Fair Work Ombudsman v Get Plucked Holdings Pty Ltd
[2022] FedCFamC2G 807
Federal Circuit and Family Court of Australia
(DIVISION 2)
Fair Work Ombudsman v Get Plucked Holdings Pty Ltd [2022] FedCFamC2G 807
File number(s): SYG 1063 of 2021 Judgment of: JUDGE STREET Date of judgment: 12 October 2022 Catchwords: FAIR WORK – civil remedy provision –compliance notices- two contraventions by first respondent – second respondent involved in first notice contravention- where the matter of penalty on the papers by consent – where declarations were made by consent as to the first and second respondents’ contraventions of the Fair Work Act 2009 (Cth) -–general deterrence and specific deterrence –– penalty awarded Legislation: Fair Work Act2009 (Cth) ss 539(2), 546, 557, 566, 716 Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] 258 CLR 482
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Division: Division 2 General Federal Law Number of paragraphs: 36 Date of last submission/s: 17 February 2022 Place: Sydney Solicitor for the Applicant: Fair Work Ombudsman Solicitor for the Respondents: Harmers Workplace Lawyers ORDERS
SYG 1063 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: GET PLUCKED HOLDINGS PTY LTD ACN 613 353 745
First Respondent
SHARON LEE HAMILTON-CLARKE
Second Respondent
order made by:
JUDGE STREET
DATE OF ORDER:
12 October 2022
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth), within 28 days of the order:
(a)the first respondent pay a pecuniary penalty to the Commonwealth in the total sum for the two declared contraventions of s 716(5) of the Fair Work Act 2009 (Cth) in the amount of $20,000;
(b)the second respondent pay a pecuniary penalty to the Commonwealth for her involvement in the first respondent’s first declared contravention of s 716(5) of the Fair Work Act 2009 (Cth) in respect of the first compliance notice in the amount of $1,890.00.
2.Liberty be granted to the applicant to make an application for further steps of enforcement if order 1(a) and/or 1(b) are not complied with within 28 days of this order.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE STREET:
introduction
These proceedings are ones within the Court’s jurisdiction under s 566 of the Fair Work Act2009 (Cth) (“the Act”), and were commenced on 15 June 2021. On 23 November 2021, by consent, declarations were made as follows and, by consent orders, were made as follows:
THE COURT DECLARES BY CONSENT THAT:
1.The First Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) by failing to comply with the compliance notice issued on 17 December 2019 (First Compliance Notice).
2.The First Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) by failing to comply with the compliance notice issued 10 February 2021 (Second Compliance Notice).
3.Ms Hamilton-Clarke, the Second Respondent, was involved, within the meaning of subsection 550(2) of the Fair Work Act 2009 (Cth), in the First Respondent’s contravention of section 716(5) of the Fair Work Act 2009 (Cth) in respect of the First Compliance Notice.
THE COURT ORDERS BY CONSENT THAT:
4.Pursuant to section 545(1) of the Fair Work Act 2009 (Cth), that the First Respondent take the following actions within 28 days of this order:
i.pay Ms Villamagna the identified underpayment of $3,399.70 owing under the Second Compliance Notice;
ii.calculate and pay to Ms Villamagna’s nominated superannuation fund any superannuation owed to Ms Villamagna in respect of the identified underpayment of $3,399.70;
iii.calculate and pay to Ms Clement’s nominated superannuation fund any superannuation payable in respect of the amount of $1,251.47 paid to Ms Clement’s pursuant to the First Compliance Notice;
iv.produce evidence of the calculations performed and the payments made in compliance with subparagraphs (i) to (iii) above.
On 16 February 2022, procedural orders were made in relation to an affidavit filed on 17 January 2022 on behalf of the respondents, and the parties agreed that the matter of penalty be determined on the papers. The last written submissions and affidavit were filed on 17 February 2022. Unfortunately, due to internal oversight, the Court did not record the outstanding decision in its reserved judgment list until late last month.
The Court notes that the parties provided an agreed statement of facts on 15 October 2021, relevantly, as follows:
INTRODUCTION AND OVERVIEW OF ADMISSIONS
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).
2.This Statement of Agreed Facts sets out the matters agreed to by the parties on the issue of liability.
3.The First Respondent admits that it contravened section 716(5) of the Fair Work Act 2009 (Cth) (FW Act), a civil penalty provision, on two occasions by:
a.failing to comply with a compliance notice dated 17 December 2019; and
b.failing to comply with a compliance notice dated 10 February 2021.
4.The Second Respondent admits she was involved, within the meaning of section 550(2) of the FW Act, in the First Respondent’s failure to comply with the compliance notice dated 17 December 2019.
PART A: PARTIES AND BACKGROUND
Applicant
5.The Applicant, the Fair Work Ombudsman, is and was at all relevant times a:
a.statutory appointee of the Commonwealth pursuant to section 687(1) of the Fair Work Act 2009 (Cth) (FW Act);
b.Fair Work Inspector pursuant to section 701 of the FW Act; and
c.person with standing to bring these proceedings under section 539(2) of the FW Act.
