Fair Work Ombudsman v G and Z United Pty Ltd
[2019] FCCA 465
•1 March 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v G & Z UNITED PTY LTD & ANOR | [2019] FCCA 465 |
| Catchwords: INDUSTRIAL LAW – Penalty – contraventions of modern award relating to remuneration – failure to keep records – liability conceded – appropriate penalty to be imposed – relevant considerations – applicable penalty – accessorial liability. |
| Legislation: Crimes Act 1914 (Cth), s.4AA Fair Work Act 2009 (Cth), ss.12, 45, 535, 536, 539, 546, 550, 556, 557 Fair Work Regulations 2009 (Cth), regs.3.32(c), 3.46 |
| Cases cited: Australian Building and Construction Commissioner v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union & Ors (No.2) [2017] FCA 367 Fair Work Ombudsman v Lohr [2018] FCA 5 Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | G & Z UNITED PTY LTD (ACN 141 588 132) |
| Second Respondent: | DANMIN ZHANG |
| File Number: | SYG 1735 of 2017 |
| Judgment of: | Judge Baird |
| Hearing dates: | 20 March 2018 17 April 2018 |
| Date of Last Submission: | 20 March 2018 |
| Delivered at: | Sydney |
| Delivered on: | 1 March 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr P Moorhouse |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Counsel for the Respondent: | Mr C Ryan |
| Solicitors for the Respondent: | Hicksons Lawyers |
ORDERS
THE COURT DECLARES THAT:
The First Respondent, G & Z United Pty Ltd, contravened each of the following civil remedy provisions:
(a)section 45 of the Fair Work Act2009 (Cth), by failing to pay to Ms Qian Zhou (Ms Zhou) the minimum rate of pay prescribed by cl.17 of the Fast Food Industry Award 2010.
(b)section 45 of the Act, by failing to pay to Ms Zhou the casual loading prescribed by cl.13.2 of the Award.
(c)section 45 of the Act, by failing to pay to Ms Zhou the Saturday penalty rates prescribed by sub-cl.25.5(b) of the Award.
(d)section 45 of the Act, by failing to pay to Ms Zhou the Sunday penalty rates prescribed by sub-cl.25.5(c)(ii) of the Award.
(e)section 45 of the Act, by failing to pay to Ms Zhou the public holiday rates prescribed by cl.30.3 of the Award.
(f)section 45 of the Act, by failing to pay to Ms Zhou the evening penalty rates prescribed by sub-cl.25.5(a)(i) of the Award.
(g)section 45 of the Act, by failing to pay to Ms Zhou the special clothing allowance prescribed by sub-cl.19.2(b)(ii) of the Award.
(h)section 45 of the Act by failing to inform Ms Zhou of the terms of her engagements as required by cl.10.2 of the Award.
(i)section 45 of the Act, by failing to inform Ms Zhou in writing of her classification under the Award as required by cl.16.1 of the Award.
(j)subsection 535(1) of the Act, by failing to make and keep records in respect of Ms Zhou as prescribed by sub-reg.3.32(c) of the Regulations.
(k)subsection 536(2) of the Act, by failing to issue payslips to Ms Zhou that included all of the information required by reg.3.46 of the FW Regulations.
The Second Respondent, Ms Danmin Zhang, was involved (within the meaning of sub-s.550(2) of the Act) in each of the First Respondent’s contraventions identified in paragraph 1 above.
THE COURT ORDERS THAT:
The First Respondent pay a total penalty of $56,183, pursuant to s.546(1) of the Act, for committing the contraventions set out in paragraph 1 above.
The Second Respondent pay a total penalty of $9,255, pursuant to s.546(1) of the Act, for her involvement in the contraventions set out in paragraph 1 above.
Pursuant to s.546(3)(a) of the Act, the Respondents are to pay the penalty amounts to the Consolidated Revenue Fund of the Commonwealth, within 90 days of this order.
The Applicant has liberty to apply on 7 days’ notice in the event that any of the preceding orders are not complied with.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1735 of 2017
| FAIR WORK OMBUDSMAN |
Applicant
And
| G & Z UNITED PTY LTD (ACN 141 588 132) |
First Respondent
| DANMIN ZHANG |
Second Respondent
REASONS FOR JUDGMENT
Introduction
This is a penalty determination arising out of civil penalty proceedings brought by the applicant, the Fair Work Ombudsman. The Ombudsman seeks declarations, the imposition of pecuniary penalties, and other orders against the first respondent, G & Z United Pty Ltd (G&Z), and the second respondent, Ms Danmin Zhang, in relation to admitted contraventions of employment law obligations under the Fair Work Act 2009 (Cth) owed in respect of one employee of G & Z, Ms Qian Zhou (also known as Doris). Ms Zhang is the wife of the sole director and secretary of G & Z, Mr Yong Gao.
G&Z operated two Subway fast food franchises located, respectively at Hampton Road, Artarmon (Artarmon Subway), and at Bridge Street, Stanmore (Stanmore Subway) (together the Stores) for periods encompassing Ms Zhou’s employment. Ms Zhou was employed by G&Z as a sandwich hand for 2 periods, the first from 29 October 2014 to 19 June 2015, and the second from 14 October 2015 to 18 April 2016.
Ms Zhou was employed primarily at Stanmore Subway, with some responsibility for opening and closing the store, and cleaning it upon closing. Ms Zhou received a flat hourly rate of $14.00 upon her engagement until 13 January 2015, when she negotiated a pay increase to $14.50 per hour. She was paid that hourly rate for the remainder of her first period of employment, and throughout her second period of employment.
The admitted contraventions
The respondents have admitted that G&Z failed to pay 7 separate monetary entitlements under the Fast Food Industry Award 2010 to Ms Zhou, being minimum wages, casual loading, Saturday, Sunday, evening, and public holiday penalty rates, and a special clothing allowance. This resulted in a total underpayment of $16,345.94. As I describe below, this underpayment has been rectified.
The underpayment contraventions arose because G&Z paid a flat hourly rate to Ms Zhou that was at all times below the ordinary minimum wage prescribed by the Award. The applicable ordinary minimum hourly rates of pay prescribed by the Award were:
(a)$18.52 in the period from 1 July 2014 to 30 June 2015; and
(b)$18.99 in the period from 1 July 2015 to 30 June 2016.
The further admitted contraventions of the Act comprise failures of G&Z to inform Ms Zhou about the terms of her engagement, and her classification under the Award, and failures to make and keep records in respect of Ms Zhou as prescribed by reg.3.32(c) of the Fair Work Regulations 2009 (Cth), and to provide her with payslips that included all of the information required by reg.3.46 of the Regulations.
The complaint and the response
In August 2016, Ms Zhou lodged a complaint with the Ombudsman that G&Z had underpaid her various employee entitlements. Following an investigation conducted by the Ombudsman, with which the respondents and Mr Gao co-operated, on 14 March 2017 the Ombudsman, by its inspector, Ms Walsh, issued a Findings of Contravention letter to G&Z, outlining the proposed contraventions, stating the total underpayment calculated owed to Ms Zhang of $16,345.94, and demanding correction of the underpayment in full by 28 March 2017. The letter states that if the respondents disagreed with the findings they could write to Ms Walsh by 28 March 2017 providing details and evidence.
Mr Gao responded by email on 24 March 2017, confirming that G&Z accepted the contraventions and underpayment owed, and requesting that the Ombudsman consider Ms Zhou part time during her second period of employment (rather than casual), and requesting consideration be given to a repayment plan of $500 per week. On 27 March 2017 Ms Walsh rejected those requests. Ms Walsh asked Mr Gao to go to the bank to borrow money, which he did. On 28 March 2017 G&Z paid Ms Zhou a first instalment of $5,000, and on 29 March 2017 G&Z paid Ms Zhou the balance of the total underpayment amount owed to her. That is, the respondents had both admitted G&Z’s contraventions and repaid the total amount determined payable by the Ombudsman within 15 days of notification, and within a day of the time specified.
This proceeding
The Ombudsman commenced this penalty proceeding in this Court by application dated 1 June 2017, and with a first Court date of 28 June 2017. All contraventions alleged in the statement of claim filed in the proceeding were admitted by the respondents by a statement of agreed facts filed on 20 October 2017. An additional fact was agreed to by the time of the hearing on penalty before me and set out in an Amended Statement of Agreed Facts: that Ms Zhang was aware from December 2015 that the Award applied to Ms Zhou. The Agreed Facts is annexed to, and forms part of these reasons. Thus, the principal and accessorial contraventions asserted have been admitted.
The essential facts of the admitted contraventions, including the relevant clauses of the Award, the hours and shifts worked by Ms Zhou, Ms Zhou’s entitlements, the corresponding underpayments, sub-totals and totals are set out in the Agreed Facts from [25] to [48]. G&Z has admitted breaching ss.45, 535 and 536 of the Act. Ms Zhang has admitted that she was directly or indirectly, knowingly concerned in or a party to G&Z’s contraventions of the Act within the meaning of s.550 of the Act, and is therefore taken to have committed those contraventions herself pursuant to s.550(1) of the Act.
Whilst the parties have agreed the form of declarations and ask the Court to make those declarations, there was no agreement as to the quantum of the penalties that should be imposed.
The parties’ proposed ranges of penalties
Counsel for the Ombudsman, Mr Moorhouse, says that there are 11 separate contraventions (after grouping multiple instances of like conduct) admitted by the respondents, 9 of which are each subject to a maximum penalty, the Ombudsman submits, in the case of G&Z, of $54,000, and in the case of Ms Zhang, of $10,800, with the other 2 contraventions each being subject to a maximum penalty of $27,000 in the case of G&Z, and $5,400 in the case of Ms Zhang. I note that these calculations are made on the basis that the higher penalty unit of $180, in effect from 31 July 2015, be applied rather than the superseded penalty unit of $170.
Having regard to the approach urged by it to the statutory course of conduct and grouping, the Ombudsman submits that the maximum penalties which the Court can impose is $540,000 on the company, and $108,000 on Ms Zhang. It urges the Court to impose penalties on G&Z and Ms Zhang, having regard to various matters, in the range of $128,520 to $185,895 for G&Z, and $32,130 to $41,310 for Ms Zhang.
