Fair Work Ombudsman v Her Fashion Box Pty Ltd
[2019] FCCA 425
•28 February 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v HER FASHION BOX PTY LTD & ANOR | [2019] FCCA 425 |
| Catchwords: INDUSTRIAL LAW – Assessment of pecuniary penalties for admitted contraventions of civil remedy provisions of the Fair Work Act 2009 (Cth) – pecuniary penalties imposed. |
| Legislation: Crimes Act 1914 (Cth), s.4AA. Fair Work Act 2009 (Cth), ss.116, 536, 546, 712. |
| Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | HER FASHION BOX PTY LTD ACN 161 372 756 |
| Second Respondent: | KATHLEEN ENYD PURKIS |
| File Number: | SYG 1388 of 2017 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 20 February 2018 |
| Date of Last Submission: | 20 February 2018 |
| Delivered at: | Sydney |
| Delivered on: | 28 February 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms V Brigden |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Counsel for the Respondents: | Ms V Bulut |
| Solicitors for the Respondents: | TTP Legal & Co |
DECLARATIONS
The first respondent contravened s.45 of the Fair Work Act 2009 (Cth) (FW Act) by failing to pay Ms Va and Mr Virata the required minimum rate of pay, contravening cl.17.1 of the Graphic Arts, Printing and Publishing Award 2010 (Graphic Arts Award).
The first respondent contravened s.45 of the FW Act by failing to pay to Ms Va and Mr Virata the required overtime, contravening cl.33.2 of the Graphic Arts Award.
The first respondent contravened s.323(1) of the FW Act by failing to pay Ms Va at least monthly in relation to the performance of work.
The first respondent contravened s.44 of the FW Act by failing to pay Ms Va, Mr Virata, and Ms Rodrigues accrued annual leave and annual leave loading, contravening s.90(2) of the FW Act.
The first respondent contravened s.45 of the FW Act by failing to pay Mr Virata the required overtime, contravening cl.33.3 of the Graphic Arts Award.
The first respondent contravened s.45 of the FW Act by failing to pay Mr Virata annual leave loading for annual leave taken, contravening cl.37.7 of the Graphic Arts Award.
The first respondent contravened s.44 of the FW Act by failing to pay each of Mr Virata and Ms Rodrigues their base rate of pay for their ordinary hours when absent on a public holiday, contravening s.116 of the FW Act.
The first respondent contravened s.536(1) of the FW Act by failing to issue payslips to Mr Virata within one day of payment.
The first respondent contravened s.45 of the FW Act by failing to pay Ms Rodrigues the required ordinary rate of pay, contravening cl.17 of the General Retail Industry Award 2010 (Retail Award).
The first respondent contravened s.45 of the FW Act by failing to pay Ms Rodrigues the required overtime hourly rate, contravening cl.29.2 of the Retail Award.
The first respondent contravened s.712(3) of the FW Act by failing to comply with notices to produce records or documents in respect of:
(a)Ms Va;
(b)Mr Virata;
(c)Ms Rodrigues; and
(d)Ms Brady.
The second respondent was involved (within the meaning of s.550(2) of the FW Act) in each of the first respondent’s contraventions identified in the declarations made above.
ORDERS
The first respondent pay pecuniary penalties in the sum of $274,278 pursuant to s.546(1) of the FW Act for its contraventions of the FW Act identified in the declarations made above.
The second respondent pay pecuniary penalties in the sum of $54,855 pursuant to s.546(1) of the FW Act for her involvement in each of the first respondent’s contraventions of the FW Act identified in the declarations made above.
Pursuant to s.546(3)(a) of the FW Act the first respondent and the second respondent each pay the penalties referred to in orders 13 and 14 to the Consolidated Revenue Fund of the Commonwealth by 28 March 2019.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1388 of 2017
| FAIR WORK OMBUDSMAN |
Applicant
And
| HER FASHION BOX PTY LTD ACN 161 372 756 |
First Respondent
| KATHLEEN ENYD PURKIS |
Second Respondent
REASONS FOR JUDGMENT
Introduction
The applicant (FWO) applies under s.546 of the Fair Work Act 2009 (Cth) (FW Act) for orders that the respondents pay pecuniary penalties because of their admitted contraventions of provisions of the FW Act. The FWO also claims declarations that reflect the respondents’ admitted contraventions of the FW Act.
I will begin by setting out the relevant admitted facts, the provisions of the FW Act the respondents admit they contravened, and the contraventions themselves.[1]
[1] These are contained in a document titled “Statement of Agreed Facts” (SAF) which I marked as exhibit “A”.
Admitted facts and contraventions
The first respondent (HFB) operated an online business (Business) in the fashion industry at various locations in Sydney.[2] The second respondent, Ms Purkis, at all relevant times was the sole director and majority shareholder of HFB, and was responsible for the overall direction, management, and control of the Business.[3]
[2] SAF, [9(e)]
[3] SAF, [10]
Employment and award coverage
HFB employed Ms Va from 1 July 2014 to 31 December 2014 (First Va Employment Period) as a graphic design intern, and from 1 January 2015 to 20 January 2015 (Second Va Employment Period) as a graphic designer. During the first Va Employment Period Ms Va performed duties that included creating and updating the website of the Business, including creating banners, assisting in creating layouts for, and editing, videos for the Business’s YouTube channel, creating electronic direct mail and newsletters, creating layouts for the Business’s magazine, and packing boxes.[4] During the Second Va Employment Period Ms Va performed the same duties she performed during the First Va Employment Period, but with some added responsibility.[5] Ms Va typically worked two days per week.[6]
[4] SAF, [20]
[5] SAF, [21]
[6] SAF, [28]
HFB employed Mr Virata from 1 March 2013 to 28 February 2014 (First Virata Employment Period) as a Graphic Designer, and from 1 March 2014 to 28 February 2015 (Second Virata Employment Period) as a Team Manager.[7] During the First Virata Employment Period Mr Virata performed duties that included designing a monthly magazine for the Business, redesigning and updating the Business’s website, designing social media, and designing stationery, business cards, and flyers.[8] During the Second Virata Employment Period Mr Virata continued to perform these duties, but in addition he supervised up to six “interns”, engaged “interns” on behalf of HFB, performed managerial tasks when other managers were absent, and led the customer service team.[9] Mr Virata worked on average at least 38 hours a week.[10]
[7] SAF, [16]
[8] SAF, [22]
[9] SAF, [23]
[10] SAF, [31]
HFB employed Ms Rodrigues from January 2014 to 31 January 2015 as a brands partnership manager.[11] Ms Rodrigues performed duties that included sourcing content for social media, sourcing and reporting on brand partnerships, undertaking product research and competitor research and analysis, administering the Business’s Facebook account, and undertaking general administrative tasks, including packing boxes.[12] Ms Rodrigues was engaged to work from 9 am to 6 pm five days per week.[13]
[11] SAF, [18]
