FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v FOOD REPUBLIC PTY LTD | [2017] FCCA 263 |
| Catchwords: INDUSTRIAL LAW – Declarations regarding contraventions – agreed facts – Asian restaurant – evidence regarding one employee – underpayments – record keeping breaches – agreed range of penalties – penalties imposed. |
| Legislation: Fair Work Act 2009, ss.12, 14, 44, 45, 90, 116, 117, 535, 536, 545, 546, Parts 2‑2, 3‑6 Fair Work Regulations 2009, regs.3.32, 3.33, 3.34, 3.36, 3.40 Restaurant Industry Award 2010, cls.20, 33, 34 |
| Applicant: | FAIR WORK OMBUDSMAN |
| Respondent: | FOOD REPUBLIC AUSTRALIA PTY LTD (ACN 155 461 966) |
| File number: | MLG 1367 of 2016 |
| Judgment of: | Judge Riley |
| Hearing date: | 9 December 2016 |
| Date of last submission: | 9 December 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 20 February 2017 |
REPRESENTATION
| Counsel for the applicant: | Rebecca Preston |
| Solicitors for the applicant: | Fair Work Ombudsman |
| Counsel for the respondents: | Mark Champion |
| Solicitors for the respondents: | Cornwall Stodart |
THE COURT DECLARES THAT, having regard to the admissions made by the respondent in the statement of agreed facts filed in this proceeding:
The respondent contravened:
(a)s.44 of the Fair Work Act 2009 (Cth) (“the Act”), by failing to pay Ms Kuan-Wen Yeh untaken accrued annual leave upon termination of employment as prescribed by s.90(2) of the Act;
(b)s.44 of the Act, by failing to pay Ms Yeh for her absence on a public holiday as prescribed by s.116 of the Act;
(c)s.44 of the Act, by failing to make a payment to Ms Yeh in lieu of providing notice of termination of employment as prescribed by s.117(2)(a) of the Act;
(d)s.45 of the Act, by failing to pay Ms Yeh minimum hourly rates of pay as prescribed by cl.20.1 of the Restaurant Industry Award 2010 (“the Modern Award”);
(e)s.45 of the Act, by failing to pay Ms Yeh Saturday penalty rates as prescribed by cl.34.1 of the Modern Award;
(f)s.45 of the Act, by failing to pay Ms Yeh Sunday penalty rates as prescribed by cl.34.1 of the Modern Award;
(g)s.45 of the Act, by failing to pay Ms Yeh public holiday penalty rates as prescribed by cl.34.1 of the Modern Award;
(h)s.45 of the Act, by failing to pay Ms Yeh Monday to Friday overtime rates as prescribed by cl.33.2(a) of the Modern Award;
(i)s.45 of the Act, by failing to pay Ms Yeh Saturday overtime rates as prescribed by cl.33.2(b) of the Modern Award;
(j)s.45 of the Act, by failing to pay Ms Yeh Sunday overtime rates as prescribed by cl.33.2(c) of the Modern Award;
(k)s.45 of the Act, by failing to pay Ms Yeh evening penalty rates as prescribed by cl.34.2(a)(i) of the Modern Award;
(l)s.535(1) of the Act by failing to make and keep records as prescribed by reg.3.32 of the Fair Work Regulations 2009 (Cth) (“the Regulations”);
(m)s.535(1) of the Act by failing to make and keep records as prescribed by reg.3.33 of the Regulations;
(n)s.535(1) of the Act by failing to make and keep records as prescribed by reg.3.34 of the Regulations;
(o)s.535(1) of the Act by failing to make and keep records as prescribed by reg.3.36 of the Regulations;
(p)s.535(1) of the Act by failing to make and keep records as prescribed by reg.3.40 of the Regulations; and
(q)s.536 of the Act, by failing to provide Ms Yeh with pay slips within one day of payment for work performed by her.
(“the contraventions”).
ORDERS
Pursuant to s.546(3)(a) of the Act, the respondent pay to the Commonwealth within 28 days penalties pursuant to s.546(1) of the Act of $107,551 in respect of the contraventions.
Pursuant to s.545(1) of the Act, the respondent, at its own expense, engage a third party with qualifications in workplace relations or accounting to undertake an audit of the respondent’s compliance with the Act and the Modern Award on the following terms:
(a)the audit period be three months during the first half of 2017;
(b)the audit be completed within 60 days of the end of the audit period;
(c)the audit apply to all employees employed by the respondent at any time during the audit period in any classification of work under the Modern Award;
(d)the audit assess the respondent’s compliance with the following obligations according to each employee’s classification of work, category of employment and hours worked during the audit period:
(i)wages and work-related entitlements under the Modern Award;
(ii)accrual and payment of entitlements under the National Employment Standards (“the NES”) in Part 2-2 of the Act; and
(iii)record keeping and pay slips obligations in Division 3 of Part 3-6 of the Act and Part 3-6 of the Regulations;
(e)the audit be signed off by all directors of the respondent;
Within 30 days of the audit being completed, the respondent provide to the applicant:
(a)a copy of the audit report, including a statement of the methodology used in the audit, signed by all directors of the respondent;
(b)a copy of the source materials used to audit the times worked by the employees, including but not limited to rosters and timebooks; and
(c)written details of any contraventions identified in the audit, the steps the Respondent will take to rectify any identified contravention(s) and the date by when rectification will occur;
In the event that the respondent does not comply with any of the preceding orders, the applicant have liberty to apply on seven days’ notice.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1367 of 2016
| FAIR WORK OMBUDSMAN |
Applicant
And
| FOOD REPUBLIC AUSTRALIA PTY LTD (ACN 155 461 966) |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns a number of contraventions of the Fair Work Act 2009 (“the Act”) and the penalties to be imposed for those contraventions. The parties filed a statement of agreed facts, in which the respondent admitted the contraventions consisting of the underpayment of the wages of one employee, Ms Kuan-Wen Yeh, and the failure to keep proper records. The breaches occurred over two periods totalling about eight months and resulted in underpayments totalling $33,169.05. In the agreed statement of facts, the parties jointly proposed that the court make certain declarations as to the contraventions, make certain orders and impose aggregate penalties in the range of $91,531 to $107,551.
In view of the High Court’s decision in the matter of Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 90 ALJR 113; (2015) 255 IR 87; (2015) 326 ALR 476; [2015] HCA 46, it may be appropriate to accept the parties’ proposals as to penalty. French CJ and Kiefel, Bell, Nettle and Gordon JJ said in that case at [58]:
… Subject to the court being sufficiently persuaded of the accuracy of the parties’ agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and, for the reasons identified in Allied Mills,78 highly desirable in practice for the court to accept the parties’ proposal and therefore impose the proposed penalty. To do so is no different in principle or practice from approving an infant’s compromise, a custody or property compromise, a group proceeding settlement or a scheme of arrangement.
