Fair Work Ombudsman v G.Q.Industries Pty Ltd
[2020] FCCA 928
•24 April 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v G.Q.INDUSTRIES PTY LTD & ANOR | [2020] FCCA 928 |
| Catchwords: INDUSTRIAL LAW – Imposition of pecuniary penalties – no appearance on behalf of the respondents – applicable principles – adverse action against vulnerable employee – non-payment of wages and other entitlements. |
| Legislation: Fair Work Act 2009 (Cth), ss.44, 45, 340, 535, 550 |
| Cases cited: Australian Competition and Consumer Commission v Coles Supermarkets Pty Ltd (2015) 327 ALR 540 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | G.Q. INDUSTRIES PTY LTD (ACN 115 434 010) |
| Second Respondent: | BRENDAN ANGUS |
| File Number: | BRG 921 of 2016 |
| Judgment of: | Judge Egan |
| Hearing dates: | 12 November 2019, 15 April 2020 |
| Date of Last Submission: | 16 April 2020 |
| Delivered at: | Brisbane |
| Delivered on: | 24 April 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr McKechnie |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| First Respondent: | No appearance |
| Second Respondent: | No appearance |
ORDERS
That within 28 days of this order, the First Respondent pay to the Commonwealth a pecuniary penalty in the amount of $147,645.00 pursuant to the provisions of section 546(1) of the FW Act.
That within 28 days of this order, the Second Respondent pay to the Commonwealth a pecuniary penalty in the amount of $29,529.00 pursuant to the provisions of section 546(1) of the FW Act for his involvement (within the meaning of section 550(2) of the FW Act) in the First Respondent’s contraventions.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT Brisbane |
BRG 921 of 2016
| fair work ombudsman |
Applicant
And
| g.q. industries pty ltd (acn 115 434 010) |
First Respondent
| brendan angus |
Second Respondent
REASONS FOR JUDGMENT
Introduction
This matter first came before the Court on 10 May 2019 at which time the following declarations were made:
“1. The First Respondent contravened:
(a) section 45 of the Fair Work Act 2009 (Cth) (FW Act) by failing to pay Mr Joseph Melit (Mr Melit) weekly as required by clause 31.3 of the Building Award;
(b) section 45 of the FW Act by failing to pay Mr Melit and David van Heuzen (Mr Heuzen) (together, the Employees) the minimum rate of pay required by clause 19.7(b) of the Building and Construction General On-site Award 2010 (Building Award) and the allowances prescribed in clause 19.7(e) of the Building Award;
(c) section 44(1) of the FW Act by failing to pay Mr Melit personal leave pursuant to section 99 of the FW Act;
(d) section 340(1)(a)(ii) of the FW Act by taking adverse action against Mr Melit because Mr Melit exercised a workplace right, namely taking personal leave;
(e) the safety net contractual entitlements for failing to pay Mr Melit for his full time hours of work of 38 hours per week;
(f) section 535 of the FW Act by failing to make and keep for seven (7) years records of the kind prescribed by the FW Regulations in relation to Mr Melit;
(g) section 536 of the FW Act by failing to provide Mr Melit with any payslips for the period February 2014 to June 2015;
(h) section 45 of the FW Act by failing to pay the Employees their Fare and Travel Pattern Allowances as required by clause 25.12 and 25.2 of the Building Award;
(i) section 44(1) of the FW Act by failing to pay the Employees for their absences on a public holiday as required by section 116 of the FW Act;
(j) section 45 of the FW Act by failing to pay the Employees overtime as required by clause 36.2 of the Building Award;
(k) section 45 of the FW Act by failing to pay the Employees Saturday penalty rates as required by clause 37.1 of the Building Award;
(l) section 45 of the FW Act by failing to pay Mr van Heuzen annual leave as required by clause 38.2(a) of the Building Award; and
(m) section 45 of the FW Act by failing to pay Mr van Heuzen annual leave loading as required by clause 38.2(b) of the Building Award.
2. The Second Respondent was involved in the First Respondent’s contraventions as set out in paragraph 1 above, within the meaning of section 550 of the FW Act.”
It was further ordered on that day as follows:
“3. Default judgment be entered in favour of the Applicant against the First Respondent and Second Respondent pursuant to rules 13.03B(2)(c) and 13.03C(2) of the Federal Circuit Court Rules 2001 (Cth).
4. The matter be listed for further hearing to 9:30 am on 12 November 2019 in the Federal Circuit Court of Australia at Brisbane to determine the penalties and any other orders that are sought against the Respondents.
5. The Applicant is to file and serve any further evidence and submissions on the issue of penalty and any other orders sought by it no later than thirty-five (35) days prior to the date for hearing fixed pursuant to Order 4 hereof.
6. The Respondents are to file and serve any further evidence and submissions on the issue of penalty and any other orders sought by the applicant no later than twenty-one (21) days prior to the date for hearing fixed pursuant to Order 4 hereof.
7. The Applicant is to file and serve any further evidence or submissions in reply no later than fourteen (14) days prior to the date of the hearing fixed pursuant to Order 4 hereof.
8. The Applicant is to serve sealed copies of these Orders upon each of the First and Second Respondents by way of emails sent to ‘[email protected]’ and posted by registered post to 32 Clausen Street, Mount Gravatt East, Queensland, 4122.
9. The parties have liberty to apply on the giving of three (3) days’ notice, each to the other.”
At the commencement of the hearing, Mr McKechnie of Counsel on behalf of the Applicant relied upon the contents of the affidavit of Ms. Henry, filed on 3 April 2020, for the purpose of establishing that notice of the hearing before the Court today had been given to each of the respondents in compliance with the orders of the Court made on 10 May 2019. The Court is satisfied that the orders of the Court have been complied with and that such notice has duly been given. The Court is cognizant of the fact that subsequent to such notice being given to each respondent, contact was made by the second respondent with Judge’s Chambers shortly before the hearing. [1] It is clear that the second respondent knew of the hearing date, but chose not to attend the penalty hearing before the Court, either in his own capacity, or in his capacity as the sole director of the first respondent.
[1] Exhibit 2 – Email trail between second respondent, Judge’s Chambers and the applicant.
As is common in matters such as the present, a Statement of Agreed Facts was filed in the proceeding. Those agreed facts are relevantly as follows:
“STATEMENT OF AGREED FACTS
1. This Statement of Agreed Facts is made by the parties in these proceedings for the purposes of section 191 of the Evidence Act 1995 (Cth).
A. ADMITTED CONTRAVENTIONS
2. On the basis of the facts set out below, the First Respondent admits to contravening the following civil remedy provisions of the Fair Work Act 2009 (Cth) (FW Act) with respect to the employments of David van Heuzen (Mr van Heuzen) and Mr Joseph Melit (Mr Melit) (collectively, the Employees) in the period from 30 September 2013 to 30 June 2015, or part thereof:
a) section 44 of the FW Act by:
i) failing to pay Mr Melit personal leave pursuant to section 99 of the FW Act;
ii) failing to pay the Employees for their absences on a public holiday as required by section 116 of the FW Act;
b) section 45 of the FW Act by:
i) failing to pay Mr Melit weekly as required by clause 31.3 of the Building and Construction General On-Site Award 2010 (Building Award)
ii) failing to pay the Employees the minimum rate of pay required by clause 19.7(b) of the Building Award and the allowances prescribed in clause 19.7(e) of the Building Award;
iii) failing to pay the Employees their Fares and Travel Patterns Allowances as required by clause 25.12 and 25.2 of the Building Award;
iv) failing to pay the Employees overtime as required by clause 36.2 of the Building Award;
v) failing to pay the Employees Saturday penalty rates as required by clause 37.1 of the Building Award;
vi) failing to pay Mr van Huezen annual leave as required by clause 38.2(a) of the Building Award;
vii) failing to pay Mr van Huezen annual leave loading as required by clause38.2(b) of the Building Award; and
(c) section 340(1)(a)(ii) of the FW Act by taking adverse action against Mr Melit because Mr Melit exercised a workplace right, namely taking personal leave;
(d) section 535 of the FW Act by failing to keep for seven (7) years records of the kind prescribed by the FW Regulations in relation to Mr Melit;
(e) section 536 of the FW Act by failing to provide Mr Melit with payslips as required in the period February 2014 to June 2015.