[12] SAF, [24]
[13] SAF, [37]
HFB was covered by the Graphic Arts, Printing and Publishing Award 2010 (Graphic Arts Award) in relation to the employment of Ms Va and Mr Virata.[14] Given the duties she performed as an employee of HFB, Ms Va fell within the classification of a “Level 5 employee” provided for by clause 5 of Schedule B to the Graphic Arts Award.[15] Further, given that Ms Va typically worked two days a week, Ms Va was properly classified as a part-time employee for the purposes of cl.12.3 of the Graphic Arts Award.[16] As for Mr Virata, given the tasks he performed as employee of HFB, during the First Virata Employment Period Mr Virata fell within the classification of a Level 5 employee for the purposes of the Graphic Arts Award, and during the Second Virata Employment Period he fell within the classification of a Level 7 employee.[17] Further, given he worked on an average of at least 38 hours a week, Mr Virata was properly classified as a full-time employee for the purposes of cl.12.2 of the Graphic Arts Award.[18]
[14] SAF, [26]
[15] SAF, [27]
[16] SAF, [29]
[17] SAF, [30]
[18] SAF, [32]
HFB was covered by the General Retail Industry Award 2010 (Retail Award) in relation to its employment of Ms Rodrigues.[19] Given the duties she performed, and the hours she worked, Ms Rodrigues fell within the classification of a Retail Employee Level 1 – Clerical Assistant provided for by Schedule B to the Retail Award,[20] and she was a full-time employee for the purposes of cl.11 of the Retail Award.[21]
[19] SAF, [35]
[20] SAF, [37]
[21] SAF, [38]
Contravention 1: failure to pay Ms Va her ordinary rate of pay
During the period for which HFB employed Ms Va, it was required by cl.17.3 of the Graphic Arts Award to pay Ms Va the minimum hourly rate provided by that clause for each ordinary hour of work Ms Va performed.[22] Given Ms Va was a Level 5 employee, HFB was required to pay Ms Va the minimum hourly wage rate of $19.64 for each ordinary hour worked.[23] During her period of employment Ms Va worked a total of 364.7 ordinary hours of work for which she was entitled to be paid $7,162.71, but HFB paid Ms Va only $1,000, and it made that payment on 22 December 2014.[24] HFB therefore underpaid Ms Va by $6,162.71 and, for that reason, contravened cl.17.3 of the Graphic Arts Award and, in turn, s.45 of the FW Act.[25]
[22] SAF, [39]
[23] SAF, [40]
[24] SAF,[41]
[25] SAF, [42]-[44]. Section 45 of the FW Act provides that a “person must not contravene a term of a modern award”.
Contravention 2: failure to pay Ms Va overtime
Under cl.33.2 of the Graphic Arts Award Ms Va was entitled to be paid at the rate of $29.46 per hour for the first three hours of overtime she worked. Ms Va performed 3.5 hours of overtime work for which HFB was required to pay Ms Va the sum of $103.11. HFB did not pay that amount to Ms Va and, by not so doing, it contravened cl.33.2 of the Graphic Arts Award and, therefore, s.45 of the FW Act.[26]
[26] SAF, [45]-[51]
Contravention 3: failure to pay Ms Va monthly
Subsection 323(1) of the FW Act provides that, subject to s.324 of the FW Act, an employer must pay an employee amounts payable to the employee in relation to the performance of work in money by one or a combination of the methods provided for by s.323(2), and at least monthly. In contravention of s.323(1) of the FW Act HFB did not pay Ms Va wages owed to her at least monthly.[27]
[27] SAF, [52]-[54]
Contravention 4 – failure to pay Ms Va accrued but untaken annual leave
At the time Ms Va’s employment with HFB ended, she had accrued but not taken 28.07 hours of annual leave. Under s.90(2) of the FW Act HFB was required to pay Ms Va the amount it would have been required to pay had Ms Va taken leave for 28.07 hours. Further, cl.37 of the Graphic Arts Award required HFB to pay Ms Va her ordinary wages plus a loading equal to 17.5% of her wages for annual leave. In those circumstances, on the termination of Ms Va’s employment HFB was required to pay to Ms Va $647.77 for accrued but untaken annual leave but, contrary to s.90(2) of the FW Act, HFB failed to pay Ms Va that amount. Given that s.90(2) of the FW Act is a provision of the “National Employment Standards” within the meaning of s.61(3) of the FW Act, and a contravention of a provision of the National Employment Standards is a contravention of s.44 of the FW Act,[28] HFB contravened s.44 of the FW Act by not paying to Ms Va $647.77 for accrued but untaken annual leave.[29]
[28] Sub section 44(1) of the FW Act provides that an “employer must not contravene a provision of the National Employment Standards”.
[29] SAF, [55]-[61]
Contravention 5: failure to pay Mr Virata his ordinary rate of pay
During the period for which it employed Mr Virata, HFB was required by cl.17.3 of the Graphic Arts Award to pay Mr Virata the minimum hourly rate provided by that clause for each ordinary hour of work Mr Virata performed during his employment with HFB. The rates HFB was required to pay were $17.59 per hour for the period 1 March 2013 to 30 June 2013, $18.58 per hour for the period 1 July 2013 to 28 February 2014, $19.55 per hour for the period 1 March 2014 to 30 June 2014, and $20.87 per hour for the period 1 July 2014 to 28 February 2015.
During the First Virata Employment Period Mr Virata worked 1,842 ordinary hours of work, as a consequence of which he became entitled to be paid a total of $31,271.30 for the work he performed. HFB, however, only paid Mr Virata $25,447.99 for ordinary hours worked. During the Second Virata Employment Period Mr Virata performed 1,842 hours of work as a consequence of which he became entitled to be paid $37,616.22 for ordinary hours worked. HFB, however, paid Mr Virata only $25,447.99 for ordinary hours worked.
On 10 November 2015 HFB paid to Mr Virata $15,216.06, purportedly as a “settlement sum”. Notwithstanding that payment, HFB has underpaid Mr Virata $4,955.06 for ordinary time.
As a consequence of these matters, HFB contravened cl.17.1 of the Graphic Arts Award and, in turn, s.45 of the FW Act.[30]
[30] SAF, [63]-[71]
Contravention 6 – failure to pay Mr Virata overtime hourly rate for first three hours overtime
During his period of employment with HFB, Mr Virata was entitled to be paid overtime under cl.33.2 of the Graphic Arts Award. The overtime rates for which he was entitled to be paid were $26.387 per hour for the period 1 March 2013 to 30 June 2013, $27.87 per hour for the period 1 July 2013 to 28 February 2014, $29.33 per hour for the period 1 March 2014 to 30 June 2014, and $31.31 per hour for the period 1 July 2014 to 28 February 2015.
During the First Virata Employment Period Mr Virata performed 84.5 hours of overtime worked in the first three hours, but HFB paid him only $1,011.98. Also during the First Virata Employment Period Mr Virata performed 6.25 hours of overtime thereafter for which he became entitled to be paid $225.82, but HFB paid Mr Virata only $169.98 for overtime thereafter. Further, during the Second Virata Employment Period, Mr Virata performed 94 hours of overtime for the first three hours for which Mr Virata became entitled to be paid $2,883.74. HFB, however, paid Mr Virata only $1,377.74 for overtime worked in the first three hours.
