Fair Work Ombudsman v Gothic Downs Pty Ltd
[2022] FedCFamC2G 21
•24 January 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Gothic Downs Pty Ltd [2022] FedCFamC2G 21
File number(s): MLG 2176 of 2020 Judgment of: JUDGE RILEY Date of judgment: 24 January 2022 Catchwords: INDUSTRIAL LAW – Whether the first respondent failed to comply with a compliance notice – whether the second respondent was accessorily liable. Legislation: Fair Work Act 2009, ss.550(1), 716 and 717 Cases cited: George v Rockett (1990) 170 CLR 104 (at 116); (1990) 93 ALR 483; (1990) 64 ALJR 384; (1990) 48 A Crim R 246; [1990] HCA 26 at [14] Division Division 2 General Federal Law Number of paragraphs: 44 Date of last submissions: 13 December 2021 Date of hearing: 29 November 2021 Place: Melbourne Counsel for the applicant: Jack Tracey Solicitor for the applicant: Office of the Fair Work Ombudsman Advocate for the first respondent: Azwar Koya Solicitor for the first respondent: Koya & Co Advocate for the second respondent: Azwar Koya Solicitor for the second respondent: Koya & Co ORDERS
MLG 2176 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
ApplicantAND: GOTHIC DOWNS PTY LTD
(ACN 006 552 058)
First RespondentGIUSEPPE CONFORTO
Second Respondent
ORDER MADE BY:
JUDGE RILEY
DATE OF ORDER:
24 JANUARY 2022
THE COURT DECLARES THAT:
1.The first respondent contravened:
a.s.716(5) of the Fair Work Act 2009 (“the Act”) by failing to comply with a compliance notice given to it on 13 December 2019 in respect of Dawinder Kaur; and
b.s.716(5) of the Act by failing to comply with a compliance notice given to it on 13 December 2019 in respect of Sahar Abdulkarim.
2.The second respondent was involved, within the meaning of s.550 of the Act, in the first respondent’s contraventions of s.716(5) of the Act by failing to comply with each of the compliance notices.
THE COURT ORDERS THAT:
3.Pursuant to s.547(2) of the Act, the first respondent, within 28 days of this order, pay interest, at the Federal Court of Australia pre-judgment interest rate, to:
(a)Ms Kaur:
(i)on the amount of $25,343.55 for the period 24 June 2020 to 4 September 2020; and
(ii)on the amount of $4,566.38 for the period 5 September 2020 to 30 November 2021; and
(b)Ms Abdulkarim, on the amount of $4,762.00 for the period 24 June 2020 to 4 September 2020.
4.The question of penalties be the subject of a further hearing on a date to be advised.
5.The applicant have liberty to apply.
Note:The form of the order is subject to the entry in the court’s records.
Note:This copy of the court’s reasons for judgment may be subject to review 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 RILEY:
INTRODUCTION
This is an application brought under the Fair Work Act 2009 (“the Act”) in relation to the alleged non-compliance with two compliance notices issued by the applicant to the first respondent under s.716 of the Act, and in relation to the second respondent’s alleged accessorial liability.
The applicant is the Fair Work Ombudsman (“the Ombudsman”). The first respondent (“Gothic”) is a company that was incorporated in 1986. It operates two bakeries and has 11 staff. The second respondent (“Mr Conforto”) is a baker by trade and was at all relevant times the sole director of Gothic.
BACKGROUND
The Ombudsman’s written submissions filed on 30 June 2021 set out the background to this matter as follows:
1. In this proceeding the Applicant, the Fair Work Ombudsman, alleges that:
(a)the First Respondent, Gothic Downs Pty Ltd, contravened section 716(5) of the Fair Work Act 2009 (FW Act) by failing to comply with:
(i)a compliance notice given to it on 13 December 2019 in respect of its employment of Dawinder Kaur (Kaur Compliance Notice); and
(ii)a compliance notice given to it on 13 December 2019 in respect of its employment of Sahar Abdulkarim (Abdulkarim Compliance Notice),
(collectively, Compliance Notices); and
(b)the Second Respondent, Giuseppe Conforto, was involved, within the meaning of section 550 of the FW Act, in the First Respondent’s contraventions of section 716(5) of the FW Act.
