Fair Work Ombudsman v Hickey (No 2)
[2021] FedCFamC2G 80
•24 September 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Hickey (No 2) [2021] FedCFamC2G 80
File number(s): BRG 1072 of 2019 Judgment of: JUDGE JARRETT Date of judgment: 24 September 2021 Catchwords: INDUSTRIAL LAW – Commonwealth – compliance and enforcement – civil remedies – pecuniary penalty orders – amount of penalty – particular cases Legislation: Crimes Act 1914 (Cth), s 4AA
Fair Work Act 2009 (Cth), ss 539(2), 546(2), 557(1)
Cases cited: Australian Building and Construction Commissioner v CFMMEU [2020] FCA 549
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
CFMMEU v ABCC (2018) 264 FCR 155
Commonwealth of Australia v Director of the FWBII (2015) 258 CLR 482
Fair Work Ombudsman v Port Douglas Investments As Trustee For The Theo Sourlos Family Trust & Anor [2018] FCCA 488
Fair Work Ombudsman v WCH Services Pty Ltd & Anor [2018] FCCA 1878
Smerff Electrical v Jordan Lamacq [2019] FWCFB 1767
Division: Division 2 General Federal Law Number of paragraphs: 39 Date of last submission/s: 18 June 2021 Date of hearing: 18 June 2021 Place: Brisbane Counsel for the Applicant: Mr McKechnie Solicitor for the Applicant: Office of the Fair Work Ombudsman The Respondent: No appearance ORDERS
BRG 1072 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2) BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: SIMON JOHN HICKEY
Respondent
ORDER MADE BY:
JUDGE JARRETT
DATE OF ORDER:
24 SEPTEMBER 2021
THE COURT ORDERS THAT:
1.The respondent pay penalties of $30,000 pursuant to subs.546(1) of the Fair Work Act 2009 (Cth) for the contraventions set out in declaration 1 of the orders made on 18 June, 2021.
2.The respondent to pay the respective penalty amount to the Consolidated Revenue Fund of the Commonwealth within 28 days of the Court’s order.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE JARRETT:
These reasons relate to the assessment and imposition of pecuniary penalties upon the respondent in respect of certain contraventions of the Fair Work Act 2009 (Cth).
On 18 June, 2021 I found that the respondent, who at the relevant times traded under the name Smerff Electrical, had contravened the following civil remedy provisions of the Act:
(a)s.45, by failing to pay Mr Jordan Lamacq during the period from 23 January, 2017 to 16 April, 2017 entitlements due to him under the Electrical, Electronic and Communications Contracting Award 2010 as follows:
(i)minimum wage (clause 16.2);
(ii)industry allowance (clause 17.2(a));
(iii)casual loading (clause 10.3(b));
(iv)overtime rates (clause 26.1(a)); and
(v)the required employer superannuation contributions (clause 23.2);
(b)s.45, by failing to comply with an order of the Fair Work Commission made on 14 January, 2019 and corrected on 4 July, 2019 requiring the respondent to pay $11,400 (taxed according to law) to Mr Lamacq for unfair dismissal by 4 February, 2019.
The respondent underpaid Mr Lamacq the total sum of $5,504 in wages and $482.93 in superannuation. In addition, the respondent has failed to pay the amount of $11,400 ordered to be paid to Mr Lamacq by the Fair Work Commission.
The applicant seeks that pecuniary penalties be imposed upon the respondent pursuant to s.546 of the Fair Work Act in respect of those contraventions.
BACKGROUND
Mr Lamacq was employed by the respondent to perform work as a casual trade assistant between 23 January, 2017 to 16 April, 2017. Mr Lamacq’s duties included removing rubbish from outside the respondent’s business vans, loading vans, gassing air conditioner units and cutting cable.
Mr Lamacq was engaged as a Level 1 employee under the Electrical Award and entitled to the following rates:
(a)$17.96 per hour for minimum wages (clause 16.2);
(b)$4.68 per hour for casual loading (clause 10.3(b));
(c)$0.76 per hour for industry allowance clause 17.2(a));
(d)$28.08 per hour for overtime for the first two hours (clause 26.1(a)); and
(e)$37.44 per hour for overtime worked in excess of two hours (clause 26.1(a)).
However, Mr Lamacq was only paid $12 per hour from 23 January, 2017 to 12 February, 2017 and $15 per hour between 13 February, 2017 and 16 April, 2017.
On 16 May, 2018 Mr Lamacq was dismissed from his employment with the respondent.
On 17 May 2018, Mr Lamacq lodged an application for an unfair dismissal remedy in the Fair Work Commission pursuant to s.394 of the Fair Work Act in respect of the termination of his employment.
On 14 January, 2019 the Fair Work Commission found that:
(a)Mr Lamacq was protected from unfair dismissal within the meaning of s.382 of the Fair Work Act;
(b)the termination of Mr Lamacq’s employment was harsh, unjust or unreasonable within the meaning of s.387 of the Fair Work Act;
(c)reinstatement of Mr Lamacq was inappropriate; and
(d)an order for payment of compensation was appropriate in the circumstances.
On that day, the Fair Work Commission ordered that the respondent pay to Mr Lamacq compensation of $11,400 (taxed according to law) by 4 February, 2019.
The respondent appealed the order, but on 26 March, 2019 a Full Bench of the Fair Work Commission dismissed the appeal.
The respondent has not satisfied the order to pay Mr Lamacq $11,400.
These proceedings were commenced on 13 December, 2019. The respondent filed a defence to them, but subsequently disengaged from the proceedings. He did not comply with the directions made by the Court for the filing of evidence or the preparation of the application for a trial on the issue of liability. Consequently when the matter came before me for trial on liability, the matter proceeded in the absence of the respondent and I made the declarations that I have referred to above.