(Admitted Contraventions)
3. The Second Respondent admits that he was involved in the Admitted Contraventions pursuant to section 550(1) of the FW Act.
4. The First Respondent further admits that it failed to provide Mr Melit's safety net contractual entitlement to be paid ordinary wages for ordinary hours in the period from 13 February 2015 to 4 May 2015.
B. THE PARTIES
The Applicant
5. The Applicant is, and was at all times material to this proceeding:
(a) a statutory appointee of the Commonwealth appointed by the Governor General by written instrument pursuant to section 687(1) of the FW Act;
(b) a Fair Work Inspector pursuant to section 701 of the FW Act;
(c) a person with standing to bring these proceedings, in accordance with section 539(2) of the FW Act; and
(d) a person with standing under section 541 of the FW Act to apply for orders on behalf of employees in respect of contraventions of safety net contractual entitlements.
The First Respondent
6. The First Respondent is, and was at all times material to this proceeding:
(a) a company incorporated under the Corporations Act 2001 (Cth);
(b) able to be sued in and by its corporate name;
(c) a constitutional corporation within the meaning of section 12 of the FW Act; and
(d) a national system employer within the meaning of section 14 of the FW Act.
7. At all material times, the First Respondent carried on a building and construction business in Queensland (Business).
The Second Respondent
8. The Second Respondent is, and was at all material times:
(a) the sole director of the First Respondent;
(b) the sole shareholder of the First Respondent;
(c) the operative and controlling mind of the First Respondent;
(d) responsible for the overall operation, management and control of the Business; and
(e) responsible for ensuring that the First Respondent complied with its legal obligations under the FW Act.
9. By reason of section 793 of the FW Act and the matters set out in paragraph 8 above, the conduct engaged in by the Second Respondent on behalf of the First Respondent is taken to have been engaged in by the First Respondent for the purpose of the FW Act.
C. EMPLOYMENT OF THE EMPLOYEES
David van Heuzen
10. Mr van Heuzen commenced employment with the Second Respondent at 17 years of age and worked for the Second Respondent from~28 May 2012 to about 29 September 2013.
11. Mr van Heuzen was employed by the First Respondent from 30 September 2013 to 15 January 2015 (van Heuzen Period).
12. At all material times, Mr van Heuzen worked for the First Respondent pursuant to a contract of training registered with the Queensland Department of Education, Training and Employment (DETE) (van Heuzen Training Contract) which included the following terms:
(a) Title and level of qualification: Certificate Ill in Carpentry;
(b) Commencement date: 28 May 2012;
(c) Nominal term of Training Contract: 48 months;
(d) Highest completed school level: year 12 or equivalent;
(e) Type of employment arrangement: federal award;
(f) Name of Award: Building Award;
(g) Number of hours of employment and training per week: 38 hours; and
(h) Full-time or part-time apprenticeship: full-time.
Joseph Melit
13. Mr Melit commenced employment with the First Respondent at 17 years of age and worked for the First Respondent from 11 February 2014 to 30 June 2015 (Melit Period).
14. At all material times, Mr Melit worked for the First Respondent pursuant to a contract of training registered with the DETE (Melit Training Contract) which included the following terms:
(a) Title and level of qualification: Certificate Ill in Carpentry;
(b) Commencement date: 4 February 2014;
(c) Nominal term of Training Contract: 48 months;
(d) Highest completed school level: year 12 or equivalent;
(e) Type of employment arrangement: federal award;
(f) Name of Award: Building Award;
(g) Number of hours of employment and training per week: 38 hours; and
(h) Full-time or part-time apprenticeship: full-time.
Hours of work
15. The usual hours of work for the Employees were:
(a) six days per week;
(b) Monday to Thursday, from between 6:00 and 6:30 am to between 3:00 and 6:00 pm;
(c) Friday, from between 6:00 and 6:30 am to between 2:30 and 5:00 pm;
(d) Saturday, from approximately 6:30 am to between 12:00 and 5:00 pm;
(e) breaking for 30 minutes each day on which work continued in excess of five hours.
16. At all material times, the Employees completed and submitted timecards to the First Respondent containing the following details:
(a) time period and week number;
(b) day of the week;
(c) job name or street address;
(d) description of work carried out;
(e) start, lunch and finish times; and
(f) daily and weekly total hours.
Periods of non-payment
17. Mr van Heuzen performed work for the First Respondent in the following weeks for which he received no payment at all from the First Respondent:
(a) week commencing'8 December 2014;
(b) week commencing 15 December 2014; and
(c) week commencing 12 January 2015.
18. Mr Melit performed work for the First Respondent in the following weeks for which he received no payment at all from the First Respondent:
(a) week commencing 8 September 2014; ·
(b) week commencing 2 February 2015;
(c) week commencing 9 February 2015;
(d) week commencing 18 May 2015;
(e) week commencing 25 May 2015;
(f) week commencing 1 June 2015;
(g) week commencing 8 June 2015;
(h) week commencing 15 June 2015;
(i) week commencing 22 June 2015; and
(j) week commencing 29 June 2015,
(Melit Period of Non-payment).
D. THE LEGISLATION AND APPLICABLE INDUSTRIAL INSTRUMENTS
19. At all relevant times, the First Respondent was required to comply with the FW Act in respect of the employment of the Employees.
20. At all relevant times:
(a) the First Respondent was bound by the Building Award; and
(b) the Building Award applied to the First Respondent and the Employees.
21. By reason of the matters set out in paragraphs 12 and 14, the Employees were entitled to be classified as "apprentices".
22. By reason of the matters set out in paragraphs 1 to 12 above, Mr van Heuzen was entitled to the following classifications during the following periods:
(a) Stage 1 apprentice from 28 May 2012 to 27 May 2013;
(b) Stage 2 apprentice from 28 May 2013 to 27 May 2014; and
(c) Stage 3 apprentice from 28 May 2014 to 15 January 2015.
23. By reason of the matters set out in paragraphs 13 and 14 above, Mr Melit was entitled to the following classifications during the following periods:
(a) Stage 1 apprentice from 11 February 2014 to 10 February 2015;
(b) Stage 2 apprentice from 11 February 2015 to 30 June 2015.
E. ADMITTED CONTRAVENTIONS
Failure to pay wages on a weekly basis - Mr Melit
24. The First Respondent was required by clause 31.3 of the Building Award to pay Mr Melit not later than the end of ordinary hours of work on Thursday of each week.
25. During the Melit Period of Non-payment, Mr Melit performed work for the First Respondent.
26. For each of the weeks in the Melit Period of Non-Payment, the First Respondent failed to pay Mr Melit not later than the end of ordinary hours of work on Thursday of each week, or at all.
27. By reason of the matters set out at paragraphs 24 to 26, the First Respondent contravened section 45 of the FW Act by failing to pay Mr Melit weekly as required by clause 31.3 of the Building Award or at all.
Failure to pay ordinary wage for ordinary hours worked - Mr Melit and Mr van Heuzen
28. At all material times, the First Respondent was required by clause 19.7(b) of the Building Award to pay the Employees a minimum rate of pay, in addition to the allowances prescribed in clause 19.7(e) of the Building Award, as part of the ordinary weekly wage for all purposes (Ordinary Wages).
