Fair Work Ombudsman v Extrados Solutions Pty Ltd - [2014] FCCA 815

FEDERAL CIRCUIT COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v EXTRADOS SOLUTIONS PTY LTD & ANOR

[2014] FCCA 815

Catchwords:
INDUSTRIAL LAW – Penalty hearing – non-compliance with compliance notice – statement of agreed facts.

Legislation:

Fair Work Act2009 (Cth) ss.550(1), 716, 716(1), 716(5)

Applicant:

FAIR WORK OMBUDSMAN

First Respondent:

EXTRADOS SOLUTIONS PTY LTD (ACN 134 398 744)

Second Respondent:

PETER JOHNSON

File Number:

BRG 1128 of 2013

Judgment of:

Judge Jarrett

Hearing date:

2 April 2014

Date of Last Submission:

2 April 2014

Delivered at:

Brisbane

Delivered on:

2 April 2014

REPRESENTATION

Counsel for the Applicant:

Ms Coulthard

Solicitors for the Applicant:

Fair Work Ombudsman

The Second Respondent appeared for the First Respondent

The Second Respondent appeared in person

ORDERS

Pursuant to s.546(1) of the Fair Work Act 2009 (Cth), the First Respondent pay a penalty of $17,850 in respect of its contravention of s.716(5) of the Fair Work Act 2009 (Cth) by failing to comply with a compliance notice.
Pursuant to s.546(1) of the Fair Work Act 2009 (Cth), the Second Respondent pay a penalty of $3,570 in respect of his involvement (within the meaning of s.550(2) of the Fair Work Act 2009 (Cth)) in the First Respondent’s contravention of s.716(5) of the Fair Work Act 2009 (Cth)in failing to comply with a compliance notice.
Pursuant to s.546(3) of the Fair Work Act 2009 (Cth), the pecuniary penalties imposed by the Court in orders 1 and 2 above be paid into the Consolidated Revenue Fund of the Commonwealth within sixty (60) days of the date of this order.

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT BRISBANE

BRG 1128 of 2013

FAIR WORK OMBUDSMAN

Applicant

And

EXTRADOS SOLUTIONS PTY LTD (ACN 134 398 744)