As a consequence of these matters, HFB contravened cl.33.2 of the Graphic Arts Award and, therefore, s.45 of the FW Act.[31]
[31] SAF, [72]-[78]
Contravention 7 - failure to pay Mr Virata rates for Saturday or Sunday work
During the period for which he was employed by HFB, Mr Virata was entitled to be paid under cl.33.3 of the Graphic Arts Award overtime for work performed on a Saturday or a Sunday. The rates HFB was required to pay were $35.18 per hour for the period 1 March 2013 to 30 June 2013, $37.16 per hour for the period 1 July 2013 to 28 February 2014, $39.10 per hour for the period 1 March 2014 to 30 June 2014, and $41.74 per hour for the period 1 July 2014 to 28 February 2015. During his period of employment Mr Virata performed 42.5 hours of overtime on a Saturday or Sunday for which he became entitled to be paid $1,524.85. HFB, however, paid Mr Virata only $843.76.
As a consequence of these matters, HFB contravened cl.33.3 of the Graphic Arts Award and, therefore, s.45 of the FW Act.[32]
[32] SAF, [79]-[83]
Contravention 8 – failure to pay Mr Virata accrued annual leave loading
Clause 37.7 of the Graphic Arts Award required HFB to pay Mr Virata a loading of 17.5% in his addition to his base salary for annual leave taken. That translated to an additional $3.65 per hour for each hour of annual leave taken. During his period of employment, Mr Virata took five days of annual leave as a consequence of which he became entitled to be paid $138.70 in annual leave loading, but HFB paid Mr Virata only $43.32 in annual leave loading. As a consequence, HFB contravened cl.37.7 of the Graphic Arts Award and, therefore, s.45 of the FW Act.[33]
[33] SAF, [84]-[89]
Contravention 9 – failure to pay Mr Virata base rate for absence on a public holiday
Section 116 of the FW Act provides that if an employee is absent from his or her employment on a day or part-day that is a public holiday, the employer must pay the employee at the employee’s “base rate of pay” for the employee’s ordinary hours of work on the day or part-day.[34] During his employment with HFB Mr Virata was absent from his work on 14 public holidays as a consequence of which:
a)for the period 1 July 2013 to 28 February 2014 Mr Virata was entitled to be paid for 40 hours at the hourly base rate of pay payable during that period, that amount being $743.30;
b)for the period 1 March 2014 to 30 June 2014 Mr Virata was entitled to be paid for 32 hours at the hourly base rate of pay payable during that period, that amount being $625.60; and
c)for the period 1 July 2014 to 28 February 2015 Mr Virata was entitled to be paid for 40 hours at the hourly base rate of pay payable during that period, that amount being $834.80.
[34] The expression “base rate of pay” is defined in s.16 of the FW Act. Subsection 16(1) defines the expression in relation to a “national system employee” as “the rate of pay payable to the employee for his or her ordinary hours of work”, but not including the classes of payments described later in the subsection.
HFB did not pay to Mr Virata these amounts but paid amounts that in total were less than $900.96 of what Mr Virata was entitled to be paid. Given that s.116 of the FW Act is a provision of the “National Employment Standards” within the meaning of s.61(3) of the FW Act, and a contravention of a provision of the National Employment Standards is a contravention of s.44 of the FW Act, HFB contravened s.44 of the FW Act by not paying to Mr Virata $900.96.[35]
Contravention 10 – failure to pay Mr Virata accrued but untaken annual leave
[35] SAF, [90]-[97]
At the time Mr Virata’s employment with HFB ended, he had accrued but had not taken 244.13 hours of annual leave. Under s.90(2) of the FW Act HFB was required to pay Mr Virata the amount it would have been required to pay had Mr Virata taken leave for 244.13 hours. Further, cl.37 of the Graphic Arts Award required HFB to pay Mr Virata his ordinary wages plus a loading equal to 17.5% for annual leave. In those circumstances, on the termination of Mr Virata’s employment, HFB was required to pay to Mr Virata $5,986.61 for accrued but untaken annual leave but, contrary to s.90(2) of the FW Act, HFB failed to pay Mr Virata that amount. Given that s.90(2) of the FW Act is a provision of the “National Employment Standards” within the meaning of s.61(3) of the FW Act, and a contravention of a provision of the National Employment Standards is a contravention of s.44 of the FW Act, HFB contravened s.44 of the FW Act by not paying to Mr Virata $5,986.61 for accrued but untaken annual leave.[36]
[36] SAF, [100]-[106]
Contravention 11 – failure to provide payslips to Mr Virata
Subsection 536(1) of the VFW Act provides that an employer must give a pay slip to each of its employees within one working day of paying an amount to the employee in relation to the performance of work. During his employment with HFB, Mr Virata was paid monthly, on average. HFB provided to Mr Virata payslips when it paid Mr Virata on 1 April 2014 and on 1 May 2014, but did not provide payslips at the other times on which it paid Mr Virata. HFB, therefore, contravened s.536(1) of the FW Act on each occasion it did not provide a pay slip to Mr Virata.[37]
[37] SAF, [110]-[113]
Contravention 12 - failure to pay Ms Rodrigues her ordinary rate of pay
During the period for which HFB employed Ms Rodrigues it was required by cl.17 of the Retail Award to pay Ms Rodrigues no less than the minimum hourly rate provided by that clause for each ordinary hour of work Ms Rodrigues performed. During the period from 6 March 2014 to 30 June 2014 HFB was required to pay Ms Rodrigues the minimum hourly rate of $17.98 for each ordinary hour worked, and during the period 1 July 2014 to 30 January 2015 HFB was required to pay Ms Rodrigues the minimum hourly rate of $18.52 for each ordinary hour worked.
From 6 March 2014 to 30 June 2014 Ms Rodrigues performed 544 ordinary hours of work, as a consequence of which she was entitled to be paid $9,781.12. HFB paid Ms Rodrigues only $5,014.96 for the ordinary hours Ms Rodrigues worked. Further, from 1 July 2014 to 30 January 2015 Ms Rodrigues worked 912 ordinary hours of work for which she became entitled to be paid $16,890.24, but HFB paid Ms Rodrigues only $8,007.78 for those hours.
HFB, therefore, contravened cl.17 of the Retail Award and s.45 of the FW Act.[38]
[38] SAF, [114]-[120]
Contravention 13 – failure to pay Ms Rodrigues overtime hourly rate for first three hours overtime
During her period of employment with HFB Ms Rodrigues was entitled to be paid overtime under cl.29.2 of the Retail Award. The overtime rates for which she was entitled to be paid were $26.98 per hour for the period 6 Mach 2014 to 30 June 2014, and $27.78 per hour for the period 1 July 2014 to 30 January 2015. Ms Rodrigues performed 24 hours overtime from 6 March 2014 to 30 June 2014, as a result of which she became entitled to be paid $647.52, and 48 hours overtime from 1 July 2014 to 30 January 2015, as a result of which she became entitled to be paid $1,333.44. HFB, however, paid Ms Rodrigues only $221.66 of the overtime amounts to which she became entitled for the period 6 March 2014 to 30 June 2014, and $538.58 of the overtime amounts to which Ms Rodrigues became entitled for the period 1 July 2014 to 30 January 2015.