29. During the Melit Period:
(a) Mr Melit performed hours of work, for which he was entitled to be paid Ordinary Wages, which are set out in columns C and D of Schedule 1;
(b) the First Respondent was required to pay Mr Melit amounts on account of Ordinary Wages which are set out in column E of Schedule 1; and
(c) the First Respondent only paid Mr Melit amounts for Ordinary Wages which are set out in column F of Schedule 1, resulting in an underpayment of $4,477.85 as set out in column G of Schedule 1.
30. During the van Heuzen Period:
(a) Mr van Heuzen performed hours of work, for which he was entitled to be paid Ordinary Wages, whi9h are set out in columns C and D of Schedule 2;
(b) the First Respondent was required to pay Mr van Heuzen amounts on account of Ordinary Wages which are set out in column E of Schedule 2; and
(c) the First Respondent only paid Mr van Heuzen amounts for Ordinary Wages which are set out in column F of Schedule 1, resulting in an underpayment of $2,179.74 as set out in column G of Schedule 2.
31. By reason of the matters set out at paragraphs 28 to 30 above, the First Respondent contravened section 45 of the FW Act by failing to pay the Employees the minimum rate of pay as required by clause 19.7(b) of the Building Award and the allowances prescribed in clause 19.7(e) of the Building Award.
Failure to pay personal leave entitlements - Mr Melit
32. By reason of the matter set out at paragraph 14(h) above, Mr Melit accrued 10 days of paid personal/carer's leave for each year of service with the First Respondent in accordance with section 96(2) of the FW Act.
33. As at 11 February 2015, Mr Melit had accrued 10 days' personal/carer's leave.
34. The First Respondent was required by section 99 of the FW Act to pay Mr Melit for periods of personal leave taken at Mr Melit's base rate of pay for the ordinary hours of work for that period.
35. On 11 and 12 February 2015:
(a) Mr Melit took 16 ordinary hours "of personal leave for which he was entitled to be paid the base rate of pay which is set out in column C of Schedule 1;
(b) the First Respondent was required to pay Mr Melit an amount on account of paid personal leave which is set out in column E of Schedule 1;
(c) the First Respondent did not pay Mr Melit any amount on account of paid personal leave, resulting in an underpayment of $204.16 as set out in column G of Schedule 1.
36. By reason of the matters set out in paragraphs 32 to 35 above, the First Respondent contravened section 44(1) of the FW Act by failing to pay Mr Melit personal leave pursuant to section 99 of the FW Act.
Taking adverse action against Mr Melit
37. Section 340(1)(a)(ii) of the FW Act prohibited the First Respondent from taking adverse action against Mr Melit because Mr Melit had exercised a workplace right.
38. Mr Melit had a workplace right pursuant to section 341(1)(a) of the FW Act in that he was entitled to a benefit under a workplace law to take paid personal leave pursuant to section 97 of the FW Act.
39. On 11 and 12 February 2015, Mr Melit exercised his workplace right to take paid personal leave.
40. The First Respondent took adverse action against Mr Melit within the meaning of section 342(1) in that the First Respondent injured Mr Melit in his employment and/or the First Respondent altered the position of Mr Melit to Mr Melit’s prejudice, in that the First Respondent failed or refused to provide Mr Melit with 38 hours' work per week between 13 February 2015 and 4 May 2015 in accordance with the Melit Training Contract.
41. The First Respondent took the adverse action set out in paragraph 40 above because Mr Melit exercised a workplace right as set out in paragraph 39 above.
42. By reason of the matters set out in paragraphs 37 to 41 above, Mr Melit suffered loss in the amount of $6,220.80 by not receiving his ordinary wages for his ordinary hours from 13 February 2015 to 4 May 2015 as set out in columns C, D and E of Schedule 1.
43. By reason of the matters set out in paragraphs 37 to 41 above, the First Respondent contravened 340( 1 )( a)(ii) of the FW Act by taking adverse action against Mr Melit.
Failing to pay Safety Net Contractual Entitlement- Mr Melit
44. Further to the contravention set out at paragraph 43 above, Mr Melit had an entitlement to be paid his ordinary wages for his ordinary hours from 13 February 2015 to 4 May 2015 which was a safety net contractual entitlement pursuant to section 542(1) of the FW Act.
45. By reason of the matters set out in paragraph 44 above, and by acting as set out in paragraph 40 above, namely failing or refusing to provide Mr Melit with 38 hours' work per week between 13 February 2015 and 4 May 2015 in accordance with the Melit Training Contract, the First Respondent failed to provide Mr Melit's safety net contractual entitlement to payment for his full time hours of work of 38 hours per week.
46. By reason of the failure admitted in paragraph 45 above, the First Respondent underpaid Mr Melit $6,220.80 as set out in columns C to G in Schedule 1.
Failing to make and keep employee records - Mr Melit
47. Pursuant to section 5'35 of !he FW Act, the First Respondent was required to keep for seven (7) years records of the kind prescribed in Chapter 3, Part 3-6, Division 3, Subdivision 1 of the Fair Work Regulations 2009 (FW Regulations) in relation to each of its employees.
48. The First Respondent failed to keep for seven (7) years any records of the kind prescribed by regulations 3.31 to 3.34, 3.36 to 3.37 and 3.40 of the FW Regulations in relation to Mr Melit.
49. By reason of the matters set out in paragraphs 47-to 48 above, the First Respondent contravened section 535 of the FW Act by failing to keep for seven (7) years records of the kind prescribed by the FW Regulations in relation to Mr Melit.
Failing to give pay slips - Mr Melit
50. Pursuant to section 536 of the FW Act, the First Respondent was required to give Mr Melit a pay slip within one working day of paying an amount in relation to the performance of work.
51. During the Melit Period, Mr Melit was paid amounts in relation to the performance of work for the First Respondent.
52. The First Respondent failed to provide to Mr Melit any payslips during the Melit Period.
53. By reason of the matters set out in paragraphs 50 to 52 above, the First Respondent contravened section 536 of the FW Act by failing to provide Mr Melit with any payslips during the Melit Period.
Failing to pay fares and travel patterns allowance - Mr Melit and Mr van Heuzen
54. At all material times, the First Respondent was required by clause 25.12 of the Building Award to pay the Employees a proportion of the allowances prescribed in clause 25.2 of the Building Award.
55. The First Respondent was required by clause 25.2 of the Building Award to pay an employee an allowance of $17.01 from 30 September 2013 to 30 June 2014 and $17.43 from 1 July 2014 to 30 June 2015 for each day worked on construction work at a construction site located:
(a) within a radius of 50 kilometres of the GPO in a capital city of a State or Territory; or
(b) within a radius of 50 kilometres of the principal post office in a regional city or town in a State or Territory
(Fares and Travel Patterns Allowance).
56. During the Melit Period:
(a) Mr Melit worked various days on construction sites located within the radiuses set out at paragraphs 55(a) and 55(b) above, for which he was entitled to be paid the Fares and Travel Patterns Allowance, as set out in columns C, D and E of Schedule 1;
(b) the First Respondent was required to pay Mr Melit amounts on account of the Fares and Travel Patterns Allowance which are set out in column E of Schedule 1;
(c) the First Respondent only paid Mr Melit the amounts on account of the Fares and Travel Patterns Allowance which are set out in column F of Schedule 1, resulting in an underpayment of $1,224.06as set out in column G of Schedule 1.
57. During the van Heuzen Period:
(a) Mr van Heuzen worked various days on construction sites located within the radius set out at paragraph 55(a) above, for which he was entitled to be paid the Fares and Travel Patterns Allowance, as set out in columns C and D of Schedule 2;
(b) the First Respondent was required to pay Mr van Heuzen amounts on account of the Fares and Travel Patterns Allowance which are set out in column E of Schedule 2;
(c) the First Respondent only paid Mr van Heuzen the amounts on account of the Fares and Travel Patterns Allowance which are set out in column F of Schedule 1, resulting in an underpayment of $543.35 as set out in column G of Schedule 1.