78 Allied Mills at 259 per Sheppard J. See also NW Frozen Foods at FCR 291; ALR 644; Mobil Oil
Similarly, in Director of the Fair Work Building Industry Inspectorate v Construction Forestry, Mining and Energy Union (Quest Apartments and Greek Community Centre) [2016] FCA 1262, Tracey J said at [23]:
The principles which emerge from the joint judgment of Burchett and Kiefel JJ (Carr J agreeing) in NW Frozen Foods were summarised by Branson, Sackville and Gyles JJ in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at [51] as follows:
“(i)It is the responsibility of the Court to determine the appropriate penalty to be imposed … .
(ii)Determining the quantum of a penalty is not an exact science. Within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another.
(iii)There is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy. Accordingly, when the regulator and contravenor have reached agreement, they may present to the Court a statement of facts and opinions as to the effect of those facts, together with joint submissions as to the appropriate penalty to be imposed.
(iv)The view of the regulator, as a specialist body, is a relevant, but not determinative consideration on the question of penalty. In particular, the views of the regulator on matters within its expertise … will usually be given greater weight than its views on more “subjective” matters.
(v)In determining whether the proposed penalty is appropriate, the Court examines all the circumstances of the case. Where the parties have put forward an agreed statement of facts, the Court may act on that statement if it is appropriate to do so.
(vi)Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court’s view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range.”
Agreed orders and declarations
The statement of agreed facts included certain declarations and orders that the parties agreed the court should make. The declarations sought were as follows:
Declarations that the Respondent contravened the following civil remedy provisions:
(a)section 44 of the FW Act, by failing to pay the Employee untaken accrued annual leave upon termination of employment as prescribed by subsection 90(2) of the FW Act;
(b)section 44 of the FW Act, by failing to pay the Employee for her absence on a public holiday as prescribed by section 116 of the FW Act;
(c)section 44 of the FW Act, by failing to make a payment to the Employee in lieu of providing notice of termination of employment as prescribed by subsection 117(2)(a) of the FW Act;
(d)section 45 of the FW Act, by failing to pay the Employee minimum hourly rates of pay as prescribed by clause 20.1 of the Modern Award;
(e)section 45 of the FW Act, by failing to pay the Employee Saturday penalty rates as prescribed by clause 34.1 of the Modern Award;
(f)section 45 of the FW Act, by failing to pay the Employee Sunday penalty rates as prescribed by clause 34.1 of the Modern Award;
(g)section 45 of the FW Act, by failing to pay the Employee public holiday penalty rates as prescribed by clause 34.1 of the Modern Award;
(h)section 45 of the FW Act, by failing to pay the Employee overtime rates (Monday to Friday) as prescribed by subclause 33.2(a) of the Modern Award;
(i)section 45 of the FW Act, by failing to pay the Employee overtime rates (Saturday) as prescribed by subclause 33.2(b) of the Modern Award;
(j)section 45 of the FW Act, by failing to pay the Employee overtime rates (Sunday) as prescribed by subclause 33.2(c) of the Modern Award;
(k)section 45 of the FW Act, by failing to pay the Employee evening penalty rates as prescribed by subclause 34.2(a)(i) of the Modern Award;
(l)subsection 535(1) of the FW Act by failing to make and keep records as prescribed by FW Regulation 3.32;
(m)subsection 535(1) of the FW Act by failing to make and keep records as prescribed by FW Regulation 3.33;
(n)subsection 535(1) of the FW Act by failing to make and keep records as prescribed by FW Regulation 3.34;
(o)subsection 535(1) of the FW Act by failing to make and keep records as prescribed by FW Regulation 3.36;
(p)subsection 535(1) of the FW Act by failing to make and keep records as prescribed by FW Regulation 3.40; and
(q)section 536 of the FW Act, by failing to provide the Employee with pay slips within one day of payment for work performed by the Employee.
There has been authority in the past to the effect that it is not appropriate for a court to make declarations based on admissions. However, there is more recent authority that in certain cases it is appropriate for the court to make declarations in such circumstances.
In particular, in Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2006) 236 ALR 665; (2008) ASAL 55-176; (2007) ATPR 42-138; [2006] FCA 1427, Kiefel J, as her Honour then was, considered at paragraphs 52 to 59 the rationale for the previous approach taken by the courts. Her Honour came to the view that the previous approach may no longer be warranted, particularly in public interest cases such as this, and particularly if the declarations are preceded by a statement that they are made upon admissions.
In all the circumstances of this case, I am satisfied that it is appropriate to make the declarations sought by the parties on the basis of the admissions made by the respondents, provided that the declarations are preceded by an appropriate preamble. Those declarations will be made accordingly.
The orders that the parties jointly sought in the statement of agreed facts, subject to some matters that were omitted during the oral hearing, were as follows:
(a)the Respondent pay penalties pursuant to subsection 546(1) of the FW Act in respect of the contraventions identified in paragraph [4] above;
(b)pursuant to subsection 546(3)(a) of the FW Act, the penalties as stated in subparagraph (a) above be paid to the Commonwealth within 28 days of the date of this order or within such further time as the Court considers appropriate;
(c)[omitted]
(d)pursuant to subsection 545(1) of the FW Act, the Respondent must, at its own expense, engage a third party with qualifications in workplace relations or accounting to undertake an audit of the Respondent’s compliance with the FW Act and the Modern Award on the following terms:
(i)the audit period will be from 1 January 2017 to 31 March 2017;
(ii)the audit is to be completed within 60 days of the end of the audit period;
(iii)the audit will apply to all employees employed by the Respondent at any time during the audit period in any classification of work under the Modern Award;
(iv)the audit will assess the Respondent’s compliance with the following obligations according to each employees’ classification of work, category of employment and hours worked during the audit period:
(A) wages and work-related entitlements under the Modern Award;
(B) accrual and payment of entitlements under the National Employment Standards (NES) in Part 2-2 of the FW Act; and
(C) record keeping and pay slips obligations in Division 3 of Part 3-6 of the FW Act and Part 3-6 of the FW Regulations;
(v)the audit must be signed off by all directors of the Respondent;
(vi)within 30 days of the audit being completed, the Respondent will provide to the applicant:
(A) a copy of the audit report, including a statement of the methodology used in the audit, signed by all directors of the Respondent;
(B) a copy of the source materials used to audit the times worked by the employees, including but not limited to rosters and timebooks; and
(C) written details of any contraventions identified in the audit, the steps the Respondent will take to rectify any identified contravention(s) and the date by when rectification will occur;
(e)the Applicant has liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with; and
(f)such further orders as the Court thinks fit.
Subject to the determination of penalty, I consider that it is appropriate to make the proposed orders.
Agreed facts
Paragraphs 11 to 89 below are taken virtually verbatim from paragraphs 4 to 82 of the statement of agreed facts filed by the parties.
