referred to in sub paragraphs 1(a) and (b) of these orders.
4.The second respondent was involved, within the meaning of s 550(2) of the FW Act, in the first respondent’s contraventions of s 536(1) of the FW Act referred to in paragraph 2 of these orders.
THE COURT ORDERS THAT:
5.Pursuant to s 545(1) of the FW Act, within 28 days after the date of these orders, the first respondent pay to the nominated accounts of the Employees the following amounts:
(a)$412.52 to Mr Andrew Stannard;
(b)$2,618.77 to Mr Charalambos Aristodimou;
(c)$1,278.08 to Mr Craig McNeill; and
(d)$6,614.68 to Mr Geoffrey Loader.
6.Pursuant to s 545(1) of the FW Act, within 28 days after the date of these orders, the first respondent, calculate and pay to each of the Employees’ nominated superannuation funds any additional superannuation contributions required to be paid on the amounts referred to in order 5 above.
7.Pursuant to s 547(2) of the FW Act the first respondent pay interest at the rate of 6% to the Employees in respect of the amounts referred to order 5.
8.Pursuant to s 545(1) of the FW Act, within 7 days after each date on which the first respondent makes each or any part of the payments referred to in orders 5, 6, and 7, the first respondent prepare and provide the applicant with evidence of the payment or payments.
9.Pursuant to s 546(1) of the FW Act, the first respondent:
(a)pay a pecuniary penalty of $19,480.50 for the contravention referred to in declaration 1(a);
(b)pay a pecuniary penalty of $22,477.50 for the contravention referred to in declaration 1(b);
(c)pay a pecuniary penalty of $26,973 for the contravention referred to in declaration 1(c); and
(d)pay a pecuniary penalty of $44,955 for the contravention referred to in declaration 2.
10.The first respondent pay the pecuniary penalties referred to in order 9 to the Commonwealth within 28 days after the date of these orders.
11.The second respondent:
(a)pay a pecuniary penalty of $3,896.10 for his involvement in the contravention referred to in declaration 1(a);
(b)pay a pecuniary penalty of $4,495.50 for his involvement in the contravention referred to in declaration 1(b); and
(c)pay a pecuniary penalty of $8,991 for his involvement in the contravention referred to in declaration 2.
12.The second respondent pay the pecuniary penalties referred to in order 11 to the Commonwealth within 28 days after the date of these orders.
THE COURT NOTES THAT:
A.These Orders have been amended pursuant to r 17.05(2)(h) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
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
INTRODUCTION
On 3 May 2023 the applicant, the Fair Work Ombudsman (FWO), commenced a proceeding against the first respondent (ESR), and the second respondent, Mr Silvestro, in which the FWO claims ESR on three occasions contravened s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) and Mr Silvestro, the manager of ESR, was a person involved, within the meaning of s 550(1) of the FW Act, in ESR’s contraventions. The contraventions related to three compliance notices given to ESR (collectively Compliance Notices), one on 10 August 2021, one on 27 January 2022, and one on 11 August 2022. The FWO also claims that ESR contravened s 536(1) of the FW Act by failing to issue payslips to four of its employees, and that Mr Silvestro was also involved in those contraventions.
The respondents have admitted they contravened s 716(5) and s 536(1) of the FW Act by their solicitor signing a statement of agreed facts made pursuant to s 191 of the Evidence Act 1995 (Cth), and filed on 11 January 2024.
In these reasons for judgment, therefore, I consider the pecuniary penalties the respondents should be ordered to pay for their admitted contraventions of s 716(5) and s 536(1) of the FW Act. Before I do so, it will be necessary to set out the procedural history, and also the agreed facts.
PROCEDURAL HISTORY
The FWO commenced this proceeding on 3 May 2023 by filing an application and a statement of claim. The FWO served the application and statement of claim on each of ESR and Mr Silvestro on 15 May 2023.
The matter came before me for a first court date on 24 May 2023. Mr Silvestro appeared on behalf of himself and ESR. I made the following orders:
1. The respondents are to file and serve a notice of address for service by 12 June 2023.
2. The respondents are to file and serve a response and defence by 19 June 2023.
3. The applicant is to file and serve any reply by 3 July 2023.
4. The matter be listed for a further directions hearing at 9:30 am on 20 July 2023, such directions hearing to proceed by telephone.
5. The parties have liberty to apply on such notice as the circumstances warrant.
The matter came before me again on 20 July 2023. The respondents, however, did not appear. I nevertheless:
(a)extended the time for the respondents’ filing and serving of a notice of address for service;
(b)extended the time for the respondents to file and serve a response and defence;
(c)extended the time for the FWO to file and serve any reply;
(d)ordered that if the respondents fail to comply with (a) and (b), the FWO may file and serve an application for default judgment;
(e)listed the matter for a directions hearing at 9:30 am on 23 August 2023;
(f)granted the parties liberty to apply on such notice as the circumstances warranted; and
(g)noted that if any of the respondents fail to comply with (a) and (b) above, or if they do not appear at the directions hearing referred to in (e), the FWO would be at liberty to apply for default judgment at that directions hearing.
On 9 August 2023 Mr Silvestro sent an email to the Registry in which he asked for a 3-week extension and said, “please do not ENTER Judgement [sic] against our company ESR group and myself”. At my direction, my Associate sent an email to Mr Silvestro and the lawyer for the FWO stating that the matter was currently listed for a directions hearing at 9:30 am on 23 August 2023, and that any question in relation to whether default judgment should be entered should be raised at the directions hearing. At the directions hearing on 23 August 2023, I made orders permitting the FWO to file and serve an application in a proceeding for default judgment, such application to be made returnable before me on 29 September 2023.
On 26 September 2023 I directed my Associate to inform the parties that I would not be available on 29 September 2023 to hear the FWO’s application for default judgment; and that the parties would be advised of a time and date at which that application would be listed. The FWO’s application for default judgment was eventually listed for hearing at 10:15 am on 16 November 2023.