The respondents’ counsel, Mr Ryan, submits that the contraventions should be grouped into 2 courses of conduct: the first comprising the underpayment of monies (payment of proper Award rates), of which there are 7 breaches, and the second course of conduct comprising administration pursuant to defaults of the Award, of which there are 4 breaches. The respondents submit that the penalty for G&Z for each of the 7 first course of conduct breaches should be $800 per breach, and the penalty for each of the 4 second course of conduct breaches should be $1,250 per breach, being a total of $10,600. In relation to Ms Zhang, for her accessorial liability, counsel submits that the applicable penalty for her culpability is limited to the period from December 2015 to 18 April 2016, approximately one third of the breach period, and one third of the company’s share of responsibility, being a total penalty for Ms Zhang of $3,500 rounded to the nearest one hundred dollars.
As will be apparent later in these reasons, I agree with the Ombudsman’s identification of the contraventions (11 contraventions) and reject the respondents’ further grouping of the contraventions. The contraventions were each concerned with discrete obligations required under the Award to be observed, or obligations required by the Regulations: Fair Work Ombudsman v Lohr [2018] FCA 5, at [28]-[34], following Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153, [2014] FCAFC 62. In the circumstances of this proceeding, however, I am not persuaded by the Ombudsman’s submission that the appropriate penalties to be imposed by the Court should be in the order of the amounts urged by it.
Factual background
The respondents and G&Z’ business
G&Z is a ‘husband and wife’ company. It was incorporated in January 2010, with Mr Gao the sole director, and Ms Zhang shortly thereafter appointed as company secretary. Ms Zhang became a co-director in November 2011, and ceased to be a director and secretary on 14 October 2016. G&Z’s sole business during the period of the admitted contraventions was as a Subway franchisee operating the 2 Stores. Those franchises have since been terminated. G&Z has admitted that it was a “constitutional corporation” within the meaning of s.12 of the Act, and a “national system employer” within the meaning of s.14 of the Act.
Mr Gao was born in China in 1984, moved to New Zealand as an 18 year old to study, and subsequently completed an engineering degree. He moved to Australia in 2008 to complete a Masters of Engineering (Telecommunications Networking). Ms Zhang was born in China in 1989, moved to Australia as an 18 year old, to study at the Sydney campus of CQ University, initially focussing on accounting, but changed to marketing. She and Mr Gao began a relationship in 2009, and married in 2013. Ms Zhang had their first child at the beginning of August 2016.
Self-evidently, English is the second language of both Mr Gao and Ms Zhang. They each attested to speaking and understanding English in most contexts. Both were cross‑examined. My observations of their individual comprehension of English under cross-examination was that Mr Gao appeared to understand the literal meaning of questioning, but not always the context, and I was not persuaded that Ms Zhang always clearly understood the questions put to her, particularly as to her knowledge, understanding, and awareness at particular points in time.
In March 2010, Mr Gao entered into a franchise agreement with Subway Systems Australia Pty Ltd to take over the operation of Artarmon Subway. Mr Gao personally paid approximately $320,000 to purchase the franchise for Artarmon Subway, providing those purchase moneys to G&Z for its purchase of the business of the franchise of Artarmon Subway from the previous owner of the business.
In June 2012, Mr Gao entered into a franchise agreement with Subway Systems to take over the operation of Stanmore Subway. He personally paid approximately $250,000 to purchase the franchise for Stanmore Subway, providing those purchase moneys to G&Z for its purchase of the business of the franchise of Stanmore Subway from the previous owner of the business.
Prior to assuming responsibility for the Artarmon store Mr Gao underwent some induction training in Brisbane with Subway Systems, which appears to have included some training around awards (at least being the Award) and award compliance. Subway Systems does not appear to have required or provided any further or ongoing training of its franchisee. Ms Zhang did not undergo any training.
G&Z was the operating company of the franchises for the Stores. It employed the staff for the 2 Stores. At the start of the franchise for Artarmon Subway Mr Gao received a generic blank payslip template from Subway Systems (on its face being a generic template originating from the Ombudsman), and a “spreadsheet” from the previous franchisee that that franchisee had used to calculate the wages owing to its staff. At the end of each paycycle thereafter Mr Gao used that spreadsheet and the blank payslip template to make a new spreadsheet to calculate payments owed to staff corresponding to the hours they worked.
Mr Gao and Ms Zhang both worked in and managed the running of the Artarmon Subway store, and after Mr Gao acquired the franchise for Stanmore Subway, subsequently both divided their time between the 2 Stores. Ms Zhang initially only worked part time whilst completing her studies, and then moved to working more hours at the end of 2011. Ms Zhang’s responsibilities at that time included managing G&Z’s employees in terms of customer service standards, overseeing cleaning, stock management and deliveries. Mr Gao’s responsibilities included recruitment, rostering and payroll.
From 2010 until 1 October 2014, Mr Gao was solely responsible for hiring, rostering and payroll management of all G&Z employees. In the period from 2012 (following taking over Stanmore Subway) G&Z had approximately 30 employees in total over that time on its rosters across the 2 Stores. The Artarmon Subway required a pool of around 4 to 5 staff to cover all shifts, and the Stanmore Subway required around 3 staff to cover all shifts. However, when Ombudsman personnel visited the Stanmore Subway in October 2016, and the Artarmon Subway in early March 2018, there was only 1 person on shift in the Store (being Ms Zhang), and when they visited the Artarmon Subway in January 2017 there were 2 people working there (including Ms Zhang).
On about 1 October 2014, Mr Gao travelled to China urgently in relation to a medical emergency with his father - an operation for a tumour on his jaw. He says that in his haste he did not think to instruct Ms Zhang before he left about the regulatory details of G&Z’s payroll. He returned to Australia in January 2015, but did not resume responsibility for management of rostering or payroll at either Store whilst Ms Zhou was employed by G&Z (i.e., until after April 2016). It appears that on his return to Australia, to the extent he worked in G&Z’s business, Mr Gao worked mainly at Artarmon Subway. He rarely if ever met Ms Zhou, although he knew who she was.
Whilst Mr Gao was in China, Ms Zhang managed the Stores on her own, including payroll and rostering, and working extra shifts. 2 staff members resigned, and Ms Zhang was working close to 70 hours a week. She placed an advertisement on the online platform Gumtree for staff experienced in working in a Subway store. Ms Zhou responded. Ms Zhang attests that she had not had any dealings with the Australian award system at that time. She says she mistakenly thought that wages were settled by agreement with the prospective employee. I describe Ms Zhang’s interview with Ms Zhou, and her employment further below at [34]-[44].
Ms Zhang gave evidence that Ms Zhou was the only person Ms Zhang employed for G&Z, and that Ms Zhang did not otherwise undertake recruitment for G&Z. I accept her evidence.
After Mr Gao returned from China, he resumed responsibility for recruitment, although as turnover in the Stores was decreasing few people were hired. Ms Zhang continued to be responsible for payroll after Mr Gao’s return, and until August 2016.
In about July 2016, Mr Gao received an email from Subway Systems reminding franchisees to post the Award on the wall in the workplace. Thenceforth he posted a copy of the Award rates on the wall. Ombudsman personnel confirmed that notice of the Award rates and information was posted on the store wall when visiting Artarmon Subway in January 2017.
Ms Zhang was pregnant during the last month of 2015 and the first half of 2016. She gave birth to their first child on 1 August 2016. During the last week of August she returned to hospital with flu and a fever, being unable to feed her baby.
Whilst Ms Zhang was attending to their newborn, and in hospital, Mr Gao attempted to cover her shifts at the Stores. The first time he became aware of Ms Zhou’s complaint was on 22 August 2016, when an officer of the Ombudsman, Ms Gwen Carbone, called him to inform him that the Ombudsman had issued a notice to produce, which she then emailed him. Mr Gao responded providing documents as he was able to locate them over the next few weeks, including documents that had been placed in storage. Ms Zhang assisted after the end of August.
Ms Zhang attests, and I accept, that when she returned to work later in August 2016 after the birth of her baby, she took over payroll and satisfied herself that she was processing the payroll in accordance with the Award and that the payslips had all the required information. She made sure that the contract used by G&Z to hire new staff stated their classification under the Award and their status as full time, part time or casual employee.
In August 2016 Mr Gao attempted to contact Ms Zhou to apologise. He could not reach her by telephone or text, and attended her workplace. Ms Carbone telephoned him a day or so later and told him to the effect, “Don’t contact Doris again”. I accept that evidence. Ms Carbone has since left the employ of the Ombudsman, and she did not give evidence. I do not accept the Ombudsman’s submission that, notwithstanding Ms Carbone’s direct prohibition on contact, the respondents should have found a way to apologise to Ms Zhou, and that the circumstance that the respondents did not apologise to Ms Zhou should be taken into account adversely in determining penalty.
Ms Zhou and her employment by G&Z at the Stores
Ms Zhou arrived in Australia in October 2010 as a 22 year old from the People’s Republic of China, and subsequently graduated with a Masters in Engineering Science from the University of New South Wales. Mandarin is her native language, and in her affidavit read in the proceeding she attests that she speaks English fluently. She is now an Australian citizen, however she says, and it is an Agreed Fact, that during her employment with G&Z she was subject to a Skilled Nominated Visa, subclass 190.
Ms Zhou began working as a sandwich hand for G&Z on 29 October 2014, after responding by email to an online advertisement in Gumtree. She was interviewed by Ms Zhang, first by phone and then in person. In her resume, a copy of which is annexed to her affidavit, and which she provided to Ms Zhang, she described herself as having “rich experience in Subway” and listed her previous experience, inter alia, as having worked as a “sandwich artist” at 2 other Subway stores in the previous 12 months. She also represented that prior to working at Subway, she had previously worked as a waitress at a fast food outlet at Sydney International Airport, and earlier as a barista (part-time) at Donut King, commencing her first job in Australia in late 2011.