The respondent
The respondent is and was at all relevant times:
a)a company incorporated under the Corporations Act 2001;
b)able to be sued in and by its corporate name;
c)a “constitutional corporation” within the meaning of s.12 of the Act;
d)a “national system employer” within the meaning of s.14 of the Act; and
e)an entity operating a business being a restaurant serving Taiwanese and Malaysian food in Box Hill trading as Food Republic, formerly Kitchen Republik (“the business”).
The employee
The respondent employed Ms Yeh in the business during the following periods;
a)16 June 2014 to 9 November 2014 (“first period”); and
b)16 March 2015 to 5 July 2015 (“second period”),
(collectively, the “employment periods”).
At all relevant times during the employment periods, Ms Yeh:
a)was a “national system employee” within the meaning of s.13 of the Act in relation to her employment with the respondent;
b)was employed by the respondent on a full-time basis;
c)was engaged by the respondent as a “kitchen hand”;
d)primarily performed cooking and other food preparation duties including:
i)operating the deep fryer and cooking chicken, oysters and dumplings;
ii)preparing lunch boxes; and
iii)assisting with noodle orders; and
e)was subject to a working holiday visa (subclass 417).
During the first period, the respondent paid Ms Yeh a flat rate of $10 for each hour worked.
During the second period, the respondent paid Ms Yeh a flat rate of $11 for each hour worked.
During the employment periods, the respondent did not pay Ms Yeh any additional amount for work performed in the evenings or on Saturdays, Sundays and public holidays.
Relevant Legislation
At all relevant times during the employment periods, the respondent was bound in respect of Ms Yeh by the Act and the Fair Work Regulations 2009 (“the Regulations”).
Relevant Industrial Instruments
At all relevant times, Ms Yeh was covered by the Restaurant Industry Award 2010 (“the Modern Award”) with respect to the employment of Ms Yeh.
By reason of the matters admitted at subparagraphs 13(a) and 13(d) above, during her employment periods, Ms Yeh performed the work of a cook, grade 1 – level 2, pursuant to the Modern Award.
UNDERPAYMENT CONTRAVENTIONS
Failure to pay minimum hourly rates of pay – cl.20.1
By reason of the matters admitted at paragraphs 11, 18 and 19 above, the respondent was required to pay Ms Yeh at least the minimum hourly wage in accordance with cl.20.1 of the Modern Award.
During the employment periods, the minimum hourly rates payable by the respondent to Ms Yeh, and the number of hours worked by Ms Yeh, which were to be paid at the minimum hourly rates, were as follows:
Period Rate Hours worked 16 June 2014 to 6 July 2014 $17.49 76 7 July 2014 to 5 July 2015 $18.02 1,162.42
During Ms Yeh’s employment periods, Ms Yeh:
a)worked a total of 1,238.42 ordinary hours;
b)was entitled to be paid $22,276.05;
c)was paid $12,904.84; and
d)was underpaid $9,371.21 in relation to her entitlement to minimum hourly rates of pay.
By reason of the matters admitted in paragraphs 20 to 22 above, the respondent contravened cl.20.1 of the Modern Award by failing to pay Ms Yeh her full entitlement to minimum hourly rates of pay in accordance with the Modern Award and, as a result, contravened s.45 of the Act.
Failure to pay Saturday penalty rates – cl.34.1
By reason of the matters admitted at paragraphs 11, 18 and 19 above, the respondent was required to pay Ms Yeh Saturday penalty rates in accordance with cl.34.1 of the Modern Award.
During the employment periods, the Saturday penalty rates payable by the respondent to Ms Yeh, and the relevant number of hours worked by Ms Yeh were as follows:
Period Rate Hours worked 16 June 2014 to 6 July 2014 $20.99 0 7 July 2014 to 5 July 2015 $22.53 57.18
During Ms Yeh’s employment periods, the Employee:
a)worked a total of 57.18 hours on Saturdays;
b)was entitled to be paid $1,288.27;
c)was paid $611.32; and
d)was underpaid $676.95 in relation to her entitlement to Saturday penalty rates.
By reason of the matters admitted in paragraphs 24 to 26 above, the respondent contravened cl.34.1 of the Modern Award by failing to pay Ms Yeh her full entitlement to Saturday penalty rates in accordance with the Modern Award and, as a result, contravened s.45 of the Act.
Failure to pay Sunday penalty rates – cl.34.1
By reason of the matters admitted at paragraphs 11, 18 and 19 above, the respondent was required to pay Ms Yeh Sunday penalty rates in accordance with cl.34.1 of the Modern Award.
During the employment periods, the Sunday penalty rates payable by the respondent to Ms Yeh, and the relevant number of hours worked by Ms Yeh were as follows:
Period Rate Hours worked 16 June 2014 to 6 July 2014 $24.49 0 7 July 2014 to 5 July 2015 $27.03 4.87
During Ms Yeh’s employment periods, Ms Yeh:
a)worked a total of 4.87 hours on Sundays;
b)was entitled to be paid $131.64;
c)was paid $53.24; and
d)was underpaid $78.40 in relation to her entitlement to Sunday penalty rates.
By reason of the matters admitted in paragraphs 28 to 30 above, the respondent contravened cl.34.1 of the Modern Award by failing to pay Ms Yeh her full entitlement to Sunday penalty rates in accordance with the Modern Award and, as a result, contravened s.45 of the Act.
Failure to pay public holiday penalty rates – cl.34.1
By reason of the matters admitted at paragraphs 11, 18 and 19 above, the respondent was required to pay Ms Yeh public holiday penalty rates in accordance with cl.34.1 of the Modern Award.
During the employment periods, the public holiday penalty rates payable by the respondent to Ms Yeh, and the relevant number of hours worked by Ms Yeh were as follows:
Period Rate Hours worked 16 June 2014 to 6 July 2014 $38.49 0 7 July 2014 to 5 July 2015 $45.05 33.27
During Ms Yeh’s employment periods, Ms Yeh:
a)worked a total of 33.27 hours on public holidays;
b)was entitled to be paid $1,498.81;
c)was paid $353.14; and
d)was underpaid $1,145.67 in relation to her entitlement to public holiday penalty rates.
By reason of the matters admitted in paragraphs 32 to 34 above, the respondent contravened cl.34.1 of the Modern Award by failing to pay Ms Yeh her full entitlement to public holiday penalty rates in accordance with the Modern Award and, as a result, contravened s.45 of the Act.
Failure to pay Monday to Friday overtime rates – cl.33.2(a)
By reason of the matters admitted at paragraphs 11, 18 and 19 above, the respondent was required to pay Ms Yeh overtime rates for overtime hours worked on Monday to Friday in accordance with cl.33.2(a) of the Modern Award.