Due to misadventure, Mr Silvestro did not dial in to the hearing when the matter was called at 10:15 am on 16 November 2023. I heard the FWO’s application for default judgment, and pronounced orders. At that point, Mr Silvestro joined the hearing. Mr Silvestro informed me that he had been away for the last 6 weeks, and that he had engaged a solicitor “last Thursday”. I ordered that the FWO’s application in a proceeding for default judgment be set down for hearing at 10:15 am on 29 November 2023.
On 28 November 2023, Ms Parekh, the lawyer for the FWO, sent an email to my Associate attaching proposed consent orders which Ms Parekh said the parties requested I make in chambers. Pursuant to that request, on 28 November 2023 I made orders in chambers which included an order that the parties file a statement of agreed facts by 12 January 2024, and an order that the matter be relisted for a hearing on the question of pecuniary penalties at 10:15 am on 27 March 2024. I also made directions for the filing and serving of evidence and submissions, which included an order that the respondents file and serve their evidence and submissions three weeks before the hearing date.
On 11 January 2024 the FWO filed a document titled “Statement of Agreed Facts” (SAF) signed on behalf of the FWO, and on behalf of the respondents. The respondents, however, did not file any affidavits or submissions.
At 8:34 am on 26 March 2024 the respondents’ solicitor, Mr Sahay, sent an email to my Associate attaching the following letter (errors in original):
We act for ESR Group Pty Limited and Paul Silvestro, the First and Second Respondents in the above-mentioned proceedings (our clients).
Kindly be advised that Mr Silvestro has been admitted to hospital since Tuesday, 19 March 2024 for a range of medical issues, including mental health issues. Due to the nature of his admission, we have been unable to obtain proper instructions regarding settling the evidentiary material intended to be relied upon at Hearing.
Mr Silvestro has intermittently responded to our emails from hospital. However, kindly be advised that no proper instructions have been received both prior to and since his admission. We have requested a copy of the hospital admission form and medical reports from our clients. However, no documents have been received by our office at this time.
Accordingly, pursuant to section 66 of the Civil Procedure Act 2005 (NSW) we ask that the Court exercise its discretion in vacating the Hearing date on Wednesday, 27 March 2024 to allow our clients a fair hearing, noting that any refusal would result in a denial of justice to the Respondents. We propose that the matter be relisted after a period of 3 months to enable our client sufficient time to produce the necessary medical documents and to enable Mr Silvestro to recover sufficiently to provide instructions and actively participate in these proceedings.
We confirm that the Applicants solicitors have been advised of our clients current medical condition and that they are unable to consent to vacating the hearing in lieu of any medical documents.
Given our clients health, and to prevent a serious injustice, we are of the view that a period of 3 months would be sufficient to produce the necessary medical documents and to actively participate in these proceedings.
We apologise for the lateness of the orders sought and await His Honours determination with respect of same.
After this letter was brought to my attention, I instructed my Associate to inform the parties that the matter would remain listed for hearing at 10:15 am on 27 March 2024; and that I would hear and determine any application to adjourn the hearing at that time.
At the hearing on 27 March 2024 Mr Sahay appeared for the respondents by telephone and applied for an adjournment. Mr Sahay was not in a position to tell me in what hospital Mr Silvestro had been admitted. In the absence of any particular information, and, more importantly, in the absence of any affidavit evidence to support the matters Mr Sahay asserted in his letter, I declined to adjourn the matter, and proceeded with the hearing. Mr Sahay elected to participate in the hearing. The only submission Mr Sahay made, however, was that the respondents admitted their contraventions. Mr Sahay said that he has been unable to obtain instructions in relation to the circumstances in which the contraventions occurred, or the reasons why the contraventions occurred.
AGREED FACTS, CONTRAVENTIONS, AND RELIEF (OTHER THAN PENALTY)
In this section of my reasons, I set out the facts stated in the SAF, and the contraventions of s 716(5) and s 536(1), which the SAF records the respondents admit.
Background
ESR is and was at all relevant times a company that operated a smash repairs business. [1] In the course of that business, ESR employed the following individuals (Employees):[2]
(a)Mr Andrew Stannard, from 9 November 2020 until 16 March 2021 (Stannard Period);
(b)Mr Charalambos Aristodimou, from 5 May 2021 until 29 September 2021 (Aristodimou Period);
(c)Mr Craig McNeill, from 4 October 2021 until 1 December 2021 (McNeill Period); and
(d)Mr Geoffrey Loader, from 5 March 2020 until on or around 15 November 2021 (Loader Period).
[1] SAF, [10(e)]
[2] SAF, [11]
Mr Silvestro made representations to the Employees that he was the manager of ESR, and that he was responsible for the overall operation and control of ESR.[3] In those circumstances, Mr Silvestro engaged in the conduct referred to below on behalf of ESR within the scope of his apparent authority and, for that reason, his conduct is taken to be the conduct of ESR pursuant to s 793(1) of the FW Act.[4]
[3] SAF, [13(b)-(c)]
[4] SAF, [13(e)]
First Investigation
On around April 2021 Ms Jambekar (FWI Jambekar), a Fair Work Inspector (FWI) appointed by the FWO under s 700 of the FW Act, began an investigation into ESR’s business after the FWO received a request for assistance (RFA) from Mr Stannard. Based on the information obtained from the investigation, from around 9 August 2021 FWI Jambekar formed the following beliefs:[5]
(a)ESR employed Mr Stannard during the Stannard Period;
(b)the Vehicle Repair, Services and Retail Award 2020 (Award) covered and applied to Mr Stannard; and
(c)when Mr Stannard’s employment ended, ESR failed to pay his accrued but untaken annual leave and annual leave loading.