…
4.In February 2019, the Applicant commenced an investigation after receiving requests for assistance from Sahar Abdulkarim (Ms Abdulkarim) and Dawinder Kaur (Ms Kaur) (collectively, Employees) in relation to their employment by the First Respondent (Investigation).1
5.In the course of the Investigation, the Applicant obtained evidence from various sources including the Employees, MatchWorks employment services and the Respondents.2
6.Following the Investigation, Fair Work Inspector James Roberts (FWI Roberts) formed what the Applicant submits was a reasonable belief that the First Respondent had contravened the following terms of the General Retail Industry Award 2010 (Retail Award) and the National Employment Standards (NES):
(a) in respect of Ms Kaur’s employment:
(i)clause 17 of the Retail Award by failing to pay the minimum wage to Ms Kaur in respect of ordinary hours worked;
(ii)clause 29.2(d) of the Retail Award by failing to pay Ms Kaur overtime for hours worked on a Sunday in excess of the ordinary hours of work;
(iii)clause 30.4(a) of the Retail Award by failing to pay Ms Kaur an early morning shift allowance when she commenced work at or after 2:00 am and before 6:00 am;
(iv)clause 30.4(c) of the Retail Award by failing to pay Ms Kaur at a rate of 150% of the ordinary rate of pay for work performed on a Saturday;
(v)clause 32.3(b)(ii) of the Retail Award by failing to pay Ms Kaur annual leave loading;
(vi)section 90(2) of the FW Act by failing to pay Ms Kaur her accrued and untaken annual leave on termination of her employment; and
(vii)section 99 of the FW Act by failing to pay Ms Kaur at her base rate of pay for her ordinary hours of work during a period of personal leave; and
(b) in respect of Ms Abdulkarim’s employment:
(i)clause 12.7 of the Retail Award by failing to pay Ms Abdulkarim 1/38th of the prescribed weekly rate for ordinary hours worked.3
7.On 13 December 2019, FWI Roberts gave the Compliance Notices to the First Respondent by sending them by post to the First Respondent’s registered address, and by email to the Second Respondent.4
8.The Kaur Compliance Notice required the First Respondent to calculate and rectify any underpayments and superannuation owed to Ms Kaur by 31 January 2020 and produce reasonable evidence of its compliance to the Applicant by 7 February 2020.5
9.The Abdulkarim Compliance Notice required the First Respondent to calculate and rectify any underpayments and superannuation owned to Ms Abdulkarim by 31 January 2020 and produce reasonable evidence of its compliance to the Applicant by 7 February 2020.6
10.The First Respondent did not take the actions required by the Compliance Notices within the specified time7 and, in respect of the Kaur Compliance Notice, has not done so to date.8
:Affidavit of James William Roberts sworn 14 April 2021 (Roberts Affidavit) at [5] to [6].
:Roberts Affidavit at [7] and [14].
:Roberts Affidavit at [23], JWR-10 and JWR-21.
:Statement of Claim filed 24 June 2020 (SOC) at [9], Defence filed 4 September 2020 (Defence) at [9], Roberts Affidavit at [24] to [25], JWR-22 and JWR-23.
:SOC at [10], Defence at [10], Roberts Affidavit at [26] and JWR-22.
:SOC at [12]. Defence at [12], Roberts Affidavit at [27] and JWR-22.
:SOC at [19], Defence at [19], Roberts Affidavit at [31] to [42] and JWR-25 to JWR-31.
:Roberts Affidavit at [31] to [44] and JWR-25 to JWR-32.
MATERIALS RELIED UPON
The Ombudsman relied upon:
(a)her written submissions filed on:
(i)30 June 2021; and
(ii)6 December 2021;
(b)the affidavit sworn by a fair work inspector, James Williams Roberts, on 14 April 2020; and
(c)the pleadings.
The respondents relied upon:
(a)their written submissions filed on:
(i)29 November 2021; and
(ii)13 December 2021; and
(b)the pleadings.
