Fair Work Ombudsman v Heiwa International Pty Ltd
[2019] FCCA 1425
•28 May 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
FAIR WORK OMBUDSMAN v HEIWA INTERNATIONAL PTY LTD & ANOR [2019] FCCA 1425
Catchwords:
INDUSTRIAL LAW – Fair Work Act 2009 (Cth) – Fair Work Regulations 2009 (Cth) – fast food industry – admitted contraventions for underpayment of employees – contraventions objectively serious – pecuniary penalties imposed as well as other agreed relief.
Legislation:
Evidence Act 1995 (Cth), s.191
Fair Work Act 2009 (Cth), ss.45, 535, 545, 546, 547, 550, 557
Fair Work Regulations 2009 (Cth)
Cases cited:
Commonwealth v Director, Fair Work Building Inspectorate (2015) 258 CLR 482
Fair Work Ombudsman v Phua & Foo Pty Ltd [2018] FCA 137
Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290
Kelly v Fitzpatrick [2007] FCA 1080
Markarian v The Queen (2005) 228 CLR 357
Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153
Applicant: FAIR WORK OMBUDSMAN
First Respondent: HEIWA INTERNATIONAL PTY LTD
Second Respondent: KIYOSHI HASEGAWA
File Number: SYG 2029 of 2017
Judgment of: Judge Dowdy
Hearing date: 16 May 2018
Date of Last Submission: 18 May 2018
Date Reserved: 30 May 2018
Delivered at: Sydney
Delivered on: 28 May 2019 REPRESENTATION
Counsel for the Applicant: Ms R. Gall of Counsel
Solicitors for the Applicant: Office of the Fair Work Ombudsman
Counsel for the Respondents: Mr R. Crow of Counsel
Solicitor for the Respondents: Ms Louise Jackson of
Raymond W M Wong & Co.BY CONSENT THE COURT DECLARES AS FOLLOWS:
(1)In the events and circumstances which have happened the First Respondent, Heiwa International Pty Ltd, contravened the following civil remedy provisions:
(a)section 45 of the Fair Work 2009 (Cth) (FW Act) by failing to pay employees Yuko Masuda, Wing Hei Cheung, Tsz Hang Chan, Zhuoya Yu, Kim Sungjun, Dandan Liu, Jingyu Zhang and Xui Haichen the minimum hourly rate of pay in accordance with clause 17 of the Fast Food Industry Award 2010 (Award);
(b)section 45 of the FW Act by failing to pay junior employees Darcy Randall, Jaleel Widders, Josef Randall, Tanika Croak and Hayley Howard the minimum hourly rate of pay in accordance with clause 18 of the Award;
(c)section 45 of the FW Act by failing to pay employees Darcy Randall, Yuko Masuda, Wing Hei Cheung, Brooke Richards, Tsz Hang Chan, Jaleel Widders, Zhuoya Yu, O'Hara Coles, Kim Sungjun, Josef Randall, Dandan Liu, Jingyu Zhang, Xui Haichen, Tanika Croak and Hayley Howard the casual loading in accordance with clause 13.2 of the Award;
(d)section 45 of the FW Act by failing to pay employees Yuko Masuda, Wing Hei Cheung, Jaleel Widders, O'Hara Coles, Kim Sungjun and Josef Randall the Saturday loading in accordance with clause 25.5(b) of the Award;
(e)section 45 of the FW Act by failing to pay employees Darcy Randall, Yuko Masuda, Brooke Richards, Tsz Hang Chan, Jaleel Widders, Zhuoya Yu, O'Hara Coles, Josef Randall and Jingyu Zhang the Sunday loading in accordance with clause 25.5(c)(ii) of the Award;
(f)section 45 of the FW Act by failing to pay employees Darcy Randall, Brooke Richards, Tsz Hang Chan, O’Hara Coles and Jingyu Zhang the public holiday penalty rate in accordance with clause 30.3 of the Award;
(g)section 45 of the FW Act by failing to roster Darcy Randall, Yuko Masuda, Brooke Richards, Tsz Hang Chan, Jaleel Widders, O’Hara Coles, Josef Randall, Dandan Liu, Jingyu Zhang and Hayley Howard for minimum daily engagements of three hours in accordance with clause 13.4 of the Award;
(h)section 45 of the FW Act by failing to pay superannuation in accordance with clause 21.2 of the Award; and
(i)section 535(1) of the FW Act by failing to make and keep employee records as prescribed by regulation 3.40 of the Fair Work Regulations 2009 (Cth) (FW Regulations).
(2)The Second Respondent was involved in each of the contraventions alleged against the First Respondent, pursuant to section 550(1) of the FW Act, as set out in paragraph 1 above.
BY CONSENT THE COURT ORDERS AS FOLLOWS:
(3)Pursuant to section 545(1) of the FW Act, the First and Second Respondents, jointly and severally, pay to the Applicant the following amounts owing to the employees set out below, less any payments made before the date of the order, within 28 days of the date of this order:
(a)Darcy Randall: $28.62;
(b)Yuko Masuda: $161.73;
(c)Wing Hei Cheung: $78.86;
(d)Tsz Hang Chan: $31.47;
(e)Jaleel Widders: $1,439.57;
(f)Zhuoya Yu: $68.70;
(g)O’Hara Coles: $1,403.08;
(h)Kim Sungjun: $10.97;
(i)Josef Randall: $20.74;
(j)Dandan Liu: $7.58;
(k)Xui Haichen: $70.37;
(l)Tanika Croak: $28.60; and
(m)Hayley Howard: $46.54.
(4)Pursuant to section 545(1) of the FW Act, the First and Second Respondents, jointly and severally, make superannuation contributions on behalf of employees Yuko Masuda, Wing Hei Cheung, Tsz Hang Chan, Jaleel Widders, Zhuoya Yu, O'Hara Coles, Kim Sungjun, Dandan Liu, Jingyu Zhang and Xui Haichen to their nominated superannuation funds at the superannuation guarantee charge rate prescribed by applicable superannuation legislation, less any payment made before the date of the order, within 28 days of the date of this order.
(5)Pursuant to section 545(1) of the FW Act, the First and Second Respondents, jointly and severally, pay to the Applicant the following amounts owing to the employees set out below in compensation for failing to engage those employees for daily engagements of three hours, less any payments made before the date of the order, within 28 days:
(a)Darcy Randall: $78.31:
(b)Yuko Masuda: $120.36;
(c)Brooke Richards: $277.84;
(d)Tsz Hang Chan: $2.85;
(e)Jaleel Widders: $58.75;
(f)O'Hara Coles: $358.80;
(g)Josef Randall: $28.93;
(h)Dandan Liu: $28.94;
(i)Jingyu Zhang: $122.32; and
(j)Hayley Howard: $35.01.
(6)Pursuant to section 547(2) of the FW Act, interest be paid by the First and Second Respondents, jointly and severally, on any amounts ordered to be paid to the employees pursuant to orders 3 to 5 above, within 28 days of the date of this order.
(7)Pursuant to section 546(3)(a) of the FW Act, any pecuniary penalties ordered to be paid be paid to the Commonwealth within 28 days of the date of this order.
(8)Pursuant to section 545(1) of the FW Act, the First Respondent, at its expense, engage a third party with qualifications in accounting or workplace relations to undertake an audit of compliance with the FW Act and the Award on the following terms:
(a)the audit period will be the period commencing on 1 June 2019 and ending 30 November 2019 (Audit Period);
(b)the audit is to be completed within 60 days of the end of the Audit Period (Audit Completion Date);
(c)the audit will apply to all employees and persons otherwise engaged to perform work for the First Respondent;
(d)the audit will assess the First Respondent's compliance with the following obligations according to each employee's classification of work, category of employment and hours worked during the Audit Period:
(i)wages and work related entitlements under the Award;
(ii)accrual and payment of entitlements under the National Employment Standards in Part 2-2 of the FW Act; and
(iii)record keeping and pay slip obligations in Division 3 of Part 3-6 of the FW Act and Part 3-6 of the FW Regulations; and
(e)within 30 days of the Audit Completion Date, the First Respondent provide to the Applicant:
(i)a copy of the audit report which will include a statement of the methodology used in the audit;
(ii)a copy of the source materials and records used to conduct the audit; and
(iii)written details of any contraventions identified in the audit, the steps the First Respondent will take to rectify any identified contravention(s) and by when the rectification will occur.
(9)Pursuant to section 545(1) of the FW Act, the First Respondent will, within 30 days of the date of this order, display a notice in a prominent position in the premises of Tokyo Sushi Fletcher that can be easily viewed by all employees (Workplace Notice) on the following terms:
(a)the Workplace Notice must contain:
(i)information on entitlements contained in the Award;
(ii)a link to the Fair Work Ombudsman's webpage at hours-app where employees can obtain information about the Fair Work Ombudsman's 'Record My Hours' app; and
(iii)information on how to contact the Fair Work Ombudsman;
(b)the Workplace Notice must be in a form approved by the Applicant at least 7 days prior to the First Respondent displaying the Workplace Notice;
(c)the First Respondent will provide proof of the display of the Workplace Notice to the Applicant within 14 days of the Workplace Notice being approved by the Applicant; and
(d)the Workplace Notice must be displayed for a period of one year.