(d)As a result of the matters stated in paragraph 20, on about 9 August 2021 FWI Jambekar formed a reasonable belief that ESR contravened s 90(2) of the FW Act by failing to pay Mr Stannard his accrued but untaken annual leave when his employment ended, including annual leave loading under cl 29.4 of the Award (Stannard Contravention).[6]
[5] SAF, [15]
[6] SAF, [16]
First Compliance Notice
On 10 August 2021 FWI Jambekar gave ESR a compliance notice (First Compliance Notice) pursuant to s 716(2) of the FW Act. FWI Jambekar gave the First Compliance Notice to ESR by express post to ESR’s registered office (Registered Office); and also sent a copy to the email address of Mr Silvestro (Email Address).[7]
[7] SAF, [17]-[18]
The First Compliance Notice required ESR to take the following actions by 17 September 2021:[8]
[8] SAF, [19]
(a)calculate the number of hours of annual leave Mr Stannard had accrued when his employment ended;
(b)calculate the full amount Mr Stannard should have been paid for the hours of accrued, but used, annual leave when his employment ended;
(c)calculate the amount Mr Stannard should have been paid for annual leave loading under cl 29.4 of the Award;
(d)make a payment to Mr Stannard for the amounts referred to in paragraphs (b) and (c);
(e)make a record of the information and amounts referred to in paragraphs (a)- (d); and
(f)furnish reasonable evidence to the FWO of compliance with the First Compliance Notice by 24 September 2021 by producing:
(i)a schedule that sets out the calculations and amounts owed to Mr Stannard; and
(ii)proof of full payment to Mr Stannard such as a bank transfer showing payment.
ESR failed to:[9]
(a)take the specified action required by the First Compliance Notice by 17 September 2021; and
(b)did not produce evidence of compliance with the First Compliance Notice by 24 September 2021.
[9] SAF, [21]
ESR, therefore, failed to comply with the First Compliance Notice and, for that reason contravened s 716(5) of the FW Act.
Second Investigation
From around December 2021, Ms Tran (FWI Tran), a FWI appointed by the FWO under s 700 of the FW Act, began investigating ESR after the FWO received a RFA from Mr Aristodimou. Based on the information obtained from the investigation, on around 24 January 2022, FWI Tran formed the following beliefs:[10]
(a)ESR employed Mr Aristodimou as a panel beater during the Aristodimou Period;
(b)the Award covered and applied to Mr Aristodimou;
(c)Mr Aristodimou was classified as a “Vehicle Industry RS&R – Employee – Level 2 R2” under the Award;
(d)Mr Aristodimou was not paid for any hours worked between 23 and 29 September 2021; and
(e)when Mr Aristodimou’s employment ended, ESR failed to pay him his accrued but untaken annual leave and annual leave loading.
[10] SAF, [23], [24]
Based on the matters set out in paragraph 23, FWI Tran formed a reasonable belief that ESR contravened:[11]
(a)cl 16.2 of the Award by failing to pay Mr Aristodimou for any ordinary hours worked between 23 and 29 September 2021 (Aristodimou Award Contravention); and
(b)s 90(2) of the FW Act, by failing to pay Mr Aristodimou all accrued but untaken annual leave when his employment ended, including annual leave loading under cl 29.4 of the Award (Aristodimou Annual Leave Contravention); (collectively, Aristodimou Contraventions).
[11] SAF, [25]
Third Investigation
On around January 2022, FWI Tran also investigated ESR after the FWO received a RFA from Mr McNeill. Based on the information obtained during the investigation, on or around 24 January 2022 FWI Tran formed the following beliefs:[12]
(a)ESR employed Mr McNeill as a panel beater during the McNeill Period;
(b)the Award covered and applied to Mr McNeill;
(c)Mr McNeill was not paid for ordinary hours of work during a period of personal leave taken on 18 October 2021 and 24 November 2021; and
(d)when Mr McNeill’s employment ended, ESR failed to pay his accrued but untaken annual leave and annual leave loading.
[12] SAF, [26], [27]
Based on the matters in paragraph 25, FWI Tran formed a reasonable belief that ESR contravened s 90(2) of the FW Act by failing to pay Mr McNeill all accrued but untaken annual leave when his employment ended, including annual leave loading under cl 29.4 of the Award (McNeill Annual Leave Contravention), and s 99 of the FW Act by failing to pay Mr McNeill’s personal leave taken on 18 October 2021 and 24 November 2021 (McNeill Personal Leave Contravention); (collectively, McNeill Contraventions).[13]
[13] SAF, [28]
Second Compliance Notice
On 27 January 2022 FWI Tran gave ESR a notice pursuant to s 716(2) of the FW Act in respect of the Aristodimou Contraventions and McNeill Contraventions (Second Compliance Notice). FWI Tran gave the Second Compliance Notice to ESR by sending a copy via express post to the Registered Office and, FWI Tran sent a copy to Mr Silvestro’s Email Address.[14]
[14] SAF, [29]
The Second Compliance Notice required ESR to take the following actions by 28 February 2022:[15]
[15] SAF, [30]
(a)to remedy the direct effects of the Aristodimou Award Contravention by:
(i)identifying the number of hours Mr Aristodimou worked from 23 to 29 September 2021 and for which he was required to be paid under the Award;
(ii)calculating the amount Mr Aristodimou should have been paid for the period 23 to 29 September 2021;
(iii)making a payment to Mr Aristodimou of the amount referred to in (ii);
(iv)making a record of the information and any amount of payment referred to in (i)-(iii);
(b)to remedy the direct effects of the Aristodimou Annual Leave Contravention and McNeill Annual Leave Contravention by:
(i)calculating the number of hours of annual leave Mr Aristodimou and McNeill had accrued when their employment ended;
(ii)calculating the full amount Mr Aristodimou and McNeill should have been paid for the hours of accrued annual leave when their employment ended;
(iii)calculating the amount Mr Aristodimou and McNeill should have been paid for annual leave loading under cl 29.4 of the Award;
(iv)making payments to Mr Aristodimou and McNeill for the amounts referred to in paragraphs (i)-(iii) ;
(v)making a record of the information and amounts referred to in paragraphs (i)-(iv);
(c)to remedy the direct effects of the McNeill Personal Leave Contravention by:
(i)calculating the number of personal leave hours taken on 18 October 2021 and 24 November 2021;
(ii)calculating the amount that Mr McNeill should have been paid for the hours of personal leave calculated in (i);
(iii)making a payment to Mr McNeill of the amount in (ii);
(iv)making a record of the information and amounts referred to in paragraphs (i)-(iii);
(d)calculate and pay any superannuation contributions required by cl 21.2 of the Award in relation to amounts required to be paid to Mr McNeill and Mr Aristodimou; and
(e)produce reasonable evidence to the FWO of compliance with the Second Compliance Notice by 7 March 2022 by producing:
(i)a schedule that sets out the calculations and amounts owed to Mr Aristodimou and Mr McNeill;
(ii)proof of full payment to Mr Aristodimou and Mr McNeill, such as a bank transfer or payroll records.