Mr Roberts was cross-examined.
The respondents did not file any affidavit evidence of their own, or otherwise adduce any evidence of their own. This was surprising, because they sought to challenge, at the liability hearing, the amounts underlying the compliance notices that the Ombudsman said that Gothic had not paid two employees.
THE UNDERPAYMENTS
After the date for compliance with the compliance notices, but before the hearing, the parties agreed that Gothic had paid all of the amounts owing to Ms Abdulkarim. Gothic paid her about $5,000 on 4 September 2020.
Also on 4 September 2020, Gothic paid about $20,000 to Ms Kaur. However, the parties remained in dispute about some further amounts outstanding to Ms Kaur.
The respondents said that they had made three attempts to calculate the amount owing to Ms Kaur, but the Ombudsman said that the amounts were wrong. The respondents said that the Ombudsman would not tell them what the correct amounts were, even though Gothic was very willing to pay them.
While it would have been helpful for the Ombudsman to tell Gothic exactly how much was outstanding on the Ombudsman’s calculation, payment of correct wages is ultimately the employer’s responsibility. An employer cannot shift blame to the Ombudsman for the employer’s contravention of workplace laws.
SECTION 716
As at 13 December 2019, when the compliance notices were issued, s.716 of the Act provided that:
(1)This section applies if an inspector reasonably believes that a person has contravened one or more of the following:
(a)a provision of the National Employment Standards;
(b)a term of a modern award;
(c)a term of an enterprise agreement;
(d)a term of a workplace determination;
(e)a term of a national minimum wage order;
(f)a term of an equal remuneration order.
Giving a notice
(2)The inspector may, except as provided by subsection (4), give the person a notice requiring the person to do either or both of the following within such reasonable time as is specified in the notice:
(a)take specified action to remedy the direct effects of the contravention referred to in subsection (1);
(b)produce reasonable evidence of the person’s compliance with the notice.
(3) The notice must also:
(a)set out the name of the person to whom the notice is given; and
(b)set out the name of the inspector who gave the notice; and
(c)set out brief details of the contravention; and
(d)explain that a failure to comply with the notice may contravene a civil remedy provision; and
(e)explain that the person may apply to the Federal Court, the Federal Circuit Court or an eligible State or Territory Court for a review of the notice on either or both of the following grounds:
(i)the person has not committed a contravention set out in the notice;
(ii)the notice does not comply with subsection (2) or this subsection; and
(f)set out any other matters prescribed by the regulations.
Relationship with enforceable undertakings
(4) An inspector must not give a person a notice in relation to a contravention if:
(a)the person has given an undertaking under section 715 in relation to the contravention; and
(b)the undertaking has not been withdrawn.
Relationship with civil remedy provisions
(4A)An inspector must not apply for an order under Division 2 of Part 4‑1 in relation to a contravention of a civil remedy provision by a person if:
(a)the inspector has given the person a notice in relation to the contravention; and
(b)either of the following subparagraphs applies:
(i)the notice has not been withdrawn, and the person has complied with the notice;
(ii)the person has made an application under section 717 in relation to the notice that has not been completely dealt with.
Note: A person other than an inspector who is otherwise entitled to apply for an order in relation to the contravention may do so.
(4B)A person who complies with a notice in relation to a contravention of a civil remedy provision is not taken:
(a)to have admitted to contravening the provision; or
(b)to have been found to have contravened the provision.
Person must not fail to comply with notice
(5) A person must not fail to comply with a notice given under this section.
Note: This subsection is a civil remedy provision (see Part 4‑1).
(6) Subsection (5) does not apply if the person has a reasonable excuse.
As can be seen, s.716(1) of the Act permits a compliance notice to be issued based on an inspector’s reasonable belief. Subsection 716(1) does not require the Ombudsman to provide categorical proof, in the context of an application for a declaration that there has been non-compliance with a compliance notice, that there has been a contravention.