58. For reason of the matters set out in paragraphs 54 to 57 above, the First Respondent contravened section 45 of the FW Act by failing to pay the Employees their Fares and Travel Patterns Allowances as required by clauses 25.2 and 25.12 of the Building Award.
Failing to pay wages for absence on public holiday - Mr Melit and Mr van Heuzen
59. Pursuant to section 116 of the FW Act, if an Employee is absent from their employment on a day that is a public holiday, the First Respondent is required to pay the Employee his base rate of pay for the Employee's ordinary hours of work on that day.
60. During the Melit Period:
(a) Mr Melit was absent from his employment on the public holiday of 8 June 2015, and was entitled to be paid his base rate of pay for his ordinary hours of work, as set out in columns C and D of Schedule 1;
(b) the First Respondent was required to pay Mr Melit an amount on account of the public holiday as set out in column E of Schedule 1; and
(c) the First Respondent did not pay Mr Melit any amount on account of the public holiday as set out in column F in Schedule 1, resulting in an underpayment of $102.08 as set out in column G of Schedule 1.
61. During the Mr van Heuzen Period,
(a) Mr van Heuzen was absent from his employment on the following public holidays and was entitled to be paid his base rate of pay for his ordinary hours of work, as set out in columns C and D of Schedule 2:
(i) 9 June 2014;
(ii) 25 December 2014;
(iii) 26 December 2014; and
(iv) 1 January 2015;
(b) the First Respondent was required to pay Mr van Heuzen amounts on account of the public holidays as set out in column E of Schedule 2; and
(c) the First Respondent paid Mr van Heuzen amounts on account of the public holidays set out in column F of Schedule 2, resulting in an underpayment of $327 .80 as set out in column G of Schedule 2.
62. By reason of the matters set out in paragraphs 59 to 61 above, the First Respondent contravened section 44(1) of the FW Act by failing to pay the Employees for their absences on a public holiday pursuant to section 116 of the FW Act.
Failing to pay overtime - Mr Melit and Mr van Heuzen
63. At all material times·, the First Respondent was required by clause 36.2 of the Building Award to pay the Employees overtime at the rate of time and a half for the first two hours and at double time thereafter for all time worked beyond the Employees' ordinary time of work, Monday to Friday.
64. The Employees' ordinary hours of work were the first eight hours worked each day on Monday, Tuesday, Wednesday and Thursday (irrespective of start time), and the first 6 hours worked on Friday.
65. The Employees' overtime rate is calculated on the basis of the Employees' ordinary wages pursuant to clause 19.7(e) of the Building Award.
66. During the Melit Period:
(a) Mr Melit performed overtime hours of work for which he was entitled to be paid at the rate of time and a half, and overtime hours of work for which he was entitled to be paid at the rate of double time, as set out in columns C and D of Schedule 1;
(b) the First Respondent was required to pay Mr Melit amounts on account of overtime which are set out in column E of Schedule 1;
(c) the First Respondent only paid Mr Melit amounts on account of overtime which are set out in column F of Schedule 1, resulting in an underpayment of $8,237.23 as set out in column G of Schedule 1.
67. During the van Heuzen Period:
(a) Mr van Heuzen performed overtime hours of work for which he was entitled to be paid at the rate of time and a half, and overtime hours of work for which he was entitled to be paid at the rate of double time, as set out in columns C and D of Schedule 2;
(b) the First Respondent was required to pay Mr van Heuzen amounts on account of overtime which are set out in column E of Schedule 2;
(c) the First Respondent only paid Mr van Heuzen amounts on account of overtime which are set out in column F of Schedule 1, resulting in an underpayment of $895.32 as set out in column G of Schedule 2.
68. By reason of the matters set out in paragraphs 63 to 67 above, the First Respondent contravened .section 45 of the FW Act by failing to pay the Employees overtime as required by clause 36.2 of the Building Award.
Failing to pay Saturday penalty rates - Mr Melit and Mr van Heuzen
69. At all material times, the First Respondent was required by clause 37.1 of the Building Award to pay the Employees at the rate of time and a half for the first two hours and double time thereafter for work on a Saturday, provided that all time worked on Saturday after 12 noon was paid at the rate of double time.
70. The Employees' Saturday penalty rate is calculated on the basis of the Employees' ordinary wages pursuant to clause 19.7(e) of the Building Award.
71. During the Melit Period:
(a) Mr Melit performed work on Saturdays for which he was entitled to be paid at the rate of time and a half, and work on Saturdays for which he was entitled to be paid at the rate of double time, as set out in columns C and D of Schedule 1;
(b) the First Respondent was required to pay Mr Melit amounts on account of Saturday penalty rates which are set out in column E of Schedule 1;
(c) the First Respondent only paid Mr Melit amounts on account of Saturday penalty rates which are set out in column F of Schedule 1, resulting in an underpayment of $4,453.49 as set out in column G of Schedule 1.
72. During the van Heuzen Period:
(a) Mr van Heuzen performed work on Saturdays for which he was entitled to be paid at the rate of time and a half, and work on Saturdays for which he was entitled to be paid at the rate of double time, as set out in columns C and D of Schedule 2;
(b) the First Respondent was required to pay Mr van Heuzen amounts on account of Saturday penalty rates which are set out in column E of Schedule 2;
(c) the First Respondent only paid Mr van Heuzen amounts on account of Saturday penalty rates which are set out in column F of Schedule 1, resulting in an underpayment of $1,439.95 as set out in column G of Schedule 2.
73. By reason of the matters set out in paragraphs 69 to 72 above, the First Respondent contravened section 45 of the FW Act by failing to pay the Employees Saturday penalty rates as required by clause 37.1 of the Building Award.
Failing to pay annual leave - Mr van Heuzen
74. The First Respondent was required by clause 38.2(a) of the Building Award to pay Mr van Heuzen, ,when he took a period of paid annual leave, the amount that he would have received for working ordinary hours if he had not been on leave.
75. The amount that Mr van Heuzen would have received for working ordinary hours, had he not been on leave, is his ordinary wages pursuant to clause 19.7(e) of the Building Award.
76. In the period from 18 December 2014 to 11 January 2015, Mr van Heuzen took 14 days' annual leave (van Heuzen Annual Leave), as set out in columns C and D of Schedule 2, for which the First Respondent:
(a) was required to pay Mr van Heuzen the amount set out in column E of Schedule 2; and
(b) did not pay Mr van Heuzen any amount on account of these hours of annual leave taken, resulting in the underpayment of $1,737.34 as set out in column G of Schedule 1.
77. By reason of the matters set out in paragraphs 74 to 76, the First Respondent contravened section 45 of the FW Act by failing to pay to Mr van Heuzen annual leave as required by clause 38.2(a) of the Building Award.
Failing to pay annual leave loading - Mr van Heuzen
78. During the van Heuzen Annual Leave, the First Respondent was required by clause 38.2(b) of the Building Award to pay Mr van Heuzen, an annual leave loading of 17.5% as set out in columns C and D of Schedule 2.
79. During the van Heuzen Annual Leave the First Respondent,
(a) was required to pay Mr van Heuzen an amount on account of annual leave loading which is set out in column E of Schedule 2; and
(b) did not pay Mr van Heuzen any amount on account of annual leave loading, resulting in an underpayment of $304.03 as set out in column G of Schedule 1.
80. By reason of the matters set out in paragraphs 78 to 79, the First Respondent contravened section 45 of the FW Act by failing to pay to Mr van Heuzen annual leave loading as required by clause 38.2(b) of the Building Award.
F. TOTAL UNDERPAYMENT
81. By reason of the matters admitted at paragraphs 24 to 80 above, the First Respondent underpaid the Employees a total amount of $32,347.20, being:
(a) $24, 919.67 owing to Mr Melit; and
(b)$7, 427.53 owing to Mr van Heuzen
G. RECTIFICATION
82. The First Respondent rectified the underpayments in full on:
(a) 8 March 2017 in respect of Mr Melit; and
(b) 9 March 2017 in respect of Mr van Heuzen.