(10)Pursuant to sections 545(1) and/or 545(2)(a) of the FW Act, the Second Respondent comply with the requirements set out in order 9 above in respect of any other business owned and/or operated by a body corporate of which the Second Respondent is an officer.
(11)The parties have general liberty to apply on seven days' notice in relation to the working out of these orders, including in the event that there is non-compliance with any of the preceding orders.
THE COURT FURTHER ORDERS THAT:
(12)Pursuant to section 546(1) of the FW Act, the First Respondent pay pecuniary penalties to a total of $169,560 in respect of the contraventions declared and set out in paragraph 1 above.
(13)Pursuant to section 546(1) of the FW Act, the Second Respondent pay pecuniary penalties to a total of $33,912 in respect of her accessorial involvement in the contraventions declared and set out in paragraph 1 above.
FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEYSYG 2029 of 2017
FAIR WORK OMBUDSMAN Applicant
And
HEIWA INTERNATIONAL PTY LTD First Respondent
KIYOSHI HASEGAWA Second Respondent
REASONS FOR JUDGMENT
1.By Application and Statement of Claim filed on 27 June 2017 the Applicant seeks declaratory, pecuniary and other relief against the Respondents in relation to contraventions of the Fair Work Act 2009 (Cth) (FW Act) and the Fair Work Regulations 2009 (Cth) (FW Regulations).
2.In substance the contraventions involve failure in relation to the payment of fifteen casual employees of the First Respondent (Heiwa) under the Fast Food Industry Award 2010 (Award) during the eight month period from 4 January 2016 to 11 September 2016 (the assessment period).
3.The Respondents did not file Defences, but rather entered into a Statement of Agreed Facts dated 4 September 2017 (Heiwa SOAF) pursuant to s.191 of the Evidence Act 1995 (Cth). On 28 September 2017 it was ordered that evidence and submissions filed in the related matter of Fair Work Ombudsman v Hasegawa & Ye Pty Ltd & Hasegawa (SYG2030/2017) also stand as evidence and submissions in this matter, insofar as relevant. I note that at the hearing [52] of the Heiwa SOAF was deleted by consent.
4.By the Heiwa SOAF the Respondents admitted to the contraventions alleged in the Statement of Claim and, except for the quantum of penalties to be imposed by the Court, all other relief has been agreed, including declaratory relief. I consider it appropriate and convenient for the Heiwa SOAF to be annexed to and form part of these Reasons.
Relevant Facts and Background
5.Heiwa was incorporated on 1 October 2008. At all material times its only director was the Second Respondent’s husband, Mr William Ye, who died on 13 April 2018 pending the hearing of this matter. Upon incorporation and up to 2 July 2015 the Second Respondent (Ms Hasegawa) and her husband each held 100 shares of the issued capital of Heiwa. On 2 July 2015 Ms Hasegawa transferred her 100 shares to her husband.
6.Since 13 February 2013 Heiwa operated a ‘kiosk-style’ sushi outlet store at Fletcher, New South Wales trading as Tokyo Sushi Fletcher (sushi shop). Seven of the fifteen employees were junior employees under 20 years of age (Junior Employees). Thirteen employees were employed as casual shop assistants whose duties included taking customer orders, serving customers, making sushi, cashier duties and cleaning the premises. One employee was employed as a manager who assisted with the management, handled cash, opened and closed the sushi shop and recorded its takings. Another employee started as a shop assistant and became a manager during the assessment period.
7.I note that the sushi shop at Fletcher and the two sushi shops operated by Hasegawa & Ye International Pty Ltd (Hasegawa & Ye) at Erina Fair on the Central Coast of New South Wales formed part of a broader network of 17 Tokyo Ramen and Tokyo Sushi stores that operated in New South Wales under the ultimate control of Ms Hasegawa and her husband, until his decease. I further note that Heiwa closed the sushi shop at Fletcher on 18 February 2018 and since that date has not conducted any business and has not had any employees.
8.During the assessment period Ms Hasegawa was responsible for the management of the employees of Heiwa and their conditions, interviewed and engaged its employees, determined and calculated the amounts to be paid to employees, had control of Heiwa’s bank accounts and was responsible for Heiwa’s financial affairs including processing payroll and paying employees by cheque.
9.In general terms Heiwa have admitted to contravening s.45 of the FW Act by failing to:
a)pay adult employees the minimum hourly rate of pay in accordance with clause 17 of the Award;
b)pay Junior Employees the minimum hourly rate of pay in accordance with clause 18 of the Award;
c)pay employees the casual loading in accordance with clause 13.2 of the Award;
d)pay employees the Saturday loading in accordance with clause 25.5(b) of the Award;
e)pay employees the Sunday Loading in accordance with clause 25.5(c)(ii) of the Award;
f)pay employees the public holiday penalty rate in accordance with clause 30.3 of the Award;
g)roster employees for minimum daily engagements of three hours in accordance with clause 13.4 of the Award; and
h)pay superannuation to ten employees in accordance with clause 21.2 of the Award.
10.Further, Heiwa has admitted to contravening s.535(1) of the FW Act by failing to make and keep employee records as prescribed by reg.3.40 of the FW Regulations (all admitted contraventions being the Admitted Contraventions).
11.I note at this point that the parties have not regarded it as necessary for the determination of the issues to place before the Court evidence or agreement of the quantum of actual separate contraventions committed by Heiwa during the assessment period.
12.As a result of the Admitted Contraventions it is admitted that during the assessment period the employees of Heiwa were underpaid a total of $22,567.22, comprised as follows:
Unpaid minimum hourly rate under clauses 17 and 18 of the Award (after crediting some overpayments totalling $1,186.91.)
$6,815.44
Unpaid casual loading under clause 13.2 of the Award.
$12,893.95
Unpaid Saturday loading.
$105.27
Unpaid Sunday loading.
$1,312.73
Unpaid public holiday penalty rate.
$1,439.82
Total
$22,567.21
13.I note, with respect to the Admitted Contraventions recorded in [9(d) and (e)] above of not paying employees the Saturday and Sunday loadings, that the total amounts involved were relatively small. Heiwa actually made payments of the Saturday and Sunday loadings but underpaid the Saturday loading for seven employees to the extent of $105.27 and underpaid the Sunday loading for nine employees to the extent of $1,312.73 because the loadings were calculated on the minimum hourly rates which were less than required under clauses 17 and 18 of the Award.
14.With respect to accessorial liability under s.550 of the FW Act (such accessorial liability being agreed at the hearing to be pursuant to s.550(2)(a) and (c)) Ms Hasegawa admits that:
a)she set the rates of pay for the employees of Heiwa and was responsible for paying them or ensuring that they were paid – see [48] of the Heiwa SOAF;
b)she knew that employment awards existed and set rates of pay for employees, that she could access minimum wage rate information online, that Heiwa was not making superannuation contributions for employees of Heiwa and that employees who worked on Saturdays and Sundays were entitled to an extra 25% and 50% penalty respectively, but did not adjust the rates for these penalties being paid to the employees to ensure their full entitlements were met – see [49(d)] and [50] – [51] of the Heiwa SOAF; and
c)she was involved in and is to be treated as herself committing the Admitted Contraventions of Heiwa.
15.Without any grouping the parties agree that the maximum penalties which may be imposed by the Court upon the Respondents respectively are as follows:
a)Heiwa - $459,000; and
b)Ms Hasegawa - $91,800.
(see TP52.45 - 47)
General Principles Guiding Exercise of Discretionary Power to Impose Penalties and Quantum of Such Penalties
16.Under s.546 of the FW Act the Court has power to order the payment of a pecuniary penalty for each of the Admitted Contraventions.
17.The Admitted Contraventions are contraventions of civil remedy provisions and the penalties to be imposed for them are to be imposed by the application of the principles relating to civil rather than criminal penalties. The purpose of a civil penalty is to promote compliance with the relevant legislative requirements. In Commonwealth v Director, Fair Work Building Inspectorate (2015) 258 CLR 482 at 506 [55] French CJ, Kiefel, Bell, Nettle and Gordon JJ said as follows:
[55] No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
“Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. ... The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.”
(citation omitted)
18.The fixing of the quantum of penalty has repeatedly been said to be a process of “instinctive synthesis”: Markarian v The Queen (2005) 228 CLR 357 at 373 – 374 [37]. However, a non-exhaustive range of considerations giving content to the process of “instinctive synthesis”, and to each of which I have had regard, has been approved by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080 at [14] as being:
·The nature and extent of the conduct which led to the breaches.
·The circumstances in which that conduct took place.
·The nature and extent of any loss or damage sustained as a result of the breaches.
·Whether there had been similar previous conduct by the respondent.
·Whether the breaches were properly distinct or arose out of the one course of conduct.
·The size of the business enterprise involved.
·Whether or not the breaches were deliberate.
·Whether senior management was involved in the breaches.
·Whether the party committing the breach had exhibited contrition.
·Whether the party committing the breach had taken corrective action.
·Whether the party committing the breach had cooperated with the enforcement authorities.
·The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements.
·The need for specific and general deterrence.