Paragraph 716(3)(e) of the Act mentions a mechanism for a recipient of a compliance notice to apply to this court or the Federal Court or an eligible State or Territory court for a review of the compliance notice on the grounds that the recipient has not committed the contravention specified in the compliance notice, or that the notice does not comply with s.716(2) or (3) of the Act. That mechanism is provided for in s.717 of the Act.
In a proceeding under s.717 of the Act, the question of whether there had been a contravention would be thoroughly ventilated. If the employer proved in that proceeding that there had been no contravention (eg, no underpayment), the compliance notice would fall away.
However, the respondents did not take the opportunity provided by s.717 to review the compliance notices. They simply sought to defend the present proceeding brought by the Ombudsman. This proceeding alleges a failure to comply with the compliance notices.
In any event, the respondents in the present proceeding did not adduce any evidence to show that they had not contravened any workplace laws.
THE COMPLIANCE NOTICES
After setting out Gothic’s rights and obligations in relation to the compliance notice, and the details of the alleged contraventions, the compliance notice in respect of both Ms Kaur and Ms Abdulkarim, said as follows:
7.In accordance with section 716(2) of the FW Act, I require you by 31 January 2020 to:
Step 1 – calculate and rectify underpayments
(a) in respect of the contravention referred to in row (a) of the table above:
(i) in respect of the Employee:
1.apply the classification of Retail Employee Level 4 to the Employee under the Award and their employment status as full-time.
2.identify the number of hours the Employee worked during the Period in respect of which the Entitlement was required to be paid by the Award (Hours)
3.identify the amount the Employer paid to the Employee during the Period in respect of the Entitlement (having regard to the Hours, where applicable)
4.calculate the amount the Employer should have paid to the Employee during the Period in respect of the Entitlement (having regard to the Hours, where applicable)
5.make a payment to the Employee of the difference between the amount referred to in (3) and the amount referred to in (4) immediately above 6. make a record of the information and amounts referred to in (1) to (4) and the amount of the payment referred to in (5) immediately above (Underpayment Rectification Information)
(b)repeat the same process described in Step 1(a) for each of the contraventions referred to in rows (b) to (h) of the table above.
Step 2 – Superannuation
(c)calculate additional superannuation contributions required by clause 22.2 of the Award in respect of the amounts required to be paid to the Employee of the Employer as a result of Step 1
(d)in relation to each Employee who is owed such additional superannuation contributions, pay such additional superannuation contributions to the chosen Superannuation Fund of the Employee.
Reasonable evidence of steps taken to comply with this Compliance Notice
8.In accordance with section 716(2) of the FW Act, I require you to produce the following reasonable evidence of your compliance with the actions specified in paragraph 7 above:
(a) a schedule that sets out:
(i)the full name of the Employee
(ii)in relation to the Employee, the Underpayment Rectification Information
(iii)in relation to the Employee, the additional superannuation contributions calculated for the Employee and paid to the Employee’s Superannuation Fund in accordance with Step 2
(b)proof that full payment has been made to the Employee of the payment(s) required to be made by Step 1 and Step 2, such as a bank transfer showing the transfer of funds to the Employee and their Superannuation Fund, or a copy of the Employee’s payroll records showing the payment(s).
9.The evidence referred to above must be provided to the Fair Work Ombudsman by 7 February 2020 by email to [email protected], in person at Level 12, 414 La Trobe Street Melbourne VIC 3000 or by post to GPO Box 9887 Hobart TAS 7001.
REASONABLE BELIEF
Gothic admitted in its defence that the compliance notices were technically correct, but did not admit that Mr Roberts had a reasonable belief that there had been the contraventions alleged, at least in relation to Ms Kaur. Essentially, Gothic claimed in its defence that Ms Kaur did not work 38 hours per week, in accordance with her employment contract, but only 35 hours per week.
The test of a reasonable belief was described by the High Court High Court in George v Rockett (1990) 170 CLR 104 (at 116); (1990) 93 ALR 483; (1990) 64 ALJR 384; (1990) 48 A Crim R 246; [1990] HCA 26 at [14] as follows:
The objective circumstances sufficient to show a reason to believe something need to point more clearly to the subject matter of the belief, but that is not to say that the objective circumstances must establish on the balance of probabilities that the subject matter in fact occurred or exists: the assent of belief is given on more slender evidence than proof. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture.