H. ACCESSORIAL LIABILITY OF THE SECOND RESPONDENT
83. The parties repeat and rely on paragraphs 5 to 81 above.
84. At all relevant times, the Second Respondent:
(a) was aware of the Melit Training Contract and is referred to by name in the Melit Training Contract;
(b) was aware of the van Heuzen Training Contract and is the person who signed the van Heuzen Training Contract;
(c) was aware that the First Respondent was required to comply with the FW Act and industrial instruments;
(d) was aware that the First Respondent was required to pay the Employees in accordance with the Building Award;
(e) knew the duties and hours of work for each of the Employees;
(f) knew the periods of leave taken by each of the Employees;
(g) knew the amounts paid by the First Respondent to each of the Employees;
(h) was solely responsible for paying the Employees;
(i) was solely responsible for allocating work to the Employees; and
(j) knew that at least some payslips were not provided to Mr Melit.
85. The Second Respondent was the person with whom the Applicant dealt during the course of the investigation in relation to the Employees.
86. By reason of the matters set out in paragraphs 83 to 85 above, the Second Respondent admits that, by way of his acts and omissions, he was:
(a) involved in (within the meaning of section 550 of the FW Act) each of the contraventions admitted by the First Respondent above; and
(b) taken to have himself committed each of the contraventions admitted by the First Respondent.
Relevant Contraventions
The proceeding is concerned with the underpayment of approximately $35,000 to two (2) young carpentering apprentices named Melit and van Heuzen. The first respondent, a small company which operated in the construction industry, underpaid such employees their award entitlements, including a failure to pay them at all for some periods of work. The first respondent also took adverse action against Melit by excluding him from work for a period of eleven (11) weeks. The second respondent has relevantly admitted that he was directly or indirectly, knowingly concerned in, or party to, the contraventions. [2] He is therefore accessorily liable for such contraventions.
[2] Section 550 of Fair Work Act 2009 (Cth).
Though the respondents were granted leave to withdraw admissions in relation to the adverse action and safety net contractual entitlement allegations, no appearance or submissions were made on the date listed for the liability hearing in this proceeding. Accordingly, the first respondent was taken to have admitted to thirteen (13) contraventions of the FWA as pleaded in the Amended Statement of Claim (ASOC). The second respondent was also taken to have contravened the provisions of the FWA.
The making of the declarations as to contraventions of the Fair Work Act 2009 (Cth) (‘the FWA’) was unopposed. There has been no appearance by or on behalf of either respondent at the penalty hearing. The Court accordingly has proceeded on the basis of the content of the Statement of Agreed Facts, and in the light of the written and oral submissions made on behalf of the applicant.
Relevant considerations
When considering the imposition of a pecuniary penalty, the Court has had regard to the judgment of Allsop J in Australian Competition and Consumer Commission v Coles Supermarkets Pty Ltd (2015) 327 ALR 540 at [6] where His Honour said:
[6] The process of arriving at the appropriate sentence for a criminal offence involves an intuitive or instinctive synthesis of all relevant factors: Markarian v R (2005) 228 CLR 357; 215 ALR 213; [2005] HCA 25. The approach set out by the High Court in Markarian can be taken to be applicable to civil penalty proceedings of this nature: TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277; [2012] FCAFC 190 at [145]; Australian Competition and Consumer Commission v Energy Australia Pty Ltd [2015] FCA 274 at [103]; Australian Competition and Consumer Commission v Reebok Australia Pty Ltd [2015] FCA 83 at [116] (Reebok). The setting of the penalty is a discretionary judgment that does not involve assessing with any precision the “range” within which the conduct falls or by applying incremental deductions from the maximum penalty. Nonetheless, the maximum penalty must be given due regard because it is an expression of the legislature’s policy concerning the seriousness of the proscribed conduct. It also permits comparison between the worst possible case and the case the court is being asked to address and thus provides a yardstick: Markarian at [31].
The Court has also had regard to, and adopted, the principles as laid down in Kelly v Fitzpatrick (2007) 166 IR 14 at [14] where Tracey J adopted the approach of Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at [26] – [59] on the question of the imposition of pecuniary penalties. The relevant factors to be taken into account by a court when approaching the issue of the imposition of a pecuniary penalty were there held to include the following:
a) The nature and extent of the conduct which led to the breaches.
b) The circumstances in which that conduct took place.
c) The nature and extent of any loss or damage sustained as a result of the breaches.
d) Whether there had been similar previous conduct by the respondent.
e) Whether the breaches were properly distinct or arose out of the one course of conduct.
f) The size of the business enterprise involved.
g) Whether or not the breaches were deliberate.
h) Whether senior management was involved in the breaches.
i) Whether the party committing the breach had exhibited contrition.
j) Whether the party committing the breach had taken corrective action
k) Whether the party committing the breach had cooperated with the enforcement authorities
l) The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
m) The need for specific and general deterrence.
There has been no apology proffered by either respondent in this matter.
The contraventions were in most instances indicative of an employer playing lip service to the statutory obligations imposed upon it to pay wages on a timely basis; to pay the minimum rate of pay prescribed; to pay proper allowances; to pay fares and travel allowances; to pay appropriate overtime; to pay penalty rates for Saturday work; to pay proper annual leave and leave loading amounts; to pay public holiday leave; to pay personal leave; to make and keep employee records; and to provide payslips as and when required. Otherwise, the contraventions included an egregious example of adverse action being taken against the employee Melit as punishment for him legitimately taking two (2) days sick leave, by reason of illness, certified as such by his general practitioner.
On the question of the assessment of penalties and the appropriate level of penalties to be imposed in respect of a number of contraventions of the FWA, the Court, having regard to the principle of totality, respectfully adopts what was said in Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (No.2) [2018] FCA 1968 at [46] – [47] per O’Callaghan J as follows:
“[46] In my view, the question of the assessment of penalties is to be approached consistently with the joint judgment of the Full Court (comprised of the Chief Justice, White J and myself) in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97 (The Non-Indemnification Personal Payment Case) in particular at [22], viz:
The overwhelming importance of deterrence as the protective purpose of the penalty does not exclude the need to determine a penalty which is proportionate to the contravening conduct. The history of contravention is to be taken into account in fixing the proper level of penalty for the proportionate response to the contravention in question. Proportionality has within it the need to characterise the seriousness of the contravention. Proportionality of penal response to a contravention assessed by reference to its seriousness and gravity is an essential characteristic of the application of the statute. The penal response is for that contravention, not earlier contraventions: Veen v The Queen [No 2] (1988) 164 CLR 465 at 477-478. Prior contraventions may reveal an apparent disregard for the Act and the need for deterrence by a penalty at a level appropriate to achieve that objective. It is to be borne in mind, however, that it is for the conduct in question that the penalty is imposed, not for prior conduct.
[47] To the extent that the submissions of the applicant suggested that the judgments of the majority in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Broadway on Ann Case) [2018] FCAFC 126 may be read to suggest otherwise, I respectfully disagree.”
The Full Court of the Federal Court in Auimatagi v Australian Building and Construction Commissioner (2018) 267 FCR 268 at [176] said as follows:
“[176] The quality or objective seriousness of the contravention (on this hypothesis) fell far short of being worthy of the maximum penalty. It is a fundamental principle, at the core of the judicial power to impose a penalty, that the imposition is for the contravention in question. Prior contraventions, even so many and often so serious as the Union may have engaged in in the past, is a factor which may be taken into account in determining the appropriate quantum for the contravention; it cannot be taken to lead to a penalty that is disproportionate to the gravity of the instant contravention. The maximum is for the worst category of cases. See the points of principle set out in the reasons of Bromwich J (dissenting in the result, but not in point of principle) in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Broadway on Ann Case) [2018] FCAFC 126 at [93] and [102] to [110], and see Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97 at [22].”