HFB, therefore, contravened cl.29.2 of the Retail Award and s.45 of the FW Act.[39]
[39] SAF, [121]-[126]
Contravention 14 – failure to pay Ms Rodrigues base rate for absence on a public holiday
During her employment with HBT, Ms Rodrigues was absent from her employment on nine public holidays. For the period from 6 March 2014 to 30 June 2014 Ms Rodrigues was entitled to be paid for 32 hours for the public holidays on which she was entitled to be absent from work, that amount being $575.36, and for the period 1 July 2014 to 30 January 2015 Ms Rodrigues was entitled to be paid for public holidays on which she was entitled to be absent from work, that amount being $740.80. HFB, however, paid Ms Rodrigues only $610.88 for her absence from work on public holidays.
For these reasons HFB contravened s.116 of the FW Act.[40]
Contravention 15 – failure to pay Ms Rodrigues accrued but untaken annual leave and annual leave loading
[40] SAF, [127]-[135]
At the time her employment with HFB ended Ms Rodrigues had accrued but had not taken 116.91 hours of annual leave. Under s.90(2) of the FW Act HFB was required to pay Ms Rodrigues the amount it would have been required to pay had Ms Rodrigues taken leave for 116.91 hours. Further, cl.32.3 of the Retail Award required HFB to pay Ms Rodrigues ordinary wages plus a loading equal to 17.5% of her wages for annual leave. In those circumstances, on the termination of Ms Rodrigues’s employment, HFB was required to pay to Ms Rodrigues $2,544.07 for accrued but untaken annual leave but, contrary to s.90(2) of the FW Act, HFB failed to pay Ms Rodrigues that amount. Given that s.90(2) of the FW Act is a provision of the “National Employment Standards” within the meaning of s.61(3) of the FW Act, and a contravention of a provision of the National Employment Standards is a contravention of s.44 of the FW Act, HFB contravened s.44 of the FW Act by not paying to Ms Rodrigues $2,544.07 for accrued but untaken annual leave.[41]
[41] SAF, [136]-[142]
Contravention 16: failure to comply with notice to produce in relation to Ms Va
Subsection 712(1) of the FW Act provides:
(1) An inspector may require a person, by notice, to produce a record or document to the inspector.
(2) The notice must:
(a) be in writing; and
(b) be served on the person; and
(c) require the person to whom it is addressed to produce the record or document at a specified place within a specified period of at least 14 days.
(3) A person who is served with a notice to produce must not fail to comply with the notice.
(4) Subsection (3) does not apply if the person has a reasonable excuse.
By notice to produce dated 26 February 2015 issued under s.712 of the FW Act the FWO required HFB to produce by 16 March 2015 records and documents relating to the employment of Ms Va (Va NTP). Without providing any reasonable excuse, HFB failed to produce documents that complied with the Va NTP by 16 March 2015. HFB did, however, produce documents by 27 March 2015. By failing without reasonable excuse to produce documents within the time required by the Va NTP HFB contravened s.712(3) of the FW Act.[42]
[42] SAF, [147]-[148]
Contravention 17: failure to comply with notice to produce in relation to Mr Virata
By notice to produce dated 21 April 2015 issued under s.712 of the FW Act the FWO required HFB to produce by 8 May 2015 records and documents relating to the employment of Mr Virata (Virata NTP). Without providing any reasonable excuse, HFB failed to produce documents that complied with the Virata NTP by 8 May 2015.
On 19 May 2015 Ms Purkis sent an email to Fair Work Inspector (FWI) Borowinski that included an invitation to share files in a Dropbox folder. After further email exchanges, on 12 October 2016 Ms Purkis produced some further documents but did not fully comply with the Virata NTP.[43]
[43] SAF, [151]-[154]
Because of these matters, HFB failed to comply with the Virata NTP and, therefore, contravened s.712(3) of the FW Act.
Contravention 18: failure to comply with notice to produce in relation to Ms Rodrigues
By notice to produce dated 19 October 2015 issued under s.712 of the FW Act the FWO required HFB to produce by 3 November 2015 records and documents relating to the employment of Ms Rodrigues (Rodrigues NTP). Without providing any reasonable excuse, HFB failed to produce documents that complied with the Rodrigues NTP by 3 November 2015. In the course of email exchanges between Ms Purkis and FWI McLeod documents were produced but HFB did not comply with Rodrigues NTP.[44]
[44] SAF, [155]-[158]
Because of these matters, HFB failed to comply with the Rodrigues NTP and, therefore, contravened s.712(3) of the FW Act.
Contravention 19: failure to comply with notice to produce in relation to Ms Brady
By notice to produce dated 22 February 2016 issued under s.712 of the FW Act the FWO required HFB to produce by 11 March 2016 records and documents relating to the employment of Ms Liana Brady (Brady NTP). Without providing any reasonable excuse, HFB failed to produce documents that complied with the Brady NTP by 11 March 2016. HFB produced some documents after 11 March 2016, but HFB did not fully comply with the Brady NTP.
Because of these matters, HFB failed to comply with the Brady NTP and, therefore, contravened s.712(3) of the FW Act.[45]
[45] SAF, [159]- [162]
Involvement of Ms Purkis
Ms Purkis had actual knowledge of, and was an intentional participant in, the factual matters comprising HFB’s contraventions of the FW Act, as set out above. In those circumstances, Ms Purkis aided abetted, counselled or procured, or was, by her acts or omissions, directly or indirectly, knowingly concerned in or a party to HFB’s contraventions of the FW Act; was a person involved in HFB’s contraventions of the FW Act; and, therefore, under s.550 of the FW Act is taken to have herself engaged in the conduct that constituted HFB’s contravention of the FW Act.[46]
[46] SAF, [163]-[165]
Statutory framework
Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”. That expression is defined in s.539 of the FW Act to include the provisions identified in column 1 of the table to s.539(2) of the Act. Sections 44, 45, 323, 536, and 712(3) of the FW Act are provisions included in that column.
Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”, and if the person is a body corporate must not be more than five times “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”. The maximum penalty units for each contravention of s.44, s.45, 323, and s.712(3) of the FW Act are 60 for an individual and 300 for a body corporate, and the maximum penalty units for a contravention of s.536 was 30 for an individual, and 150 for a body corporate.
Finally, I need to refer to s.12 of the FW Act which provides that “penalty unit” has the meaning given by s.4AA of the Crimes Act 1914 (Cth). It is common ground that for all but the contraventions associated with the Rodrigues and Brady NTPs, $170 is the “penalty unit” provided for by s.4AA for the period in which the admitted contraventions occurred. The “penalty unit” in relation to the contraventions associated with the Rodrigues and Brady NTPs is $180.
Principles
The approach to assessing penalties for contraventions of provisions of the FW Act was outlined by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown as follows:[47]
(1) Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2) Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3) Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
(4) Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5) Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23] [71] and [102].