Ms Zhang in her affidavit evidence says that when she interviewed Ms Zhou she asked Ms Zhou what her desired wage rate was, and that Ms Zhou responded “$14.00 or more”, and “that is what I’m getting paid working in the Subway Surry Hills and Subway Leichardt stores”. Ms Zhang offered to match that rate, and a few days later contacted Ms Zhou and told her she was hired. Ms Zhou’s affidavit evidence is to the same effect, save that Ms Zhou also says, inconsistently with her resume, that her previous job at the other Subway stores was her first job in Australia. Ms Zhou says that she thought that $14.00 per hour was low but she just thought that it was Subway’s standard wages.
Initially Ms Zhou continued to work at the other (third party operated) Subway stores as well, but in January 2015 she informed Ms Zhang that she didn’t want to work at those other stores, and requested a higher pay and more hours to work for G & Z. Ms Zhang says she offered $14.50 per hour, but did not offer more money at that time as the business was not doing that well. Ms Zhou’s evidence is to the same effect. From 15 January 2015, G&Z paid Ms Zhou a flat rate of $14.50 per hour.
Ms Zhou says she primarily worked out of Stanmore Subway, working at Artarmon Subway when it was really busy, on about 10 occasions in total. Ms Zhou ceased working with G & Z in her first period of employment with the company in June 2015, and returned to China to get married and visit her family between 17 June and 13 October 2015.
In her affidavit Ms Zhou says that the reason she wanted to quit working for G & Z was that she had found a full-time job as a travel consultant at “AU Trip Travel Consultants”. Ms Zhou says that in October 2015 on her return to Australia from China, Ms Zhang contacted her, and asked for her help to work one day a week, which she agreed to do. Ms Zhou quit working for G & Z the second time in April 2016, informing Ms Zhang on WeChat that she was quitting. She says that working 2 jobs (at AU Trip and Stanmore Subway) was too much for her.
In her affidavit Ms Zhou says that she lodged her complaint with the Ombudsman in August 2016 when she realised that she had been underpaid after speaking with her husband. Inconsistently with her evidence of her full-time employment with AU Trip, and her discussion with her husband, later in her affidavit she then says that she applied for new jobs because she wasn’t earning enough money at G & Z, and it was when applying for new jobs that she realised she was underpaid the whole time. She also claimed that because of what she was paid by G&Z she “never had enough money and had to rely on my husband to pay all of our household bills and expenses”.
Ms Zhou said she “had kept” her uniform from her “previous employer”, and used it when working with G&Z. The evidence establishes that initially after commencing employment with G&Z Ms Zhou continued to work at the third party operated Subway stores.
As I have stated, Ms Zhou was paid a fixed hourly rate of $14 from 29 October 2014 to 13 January 2015, and $14.50 from thereafter until the end of her first employment period, and throughout her second period of employment. The flat rate applied during the weekday, on evenings, Saturdays, Sundays, and public holidays.
Ms Zhou was not cross-examined. Throughout her affidavit Ms Zhou makes claims that are inconsistent with the documentary evidence, and with the chronology of events, including her testimony in other parts of her affidavit. Given the inconsistencies in her affidavit evidence, I do not accept her assertions where they are inconsistent with the documentary evidence or evidence of other witnesses, or where her evidence is argumentative, for example that the Subway job was her first job in Australia, that she had simply “kept” the uniform from her “previous employer”, and her claim that her wages from G&Z were the sole cause of her claimed reliance on her husband, in the face of a concurrent full-time position working with AU Trip.
The parties before me agreed that at all material times during Ms Zhou’s employment by G&Z:
(a)G&Z was bound by the Act and Regulations,
(b)G&Z was covered by the Award with respect to the employment of Ms Zhou;
(c)Ms Zhou was properly a casual employee under clauses 11, 12.1 and 12.6 of the Award; and
(d)Ms Zhou was properly classified as a “Fast Food Employee Level 1” under clause B.1 of Schedule B to the Award.
Post contravention events
By letter dated 13 June 2017, Subway Systems gave Mr Gao notice of breach of the franchise agreements and that it intended to terminate the agreements giving 90 days’ notice. It referred to the Ombudsman’s notice to G&Z of 25 May 2017 which described the contraventions, the underpayments and the repayment to Ms Zhou, and indicated an intention to commence proceedings against G&Z and Ms Zhang. Subway Systems gave Mr Gao 60 days to remedy the default, but stated that the only acceptable remedy was for G&Z to transfer the franchise businesses to another party approved by Subway Systems and to effect the sales within that time.
Subway Systems subsequently extended time for Mr Gao, and G&Z, as the franchisee operating company, to find acceptable purchasers of the Stores. Mr Gao says he found 3 potential purchasers for Stanmore Subway, but each of those potential purchasers advised him that their application was refused by Subway Systems. On about 24 November 2017, Subway Systems terminated the franchise agreement in relation to Stanmore Subway. The lease for Stanmore Subway store was surrendered to the landlord.
So too, in relation to Artarmon Subway, Mr Gao sought to find a buyer. There were communications with Subway Systems about what remodelling of the Artarmon store was required. Subway Systems rejected several potential purchasers of Artarmon Subway proposed by G&Z and Mr Gao in the period July 2017 to March 2018. On 31 January 2018, it cancelled Mr Gao’s franchise agreement for Artarmon Subway. On 11 March 2018, the entity Subway Realty Pty Ltd, as sub-lessor of the premises, took possession of the Artarmon store.
The respondents’ financial and asset position
The Ombudsman asserts that the respondents have capacity to pay the amount of penalties that it seeks to be imposed.
The bank statements in evidence as at the date of hearing show that G&Z has less than $2,000 in its accounts. Neither G&Z nor Mr Gao received any money upon termination of the franchises or for the loss of the Stores and the business. Its tax return shows that in 2017 financial year, it had a loss of $44,000 (approximately).
As at the time of the hearing before me Mr Gao was the manager of Gallery Automotive Pty Ltd, a warehouse that sold used motor vehicles, and he was responsible for its day to day operations. Gallery Automotive paid Mr Gao $22,000 salary in the 2017 financial year. Its tax return for that year shows a loss of $77,570. Mr Gao is its sole employee. He spends approximately 20 hours a week working in that business. It does not pay him a regular income. Ms Zhang is the sole shareholder and director of Gallery Automotive.
Ms Zhang is not in paid employment. She works full time as the carer of her young child. Her bank accounts, including accounts jointly held with Mr Gao, show total balances of less than $1,500. Ms Zhang received a tax refund of $1,600 on a 2017 taxable income of $19,486.
Ms Zhang owns an investment unit in Asquith, Sydney, purchased in late 2016 for $730,000. It is subject to 2 mortgages for a total of approximately $530,000. As at the date of the hearing it was tenanted.
Ms Zhang and Mr Gao are tenants-in-common of their matrimonial home in Rydalmere, purchased in late 2017.
Legislation, relevant legal principles, admitted liability
Admitted liability of G&Z
Section 45 of the Act specifies that a person must not contravene a term of a modern award. It is not in dispute that the Award (that is, the Fast Food Award 2010) is a modern award.
Pursuant to sub‑ss.535(1) and (2) of the Act, during the period of an employee’s employment, an employer such as G&Z is required to make and keep for 7 years employee records of the kind, and containing information, prescribed by the Regulations. Relevantly in relation to employment of Ms Zhou, G&Z was required to make and keep employee records required by reg.3.32(c) specifying whether her employment was full‑time or part‑time, and permanent, temporary or casual.
Pursuant to sub‑ss.536(1) and (2) of the Act, G&Z was required to give a payslip to Ms Zhou within one day of paying her, in the form, and containing information, prescribed by the Regulations, relevantly, (i) as required by reg.3.46(1), specifying the date on which the payment was made, (ii) as required by reg.3.46(3), specifying the hourly rate of pay, and (iii) as required by reg.3.46(5), specifying the amount of any superannuation contribution made and the superannuation fund.
As I have said at [3]-[5] above, the Award required G&Z to pay Ms Zhou certain minimum rates of pay, casual loading, Saturday penalty rates, Sunday penalty rates, public holiday penalty rates, evening penalty rates, and a special clothing allowance per shift. Instead, G&Z paid Ms Zhou a flat rate, variously $14 and $14.50 per hour. G&Z has admitted that it contravened s.45 of the Act by failing to pay Ms Zhou the specified rates prescribed by the clauses of the Award, as set out in the Agreed Facts, by failing to tell Ms Zhou about the terms of her engagement as required by clause 10.2 of the Award, and by failing to tell her about her classification under the Award as required by clause 16.1 of the Award.
As a consequence, as it has admitted, G&Z failed to make and keep records in respect of Ms Zhou as prescribed by reg.3.32(c) in contravention of s.535(1) of the Act, and it failed to provide Ms Zhou with pay slips that included all of the information required by reg.3.46 in contravention of s.536(2) of the Act. It has admitted that it underpaid Ms Zhou a total of $16,345.94. In those circumstances, G&Z has contravened ss.45, 535(1) and 536(2) of the Act.
Sections 45, 535 and 536 are civil remedy provisions: sub-s.539(1), and sub‑s.539(2), items 2, 29.
Accessorial liability of Ms Zhang
Section 550(1) of the Act provides that a person “who is knowingly involved in a contravention of a civil remedy provision is taken to have contravened that provision”. Subsection (2) determines when a person is “involved in a contravention”, relevantly, if they have “been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention”: sub‑s.550(2)(c).
Ms Zhang has admitted that she was aware from December 2015 that the Award applied to Ms Zhou. By reason of the Agreed Facts Ms Zhang has admitted that she:
(a)was the person who engaged Ms Zhou to work for G&Z,
(b)knew that Ms Zhou worked for G&Z as an employee,
(c)was a person who, on behalf of G&Z, had control over Ms Zhou’s employment,
(d)was a person responsible for ensuring that it complied with its legal obligations to Ms Zhou under the Act and Regulations,
(e)was the person initially responsible for determining the days and hours Ms Zhou worked,
(f)knew those days and hours,
(g)knew the rates of pay paid to her by G&Z, and that she was paid the same hourly rate regardless of when she worked, and
(h)was a person responsible for making payments, and creating and sending pay slips to Ms Zhou and for keeping employee records on behalf of G&Z in relation to Ms Zhou.
As I have said above at [10], Ms Zhang has admitted that at all material times she was directly or indirectly, knowingly concerned in or party to G&Z’s contraventions. In the circumstances that I have set out in greater detail elsewhere in these reasons, I find that Ms Zhang was involved in each of G&Z’s contraventions within the meaning of sub‑s.550(2)(c) of the Act in the period from December 2015 to April 2016, and so is taken to have contravened the same provisions.