During the employment periods, the overtime rates payable for overtime hours worked on Monday to Friday payable by the respondent to Ms Yeh, and the relevant number of hours worked by Ms Yeh were as follows:
Period Rate (first two hours) Hours worked Rate (thereafter) Hours worked 16 June 2014 to 6 July 2014 $26.24 4.00 $34.99 5.50 7 July 2014 to 5 July 2015 $27.03 73.87 $36.04 167.16
During Ms Yeh’s employment periods, Ms Yeh:
a)worked a total of 250.53 overtime hours from Monday to Friday;
b)was entitled to be paid $8,318.57;
c)was paid $2,577.98; and
d)was underpaid $5,740.59 in relation to her entitlement to Monday to Friday overtime rates.
By reason of the matters admitted in paragraphs 36 to 38 above, the respondent contravened cl.33.2(a) of the Modern Award by failing to pay Ms Yeh her full entitlement to overtime rates for overtime hours worked Monday to Friday in accordance with the Modern Award and, as a result, contravened s.45 of the Act.
Failure to pay Saturday overtime rates – cl.33.2(b)
By reason of the matters admitted at paragraphs 11, 18 and 19 above, the respondent was required to pay Ms Yeh overtime rates for overtime hours worked on Saturdays in accordance with cl.33.2(b) of the Modern Award.
During the employment periods, the overtime rates payable for overtime hours worked on Saturdays payable by the respondent to Ms Yeh and the hours worked by Ms Yeh were as follows:
Period Rate (first two hours) Hours worked Rate (thereafter) Hours worked 16 June 2014 to 6 July 2014 30.62 4 34.99 14.50 7 July 2014 to 5 July 2015 31.54 50 36.04 151.93
During Ms Yeh’s employment periods, Ms Yeh:
a)worked a total of 220.43 overtime hours on Saturdays;
b)was entitled to be paid $7,682.40;
c)was paid $2,273.35; and
d)was underpaid $5,409.05 in relation to her entitlement to Saturday overtime rates.
By reason of the matters admitted in paragraphs 40 to 42 above, the respondent contravened cl.33.2(b) of the Modern Award by failing to pay Ms Yeh her full entitlement to overtime rates for overtime hours worked on Saturdays in accordance with the Modern Award and, as a result, contravened s.45 of the Act.
Failure to pay Sunday overtime rates – cl.33.2(c)
By reason of the matters admitted at paragraphs 11, 18 and 19 above, the respondent was required to pay Ms Yeh overtime rates for overtime hours worked on Sundays in accordance with cl.33.2(c) of the Modern Award.
During the employment periods, the overtime rates for overtime hours worked on Sundays payable by the respondent to Ms Yeh, and the relevant number of hours worked by Ms Yeh were as follows:
Period Rate Hours worked 16 June 2014 to 6 July 2014 $34.99 16 7 July 2014 to 5 July 2015 $36.04 286.31
During Ms Yeh’s employment periods, Ms Yeh:
a)worked a total of 302.31 overtime hours on Sundays;
b)was entitled to be paid $10,878.45;
c)was paid $3,152.88; and
d)was underpaid $7,725.57 in relation to her entitlement to Sunday overtime rates.
By reason of the matters admitted in paragraphs 44 to 46 above, the respondent contravened cl.33.2(c) of the Modern Award by failing to pay Ms Yeh her full entitlement to overtime rates for overtime hours worked on Sundays in accordance with the Modern Award and, as a result, contravened s.45 of the Act.
Failure to pay evening penalty rates – cl.34.2(a)(i)
By reason of the matters admitted at paragraphs 11, 18 and 19 above, the respondent was required to pay Ms Yeh evening penalty rates in accordance with cl.34.2(a)(i) of the Modern Award.
During the employment periods, the evening penalty rates payable by the respondent to the employee, and the relevant number of hours worked by the employee were as follows:
Period Rate Hours Worked 16 June 2014 to 6 July 2014 $1.53 0 7 July 2014 to 5 July 2015 $1.96 14
During Ms Yeh’s employment periods, Ms Yeh:
a)worked a total of 14 hours between 10pm and midnight on Monday to Friday;
b)was entitled to be paid $27.44;
c)was not paid; and
d)was underpaid $27.44 in respect of her entitlement to evening penalty rates.
By reason of the matters admitted in paragraphs 48 to 50 above, the respondent contravened cl.34.2(a)(i) of the Modern Award by failing to pay Ms Yeh evening penalty rates in accordance with the Modern Award and, as a result, contravened s.45 of the Act.
Failure to make payment for absence on a public holiday – s.116
By reason of the matters admitted in paragraphs 11 and 17 above, the respondent was required to pay Ms Yeh for her ordinary hours when she was absent from work on a public holiday in accordance with s.116 of the Act.
Ms Yeh was absent from work on 6 April 2015, which was the Easter Monday public holiday.
Ms Yeh:
a)did not work on 6 April 2015;
b)was entitled to be paid $136.95;
c)was not paid; and
d)was underpaid $136.95 in relation to her entitlement to payment for absence on a public holiday.
By reason of the matters admitted at paragraphs 52 to 54 above, the respondent contravened s.116 of the Act by failing to pay Ms Yeh for her absence on a public holiday and, as a result, contravened s.44 of the Act.
Failure to make payment in lieu of notice – s.117(2)(a)
By reason of the matters admitted in paragraphs 11 and 17 above, the respondent was required to make payment in lieu of notice of termination of employment to Ms Yeh in accordance with s.117(2)(a) of the Act.
The respondent terminated Ms Yeh’s employment on 5 July 2015 without notice.
Ms Yeh:
a)was employed for a period of not more than one year;
b)was entitled to receive one week’s payment in lieu of notice equal to $684.76;
c)was not paid any amount in lieu of notice; and
d)was underpaid $684.76 in relation to her entitlement to payment in lieu of notice on termination of employment.
By reason of the matters admitted at paragraphs 56 to 58 above, the respondent contravened s.117(2)(a) of the Act by failing to make a payment in lieu of notice to Ms Yeh’s and, as a result, contravened s.44 of the Act.
Failure to pay annual leave on termination of employment – s.90(2)
By reason of the matters admitted in paragraphs 11 and 17 above, the respondent was required to pay Ms Yeh any untaken accrued annual leave on termination of employment in accordance with s.90(2) of the Act.
At the termination of the first period and second period of Ms Yeh’s employment, the respondent was required to pay Ms Yeh for any untaken accrued annual leave at the following rates:
Annual Leave rate Annual Leave Loading Rate $18.02 $3.15
The first period
On termination of the first period of Ms Yeh’s employment:
a)had accrued 58.30 hours of untaken annual leave;
b)was entitled to receive $1,234.21;
c)was not paid; and
d)was underpaid $1,234.21.
The second period
On termination of the second period of Ms Yeh’s employment:
a)had accrued 44.32 hours of untaken annual leave;
b)was entitled to receive $938.25;
c)was not paid; and
d)was underpaid $938.25.