Fair Work Inspectors
6.Peter Charles Richter (Inspector Richter) is and was at material times a Fair Work Inspector within the meaning of section 700 of the FW Act.
7.Andy Shu Cheong Lam (Inspector Lam) is and was at material times a Fair Work Inspector within the meaning of section 700 of the FW Act.
First Respondent
8.The First Respondent, Get Plucked Holdings Pty Ltd (ACN 613 353 745) (First Respondent), is and was at all relevant times:
a.a company incorporated under the Corporations Act 2001 (Cth) since 29 June 2016;
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; and
e.a company operating a business trading under names including Sharon Lee Eyebrow Atelier.
9.At all relevant times, the First Respondent:
a.operated its principal place of business:
i.between 29 June 2016 and 13 July 2020, at 51 Queen Street Woollahra in the State of New South Wales; and
ii.from 14 July 2020, at Suite 1, Level 1, 118 Queen Street, Woollahra in the State of New South Wales;
b.had its registered office address located at 9A Milton Avenue, Woollahra, in the State of New South Wales (Registered Office Address).
Second Respondent
10.The Second Respondent, Sharon Lee Hamilton-Clarke, is and was at all relevant times:
a.a natural person capable of being sued;
b.the sole director and secretary of the First Respondent since 29 June 2016; and
c.a person responsible for the operation, management, and control of the First Respondent
First Investigation
11.On 23 September 2019, Tara Clements lodged a request for assistance with the Office of the Fair Work Ombudsman in respect of her employment with the First Respondent.
12.On or around 25 September 2019, Inspector Richter commenced an investigation into Ms Clements’ employment with the First Respondent (First Investigation).
13.On 29 October 2019, Inspector Richter had a telephone conversation with the Second Respondent (via her mobile number 0477500700). During this conversation Inspector Richter advised the Second Respondent of the request for assistance lodged by Ms Clements and the allegations made by Ms Clements subject of the First Investigation, including failure to pay annual leave entitlements on termination and failure to pay wages for her final week of work (Clements’ Allegations). The Second Respondent also confirmed her email address was “[email protected]”, and advised that she was traveling to Hong Kong and would not be able to respond to any requests for information for 4.5 weeks.
14.On 29 October 2019, Inspector Richter emailed the Second Respondent at “[email protected]” requesting records and documents pertaining to Ms Clements’ employment by 31 October 2019. Inspector Richter did not receive a response to this email.
15.On 4 November 2019, Inspector Richter had a telephone conversation with the Second Respondent (via her mobile number 0477500700). During this telephone conversation Inspector Richter requested records of the hours worked by Ms Clements during her final week of work. The Second Respondent said words to the effect that she held records which showed that Ms Clements did not work the hours she claimed (that is during the period 2 to 7 September 2019) but was unable to provide said records for 2.5 weeks as her computer was being repaired.
16.On 5 November 2019, Inspector Richter emailed the Second Respondent at “[email protected]” requesting records and documents pertaining to Ms Clements’ employment by 5:00 pm, 7 November 2019, or alternatively, written reasons as to why requested records could not be provided. Inspector Richter did not receive a response to this email.
17.On 8 November 2019, Inspector Richter emailed the Second Respondent at “[email protected]” advising of his preliminary findings with respect to the Clements’ Allegations. On the same day, the Second Respondent sent Inspector Richter an email in response from “[email protected]” advising she was overseas until 22 November 2019.
18.On 11 November 2019 at Inspector Richter emailed the Second Respondent at “[email protected]” requesting a response to the email sent on 8 November 2019 evidence supporting the First Respondent’s position by 5:00 pm, 26 November 2019. Via the email address “[email protected]” the Second Respondent responded to Inspector Richter on the same day, requesting a dot point summary of evidence sought.
19.On 11 November 2019 at 3:27 pm, Inspector Richter sent an email to the Second Respondent at “[email protected]” requesting evidence relating to:
a.any record or document detailing Ms Clements’ start times and finish times during the period from 2 September 2019 to 7 September 2019;
b.annual leave records for Ms Clements; and
c.any written correspondence (including emails and text messages) relating to the termination of Ms Clements’ employment.
20.On 26 November 2019, the Second Respondent emailed Inspector Richter via the email address “[email protected]”, denying the Clements’ Allegations. No evidence in support was attached to this email by the Second Respondent.
21.On 27 November 2019, Inspector Richter replied to the Second Respondent via the email address “[email protected]”, advising that he would consider her response provided on 26 November 2019 and would be in contact in the near future.
22.On 12 December 2019, Inspector Richter emailed the Second Respondent via the email address “[email protected]”, and, amongst other things:
a.advised the Second Respondent that he considered the appropriate enforcement measure was to issue a compliance notice to the First Respondent; and
b.invited the Second Respondent to attend an interview at the offices of the Applicant.
Inspector Richter did not receive a response to this email.