Gothic noted in its post-hearing submissions that Mr Roberts conceded in cross-examination that he did not himself calculate the shortfall in respect of Ms Kaur. Instead, Gothic argued, Mr Roberts had only relied on what Ms Kaur had said. As such, Gothic argued, Mr Roberts could not have formed a reasonable belief that Gothic had contravened a workplace law.
That submission is to misunderstand what is required for a reasonable belief. It is somewhat more than a suspicion, and it must have a rational basis, but it does not require proof on a balance of probabilities. Also, to assess whether a person had a reasonable belief requires the court to look back at the information that the relevant person had at the time that the allegedly reasonable belief was formed. That assessment is not based on any additional information that might be known at the time of the court’s assessment.
Mr Roberts said at paragraph 7 of his affidavit that:
Steps undertaken during the Investigation included:
(a)on 26 March 2019, I conducted a site visit at Gothic Down’s premises located in Meadow Heights, Victoria, together with two other FWO employees;
(b)reviewing documents provided by Ms Kaur, including:
(i)pay slips covering the period 26 February 2018 to 24 June 2018 (Pay Slips);
(ii)PAYG Payment Summary for the year ending 30 June 2018;
(iii)contract of employment between Ms Kaur and Gothic Downs signed on 18 January 2016 (Contract of Employment);
(iv)Notification of grant of a Temporary Work (Skilled) (subclass 457) visa dated 10 March 2017;
(v)bank statements for Ms Kaur for the period 1 August 2016 to 31 January 2019;
(vi)diary entries for the period 1 August 2016 to 30 December 2016 recording cash payments received by Ms Kaur from Gothic Downs; and (vii) screen shots of text messages between Ms Kaur and Mr Conforto during the period 7 October 2016 and 17 September 2018;
Copies of the documents provided by Ms Kaur are annexed and marked “JWR-2”.
(c) reviewing documents provided by Ms Abdulkarim, including:
(i)pay slips covering the periods 24 October 2016 to 11 December 2016, 6 February 2017 to 12 February 2017, 20 March 2017 to 26 March 2017, 18 September 2017 to 24 September 2017 and 16 April 2018 to 22 April 2018;
(ii)PAYG Payment Summary for the year ending 30 June 2018;
(iii)bank statements for Ms Abdulkarim for the period 28 December 2017 to 28 December 2018; and (iv) letters from REST Industry Super to Ms Abdulkarim dated 14 August 2017 and 30 December 2018;
Copies of the documents provided by Ms Abdulkarim are annexed and marked ‘JWR-3’.
(d)reviewing documents provided by MatchWorks employment services (MatchWorks) in respect of Ms Abdulkarim, including:
(i)pay slips covering the period 24 October 2016 to 11 December 2016; and
(ii)a record of hours worked for a 13 week period ending 29 November 2016;
Copies of the documents provided by MatchWorks are annexed and marked ‘JWR-4’.
(e)on 27 March 2019, I conducted a recorded interview with Ms Abdulkarim, together with former FWI Rachael D’Rozario;
(f)on 28 March 2019, I conducted an interview with Ms Kaur, together with FWI John Richards (FWI Richards). During the interview, Ms Kaur said words to the following effect to me and FWI Richards:
Ms Kaur:“I started work on 1 August 2016 and I work 7 days a week from 1:00 am / midnight to 6:30 am - 7:00 am”.
…
I said:“You talked a bit before about the hours that you worked. How did you know when to work?”
Ms Kaur said: “ ... Joe (Mr Conforto) told me actually to start at 1:00 o’clock at night until 6:30 - 7:30 whenever you finish your job you can go home.”
I said:“And then after that how did you know to work every day?”