By reason of the matters admitted at paragraphs 60 to 63 above, the respondent contravened s.90(2) of the Act by failing to pay Ms Yeh untaken accrued annual leave upon the termination of each of her employment periods and, as a result, contravened s.44 of the Act.
The underpayment
By reason of the matters admitted in paragraphs 20 to 64 the respondent caused Ms Yeh to be underpaid $33,169.05 (“the underpayment”).
On 15 April 2016, the respondent repaid the underpayment to Ms Yeh.
RECORD KEEPING CONTRAVENTIONS
Failure to make and keep records – required content – reg.3.32
By reason of the matters admitted in paragraphs 11 and 17 above, the respondent was at all relevant times, required by s.535(1) of the Act to make, and to keep, records in relation to Ms Yeh of the kind prescribed by reg.3.32 of the Regulations.
The respondent failed to make and keep any record which specified whether Ms Yeh’s employment was:
a)part-time or full-time; and
b)permanent, temporary or casual.
By reason of the matters admitted in paragraphs 67 and 68 above, the respondent contravened reg.3.32 of the Regulations by not making and keeping records that satisfied the requirements of reg.3.32 of the Regulations and, as a result, contravened s.535(1) of the Act.
Failure to make and keep pay records – reg.3.33
By reason of the matters admitted in paragraphs 11 and 17 above, the respondent was at all relevant times, required by sub-s.535(1) of the Act to make, and to keep, records in relation to Ms Yeh of the kind prescribed by reg.3.33 of the Regulations.
The respondent did not make or keep any record that specified:
a)the rate of remuneration paid to Ms Yeh;
b)the gross and net amounts paid to Ms Yeh; or
c)if Ms Yeh was entitled to receive a loading, penalty rate or any other monetary allowance.
By reason of the matters admitted in paragraphs 70 and 71 above, the respondent contravened reg.3.33 of the Regulations by not making and keeping records that satisfied the requirements of reg.3.33 of the Regulations, and as a result, contravened s.535(1) of the Act.
Failure to make and keep overtime records – reg.3.34
By reason of the matters admitted in paragraphs 11 and 17 above, the respondent was at all relevant times, required by s.535(1) of the Act to make, and to keep, records in relation to Ms Yeh of the kind prescribed by reg.3.34 of the Regulations.
Ms Yeh worked overtime hours during her employment periods as set out in paragraphs 36 to 47 above.
The respondent failed to make or keep any record of overtime hours worked by Ms Yeh.
By reason of the matters admitted in paragraphs 73 to 75 above, the respondent contravened reg.3.34 of the Regulations by not making and keeping records that satisfied the requirements of reg.3.34 of the Regulations and, as a result, contravened s.535(1) of the Act.
Failure to make and keep leave records – reg.3.36
By reason of the matters admitted in paragraphs 11 and 17 above, the respondent was at all relevant times, required by s.535(1) of the Act to make, and to keep, records in relation to Ms Yeh of the kind prescribed by reg.3.36 of the Regulations.
Ms Yeh did not take any period of paid annual leave during her employment periods.
The respondent did not make or keep any record that set out the balance of Ms Yeh’s entitlement to leave during the employment periods.
By reason of the matters admitted at paragraphs 77 to 79 above, the respondent contravened reg.3.36 of the Regulations by not making and keeping records that satisfied the requirements of reg.3.36 of the Regulations and, as a result, contravened s.535(1) of the Act.
Failure to make and keep termination records – reg.3.40
By reason of the matters admitted in paragraphs 11 and 17 above, the respondent was at all relevant times, required by s.535(1) of the Act to make, and to keep, records in relation to Ms Yeh of the kind prescribed by reg.3.40 of the Regulations.
The first period
Ms Yeh resigned from her employment with the respondent on 9 November 2014.
The respondent did not make or keep any record that set out:
a)whether the employment was terminated:
i)by consent;
ii)by notice;
iii)summarily; or
iv)in some other specified manner; nor
b)the name of the person who acted to terminate the employment.
The second period
Ms Yeh’s employment was terminated by the respondent on 5 July 2015.
The respondent did not make or keep any record that set out the matters referred to in paragraph 83 above.
By reason of the matters admitted in paragraphs 81 to 85 above, the respondent contravened reg.3.40 of the Regulations by not making or keeping records that satisfied the requirements of reg.3.40 and, as a result, contravened s.535(1) of the Act.
Failure to provide pay slips within only one day – s.536
By reason of the matters admitted in paragraphs 11 and 17 above, the respondent was required to provide Ms Yeh with pay slips in accordance with s.536 of the Act.
The respondent failed to provide Ms Yeh with any pay slips during either of the employment periods.
By reason of the matters admitted at 87 and 88 above, the respondent contravened s.536 of the Act.
Affidavit evidence
In addition to the statement of agreed facts, the applicant filed three affidavits and the respondent filed two affidavits. The parties each accepted the evidence filed by the other. The affidavits filed on behalf of the applicant were the affidavits affirmed by:
a)Fortina Giouleas on 9 September 2016;
b)Luke Russell Thomas on 7 September 2016; and
c)Paryssa Shayan on 14 November 2016.
The affidavits relied on the respondent were the affidavits affirmed by Chia Hung Kuo on 28 September 2016 and 25 November 2016.
As there was no dispute as to the evidence in any of the five affidavits, I accept the evidence contained in them.
Approach to determining penalty
In general, the proper approach to determining penalty in cases such as this is as follows. The first step for the court is to identify each separate contravention involved.
Where there are multiple contraventions, the second step is to consider whether any of the various contraventions constituted a single course of conduct, such that multiple breaches should be treated as a single breach.
The third step is for the court to consider the extent, if any, to which two or more contraventions have common elements. A person should not be penalised more than once for the same conduct.
The penalty imposed by the court should be an appropriate response to the contravenor’s conduct.[1] This is a separate process from the application of the totality principle.[2]
[1] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8 at [46] (Graham J).
[2] Mornington Inn Pty Ltd v Jordan (2008) 171 IR 455; (2008) 168 FCR 383; (2008) 247 ALR 714; [2008] FCAFC 70 at [41]-[46] (Stone and Buchanan JJ).
The fourth step is for the court to consider the appropriate penalty for each breach, treating multiple breaches arising from a course of conduct as a single breach, and taking into account any common elements shared by the various breaches.
The fifth step is for the court to apply the totality principle. This requires the court to consider the aggregate penalty overall, and determine whether it is an appropriate response to the conduct which resulted in the breaches.[3] The court in this step makes an “instinctive synthesis”.[4]
[3] See Kelly v Fitzpatrick (2007) 166 IR 14 at [30] (Tracey J) (Kelly); Ophthalmic, supra at [23] (Gray J), [71] (Graham J) and [102] (Buchanan J).
[4] Ophthalmic, supra at [27] (Gray J) and [55] and [78] (Graham J).