19.At [15] above I have referred to “grouping”. This refers to the effect of s.557 of the FW Act which provides that two or more contraventions of a term of a civil remedy provision committed by the same person and arising out of a course of conduct by that person are taken to constitute a single contravention.
Findings Relevant to Penalties
20.I make the following findings relevant to the question of the appropriate penalties.
21.The discovery of the Admitted Contraventions arose out of the Applicant’s investigation into the sushi industry in the Hunter and Central Coast regions of New South Wales which commenced in April 2016. The investigation commenced as a result of previous complaints received by the Applicant from former employees of sushi businesses located in northern New South Wales and the Gold Coast region of Queensland. In this respect I note that a relevant factor in this case which involves the “fast-food” industry is that this industry has been notorious in recent years for employers underpaying staff. In Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290 at [26] – [27] Flick J said:
[26]The need for general deterrence arises by reason of the fact that the employees concerned were employed in the “fast-food” industry, where:
• employees are commonly employed on a casual basis;
and where:
• employees are commonly vulnerable by reason of their age, limited education and limited English communication skills.
[27] Albeit only one of the considerations to be taken into account in fixing the quantum of penalties, the relevance of both specific and general deterrence assumes some considerable importance on the facts of the present case. The importance of general deterrence includes the need to ensure that any penalty that may be imposed is not seen as “the cost of doing business”.
22.The Admitted Contraventions are on any basis objectively serious. The simple fact of the matter is that persons who engage in business activities which necessitate the employment of staff are under a strict obligation to pay their staff the just entitlements of the staff in accordance with law, whether the relevant employer is a major corporation or, as here, a family business. Whilst I accept that the sushi shop was a family business, Ms Hasegawa and her deceased husband were not unsophisticated innocents abroad. They took out a loan for $250,000 in 2001 and set up a restaurant at the Westfield Hornsby Shopping Centre and opened a ramen restaurant called Tokyo Ramen for which Hasegawa & Ye International Pty Ltd (Hasegawa & Ye) was formed in order to own and operate and which was a shelf company obtained from an accountant at Wahroonga named Mr Raymond Wong. Heiwa was also a shelf company obtained from Mr Wong. In around 2003 Mr Ye and Ms Hasegawa commenced operating the Tokyo Sushi branded stores, and as at 4 September 2017 there were some 17 Tokyo Sushi and Tokyo Ramen stores in operation within New South Wales, each operated by a separate corporate entity. A separate shelf company by the name of Nippon Gourmet Pty Ltd was obtained from Mr Wong for the purpose of initially holding leases and later of expanding the Tokyo Sushi business through franchising arrangements, subject to a Franchise Agreement between the relevant franchisee and Nippon Gourmet Pty Ltd. Mr Wong was acting on behalf of Heiwa when on 1 August 2016 he provided records and documents to the Applicant on behalf of Heiwa and the solicitor on the record in this proceeding for Heiwa and Ms Hasegawa is an employee of Mr Wong.
23.In other words, whilst Heiwa and Ms Hasegawa ran a family business, it was a substantial family business which clearly had access when needed to reasonably sophisticated financial advisers who created reasonably complex and sophisticated Franchise Agreements and registered trademarks for Tokyo Sushi in 2013. In my view there is no excuse for a family business of this type to not pay its employees in accordance with law. Employees are entitled to respect and part of that respect is to pay them their full entitlements which must be recognised and known to the employer.
24.The adult employees (apart from the employee who was employed as a manager at the commencement of the assessment period referred to in [6] above) who were employed at the commencement of the assessment period were initially paid at the rate of pay of $12 per hour (and in two cases $11 per hour), when up to the first full pay period prior to 1 July 2016 they should have been paid at the rate of $18.99 per hour or $20.44 per hour, dependent on their staff classification, and for the first full period on or after 1 July 2016 until the end of the assessment period should have been paid at rates of $19.44 per hour and $20.93 per hour. Any increases throughout the assessment period for these adult employees were still, in most cases, well below the required hourly rate. The total amount of the underpayment for the adult employees on these minimum hourly rates was $6,994.70. Underpayments on the minimum hourly rates led into the underpayments of the Saturday and Sunday loadings. With the exception of the employees who were employed as managers referred to in [6] above during the assessment period, each of the adult employees were paid rates of pay of $13 per hour or below until mid-August 2016. Five of the Junior Employees were underpaid a total of $1,007.65 for the assessment period, with one being underpaid $936.07. Although the employees were engaged as casual employees, no casual loading was paid to them, and ten of the employees were not paid any amounts on account of superannuation as required by law.
25.In my view Ms Hasegawa has not given, nor could she give in the circumstances, any proper or reasonable excuse for Heiwa’s failure to comply with its legal obligations towards its staff who vis a vis Heiwa were in a position of some vulnerability as employees, particularly the junior employees. Nevertheless, I accept that her affidavit of 20 October 2017 establishes that she now understands the requirement of complying with the Award and the FW Act, has taken steps to have others comply with those requirements which she will monitor and that she is truly and sincerely remorseful and contrite for the Admitted Contraventions. I am of the view that repetition of contraventions of the Award and the FW Act in the future by her or her companies is unlikely. The entitlements of the employees have now been paid insofar as has been possible to date.
26.I further take into account that the Admitted Contraventions were first offences. When the first complaint was made in early January 2016, prior to the commencement of the Applicant’s investigation in the Hunter and Central Coast regions, by an employee at Tokyo Sushi Katoomba about an underpayment of $1,635.42, such amount was paid to the complaining employee by 18 January 2016 and thereafter Heiwa and Ms Hasegawa have generally co-operated with the Applicant and not sought to deceive or mislead the Applicant in its investigations, as is quite regularly the case in matters of this type.
27.Finally, I have generally had regard to general and specific deterrence.
Dispute About Grouping
28.There is no dispute between the parties that the failure to pay minimum hourly rates of pay in breach of clauses 17 and 18 of the Award should be grouped. I agree and have done so: see Group 1 in the tables below at [33] and [34].
29.However, Mr Crow of Counsel who appeared for the Respondents also sought the grouping as a single course of conduct of the failures to pay the Saturday and Sunday loadings together with the failure to pay the minimum hourly rates of pay under clauses 17 and 18 of the Award, because the failure to pay the correct amounts for the weekend loadings flowed from and was causally related to the failure to pay the minimum hourly rates of pay. I further note that in oral submissions at the hearing Mr Crow also appeared to submit that the failure to pay the weekend loadings might be grouped together, even if not grouped with the failure to pay the minimum hourly rates of pay.
30.Ms Gall of Counsel, who appeared for the Applicant, maintained that the only proper grouping was of the failure to pay the minimum hourly rates of pay.
31.I accept the submission of the Applicant that the only grouping should be the failures to pay the minimum hourly rates. In my view there is no interrelationship between “the legal and factual elements” comprising the failure to correctly pay the Saturday and Sunday loadings and the failure to pay the minimum hourly rates or between the failure to correctly pay the Saturday loading and the failure to correctly pay the Sunday loading. The contraventions under consideration here were separate contraventions of different terms of the Award which, on the reasoning and authority of the decision of the Full Court of the Federal Court of Australia in Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153 (Rocky Holdings), ought not to be grouped together: see in particular the table recording the separate contraventions and the penalties imposed by the primary judge and upheld by the Full Court in Rocky Holdings at 155 – 157 [6].
32.The same approach was taken by Siopis J in Fair Work Ombudsman v Phua & Foo Pty Ltd [2018] FCA 137 (Foo) where he did not group, but treated separately as four contraventions:
a)the failure to pay the required minimum rate of pay;
b)the failure to pay the casual loading;
c)the failure to pay the Saturday penalty rate; and
d)the failure to pay the Sunday penalty rate;
because each was a contravention of a different term of the relevant award: see Foo at [4] and [33] – [36].