23.As a result of the First Investigation, Inspector Richter formed a belief that at all relevant times:
a.Ms Clements was employed by the First Respondent from 9 August 2019 to 7 September 2019;
b.Ms Clements was employed as a full-time employee;
c.the FW Act applied to the First Respondent in relation to Ms Clements;
d.the Hair and Beauty Industry Award 2010 (Hair and Beauty Award) covered and applied to the First Respondent in respect of Ms Clements; and
e.the First Respondent had contravened the following terms of the Hair and Beauty Award in respect of the employment of Ms Clements:
i.clause 17: full-time minimum wage; and
ii.clause 33.1: annual leave
(Clements Contraventions).
Second Investigation
24.On 14 April 2020, Kathryn Villamagna lodged a request for assistance with the Office of the Fair Work Ombudsman in respect of her employment with the First Respondent.
25.On or around 14 April 2020, Inspector Lam commenced an investigation into Ms Villamagna’s employment with the First Respondent (Second Investigation).
26.On 6 May 2020, Inspector Richter attempted to call the Second Respondent via her mobile number 0477500700 in respect of the Second Investigation, and left a voicemail requesting a call back. Inspector Richter did not receive a response to this telephone call.
27.On 7 May 2020 at 2:55 pm Inspector Richter attempted to call the Second Respondent via her mobile number 0477500700 in respect of the Second Investigation, and left a voicemail requesting a call back.
28.On 7 May 2020 at 2:55 pm Inspector Richter attempted to call the Second Respondent via her mobile number 0413700700 in respect of the Second Investigation, and left a voicemail requesting a call back.
29.On 7 May 2020, the Second Respondent returned Inspector Richter’s call via her mobile number 0413700700. During this telephone conversation Inspector Richter:
a.advised the Second Respondent of the request for assistance lodged by Ms Villamagna and the allegations made by Ms Villamagna against the First Respondent, including failure to pay annual leave entitlements on termination, failure to make payment in lieu of notice and failure to pay wages for her final week of work (Villamagna Allegations); and
b.confirmed that he would send an email to the Second Respondent outlining the Villamagna Allegations and requesting relevant records and documents.
30.During the telephone conversation on 7 May 2020 referred to above, the Second Respondent:
a.advised that her insurer, Employsure, dealt with this side of the business;
b.confirmed her personal mobile number was 0413700700 (Personal Number) and contact could be made via the mobile number 0477500700 (Alternative Number); and
c.confirmed her correct email address was “[email protected]”.
31.On 7 May 2020, Inspector Richter sent an email to the Second Respondent at “[email protected]”, setting out the Villamagna Allegations and requesting records and documents pertaining to Ms Villamagna’s employment by 5:00pm 21 May 2020. The email stated that the Second Respondent was welcome to forward the email and Inspector Richter’s contact details to her representatives. Inspector Richter did not receive a response to this email.
32.On 22 May 2020, Inspector Richter emailed the Second Respondent at “[email protected]” noting he had not received any information from her or her representatives and again requested the information referred to in his email sent on 7 May 2020, by 5:00pm 25 May 2020. Inspector Richter did not receive a response to this email.
33.On 26 May 2020, at 10:22 am Inspector Richter attempted to call the Second Respondent via her Alternative Number, and left a voicemail requesting a call back.
34.On 26 May 2020, at 10:35 am Inspector Richter emailed the Second Respondent at “[email protected]” and by text message to her Personal Number (using a email to text message application “messagenet”) referring to previous requests for information on 7 and 22 May 2020, and asking the Second Respondent to provide reasons for failing to provide records and documents by the requested due dates by 5:00 pm 26 May 2020. Inspector Richter did not receive a response to this email.
35.On 27 May 2020, Inspector Richter emailed the Second Respondent at “[email protected]” outlining his preliminary findings in respect of the Villamagna Allegations, and invited the Respondents to respond and provide any supporting evidence by 5:00pm 3 June 2020. Inspector Richter did not receive a response to this email.
36.On 5 June 2020, Inspector Richter emailed the Second Respondent at “[email protected]”, advising that Inspector Lam had taken over the Second Investigation.
37.On 8 July 2020, Inspector Lam sent an email to the Second Respondent at “[email protected]”, and amongst things, referred to previous correspondence sent by Inspector Richter, and requesting a response and supporting evidence by 5:00pm 3 July 2020. Inspector Lam did not receive a response to this email.
38.On 17 July 2020, Inspector Lam attempted to call the Second Respondent via her Personal Number, and left a voicemail requesting a call back. Inspector Lam did not receive a response to this telephone call.
39.On 20 July 2020, Inspector Lam emailed the Second Respondent at “[email protected]”, advising that he had attempted to contact her via telephone and requested documents or a response be provided.
40.On 21 July 2020, Inspector Lam had a telephone conversation with the Second Respondent. During the telephone conversation, Inspector Lam confirmed he had taken over the Second Investigation and the Second Respondent responded with words to the effect that the Villamagna Allegations were untrue.
41.On 21 July Inspector Lam sent an email to the Second Respondent at “[email protected]”, and, amongst things, advising that a possible outcome of his assessment may be the issuance of a compliance notice and again requested that the Respondents provide evidence to support their denial of the Villamagna Allegations.