ESR failed to:[16]
(a)take the specified action required by the Second Compliance Notice by 28 February 2022; and
(b)produce to the FWO reasonable evidence of compliance with the Second Compliance Notice by 7 March 2022.
[16] SAF, [32]
For these reasons ESR failed to comply with the Second Compliance Notice and, therefore, contravened s 716(5) of the FW Act.
Fourth Investigation
On or around June 2022, FWI Tran also investigated ESR after the FWO received a RFA from Mr Loader.[17]
[17] SAF, [32]
On or around 5 August 2022, based on the information she obtained in the course of the investigation, FWI Tran formed the following beliefs:[18]
(a)ESR employed Mr Loader during the Loader Period;
(b)the Award covered and applied to Mr Loader;
(c)Mr Loader worked as a spray painter and was classified as a “Vehicle Industry RS&R – Tradesperson” or equivalent “Level I R6” under the Award;
(d)Mr Loader was not paid for hours worked between 1 and 11 November 2021; and
(e)ESR failed to pay Mr Loader accrued but untaken annual leave and annual leave loading on termination.
[18] SAF, [35]
Based on the matters referred to in paragraph 32, on around 5 August 2022, FWI Tran formed a reasonable belief that ESR contravened:[19]
(a)cl 16.2 of the Award by failing to pay Mr Loader for any ordinary hours worked between 1 and 11 November 2021 (Loader Award Contravention); and
(b)s 90(2) of the FW Act by failing to pay Mr Loader his accrued but untaken annual leave and annual leave loading (Loader Annual Leave Contravention).
[19] SAF, [36]
Third Compliance Notice
On 11 August 2022 FWI Tran gave ESR a notice pursuant to s 716(2) of the FW Act in relation to the Loader Award Contravention and the Loader Annual Leave Contravention (Third Compliance Notice) by express post to the Registered Office; FWI Tran also sent a copy of the Third Compliance Notice to Mr Silvestro’s Email Address.
The Third Compliance Notice required ESR to take the following actions by 15 September 2022:[20]
[20] SAF, [38]
(a)to remedy the direct effects of the Loader Award Contravention by:
(i)identifying the number of hours Mr Loader worked from 1 to 11 November 2021 and was required to be paid by the Award;
(ii)calculating the amount Mr Loader should have been paid for the period of 1 to 11 November 2021;
(iii)identifying any amount ESR paid from 1 to 11 November 2021;
(iv)making a payment to Mr Loader of the difference between any amount referred to in (ii) and (iii) above;
(v)making a record of the information and amounts referred to in (i) to (iv) above;
(b)to remedy the direct effects of the Loader Annual Leave Contravention by:
(i)calculating the number of hours of annual leave Mr Loader had accrued but not used when his employment ended;
(ii)identifying any amount ESR paid at the end of Mr Loader’s employment regarding annual leave;
(iii)calculating the full amount Mr Loader should have been paid for the hours of accrued annual leave when his employment ended and identifying the applicable rate of pay;
(iv)making a payment to Mr Loader for any difference of the amounts referred to in (ii) and (iii);
(v)making a record of the information and any payment referred to in (ii)-(iv);
(c)calculate and pay any superannuation contributions required by cl 21.2 of the Award in relation to amounts required to be paid to Mr Loader; and
(d)produce reasonable evidence to the FWO of compliance with the Third Compliance Notice by 22 September 2022 by producing:
(i)a schedule that sets out the calculations and amounts owed to Mr Loader;
(ii)proof of full payment to Mr Loader such as a bank transfer showing payment.
ESR failed to:[21]
(a)take the specified action required by the Third Compliance Notice by 15 September 2022; and
(b)produce to the FWO reasonable evidence of compliance with the Third Compliance Notice by 22 September 2022.
[21] SAF, [40]
For these reasons, ESR failed to comply with the Third Compliance Notice and, therefore, contravened s 716(5) of the FW Act.
Amounts owing under the Compliance Notices
If ESR complied with the Compliance Notices within their respective times for compliance, ESR would have calculated and paid a total amount of $10,924.95 to the Employees as follows:[22]
(a)$412.52 to Mr Stannard;
(b)$2,618.77 to Mr Aristodimou;
(c)$1,278.98 to Mr McNeill; and
(d)$6,614.68 to Mr Loader.
[22] SAF, [42]
Failure to provide payslips
Pursuant to s 536(1) of the FW Act, at all material times ESR was required to give pay slips to its employees within one working day of making payment to each employee in relation to the performance of work.
In each of the periods stated in the table below ESR paid the Employees in relation to the performance of work on an approximately weekly basis; but it failed to give the Employees pay slips within one working day of payment or at all.[23]
[23] SAF, [44]
Employee Period Mr Stannard 19 November 2020 to 29 January 2021;
12 February 2021 to 12 March 2021Mr McNeill 4 October 2021 to 1 December 2021 Mr Aristodimou 5 May 2021 to about 2 July 2021 Mr Loader 1 November 2020 to 24 December 2020
For these reasons, ESR contravened s 536(1) of the FW Act.
Mr Silvestro’s involvement in ESR’s contraventions of s 716(5) of the FW Act
After ESR was given the First Compliance Notice:[24]
(a)on 27 August 2021 and 7 September 2021, Mr Silvestro had telephone calls with Ms Merritt, an employee of the Office of the FWO, regarding the First Compliance Notice; and
(b)Ms Merritt sent a copy of the First Compliance Notice to the Email Address.