Penalties for Heiwa
33.Having regard to the facts and circumstances as established by the Heiwa SOAF, the other evidence before the Court and my views as expressed in [20] – [32] above, I am of the view that I should impose a penalty on Heiwa of $169,560, calculated as follows:
| Penalty Calculations for Heiwa | ||||
| Group | Possible Maximum Penalty After Grouping | Imposed Percentage of Maximum Penalty | Quantum of Imposed Percentage of Maximum Penalty | Less 20% Discount |
| Group 1 | $54,000. | 75% | $40,500. | $32,400. |
| Group 2 | $54,000. | 80% | $43,200. | $34,560. |
| Group 3 | $54,000. | 20% | $10,800. | $8,640. |
| Group 4 | $54,000. | 30% | $16,200. | $12,960. |
| Group 5 | $54,000. | 50% | $27,000. | $21,600. |
| Group 6 | $54,000. | 80% | $43,200. | $34,560. |
| Group 7 | $54,000. | 45% | $24,300. | $19,440. |
| Group 8 | $27,000. | 25% | $6,750. | $5,400. |
| TOTALS | $405,000. | $211,950. | $169,560. | |
Penalties for Ms Hasegawa
34.Ms Hasegawa has accepted that she is accessorily liable for the Admitted Contraventions and she was herself closely and intimately involved in the committing by Heiwa of those Admitted Contraventions. However, under the FW Act, there are different and much lower penalties for individuals than for corporations and hence the maximum penalty which can be imposed upon Ms Hasegawa, after grouping of the failures to pay minimum hourly rates, is $81,000. In the circumstances I consider that I should impose a penalty of $33,912, calculated as follows:
| Penalty Calculations for Ms Hasegawa | ||||
| Group | Possible Maximum Penalty After Grouping | Imposed Percentage of Maximum Penalty | Quantum of Imposed Percentage of Maximum Penalty | Less 20% Discount |
| Group 1 | $10,800. | 75% | $8,100. | $6,480. |
| Group 2 | $10,800. | 80% | $8,640. | $6,912. |
| Group 3 | $10,800. | 20% | $2,160. | $1,728. |
| Group 4 | $10,800. | 30% | $3,240. | $2,592. |
| Group 5 | $10,800. | 50% | $5,400. | $4,320. |
| Group 6 | $10,800. | 80% | $8,640. | $6,912. |
| Group 7 | $10,800. | 45% | $4,860. | $3,888. |
| Group 8 | $5,400. | 25% | $1,350. | $1,080. |
| TOTALS | $81,000. | $42,390. | $33,912. | |
Totality Principle
35.For the purposes of the totality principle I have considered whether or not the penalties I have regarded as appropriate to impose for each contravention are appropriate to the entire and total contravening conduct. In my view the appropriate overall penalties could certainly not be any less but are sufficient, if only just sufficient. They are sufficient in totality to deter repetition by the Respondents as well as others who might be inclined to contravene the FW Act in a similar fashion. They are required by the objective seriousness of the contraventions in themselves. They are not oppressive or crushing and there is no plea of impecuniosity.
Conclusion
36.In the result Heiwa is to pay a penalty of $169,560 and Ms Hasegawa is to pay a penalty of $33,912, such penalties to be paid to the Consolidated Revenue fund of the Commonwealth within 28 days of the orders which I shall make.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Judge Dowdy
Associate:
Date: 28 May 2019
ANNEXURE
IN THE FEDERAL CIRCUIT COURT File number: SYG2029/2017
OF AUSTRALIA
SYDNEY REGISTRY
FAIR WORK DIVISIONFAIR WORK OMBUDSMAN
ApplicantHEIWA INTERNATIONAL PTY LTD (ACN 133 513 005)
First RespondentKIYOSHI HASEGAWA
Second RespondentSTATEMENT OF AGREED FACTS
This Statement of Agreed Facts is an agreed document between the Applicant and the First Respondent and Second Respondent (together, the Respondents) in these proceedings. The parties agree and intend that it be received into evidence by the Court for the purposes of section 191 of the Evidence Act 1995 (Cth).
The parties agree as set out below.
PART A: BACKGROUND
Applicant
1.The Applicant is and was at all material times:
(a) a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to section 687 of the Fair Work Act 2009 (Cth) (FW Act);
(b) a Fair Work Inspector pursuant to section 701 of the FW Act; and
(c) a person with standing to bring these proceedings pursuant to section 539(2) of the FW Act.
First Respondent
2.Heiwa International Pty Ltd (ACN 133 513 005) (First Respondent) admits that it is and was at all material times:
(a) since 1 October 2008, a corporation incorporated under the Corporations Act 2001 (Cth);
(b) capable of being sued in 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(1)(a) of the FW Act; and
(e) the operator of a ‘kiosk-style’ sushi outlet located at Fletcher in the State of New South Wales, trading as Tokyo Sushi Fletcher (Business).
3.During the period of 4 January 2016 to 11 September 2016 (Assessment Period), the First Respondent admits that it employed the following employees:
(a) Darcy Randall (Darcy);
(b) Yuko Masuda (Yuko);
(c) Wing Hei Cheung (Priscilla);
(d) Brooke Richards (Brooke);
(e) Tsz Hang Chan (Stephen);
(f) Jaleel Widders (Jaleel);
(g) Zhuoya Yu (Grace);
(h) O’Hara Coles (Harry);
(i) Kim Sungjun (Jun);
(j) Josef Randall (Josef);
(k) Dandan Liu (Dona);
(l) Jingyu Zhang (Momo);
(m) Xui Haichen (Xui);
(n) Tanika Croak (Tanika); and
(o) Hayley Howard (Hayley),
(collectively, the Employees).
4.Mr William Ye:
(a) has been the sole director of the First Respondent since its registration date;
(b) currently holds all 200 shares issued in the First Respondent; and
(c) is the husband of the Second Respondent.
The Second Respondent
5.Ms Kiyoshi Hasegawa (Second Respondent), in respect of the First Respondent’s business operations:
(a) had responsibility for the management of the Employees and their conditions during the Assessment Period;
(b) held 100 shares of the First Respondent between 1 October 2008 to 2 July 2015;
(c) interviewed and engaged the Employees;
(d) determined what amounts the Employees would be paid;
(e) calculated the amounts paid to the Employees using the Microsoft Excel software program; and
(f) had control of its bank accounts and was responsible for its financial affairs including processing payroll and paying employees by cheque.
The Employees
6.The First Respondent admits that during the Assessment Period:
(a) each of the Employees was engaged as a casual employee for the purposes of clause 13.1 of the Fast Food Industry Award 2010 (Award);
(b) it employed each of the Employees, except for Harry, as a shop assistant (collectively Shop Assistants);
(c) it employed Harry as a manager;
(d) it employed Yuko:
i.from the commencement of the Assessment Period until 12 June 2016 as a shop assistant; and
ii.from 13 June 2016 until the conclusion of the Assessment Period as a manager;
(e) when Employees were performing the work of shop assistants at the Business, their duties included:
i.cashier duties;
ii.taking customer orders;
iii.serving customers;
iv.making sushi;
v.preparing ingredients;
vi.cutting up ingredients; and
vii.cleaning the Business.
(f) when Harry and Yuko were performing the work of managers, their duties included:
i.assisting with management of the Business;
ii.handling cash;
iii.recording the takings of the Business; and
iv.opening and closing the Business.
(g) the following employees were 20 years old or younger:
i.Darcy: 17 years old;
ii.Brooke: 17 years old;
iii.Jaleel: 20 years old;
iv.Harry: 19 years old;
v.Josef: under 16 years old;
vi.Tanika: 16 years old; and
vii.Hayley: 16 years old,
(collectively, the Junior Employees);
(h) it paid the Employees:
i.the rates of pay for ordinary hours worked during the Assessment Period as set out in Table 1;
ii.an additional 25% of their rate of pay set out in Table 1 for hours worked on a Saturday during the Assessment Period; and
iii.an additional 50% of their rate of pay set out in Table 1 for hours worked on a Sunday during the Assessment Period.
7.The Employees performed work over the following periods within the Assessment Period:
(a) Darcy: 8 January 2016 to 4 September 2016;
(b) Yuko: 12 January 2016 to 29 August 2016;
(c) Priscilla: 5 July 2016 to 3 September 2016;
(d) Brooke: 4 January 2016 to 4 September 2016;
(e) Stephen: 29 February 2016 to 29 August 2016;
(f) Jaleel: 2 May 2016 to 23 June 2016;
(g) Grace: 18 July 2016 to 4 September 2016;
(h) Harry: 4 January 2016 to 10 June 2016;
(i) Jun: 27 June 2016 to 20 August 2016;
(j) Josef: 23 April 2016 to 3 September 2016;
(k) Dona: 5 January 2016 to 29 August 2016;
(l) Momo: 29 January 2016 to 21 August 2016;
(m) Xui: 5 January 2016;
(n) Tanika: 21 April 2016 to 22 April 2016; and
(o) Hayley: 4 July 2016 to 29 August 2016.
The Tokyo Sushi Franchise
8.The Tokyo Ramen business was started by Hasegawa & Ye International Pty Ltd in May 2001, by Mr Ye and the Second Respondent who were both directors of the entity at the relevant time.
9.In around 2003, Mr Ye and the Second Respondent commenced operating the Tokyo Sushi branded stores.
10.At the time of entry into this Statement of Agreed Facts there are 17 Tokyo Sushi and Tokyo Ramen stores (Tokyo Brand Stores) in operation, all located in the state of New South Wales.
11.Each of the Tokyo Brand Stores:
(a) is operated by a separate corporate entity; and
(b) for those Tokyo Brand Stores operating through a franchising arrangement, subject to a franchise agreement between the relevant operating entity and Nippon Gourmet Pty Ltd (Nippon Gourmet).
12.From 22 May 2001, the Second Respondent was the director, secretary and sole shareholder of Hasegawa & Ye International Pty Ltd.
13.Mr Ye is:
(a) the sole director of Nippon Gourmet; and
(b) responsible for the operation of Nippon Gourmet;
(c) a director of four separate entities that operate a Tokyo Brand Store (being, Nippon Gourmet Pty Ltd; Heiwa Holdings Pty Ltd; Heiwa International Pty Ltd; and Red Diamond (W&M) Pty Ltd); and
(d) not a party to these proceedings.