A convenient checklist of the factors that the court might consider in determining penalty include the matters that were identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at [26]-[59] and adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [14]. That list is as follows, (with paragraph letters inserted):
(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.
(m)The need for specific and general deterrence.
The court must, of course, be mindful of the caution expressed by Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8 at [91] as follows:
Checklists of this kind can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations. There is no suggestion in the present case that the learned magistrate made any relevant error in her identification of the matters which she should consider in fixing penalties.
The court will consider the circumstances of the case under the various headings suggested by Mowbray FM, and then consider whether any other matters are relevant.
Step 1: identifying the breaches
The contraventions are as follows:
a)s.44 of the Act, by failing to pay Ms Yeh untaken accrued annual leave upon termination of employment as prescribed by s.90(2) of the Act;
b)s.44 of the Act, by failing to pay Ms Yeh for her absence on a public holiday as prescribed by s.116 of the Act;
c)s.44 of the Act, by failing to make a payment to Ms Yeh in lieu of providing notice of termination of employment as prescribed by s.117(2)(a) of the Act;
d)s.45 of the Act, by failing to pay Ms Yeh minimum hourly rates of pay as prescribed by cl.20.1 of the Modern Award;
e)s.45 of the Act, by failing to pay Ms Yeh Saturday penalty rates as prescribed by cl.34.1 of the Modern Award;
f)s.45 of the Act, by failing to pay Ms Yeh Sunday penalty rates as prescribed by cl.34.1 of the Modern Award;
g)s.45 of the Act, by failing to pay Ms Yeh public holiday penalty rates as prescribed by cl.34.1 of the Modern Award;
h)s.45 of the Act, by failing to pay Ms Yeh Monday to Friday overtime rates as prescribed by cl.33.2(a) of the Modern Award;
i)s.45 of the Act, by failing to pay Ms Yeh Saturday overtime rates as prescribed by cl.33.2(b) of the Modern Award;
j)s.45 of the Act, by failing to pay Ms Yeh Sunday overtime rates as prescribed by cl.33.2(c) of the Modern Award;
k)s.45 of the Act, by failing to pay Ms Yeh evening penalty rates as prescribed by cl.34.2(a)(i) of the Modern Award;
l)s.535(1) of the Act by failing to make and keep records as prescribed by reg.3.32 of the Regulations;
m)s.535(1) of the Act by failing to make and keep records as prescribed by reg.3.33 of the Regulations;
n)s.535(1) of the Act by failing to make and keep records as prescribed by reg.3.34 of the Regulations;
o)s.535(1) of the Act by failing to make and keep records as prescribed by reg.3.36 of the Regulations;
p)s.535(1) of the Act by failing to make and keep records as prescribed by reg.3.40 of the Regulations; and
q)s.536 of the Act, by failing to provide Ms Yeh with pay slips within one day of payment for work performed by Ms Yeh.
Step 2: single course of conduct
The parties agreed that, although there were multiple contraventions of each civil remedy provision, the contraventions of each civil remedy provision should be treated as a single contravention. I accept that is the appropriate approach.
Step 3: grouped breaches
In addition, the parties have agreed, and I accept, that breaches (h), (i) and (j), being the overtime breaches, should be treated as a single grouped breach, and breaches (l), (m), (n), (o) and (p), being the record keeping breaches, should be treated as another single grouped breach.
The net effect of that is that the breaches for which penalties are to be imposed are 11 breaches, being the breaches of:
a)s.44 of the Act, by failing to pay Ms Yeh untaken accrued annual leave upon termination of employment as prescribed by s.90(2) of the Act;
b)s.44 of the Act, by failing to pay Ms Yeh for her absence on a public holiday as prescribed by s.116 of the Act;
c)s.44 of the Act, by failing to make a payment to Ms Yeh in lieu of providing notice of termination of employment as prescribed by s.117(2)(a) of the Act;
d)s.45 of the Act, by failing to pay Ms Yeh minimum hourly rates of pay as prescribed by cl.20.1 of the Modern Award;
e)s.45 of the Act, by failing to pay Ms Yeh Saturday penalty rates as prescribed by cl.34.1 of the Modern Award;
f)s.45 of the Act, by failing to pay Ms Yeh Sunday penalty rates as prescribed by cl.34.1 of the Modern Award;
g)s.45 of the Act, by failing to pay Ms Yeh public holiday penalty rates as prescribed by cl.34.1 of the Modern Award;
h)s.45 of the Act, by failing to pay Ms Yeh overtime rates for Monday to Friday as prescribed by cl.33.2(a) of the Modern Award, for Saturday as prescribed by cl.33.2(b) of the Modern Award and for Sunday as prescribed by cl.33.2(c) of the Modern Award;
i)s.45 of the Act, by failing to pay Ms Yeh evening penalty rates as prescribed by cl.34.2(a)(i) of the Modern Award;
j)s.535(1) of the Act by failing to make and keep records as prescribed by regs.3.32, 3.33, 3.34, 3.36 and 3.40 of the Regulations; and
k)s.536 of the Act, by failing to provide Ms Yeh with pay slips within one day of payment for work performed by Ms Yeh.
Step 4: the appropriate penalty for the breaches
a. the nature and extent of the conduct which led to the breach
The breaches involved significant underpayment of wages of one employee, Ms Yeh, and failure to keep proper records in respect of her employment. The breaches extended over the whole of Ms Yeh’s two periods of employment by the respondent, which amounted to about eight months in total.
The underpayments consisted of failure to pay minimum rates ($10 or $11 per hour instead of $17.49 or $18.02 per hour for ordinary time), failure to pay penalty rates (for work on Saturdays, Sundays, public holidays and evenings), failure to pay overtime (for work on weekdays, Saturdays and Sundays), failure to pay for absence on a public holiday, failure to give pay in lieu of notice and failure to pay accrued annual leave on termination. In the eight months Ms Yeh worked for the respondent, the respondent underpaid Ms Yeh a total of $33,169.05.
The record keeping contraventions consisted of:
a)failing to keep a record of whether Ms Yeh was part-time or full-time and permanent, temporary or casual;
b)failing to keep a record of the rate at which Ms Yeh was paid, the gross and net amounts paid to her, and whether she was entitled to any penalty rates or other loadings; and
c)failing to keep a record of Ms Yeh’s overtime, leave entitlements; and termination.
b. the circumstances in which that conduct took place
The respondent has operated a Taiwanese and Malaysian restaurant in Box Hill since February 2012. The respondent employed Ms Yeh on a full-time basis between 16 July 2014 and 9 November 2014 and then between 16 March 2015 and 5 July 2015 as a “kitchen hand”. However, she performed the work of a cook, grade 1 – level 2, under the Modern Award.