[24] SAF, [46]
After ESR was given the Second Compliance Notice:[25]
(a)on 27 January 2022 FWI Tran sent a copy of the Second Compliance Notice to the Email Address;
(b)on 7 and 21 February 2022, Ms Merritt, on the instructions of FWI Tran, sent the Second Compliance Notice to the Email Address; and
(c)on 24 February 2022 Mr Silvestro had a telephone conversation with Ms Merritt regarding the Second Compliance Notice.
[25] SAF, [47]
At all material times, Mr Silvestro:[26]
(a)was responsible for ensuring ESR complied with its legal obligations under the FW Act and in relation to the First and Second Compliance Notices;
(b)had knowledge that the First and Second Compliance Notices were given to ESR and that ESR was required to comply with the First and Second Compliance Notices within the timeframe specified;
(c)had knowledge that ESR failed to comply with each of the First and Second Compliance Notices; and
(d)was an intentional participant in ESR’s failure to comply with each of the First and Second Compliance Notices.
[26] SAF, [48]
For these reasons Mr Silvestro was involved, within the meaning of s 550(2)(c) of the FW Act, in the contraventions by ESR of s 716(5) of the FW Act, and pursuant to s 550(1) of the FW Act is taken to have himself contravened s 716(5) of the FW Act.
Mr Silvestro’s involvement in ESR’s contraventions of s 536(1) of the FW Act
At all material times, Mr Silvestro undertook payroll administration tasks on behalf of ESR, including for paying employee wages; and from at least 5 July 2021, issuing some employees with pay slips.[27]
[27] SAF, [50]
During their respective employment periods, each of the Employees made a request to Mr Silvestro for ESR to issue them with pay slips.[28]
[28] SAF, [51]
In these circumstances, Mr Silvestro:[29]
(a)had knowledge that ESR did not provide each of the Employees pay slips within one working day of paying an amount to them in relation to their performance of work; and
(b)was an intentional participant in ESR’s failure to provide each of the Employees with pay slips.
[29] SAF, [52]
For these reasons, Mr Silvestro was involved, within the meaning of s 550(2)(c) of the FW Act in the ESR’s contraventions of s 536(1) of the FW Act, and by reason of s 550(1) of the FW Act, is taken to have contravened s 536(1) of the FW Act.
Relief sought
The parties agreed to jointly recommend that the Court make the following declarations. [30]
[30] SAF, [55]
(a)ESR contravened s 716(5) of the FW Act by failing to comply with the:
(i)First Compliance Notice;
(ii)Second Compliance Notice; and
(iii)Third Compliance Notice;
(b)ESR contravened s 536(1) of the FW Act by failing to provide to each of Mr Andrew Stannard, Mr Charalambos Aristodimou, Mr Craig McNeill and Mr Geoffrey Loader pay slips within one working day of paying amounts to them in relation to performance of work;
(c)Mr Silvestro was involved, within the meaning of s 550(2) of the FW Act, in the First Respondent’s contraventions of section 716(5) of the FW Act regarding the First Compliance Notice and the Second Compliance Notice; and
(d)Mr Silvestro was involved, within the meaning of section 550(2) of the FW Act, in the First Respondent’s contraventions of section 536(1) of the FW Act regarding each of Mr Stannard, Mr Aristodimou, Mr McNeill and Mr Loader.
The parties also agreed to jointly recommend to the Court that it make the following orders:[31]
[31] SAF, [56] – [58]
(a)pursuant to s 545(1) of the FW Act, within 28 days ESR:
(i)rectify the agreed underpayments to the Employees referred to in paragraph 38 of these reasons; and
(ii)provide proof to the Applicant that these amounts have been paid;
(b)pursuant to s 545(1) of the FW Act, within 28 days ESR pay to:
(i) Mr Aristodimou’s chosen superannuation fund any additional superannuation contributions required to be paid on the outstanding amounts referred to in the Second Compliance Notice;
(ii) Mr McNeill’s chosen superannuation fund any additional superannuation contributions required to be paid on the outstanding amounts referred to in the Second Compliance Notice;
(iii) Mr Loader’s chosen superannuation fund any additional superannuation contributions required to be paid on the outstanding amounts referred to in the Third Compliance Notice; and
(iv) preparing and producing to the FWO a schedule outlining the outstanding amounts to Mr Aristodimou, Mr McNeill and Mr Loader and providing proof that these amounts have been paid.
(c)pursuant to s 547(2) of the FW Act, that ESR pay pre-judgment interest to Mr Stannard, Mr McNeill, Mr Aristodimou and Mr Loader on the amounts referred to in paragraph 40 of these reasons.
PECUNIARY PENALTIES
Power
Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”.[32] That expression is defined in s 539(1) of the FW Act to include the provisions identified in column 1 of the table to s 539(2) of the FW Act. Subsection 536(1) and s 716(5) are both in column 1 of the table to s 539(2) of the FW Act.
[32] I repeat in this and the following 4 paragraphs much of what I said in Fair Work Ombudsman v Corinthian Capital Pty Ltd [2022] FedCFamC2G 309, [8]- [23]
Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”, and, if the person is a body corporate, must not be more than five times “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”. The maximum penalty units for a contravention of s 716(5) of the FW Act as at 17 September 2021, 28 February 2022, and 15 September 2022, being the days by which ESR was required to carry out the Specified Action specified in each of the First, Second, and Third Compliance Notices, are 30 penalty units for an individual, and 150 penalty units for a body corporate. The maximum penalty units for a contravention of s 536(1) of the FW Act during the Employment Period was 60 penalty units for an individual, and 300 penalty units for a body corporate.
Section 12 of the FW Act provides that “penalty unit” has the meaning given by s 4AA of the Crimes Act 1914 (Cth). During each of the Stannard, Aristodimou, McNeill, and Loader periods the penalty unit provided for by s 4AA was $222.[33] Thus, $33,300 is the maximum pecuniary penalty ESR may be ordered to pay for each contravention of s 716(5) of the FW Act; and $66,600 is the maximum pecuniary penalty ESR may be ordered to pay for its contraventions of s 536(1) of the FW Act. The maximum pecuniary penalty Mr Silvestro may be ordered to pay for his involvement in each of ESR’s contraventions of s 716(5) of the FW Act is $6,600, and the maximum pecuniary penalty he may be ordered to pay for his involvement in ESR’s contraventions of s 536(1) of the FW Act is $13,320.