14.Ms Jia Lu Xu (Lulu):
(a) is engaged by Nippon Gourmet as its Operations Manager;
(b) is directed by Mr Ye in the performance of work for Nippon Gourmet;
(c) is responsible for the day to day management for each of the Tokyo Brand Stores;
(d) holds 50 out of 300 shares in Nippon Gourmet; and
(e) is not a party to these proceedings.
15.In May 2016 Lulu commenced paying employees of the First Respondent by cheque with funds from the Nippon Gourmet bank account. These amounts were based on a spreadsheet provided to Lulu by the Second Respondent which indicated the relevant rates of pay, and employee hours.
PART B: LEGISLATION AND APPLICABLE INSTRUMENTS
Legislation and Industrial instruments
16.At all relevant times, the First Respondent was bound by the FW Act and the Fair Work Regulations 2009 (FW Regulations) in respect of the employment of the Employees.
Industrial instruments
17.At all relevant times the First Respondent was bound by the Award in respect of the Employees’ employment.
18.The First Respondent admits that:
(a) when working as Shop Assistants, the Employees were properly classified as Fast Food Employees Level 1 under the Award;
(b) when working as managers, Harry and Yuko were properly classified as Fast Food Employees Level 3 under the Award; and
(c) when the Junior Employees performed work for the First Respondent, they were properly classified as junior employees and were entitled to be paid junior rates under clause 18 of the Award.
PART C: ALLEGED CONTRAVENTIONS OF THE FAIR WORK ACT
SECTION 45 – CONTRAVENING AN AWARD
Minimum Wages – Clauses 17 and 18
19.The First Respondent was required to pay to the Employees, except the Junior Employees, the minimum hourly rates in accordance with clause 17 of the Award, as set out below:
Period
Classification
Hourly Rate
Commencement of Assessment Period until first full pay period prior to 1 July 2016
Fast Food Employee Level 1
$18.99 per hour
Fast Food Employee Level 3
$20.44 per hour
First full pay period on or after 1 July 2016 until the end of the Assessment Period
Fast Food Employee Level 1
$19.44 per hour
Fast Food Employee Level 3
$20.93 per hour
20.The First Respondent was required to pay the Junior Employees the relevant percentage of the applicable minimum hourly rate in accordance with clause 18 of the Award, as set out in the table below:
Age
% of weekly wage
Under 16 years of age
40
16 years of age
50
17 years of age
60
18 years of age
70
19 years of age
80
20 years of age
90
21.During the Assessment Period, the Employees listed in Column 1 of Table 2 (the Minimum Wage Employees):
(a) worked the number of ordinary hours as set out in Column 3 of Table 2;
(b) were entitled to be paid the amounts by the First Respondent for ordinary hours worked as set out in Column 4 of Table 2; and
(c) were paid the rates set out in Table 1, and amounts set out in Column 5 of Table 2 for ordinary hours worked, which were insufficient to meet their entitlements to the minimum hourly rate.
22.The First Respondent admits that it:
(a) contravened section 45 of the FW Act by contravening clause 17 of the Award in respect of the adult Minimum Wage Employees;
(b) underpaid the adult Minimum Wage Employees $6,994.70 in respect of their entitlement to the minimum hourly rate as set out in Column 6 of Table 2;
(c) contravened section 45 of the FW Act by contravening clause 18 of the Award in respect of the junior Minimum Wage Employees; and
(d) underpaid the junior Minimum Wage Employees $1,007.65 in respect of their entitlement to the minimum hourly rate as set out in Column 6 of Table 2.
Casual Loading – Clause 13.2
23.The First Respondent was required to pay the Employees an additional casual loading of 25% of the minimum hourly rate in accordance with clause 13.2 of the Award, for ordinary hours worked from Monday to Saturday.
24.During the Assessment Period, the Employees:
(a) were entitled to be paid the casual loading amount per hour as set out in Column 2 of Table 3;
(b) worked the number of hours in respect of which the casual loading was required to be paid as set out in Column 3 of Table 3;
(c) were entitled to be paid the amounts by the First Respondent as set out in Column 4 of Table 3; and
(d) were paid the rates set out in Table 1 for ordinary hours worked, and were not paid any amounts in respect of the casual loading.
25.The First Respondent admits that it:
(a) contravened section 45 of the FW Act by contravening clause 13.2 of the Award;
(b) underpaid the Employees $12,893.95 in respect of their entitlement to casual loading as set out in Column 5 of Table 3.
Saturday Loading – Clause 25.5(b)
26.The First Respondent was required to pay the Employees an additional Saturday loading of 25% (in addition to the 25% casual loading) for ordinary hours worked on a Saturday in accordance with clause 25.5(b) of the Award.
27.During the Assessment Period, the Employees listed in Column 1 of Table 4 (Saturday Loading Employees);
(a) were entitled to be paid the Saturday loading amount as set out in Column 2 of Table 4;
(b) worked the number of hours on a Saturday as set out in Column 3 of Table 4;
(c) were entitled to be paid the amounts by the First Respondent with respect to the Saturday loading as set out in Column 4 of Table 4;
(d) were paid amounts with respect to the Saturday loading as set out in Column 5 of Table 4, which were insufficient to meet their entitlements to Saturday loading.
28.The First Respondent admits that it:
(a) contravened section 45 of the FW Act by contravening clause 25.5(b) of the Award; and
(b) underpaid the Saturday Loading Employees $105.27 in respect of their entitlement to Saturday loading payments as set out in Column 6 of Table 4.
Sunday Loading – Clause 25.5(c)(ii)
29.The First Respondent was required to pay the Employees an additional Sunday loading of 75% (inclusive of the 25% casual loading) when they worked ordinary hours on a Sunday in accordance with clause 25.5(c)(ii) of the Award.
30.During the Assessment Period, the Employees listed in Column 1 of Table 4 (Sunday Loading Employees):
(a) were entitled were entitled to be paid the Sunday loading amount as set out in Column 2 of Table 5;
(b) worked the number of hours on a Sunday as set out in Column 3 of Table 5;
(c) were entitled to be paid the amounts by the First Respondent with respect to the Sunday loading as set out in Column 4 of Table 5;
(d) were paid the amounts with respect to the Sunday loading as set out in Column 5 of Table 6, which were insufficient to meet their entitlements to Sunday loading.
31.The First Respondent admits that it:
(a) contravened section 45 of the FW Act by contravening clause 25.5(c)(ii) of the Award;
(b) underpaid the Sunday Loading Employees $1,312.73 in respect of their entitlement to Sunday loading payments as set out in Column 6 of Table 6.
Public Holiday Rate – Clause 30.3
32.The First Respondent was required to pay the Employees at the rate of 275% (inclusive of the ordinary hourly rate and casual loading) for hours worked on a public holiday in accordance with clause 30.3 of the Award.
33.During the Assessment Period, the Employees listed in Column 1 of Table 6 (Public Holiday Rate Employees):
(a) were entitled to be paid the amounts by the First Respondent with respect to the public holiday loading as set out in Column 2 of Table 5;
(b) worked the number of hours on a public holiday as set out in Column 3 of Table 6;
(c) were entitled to be paid the amounts by the First Respondent with respect to work on a public holiday as set out in Column 4 of Table 6;
(d) were paid the rates set out in Table 1 for all hours worked and were not paid any additional amount in respect of working on a public holiday;
(e) were paid the Public Holiday Rate Employees the amounts with respect to the public holiday loading as set out in Column 5 of Table 6, which were insufficient to meet their entitlements to the public holiday rate.
34.The First Respondent admits that it:
(a) contravened section 45 of the FW Act by contravening clause 30.3 of the Award;
(b) underpaid the Public Holiday Rate Employees $1,439.82 in respect of their entitlement to public holiday loading payments as set out in Column 6 of Table 6.
Total Underpayment
35.By reason of the contraventions admitted in paragraphs 22, 25, 28, 31, and 34 above, the First Respondent caused the Employees to be underpaid a total of $23,754.12 as set out in Column 2 of Table 7.
36.During the Assessment Period, the following Employees were paid amounts in excess of their entitlements to Award minimum rates of pay for some pay periods during their employment totalling:
(a) Darcy: $434.67;
(b) Yuko: $2.83;
(c) Brooke: $281.36;
(d) Jaleel: $24.55;
(e) Harry: $344.81;
(f) Josef: $58.74:
(g) Momo: $30.05: and
(h) Hayley: $9.90.
37.The Applicant has deducted the amounts set out in paragraph 36 above from the Underpayment, resulting in an underpayment of $22,567.22 (Total Underpayment) as set out in Column 3 of Table 7.
Superannuation Contributions – Clause 21
38.Clause 21.2 of the Award provides that the First Respondent must make superannuation contributions for the benefit of the Employees as will avoid the First Respondent being required to pay the superannuation guarantee charge.
39.During the Assessment Period, the First Respondent:
(a) was required to pay superannuation contributions at the rate of 9.5% percent of an employee’s ordinary time earnings;
(b) did not make any superannuation contributions for the benefit of Yuko, Priscilla, Stephen, Jaleel, Grace, Harry, Jun, Dona, Momo or Xui.
40.The First Respondent admits that it contravened section 45 of the FW Act by contravening clause 21.2 of the Award.