Principles regarding penalty
As I am satisfied that both G&Z and Ms Zhang have contravened civil remedy provisions, under s.546(1) of the Act I have the power to order them to pay a pecuniary penalty I consider appropriate. As contraventions, the penalties are to be imposed by the application of principles relating to civil penalties.
That power must be exercised having regard to the purpose for which the power is given. In Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; [2015] HCA 46 (FWBII) the High Court explained the purpose of the imposition of penalties for civil contraventions at [55] as follows (citations omitted):
[55]No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
"Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. ... The principal, and I think probably the only, object of the penalties imposed by s 76 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 the Act."
See also Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union & Anor [2018] HCA 3; (2018) 262 CLR 157, at [116] per Keane, Nettle and Gordon JJ:
[116]As has been observed, the 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. According to orthodox sentencing conceptions as they apply to the imposition of civil pecuniary penalties, specific deterrence inheres in the sting or burden which the penalty imposes on the contravener. Other things being equal, it is assumed that the greater the sting or burden of the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and thus the more likely it will be that the contravener is deterred from further contraventions; likewise, the more potent will be the example that the penalty sets for other would-be contraveners and therefore the greater the penalty's general deterrent effect. Conversely, the less the sting or burden that a penalty imposes on a contravener, the less likely it will be that the contravener is deterred from further contraventions and the less the general deterrent effect of the penalty. Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any, specific or general deterrent effect, and so it will be unlikely, or at least less likely, to achieve the specific and general deterrent effects that are the raison d'être of its imposition.
Maximum penalty unit for a contravention
Pursuant to s.12 of the Act, a “penalty unit” has the same meaning as in s.4AA of the Crimes Act 1914 (Cth). From 28 December 2012 until 19 April 2015, a penalty unit was defined in the Crimes Act as $170, and from 31 July 2015, the value of the penalty unit in the Crimes Act was $180: Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Act 2012 (Cth), as amended by the Crimes Legislation Amendment (Penalty Unit) Act 2015 (Cth).
Pursuant to sub‑ss.539(2) and 546(2) at the relevant time, the maximum penalty was 300 penalty units for G&Z, and 60 penalty units for Ms Zhang for each contravention of s.45 of the Act, and 150 penalty units for G&Z and 30 penalty units for Ms Zhang for each contravention of sub‑ss.535(1) and 536(2) of the Act. For the reasons explained by Judge Smith in Fair Work Ombudsman v Amritsaria Four Pty Ltd & Anor [2016] FCCA 968 at [45]-[53], I propose to proceed in the basis that the appropriate maximum penalty unit is $180, but I take into account that, for some of the time, the maximum penalty unit was $170. Therefore, in sum, the maximum penalty per contravention that the Court can impose for a contravention of s.45 is $54,000 on G&Z, and $10,800 on Ms Zhang, and for a contravention of each of sub‑ss.535(1) and 536(2) is $27,000 on G&Z, and $5,400 on Ms Zhang.
The Agreed Facts identifies 9 different clauses of the Award that G&Z has contravened, and 2 Regulations.Where, as is the case before me, the term of an award or a provision of the Act or Regulations imposes an obligation that accrues periodically, the term or provision is contravened on each occasion the obligation accrues but is not performed. This is reflected in the contraventions identified in the Agreed Facts, and in the declarations which the Ombudsman and the respondents ask me to make.
The approach for assessing penalties
The Court has a broad discretion to assess the appropriate penalty. The approach for assessing penalties was summarised by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301, at [36] as follows (citations omitted):
… Five steps were described as follows (with some adjustment of expression):
(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 [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 [Ombudsman] (as permitted by [FWBII] at [64]) 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.
As Judge Manousaridis observed recently in Fair Work Ombudsman v A to Z Catering Solution Pty Ltd & Anor (No.3) [2018] FCCA 3574, at [7], the above passage prescribes 3 broad steps: (1) identify the contraventions; (2) (provisionally) assess the penalty for each contravention; and (3) consider whether adjustments should be made to the penalty provisionally assessed for each contravention. However, the steps identified in New Shanghai above, “may not necessarily reveal all of the steps for assessing penalties; and it may incorrectly imply that contraventions that have been treated as 1 contravention under s.557(1) of the [Act] may be grouped further to give effect to the principle that the same conduct should not be penalised more than once.”
Grouping pursuant to s.557
Section 557(1) of the Act provides that:
For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:
(a)the contraventions are committed by the same person; and
(b)the contraventions arose out of a course of conduct by the person.
Pursuant to sub-s.557(2) relevantly, the civil remedy provisions are s.45, and sub-ss.535(1), (2), (4) and 536(1), (2), and (3) of the Act. Subsection 557(3) has no application in the present case.
In Rocky Holdings, the Full Court of the Federal Court held that a “civil remedy provision” in s.557 meant, relevantly, a term of a modern award, and not a provision of the Act. Each occasion of a breach of a term (in the terminology of the Award, a clause) of an award is a contravention. Thus, as explained by Judge Manousaridis in this Court in Fair Work Ombudsman v Australian Wild Tuna Pty Ltd & Anor (2016) 313 FLR 126; [2016] FCCA 2626, at [32], the effect of the authorities is that s.557(1) applies to multiple contraventions of the one term of a modern award, even where the contravention may affect 2 or more persons; and s.557(1) of the Act does not apply to group contraventions of different terms of modern awards, even if such contraventions arise out of a course of conduct, and even if the contraventions affect only one person. So too, s.557 does not apply to contraventions of 2 or more separate civil remedy provisions that do not involve a breach of a term of an award (in the present case, contraventions of each of the separate civil remedy provisions referred to in s.535 and s.536 of the Act),
The consequence is that, in the present case, each time G&Z contravened a term of the Award - e.g. clause 17 – by failing to pay Ms Zhou the prescribed minimum rate of pay for a shift, it contravened a civil remedy provision, and each time G&Z contravened another term of the Award – e.g. clause 13.2, by failing to pay Ms Zhou the prescribed casual loading, it separately contravened a civil remedy provision. However, s.557 operates to “group” the multiple times G&Z failed to pay Ms Zhou the prescribed minimum rate of pay to treat that conduct as a single contravention, and to “group” the multiple times G&Z failed to pay Ms Zhou the prescribed casual loading as a second single contravention.
In A to Z Catering at [11]-[26] Judge Manousaridis discussed s.556 and s.557(1) of the Act, each of which address circumstances where 2 or more contraventions of provisions of the Act can be the subject of only one pecuniary penalty order. Section 556 provides that the Court is prohibited from making more than one pecuniary penalty order in relation to 2 or more contraventions, and s.557, as I have adverted to above, provides for circumstances where a number of distinct contraventions are treated as a single contravention. As his Honour observed at [12], it may reasonably be supposed that both sections seek to give effect to the policy that the same conduct, or conduct or the same character, should be penalised only once, but the means by which each provision gives effect to this policy differs. Section 556 continues to treat the contravener as having contravened 2 or more provisions of the Act, but the conduct can be penalised only the once. Judge Manousaridis discusses several decisions of judges of the Federal Court that have construed s.556, including and following Jessup J’s construction of the section in Australian Building and Construction Commissioner v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union & Ors (The Australian Paper Case) (No.2) [2017] FCA 367. It suffices to adopt Judge Manousaridis’ conclusion at [26]:
… Given that s.556, like s.557(1) of the FW Act, appears to have been enacted to further the policy that the same conduct should not be penalized more than once, and that s.557(1) applies to contraventions of s.45 of the FW Act, there is every reason to expect that s.556 is also intended to apply to the contravention of all civil remedy provisions, including s.45 of the FW Act.
In the present case, the Ombudsman accepted that it is open to the Court to group separate contraventions together where the contraventions overlap with each other or, if treated separately, would result in the respondents being penalised twice for substantially similar conduct, referring to McAlary-Smith v Australian Ophthalmic Supplies Pty Ltd (2008) 165 FCR 560; [2008] FCAFC 8, at [46] per Graham J.
In Lohr, at [32], [34], however, Bromwich J accepted the Ombudsman’s submission made in that case that s.557 “is the express statutory manifestation of the one transaction or course of conduct principle” and that once s.557 has been applied it is not possible to “further consolidate the … contravention into one contravention by applying that principle, in effect, again.” Thus, referring to White J’s approach in Australian Building and Construction Commissioner v Huddy (No.2) [2017] FCA 1088, the Ombudsman submits before me that the correct approach is to fix separate penalties for each separate contravention, consider whether the aggregate is excessive, and if so, adjust each separate penalty to avoid that outcome.
More recently, Flick J in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (the BKH Contractors Case) (No.2) [2018] FCA 1563, at [59], approached the task by first (provisionally) assessing a penalty for 2 or more contraventions, and then adjusting the penalties so assessed having regard to the degree of commonality between the conduct that constitutes each contravention, as follows:
[59]Of particular concern in the present proceeding is the need to:
·separately consider the penalty which should be imposed in respect to each contravention and to properly characterise conduct which may constitute separate contraventions by reference to the objective facts and circumstances giving rise to those contraventions,
but also the need to:
·consider whether the conduct giving rise to separate contraventions was such that the separate imposition of penalties would be effectively imposing multiple penalties for either the same conduct or for overlapping parts of the same conduct which separately went to make out the separate contraventions; and
·ensure that a person who has engaged in contravening conduct is not punished twice for the same conduct and to ensure that the total penalty imposed in respect to the contraventions is “just and appropriate” and not disproportionate.
The attempt being made is to quantify the appropriate penalty for each contravention whilst at the same time recognising that conduct may involve different factual elements – some elements of which go towards one contravention and different elements going to another contravention. Common to multiple different contraventions, however, may be one or more of those common facts.
Having identified the contraventions after applying ss.557 and 556 (if applicable), the next step is to assess the penalties for each of the contraventions by reference to the conduct that constitutes each contravention.