[33] See notice of Indexation of the Penalty Unit Amount issued on 14 May 2022 pursuant to s 4AA(1A) of the Crimes Act 1914 (Cth).
Assessing pecuniary penalties for multiple contraventions
The FWO correctly submits that ESR’s failure to comply with the Compliances Notices constitutes three separate contraventions of s 716(5) of the FW Act. That means I am required to assess penalties for multiple contraventions of s 716(5) of the FW Act.
The approach to assessing penalties for multiple contraventions of provisions of the FW Act was outlined by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown (New Shanghai) as follows (emphasis in original):[34]
(1)Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2)Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3)Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
(4)Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5)Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO . . . and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary . . . .
[34] Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301, at [36]
It is unnecessary to apply the second of the five steps Bromwich J identifies in this passage to the respondents’ contraventions of s 716(5) of the FW Act, as this provision is not mentioned in s 557(2) of the FW Act and, for that reason, s 557(1) does not apply to multiple contraventions of s 716(5) of the FW Act. The second step, however, applies to ESR’s contraventions of s 536(1), because that is a civil remedy provision specified in s 557(2) of the FW Act and to which, therefore, s 557(1) of the FW Act applies. The FWO accepts that s 557(1) applies to ESR’s contraventions of s 536(1) in relation to each of the Employees, with the consequence that ESR is liable to being ordered to pay one pecuniary penalty in relation to those contraventions.
The third step Bromwich J mentions requires the application of what is often referred to as the “one transaction principle”. Owen JA gave a useful statement of the principle in Royer v Western Australia:[35]
At its heart, the one transaction principle recognises that, where there is an interrelationship between the legal and factual elements of two or more offences with which an offender has been charged, care needs to be taken so that the offender is not punished twice (or more often) for what is essentially the same criminality. The interrelationship may be legal, in the sense that it arises from the elements of the crimes. It may also be factual, because of a temporal or geographical link or the presence of other circumstances compelling the conclusion that the crimes arise out of substantially the same act, omission or occurrences.
[35] Royer v The State of Western Australia [2009] WASCA 139, at [22]
Lockhart J stated the principle in the context of the imposition of penalties for contraventions of provisions of the Trade Practices Act 1974 (Cth) in Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd:[36]
Guidance is given in the field of sentencing for criminal offences by the well-known principle that where several offences are heard together and arise out of the same transaction it is a sound working rule that the sentences imposed for those offences should be made concurrent; it is inappropriate to sentence consecutively when the offences were all really involved in the same episode . . .
[36] Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd [1980] FCA 47; (1980) 44 FLR 149; (1980) ATPR 40-161, at 42, 277
The Full Federal Court confirmed the relevance of the “one transaction principle” in the assessment of multiple contraventions of a single civil remedy provision in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union:[37]
There is no doubt that, in an appropriate case involving multiple contraventions, the Court should consider whether the multiple contraventions arose from a course or separate courses of conduct. If the contraventions arose out of a course of conduct, the penalties imposed in relation to the contraventions should generally reflect that fact, otherwise there is a risk that the respondent will be doubly punished in respect of the relevant acts or omissions that make up the multiple contraventions.
[37]Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, at [148] (Dowsett, Greenwood, and Wigney JJ)
There are two matters to note about the application of the “one transaction principle”. First, the principle does not relieve the Court from assessing a penalty for each contravention, even if the contravention arose out of a course of conduct. The “one transaction principle” is applied only after a penalty has been (provisionally) assessed for each contravention. That is apparent from the fourth step Bromwich J identifies in New Shanghai, namely, the consideration of “the appropriate penalty in respect of each final individual group of contraventions, taken in isolation” (emphasis added).[38] Second, “even if the contraventions are properly characterised as arising from a single course of conduct, a judge is not obliged to apply the principle if the resulting penalty fails to reflect the seriousness of the contraventions”.[39]
[38] Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301, at [36]
[39] Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73, at [235] (Allsop CJ, Middleton and Robertson JJ)
The final step Bromwich J identifies in New Shanghai is the application of a related, but distinct principle known as the “totality principle”. [40] Under that principle, a sentencing judge is required “to impose a sentence or sentences which reflect the overall criminality of the offending for which the offender has been convicted”.[41] In R v Holder & Johnston Street CJ described the principle as follows:[42]
The principle of totality is a convenient phrase, descriptive of the significant practical consideration confronting a sentencing judge when sentencing for two or more offences. Not infrequently a straight-forward arithmetical addition of sentences appropriate for each individual offence considered separately will arrive at an ultimate aggregate that exceeds what is called for in the whole of the circumstances. In such a situation the sentencing judge will evaluate, in a broad sense, the overall criminality involved in all of the offences and, having done so, will determine what, if any, downward adjustment is necessary, whether by telescoping or otherwise, in the aggregate sentences in order to achieve an appropriate relativity between the totality of the criminality and the totality of the sentences.
[40] Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70, at [42], Stone and Buchanan JJ said: “For the purpose of the present discussion the general principle which appears to be relied upon by the appellant [i.e., the “one transaction principle”] may be accepted, although it is important to distinguish it from the application of the totality principle which is a final check to be applied to ensure that a final, total or aggregate, penalty is not unjust or out of proportion to the circumstances of the case.”
[41] Contin v The Queen [2012] VSCA 247, at [38]
[42] R v Holder& Johnston [1983] 3 NSWLR 245, at page 260
The “totality principle” has been held to apply to the assessment of pecuniary penalties.[43] The application of the “totality principle” to the assessment of pecuniary penalties was confirmed by the Full Federal Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union:[44]
The totality principle, like the course of conduct principle, has its origins in criminal sentencing. . . .