Minimum Daily Engagement – Clause 13.4
41.The First Respondent was required to engage the Employees for at least three hours each day the Employees worked in accordance with clause 13.4 of the Award.
42.During the Assessment Period, the Employees listed in Column 1 of Table 8 (Minimum Engagement Employees) were engaged to work, and did work, shifts of less than three hours, as set out in Column 2 of Table 8.
43.The First Respondent admits that it contravened section 45 of the FW Act by contravening clause 13.4 of the Award.
44.The First Respondent caused the Minimum Engagement Employees to suffer a loss in the amounts set out in Column 3 of Table 8.
SECTION 535 – FAILURE TO MAKE AND KEEP EMPLOYEE RECORDS
45.Pursuant to section 535(1) of the FW Act and regulation 3.40 of the FW Regulations, the First Respondent was required to keep records, if an employee’s employment was terminated, of:
(a) whether the employment was terminated by consent, notice, summarily or in some other manner (regulation 3.40(a)); and
(b) the name of the person who acted to terminate the employment (regulation 3.40(b)).
46.During the Assessment Period:
(a) Jaleel, Harry, Xiu and Tanika’s employment was terminated; and
(b) the First Respondent did not make or keep any records required by section 535(1) of the FW Act and regulation 3.40 of the FW Regulations for Jaleel, Harry, Xiu or Tanika.
47.The First Respondent admits that it contravened section 535(1) of the FW Act.
PART D: ACCESSORIAL LIABILITY
48.At all relevant times the Second Respondent:
(a) set the rates of pay for employees of the First Respondent;
(b) was responsible for paying employees of the First Respondent and/or ensuring that employees of the First Respondent were paid;
(c) performed and/or oversaw the payroll functions for the First Respondent, including:
i.looking at the hours worked by the employees of the First Respondent as contained in rosters;
ii.paying wages to employees of the First Respondent based on hours worked; and
iii.making superannuation contributions for employees of the First Respondent.
(d) prepared pay slips or instructed that pay slips be prepared for employees of the First Respondent;
(e) paid employees of the First Respondent for the hours they worked in a shift, even if the shift was less than three hours in duration;
(f) from around May 2016, directed Lulu by providing her with a spreadsheet of rates of pay and employee hours, to pay the Employees by cheque with funds from the Nippon Gourmet bank account;
49.At all relevant times the Second Respondent knew that:
(a) awards existed and that awards set rates of pay for employees of the First Respondent;
(b) she could access minimum wage rate information online;
(c) the First Respondent was not making superannuation contributions for employees of the First Respondent;
(d) when employees of the First Respondent worked on Saturdays they were entitled to payment of an extra 25% penalty and on Sundays an extra 50% penalty; and
(e) the First Respondent did not make and keep employee records for the First Respondent in relation to termination of employment.
50.During the Assessment Period, the Second Respondent knew the First Respondent paid employees an additional 25% or 50% of the rates set out in paragraph 6(h) above when they worked on Saturdays or Sundays.
51.Despite having the knowledge referred to above the Second Respondent did not adjust the rates being paid to the First Respondent’s employees to ensure their entitlements were met.
52.During the Assessment Period, the Second Respondent:
(a) had actual knowledge of; and
(b) was an intentional participant in,
each of the admitted contraventions of the First Respondent.
53.By reason of the matters admitted and pursuant to section 550(1) of the FW Act, the Second Respondent admits she was involved in, and is therefore to be treated as having herself contravened, each of the provisions set out in paragraphs 22, 25, 28, 31, 34, 43 and 47 above, being the provisions which the First Respondent is alleged to have contravened.
PART E: THE APPLICANT’S INVESTIGATION
Katoomba Complaint
54.In January 2016, a request for assistance was made to the Applicant by an employee of the Tokyo Sushi Katoomba store concerning underpayments (Katoomba Complaint).
55.Mr Ye and the Second Respondent were advised that the Katoomba Complaint concerned an employee underpayment, by Lulu who was the Director of Glorious Hills Pty Ltd t/as Tokyo Sushi Katoomba.
56.In dealing with the Katoomba Complaint, Lulu was advised by the Applicant of appropriate rates of pay and Award coverage for Tokyo Sushi Katoomba employees.
57.Lulu was directed by Mr Ye to rectify the amounts arising out of the Katoomba Complaint. Payment of $1,635.42 was made to the employee by electronic funds transfer on or around 18 January 2016.
Tokyo Sushi Fletcher
58.The Applicant visited the Business on 12 July 2016 (First Site Visit), and on 15 July 2016, as part of the Applicant’s 2016 Hunter & Central Coast Sushi Campaign to check compliance in these locations in sushi outlets.
59.At the First Site Visit a manager of the Business provided to Fair Work Inspector David Anson (FWI Anson) copies of time sheets, rosters and takeaway bags for the Business which contained the name “Nippon Gourmet Pty Ltd”.
60.Nippon Gourmet:
(a) was issued with a Notice to Produce Records or Documents (NTP) by the Applicant on 13 July 2016, requesting records for the period 1 January 2016 to 12 July 2016, concerning the employees working at the Business;
(b) on 1 August 2016 provided records and documents to the Applicant through its accountant Mr Raymond Wong on behalf of the First Respondent which recorded that the First Respondent operated the Business and employed the Employees;
(c) held the lease on the premises for the Business during the Assessment Period.
61.Recorded interviews were held with Fair Work Inspectors and the following individuals:
(a) Mr Ye and the Second Respondent separately on 18 August 2016; and
(b) Lulu on 2 March 2017.
62.On 14 March 2017, the FWO issued a Findings of Contravention Letter on the First Respondent, identifying an underpayment of $22,440.87 (Findings of Contravention Letter).
63.On 4 April 2017, the FWO issued a Final Contravention Letter on the First Respondent as no response had been received to the Findings of Contravention Letter (Final Contravention Letter).
64.On 7 April 2017, the First Respondent responded to the Findings of Contravention Letter and the Final Contravention Letter by way of a letter signed by Mr Ye.
65.The First Respondent commenced rectification of the underpayments on 25 September 2016.
PART F: DECLARATIONS AND ORDERS SOUGHT
Recommendation as to declarations and orders
66.The Applicant and Respondents have agreed to recommend to the Court the declarations and orders as set out below.
The Court declares that:
67.Declarations that the First Respondent has contravened:
(a) section 45 of the FW Act by failing to pay the Adult Minimum Wage Employees the minimum hourly rate of pay in accordance with clause 17 of the Award;
(b) section 45 of the FW Act by failing to pay the Junior Minimum Wage Employees the minimum hourly rate of pay in accordance with clause 18 of the Award;
(c) section 45 of the FW Act by failing to pay the Employees the casual loading in accordance with clause 13.2 of the Award;
(d) section 45 of the FW Act by failing to pay the Saturday Loading Employees the Saturday loading in accordance with clause 25.5(b) of the Award;
(e) section 45 of the FW Act by failing to pay the Sunday Loading Employees the Sunday loading in accordance with clause 25.5(c)(ii) of the Award;
(f) section 45 of the FW Act by failing to pay the Public Holiday Rate Employees the public holiday penalty rate in accordance with clause 30.3 of the Award;
(g) section 45 of the FW Act by failing to roster the Minimum Engagement Employees for minimum daily engagements of three hours in accordance with clause 13.4 of the Award;
(h) section 45 of the FW Act by failing to pay superannuation in accordance with clause 21.1 of the Award; and
(i) section 535(1) of the FW Act by failing to make and keep employee records as prescribed by FW Regulation 3.40.
68.Declarations that the Second Respondent was involved in each of the contraventions alleged against the First Respondent, pursuant to section 550(1) of the FW Act as set out in paragraph 67 above.
69.An order pursuant to section 545(1) of the FW Act that the First and Second Respondents, jointly and severally, pay to the Applicant the following amounts owing to the Employees, less any payments made to the Employees before the date of the order, within 28 days:
(a) Darcy: $28.62;
(b) Yuko: $161.73;
(c) Priscilla; $78.86;
(d) Stephen: $31.47;
(e) Jaleel: $1,439.57;
(f) Grace: $68.70;
(g) Harry: $1,403.08;
(h) Jun: $10.97;
(i) Josef: $20.74;
(j) Dona: $7.58;
(k) Xui: $70.37;
(l) Tanika: $28.60; and
(m) Hayley: $46.54.
70.An order pursuant to section 545(1) of the FW Act that the First and Second Respondents, jointly and severally, make superannuation contributions on behalf of the Employees to their nominated superannuation funds at the superannuation guarantee charge rate prescribed by applicable superannuation legislation less any payment made before the date of the order, within 28 days.
71.An order pursuant to section 545(1) of the FW Act that the First and Second Respondents, jointly and severally, pay to the Applicant the following amounts owing to the Employees in compensation for failing to engage the Minimum Shift Employees for daily engagements of three hours, less any payments made to the Employees before the date of the order, within 28 days:
(a) Darcy: $78.31;
(b) Yuko: $120.36;
(c) Brooke: $277.84;
(d) Stephen: $2.85;
(e) Jaleel: $58.75;
(f) Harry: $358.80;
(g) Josef: $28.93;
(h) Dona: $28.94;
(i) Momo: $122.32; and
(j) Hayley: $35.01.