When assessing the amount of the pecuniary penalty it is useful to distinguish between the purpose or purposes for which pecuniary penalties are to be imposed (as to which, see above at [64]), and, given that purpose or purposes, the matters that may be relevant to assessing the penalty: A to Z Catering at [30], referring to the statement of the Full Federal Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (ABCC v CFMEU) [2017] FCAFC 113 at [98]:
… 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.
Factors relevant to penalty
A non-exhaustive list of considerations relevant to the imposition of penalty was endorsed by Tracey J in the Federal Court in Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 at [14], there referring to the considerations summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 at [26] to [59]. Those considerations are:
(a) the nature and extent of the conduct which led to the contraventions;
(b)the circumstances in which the conduct took place;
(c) the nature and extent of any loss or damage sustained as a result of the contraventions;
(d) whether there had been similar previous conduct by the respondent;
(e) whether the contraventions 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 contraventions were deliberate;
(h)whether senior management was involved in the contraventions;
(i) whether the party committing the contraventions had exhibited contrition, taken corrective action and/or had cooperated with the enforcement authorities;
(j) the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(k) the need for specific and general deterrence.
The factors that may be relevant may conveniently be categorised according whether they relate to the objective nature and seriousness of the offending conduct, or concern the particular circumstances of the respondent in question.
The maximum penalty prescribed by the Act for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed: BHK Contractors Case at [19].
Having assessed the penalty for each contravention, the Court is required to consider whether any adjustment should be made under the one transaction principle, also referred to as requiring the Court to assess the extent to which 2 or more contraventions have common elements. As explained by McKerracher J in Fair Work Ombudsman v Kentwood Industries Pty Ltd (No.3) [2011] FCA 579, at [10], “to the extent that two or more contraventions have common elements, this may be taken into account when considering what is an appropriate penalty for each contravention . The respondents should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to the respondents’ actions.”
As succinctly explained by Judge Manousaridis in A to Z Catering at [36]-[37], a related, although distinct principle, known as the “totality principle” usually must be considered, directed to the assessment of the overall quality of the contravener’s conduct, pursuant to which 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. It has been held to apply to the assessment of pecuniary penalties under the Act.
Penalty Assessment
Identification of the contraventions, and application of s.557
In Table 1 below I set out the admitted contraventions, and the extent of the contravention in terms of hours and underpayments, taken from the Agreed Facts. Each of the admitted contraventions of a term of the Award and of the Regulations is listed in column 2, with a short identifier of the contravention (emboldened), the relevant clause of the Award, and the relevant provision of the Act or Regulation. The Award entitlement is set out in column 3, first in the period 1 July 2014 to 30 June 2015, and then from 1 July 2015 to 30 June 2016, noting that Ms Zhou’s 2 periods of employment are 29 October 2014 to 19 June 2015, and 14 October 2015 to 18 April 2016. The total number of underpaid hours, and total amount of underpayment per term of the Award is set out in column 4.
Each of the obligations set out in items 1 to 9 in Table 1 is a distinct obligation that arises under a separate term of the Award. In each case, as will be apparent from the total hours set out corresponding to each item, G&Z failed or omitted to perform its obligation on multiple occasions during its employment of Ms Zhou. It thereby contravened each corresponding term of the Award multiple times. Each of items 10 and 11 in Table 1 is a distinct obligation that arises under the Regulations, which obligation G&Z also failed or omitted to perform on multiple occasions.
Applying the statutory course of conduct provision of s.557(1) of the Act, I conclude that those multiple occasions of contraventions of a specific clause of the Award or of a Regulation should be treated as a single contravention of that clause or Regulation (as the case may be). Thus, I accept the Ombudsman’s submission that there are 11 separate contraventions.
Table 1 – Contraventions
Contravention
(clause of Award/ provision of Act)
Entitlement under Award Total ordinary hours/ Sub-total of underpayment 1 Failing to pay the minimum rate of pay – Award clause 17 / s.45 $18.52 /
$18.99 per hour
Total hours: 1,461 Monday-Friday
Total underpaid: $6,156.90
2 Failing to pay casual loading –
Award clause 13.2 / s.45
$4.63 /
$4.75
Total hours: 1,461
Total underpaid: $6,785.74
3 Failing to pay Saturday penalty rates –
Award clause 25.5(b) / s.45
$4.63 /
$4.75
Total hours: 28
Total underpaid: $131.20
4 Failing to pay Sunday penalty rates –
Award clause 25.5(c)(ii) / s.45
$13.89 /
$14.25
Total hours: 215.5
Total underpaid: $1,996.85
5 Failing to pay public holiday rates -
Award clause 30.3/ s.45
$5093 /
$52.23
Total hours: 32.5
Total underpaid: $1,192.57
6 Failing to pay Evening rates -
Award clause 25(a)(i) / s.45
$1.85 /
$1.89
Total hours: 34
Total underpaid: $62.93
7 Failing to pay the special clothing allowance
Award clause 19.2(b)(ii) / s.45
$1.25 /
$1.25 (per shift)
Total shifts: 187
Total underpaid: $233.75
8 Failing to inform employee of her terms of engagement –
Award clause 10.2 / s.45
9 Failing to inform employee in writing of her classification – Award clause 16.1 / s.45 10 Failing to make and keep records re Ms Zhou as prescribed by reg.3.32(c) / s.535(1) 11 Failing to issue payslips including all information required by reg.3.46 / s.536(2)
Counsel for the respondents submits that these 11 contraventions should be further grouped pursuant to s.557 into 2 courses of conduct, the first being underpayment of monies (items 1 to 7), and the second being administration defaults (items 8 to 11). I do not accept these submissions. Whilst items 1 to 7 may be described in an overall way as a failure to pay the proper amount, various clauses of the Award each specify different rates of pay for work on a different day or time (weekday, weekend, public holiday and evening). Each term or clause of the Award, and each regulation, imposes a separate obligation on an employer.
Whilst it may be said at a level of generality that the failure to inform Ms Zhou of her terms of employment, and failure to inform her in writing of her employment classification (items 8 and 9 in Table 1), and the failures to keep prescribed records and provide payslips with the prescribed information (items 10 and 11 in Table 1), arise out of the same factual circumstances as the circumstances giving rise to her engagement, and that they arise consequent upon the omissions or failures to pay Ms Zhou her prescribed entitlements (Ms Zhou not being paid the correct amounts, the records did not contain the correct information, and the payslips were inaccurate), those obligations are each distinct and separate obligations. It is not appropriate to further reduce the number of the contraventions. As directed by Rocky Holdings, and for the reasons explained in A to Z Catering at [23], I find that there are 11 contraventions, as I list in Table 1, each of which may attract a maximum penalty as I have set out at [66].
Determination of the penalty for each contravention, in isolation
The Ombudsman submits that the contraventions are serious in nature, and warrant a meaningful penalty because:
(a)the contraventions are of minimum standards of the most fundamental kind, being minimum wages and other payments to which Ms Zhou was entitled;
(b)the respondents failed to advise Ms Zhou of her employment status and classification, and failed to provide appropriate information to allow her to understand her workplace entitlements; and
(c)a failure to keep records and to issue pay slips to Ms Zhou with the required information on them, is important as it ensures that records are clear and able to be properly scrutinised.
In assessing (provisionally) the penalty for each contravention in the circumstances of this case, I have had regard to the considerations endorsed by Tracey J in Kelly (see above at [80]), and the guidance provided in ABCC v CFMEU (above at [79]), and having regard to the seriousness of the contraventions as submitted by the Ombudsman. It is convenient to deal with those considerations under the following subheadings.
Nature and extent of the conduct, the circumstances and the loss
In the factual background earlier in these reasons I have described and set out my findings regarding the circumstances in which the contraventions occurred. The amount of underpayment was significant, and occurred over 2 periods of employment, over a total of approximately 13 and a half months (7 and half months, and 6 months). I consider that the amount and duration of the underpayment is a relevant factor.
G&Z’s conduct, however, involved one employee, employed in particular circumstances, of which there is no evidence of repetition. When she employed Ms Zhou, Ms Zhang’s usual role within G&Z did not extend to advertising for, employing, or paying staff. She did so at a time when she was managing the Stores alone, without the support and direction of Mr Gao, who was overseas, and at a time when his father was ill, and, on the evidence, without real practical guidance and support from the franchisor.
I have had the benefit of observing Ms Zhang give evidence. I accept Ms Zhang’s evidence. I accept Ms Zhang’s evidence of her lack of knowledge. I accept that she relied on Ms Zhou’s representation of her pay rate. I accept that she mistakenly thought that each staff member individually negotiated pay rates, and that she didn’t use the pay spreadsheet in respect of Ms Zhou as she did not think it was relevant, and that she created a new payslip template for Ms Zhou as the template contained information she did not think applied to Ms Zhou’s employment.
Based on my impression of Ms Zhang in the witness box, where there is any difference in the accounts of conversations as among Ms Zhang and Ombudsman personnel, or the state of knowledge, understanding and awareness of the Award pay rates and other requirements under the Award and the Act attributed to Ms Zhang at any particular time, I prefer Ms Zhang’s account. I note there are also differences in emphasis, detail and completeness in the attendance notes taken as among the Ombudsman’s personnel, such that I am not persuaded of their reliability and accuracy. I am not persuaded that any of the conversations the Ombudsman’s personnel attested to having had with Ms Zhang in October 2016 and January 2017 to the effect that Ms Zhang was aware of the “correct wages”, the IPCA pay rates or the terms of the Award during the time Ms Zhou was employed were to the effect and had the import the personnel attested to in their affidavits.
In the course of this proceeding Ms Zhang has admitted knowing from December 2015 that the Award applied to Ms Zhou. However, I also take into account and accept Ms Zhang’s evidence that she was unwell and did not know that she was pregnant towards the end of November and then underwent some tests, and I consider it believable that the application of the Award or pay rates to Ms Zhou’s employment was not at the forefront of her consciousness around that time.
Whilst Ms Zhang was willing to engage Ms Zhou at a flat rate, and subsequently marginally to increase that flat rate, I do not accept that Ms Zhang’s or through her conduct, G&Z’s conduct, was undertaken deliberately to flout G&Z’s obligations under the Award, was covert or reckless. It was unknowing, and mistaken.