[47] [2017] FCA 1301, at [36]
In Fair Work Ombudsman v A To Z Catering Solution Pty Limited (No.3),[48] I noted that step 3 (which I understood to express the “one transaction principle”) could be taken to suggest that it is appropriate to further group contraventions after the application of s.557(1) of the FW Act. For the reasons I gave in A To Z Catering Solution,[49] the proper approach appears to be to assess penalties to contraventions after the application of s.557(1) of the FW Act, and then to consider:[50]
whether the conduct giving rise to separate contraventions was such that the separate imposition of penalties would be effectively imposing multiple penalties for either the same conduct or for overlapping parts of the same conduct which separately went to make out the separate contraventions; and
ensure that a person who has engaged in contravening conduct is not punished twice for the same conduct and to ensure that the total penalty imposed in respect to the contraventions is “just and appropriate” and not disproportionate.
[48] [2018] FCCA 3574, at [27]
[49] [2018] FCCA 3574, at [28]
[50] Australian Building and Construction Commissioner v Construction, Forestry,Mining and Energy Union (the BKH Contractors Case) (No 2) [2018] FCA 1563, [59] (Flick J)
That is the approach I will follow in this case.
In ABCC v CFMEU the Full Federal Court provided the following guidance to assessing penalties:[51]
The fixing of a pecuniary penalty involves the identification and balancing of all the factors relevant to the contravention and the circumstances of the defendant, and making a value judgment as to what is the appropriate penalty in light of the protective and deterrent purpose of a pecuniary penalty.
In general terms, the factors that may be relevant when fixing a pecuniary penalty may conveniently be categorised according to whether they relate to the objective nature and seriousness of the offending conduct, or concern the particular circumstances of the defendant in question.
The factors relating to the objective seriousness of the contravention include: the extent to which the contravention was the result of deliberate, covert or reckless conduct, as opposed to negligence or carelessness; whether the contravention comprised isolated conduct, or was systematic or occurred over a period of time; if the defendant is a corporation, the seniority of the officers responsible for the contravention; the existence, within the corporation, of compliance systems and whether there was a culture of compliance at the corporation; the impact or consequences of the contravention on the market or innocent third parties; and the extent of any profit or benefit derived as a result of the contravention.
The factors that concern the particular circumstances of the defendant, particularly where the defendant is a corporation, generally include: the size and financial position of the contravening company; whether the company has been found to have engaged in similar conduct in the past; whether the company has improved or modified its compliance systems since the contravention; whether the company (through its senior officers) has demonstrated contrition and remorse; whether the company had disgorged any profit or benefit received as a result of the contravention, or made reparation; whether the company has cooperated with and assisted the relevant regulatory authority in the investigation and prosecution of the contravention; and whether the company has suffered any extra-curial punishment or detriment arising from the finding that it had contravened the law.
[51] [2017] FCAFC 113, [100]-[104]
It would also be useful to refer to what the Full Federal Court said in the context of assessing pecuniary penalties for contraventions of the Trade Practices Act 1974 (Cth) in Flight Centre Ltd v Australian Competition and Consumer Commission (No 2):[52]
[T]he task is one that is evaluative, taking into account all the circumstances of the case, not to be reached mechanically or by some illusory process of exactitude, but rather by evaluation that is articulated to a point (but no further) that is useful and meaningful. One starts the process by giving proper weight to the statutory maximum as referable to the most serious kind of contravention.
[52] [2018] FCAFC 53, at [55]
The parties have proceeded on the common assumption that the non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick,[53] which his Honour adopted from the judgment of Mowbray FM in Mason v Harrington Corporation Pty Ltd,[54] are relevant to assessing the amount of penalties.[55] Those considerations are:
[53] [2007] FCA 1080, [14]
[54] [2007] FMCA 7
[55] At [22] of the “Applicant’s Outline of Submissions on Penalty” the FWO her refers to Mason. The respondents do not refer to Mason, but instead refer to the judgment of French J when a judge of the Federal Court in Trade Practices Commission v CSR Ltd [1992] 52-193 at [42. His Honour there set out the same factors that are set out in Mason: (Respondents’ Outline of Submissions on Penalty, [30]).
a)the nature and extent of the conduct which led to the breaches;
b)the circumstances in which that conduct took place;
c)the nature and extent of any loss or damage sustained as a result of the breaches;
d)whether there had been similar previous conduct by the respondent;
e)whether the breaches were properly distinct or arose out of the one course of conduct;
f)the size of the business enterprise involved;
g)whether or not the breaches were deliberate;
h)whether senior management was involved in the breaches;
i)whether the party committing the breach had exhibited contrition;
j)whether the party committing the breach had taken corrective action;
k)whether the party committing the breach had cooperated with the enforcement authorities;
l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
m)the need for specific and general deterrence.
Also relevant is the maximum penalty for the contravention provided for by the FW Act; and here I need only refer to the following passage from the judgment of Flick J in The BKH Contractors Case (No 2):[56]
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed . . . .
[56] [2018] FCA 1563, [19]
Application of s.557(1) of the FW Act
The parties are in dispute about the application of s.557(1) of the FW Act, which provides as follows:
For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:
(a) the contraventions are committed by the same person; and
(b) the contraventions arose out of a course of conduct by the person.
Sections 44 and 45 of the FW Act are referred to in s.557(2), but s.712(3) is not. Subsection 557(3) of the FW Act is not relevant.
The respondents submit that when applied to the 19 admitted contraventions, s.557(1) of the FW Act requires that they be treated as seven contraventions.[57] The FWO accepts that s.557(1) of the FW Act applies so that each of Contraventions 1 and 5,[58] Contraventions 2 and 6,[59] Contraventions 4, 10, and 15,[60] and Contraventions 9 and 14, are to be treated as one contravention.[61] The FWO submits s.557(1) does not apply in relation to the other admitted contraventions.
[57] I will identify each of the groupings for which the respondents contend by applying the letters “HFB”.
[58] Applicant’s Reply to the Respondents’ Submissions on Penalty, [5]
[59] Applicant’s Reply to the Respondents’ Submissions on Penalty, [14]
[60] Applicant’s Reply to the Respondents’ Submissions on Penalty, [19]
[61] Applicant’s Outline of Submissions on Penalty, [14(g)]
The competing positions on the application of s.557 of the Contraventions may be represented in the following table where I have included in bold the Contraventions the FWO accepts should be grouped in the manner contended for by HFB.
