Fair Work Ombudsman v Go Yo Trading Pty Limited & Anor
[2012] FMCA 865
•27 July 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v GO YO TRADING PTY LIMITED & ANOR | [2012] FMCA 865 |
| INDUSTRIAL LAW – Civil penalty provisions – default judgment – underpayments – considerations relevant to penalty. |
| Fair Work Act2009, ss.45, 550(1) Restaurant Industry Award 2010, cl.13.1, 20.1, 34.1, A.5.4, A.7.3 |
| Fair Work Ombudsman v Orwill Pty Ltd (2011) FMCA 730 Fair Work Ombudsman v Sanada Investments Pty Ltd [2010] FMCA 401 Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd (2012) FMCA 258 Kelly v Fitzpatrick (2007) FCA 1080 Mason v Harrington Corporation Pty Ltd (2007) FMCA 7 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | GO YO TRADING PTY LIMITED |
| Second Respondent: | YOJIRO NAKAUCHI |
| File Number: | BRG 1136 of 2011 |
| Judgment of: | Jarrett FM |
| Hearing date: | 27 July 2012 |
| Date of Last Submission: | 27 July 2012 |
| Delivered at: | Brisbane |
| Delivered on: | 27 July 2012 |
REPRESENTATION
| Counsel for the Applicant: | Ms S Ashford |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| The First respondent appeared by its agent the second respondent. |
| The Second Respondent appeared in person. |
ORDERS
THE COURT DECLARES THAT:
The First Respondent contravened:
(a)s.45 of the Fair Work Act 2009 by contravening clause 20.1 of the Restaurant Industry Award 2010;
(b)s.45 of the Fair Work Act 2009 by contravening clauses 34.1 and A.7.3 of the Restaurant Industry Award 2010; and
(c)s.45 of the Fair Work Act 2009 by contravening clauses 13.1 A.5.4 of the Restaurant Industry Award 2010.
(d)Pursuant to s.550(1) of Fair Work Act 2009, the Second Respondent was involved in the First Respondent’s contraventions, namely:
(e)s.45 of the Fair Work Act 2009 by contravening clause 20.1 of the Restaurant Industry Award 2010;
(f)s.45 of the Fair Work Act 2009 by contravening clauses 34.1 and A.7.3 of the Restaurant Industry Award 2010; and
(g)s.45 of the Fair Work Act 2009 by contravening clauses 13.1 A.5.4 of the Restaurant Industry Award 2010.
THE COURT ORDERS THAT:
(h)Pursuant to s.545(2)(b) of the Fair Work Act 2009, that the First Respondent pay the following amounts to the affected employees in rectification of the underpayments:
(i)$3,007.78 to Ms Lee Youngji; and
(j)$4,771.53 to Ms Nam Unjung.
(k)Pursuant to s.547(2) of the Fair Work Act 2009, that the First Respondent pay interest on the amounts referred to in the preceding order to Ms Lee Youngji and Ms Nam Unjung at the rates specified in the Federal Court Act 1976.
(l)Pursuant to s.546(1) of the Fair Work Act 2009, that the First Respondent pay penalties in the amount of $49,500 for the contraventions of s.45 of the Fair Work Act 2009.
(m)Pursuant to s.546(1) of the Fair Work Act 2009, that the Second Respondent pay penalties in the amount of $9,900 for the contraventions of s.45 of the Fair Work Act 2009.
(n)Pursuant to s.546(3)(a) of the Fair Work Act 2009, that all penalties be paid into the Consolidated Revenue Fund of the Commonwealth.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 1136 of 2011
| FAIR WORK OMBUDSMAN |
Applicant
And
| GO YO TRADING PTY LIMITED |
First Respondent
| YOJIRO NAKAUCHI |
Second Respondent
REASONS FOR JUDGMENT
Ex tempore
This is an application for the imposition of civil penalties against the first and second respondents for breaches of the Fair Work Act2009.
The first respondent conducted a restaurant business, and the second respondent was intimately involved in that as the sole director and shareholder of the first respondent. The application has proceeded to a penalty hearing because the respondents have admitted the contraventions, and the second respondent has admitted his involvement in those contraventions.
There is before the Court a statement of agreed facts which was filed on 18 June, 2012 which sets out all of the relevant factual matters agreed between the parties.