The totality principle is sometimes confused or conflated with the course of conduct principle. That is perhaps not surprising because application of the totality principle may again result in a court adjusting what would otherwise have been consecutive or cumulative sentences to sentences that are wholly or partially concurrent. The proper approach, however, is to first consider the course of conduct principle and determine whether the sentences should be consecutive, or wholly or partly concurrent. Once that is done, the Court should then review the aggregate sentence to ensure that it is just and appropriate. That may require a further adjustment of the sentences: either by ordering further concurrency or, if appropriate, lowering the individual sentences below what would otherwise be appropriate.
While, in the criminal sentencing context, the totality principle is generally applied in cases involving sentences of imprisonment, it has been held to apply to the fixing of fines . . . . In the case of fines, the Court must fix a fine for each offence and then review the aggregate to ensure that it is just and appropriate. If the result of the aggregation of multiple fines is that the penalty is excessive, that may lead to the moderation of the fine imposed in respect of each offence . . . .
Once again, the important point to emphasise is that, in the criminal sentencing context, application of the totality principle does not authorise or permit the sentencing court to impose a single sentence for multiple offences.
[43] Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59, at [41]
[44] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, at [116]-[119] (Dowsett, Greenwood, and Wigney JJ) (citations omitted)
Assessing penalty for a single contravention – object of assessment
When assessing the amount of the pecuniary penalty that the Court should order be paid, it is useful to distinguish between the purpose or purposes for which pecuniary penalties are to be imposed and, given that purpose or purposes, the matters that may be relevant to assessing the penalty. As for the purpose of imposing pecuniary penalties, the Full Federal Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union said:[45]
Whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty is primarily, if not wholly, protective in promoting the public interest in compliance. The principal object of a pecuniary penalty is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene; both specific and general deterrence are important. A pecuniary penalty for a contravention of the law must be fixed with a view to ensuring that the penalty is not to be regarded by the offender or others as an acceptable cost of doing business. In relation to general deterrence, it is important to send a message that contraventions of the sort under consideration are serious and not acceptable.
The question whether a pecuniary penalty involves an element of punishment remains somewhat controversial. To a certain extent, that debate appears to be more semantic or philosophical than real. It is sufficient to say that, accepting that the primary purpose of imposing a pecuniary penalty is to protect and deter, that purpose is achieved by imposing a punishment in the form of a pecuniary penalty.
[45] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, at [98], [99] (citations omitted)
That the principal purpose of making an order for the payment of a pecuniary penalty is deterrence was confirmed by the plurality in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (references omitted):[46]
[T]he principal object of an order that a person pay a pecuniary penalty under s 546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners.
[46] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3, at [116] (Keane, Nettle and Gordon JJ) (citation omitted)
Assessing pecuniary penalty for a single contravention – factors
The approach of most judges when assessing penalties for a single contravention of a provision of the FW Act is to take into account the non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick,[47] which his Honour adopted from the judgment of Mowbray FM in Mason v Harrington Corporation Pty Ltd.[48] Those considerations are:
[47] Kelly v Fitzpatrick [2007] FCA 1080, at [14]
[48] Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
(a)the nature and extent of the conduct which led to the breaches;
(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 breaches;
(d)whether there had been similar previous conduct by the respondent;
(e)whether the breaches 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 breaches were deliberate;
(h)whether senior management was involved in the breaches;
(i)whether the party committing the breach had exhibited contrition;
(j)whether the party committing the breach had taken corrective action;
(k)whether the party committing the breach had cooperated 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.
Although these factors have been identified and applied as relevant to the assessment of penalties, they do not constitute a “rigid catalogue of matters for attention”.[49]
[49] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8, at [91] (Buchanan J)
Also relevant is the maximum penalty for the contravention provided for by the FW Act; and here I refer to the following passage from the judgment of Flick J in The BKH Contractors Case (No 2):[50]
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed . . . .
ASSESSMENT
[50] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563, at [19]
Pecuniary penalties for contraventions of s 716(5) (before adjustments)
Although I am required to assess separately a penalty for each of ESR’s three contraventions of s 716(5) of the FW Act, it would be convenient if I consider the contraventions together.
Nature, extent, circumstances and deliberateness of the contravening conduct
Each of the contraventions consisted of ESR not complying with a compliance notice; and each contravention was deliberate. In relation to the First Compliance Notice, Ms Merritt sent emails to Mr Silvestro on 1, 20, and 23 September 2021, and on 1 and 20 October 2021. Mr Silvestro sent an email in reply on 20 October 2021 in which he stated “Ok done will sort asap”.[51] In relation to the Second Compliance Notice, on 7 February 2022 Ms Merritt sent an email to Mr Silvestro reminding him that ESR was required to comply with the Second Compliance Notice by 28 February 2022;[52] and on 24 February 2022 Ms Merritt had a telephone conversation with Mr Silvestro.[53]
[51] Affidavit of A A Jambekar 08.02.2024, at [14]; annexure AAJ-5
[52] Affidavit of L T Tran 13.02.2024, [17]; annexure LTT-7
[53] Affidavit of L T Tran 13.02.2024, [18]; annexure LTT-7
The following passage from the judgment of Judge Emmett in Fair Work Ombudsman v Viper Industries Pty Ltd applies to the nature of ESR’s contravention of s 716(5) of the FW Act, and Mr Silvestro’s involvement in that contravention.[54]
The Respondents’ intentional failure to comply with a mandatory notice issued by the workplace regulator is “conduct ... [which] undermines the utility and effectiveness of a fundamental object” [of] the FW Act. The failure to comply undermines and frustrates the powers conferred on Fair Work Inspectors, which are conferred for the purposes of providing an effective means of enforcing compliance with lawful minimum entitlements. There is a significant cost to the public by reason of the need to bring this matter before the court to enforce compliance.
[54] Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492, at [42]
These are matters that point to the assessment of penalty at the higher end of the scale.