42.On 28 July 2020, Inspector Lam issued a Notice to Produce records and documents to the First Respondent pursuant to section 712 of the FW Act pertaining to the employment of Ms Villamagna and the Second Investigation (NTP) via registered post on the Registered Office Address of the First Respondent, due at 4:00pm 14 August 2020. Inspector Lam did not receive a response to this email.
43.On 18 August 2020, Inspector Lam sent an email to the Second Respondent at “[email protected]”, and, amongst things, requested a response to the NTP. Inspector Lam did not receive a response to this email.
44.On 19 August 2020, Inspector Lam send a letter to the Registered Office Address addressed to the Second Respondent as proper officer of the First Respondent via post and email to [email protected], advising that the First Respondent had failed to comply with the NTP (FTC Letter) and requesting the First Respondent provide any reasonable excuse for its non-compliance by 26 August 2020. Inspector Lam did not receive a response to this email.
45.On 26 August 2020, Inspector Lam sent an email to the Second Respondent at “[email protected]”, noting that the Respondents had failed to comply with the NTP and had not responded to the FTC Letter, and requested a response by 29 August 2020. Inspector Lam did not receive a response to this email.
46.As a result of the Second Investigation, Inspector Lam formed a belief that:
a.Ms Villamagna was employed by the First Respondent from 5 September 2019 to 21 March 2020;
b.Ms Villamagna was employed as a full-time employee;
c.the FW Act applied to the First Respondent in relation to Ms Villamagna; and
d.the Hair and Beauty Award covered and applied to the First Respondent in respect of Ms Villamagna;
e.the First Respondent had contravened the following provisions in respect of Ms Villamagna:
i.clause 17 of the Hair and Beauty Award;
ii.section 90(2) of the FW Act, a provision of the National Employment Standards; and
iii.section 117 of the FW Act, a provision of the National Employment Standards.
(Villamagna Contraventions).
Previous attempts to give the Second Compliance Notice
47.Between 14 September 2020 and 22 January 2021, Inspector Lam attempted to cause a compliance notice relating to the Villamagna Contraventions to be served on the First Respondent on three occasions as set out in paragraphs 48 to 55 below. In each instance, due to identified deficiencies with the content or the service of the notice, the relevant notice was withdrawn. The Villamagna Contraventions were ultimately included in the Second Compliance Notice as defined at paragraph 65 below.
48.On 14 September 2020, Inspector Lam first caused a compliance notice relating to the Villamagna Contraventions (First Villamagna Notice) to be sent to the First Respondent’s Registered Office Address via express post, which required the First Respondent to take required action by 19 October 2020.
49.On 15 September 2020, Inspector Lam sent an email to the Second Respondent at “[email protected]”, attaching the First Villamagna Notice and covering letter. On the same day Inspector Lam received a “read receipt”, showing that the said email had been read at 1:00pm.
50.On 20 October 2020, Inspector Lam sent an email to the Second Respondent at “[email protected]”, attaching a letter advising that the First Respondent had failed to comply with the First Villamagna Notice and requesting the Respondents any provide a reasonable excuse for non-compliance. On 21 October 2020 Inspector Lam received a “read receipt”, showing that the said email had been read at 8:03 am.
51.On 28 October 2020, Inspector Lam had a telephone conversation with the Second Respondent in respect of the First Villamagna Notice. During the telephone conversation, the Second Respondent said, among other things, words to the effect that:
a.she was unwell following back surgery and punctured lungs so could only talk for a brief time;
b.she had responded to all emails sent;
c.she continued to deny the Villamagna Allegations against the First Respondent.
52.On 22 December 2020, Inspector Lam caused a second compliance notice relating to the Villamagna Contraventions (Second Villamagna Notice) and covering letter to be served on the First Respondent’s Registered Office Address via process servers, Sharmans Investigations and Process Servers (Sharmans) . The covering letter stated that the First Villamagna Notice had been withdrawn. On the same day Inspector Lam received a service report from Sharmans advising that service was effected on the Second Respondent personally at 7:24 am.
53.On 23 December 2020, Inspector Lam sent an email to the Second Respondent at “[email protected]”, attaching the Second Villamagna Notice and covering letter.
54.On 22 January 2021, Inspector Lam caused Sharmans to serve a third compliance notice relating to the Villamagna Contraventions (Third Villamagna Notice) and covering letter to on the First Respondent’s Registered Office Address. The covering letter stated that the Second Villamagna Notice had been withdrawn.
55.On 28 January 2021, Inspector Lam received a service report from Sharmans via email in respect of the Third Villamagna Notice. In the service report Sharmans advised that:
a.its agent buzzed the intercom at the Registered Office Address and spoke personally with a person who self-identified as the Second Respondent;
b.during their conversation the agent explained the reason for his attendance to the Second Respondent;
c.the Second Respondent responded with words to the effect: 'I'm not accepting that’, and proceeded to hang up the intercom.
d.the agent placed copies of the Third Villamagna Notice and covering letter which were in a sealed envelope in the letter box at the Registered Office Address.