72.An order pursuant to section 547(2) of the FW Act that interest be paid on any amounts ordered to be paid to the Employees pursuant to paragraphs 69 to 71 above, within 28 days.
73.An order pursuant to section 546(1) of the FW Act that the First Respondent pay pecuniary penalties in respect of the contraventions set out at paragraph 67 above.
74.An order pursuant to section 546(1) of the FW Act that the Second Respondent pay pecuniary penalties in respect of her involvement in the contraventions set out at paragraph 67 above.
75.An order pursuant to section 546(3)(a) of the FW Act that any pecuniary penalties ordered to be paid be paid to the Commonwealth within 28 days.
76.An order pursuant to section 545(1) of the FW Act that the First Respondent, at its expense, engage a third party with qualifications in accounting or workplace relations to undertake an audit of compliance with the FW Act and the Award on the following terms:
(a)the audit period will be the period commencing on 1 March 2019 and ending 31 August 2019 (Audit Period);
(b)the audit is to be completed within 60 days of the end of the Audit Period (Audit Completion Date);
(c)the audit will apply to all employees and persons otherwise engaged to perform work for the First Respondent;
(d)the audit will assess the First Respondent’s compliance with the following obligations according to each employee’s classification of work, category of employment and hours worked during the Audit Period:
(i) wages and work related entitlements under the Award;
(ii) accrual and payment of entitlements under the National Employment Standards in Part 2-2 of the FW Act; and
(iii) record keeping and pay slip obligations in Division 3 of Part 3-6 of the FW Act and Part 3-6 of the FW Regulations; and
(e)within 30 days of the Audit Completion Date, the First Respondent provide to the Applicant:
(i) a copy of the audit report which will include a statement of the methodology used in the audit;
(ii) a copy of the source materials and records used to conduct the audit; and
(iii) written details of any contraventions identified in the audit, the steps the First Respondent will take to rectify any identified contravention(s) and by when the rectification will occur.
77.An order pursuant to section 545(1) of the FW Act that the First Respondent will, within 30 days of being ordered, display a notice in a prominent position in the premises of as Tokyo Sushi Fletcher that can be easily viewed by all employees (Workplace Notice) on the following terms:
(a)the Workplace Notice must contain:
(i) information on entitlements contained in the Award;
(ii) a link to the Fair Work Ombudsman’s webpage at where employees can obtain information about the Fair Work Ombudsman’s ‘Record My Hours’ app; and
(iii) information on how to contact the Fair Work Ombudsman;
(b)the Workplace Notice must be in a form approved by the Applicant at least 7 days prior to the First Respondent displaying the Workplace Notice;
(c)the First Respondent will provide proof of the display of the Workplace Notice to the Applicant within 14 days of the Workplace Notice being approved by the Applicant; and
(d)the Workplace Notice must be displayed for a period of one year.
78.An order pursuant to sections 545(1) and/or 545(2)(a) of the FW Act that the Second Respondent comply with the requirements set out in paragraph 77 above in respect of any other business owned and/or operated by a body corporate of which the Second Respondent is an officer.
79.An order that the Applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
80.Such further orders as the Court deems appropriate.
SCHEDULE 1: OUTSTANDING UNDERPAYMENTS
TABLE 1 – RATES PAID TO THE EMPLOYEES
Column 1 Column 2 Column 3 Employee Period Rate of pay paid per hour (a) Darcy Commencement of the Assessment Period until 8 June 2016 $12.00 9 June 2016 until 3 July 2016 $12.50 4 July 2016 until the conclusion of the Assessment Period $13.00 (b) Yuko Commencement of the Assessment Period until 6 June 2016 $12.00 7 June 2016 until 12 June 2016 $12.50 13 June 2016 until 17 July 2016 $19.00 18 July 2016 until 28 August 2016 $20.00 29 August 2016 until the conclusion of the Assessment Period $21.00 (c) Priscilla Commencement of the Assessment Period until 17 July 2016 $12.00 18 July 2016 until 31 July 2016 $12.50 from 1 August 2016 until 14 August 2016 $13.00 15 August 2016 until the conclusion of the Assessment Period $19.00 (d) Brooke Commencement of the Assessment Period until 16 June 2016 $12.00 17 June 2016 until 11 July 2016 $12.50 12 July 2016 until the conclusion of the Assessment Period $13.00 (e) Stephen Commencement of the Assessment Period until 14 June 2016 $12.00 15 June 2016 2016 until 5 July 2016 $12.50 6 July 2016 until 14 August 2016 $13.00 15 August 2016 until the conclusion of the Assessment Period $19.00 (f) Jaleel Commencement of the Assessment Period until 8 May 2016 $10.00 9 May 2016 until the conclusion of the Assessment Period $11.00 (g) Grace Commencement of the Assessment Period until 31 July 2016 $12.00 1 August 2016 until 14 August 2016 $13.00 15 August 2016 until the conclusion of the Assessment Period $19.00 (h) Harry Commencement of the Assessment Period until 31 January 2016 $15.20 1 February 2016 until 14 February 2016 $15.19 15 February 2016 until 28 February 2016 $17.09 29 February 2016 until the conclusion of the Assessment Period $19.00 (i) Jun Commencement of the Assessment Period until 17 July 2016 $11.00 18 July 2016 until 19 August 2016 $12.50 20 August 2016 until the conclusion of the Assessment Period $19.00 (j) Josef Commencement of the Assessment Period until 27 May 2016 $9.00 28 May 2016 2016 until 4 July 2016 $9.50 5 July 2016 until 17 July 2016 $10.00 18 July 2016 until the conclusion of the Assessment Period $10.50 (k) Dona Commencement of the Assessment Period until 31 July 2016 $12.00 1 August 2016 until 14 August 2016 $12.50 15 August 2016 until the conclusion of the Assessment Period $19.00 (l) Momo Commencement of the Assessment Period until 31 January 2016 $11.00 1 February 2016 until 9 June 2016 $12.00 10 June 2016 until 3 July 2016 $12.50 4 July 2016 until 14 August 2016 $13.00 15 August 2016 until the conclusion of the Assessment Period $19.00 (m) Xui 4 January 2016 to 17 January 2016 $11.50 (n) Tanika 21 April 2016 to 22 April 2016 $9.00 (o) Hayley Commencement of the Assessment Period until 14 August 2016 $11.00 15 August 2016 until 28 August 2016 $11.40 29 August 2016 until the conclusion of the Assessment Period $12.00
TABLE 2: CLAUSES 17 AND 18 – MINIMUM WAGES
Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Employee Minimum Hourly Rate Entitlement Hours Worked Entitlement Amount Amount Paid Underpayment Amount Adults (a) Yuko Commencement of the Assessment Period until 13 June 2016 - $18.99 448.82 $8,523.05 $5,396.00 $3,127.05 14 June 2016 until 3 July 2016 - $20.44 82 $1,676.08 $1,558.00 $118.08 4 July 2016 until the conclusion of the Assessment Period - $20.93 322.25 $6,744.71 $6,494.57 $252.97 (b) Priscilla 5 July 2016 to 3 September 2016 - $19.44 86 $1,671.84 $1,448.22 $223.62 (c) Stephen Commencement of the Assessment Period until 3 July 2016 - $18.99 142.13 $2,699.13 $1,728.50 $970.63 4 July 2016 until the conclusion of the Assessment Period - $19.44 99 $1,924.56 $1,416.00 $508.56 (d) Grace 18 July 2016 to 4 September 2016 - $19.44 72 $1,399.68 $1,190.50 $209.18 (e) Jun Commencement of the Assessment Period until 3 July 2016 - $18.99 9.5 $180.41 $104.50 $75.91 4 July 2016 until the conclusion of the Assessment Period - $19.44 12.5 $243.00 $195.25 $47.75 (f) Dona Commencement of the Assessment Period until 3 July 2016 - $18.99 7.55 $143.38 $90.75 $52.63 4 July 2016 until the conclusion of the Assessment Period - $19.44 24 $466.56 $443.00 $23.56 (g) Momo Commencement of the Assessment Period until 3 July 2016 - $18.99 157.38 $2,988.73 $1,961.92 $1,056.86 4 July 2016 until the conclusion of the Assessment Period - $19.44 61 $1,185.84 $901.00 $284.84 (h) Xui 4 January 2016 to 17 January 2016 - $18.99 5.75 $109.19 $66.13 $43.06 Subtotal:
$6,994.70
Juniors (i) Darcy 4 September until conclusion of the Assessment Period - $13.61 18 $244.98 $239.40 $5.58 (j) Jaleel 2 May 2016 to 23 June 2016 - $17.09 155.5 $2,657.53 $1,746.01 $936.07 (k) Josef Commencement of the Assessment Period until 3 July 2016 - $9.49 73.25 $695.16 $677.75 $17.77 (l) Tanika 21 April 2016 to 22 April 2016 - $9.49 10 $94.90 $90.00 $4.90 (m) Hayley 4 July 2016 to 29 August 2016 - $11.67 107.5 $1,254.53 $1,221.10 $43.33 Subtotal:
$1,007.65
TOTAL: $8,002.35
TABLE 3: CLAUSE 13.2 – CASUAL LOADING
Column 1 Column 2 Column 3 Column 4 Column 5 Employee Casual Loading Entitlement Hours Worked Entitlement Amount Underpayment Amount (a) Darcy Commencement of the Assessment Period until 3 July 2016 - $2.85 116.4 $331.85 $331.85 4 July 2016 until 3 September 2016 - $2.92 61.5 $179.58 $179.58 (b) Yuko Commencement of the Assessment Period until 13 June 2016 - $4.75 448.80 $2,131.91 $2,131.91 14 June 2016 until 3 July 2016 - $5.11 82 $419.02 $419.02 4 July 2016 until the conclusion of the Assessment Period - $5.23 317.8 $1,661.85 $1,661.85 (c) Priscilla 5 July 2016 to 3 September 2016-
$4.8686 $417.96 $417.96 (d) Brooke Commencement of the Assessment Period until 3 July 2016 - $2.85 175.8 $500.91 $500.91 4 July 2016 until the conclusion of the Assessment Period - $2.92 54 $157.68 $157.68 (e) Stephen Commencement of the Assessment Period until 3 July 2016 - $4.75 142.1 $675.16 $675.16 4 July 2016 until the conclusion of the Assessment Period - $4.86 95 $461.70 $461.70 (f) Jaleel 2 May 2016 to 23 June 2016-
$4.27154.3 $658.68 $658.68 (g) Grace 18 July 2016 to 4 September 2016-
$4.8667 $325.62 $325.62 (h) Harry Commencement of the Assessment Period until 19 February 2016 - $3.80 184 $699.20 $699.20 20 February 2016 until 28 February 2016 - $4.27 37.75 $161.20 $161.20 29 February 2016 until the conclusion of the Assessment Period - $4.60 474.30 $2,181.55 $2,181.55 (i) Jun Commencement of the Assessment Period until 3 July 2016 - $4.75 9.5 $45.13 $45.13 4 July 2016 until the conclusion of the Assessment Period - $4.86 12.5 $60.75 $60.75 (j) Josef Commencement of the Assessment Period until 3 July 2016 - $2.37 61.75 $146.35 $146.35 4 July 2016 until the conclusion of the Assessment Period - $2.43 72.5 $176.19 $176.19 (k) Dona Commencement of the Assessment Period until 3 July 2016 - $4.75 7.55 $35.87 $35.87 4 July 2016 until the conclusion of the Assessment Period - $4.86 24 $116.64 $116.64 (l) Momo Commencement of the Assessment Period until 3 July 2016 - $4.75 156.1 $741.24 $741.24 4 July 2016 until the conclusion of the Assessment Period - $4.86 50 $243.00 $243.00 (m) Xui 4 January 2016 to 17 January 2016- $4.75 5.75 $27.31 $27.31 (n) Tanika 21 April 2016 to 22 April 2016- $2.37 10 $23.70 $23.70 (o) Hayley 4 July 2016 to 29 August 2016- $2.92 107.5 $313.90 $313.90 TOTAL: $12,893.95
TABLE 4: CLAUSE 25.5(b) – SATURDAY LOADING
Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Employee Saturday Loading Entitlement Hours Worked Entitlement Amount Amount Paid Underpayment Amount (a) Yuko 4 July 2016 until the conclusion of the Assessment Period - $5.24 31.5 $165.06 $88.31 $76.75 (b) Priscilla 5 July 2016 to 3 September 2016- $4.86 6.5 $31.59 $14.16 $17.43 (c) Jaleel 2 May 2016 to 23 June 2016- $4.28 2.75 $11.77 $7.56 $4.21 (d) Harry Commencement of the Assessment Period until 18 February 2016 - $3.80 27.75 $105.45 $105.42 $0.03 20 February 2016 until 28 February 2016 - $4.28 15.5 $66.34 $66.22 $0.12 29 February 2016 until the conclusion of the Assessment Period - $4.60 86.5 $397.90 $395.31 $2.59 (e) Jun 4 July 2016 until the conclusion of the Assessment Period – $4.86 6 $29.16 $28.50 $0.66 (f) Josef Commencement of the Assessment Period until 3 July 2016 - $2.38 52.75 $125.55 $122.07 $3.48 TOTAL: $105.27
TABLE 5: CLAUSE 25.5(c)(ii) – SUNDAY LOADING
Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Employee Sunday Loading Entitlement Hours Worked Entitlement Amount Amount Paid Outstanding Underpayment Amount (a) Darcy Commencement of the Assessment Period until 3 July 2016 - $8.55 212.3 $1,814.75 $1,281.11 $533.64 4 July 2016 until 3 September 2016 - $8.76 69 $604.44 $448.50 $155.94 4 September 2016 until the conclusion of the Assessment Period - $10.21 18 $183.78 $119.70 $64.08 (b) Yuko
4 July 2016 until the conclusion of the Assessment Period - $15.70 4.5 $70.65 $42.75 $27.90 (c) Brooke Commencement of the Assessment Period until 3 July 2016 - $8.55 53.65 $458.72 $325.43 $133.29 4 July 2016 until the conclusion of the Assessment Period - $8.76 23 $201.48 $149.50 $51.98 (d) Stephen
4 July 2016 until the conclusion of the Assessment Period - $14.58 4 $58.32 $26.00 $32.32 (e) Jaleel 2 May 2016 to 23 June 2016- $12.82 1.25 $16.03 $6.87 $9.16 (f) Grace 18 July 2016 to 4 September 2016- $14.58 5 $72.90 $47.50 $25.40 (g) Harry Commencement of the Assessment Period until 19 February 2016 - $11.40 5 $57.00 $37.97 $19.03 29 February 2016 until the conclusion of the Assessment Period - $13.80 30.75 $424.35 $285.36 $138.99 (h) Josef Commencement of the Assessment Period until 3 July 2016 - $7.12 11.5 $81.88 $52.88 $29.00 4 July 2016 until the conclusion of the Assessment Period - $7.29 5 $36.45 $26.25 $10.20 (i) Momo Commencement of the Assessment Period until 3 July 2016 - $14.25 1.333 $19.00 $8.08 $10.92 4 July 2016 until the conclusion of the Assessment Period - $14.58 11 $160.38 $89.50 $70.88 TOTAL: $1,312.73
TABLE 6: CLAUSE 30.3 – PUBLIC HOLIDAY RATE
Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Employee Public Holiday Loading Entitlement Hours Worked Entitlement Amount Amount Paid Outstanding Underpayment Amount (a) Darcy
Commencement of the Assessment Period until 3 July 2016 - $31.33 15.5 $485.62 $232.50 $253.12 (b) Brooke
Commencement of the Assessment Period until 3 July 2016 - $31.33 8.35 $261.61 $119.38 $142.23 (c) Stephen
Commencement of the Assessment Period until 3 July 2016 - $52.23 5 $261.15 $75.00 $186.15 (d) Harry
Commencement of the Assessment Period until 19 February 2016 - $41.78 8.25 $344.69 $125.26 $219.43 29 February 2016 until the conclusion of the Assessment Period - $50.60 16.75 $847.55 $394.81 $452.74 (e) Momo Commencement of the Assessment Period until 3 July 2016 - $52.23 5 $261.15 $75.00 $186.15 TOTAL: $1,439.82
TABLE 7: OUTSTANDING UNDERPAYMENT
Column 1
Column 2
Column 3
Employee
Underpayment
Outstanding Underpayment
(a)
Darcy
$1,523.79
$1,089.12
(b)
Yuko
$7,815.53
$7,812.70
(c)
Priscilla
$659.01
$659.01
(d)
Brooke
$986.09
$704.73
(e)
Stephen
$2,834.52
$2,834.52
(f)
Jaleel
$1,608.12
$1,583.57
(g)
Grace
$560.20
$560.20
(h)
Harry
$3,874.88
$3,530.08
(i)
Jun
$230.20
$230.20
(j)
Josef
$382.99
$324.25
(k)
Dona
$228.70
$228.70
(l)
Momo
$2,593.89
$2,563.84
(m)
Xui
$70.37
$70.37
(n)
Tanika
$28.60
$28.60
(o)
Hayley
$357.23
$347.33
UNDERPAYMENT
$23,754.12
OUTSTANDING UNDERPAYMENT
$22,567.22
TABLE 8: CLAUSE 13.4 – MINIMUM DAILY ENGAGEMENT
Column 1
Column 2
Column 3
Employee
Shifts Less Than Three Hours
Loss Suffered
(a)
Darcy
4
$78.31
(b)
Yuko
3
$120.36
(c)
Brooke
24
$277.84
(d)
Stephen
1
$2.85
(e)
Jaleel
2
$58.75
(f)
Harry
10
$358.80
(g)
Josef
3
$28.93
(h)
Dona
2
$28.94
(i)
Momo
4
$122.32
(j)
Hayley
3
$35.01
Total:
$1,112.11
Key Legal Topics
Areas of Law
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Employment Law
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Statutory Interpretation
Legal Concepts
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Breach
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Penalty
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Statutory Construction
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Remedies
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