HFB’s grouping
Contraventions
Description
HFB1
Contravention 1
Failure to pay ordinary rate of pay to Ms Va under the Graphics Arts Award
Contravention 5
Failure to pay ordinary rate of pay to Mr Virata under the Graphics Arts Award
Contravention 12
Failure to pay ordinary rate of pay to Ms Rodrigues under the Retail Award
HFB2
Contravention 2
Failure to pay overtime to Ms Va under Graphics Arts Award
Contravention 6
Failure to pay overtime to Mr Virata under Graphics Arts Award
Contravention 7
Failure to pay overtime at the Saturday and Sunday overtime rates to Mr Virata under Graphics Arts Award
Contravention 13
Failure to pay overtime to Ms Rodrigues under Retail Award
HFB3
Contravention 3
Failure to pay Ms Va at least monthly
HFB4
Contravention 4
Failure to pay Ms Va accrued annual leave on termination
Contravention 10
Failure to pay Mr Virata accrued annual leave on termination
Contravention 15
Failure to pay Ms Rodrigues accrued annual leave on termination
Contravention 8
Failure to pay Mr Virata annual leave loading
HFB5
Contravention 9
Failure to pay Mr Virata for absence on a public holiday
Contravention 14
Failure to pay Ms Rodrigues for absence on a public holiday
HFB6
Contravention 11
Failure to issue payslips to Mr Virata within one day of payment
HFB7
Contravention 16
Failure to comply with Va NTP
Contravention 17
Failure to comply with Virata NTP
Contravention 18
Failure to comply with Rodrigues NTP
Contravention 19
Failure to comply with Brady NTP
From this table it will be seen the questions that arises are:
a)whether Contravention 12 should be grouped with Contraventions 1 and 5;
b)whether either or both of Contraventions 7 and 13 should be grouped with Contraventions 2 and 6;
c)whether Contravention 8 should be grouped with Contraventions 4, 10, and 15; and
d)whether Contraventions 16, 17, 18, and 19, should be grouped as one contravention.
Principles
I considered the scope of s.557(1) of the FW Act in Fair Work Ombudsman v Australian Wild Tuna Pty Ltd.[62] I there concluded that s.557(1) of the FW Act does not apply to contraventions of different terms of modern awards, even if such contraventions arise out of a course of conduct, and even if the contraventions affect only one person; and that s.557(1) of the FW Act applies to multiple contraventions of the one term of a modern award, even where the contravention may affect two or more persons.[63]
[62] [2016] FCCA 2626, at [25]-[34]
[63] [2016] FCCA 2626, at [32]
What I said in Australian Wild Tuna should be considered in the light of Rocky Holdings Pty Ltd v Fair Work Ombudsman.[64] In that case the Full Federal Court rejected the submission that where s.44 and s.45 of the FW Act have been contravened, and there are two or more contraventions, s.557(1) operates to provide that each contravention of s 44(1) is taken to constitute a single contravention, and each contravention of s.45 is taken to constitute a single contravention. [65] In Shanghai Trading Bromwich J explained the effect of the Full Federal Court’s judgment in Rocky Holdings as follows:[66]
[T]he phrase “civil remedy provision” in s 557 does not refer to ss 44(1) and 45 of the FW Act, but rather to “a provision” of the National Employment Standards or “a term” of a modern award. What is required is a focus on the substance of the particular obligation creating provisions, and “grouping” them accordingly to produce a rational outcome: Rocky Holdings at [23], [26]. This process of grouping is analogous to the criminal law concept of “rolled up” charges and can produce a considerable degree of leniency in the penalty determination process, albeit that the process is mandated by statute: cf R v Glynatsis [2013] NSWCCA 131; 230 A Crim R 99 at [65]-[66].
[64] [2014] FCAFC 62
[65] [2014] FCAFC 62
[66] [2017] FCA 1301, [39]
On the basis of these authorities s.557(1) of the FW Act does not apply to treat as one contravention contraventions of two different terms of the Graphic Arts Award or the Retail Award. In those circumstances:
a)Contraventions 1 and 5 are not to be grouped with Contravention 12 because Contraventions 1 and 5 relate to the same term under the Graphic Arts Award whereas Contravention 12 relates to a different term, being a term of the Retail Award.
b)Contraventions 2 and 6 are not to be grouped with either Contraventions 7 or 13, and Contraventions 7 and 13 are not to be grouped together. Contraventions 2 and 6 relate to the contravention of the same term of the Graphic Arts Award whereas Contravention 7 relates to the contravention of a different term of the Graphic Arts Award; and Contravention 13 relates to a term of the Retail Award.
Whether Contraventions 16, 17, 18, and 19 should be grouped into one contravention raises different considerations because they do not consist of contraventions of a term of an award. They relate to the contraventions of one provision, namely s.712(3) of the FW Act. As I have already noted, s.557(1) does not apply to contraventions of s.712 of the FW Act because that provision is not included in s.557(3). I will in any event consider the competing submissions about whether the NTP contraventions should be considered as constituting a course of conduct.
Counsel for the respondents submit the contraventions should be treated as one contravention because, although the notices to produce (NTPs) were issued at different times, and in relation to different employees, they called for the same classes of documents. Counsel further submitted that HFB and Ms Purkis sought to respond to the NTPs “globally”. Counsel relies on the affidavit of Ms Purkis. Counsel for the FWO, on the other hand, submits that while HFB responded to each NTP in the same manner, the NTPs were issued at different times, and there was extensive correspondence between HFB and the FWO about compliance with the HFB.
I set out later in these reasons the evidence relating to HFB’s responses to the NTPs. The evidence shows that it can be said that after the Brady NTP was issued Ms Purkis did deal “globally” with the NTPs. But that circumstance ignores that the contraventions of s.712(3) of the FW Act consisted of the failure to produce the documents called for by the NTP’s without reasonable excuse by the times required by each NTP. This occurred at four different times. That HFB, after the last of the NTPs had been issued, can be said to have attempted to respond to all of the NTPs does not give any unity or sufficient unity to HFB’s failure to comply with each of the NTPs by the dates each NTP required HFB to produce documents to justify characterising HFB’s failures as a course of conduct.
In my opinion, therefore, Contraventions 16, 17, 18, and 19 are not to be treated as one contravention, but as four separate contraventions.
After applying s.557(1) of the FW Act, therefore, the following are the contraventions for which I must assess a penalty:
Contraventions after grouping
Contraventions grouped
Description
GC1
Contravention 1
Failure to pay ordinary rate of pay to Ms Va under the Graphics Arts Award
Contravention 5
Failure to pay ordinary rate of pay to Mr Virata under the Graphics Arts Award
GC2
Contravention 12
Failure to pay ordinary rate of pay to Ms Rodrigues under the Retail Award
GC3
Contravention 2
Failure to pay overtime to Ms Va under Graphics Arts Award
Contravention 6
Failure to pay overtime to Mr Virata under Graphics Arts Award
GC4
Contravention 7
Failure to pay overtime at the Saturday and Sunday overtime rates to Mr Virata under Graphics Arts Award
GC5
Contravention 13
Failure to pay overtime to Ms Rodrigues under Retail Award
GC6
Contravention 3
Failure to pay Ms Va at least monthly
GC7
Contravention 4
Failure to pay Ms Va accrued annual leave on termination
Contravention 10
Failure to pay Mr Virata accrued annual leave on termination
Contravention 15
Failure to pay Ms Rodrigues accrued annual leave on termination
GC8
Contravention 8
Failure to pay Mr Virata annual leave loading
GC9
Contravention 9
Failure to pay Mr Virata for absence on a public holiday
Contravention 14
Failure to pay Ms Rodrigues for absence on a public holiday
GC10
Contravention 11
Failure to issue payslips to Mr Virata within one day of payment
GC11
Contravention 16
Failure to comply with Va NTP
GC12
Contravention 17
Failure to comply with Virata NTP
GC13
Contravention 18
Failure to comply with Rodrigues NTP
GC14
Contravention 19
Failure to comply with Brady NTP
Stage 2 – assessment of penalties for Contraventions
I will consider separately each of the conventions, including those that because of s.557(1) of the FW Act are to be treated as one contravention.