PART B: ADMITTED CONTRAVENTIONS OF SECTION 716(5) OF THE FW ACT
First Compliance Notice
56.On 17 December 2019, by registered post to the Registered Office Address, Inspector Richter gave a notice pursuant to section 716(2) of the FW Act to the First Respondent in respect of the Clements Contraventions (First Compliance Notice).
57.On 20 December 2019, Inspector Richter also emailed the Second Respondent a copy of the First Compliance Notice via the email address “[email protected]”. Inspector Richter did not receive a response to this email.
58.The First Compliance Notice was, and stated it was, issued pursuant to section 716(2) of the FW Act.
59.The First Compliance Notice met the requirements of section 716(3) of the FW Act.
60.The First Compliance Notice required the First Respondent to take the following specified action by 24 January 2020 to remedy the direct effects of the Clements Contraventions:
a.identify the amounts paid to Ms Clements in respect of minimum wages and annual leave on termination;
b.calculate the amount that Ms Clements should have been paid in respect of minimum wages and annual leave on termination;
c.make a payment to Ms Clements of the difference between the amounts she was paid and the amounts she was entitled to be paid (Clements Underpayment);
d.make a record of the information and amounts referred to in subparagraphs 60(a) to 590(c) above;
e.calculate any additional superannuation contributions required by clause 24.2 of the Hair and Beauty Award in respect of the Clements Underpayment; and
f.pay this amount of superannuation to Ms Clements’ nominated superannuation fund.
61.The First Compliance Notice also required the First Respondent to produce evidence to the Inspector Richter, by 31 January 2020, of its compliance with the First Compliance Notice by producing:
a.a schedule that records the information and amounts referred to in paragraph 65 above; and
b.evidence demonstrating payment was made to Ms Clements.
Failure to comply with the First Compliance Notice
62.The First Respondent admits it did not:
a.take any steps in response to the First Compliance Notice by 24 January 2020; and/or
b.produce any evidence of steps taken to comply with the First Compliance Notice by 31 January 2020.
63.By reason of the matters admitted in paragraph 62 above, the First Respondent admits it:
a.failed to comply with the First Compliance Notice; and
b.contravened section 716(5) of the FW Act.
64.As at the date of the Statement of Claim, the First Respondent had not:
a.produced a schedule that recorded the information and amounts referred to in paragraph 60 to the Applicant;
b.paid Ms Clements any amounts as required by the First Compliance Notice; and/or
c.produced any evidence of payment made to Ms Clements.
Second Compliance Notice
65.On 10 February 2021, by process server on the Registered Office, Inspector Lam gave a notice pursuant to section 716(2) of the FW Act to the First Respondent in respect of the Villamagna Contraventions (Second Compliance Notice).
66.On 17 February 2021, Inspector Lam also sent an email to the Second Respondent at “[email protected]”, attaching the Second Compliance Notice and covering letter.
67.The Second Compliance Notice was, and stated it was, issued pursuant to section 716(2) of the FW Act.
68.The Second Compliance Notice met the requirements of section 716(3) of the FW Act.
69.The Second Compliance Notice required the First Respondent to take the following specified action by 11 March 2021 to remedy the direct effects of the Villamagna Contraventions:
a.identify the amounts paid to Ms Villamagna in respect of minimum wages, annual leave on termination and payment in lieu of notice of termination;
b.calculate the amount that Ms Villamagna should have been paid in respect of respect of minimum wages, annual leave on termination and payment in lieu of notice of termination;
c.make a payment to Ms Villamagna of the difference between the amounts she was paid and the amounts she was entitled to be paid (Villamagna Underpayment);
d.make a record of the information and amounts referred to in subparagraphs 69(a) to 69(c) above;
e.calculate any additional superannuation contributions required by clause 24.2 of the Hair and Beauty Award in respect of the Villamagna Underpayment; and
f.pay this amount of superannuation to Ms Villamagna’s nominated superannuation fund.
70.The Second Compliance Notice also required the First Respondent to produce evidence to the Inspector Lam, by 18 March 2021, of its compliance with the Second Compliance Notice by producing:
a.a schedule that recorded the information and amounts referred to in paragraph 69; and
b.evidence demonstrating payment was made to Ms Villamagna.
Failure to comply with the Second Compliance Notice
71.The First Respondent admits it did not:
a.take any steps in response to the Second Compliance Notice by 11 March 2021; and/or
b.produce any evidence of steps taken to comply with the Second Compliance Notice by 18 March 2021.
72.By reason of the matters in paragraph 71 above, the First Respondent admits it:
a.failed to comply with the Second Compliance Notice; and
b.contravened section 716(5) of the FW Act.
73.As at the date of the Statement of Claim, First Respondent had not:
a.produced a schedule that records the information and amounts referred to in paragraph 69 to the Applicant;
b.paid Ms Villamagna any amounts as required by the First Compliance Notice; and/or
c.produced any evidence of payment made to Ms Villamagna.