Nature and extent of loss occasioned by the contraventions
It is admitted that had ESR complied with the Compliance Notices, Mr Stannard, Mr Aristodimou, Mr McNeill, and Mr Loader would have received total payments of $10,924.95. It may be inferred, and I find, that had ESR complied with the First Compliance Notice Mr Stannard would have been paid $412.52; had ESR complied with the Second Compliance Notice Mr Aristodimou and Mr McNeill would have been paid $2,618.77 and $1,278.98 respectively; and had ESR complied with the Third Compliance Notice Mr Loader would have been paid $6,614.68. These are significant amounts, and point to assessing pecuniary penalties at the higher end of the scale.
Deterrence
I accept the FWO’s submission that specific deterrence is important in this matter, and in particular in relation to Mr Silvestro. That is so because the evidence reveals the following:[55]
[55] Affidavit of L T Tran 13.02.2024, [44]-[48]; Affidavit of A A Jambekar 08.02.2024, [25]-[29]
(a)ESR has been registered since 12 July 2013.
(b)ESR’s registered office and principal place of business is at 71 . . . Seven Hills, New South Wales.
(c)Mr Silvestro is the sole director of a company named Mazarati Pty Ltd, and he has been the sole director since that company was registered on 29 November 2023.
(d)The registered office and principal place of business of Mazarati Pty Ltd is at 73 . . . Seven Hills, New South Wales, being premises adjacent to ESR’s registered office and principal place of business.
(e)On 31 January 2024, four FWIs visited the properties on 71 and 73 . . . . Seven Hills, New South Wales (Site). The FWIs observed signage with the name “Essential Motor Body Smash Repairs”.
(f)During their visit to the Site Mr Silvestro informed the FWIs that:
(i)Mr Silvestro’s wife is the director of ESR.
(ii)Mr Silvestro and his wife are going through a divorce.
(iii)The business that is now operating at the site is known as “Silvs Enterprise Pty Ltd” (Silvs), not ESR.
(iv)The primary business of Silvs is automotive repairs and towing.
(v)Mr Silvestro operates Silvs with his son.
(vi)Silvs will advertise on “Seek” for staff when needed.
This evidence shows that it is likely that Mr Silvestro will be involved in business that will require the engagement of employees; and, given it remains registered, ESR may be one of the vehicles by which Mr Silvestro will engage employees. These matters call for the assessment of a pecuniary penalty that will deter Mr Silvestro, through ESR, from engaging in contravening conduct in the future.
Also relevant is the fact that ESR has failed to comply with three compliance notices. That manifests a strong propensity to act in defiance of industrial laws; and the assessment of pecuniary penalties should be set at a level that will eliminate such propensity.
The pecuniary penalties should also incorporate a significant element for general deterrence. The pecuniary penalties should be set to deter employers generally from engaging in the contravening conduct in which ESR and Mr Silvestro have engaged in. I refer to what Judge Jarrett said in Fair Work Ombudsman v VS Investment Group Pty Ltd:[56]
The failure to comply with a notice properly issued by the applicant in the course of its investigations and the discharge of its statutory functions is serious. Recipients of such notices should be left under no misapprehension about their obligations to comply with those notices.
[56] Fair Work Ombudsman v VS Investment Group Pty Ltd & Anor [2013] FCCA 208, at [51]
Contrition, co-operation, and corrective action
It is the case that ESR and Mr Silvestro have co-operated to the extent that they engaged a lawyer, and admitted their contraventions. I propose to give this some, but not much, weight by applying a 10% discount to the pecuniary penalties I will assess. The respondents’ admissions have not been met by action, and in particular, they have not done that which the Compliance Notices required them to do, which included paying money to the Employee their entitlements.
Assessment before adjustments
I propose to assess the pecuniary penalties as follows:
Contravention Penalty for ESR Penalty for Mr Silvestro First Compliance Notice $21,645 (65% of maximum) $4,329 (65% of maximum) Second Compliance Notice $24,975 (75% of maximum) $4,995 (75% of maximum) Third Compliance Notice $29,970 (90% of maximum) $5,994 (90% of maximum) Pecuniary penalties for contraventions s 536(1) (before adjustments)
The contravention consisted of ESR not issuing a payslip to four employees during the following periods:
Employee Period Mr Stannard 19 November 2020 to 29 January 2021;
12 February 2021 to 12 March 2021Mr McNeill 4 October 2021 to 1 December 2021 Mr Aristodimou 5 May 2021 to about 2 July 2021 Mr Loader 1 November 2020 to 24 December 2020
That manifests a persistent intentional action, and a complete disregard of s 536(1) of the FW Act. These matters point to the penalty being assessed on the higher end of the scale.
For the reasons I have given in relation to ESR’s contraventions of s 716(5), specific deterrence and general deterrence must be reflected in the assessment of a pecuniary penalty. Further, what I have said about contrition, co-operation, and corrective action in relation to ESR’s contraventions of s 716(5) apply to ESR’s contraventions of s 536(1) of the FW Act.
I am satisfied that 75% of the maximum amount of the pecuniary penalty is an appropriate assessment of the amount of the pecuniary penalties ESR and Mr Silvestro should be ordered to pay before adjustment, namely, $49,950 and $9,990 respectively.
Adjustments
As I have already noted I propose to allow a discount of 10% to reflect the respondents having admitted their contraventions. I am satisfied that no other adjustment is warranted, either under the one transaction principle, or under the totality principle. I therefore propose to order that ESR and Mr Silvestro pay the following pecuniary penalties.
Contravention Penalty for ESR (including 10% discount) Penalty for Mr Silvestro (including 10% discount First Compliance Notice $19,480.50 $3,896.10 Second Compliance Notice $22,477.50 $4,495.50 Third Compliance Notice $26,973 $5,394.60 s 536(1) $44,955 $8,991 DISPOSITION
I propose to make declarations and orders substantially to the effect of the declarations and orders the parties have requested I make to give effect to the matters agreed to in the SAF. I will also order that the respondents pay pecuniary penalties in the amounts I have assessed; that they pay these amounts to the Commonwealth; and that they do so within 28 days after the date I pronounce orders.
I certify that the preceding eighty-five (85) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 29 November 2024
15
4