The lack of continued and relevant training and practical guidance by Subway Systems is evident. I do not find the instances of communications provided to G&Z of which examples were given in evidence clearly and unambiguously educative of G&Z’s employment law obligations.
An example of such communication was an “IPCA Update Bulletin” issued by “Independent Purchasing Company (Australasia) Limited (IPCA)”. It reads as a marketing and advertising flyer. In amongst promotional items for new products, advertisements and marketing information, the bulletin contained news of a Fair Work Commission increase to the minimum wage, due to take effect the next month, and a notation where on the IPCA website updates and the Award minimum wage guide would then be available. In the circumstances pertaining to this case, I do not consider that that notice, contained as it was within distracting and diversionary promotional and advertising messages in the bulletin, sufficient to educate and inform persons in the situation of the respondents about their employment law obligations. Marketing and advertising literature is not a ready vehicle through which to convey important information as to workplace and employment obligations.
No established instance of similar previous conduct
Ms Zhang gave evidence that Ms Zhou was the only staff member she employed for G&Z. As I have said at [27] above, I accept her evidence. There are no established instances of similar previous conduct.
The size of the business and involvement of senior management
The evidence is that G&Z is a small, family company. Its sole business was the operation of the Subway franchises for the 2 Stores. The business was small, and ultimately unsustainable. As I have described above, those franchises have been terminated. Whatever their size, or financial circumstances, however, employers have obligations to meet the minimum standard and comply with workplace and employment laws. Ms Zhang was a director and shareholder of G&Z at the time of Ms Zhou’s employment. She has admitted her accessorial liability. In my view this aspect of the matter does not take the Court further.
I have described the evidence of the respondents’ financial circumstances above. I consider that G&Z and Ms Zhang have limited capacity to pay. The authorities indicate that I should give this factor little weight, and accordingly I note this factor, but accord it little weight.
Co-operation, corrective action and compliance and contrition
G&Z, through the agency of Mr Gao, and Ms Zhang co‑operated with the Ombudsman’s investigations. I give G&Z credit for its acceptance of the Ombudsman’s findings and payment in full of the underpayment within 15 days of being informed of the amount payable. I give the company and Mr Gao credit for not cavilling at the Ombudsman’s (through inspector Ms Walsh) rejection of his submission that Ms Zhou be treated as part-time in her second period of employment, and the request for a payment plan.
I find that G&Z did change its conduct, and did seek to remedy its failures and omissions, including ensuring that notification of the Award was given by placing notices on the wall where employees could read them. The Ombudsman’s inspector, Ms Walsh, attested to G&Z’s, and Ms Zhang’s compliance with G&Z’s employment obligations during site visits on 12 October 2016, and on 19 January 2017. Ms Walsh, who is based in Adelaide, visited Artarmon Subway (in Sydney) with 2 colleagues on 19 January 2017. The site visit took approximately half an hour. Their investigations and discussion with Ms Zhang revealed that G&Z was complying with its Award obligations, including payment rates, retention of tax amounts, provision of payslip details, and posting up notices of Award details for employees to see.
I find that as at those dates and in the interim G&Z was complying with its obligations, and that Ms Zhang had taken steps to be informed of, and to comply with, G&Z’s employment law obligations, including its obligations under the Award, and regarding making and keeping of records, and timely and properly informative payslips.
I accept that Mr Gao sought to apologise to Ms Zhou on behalf of G&Z, and that he was warned off contacting her again by Ms Carbone on behalf of the Ombudsman. As I have said at [33], I do not accept the Ombudsman’s submission that somehow the respondents or Mr Gao should have nonetheless sought to convey an apology and contrition to the Ombudsman’s inspectors for communicating to Ms Zhou, or to the Court. I observe that Ms Zhang expressed the wish that she could have apologised to Ms Zhou for the underpayment and the difficulty she encountered because of it. She would have told Ms Zhou she was always happy with her work and did not intend for her not to be paid properly.
I consider that the respondents have co-operated in the proceeding. I do not consider the time that the respondents took to make admissions was unreasonable or not timely.
Deterrence and disapproval
The Ombudsman has submitted that ensuring compliance with minimum standards is a “very significant factor” in the present case. I agree. I would also expect that it is commonly a very significant factor where wherever and whenever minimum wages are not paid, and award terms are not followed. So too, it is important that obligations to inform employees of the terms of their employment, to provide the written communications prescribed by awards, and to comply with record-keeping obligations are adhered to. When they are not, the Court expresses its disapproval, and communicates the serious consequences for failing to comply with workplace laws by the imposition of penalties.
Specific deterrence
Although G&Z is no longer operating the Subway franchises, and it may be assumed that specific deterrence will be ineffective, the penalty should signal the importance of employers ensuring that they are aware of, and comply with, their employment law obligations, even at times when the employer’s business faces financial stress, or management are under personal stress.
Given that by the time of the hearing the franchises of Artarmon Subway and Stanmore Subway had both been terminated, and neither Store was being operated by the respondents or any person associated with them or Mr Gao, contrary to the submission of the Ombudsman, I do not consider that there is such a strong need for a significant penalty to ensure future compliance by the respondents as it is unlikely G&Z will repeat the contraventions. Nor is there the need in the case for Ms Zhang, given the particular circumstances in which the contravention arose, and her evidence of remedial self-education.
As to Ms Zhang’s directorship and shareholding in Galaxy Automotive, I do not accept that Ms Zhang should be penalised in such a way as to ensure future compliance with Australian workplace laws as submitted by the Ombudsman. I consider that to penalise Ms Zhang to the extent urged by the Ombudsman in its written submission, and for the reasons there submitted by the Ombudsman, would be to fall into the trap of seeking to punish Ms Zhang or exact retribution.
General deterrence
General deterrence is another matter. The Ombudsman urges the Court to send a message to the community and to employers that employees and particularly award-reliant workers must be provided with the correct entitlements, and that accurate and compliant employment records and payslips are not optional (but obligatory). I agree. The penalties I impose will send that message.
So too, the Ombudsman submits that a strong message must be sent to the fast food industry in which G&Z operates to that effect. The penalties I impose will have that effect. However, that message is a message that should also bite on unsupportive franchisors, and their satellite organisations, and those entities that benefit from opportunistically terminating franchises. The Ombudsman has not proffered any explanation how the penalties it submits I impose on the respondents will convey that necessary message to participants in the fast food industry.
Other matters – media coverage
The respondents complain of the media release that the Ombudsman communicated about the commencement of the proceeding. Counsel for the Ombudsman submitted that the use of media releases by a government regulator is recognised by the Courts and Australian Law Reform Commission as a proper and effective tool of a government regulator. I accept that submission. Counsel further submitted that the Ombudsman’s practice was to release very limited information, primarily based on the information contained in the statement of claim, and that all such information is clearly stated to be allegations only, and is presented in a neutral manner. That is, however, to beg the question, as clearly, this will not excuse the repetition of unfair, inaccurate or incorrect allegations made in a claim. As the authorities indicate, appropriate restraint in tone and content is required, and where the media coverage is unfair or incorrect reporting, it will be “adverse”.
The Ombudsman’s written media policy includes a statement that it is not its practice to “use descriptive words which are not neutral, or which may prejudice the public as to a party prior to the conclusion of a court hearing”. In the present case, the Ombudsman says the media release it issued was fair, accurate and appropriate reporting of its activities as a regulator, and was not adverse. The media release named Ms Zhang and Mr Gao, G&Z, it named the Stores and their locations. It contained the headline “Subway franchisee faces Court over alleged deliberate underpayment of Chinese worker”, and statements such as “It is alleged the underpayment occurred despite Ms Zhang having received summaries of applicable minimum Award wage rates from Independent Purchasing Company Australasia being displayed on the walls of the Artarmon and Stanmore Subway outlets” and “Fair Work Ombudsman Natalie James says legal action has been commenced because of the alleged blatant exploitation of a vulnerable overseas worker”, among other claims.
I do not agree that the media release was any of fair, accurate or appropriate. The language used was not neutral. In parts it was intemperate. Prefacing claims with the term “alleged”, in the case of the particular media release issued in respect of the present proceeding does not nullify the stings of inaccuracy and intemperance. It is to be hoped that the media release before me is an aberration.
The issue, however, is whether the media release has resulted in any adverse effects on the respondents. I accept that the effect was to publicly shame Mr Gao and Ms Zhang. However, there is no evidence that the loss of the franchises was as a result of the media releases.
Provisional assessment
The Ombudsman recommended high penalties. I am conscious that the maximum penalty is a “yardstick” against which the appropriate penalty should be assessed. In the circumstances I have considered above, having regard to the extent and duration of the failures to comply with each term of the Award or regulation that I have summarised in Table 1, weighing the above factors, and the need for deterrence on the one hand, and on the other hand, the circumstances in which the contraventions occurred, and that I find the failure and omissions were not part of a course of conduct to deliberately flout the obligations imposed by the Award and the Act and Regulations, I find that the penalty I should provisionally assess for each contravention as follows is:
Table 2 – Provisional Assessment
Contravention
% of total penalty units
G&Z
Ms Zhang
1 Minimum rate of pay – Award clause 17 / s.45 30% $16,200 $3,240 2 Casual loading –
Award clause 13.2 / s.45
30% $16,200 $3,240 3 Saturday penalty rates –
Award clause 25.5(b) / s.45
10% $5,400 $1,080 4 Sunday penalty rates –
Award clause 25.5(c)(ii) / s.45
15% $8,100 $1,620 5 Public holiday rates -
Award clause 30.3/ s.45
10% $5,400 $1,080 6 Evening rates -
Award clause 25(a)(i) / s.45
10% $5,400 $1,080 7 Special clothing allowance
Award clause 19.2(b)(ii) / s.45
15% $8,100 $1,620 8 Terms of engagement –
Award clause 10.2 / s.45
10% $5,400 $1,080 9 Classification – Award clause 16.1 / s.45 10% $5,400 $1,080 10 Make and keep records - reg.3.32(c) / s.535(1) 25% $6,750 $1,350 11 Payslips - reg.3.46 / s.536(2) 25% $6,750 $1,350 Provisional Assessment (Total) $89,100 $17,820
Adjustments
I now consider whether there are common elements among any of the 11 contraventions sufficient to require adjustment of the separate penalties. I am guided by Flick J’s directions in the BKH Contractors Case, by Bromwich J’s analysis in New Shanghai, having regard to Judge Manousaridis observations in A to Z Catering.