PART C: ACCESSORIAL LIABILITY OF SECOND RESPONDENT IN RESPECT OF THE FAILURE TO COMPLY WITH THE FIRST COMPLIANCE NOTICE
74.The Parties refer to and repeat paragraph 10 above.
75.Ms Hamilton-Clarke:
a.from 28 October 2019 to 26 November 2019, communicated with Inspector Richter in the course of the First Investigation on behalf of the First Respondent by email and telephone;
b.was a person who sent and received emails from the email address [email protected].
76.By reason of the matters admitted in paragraphs 56, 57, 74 and 75 above, Ms Hamilton-Clarke received a copy of the First Compliance Notice.
77.Ms Hamilton-Clarke:
a.was, at all relevant times, a person with the authority to cause the First Respondent to comply with the First Compliance Notice;
b.took no steps, during the period for compliance or since, to ensure that the First Respondent complied with the First Compliance Notice; and
c.has not responded to or communicated with the Applicant since the First Respondent was given the First Compliance Notice.
78.By reason of matters admitted in paragraph 10, 76 and 77 above, at all relevant times Ms Hamilton-Clarke:
a.was responsible for ensuring that the First Respondent complied with the First Compliance Notice;
b.had actual knowledge of the First Compliance Notice and its contents;
c.had actual knowledge that the First Respondent:
i.did not take the steps required by the First Compliance Notice within the time required or at all; and
ii.as a result, did not comply with the First Compliance Notice; and
d.was an intentional participant in the First Respondent’s failure to comply with the First Compliance Notice.
79.By reason of the matters admitted in paragraph 74 to 78 above, Ms Hamilton-Clarke:
a.was a person involved within the meaning of section 550(2) of the FW Act, in the First Respondent’s contravention of section 716(5) of the FW Act in respect of the First Compliance Notice; and
b.by reason of section 550(1) of the FW Act is taken to have contravened section 716(5) of the FW Act in respect of the First Compliance Notice.
PART D: AGREED UNDERPAYMENT AMOUNTS
80.The Parties agree that the Clements Underpayment is:
Entitlement Amount Total Minimum wage contravention- clause 17 of the Award $958.12 $1251.47 Annual leave on termination contravention- section 90(2) of the Fair Work Act 2009 $293.35
81.The Parties agree that the Villamanga Underpayment is:
Entitlement Amount Total Minimum wage contravention- clause 17 of the Award $1,109.92 $3,399.70 Annual leave on termination contravention- section 90(2) of the Fair Work Act 2009 $1352.70 Payment in lieu of notice contravention- section 117(2) of the Fair Work Act 2009 $937.08
evidence
The applicant also provided an affidavit by Peter Charles Richter, sworn 6 December 2021, which identified the background investigation in relation to the employee of the first respondent, Ms Tara Clements, and the sending of the first compliance notice, dated 17 December 2019, and a failure to respond in that regard. The affidavit then refers to a second investigation in relation to an employee of the first respondent, Ms Kate Villamagna, and the taking of the investigative steps as identified in the statement of agreed facts. The affidavit also identified relevant education in relation to the respondents.
The applicant also relied upon an affidavit of Andy Shu Cheong Lam, sworn on 3 December 2021, which also addressed the steps in respect of the second investigation and the issuing of a second compliance notice, dated 10 February 2021. The affidavit also, relevantly, provided information from the ASIC database in respect of the respondents and information about the hairdressing and beauty service industry.
The applicant also relied upon an affidavit of Andy Shu Cheong Lam, dated 7 February 2022, which identified steps taken to contact Ms Clements, the confirmation received on 10 November 2021 of payment to Ms Clements from the respondents, and referred to an overpayment and unsuccessful endeavour to recover the overpayment.
The second respondent identified that she is the sole shareholder and director of the first respondent in an affidavit dated 17 February 2022. The affidavit referred to the employment of Ms Clements from 9 August 2019 until 7 September 2019. The affidavit referred to an email, dated 28 August 2019, in which Ms Clements stated that she intended to resign her position as salon coordinator. The affidavit referred to an alleged shortfall in the cashbox on Ms Clements’ last day at work and alleged attempts to contact Ms Clements to arrange for the outstanding payment in or around September 2019.
The affidavit also identified the employment of Ms Villamagna from 5 September 2019 to 21 March 2020, and addressed the circumstances in which Ms Villamagna requested payment for her final week on 3 April 2020 and alleged attempts, in April 2020, to contact Ms Villamagna to pay her the amount owed. The second respondent alleged that she was unaware of the earlier complaints referred to at paragraph 10 in the affidavit of Peter Charles Richter.
The affidavit of the second respondent referred to the payment made on 5 November 2021 to Ms Clements, an alleged overpayment, and an unsuccessful endeavour to recover the overpayment. The affidavit also addressed payment to Ms Villamagna on 5 November 2021 and that the details were corrected in the making of the payment to the updated bank account details on behalf of Ms Villamagna on 23 December 2021.