The parties agree that the first respondent contravened:
a)s.45 of the Fair Work Act2009, by contravening clause 20.1 of the Restaurant Industry Award 2010;
b)s.45 of the Fair Work Act2009 by contravening clauses 34.1 and A.7.3 of the Restaurant Industry Award 2010 ;
c)s.45 of the Fair Work Act2009 by contravening clauses 13.1 and A.5.4 of the Restaurant Industry Award 2010.
The parties agree that the second respondent was involved in those contraventions for the purposes of s.550(1) of the Fair Work Act2009.
The contraventions of the award arise in respect of two employees employed by the first respondent in its restaurant business based in George Street, Brisbane. Those two employees were South Korean Nationals in Australia on subclass 417 tourist visas. They were entitled to work, and were working for the first respondent in its restaurant.
The breaches consist of the first respondent not paying to each of those workers their entitlements under the Award.
The Court is assisted by the written submissions delivered by the applicant in support of this application. Those written submissions set out the legislative basis for the applicant’s authority to bring these proceedings. It is not in dispute, and I will not repeat it.
The approach to the imposition of a penalty under the Fair Work Act2009 like this has been the subject of judicial determination. Guidance is offered by Mason v Harrington Corporation Pty Ltd (2007) FMCA 7, affirmed as an appropriate statement of the law by Tracey J in Kelly v Fitzpatrick (2007) FCA 1080. In Mason there was a non-exhaustive list of considerations that the Court might look at when fixing a pecuniary penalty in a case such as this. That list is a useful guide to, although not an exhaustive list of, the relevant considerations.
The breaches of the Act consist of failures to pay the correct monetary entitlements to the two casual employees the subject of the contraventions. The relevant pay and entitlement rates are set by the Restaurant Industry Award 2010. The underpayments are of three types. The first is underpayment of the base hourly rate of pay to which each worker was entitled. The underpayment for each was in excess of $5.00 per hour. The second is underpayment of casual leave loading to each of the employees. Both were entitled to a casual leave loading of 23.4% on their base hourly rate. Neither received any casual leave loading. The third is underpayment of penalty rates to which each employee was entitled. No penalty rates were paid to either. The total of the underpayments across all categories and in respect of both employees was $7,779.31.
The underpayments took place over a four month period – the whole period during which the two workers were employed by the first respondent.
The applicant submits that I ought to deal with the contraventions as one because they arise out of one course of conduct. I accept that submission. There is legislative authority to take such an approach, although I did express some interest in the proposition that they ought to be treated as two contraventions rather than one, having regard to the fact that there were two separate employees. But I am persuaded by the applicant that I ought to deal with the matter compendiously as the applicant suggests.
The failure in this case is, I accept, a failure to provide a basic level of entitlement. The basic entitlement of any employee is to be paid wages at the appropriate rate. Where rates of pay are determined according to an industrial instrument, the basic obligation on an employer is to meet that entitlement according to that industrial instrument. Here, not even that basic entitlement has been met. Additionally, the casual leave loading and penalty rates to which the employees were entitled have not been met. The purpose of those entitlements is to provide compensation to employees because of the way in which they have been employed, namely, on a casual basis and the times at which they are required to work. They are matters which are important to take into account.
The contraventions took place in the context of the first respondent’s restaurant business. The employees concerned were young people – one was 20 years of age, the other was 23. As I have already remarked, they were not Australian citizens, but rather, South Korean citizens. English was not their first language and they were here in this country on a working holiday visa. It is hardly surprising that they may not have had a full and complete understanding of their entitlements, and so it is reasonable to assume, I think, that they relied upon their employer, to ensure they were properly remunerated.
Foreign nationals working in Australia on visas, be they 417 visas or 457 visas or some other form of visa, in my view, represent a particular class of employee who are potentially vulnerable to improper practices by their employer. The cases demonstrate that those characteristics mean that a particular employee concerned is of a vulnerable class: see, for example, Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd (2012) FMCA 258, Fair Work Ombudsman v Orwill Pty Ltd (2011) FMCA 730; Fair Work Ombudsman v Sanada Investments Pty Ltd [2010] FMCA 401 at [60].
It is important, in my view, that employees in such a potentially vulnerable position have their entitlements met, and that employers understand very clearly that such employees are not available for exploitation.
In this case, the underpayment was significant – $7,779.31 – between each of the employees concerned. As I understand the evidence and the agreed facts, that amount remains outstanding. Given the submissions made by the second respondent, it seems unlikely that those entitlements will ever be paid.