Ms Kaur said: “That's what Joe said to me”;
(g)on 5 April 2019, FWI Walsh issued a notice to produce records or documents pursuant to section 712 of the FW Act (First NTP) to Gothic Downs, by sending it via registered post to its registered office. The First NTP required Gothic Downs to produce, amongst other things, records or documents relating to the employment of Ms Kaur and Ms Abdulkarim during the period 1 August 2016 to 31 December2018 by 29 April 2019. A copy of the First NTP is annexed and marked “JWR-5”;
(h)on 7 May 2019, I sent an email to the email address [email protected], being an email address used by Mr Conforto, attaching a letter notifying Gothic Downs of its failure to comply with the First NTP. Copies of my email and letter dated 7 May 2019 are annexed and marked “JWR-6”;
(i)on 14 May 2019, I received a telephone call from Mr Conforto, during which Mr Conforto indicated his intention to produce the records or documents sought by the First NTP. A copy of my file note of this conversation is annexed and marked “JWR-7”;
(j)on 30 May 2019, after no documents were produced by Gothic Downs in response to the First NTP and Mr Conforto requested further time to produce the material, I issued a further notice to produce records or documents pursuant to section 712 of the FW Act (Second NTP) to Gothic Downs, by sending it via registered post to its registered office. The Second NTP required Gothic Downs, amongst other things, to produce records or documents relating to the employment of Ms Kaur and Ms Abdulkarim during the period 1 August 2016 to 31 December 2018 by 20 June 2019. A copy of the Second NTP is annexed and marked “JWR-8”;
(k)on 24 June 2019, I sent an email to the email address [email protected], attaching a letter notifying Gothic Downs of its failure to comply with the Second NTP. Copies of my email and letter dated 24 June 2019 are annexed and marked “JWR-9”.
If Ms Kaur had worked the minimum hours that she said she worked, from 1am until 6.30am 7 days per week, that would have amounted to 5.5 hours per day and 38.5 hours per week. The respondents claimed that Ms Kaur only worked 35 hours per week, and that the pay slips that Gothic had provided to her were wrong.
However, in view of the information that was available to the Ombudsman at the time that Mr Roberts issued the compliance notices, including the minimum hours that Ms Kaur claimed to have worked, it seems to me that Mr Roberts had ample information to form the reasonable belief that Gothic had contravened workplace laws as described in the notices. As noted above, it was open to the respondents to apply to this or another court to challenge the compliance notices, and prove that they had not contravened any workplace laws as described in the compliance notices. However, the respondents did not bring any such application.
THE PURPORTED COMPLIANCE WITH THE COMPLIANCE NOTICES
Mr Roberts’ unchallenged evidence was that, at 11.19am on 31 January 2020, an accountant on behalf of Gothic sent him an email containing two letters dated 30 January 2020 and a bundle of excel spreadsheets. The first letter, in respect of Ms Kaur, said:
Reference is made to the Compliance Notice received in relation to - Dawinder Kaur We note that we have calculated the underpayment as per step 1 using the Retail Employee classification Level 1 for hours worked between the 1st August 2016 and 30th September 2018.
The underpayment amounts to $20,779.17
Our client will pay $20,779.17 to Ms Kaur in full
The calculation required in Step 2 in relation to superannuation will result in an amount of $10,646.66 being reported to Rest Super Fund on behalf of Ms Kaur.
Our client will pay the amount directly
We note that our client is under financial stress at present and cannot confirm the exact date these payments will be made, however our client agrees to the payments in full.
We ask for a review of the penalties imposed given that they will cause further hardship.
The second letter, in respect of Ms Abdulkarim, said:
Reference is made to the Compliance Notice received in relation to Ms Abdulkarim We note that we have calculated the underpayment as per step 1 using the Retail Employee classification Level 1 for hours worked between the 15th August 2016 and the 27th December 2018.
The underpayment amounts to $6,465.42
Our client will pay $6,465.42 to Ms Abdulkarim in full
The calculation required in Step 2 in relation to superannuation will result in an amount of $3,933.45 being reported to Rest Super Fund on behalf of Ms Abdulkarim.
Our client will pay the amount directly
We note that our client is under financial stress at present and cannot confirm the exact date these payments will be made, however our client agrees to the payments in full.