While she worked for the respondent, Ms Yeh was in Australia on a working holiday subclass 417 visa. When she began working with the respondent, she was 22 years old. She is a native speaker of Mandarin and has limited English skills. Most of her interactions with the applicant were conducted through an interpreter. Ms Yeh performed over 700 hours of overtime during her eight months of employment by the respondent. That averages about 20 hours per week of overtime. Ms Yeh has now returned to Taiwan.
c. the nature and extent of any loss or damage sustained
Ms Yeh was underpaid $33,169.05. However, after the applicant issued a findings of contravention letter to the respondent on 1 April 2016, the respondent repaid Ms Yeh the amount she was owed.
d. whether there had been similar previous conduct
There was no evidence of any previous similar conduct by the respondent.
However, it was drawn to the court’s attention that the respondent’s directors are directors of another company called Crystal Jade LA Mian Xio Long Bar Restaurant Pty Ltd that runs another restaurant. There was a request for assistance made to the applicant by or on behalf of two employees of Crystal Those matters did not result in court findings, but were resolved by way of infringement notices. Ultimately, the two employees were paid $1,900 and $970 respectively. The requests for assistance were made on 6 November 2015. The breaches in relation to Ms Yeh occurred before that.
The matters involving Crystal Jade concern a separate legal entity. For that reason, they cannot be regarded as prior breaches by the present respondent. Moreover, the timeline indicates that the breaches in relation to Ms Yeh occurred first.
e. whether the breaches arose out of the one course of conduct
This point has already been addressed.
f. the size of the business enterprise involved
The respondent accepted that it ran a mid-sized business. In any event, Tracey J said in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [28]:
No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does not it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction “must be imposed at a meaningful level” (citation omitted)
Similarly, in Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412, this court said at [27]:
Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to the Court’s consideration of penalty. … (citation omitted)
g. whether or not the breaches were deliberate
It was not submitted that the breaches were anything other than deliberate.
h. whether senior management was involved in the breach
It was not submitted that senior management was not involved in the breaches. It was conceded that senior management did not take adequate steps to ensure that the breaches did not occur.
contrition, corrective action and co-operation with the authorities
To assist with the investigation, the respondent compiled Excel spreadsheets to facilitate the calculation of the amounts owed to Ms Yeh.
The applicant received a request for assistance from Ms Yeh on 10 July 2015. After the applicant issued a “findings of contravention” letter to the respondent on 1 April 2016, the respondent repaid Ms Yeh the amount she was owed on 15 April 2016. The repayment is clearly corrective action, although it only occurred after the applicant had made findings against the respondent.
In his affidavit affirmed on 28 September 2016, Mr Kuo, a director of the respondent said:
4.I acknowledge and accept that the employment arrangements that were in place for Kuan-Wen Yeh (the Employee) with the Respondent were in contravention of the Fair Work Act 2009 (Cth) (FW Act) and the Restaurant Industry Award 2010 (the Award) in a number of respects and were totally unacceptable. There is no good excuse for the Employee’s employment arrangements with us.
5.I am truly apologetic and remorseful for what occurred and will endeavour to ensure that the Respondent fully complies with its obligations under the FW Act and the Award for all of its employees going forward. (emphasis in original)
There was no cross-examination of Mr Kuo. I accept that he does feel apologetic and remorseful. However, there was no evidence of any apology to Ms Yeh.
Mr Kuo also said in his affidavit affirmed on 28 September 2016, under the heading, “Corrective Action”:
6.To this end, earlier this year the Respondent developed and negotiated an enterprise agreement with its staff which was proposed to cover all of its employees. However, due to the uncertainty created by the impending decision of the Fair Work Commission regarding possible changes to penalty rates under the Award and other modern awards, the Respondent has decided not to proceed with introducing an enterprise agreement at the workplace for the time-being. Therefore the Award still applies to the Respondent.
7.We may revisit the idea of seeking to introduce an enterprise agreement at the workplace once the Fair Work Commission’s decision with respect to penalty rates is known.
8.On 1 April 2016, the Applicant issued a contravention letter to us regarding the Employee. In that letter, Ms Giouleas (Fair Work Inspector) wrote, among other matters, that the company owes “Miss Yeh a total of $33,410.20 (gross).” The letter is Annexure 19 to the SOAF (pages 99 -104).
9.Two weeks later, on 15 April 2016 the Respondent paid the full amount of $33,410.20 to the Employee. The payment is referred to in a letter of the Respondent’s solicitor dated 15 April 2016 which is Annexure 22 to the SOAF (page 114). This payment was made before 28 June 2016, the date on which the Applicant commenced this proceeding.
10.To help discharge the Respondent’s obligations under the Award and the FW Act and to try to ensure that no further contraventions are committed going forward, in July 2016 we purchased and introduced MYOB software for the business. Previously we relied upon Excel spreadsheets and handwritten notes for the payroll function.
11.The Respondent has also arranged for an employee to administer the MYOB system. This employee has undergone training on how to use MYOB, and has been assigned to spend approximately 8 hours per work on average to help carry out the payroll function.
12.The appropriate wage rate and entitlements for each employee have been entered into the MYOB system based on their hours of work. Pay slips from the MYOB system are generated and issued to staff fortnightly. (emphasis in original)
I accept that the system that the respondent has put in place reduces the likelihood that the respondent will underpay current and future employees. To that extent, the respondent has taken corrective action.
The respondent has co-operated with the authorities by entering into an agreed statement of facts, and has agreed to proposed penalties. The applicant acknowledged that the respondent had made admissions at the earliest opportunity and that its co-operation was a substantial mitigating factor. However, the applicant noted as a matter that “slightly” detracted from the respondent’s co-operation that it had not participated in a recorded interview with the respondent. In the context of this case, I consider that issue to be so slight as to be negligible.
j. the need to ensure compliance with minimum standards
The respondent in this case breached Ms Yeh’s minimum entitlements. Paying $10 or $11 per hour is an egregious departure from the mandated minimum rates of pay.
k. the need for specific and general deterrence
In relation to specific deterrence, Gray J observed in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170 at [37] that:
… Specific deterrence focuses on the party on whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future. Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur. …
In relation to general deterrence, Lander J noted in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65 at [93]:
… In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty … (citations omitted)
Similarly, in Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228 at 230-231; [2001] FCA 1364, Finkelstein J said:
… even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law’s disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct… .
The applicant submitted that, as the respondent continues to operate in the restaurant industry and as its directors operate other restaurants, specific deterrence was an important issue in this case. Moreover, the applicant submitted that Mr Kuo’s present intentions are not sufficient.
The respondent submitted that, as it had consented to an audit of its employment arrangements, and had engaged a trained MYOB payroll clerk, there were safeguards against recidivism.
I accept that the respondent has taken significant steps to reduce the likelihood of future breaches. However, because of the egregious nature of the breaches in this case, it seems to me that a penalty containing some measure of specific deterrence is necessary.