I accept the submission that there is no evidence to suggest that the first respondent’s failure to comply with its relevant industrial obligations would not have continued had the employment of the employees not ceased and had it not been brought to the attention of the authorities.
There is no evidence before me about the size of this particular business, but I accept the submissions from the applicant that it is not likely that this is a large business. Indeed, the submissions made by the second respondent suggest that the business, in fact, exists no more and has ceased operating. There is no evidence before me about that, simply the submissions from the bar table, but I take those submissions into account – that it is likely that this business is of small size and may, indeed, have ceased operating.
Having said those things, the size of the business, in my view, is of little importance, because employees of small concerns are just as much entitled to protection as employees of large concerns, and so to the extent that it is suggested that the size of a business might have some impact on the Court’s consideration as to the appropriate penalty to be imposed, in my view, those suggestions are, with respect, misplaced. There seems to me, at least, to be no warrant to draw a distinction between the size of the particular employer when considering the penalty to be imposed for a contravention of the Act.
The applicant submits that while the respondents may not have deliberately set out to contravene the Fair Work Act2009, their actions demonstrated at least reckless disregard for the statutory obligations cast on the first respondent. I accept that submission. Nothing has been put before me to suggest that any steps were taken, any processes were implemented, or any advice was sought about the entitlements of the first respondent’s employees. Nothing is before me which would suggest that the underpayments were mere oversight or that for some other reason a mistake was made. Rather, the evidence tends to suggest, given the period of time concerned, a systematic failure to meet the relevant obligations.
The evidence reveals that the applicant brought the obligation to pay the relevant rates of pay to the attention of the first respondent by correspondence in August, 2011. Despite that, it took until these proceedings were instituted before the first and second respondents voluntarily complied with their obligations.
I take also into account the statements made by the second respondent on 4 July, 2011 in a record of interview with representatives of the applicant, to the effect that he had some knowledge of the required minimum wage. There is no contention that the second respondent was not the sole director and 50 per cent shareholder of the first respondent. His submissions confirm that he was, indeed, the person in control of the first respondent’s business.
There is nothing before me that suggests any contrition on the part of either the first or second respondent. It is easy to have sympathy for the respondents’ position in the sense that it is, no doubt, difficult to succeed in the style of business operated by the first respondent in what might generally be seen as difficult economic conditions. But that, of course, is no excuse, and there is, I repeat, nothing in the material before me that suggests any form of contrition on the part of the first respondent or second respondent. The fact that these entitlements remain outstanding underscores that.
The respondents have cooperated, to an extent, with these proceedings and the investigations undertaken by the applicant. They have agreed on a statement of agreed facts. There have been some difficulties along the way in these proceedings in securing the full attention of the respondents, but it is right to say that the approach of the respondents to these proceedings ultimately have saved some time and expense associated with a full hearing of the application.
I have already made some observations about the importance of general deterrence in respect of employees who fall into this particular category. It is necessary to mark the Court’s disapproval of this particular behaviour by these particular respondents, and to the extent that it might be suggested that the first respondent will pursue restaurant-style businesses, or employ employees in the future, some element of specific deterrence enters into the consideration of relevant penalty.
I accept the submissions for the applicant that, having regard to all the facts and circumstances, having regard to the way in which the contraventions have been dealt with together, and having regard to what is described in the outline of submissions as the totality principle, a penalty of 50 per cent of the maximum in respect of the first respondent is appropriate. The total maximum penalty that could be imposed upon the first respondent in respect of each of the three contraventions is $99,000. The penalty should be 50 per cent of that. The total which can be imposed upon the second respondent is $19,800, and the penalty in respect of the second respondent should be 50 per cent of that.
I have heard and listened carefully to the second respondent’s submissions about his financial position. I take his financial position into account, but in my view, it has a very small part to play in the fixing of penalty. There will, therefore, be declarations in accordance with the statement of agreed facts, confirming the contraventions by the first respondent, as I have already outlined. There will be a declaration against the second respondent as to his involvement. There will be an order that the first respondent pay a penalty to the Commonwealth Consolidated Revenue of 50 per cent of the maximum, and a similar order in respect of the second respondent.
[Recorded: Not transcribed]
I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Jarrett FM delivered on 27 July, 2012.
Date: 17 September 2012
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