The second respondent alleged that the business is a small beauty industry employer with only four employees, and has been impacted by the COVID-19 pandemic. The affidavit also deposed to a reduction in revenue. The second respondent identified a commitment to taking steps to prevent employee underpayments from occurring in the future and expressed remorse for the deficient systems that were then in place.
Law
Section 546 of the Act is as follows:
Pecuniary penalty orders
(1) The Federal Court, the Federal Circuit and Family Court of Australia (Division 2) or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.
Note: Pecuniary penalty orders cannot be made in relation to conduct that contravenes a term of a modern award, a national minimum wage order or an enterprise agreement only because of the retrospective effect of a determination (see subsections 167(3) and 298(2)).
Determining amount of pecuniary penalty
(2) The pecuniary penalty must not be more than:
(a)if the person is an individual--the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2); or
(b) if the person is a body corporate--5 times the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2).
Payment of penalty
(3) The court may order that the pecuniary penalty, or a part of the penalty, be paid to:
(a) the Commonwealth; or
(b) a particular organisation; or
(c) a particular person.
Recovery of penalty
(4)The pecuniary penalty may be recovered as a debt due to the person to whom the penalty is payable.
No limitation on orders
(5)To avoid doubt, a court may make a pecuniary penalty order in addition to one or more orders under section 545.
It is not in dispute that the compliance and notice of contraventions, the subject of the two declarations made on 23 November 2021, is a civil remedy provision within s 539(2) of the Act. The Court accepts that the appropriate approach to penalty is as set out by the learned Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301, relevantly:
[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 notes that the statutory course of conduct provision in s 557 of the Act does not apply in respect of contraventions under s 716 of the Act. The Court also notes that the failure to comply with each of the compliance notices should be treated as a distinct contravention as against the first respondent and that, accordingly, the common elements for the grouping principle has no application. Under ss 539(2) and 546(2) of the Act, the maximum penalty relevantly in respect to the failure to comply with the first compliance notice is $6,300.00 for an individual and $31,500.00 for a corporation, and the second compliance notice, a $33,300.00 for a corporation
The Court has taken into account the importance of specific and general deterrence in relation to the objective of imposing civil penalties as identified in Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] 258 CLR 482 at 506 and 513. The Court has also taken into account the observations of the High Court of Australia in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3 at [116] in respect of the principal object of deterrence depending upon a penalty having the necessary sting or burden to achieve specific and general deterrence as being the raison d'etre for its imposition.
The Court has also taken into account the non-exhaustive factors to determine the appropriate penalty in an industrial regulatory context as identified in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7, as endorsed by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080 at [14], relevantly as follows:
•The nature and extent of the conduct which led to the contraventions;
•The circumstances in which that conduct took place;
•The nature and extent of any loss or damage sustained as a result of the contraventions;
•Whether there has been similar previous conduct by the respondent;
…
•The size of the business enterprise involved;
•Whether or not the contraventions were deliberate;
•Whether senior management was involved in the contraventions;
•Whether the party committing the contraventions has exhibited contrition; taken corrective action; and/or cooperated with the enforcement authorities; and
•The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements.
In relation to the contraventions, the applicant addressed the factors and, in summary, after applying a 20 per cent discount, provided a table in respect of proposed penalties as follows:
Respondent Maximum Penalty Maximum Penalty (applying 20% discount) Proposed penalties Get Plucked – s 716(5) regarding the First Compliance Notice $31,500 $25,200 $8,820 - $11,340 Ms Hamilton-Clarke – s 550 regarding the First Compliance Notice $6,300 $5,040 $1,764 - $2,268 Get Plucked – s 716(5) regarding the Second Compliance Notice $33,300 $26,640 $13,320 - $14,652
Respondents’ Submissions.
The respondents seek to take issue with the objective seriousness of the contraventions and refer to alleged corrective action, cooperation and contrition. In summary, the first respondent said that the appropriate penalties range should be as follows:
(a) for the First Respondent:
(i) For failing to comply with the First Compliance Notice: $0 to $5,906;
(ii)for failing to comply with the Second Compliance Notice: $0 to $1,181;
(b)for the Second Respondent, for her involvement in the First Respondent’s failure to comply with the Failing to comply with the First Compliance Notice: $0 to $6,244.
The respondent focused on the corrective action in paying 100 per cent of the aggregated underpayment amounts, that there was training that was to be provided in relation to compliance, an alleged reliance on incorrect advice, and the small size of the business. No issue is taken as to the principles to be applied.
The respondents’ submissions expanded on the alleged reliance upon erroneous advice. Attention was also drawn to the nature and extent of the loss of the overpayment made to Ms Clements. It was submitted that there is no need for specific deterrence because of the respondents’ commitment to corrective action and proactive compliance measures. It was submitted that the prior complaints were not ones of which the respondents were aware and that they had not been placed on notice of the alleged prior complaints. Accordingly, it was submitted that the prior complaints should not be considered as an aggravating factor in the present case.