GC1 (Contraventions 1 and 5) – failure to pay ordinary rate of pay to Ms Va and Mr Virata
Nature and extent of conduct and circumstances in which it occurred. The contraventions consisted of HFB’s failure to pay amounts to which Ms Va and Mr Virata were entitled under a term of a modern award for work they performed. The total amounts of the underpayments is significant - $6,162.71 in the case of Ms Va, and $4,955.06 in the case of Mr Virata. The circumstances in which HFB failed to pay the amounts due to Ms Va and Mr Virata are also relevant.
In the case of Ms Va, the circumstances of the underpayments are as follows.[67]
a)After completing a Bachelor of Applied Design (Communication) Ms Va responded to an advertisement from HFB offering an “internship” with HFB. HFB engaged Ms Va as an “intern” working on an average of two days a week. HFB did not pay Ms Va for the work she performed.
b)In August 2014 Ms Purkis and Mr Virata informed Ms Va that HFB would like to keep her with the Business, but Ms Va would need to wait four to six weeks before HFB could offer Ms Va a role because HFB was expecting to receive money from investors. Ms Va continued to work without pay expecting she would be offered a contract of employment.
c)In October 2014 Ms Va asked Ms Purkis for an update on an offer for a role in the Business, and Ms Purkis asked Ms Va to continue to wait because HFB was waiting for money. Ms Purkis said she was starting to prepare Ms Va’s contract of employment. Ms Va continued to work without pay hoping she would be given a full-time role when the investors’ money came in.
d)On 15 December 2014 Ms Va met Ms Purkis to discuss Ms Va’s new full-time work. Ms Purkis informed Ms Va that her salary would be $25,000 per year. Ms Va accepted that salary even though she believed that the starting salary for a qualified designer was around $35,000.
e)On 22 December 2014 HFB paid Ms Va $1,000 as a “Christmas bonus”. HFB made this payment after Ms Va requested that she be given a Christmas bonus because the commencement of her fulltime-contract kept being delayed.
f)At a meeting on 20 January 2015 Ms Purkis displayed on a computer screen to Ms Va what Ms Purkis said was Ms Va’s contract of employment, but Ms Va did not receive a copy of that contract. Ms Va then sent to Ms Purkis spread sheets detailing her hours of work and requesting payment. When Ms Purkis responded on 10 February 2015 she informed Ms Va that “[a]s we didn’t officially employ you as a HFB employee, can you please create an invoice for me with your January hours as a contractor”, and that “[w]e are having [sic] contractors at $17 per hour for graphic designers”.
g)Ms Va ceased working with HFB by 20 January 2015. On 24 August 2017 Ms Va received an email from an FWO investigator attaching a letter stating the FWO had received $6,913.50 which represented the amount for which Ms Va had been underpaid. Ms Va received a payment in that amount by around 30 August 2017.
[67] Affidavit of V. Va, 19.09.2017
The circumstances of the underpayments of Mr Virata are as follows:[68]
a)Mr Virata had two periods of employment with HFB. The first was from 1 March 2013 to 28 February 2014. At the time he commenced working with HFB Ms Purkis told Mr Virata that because he was not signing any contract the only way HFB could pay him is if he provided invoices to HFB. Mr Virata provided invoices initially claiming $18 per hour, and then $19 per hour.
b)During his second period of employment with HFB, which was from 1 March 2014 to 27 February 2015, Mr Virata performed work under a contract of employment with HFB which provided for the payment of an annual salary of $30,000, including superannuation which was to increase to $40,000 “once a Seed round investor’s money had settled”. HFB delayed making payments, and many of the payments it made were less than those to which Mr Virata was entitled under his contract of employment.
c)On 1 December 2014, in response to an email from Mr Virata stating that he had not received money in his account, and that he could not afford not to be paid any longer, Ms Purkis sent an email to Mr Virata asking him to let Ms Purkis know “if you will be back tomorrow at HFB (if I can EFT $7947.35 tonight) as it is a critical time for HFB”. The $7,947.35 represented the amounts owing on invoices Mr Virata had provided to HFB during his first period of employment; it did not include amounts owing under his contract of employment. Instead of paying the $7,947.35 Ms Purkis referred to in her email, HFB paid Mr Virata $4,434 which was described as “JV NOV HFB SALARY”. Mr Virata ended his employment on 27 February 2015 after giving four weeks’ notice. HFB did not pay Mr Virata for the work he performed in February 2015.
d)On 28 November 2016 Mr Virata received a letter from Ms Purkis in her capacity as chief executive officer of HFB stating: “I will pay the agreed outstanding amount (including outstanding salary and contracting fees) of $4,016.17”. The letter invited Mr Virata to sign the letter, noting that “the signing of this document . . . will represent a final deed of release between us and settlement of all matters arising out of the Employment, Conclusion and conclusion thereof on the terms contained in this document”. Mr Virata signed and returned the letter, and he received payment of $4,016.17.
e)On 24 August 2017 Mr Virata received an email from an FWO investigator attaching a letter stating the FWO had received $11,495.14 which represented the amount for which Mr Virata had been underpaid. Mr Virata received a payment in that amount by around 30 August 2017.
[68] Affidavit of J R Virata, 06.10.2017
This summary of the evidence, which I accept, shows that the contraventions extended over significant periods of time for each of Ms Va and Mr Virata, and in circumstances where both Ms Va and Mr Virata were demanding that they be paid for the work they had performed. The size of the underpayments, and the extended period over which HFB failed to pay Ms Va and Mr Virata amounts due to them for the work they performed, are matters that weigh heavily in favour of assessing a penalty at the higher end of the scale.
Counsel for the respondents submits that the conduct that led to the contraventions resulted from “lack of understanding, knowledge and resources”.[69] That submission is based on the evidence Ms Purkis has given by affidavit, the relevant parts of which may be summarised as follows:[70]
a)In 2005 and 2006, while attending the FBI Fashion College, Ms Purkis “interned at a number of companies in the capacity as an unpaid intern”. After she graduated with a Fashion Business Diploma she worked for a fashion designer from 2006 to 2007, the first six months as an unpaid intern.
b)In around 2008 Ms Purkis started her first online fashion retail company (First Business) which provided customers with the ability to purchase designer fashion products online and have them delivered to their home. After the Global Financial Crisis the First Business moved into manufacturing its own fashion lines in China. The First Business was unable to generate any profit, and Ms Purkis ceased its operations in 2012. The First Business did not employ any person in it other than Ms Purkis.
c)Ms Purkis registered HFB in 2012 and commenced the Business as an online subscription-based fashion store. Ms Purkis was 27 years of age at the time. She began the Business by raising $230,000 in capital from investors, and herself investing her entire savings of $30,000.
d)During the financial years ended 30 June 2013 and 2014, although the Business was able to generate increased sales, HFB suffered losses of $83,286, and $107,128 for those financial years.
e)In late 2014 HFB raised a further $250,000 from investors. Although the Business was again able to generate increased sales, it made a loss of $408,671 for the financial year ended 2015.
f)In around November 2015 Ms Purkis induced investors on a television show to commit to investing $200,000 for 16% of HFB, subject to due diligence, but the investors decided not to invest.
g)HFB continued to trade in 2016 but, again, without generating any profit. It made a loss of $343,150 for the financial year ended 30 June 2016.