The Court adopts the approaches as set out in each of the above cases.
The principle of totality has been taken into consideration by the Court when assessing the appropriate level of pecuniary penalty to be imposed in this matter. The Court has also had regard to the requirement that pecuniary penalty orders must in all circumstances be proportionate.
The conduct which has constituted the contraventions was deliberate and involved senior management. The Court finds, consistently with the penalties schedule below, that some of the contraventions were part of a separate breach, such that the contraventions ought not to be regarded as part of a single contravention.
On the question of deterrence, the Court recognises that though the penalty imposed must not be crushing or oppressive, it must be commensurate with the conduct engaged in by the respondents.
The Court respectfully adopts the reasons for judgment of the Court in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at [55] where it was said per French CJ, Kiefel, Bell, Gageler, Keane, Nettle and Gordon JJ
“55. No less importantly, whereas criminal penalties import notions of retribution (106) 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 (107):
“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 contravenor and by others who might be tempted to contravene the Act.”
The Court recognises that it has a broad discretion when assessing whatever penalties it considers ought to be imposed. The Court respectfully adopts the approach of Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd (2017) 275 IR 148 at [36] where His Honour said:
“[36] The written submissions in chief for the FWO helpfully outlined the approach that should be taken in determining the appropriate penalty, there being no dissent between the parties at this level of principle. 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 FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
3) Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
4) Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
5) Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) 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: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23]. [71] and [102].”
The Court further recognises that in the present case, each of the apprentices was vulnerable. They each depended upon regular employment to make ends meet. Each of the contraventions adversely impacted upon their ability to meet their respective monetary commitments as and when they fell due. The contraventions also adversely impacted upon their general well-being.
There is evidence that the first respondent had received a letter of caution for similar contraventions at an earlier point in time. [3] In such circumstances, the proscribed conduct could not be viewed as isolated.
[3] Cook affidavit at [39] – [68].
Though the respondents were fully reimbursed for their losses following the commencement of these proceedings, such reimbursement did not occur at the earliest opportunity. The first respondent had benefited from the non-payment of monies due to the apprentices for a period of two (2) years.
There has been little co-operation on the part of either respondent with the applicant.
Penalties
The contraventions were serious. They were committed against young and vulnerable employees. The penalties imposed reflect the need for employers, and the persons controlling the employers, to recognise that the provisions of the FWA relating to the payment of employees must be obeyed. The penalties also reflect the need to deter employers from committing similar contraventions in the future.
Having considered all relevant matters, the Court imposes the following pecuniary penalties upon the respondents:
| Contraventions (after s 557 course of conduct) | Maximum Penalty | Penalty Percentage | Allowance for Admissions 15% (0% for Taking Adverse Action) | Penalty to be Imposed | ||||
| G.Q. Industries | Mr Angus | G.Q. Industries | Mr Angus | G.Q. Industries | Mr Angus | G.Q. Industries | Mr Angus | |
| 1. s.45 - Failure to pay wages on weekly basis prescribed by cl 31.3 of the Building Award | $51,000 | $10,200 | 30% ($15,300) | 30% ($3,060) | $2,295 | $459 | $13,005 | $2,601 |
| 2. s.45 - Failure to pay minimum rate of pay prescribed by cl 31.3 of the Building Award | $51,000 | $10,200 | 30% ($15,300) | 30% ($3,060) | $2,295 | $459 | $13,005 | $2,601 |
| 3. s.45 - Failure to pay all purpose allowances prescribed by cl 19.7(e) of the FW Act | $51,000 | $10,200 | To be grouped with contravention 2 (minimum rate of pay) as part of a single unlawful transaction of failing to pay ordinary wages | |||||
| 4. s.45 - Failure to pay fares and travel pattern allowances prescribed by cl 25.12, 25.2(a) and 25.2(b) | $51,000 | $10,200 | 30% ($15,300) | 30% ($3,060) | $2,295 | $459 | $13,005 | $2,601 |
| 5. s.45 - Failure to pay overtime prescribed by cl 36.2 of the Building Award | $51,000 | $10,200 | 30% ($15,300) | 30% ($3,060) | $2,295 | $459 | $13,005 | $2,601 |
| 6. s.45 - Failure to pay Saturday penalties prescribed by cl 37.1 of the Building Award | $51,000 | $10,200 | 30% ($15,300) | 30% ($3,060) | $2,295 | $459 | $13,005 | $2,601 |
| 7. s.45 - Failure to pay annual leave prescribed by cl 38.2 of the Building Award | $51,000 | $10,200 | 30% ($15,300) | 30% ($3,060) | $2,295 | $459 | $13,005 | $2,601 |
| 8. s.45 - Failure to pay annual leave loading prescribed by cl 38.2 of the Building Award | $51,000 | $10,200 | To be grouped with contravention 7 (failure to pay annual leave) as part of a single transaction of failing to pay entitlements due for a period of leave | |||||
| 9. s.44(1) - Failure to pay public holidays as required by s.116 of the FW Act | $51,000 | $10,200 | 30% ($15,300) | 30% ($3,060) | $2,295 | $459 | $13,005 | $2,601 |
| 10. s.44(1) - Failure to pay personal leave as required by s.99 of the FW Act | $51,000 | $10,200 | 30% ($15,300) | 30% ($3,060) | $2,295 | $459 | $13,005 | $2,601 |
| 11. s.340(1)(a)(ii) - Taking adverse action | $51,000 | $10,200 | 60% ($30,600) | 60% ($6,120) | $0 | $0 | $30,600 | $6,120 |
| 12. s.535 - Failure to make and keep employee records | $25,500 | $5,100 | 30% ($7,650) | 30% ($1,530) | $1,147.50 | $229.50 | $6,502.50 | $1,300.50 |
| 13. s.536 - Failure to give pay slips | $25,500 | $5,100 | 30% ($7,650) | 30% ($1,530) | $1,147.50 | $229.50 | $6,502.50 | $1,300.50 |
| Totals | $612,000 | $122,400 | $168,300 | $33,660 | $20,655 | $4,131 | $147,645 | $29,529 |
The amounts of pecuniary penalties respectively payable by the respondents are as follows:
a)First Respondent $147,645.00
b)Second Respondent $29,529.00
Total: $177,174.00
Whether a Training Order Ought to be Made or Not
The applicant has submitted that this is an appropriate case where, in addition to the imposition of pecuniary penalties, a ‘Training Order’ ought to be made pursuant to the provisions of s. 545(1) of the FWA. It was submitted that the second respondent ought to be required to undertake training courses offered by the applicant.
In Fair Work Ombudsman v ZNZ Education Pty Ltd & Ors [2018] FCCA 3136 at [13] – [28], this Court found that there was no power on the part of the Court to make ‘Education Orders’, which proposed orders were analogous to the training order sought here by the applicant. It was there said:
“[13] The applicant has sought further orders as follows:
4. An order pursuant to subsection 545(1) of the FW Act that the Second Respondent, within a period of two months register with the Applicant’s Online Learning Centre at and complete all education courses designed for employers and provide the Applicant with evidence of completion of those courses within a further one month.
5. An order pursuant to subsection 545(1) of the FW Act that the Third Respondent, within a period of two months register with the Applicant’s Online Learning Centre at and complete all education courses designed for employers and provide the Applicant with evidence of completion of those courses within a further one month.
[14]Those orders were as sought in paragraphs 107 and 108 respectively of the statement of claim. Those proposed orders have been referred to by respective counsel as "education orders". The making of such orders in the past has been commonplace.