There is a common element in each of contraventions items 1 to 6, namely payment of amounts to Ms Zhou calculated at an hourly fixed rate. I consider that a 20% reduction of each of the provisional amounts assessed for contraventions items 1 to 6 is sufficient to take into account this common element.
Additionally, I find that there is a common origin to the contraventions in the negotiation between Ms Zhou and Ms Zhang, in which Ms Zhou proposed the flat hourly rate, and that as a consequence of the payment of a flat rate, records were not made and kept as required, and payslips were inaccurate and incomplete. However, I do not consider that commonality requires any adjustment to the penalties I have provisionally assessed for each of the contraventions items 10 and 11.
Applying the above adjustments, the provisional penalties adjusted are as follows:
Table 3 – Provisional assessment of penalty adjusted
Contravention
G&Z
Ms Zhang
1
Minimum rate of pay
$12,960*
$2,592*
2
Casual loading
$12,960*
$2,592*
3
Saturday penalty rates
$4,320*
$864*
4
Sunday penalty rates
$6,480*
$1,296*
5
Public holiday rates
$4,320*
$864*
6
Evening rates
$4,320*
$864*
7
Special clothing allowance
$8,100
$1,620
8
Terms of engagement
$5,400
$1,080
9
Classification
$5,400
$1,080
10
Make and keep records
$6,750
$1,350
11
Payslips
$6,750
$1,350
*Common element adjustment
Provisional assessment (adjusted)(total)
$77,760
$15,552
Discount for co-operation
There is the further matter that the Respondents have admitted their contraventions and not contested liability.
The Ombudsman proposes a discount of no more than 15% be applied to each proposed penalty for co‑operation. I consider that it is important to recognise the importance of such assistance, and to communicate to others the importance of co-operation, both at the time of investigation, and during penalty proceedings. If co‑operation with the Ombudsman’s investigations is not acknowledged and encouraged, or if the making of admissions well before hearing – as I consider occurred in the present case - is not recognised by some appreciable adjustment to the overall amount, then the Ombudsman’s task may well be more difficult in the future.
I propose to apply a discount of 15% to each of the adjusted penalties set out in Table 3 to take into account the extent of co-operation by the respondents, as follows in Table 4:
Table 4 – adjustment for co-operation
(15% each penalty, rounded to the dollar))
Contravention
G&Z
Ms Zhang
1
Minimum rate of pay
$11,016
$2,203
2
Casual loading
$11,016
$2,203
3
Saturday penalty rates
$3,672
$734
4
Sunday penalty rates
$5,508
$1,102
5
Public holiday rates
$3,672
$734
6
Evening rates
$3,672
$734
7
Special clothing allowance
$6,885
$1,377
8
Terms of engagement
$4,590
$918
9
Classification
$4,590
$918
10
Make and keep records
$5,738
$1,148
11
Payslips
$5,738
$1,148
Adjusted provisional assessment (co-operation)(total)
$66,097
$13,219
Overall Assessment
Finally, I consider whether the penalties I have assessed viewed as a whole are just and appropriate, and proportionate to the contravening conduct, also viewed as a whole, that is, applying the totality principle. The Ombudsman accepted that, owing to the large number of contraventions a totality discount was appropriate, and proposed that a discount of between 10% to 20% would be appropriate after considering the aggregate penalty. I consider that there is also force in Mr Ryan’s submission on behalf of the respondents that Ms Zhang’s accessorial liability arose for part only of the period of G&Z’s contravention, namely, December 2015 to April 2016, and that the penalty should reflect that relative share of responsibility.
Taking into account the parties’ respective submissions, I apply a totality discount to G&Z’s proposed penalty of 15%, and a totality discount to Ms Zhang’s proposed penalty of 30%. Accordingly, having regard to the totality principle, I assess penalties as follows:
Table 5 – Penalties
Contravention
G&Z
Ms Zhang
1
Minimum rate of pay
$9,364
$1,542
2
Casual loading
$9,364
$1,542
3
Saturday penalty rates
$3,121
$514
4
Sunday penalty rates
$4,682
$771
5
Public holiday rates
$3,121
$514
6
Evening rates
$3,121
$514
7
Special clothing allowance
$5,852
$964
8
Terms of engagement
$3,902
$643
9
Classification
$3,902
$643
10
Make and keep records
$4,877
$804
11
Payslips
$4,877
$804
Total Penalty
$56,183
$9,255
Disposition
The parties agree that declarations should be made. I am satisfied that there are facts established (including by admissions) which underpin each of the declarations proposed. I will accordingly make declarations as proposed by the parties.
I will order that the respondents each pay total penalties as follows:
G&Z
$56,183
Ms Zhang
$9,255
I will order that the respondents have 90 days to pay.
I certify that the preceding one hundred and twenty-nine (129) paragraphs are a true copy of the reasons for judgment of Judge Baird
Date: 1 March 2019
Schedule 1
IN THE FEDERAL CIRCUIT COURT File number: SYG1735/2017
OF AUSTRALIA
REGISTRY: SYDNEY
FAIR WORK DIVISION
FAIR WORK OMBUDSMAN
Applicant
G & Z UNITED PTY LTD (ACN 141 588 132)
First Respondent
DANMIN ZHANG
Second Respondent
AMENDED STATEMENT OF AGREED FACTS
This Amended Statement of Agreed Facts is made by the Applicant, the First Respondent and the Second Respondent in these proceedings for the purposes of section 191 of the Evidence Act 1995 (Cth).
THE APPLICANT
The Applicant, the Fair Work Ombudsman, is and was at all material times:
(a)a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to section 687 of the Fair Work Act 2009 (Cth) (FW Act);
(b)a Fair Work Inspector (FWI) pursuant to section 701 of the FW Act; and
(c)a person with standing to bring proceedings and apply for orders in respect of contraventions of civil remedy provisions under section 539(2) of the FW Act.
THE FIRST RESPONDENT
The First Respondent, G & Z United Pty Ltd (A.C.N 141 588 132) (G&Z), is and was at all material times:
(a)since 20 January 2010, a company incorporated under the Corporations Act 2001 (Cth);
(b)capable of being sued in and by its corporate name;
(c)a “constitutional corporation” within the meaning of section 12 of the FW Act;
(d)a “national system employer” within the meaning of section 14 of the FW Act.
G&Z did at all material times and still does carry on a business that:
(a)operates two fast food outlets trading under the “Subway” brand; and
(b)operates from the following addresses:
(i) 88 Hampden Road, Artarmon in the State of New South Wales (Subway Artarmon); and
(ii) Shop 1, 2-6 Bridge Street, Stanmore in the State of New South Wales (Subway Stanmore).
At all material times, during the periods 29 October 2014 to 19 June 2015 and 14 October 2015 to 18 April 2016 (collectively, Employment Period), G&Z employed Ms Qian Zhou, also known as “Doris Zhou” (Ms Zhou).
At all material times, during the Employment Period, the directors of G&Z were:
(a)the Second Respondent, Ms Danmin Zhang (Ms Zhang); and
(b)Mr Yong Gao (Mr Gao).
Ms Zhang and Mr Gao are both immigrants to Australia and English is their second language.
THE SECOND RESPONDENT
The Second Respondent, Ms Zhang, is and was at all material times:
(a)also known as “Irene Zhang”;
(b)a natural person capable of being sued;
(c)a director of G&Z; and
(d)the secretary of G&Z;
THE EMPLOYEE
G&Z employed Ms Zhou during the Employment Period as a Fast Food Employee.
Ms Zhou:
(a)is and was at all material times a citizen of the People’s Republic of China; and
(b)at all material times during the Employment Period was resident in Australia subject to a Skilled Nominated (subclass 190) visa.
Ms Zhou returned to her home country of China during the period from 20 June 2015 to 13 October 2015. There was no other reason for the break in the Employment Period.
MS ZHOU’S DUTIES
At all material times during her Employment Period, the primary duties performed by Ms Zhou for G&Z involved:
(a)opening and closing the store;
(b)greeting and serving customers;
(c)taking customers’ orders;
(d)operating the till and handling money;
(e)making sandwiches for customer orders;
(f)baking bread and cookies; and
(g)cleaning.
NATURE OF MS ZHOU’S ENGAGEMENT
At all material times during her Employment Period, Ms Zhou:
(a)was not informed by G&Z whether her engagement was full-time, part-time or casual in nature;
(b)was engaged solely by reference to an hourly rate, with no entitlement to leave payments and without any advance commitment to a fixed or regular pattern of work;
(c)was not engaged to work an average of 38 hours per week; and
(d)did not work less than 38 hours per week and with reasonably predictable hours of work.
MS ZHOU’S PAY RATES DURING THE EMPLOYMENT PERIOD
During her Employment Period, G&Z paid Ms Zhou a fixed hourly rate of:
(a)$14 per hour up to and including 13 January 2015; and
(b)$14.50 per hour thereafter.
APPLICABLE LEGISLATION AND INDUSTRIAL INSTRUMENTS
At all material times during Ms Zhou’s Employment Period:
(a)G&Z was bound by the FW Act and the FW Regulations;
(b)G&Z was covered by the Award with respect to the employment of Ms Zhou;
(c)by reason of the matters agreed in paragraph 13 above, Ms Zhou was properly a casual employee under clauses 11, 12.1 and 12.6 of the Award; and
(d)by reason of the matters agreed in paragraphs 9 and 12 above, Ms Zhou was properly classified as a “Fast Food Employee Level 1” under clause B.1 of Schedule B to the Award.
THE INVESTIGATION
On 15 August 2016, Ms Zhou lodged a complaint with the Applicant alleging that G&Z underpaid her various employee entitlements.
On 30 August 2016, Craig Dangerfield, a Fair Work Inspector appointed under section 700 of the FW Act (FWI) issued a Notice to Produce Records or Documents under section 712 of the FW Act (NTP) to G&Z. The NTP requested that G&Z provide FWI Dangerfield with all records and documents in relation to the employment of Ms Zhou at G&Z by 13 September 2016.