We ask for a review of the penalties imposed given that they will cause further hardship
On 31 January 2020, Gothic purported to comply with the part of the compliance notices that required the calculation of the amounts outstanding to Ms Kaur and Ms Abdulkarim. However, the compliance notices also required Gothic to have paid the outstanding amounts by 31 January 2020.
The respondents did not suggest that Gothic had paid the outstanding amounts by 31 January 2020. I am satisfied that Gothic did not do so. It follows that Gothic did not comply with the compliance notices by the due date.
ACCESSORIAL LIABILITY
Subsection 550(1) of the Act provides that:
A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
Subsection 716(5) of the Act is a civil remedy provision.
Mr Conforto was involved in Gothic’s contravention of s.716(5) of the Act, as Mr Conforto was Gothic’s sole director at all material times. He was personally involved in all of the steps leading to the underpayments themselves and the failure to comply with the compliance notice.
Mr Conforto sought to avoid liability by saying that he had put matters in the hands of his accountants. However, that is irrelevant. Mr Conforto was ultimately responsible for, and involved in, all of the actions of Gothic. There is no suggestion that he was an innocent victim of fraud by the accountants. I am satisfied that Mr Conforto was involved in Gothic’s contraventions.
REASONABLE EXCUSE
During the hearing in this court, the respondents sought to argue that they had a reasonable excuse for not complying with the compliance notices. Subsection 716(6) of the Act provides that a person may fail to comply with a compliance notice if they have a reasonable excuse.
The onus was on the respondents to prove that they had a reasonable excuse. They did not adduce any evidence to substantiate that they had a reasonable excuse. The Ombudsman said that the respondents’ claim could therefore not succeed. However, in theory at least, the respondents could rely on evidence adduced by the Ombudsman to show that they had a reasonable excuse.
The reasonable excuse proffered by the respondents was that the parties had failed to reach an agreement as to the quantum outstanding in respect of Ms Kaur and Ms Abdulkarim.
Compliance was due by 31 January 2020. At 11.19am on that date, the respondents’ accountants sent two letters to the Ombudsman setting out their first calculation of the amounts outstanding, but saying that they were not in a position to pay those amounts. At 3.37pm on 31 January 2020, Mr Roberts replied to the accountants’ email, raising a number of issues with the calculations.
However, notwithstanding those issues, it is clear that Gothic had no intention of paying the outstanding amounts on 31 January 2020. It followed that, regardless of Mr Roberts’ queries about the amounts outstanding, Gothic was not going to comply with the compliance notices on 31 January 2020. (Moreover, “by 31 January 2020” arguably means no later than midnight on 30 January 2020.)
That is, the “failure to reach an agreement” was not the reason for the non-payment by the required date so it cannot have been a reasonable excuse for the non-payment. Payment was a significant component of compliance with the compliance notices.
REASONABLENESS OF COMPLIANCE
The respondents also argued that they could not comply with the compliance notices because compliance with them could not be reasonably achieved, particularly the calculation of the amounts outstanding. The respondents said this was because the Ombudsman would not agree on the figures.
This argument is without merit. Employers are responsible for calculating the amounts due to their employees. While it is not necessarily easy, it is the employer’s responsibility. It is also the employer’s responsibility to keep accurate records of employee’s working hours and accurate payslips. The accuracy of these documents should make the correct calculation of amounts owing fairly straightforward. The employer should then be able to demonstrate to the Ombudsman that the calculation is accurate.
In the present case, the respondents have claimed that the payslips were not accurate. That was their responsibility. Any difficulty with calculation, and any difficulty demonstrating that Gothic’s figures are correct, are Gothic’s own responsibility. They cannot shift the blame for this to the Ombudsman.
CONCLUSION
In these circumstances, I am satisfied that it is appropriate to make the declarations and orders sought by the Ombudsman, as set out in her submissions filed on 30 June 2021 and as amended in her submissions filed on 6 December 2021, save that I will hear the parties before making any order in relation to penalties.
In the absence of any evidence from the respondents, I accept the Ombudsman’s figures for the purposes of the interest calculation.
I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Riley. Associate:
Dated: 24 January 2022
4
3
1