[15] It was submitted by Mr Spry of Counsel, on behalf of the applicant, that such orders were both remedial and preventative in the sense that the making of such orders imposed upon those who have contravened provisions of the Act an obligation to carry out a form of education which would relevantly inform them of their employment responsibilities, such that they would be loath to similarly contravene in the future.
[16] Such orders were submitted as being consistent with the purpose of the Act, and within the court's power, pursuant to the provisions of section 545 of the Act. Such orders could also be seen as having a deterrence aspect to them. That section provides as follows:
Orders that can be made by particular courts
Federal Court and Federal Circuit Court
545. (1) The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.
Note 1: For the court's power to make pecuniary penalty orders, see section 546.
Note 2: For limitations on orders in relation to costs, see section 570.
Note 3: The Federal Court and the Federal Circuit Court may grant injunctions in relation to industrial action under subsections 417(3) and 421(3).
Note 4: There are limitations on orders that can be made in relation to contraventions of subsection 65(5), 76(4), 463(1) or 463(2) (which deal with reasonable business grounds and protected action ballot orders) (see subsections 44(2), 463(3) and 745(2)).
(2) Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:
(a) an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;
(b) an order awarding compensation for loss that a person has suffered because of the contravention;
(c) an order for reinstatement of a person.
Eligible State or Territory courts
(3) An eligible State or Territory court may order an employer to pay an amount to, or on behalf of, an employee of the employer if the court is satisfied that:
(a) the employer was required to pay the amount under this Act or a fair work instrument; and
(b) the employer has contravened a civil remedy provision by failing to pay the amount.
Note 1: For the court's power to make pecuniary penalty orders, see section 546.
Note 2: For limitations on orders in relation to costs, see section 570.
(3A) An eligible State or Territory court may order an outworker entity to pay an amount to, or on behalf of, an outworker if the court is satisfied that:
(a) the outworker entity was required to pay the amount under a modern award; and
(b) the outworker entity has contravened a civil remedy provision by failing to pay the amount.
Note 1: For the court's power to make pecuniary penalty orders, see section 546.
Note 2: For limitations on orders in relation to costs, see section 570.
When orders may be made
(4) A court may make an order under this section:
(a) on its own initiative, during proceedings before the court; or
(b) on application.
Time limit for orders in relation to underpayments
(5) A court must not make an order under this section in relation to an underpayment that relates to a period that is more than 6 years before the proceedings concerned commenced.
[17] It was submitted by Mr Spry of Counsel, on behalf of the applicant, that the words -
The Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that the person has contravened a civil remedy provision.
- are very wide in ambit, and that they allow the court an unfettered discretion as to what orders it might make in addition to the making of a pecuniary penalty order. He submitted that the types of orders as set out in section 545(2)(a) to (c) inclusive were not exhaustive, and that, as a matter of construction, such subsection should not be looked to for the purpose of construing section 545(1) in respect of the type of "appropriate" orders which the court was empowered to, and ought to, make.
[18] Mr Latham of Counsel, on behalf of the second and third respondents, submitted that the court had no jurisdiction to make "education orders". He submitted that section 545(1) of the Fair Work Act ought to be so construed by reference to the types of orders set out in section 545(2), and that, therefore, the court was limited to the making of orders similar in nature and substance to those set out in subparagraphs (a) to (c) inclusive thereof. He referred the court to the decision of the High Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] 273 IR 211 (“ABCC v CFMEU”) where it was held, in respect of the making of a non-indemnification order (found to be a penalty order) that:
Despite the breadth of the power conferred by section 545(1) of the Act, it was limited to empowering the making of appropriate preventative, remedial and compensatory orders and, as such, did not include a power to make penal orders.
[19] Mr Latham submitted, similarly, that the breadth of the power conferred by section 545(1) of the Act was limited in respect of contraventions falling within section 545(1) to orders of the type prescribed in 545(2)(a) to (c) inclusive.
[20] In ABCC v CFMEU, Kiefel CJ, at [22] to [25] inclusive, said as follows:
22. It cannot be doubted that s 546(1) is the sole source of the power for the Federal Court to make an order that a person pay a pecuniary penalty when that person has contravened a civil remedy provision. The specific grant of power in s 546(1) involves a denial of a power to do the same thing in the same case free from the conditions and the qualification prescribed by the provision. The primary judge's reasons do not suggest that her Honour regarded s 545(1) as containing a power to penalise; rather, her Honour considered it might be used in aid of, and to reinforce, the penalty imposed under s 546(1).
23. Section 545(1) is not directed to the subject of penalties. By its terms, its sphere of operation is circumscribed. The express terms of s 545(1) permit the Federal Court only to make orders which it considers to be "appropriate" in the circumstance where it is satisfied that a person has contravened or proposes to contravene a civil remedy provision. The Court is therefore restricted to making the kinds of orders which are capable of properly being seen as appropriate to be made by the Court in the exercise of its jurisdiction. The ABCC's reliance on the principle that a power conferred on a court should not be construed by reference to unexpressed limitations is misplaced.
24. The terms of s 545(2) do not suggest that s 545(1) should be read more widely. Its opening words, "[w]ithout limiting subsection (1)", go no further than to ensure that s 545(1) is not read down in light of the specific orders set out in s 545(2) as examples of what orders may be made under s 545(1). In stating that "orders the Federal Court … may make include the following", s 545(2) is to be read as conferring power to make orders of the kinds specified whether or not orders of those kinds would always or sometimes fall within the scope of s 545(1). Section 545(2) is not cast as an amplification of the power conferred by s 545(1). Section 545(2) cannot be read as if it commenced, "The orders the Federal Court may make under subsection (1) include, but are not limited to, the following".
25. The terms of s 545(2) provide the context for the kinds of orders which may be made under s 545(1). The examples given in s 545(2) are directed to preventing contraventions or addressing or remedying the effects of a contravention, including compensating victims of a contravention. A non-indemnification order is not an order of these kinds. It is addressed to the penalty made in s 546(1).
[21] At paragraphs [30]-[31] the Chief Justice further said:
30. Section 545(1) of the FWA does not provide a general power to add to or enhance the effect of other remedies or orders such as a pecuniary penalty order. In Pelechowski v Registrar, Court of Appeal (NSW), Gaudron, Gummow and Callinan JJ, after observing that an asset preservation order for a short period might have been considered reasonably required in aid of execution, explained that the effect of an order made under the court's inherent power which restrained the judgment debtors altogether from selling their only asset was to give the judgment creditor additional security and could not be regarded as reasonably required for execution. In Jackson v Sterling Industries Ltd, Deane J said that the purpose of an order for the preservation of assets is not to create security for the plaintiff but to prevent the defendant from frustrating the processes of the court. Likewise, the power given under s 545(1) is not to add to the penalty made under s 546(1).
31 The primary judge was minded to make the non-indemnification order because her Honour considered that it was consistent with the purpose of a pecuniary penalty order that it have a stronger deterrent effect. Her Honour said that the "effectiveness of an exercise of judicial power to impose penalties is significantly impaired where the reality is that the contravener is likely to be entirely indemnified from the consequences of the order"
[22] In the joint judgment of Keane, Nettle and Gordon JJ at [103]-[104] it was said:
103. As Jessup J observed in the Full Court, it assists in the construction of s 545(1) to have regard to its legislative history. But the starting point of the process must be the text of s 545(1) read in the context of the Fair Work Act as a whole and, in particular, in light of s 546. So approached, the first and most immediate point of significance is the breadth of the terms in which s 545(1) empowers the court to make any order the court considers appropriate. What is "appropriate" for the purpose of s 545(1) falls to be determined in light of the purpose of the section and is not to be artificially limited. As the ABCC submitted, such broad terms of empowerment are constrained only by limitations that are strictly required by the language and purpose of the section. To adopt and adapt the language of Flick J in Transport Workers' Union of Australia, NSW Branch v No Fuss Liquid Waste Pty Ltd, the object and purpose of the power under s 545(1) is quite separate and distinct from that of the power under s 546 to order that a contravener pay a pecuniary penalty.