Between 8 September 2016 and 13 October 2016, G&Z sent a series of emails to Gwen Carbone, an officer employed in the Overseas Workers Team in the Office of the Fair Work Ombudsman, which attached documents and records referred to in the NTP.
On 12 October 2016, FWI Dangerfield and FWI Bomby Noudaranouvong attended a site visit at Subway Stanmore and spoke with Ms Zhang. During this site visit Ms Zhang confirmed that:
(a)she was responsible for recruiting Ms Zhou;
(b)Ms Zhou’s pay rate was set initially at $14.00 per hour; and
(c)she managed Ms Zhou’s duties and payroll.
On 19 January 2017, FWI Kristen Walsh and FWI Andrew Alexander attended a site visit at Subway Artarmon and spoke with Ms Zhang. During this site visit Ms Zhang confirmed, among other things, that she was aware of the Award and the National Employment Standards.
20AThe Second Respondent was aware from December 2015 that the Award applied to Ms Zhou’s employment.
On 14 March 2017, FWI Walsh issued a Findings of Contravention letter to G&Z. This letter outlined the proposed contraventions and the total underpayment owed to Ms Zhou.
On 24 March 2017, Mr Gao sent an email to FWI Walsh in which he confirmed that:
(a)G&Z accepted the contraventions and underpayment owed to Ms Zhou; but
(b)requested the FWO consider Ms Zhou as part time status after she returned from China on 14 October 2015; and
(c)requested that consideration be given to a repayment plan of $500.00 per week.
On 27 March 2017, FWI Walsh responded to Mr Gao’s response to the Findings of Contravention letter and confirmed that the FWO’s position was that:
(a)Ms Zhou was casual for the entirety of her employment period; and
(b)the proposed payment plan was not reasonable.
On 29 March 2017, G&Z paid $16,345.94 to Ms Zhou in full rectification of the underpayment amount owed to her.
ADMITTED CONTRAVENTIONS
Section 45 of the FW Act - Failure to pay minimum rates
Pursuant to clause 17 of the Award, G&Z was required to pay Ms Zhou no less than the minimum hourly rate of pay for each ordinary hour of work performed by her during her employment with G&Z.
During the Employment Period, Ms Zhou:
(a)worked a total of 1,461 ordinary hours on Monday to Friday;
(b)was paid the rates agreed at paragraph 14 above by G&Z;
(c)was entitled to be paid $27,141.15 in respect of the minimum hourly rate for ordinary hours worked on Monday to Friday;
(d)was paid a total of $20,984.25 by G&Z attributable to the minimum hourly rate for ordinary hours worked on Monday to Friday; and
(e)accordingly, was underpaid $6,156.90 in respect of the minimum hourly rate for ordinary hours worked on Monday to Friday as required by clause 17 of the Award.
Section 45 of the FW Act - Failure to pay casual loading
Pursuant to clause 13.2 of the Award, G&Z was required to pay Ms Zhou a casual loading of 25% of the applicable minimum hourly rate for each hour of work performed by her.
During the Employment Period, Ms Zhou:
(a)worked a total of 1,461 ordinary hours that attracted a casual loading;
(b)was entitled to be paid $6,785.74 in respect of casual loading for the ordinary hours she worked;
(c)was not paid anything by G&Z in respect of this loading; and
(d)accordingly, was underpaid $6,785.74 in respect of casual loading for all ordinary time hours worked as required by clause 13.2 of the Award.
Section 45 of the FW Act - Failure to pay Saturday penalty rates
Pursuant to clause 25.5(b) of the Award, G&Z was required to pay Saturday penalty rates to Ms Zhou for ordinary time worked on a Saturday.
During the Employment Period, Ms Zhou:
(a)worked a total of 28 ordinary time hours on a Saturday;
(b)was entitled to be paid $131.20 for working on a Saturday; and;
(c)was not paid anything by G&Z in respect of this entitlement; and
(d)accordingly, was underpaid $131.20 in respect of ordinary time hours worked on a Saturday as required by clause 25.5(b) of the Award.
Section 45 of the FW Act - Failure to pay Sunday penalty rates
Pursuant to clause 25.5(c)(ii) of the Award, G&Z was required to pay Sunday penalty rates to Ms Zhou for ordinary time worked on a Sunday.
During the Employment Period, Ms Zhou:
(a)worked a total of 215.5 ordinary time hours on a Sunday;
(b)was entitled to be paid $1,996.85 for working on a Sunday;
(c)was not paid anything by G&Z in respect of this entitlement; and
(d)accordingly, was underpaid $1,996.85 in respect of ordinary time hours worked on a Sunday as required by clause 25.5(c)(ii) of the Award.
Section 45 of the FW Act - Failure to pay public holiday penalty rates
Pursuant to clause 30.3 of the Award, G&Z was required to pay public holiday penalty rates to Ms Zhou for ordinary time worked on a public holiday.
During the Employment Period, Ms Zhou:
(a)worked a total of 32.5 ordinary time hours on a public holiday;
(b)was entitled to be paid $1,662.32 for working on a public holiday;
(c)was paid a total of $469.75 by G&Z attributed by the FWO and agreed by G&Z for ordinary time hours worked on a public holiday; and
(d)accordingly, was underpaid $1,192.57 in respect of ordinary time hours worked on a public holiday as required by clause 30.3 of the Award.
Section 45 of the FW Act - Failure to pay evening penalty rates
Pursuant to clause 25.5(a)(i) of the Award, G&Z was required to pay Ms Zhou a penalty rate for evening work performed on a Monday to Friday.
During the Employment Period, Ms Zhou:
(a)worked a total of 34 ordinary time hours in the evening;
(b)was entitled to be paid $62.93 for working in the evening;
(c)was not paid anything by G&Z in respect of this entitlement; and
(d)accordingly, was underpaid $62.93 in respect of evening work performed on a Monday to Friday as required by clause 25.5(a)(i) of the Award.
Section 45 of the FW Act - Failure to pay special clothing allowance
Pursuant to clause 19.2(b)(ii) of the Award, G&Z was required to pay Ms Zhou a special clothing allowance of $1.25 per shift.
During the Employment Period, Ms Zhou:
(a)worked a total of 187 shifts;
(b)was entitled to be paid $233.75 in respect of the special clothing allowance;
(c)was not paid anything by G&Z in respect of this entitlement; and
(d)accordingly, was underpaid $233.75 in respect of special clothing allowance in accordance with clause 19.2(b)(ii) of the Award.
Section 45 of the FW Act - Failure to inform employee of employment status
Pursuant to clause 10.2 of the Award, G&Z was required to inform Ms Zhou of the terms of her engagement; in particular whether she was to be full-time, part-time or casual.
G&Z admits that it did not inform Ms Zhou at the time of her engagements whether she was full-time, part-time or casual.
Section 45 of the FW Act - Failure to inform employee of employment classification
Pursuant to clause 16.1 of the Award, G&Z was required to inform Ms Zhou in writing of her classification under the Award, and of any changes to her classification.
G&Z admits that it did not inform Ms Zhou in writing as to what her classification was under the Award, either at the time of her engagements or at any other time during the Employment Period.
Section 535 of the FW Act – failure to keep make and keep records
At all material times, G&Z was required by section 535(1) of the FW Act to make and keep for seven years, employee records of the kind prescribed by the FW Regulations in relation to Ms Zhou.
During the Employment Period, G&Z did not make and keep the following types of records required by regulation 3.32(c) of the FW Regulations in relation to Ms Zhou:
(a)records specifying whether Ms Zhou’s employment was full-time or part-time; and
(b)records specifying whether Ms Zhou’s employment was permanent, temporary or casual.
At all material times, G&Z did not make and keep the specified employee records in respect of Ms Zhou as prescribed by regulation 3.32(c) of the FW Regulations, in accordance with section 535(1) of the FW Act.
Section 536(2) of the FW Act – failure to provide pay slips with all of the prescribed information
At all material times, G&Z was required by section 536(2) of the FW Act, to give a pay slip to Ms Zhou which is in the form prescribed by the FW Regulations and within one day of paying Ms Zhou.
During the Employment Period, G&Z did not provide Ms Zhou with pay slips that included the following information:
(a)records required by regulation 3.46(1)(d) of the FW Regulations specifying the date on which the payment was made;
(b)records required by regulation 3.46(3) of the FW Regulations specifying the hourly rate of pay; and
(c)records required by regulation 3.46(5) of the FW Regulations specifying the amount of any superannuation contribution made and the superannuation fund details.
At all material times, G&Z admits that it did not give a pay slip to Ms Zhou which is in the form prescribed by the FW Regulations in accordance with section 536(2) of the FW Act.
TOTAL UNDERPAYMENTS
As a result of the contraventions referred to in paragraphs 27 to 50 above, G&Z underpaid Ms Zhou the total amount of $16,345.94 (Total Underpayment).
G&Z rectified the Total Underpayment in full on 29 March 2017.
ACCESSORIAL LIABILITY OF THE SECOND RESPONDENT
Ms Zhang:
(a)was a person who, on behalf of the First Respondent, had control over the employment of Ms Zhou;
(b)was a person responsible for ensuring that the First Respondent complied with its legal obligations to Ms Zhou under the FW Act and FW Regulations;
(c)was the person who engaged Ms Zhou to work for the First Respondent;
(d)knew that Ms Zhou worked for the First Respondent as an employee;
(e)was the person initially responsible for determining the days and hours of work of Ms Zhou;
(f)knew the days and hours worked by Ms Zhou;
(g)knew the rates of pay paid to Ms Zhou by the First Respondent;
(h)knew that Ms Zhou was paid the same hourly rate by the First Respondent regardless of when she worked;
(i)was a person responsible for making payments to Ms Zhou and for creating and sending her pay slips; and
(j)was a person responsible for keeping employee records on behalf of the First Respondent in relation to Ms Zhou;
At all material times, Ms Zhang admits that she:
(a)was directly or indirectly, knowingly concerned in or a party to G&Z’s contraventions of the FW Act (within the meaning of section 550 of the FW Act); and
(b)is therefore taken to have committed those contraventions herself pursuant to subsection 550(1) of the FW Act.
PROPOSED DECLARATIONS AND ORDERS [NOT REPRODUCED]
0
17
4