The applicant submitted that the high number of young workers with low skills in the restaurant industry, and the significant number of requests for assistance received by the applicant from employees in the restaurant industry, called for significant weight to be given to general deterrence in fixing a penalty.
The respondent acknowledged that general deterrence is a relevant factor in this matter, and submitted that the agreed penalty range adequately addressed that issue.
I consider that general deterrence is a very significant factor in this case, for the reasons given by the applicant.
Other issues
The parties agreed that a discount for admissions of 25% was appropriate in this case.
In Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; (2008) 247 ALR 714; (2008) 171 IR 455; [2008] FCAFC 70, Stone and Buchanan JJ held at [75]:
A conventional consideration in assessing a discount in a criminal case for a plea of guilty is the stage in the proceedings at which the plea is entered. Normally, the maximum discount for this factor, sometimes thought to be 25%, is reserved for a plea made at the first reasonable opportunity …
In Fair Work Ombudsman v Bedington [2012] FMCA 1133 Jarrett FM held at [87]:
The cases indicate that a discount on the penalty to be imposed is appropriate where there has been co-operation and admissions early in the course of an investigation or soon after the commencement of proceedings. Such discounts range as high as 30% in some cases. …
I accept that it is appropriate to give a discount of 25% for admissions in all the circumstances of this case.
Step 4: the appropriate penalty
The parties agreed that the appropriate penalty range was as set out in annexure A to the applicant’s submissions, which is as follows:
Maximum Penalties
(prior to grouping)$1,116,000 Maximum Penalties
(post grouping)$509,000 Discount for admissions 25% Maximum
(including 25% discount)$381,750 Contraventions Maximum Inc. discount % Amount Ordinary hours
Clause 20.1$51,000 $38,250 70-75% $26,775 - $28,688 Saturday penalty rates
Clause 34.1$51,000 $38,250 50-55% $19,125 - $21,038 Sunday Penalty Rates
Clause 34.1$51,000 $38,250 10-20% $3,825 - $7,650 Public Holiday penalty rates
Clause 34.1$51,000 $38,250 55-65% $21,038 - $24,863 Overtime
Clauses 33.2(a), 33.2(b) & 33.2(c)$51,000 $38,250 70-80% $26,775 - $30,600 Evening penalty
Clause 34.2(a)(i)$51,000 $38,250 0% 0 Public holiday absence
Section 116$51,000 $38,250 0% 0 Payment in lieu of notice
Section 117(2)(a)$51,000 $38,250 40-50% $ 15,300 - $19,125 Annual leave on termination
Section 90(2)$51,000 $38,250 45-55% $17,213 - $21,038 Record keeping
Regulations 3.32, 3.33, 3.34, 3.36 & 3.40$25,000 $18,750 60-70% $11,250 - $13,125 Pay slips
Section 536$25,000 $18,750 60-70% $11,250 - $13,125 TOTAL $152,551 - $179,252 RECOMMENDED PENALTY RANGE
(after 40% totality reduction)$91,531 - $107,551
It can be seen that, the percentages in the “%” column are the stated percentages of the amounts discounted for admissions in the “Inc. Discount” column rather than percentages of the amount stated in the “Maximum” column. I do not consider that to be a helpful approach. A better approach would be to state the percentages of the maximum penalty. Restating that table, with the percentage column showing the reduction from the maximum penalty in the proposed penalty, results in the following:
Maximum Penalties
(prior to Grouping)$1,116,000 Maximum Penalties
(post grouping)$509,000 Discount for admissions 25% Maximum
(including 25% discount)$381,750 Contraventions Maximum % Amount Ordinary hours
Clause 20.1$51,000 53-56% $26,775 - $28,688 Saturday penalty rates
Clause 34.1$51,000 38-41% $19,125 - $21,038 Sunday Penalty Rates
Clause 34.1$51,000 8-15% $3,825 - $7,650 Public Holiday penalty rates
Clause 34.1$51,000 41-49% $21,038 - $24,863 Overtime
Clauses 33.2(a), 33.2(b) & 33.2(c)$51,000 53-60% $26,775 - $30,600 Evening penalty
Clause 34.2(a)(i)$51,000 0% 0 Public holiday absence
Section 116$51,000 0% 0 Payment in lieu of notice
Section 117(2)(a)$51,000 30-38% $ 15,300 - $19,125 Annual leave on termination
Section 90(2)$51,000 34-41% $17,213 - $21,038 Record keeping
Regulations 3.32, 3.33, 3.34, 3.36 & 3.40$25,000 45-53% $11,250 - $13,125 Pay slips
Section 536$25,000 45-53% $11,250 - $13,125 TOTAL $152,551 - $179,252 RECOMMENDED PENALTY RANGE $91,531 - $107,551
The parties did not explain why they had arrived at different percentages for different breaches. In any event, I consider penalties at the top of the proposed range are appropriate in this case. The underpayments of minimum wages were very significant and deliberate. Ms Yeh was a young and vulnerable worker, who the respondent grossly exploited. It is necessary for the court to signal its disapproval of such conduct in strong terms, both to the respondent and to the industry generally. If the respondent had not co-operated with the authorities, taken corrective action and shown a degree of contrition, the penalties would have been significantly higher.
Step 5: the totality principle
In relation to the check that is required by the totality principle, I consider that the aggregate penalties indicated above are appropriate for the whole of the contravening conduct engaged in by the respondent.
There will be orders accordingly.
I certify that the preceding one hundred and forty-four (144) paragraphs are a true copy of the reasons for judgment of Judge Riley.
Date: 20 February 2017
at [53].
- AGLC
- Fair Work Ombudsman v Food Republic Pty Ltd [2017] FCCA 263
- Case
- [2017] FCCA 263
- Decision Date
CaseChat Overview and Summary
The primary legal issue before the Court was whether Food Republic had contravened section 44 of the *Fair Work Act 2009* (Cth) by failing to pay employees at the rates prescribed by the relevant award, and whether this failure constituted a contravention of section 50 of the *Fair Work Act 2009* (Cth) by failing to pay minimum wages. The Court was required to determine the extent of the underpayments and whether Food Republic had a valid defence, such as a genuine mistake.
Judge Riley found that Food Republic had indeed contravened the *Fair Work Act 2009* (Cth) by failing to pay its employees their minimum lawful entitlements, including overtime and penalty rates, as required by the applicable award. The Court rejected Food Republic's defence of genuine mistake, finding that the company had not taken reasonable steps to ensure compliance. The Court applied the principles of statutory interpretation to the relevant provisions of the Act and the award, emphasizing the employer's obligation to ensure correct payment of wages.
Consequently, the Court ordered Food Republic to pay pecuniary penalties totalling $10,800 for the contraventions. In addition, Food Republic was ordered to rectify the underpayments to the affected employees, with the total amount of back pay to be determined.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
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Ratio Decidendi
Legal Principle Established
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