104. The second point of significance is contextual, and it points the other way. It will be observed that all of the example orders listed in s 545(2) are directed to preventing the occurrence of an apprehended contravention, remedying the effects of a committed contravention or compensating victims of a contravention for the consequences of the contravention. None of the example orders is penal. That suggests that the types of orders that may be regarded as "appropriate" within the meaning of s 545(1) are limited to preventative, remedial or compensatory orders, or at least do not include penal orders.
[23] Section 568 of the Act provides:
No limitation on Federal Circuit Court's powers
To avoid doubt nothing in this Act limits the Federal Circuit Court's powers under section 14, 15 or 16 of the Federal Circuit Court of Australia Act 1999.
[24] Those sections confer upon the Federal Circuit Court the power to make such orders as the court considers appropriate so as to finally determine issues before it. Keane, Nettle and Gordon JJ, when considering similar provisions in section 23 of the Federal Court of Australia Act 1999 (Cth), insofar as that section might have impacted upon the provisions of section 545(1) of the Act, said as follows at [109]-[110]:
The final consideration is s 564 of the Fair Work Act. Section 23 of the Federal Court of Australia Act empowers the Federal Court to make such orders as it considers "appropriate" to be made in the exercise of its jurisdiction and powers, as an incident of the general grant to it as a superior court of law and equity of the jurisdiction to deal with such matters. The power conferred by s 23 extends to making orders necessary to ensure the effective exercise of the determination of a matter and orders reasonably required or legally ancillary to ensuring that the court's order is effective according to its tenor. But the power conferred by s 23 does not extend to making penal orders. Consequently, the fact that s 564 provides that nothing in the Fair Work Act limits the orders that may be made under s 23 of the Federal Court of Australia Act does not suggest that the power conferred by s 545(1) extends to making penal orders. Rather, s 564 serves to make clear that the range of preventative, remedial and compensatory orders which may be made under s 545 does not, by implication, restrict the range of non-penal orders open to be made under s 23.
In the result, despite the breadth of the power conferred by s 545(1), it should be concluded that it is limited to making appropriate preventative, remedial and compensatory orders and as such does not include a power to make penal orders.
[25] Section 545(1) countenances the making of "appropriate orders", either where a person has contravened a provision of the Act, or where a person "proposes to contravene a provision of the Act". It cannot be said that the making of an education order in respect of a past contravention could be preventative, remedial or compensatory, in the sense of those words as used in the joint judgment of Keane, Nettle and Gordon JJ. The making of an education order, as contended for by the applicant as being appropriate and within power:
a) Would post-date the occurrence of any contravention and, therefore, not be preventative;
b) Would not remedy or cure the past occurrence of a contravention;
c) Is not compensatory in character; and
d) Has a penal character to it - namely, the imposition upon the respondents of an obligation to undertake tasks (over and above the payment by them of a monetary penalty as ordered) which were not prescribed by law, or otherwise flagged by Parliament as being penalties of the kind open to be imposed in the event of proven statutory breach.
[26] Section 545(1) does not permit the court to make penal “education orders” in respect of past contraventions. For it to do so, particular language would have needed to have been used by the legislature had that been the intention.
[27] It may be that in circumstances where there is clear evidence that a person "proposes to contravene" a civil remedy provision that, in addition to the making of an order granting an interim injunction pursuant to section 545(2) of the Act, the court might have power to make an education order. But that is a moot point for present purposes which need not be addressed further.
[28] The making of an education order as here contended for by the applicant is beyond the power of the court, and the application made on behalf of the applicant for such orders is dismissed.”
Mr McKechnie of Counsel, on behalf of the applicant, brought to the Court’s attention a decision of the Full Court of the Federal Court in Parker v ABCC (2019) 365 ALR 402 where, at [371], the Court found that if s.545 of the FWA did not provide power for the making of ‘publication orders’, s.23 of the Federal Court of Australia Act 1976 (Cth) did provide such power. The equivalent to s.23 of the Federal Court of Australia Act is s. 15 of the Federal Circuit Court of Australia Act 1999 (Cth). The Court accepts that it is bound by the reasoning in Parker to the extent that s.15 of the Federal Circuit Court Act of Australia Act 1999 (Cth) compliments this Court’s power to make any appropriate order, complimentary to s.545(1) of the FWA, which is preventative, remedial or compensatory - consistent with the reasoning of Keane, Nettle and Gordon JJ at [109] of the Section 545 Powers Case – and which is not penal in nature.
The question which arises for consideration, then, is whether or not the Court ought to exercise its power to make a training order in this case. The Court is not inclined to do so. It respectfully adopts what was said by the Full Court in Parker at [376] and [377], on the question of whether primary regard ought to first be had to the provisions of s. 545 of the FWA before any such order is made. The Court (Besanko, Reeves and Bromwich JJ) said as follows:
“[376] Even with the wide powers available under s 23, due and primary regard should be had to the specific legislation giving rise to the seeking of the order in the first place. That is not to fetter the breadth of the power in s 23, but rather to appropriately confine and restrain its exercise. Section 23, even though available as a source of power, should not lightly be used to bypass the limitation of the specific statutory power available. That is not to say that the wider power should never be used in that way, but rather that to do so requires proper justification, especially in light of the High Court’s decision in the Section 545 Powers Case. Reasons need to be given to bypass specific limitations of that kind. Of course, the primary judge cannot be criticised for failing to consider a limitation which did not exist until described by the High Court, at least not in those terms.
[377] Given that the ground has shifted in such an important way, with the benefit of the Section 545 Powers Case it may be seen that the exercise of the power has miscarried. The order should be set aside. In those circumstances it is not necessary to consider the alternative utility argument raised by ground 22, cast in terms of the circumstances that existed at the time that the primary judge made the order. Rather, it can be considered in the context of the fresh exercise of discretion.”
The Court does not accept that it is either necessary, desirable or appropriate that any training order be made. It does not accept, in any event, that any such order falls into the category of one which would be either preventative, remedial or compensatory in the sense as discussed in the Section 545 Powers Case.
Further, the Court considers that, in this case, there is little utility in subjecting the second respondent to training orders in circumstances where most of the contravening conduct occurred more than 5 years ago. There is no recent evidence before the Court that the first respondent is still trading, or whether the second respondent is still even involved in the building industry, whether in an individual capacity, as a director of a company, or as the owner of a business conducting building work. Though there is evidence that the first respondent was still registered as at September 2019, and that the second respondent was still a director of such company, that does not constitute evidence that the respondents are currently involved in the building industry. As was said by the Full Court in Parker at [378]:
“[378] The appellants’ argument, recast in terms of the fresh exercise of discretion, asserts that there is no utility in making the publication order now, with the events having occurred so many years ago. Against that, the Commissioner’s at least implicit argument is that the conduct of the CFMEU has continued, and numerous decisions of this Court have indicated that penalties alone, even very severe penalties, have not been effective in having a readily measurable effect. On the Commissioner’s argument, while the conduct may now be stale, the penalties that will have to be paid as a result of that conduct will occur in the immediate future, and thus be fresh and not stale. Given that the reasons of this Court are publically and easily available, the members of the CFMEU who are interested will have no difficulty in obtaining a copy and can be as well-informed as any publication order will achieve. In those circumstances, it is difficult to see what real or substantial additional deterrent value the publication order would provide beyond the fact of the penalties being imposed and being required to be paid. This is quite unlike a case in which a regulator is concerned to ensure that members of the public who might otherwise never chance upon a particular decision of this Court of potential importance to them in their capacity as, for example, consumers of goods or services the subject of the decision, orders and declarations made are informed of the existence and content of the case.”
The application for the making of a training order is accordingly dismissed.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Judge Egan
Associate:
Date: 24 April 2020
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