First Respondent

PETER JOHNSON

Second Respondent

REASONS FOR JUDGMENT

ex tempore

This is an application for the imposition of pecuniary penalties on two respondents, the first Extrados Solutions Pty Ltd and the second, Peter Johnson. It is alleged in the proceedings, and the respondents agree, that the first respondent breached s.716(5) of the Fair Work Act2009 because the first respondent failed to comply with a compliance notice that was properly given to it under the Fair Work Act. The case against the second respondent is that he is liable for the contravention pursuant to s.550(1) of the Fair Work Act because he was a person who was involved in the contravention.
On 13 September, 2013 a Fair Work inspector issued a compliance notice to the first respondent. The inspector was Mr Ingle. I have evidence from him before me. The notice set out that:
a)the first respondent was an employer to whom the obligations cast upon employers under the Fair Work Act applied;
b)the first respondent was the employer of a Mr Ki Chen, an employee, who was employed with the company from 21 January, 2013 to 15 May, 2013;
c)Mr Ingle had determined that the first respondent had contravened certain provisions of the Fair Work Act and in particular had contravened the Act insofar as certain payments to which Mr Chen was entitled had not been paid. The particular contraventions of the Act were specified in the compliance notice.
The notice then set out the action required of the first respondent. It required the first respondent to pay $10,067.57 to Mr Chen in respect of wages and $745.65 in respect of accrued annual leave entitlements that were due to Mr Chen when he was terminated. The compliance notice, as they usually do, set out in bold writing what might occur if the first respondent failed to comply with the compliance notice. For that reason, I do not understand the submission made on behalf of the first and second respondents that in some way the applicant or the applicant’s inspector should have brought to the attention of the first or second respondents that failure to comply with the compliance notice was likely to be treated as significant and important.
That the consequences of non-compliance with the notice were potentially serious appears from the last two paragraphs of the notice itself. Those two paragraphs make it clear, at least in my view, that it is important that the notice be complied with and, in the event that it was not, there may be proceedings in this Court or the Federal Court or an eligible state or territory court in relation to the non-compliance.
The notice was not complied with by the first respondent – hence these proceedings.
The applicant seeks the imposition of penalties on the first respondent and the second respondent for the contravention and the second respondent’s involvement in the contravention.
The particular contraventions which were the subject of the compliance notice are not the subject of the proceedings before me and it is important to bear that firmly in mind. I am not being asked to impose penalties for the breaches by the first respondent of its obligations towards Mr Chen but rather, the penalties relate to the non-compliance with the compliance notice. In that respect, there is but one contravention insofar as each of the respondents is concerned.
The Fair Work Act provides that there are maximum penalties that might be applied to those contraventions. For a contravention of s.716(5) of the Act the maximum penalty for the first respondent is 150 penalty units or $25,500. Insofar as the second respondent is concerned, an individual, the maximum penalty is $5,100.
It is difficult to see any mitigating circumstances in this case insofar as the first or second respondents are concerned. It has been said on behalf of the first and second respondents that the business conducted by the first respondent is a small business and no longer exists. That might be so but the financial circumstances of the first respondent and the second respondent, and the size of the business conducted by the first respondent, whilst of some relevance can only ever be of marginal importance. That is so because employees of small concerns are just as much entitled to the protections of the Fair Work Act as employees of large concerns. And whilst I am only dealing with contraventions of the Fair Work Act relating to s.716(5), it is of course part of the substratum of the facts of this case to note that the genesis of the compliance notice is a failure to pay an employee entitlements to which he was otherwise entitled.
The obligation to comply with the Fair Work Act and, in particular, s.716 falls just as heavily on small corporations and small businesses – and individuals, for that matter – as it does on large employers or businesses. Put shortly, one cannot shirk one’s responsibilities imposed by law simply because one might be described as a “small business”. or because the business has a particular size. It is incumbent on all employers to comply with the requirements of the Fair Work Act.
The frequency with which applications come before this Court in which there are allegations, generally proved, of contraventions of basic obligations imposed by the Fair Work Act make it necessary for any penalty to be imposed to have a deterrent effect. Employers ought to be left in no doubt that the obligations cast upon them by the Fair Work Act require observance.
Moreover, in this case there is a need for some specific deterrence. The evidence reveals that the first and second respondents – I group them together because, in submissions, the second respondent made it clear that he and the first respondent are essentially one and the same – both respondents were given ample opportunity to meet their obligations to comply with the compliance notice. The only matter offered by way of explanation for the non-compliance is that the “business” did not have the funds to make the payments required by the compliance notice. Two things need to be said about that. The first is the compliance notice was issued in September of last year. It is now April of the following year and there is no evidence at all that suggests that any payment whatsoever has been made. One would have thought that if there was an ounce of contrition from the first respondent or the second respondent, something would have been paid.
The second thing to note is that whilst there are submissions and some evidence about the financial circumstances of the first respondent, there is nothing about the financial circumstances of the second respondent and, as I have said, if they are treated at least by the second respondent as one and the same entity – he is the company and vice versa – one wonders why the second respondent might not have sought to rectify the situation. Maybe his financial situation is poor, maybe not, but there is no evidence one way or the other about that.
There is some evidence of cooperation with the investigation that was conducted by the Fair Work Ombudsman but one needs to be careful not to overstate that cooperation. These proceedings, as outlined by Ms Coulthard of Counsel for the applicant, were somewhat problematical but eventually were resolved by way of a statement of agreed facts and this penalty hearing. There has been a saving of time and money in the sense that there has been no necessity for there to be a proper trial of the proceedings. I take that into account. It mitigates the penalty.
In all of the circumstances, it seems to me that a penalty which marks the Court’s disapproval of the first respondent’s failure to comply with a very clear compliance notice requires the imposition of a penalty which is 70 per cent of the maximum. In respect of Mr Johnson, a similar penalty – that is, 70 per cent of the maximum – ought also be imposed. Those penalties ought to be paid to the Commonwealth consolidated revenue fund given that there is already an order for the payment of moneys owed to Mr Chen.
The respondents seek an order that they have 60 days to pay the penalties. Given that the penalties are to be paid to the Commonwealth consolidated revenue fund, there is already an order in place for payment within 14 days in respect of the moneys owed to Mr Chen and there is some evidence – scant as it is – about the financial circumstances of the first respondent, I am prepared to order that the penalties imposed be paid within 60 days of today’s date.

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered 2 April 2014.

Associate:

Date: 23 April 2014