The respondents accepted that general deterrence is a significant factor in the determination of penalties, that the amount of penalty should be proportionate to the contravention and not so high as to be oppressive. It was submitted that there are mitigating factors in the present case that diminish the force of the applicant’s submissions in relation to industry standards as a reason for deterrence against the respondents.
Submissions drew attention to the impact of the COVID-19 pandemic on the small business operated by the first respondent, which, it is submitted, should be a mitigating factor in determining penalty. Submissions were then made as to the contrition, cooperation and corrective action which address the steps taken to attend to the underpayments.
reasoning
The Court accepts the submission that the earlier complaints should not be taken into account as aggravating factors. The Court does not accept the respondents’ submissions that there is no need for specific deterrence in respect of both respondents. The conduct the subject of the two offences concerning the first compliance notice was not immediately rectified within the specified time by the respondents. The conduct the subject of the second compliance notice was not immediately rectified by the first respondent.
Nature and Extended Circumstances of the Contravening Conduct
In relation to the first compliance notice, both respondents were aware of the same and failed to take appropriate steps to comply. The compliance notice regime under the Act is a most important provision to ensure compliance with award entitlements and the obligations of employers under the Act. The failure of the respondents to take steps to comply with the first notice of compliance, and by the first respondent in respect of the second notice of compliance, within the due time for compliance, are serious contraventions which have caused the Fair Work Ombudsman to have to spend public resources to commence proceedings to enforce the compliance notices.
The affidavit by the second respondent does not satisfactorily explain the failure to comply with the respective notices, including undertaking calculations of the underpayment amounts owing. The first steps taken by the respondents to rectify the underpayments were some six months after the proceedings were commenced, at approximately 21 months after the first compliance notice was issued and 9 months after the second compliance notice was issued.
Deliberateness
The Court accepts the applicant’s submissions that the instances of non-compliance were intentional and has taken into account the admissions made as to the non-compliance in the agreed statement of facts and as reflected in the consent orders. The Court does not accept the respondents’ submissions that the deliberateness is mitigated by erroneous advice or the circumstances referred to in the second respondent’s affidavit concerning the departure from employment by the respective employees. The compliance notices were independent requirements under the Act, in respect of which there was a deliberate failure to comply as reflected in the consent orders.
Nature of Extended Loss
The Court accepts that the amounts owing were not at the large end of the spectrum, but for employees in this industry would nonetheless have reflected a significant deprivation. The unrecovered overpayment in relation to Ms Clements is a relevant factor which the court has taken into account.
Size of the Business
The Court accepts that the first respondent’s business is a small business, but that is generally so of many businesses in the hairdressing and beauty industry. The Court accepts the applicant’s submissions as to the importance of general deterrence as being particularly significant in this industry, notwithstanding the small size of the business. The Court has taken into account that COVID has caused a downturn in the revenue of the first respondent.
Management, contrition, compliance
The second respondent as senior management was involved in the first contravention. The Court finds there is no relevant history of non-compliance for either respondent prior to the first notice. The Court accepts that there has been belated corrective action and belated cooperation and contrition that justifies the 20 per cent discount for the respective contraventions as being appropriate, as identified by the applicant.
The applicant had to commence proceedings in order to achieve the steps taken to address the outstanding entitlements. The Court has taken into account the importance of the provisions the subject of the contravention as against the relevant respondent. The second contravention by the first respondent is not a basis to reduce the penalty for the second contravention as advanced by the first respondent and the earlier non-compliance of the first notice is an aggravating factor in respect of the second contravention.
CONCLUSION
The Court finds that there is the need in the present case for specific deterrence in respect of both respondents and that general deterrence is of particular importance in this hairdressing and beauty service industry. The Court has taken into account all the factors referred to above and the need for the penalty to be appropriate and proportionate to the conduct viewed as a whole and the totality principle in respect of the two contraventions by the first respondent.
The Court has taken into account the statutory maximum penalty for the respective contraventions, the agreed facts, evidence, submissions and findings made above, as well as the cooperation in these proceedings, corrective action and contrition as referred to above. The Court must make adjustments considered necessary to determine the appropriate penalty for the respective respondent taking into account the above matters in respect of the two contraventions of the civil remedy provision by the first respondent and contravention of the civil remedy provision by the second respondent.
The Court considers that the appropriate pecuniary penalty to be imposed on the first respondent for the first contravention, is $9,450.
In respect of the contravention by the second respondent in respect of the first compliance notice, the Court considers the appropriate pecuniary penalty is $1,890.
In respect of the second notice, the Court finds before adjustment that an appropriate penalty for the second contravention by the first respondent would be in the order of $13,320. Applying the totality principle and proportionate adjustments considered necessary the Court considers the total appropriate pecuniary penalty to be paid for the two contraventions by the first respondent is $20,000.
The Court intends to order that the above pecuniary penalty in the sum of $20,000 be paid by the first respondent to the Commonwealth.
The Court intends to order that the above pecuniary penalty in the sum of $1,890 be paid by the second respondent to the Commonwealth.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Judge Street. Associate:
Dated: 12 October 2022