[69] Respondent’s Outline of Submissions on Penalty [35]
[70] Affidavit of K Purkis 22.09.2017
In oral address counsel for the respondents submitted the FWO has not alleged that Ms Purkis had knowledge that Ms Va or Mr Virata were covered by any award. Counsel submitted that when she started the Business Ms Purkis had no prior management of any business, and that it was her lack of experience in managing and her lack of awareness of the industry that led to the position in which the Business ultimately found itself.
There are a number of difficulties with these submissions.
a)First, although in her affidavit Ms Purkis says she was “unaware of the laws and regulations regarding internships and employment generally”, the Statement of Agreed Facts (SAF) states that Ms Purkis “knew that an award applied to the Employees of the First respondent and that the award contained minimum rates of pay and conditions”.[71]
b)Second, answers Ms Purkis gave during an interview conducted by FWI Jackson on 27 October 2016 support a finding that Ms Purkis knew at the relevant time that which the SAF states Ms Purkis knew. And here there are at least three answers Ms Purkis gave during the interview which suggest she had such knowledge. First, when asked whether she had any response to the claim that from 1 March 2014 to 28 February 2015 “Mr Verado” (I take that to be an intended reference to Mr Virata) “was not paid his correct award entitlements”, Ms Purkis said “Jamiel was definitely paid … the award wage”.[72] Second, when asked to respond to the claim that Ms Va had not been paid “the correct award entitlements for the entirety of her engagement” at HFB, Ms Purkis said Ms Va “was definitely paid award [sic] wage” after her internship.[73] Third, when responding to whether she had heard of the FWO before she had been contacted by officers of the FWO, Ms Purkis said she had, and she claimed she had done a “lot of reading . . . in particular in relation to internships”.[74] Ms Purkis later said she had “read about how” the FWO “speak to company owners and they get them to improve processes and different things like that”, and that she had “read cases where people have said they were an intern and they weren’t an intern”.[75]
c)Third, even if it be accepted Ms Purkis was entirely ignorant that HFB was bound by terms of an award in relation to its employment of Ms Va or Mr Virata, Ms Purkis knew that Ms Va and Mr Virata had performed work for which they were entitled to be paid under the arrangements Ms Purkis entered into with Ms Va and Mr Virata, but HFB either did not pay them those amounts or was late in paying those amounts. The basis of my finding that Ms Purkis knew these matters is that Ms Va and Mr Virata demanded from Ms Purkis payment of money due to them, but their demands were not met by any suggestion by Ms Purkis that they were unfounded. One way or the other, therefore, Ms Purkis knew that HFB was not paying amounts to Ms Va and to Mr Virata to which they were entitled to be paid for work they had performed.
d)Fourth, although HFB suffered losses in 2013, 2014, and 2015, that by itself does not mean the losses explain HFB’s failure to pay to Ms Va or Mr Virata the amounts to which they were entitled to be paid. HFB traded, notwithstanding its generating losses; and there is no evidence to suggest that had HFB paid to Ms Va and Mr Virata the amounts to which they were entitled, HFB would have been unable to trade.
e)Fifth, even if there had been evidence that HFB could not afford to pay Ms Va or Mr Virata the amounts to which they became entitled for the work they performed, that not only would not be a mitigating factor; it would be a matter of aggravation. And that is because HFB was inducing Ms Va and Mr Virata to perform work in circumstances where HFB could not have believed, or could not reasonably have believed, it would be able to pay them for their work.
[71] SAF, [164(k)]
[72] Affidavit of C M Jackson, page 222.8
[73] Affidavit of C M Jackson, page 223.14
[74] Affidavit of C M Jackson, page 234.28
[75] Affidavit of C M Jackson, page 235.18
The matters on which counsel for the respondents relies, therefore, are not available to lessen the weight that should otherwise attach to the nature of the conduct constituting the contraventions, and the circumstances in which that conduct occurred.
[93] After 80% discount.
In the case of Ms Purkis:
Contraventions after grouping
Contraventions grouped
Description
Penalty
GC1
Contraventions 1 and 5
Failure to pay ordinary rate of pay to Ms Va and Mr Virata under the Graphics Arts Award
$6,528
GC2
Contravention 12
Failure to pay ordinary rate of pay to Ms Rodrigues under the Retail Award
$6,528
GC3
Contraventions 2 and 6
Failure to pay overtime to Ms Va and Mr Virata under Graphics Arts Award
$3,264
GC4
Contravention 7
Failure to pay overtime at the Saturday and Sunday overtime rates to Mr Virata under Graphics Arts Award
$1,632
GC5
Contravention 13
Failure to pay overtime to Ms Rodrigues under Retail Award
$3,264
GC6
Contravention 3
Failure to pay Ms Va at least monthly
$1,305[94]
GC7
Contraventions 4, 10, and 15
Failure to pay Ms Va, Mr Virata, and Ms Rodrigues accrued annual leave on termination
$3,264
GC8
Contravention 8
Failure to pay Mr Virata annual leave loading
$816
GC9
Contraventions 9 and 14
Failure to pay Mr Virata for absence on a public holiday
$1,632
GC10
Contravention 11
Failure to issue payslips to Mr Virata within one day of payment
$1,632
GC11
Contravention 16
Failure to comply with Va NTP
$6,069
GC12
Contravention 17
Failure to comply with Virata NTP
$6,069
GC13
Contravention 18
Failure to comply with Rodrigues NTP
$6,426
GC14
Contravention 19
Failure to comply with Brady NTP
$6,426
TOTAL
$54,855
[94] After 80% discount, rounded down to the nearest dollar
The final matter to consider is whether the penalties I have assessed viewed as a whole are appropriate and proportionate to the contravening conduct viewed as a whole.
There is no doubt that the penalties, when viewed individually and as an aggregate, are substantial. Unfortunately, the contravening conduct in response to which I have assessed the penalties constitutes serious and sustained contraventions of important provisions of the FW Act. In my opinion, substantial as the penalties I have assessed are, I am satisfied they are appropriate and proportionate to the contravening conduct.
Declarations
The parties agree that I should make declarations reflecting the admitted contraventions. In my opinion there is a public interest to be served by making the declarations sought by the FWO, and I propose to make the declarations.
Disposition
I propose to make declarations substantially in the form proposed in the SAF. I also propose to order that HFB pay pecuniary penalties in the sum of $274,278 and that Ms Purkis pay pecuniary penalties in the sum of $54,855 and that, under s.546(3)(b) of the FW Act, HFB and Ms Purkis pay the pecuniary penalties to the Consolidated Revenue Fund of the Commonwealth by 28 March 2019, being 28 days after the day I expect to pronounce my orders.
I certify that the preceding one hundred and thirty-four (134) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Date: 28 February 2019
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