The Contraventions by the respondent are as follows:
No. Provision of FW Description of contravention Number of contraventions Act contravened 1 s 45 (contravention of modern award) Minimum wages
Failure to pay minimum rates of pay: cl 16.2 of the Electrical Award
Multiple contraventions between 23 January 2017
and 16 April 2017
2 s 45 (contravention of modern award) Casual loading
Failure to pay casual loading: cl 10.3(b) of the Electrical Award
Multiple contraventions between 23 January 2017
and 16 April 2017
3 s 45 (contravention of modern award) Overtime rates
Failure to pay overtime rates: cl 26.1(a) of the Electrical Award
Multiple contraventions between 23 January 2017
and 16 April 2017
4 s 45 (contravention of modern award) Industry Allowance
Failure to pay industry allowance: cl 17.2(a) of the Electrical Award
Multiple contraventions between 23 January 2017
and 16 April 2017
5 s 45 (contravention of modern award) Superannuation
Failure to make superannuation contributions: cl 23.2 of the Electrical Award
Multiple contraventions between 23 January 2017
and 16 April 2017
6 S 405 (failure to
comply with FWC Order)
FWC Order
Failure to comply with FWC Order
One – by failing to comply by 4 February 2019 or at all
Subsection 557(1) of the Fair Work Act provides that two or more contraventions of specified civil remedy provisions must be treated as a single contravention where those contraventions were committed by the same person and arose from the same course of conduct. The applicant accepts that the respondent is entitled to that benefit in relation to repeated contraventions of each separate obligation under the Electrical Award, resulting in separate breaches of s.45 of the Fair Work Act. Thus, following the application of s.557(1), the contraventions of the following sections of the Fair Work Act should be treated as six single contraventions namely one contravention of s.405 of the Fair Work Act and five contraventions of s.45 of the Fair Work Act. I accept that submission. In my view that is a proper recognition of the application of s.557(1) in the present case.
Further, I accept the applicant’s submission that it would not be appropriate to further group the contraventions on the basis of common elements, as each contravention arises from separate and distinct obligations arising under the Electrical Award and to do so would give insufficient weight to the separate legal character of the obligations.
Sections 539(2) and 546(2) of the Fair Work Act prescribe maximum penalties that may be imposed by the Court for contraventions of civil remedy provisions, by reference to penalty units within the meaning of s.4AA of the Crimes Act 1914 (Cth). During the period in which the contravening conduct occurred, the value of a penalty unit was $180.00 prior to 1 July 2017 and $210.00 thereafter. The contraventions of s.45 of the Fair Work Act took place when the penalty unit was $180. The contravention of s.405 of the Fair Work Act took place after 1 July 2017 when the penalty unit was $210.
Therefore, the total maximum penalties that could be imposed are $66,600.
I accept the applicant’s submissions that the contraventions are objectively serious. The underpayment contraventions are serious enough, but the contravention of s.405 of the Fair Work Act has its own quality. Such a contravention can only arise where there have been successful proceedings in the Fair Work Commission and then a failure to comply with an order of the Fair Work Commission with an accompanying exhaustion of appeal rights: Fair Work Ombudsman v WCH Services Pty Ltd & Anor [2018] FCCA 1878 at [28]
The respondent’s failure to comply with the Fair Work Commission order demonstrates a wilful disregard of the Fair Work Commission’s authority and integrity.
In Fair Work Ombudsman v Port Douglas Investments As Trustee For The Theo Sourlos Family Trust & Anor [2018] FCCA 488, the Court stated that the overriding consideration in determining penalty was the “deliberate defiance of an order of the Fair Work Commission” and observed as follows at [46]:
The Court must, in imposing penalty, make a very loud statement that the Fair Work Commission must be respected. Section 405 must be a s.by which the Court shows its absolute displeasure at any disrespect shown by any party towards the Fair Work Commission.
More than two years have passed since the Fair Work Commission made the order the subject of the contravention before me. The respondent has had since then to meet the order but he has deliberately chosen not to do so. The evidence amply demonstrates that. The respondent was aware of the Fair Work Commission order having unsuccessfully appealed the order.
Moreover, the evidence shows that during the course of the applicant’s investigation the respondent acknowledged to the applicant’s investigators that he was aware of the Fair Work Commission order but that he would not pay the compensation. These acknowledgments include him making the following statements:
I did nothing wrong. Thieves do not deserve to be compensated in any way….. you think Giraffe deserves $11,400 ? ok fine, give it to him that’s your business. Nothing to do with me.
and
…stop emailing me. you get nothing giraffe gets nothing. There’s nothing to get and I am not going to work and create wealth for you to just steal it to give to others. Fuck that…
The respondent also emailed the Fair Work Commission on 14 January, 2019 following the Fair Work Commission order being issued:
Do you really think he is getting 11 grant? lol
Insane
…
He can come and collect a dollar a week 11 grand lol.
He emailed the Fair Work Commission again on 8 July, 2019:8
I don’t think you get it
I am not opening your stupid attachments I am not paying Giraffe a fucking cent Stop emailing me retards.
The contraventions had a serious impact on Mr Lamacq (referred to in the above communications from the respondent as “Giraffe”. Mr Lamacq has now been without the benefit of his wages since April, 2017 being more than four years. Whilst he was paid during his employment, he was only paid 54.33% of his entitlements. Mr Lamacq’s evidence is that his reduced income “made it difficult to successfully apply for a rental” and that it was “also difficult paying for general living expenses”. Mr Lamacq has also been without the benefit of the compensation for his unfair dismissal since February, 2019.
The evidence of Mr Lamacq is that he had difficulty finding work as he did not have a good reference from Mr Hickey and had stopped his electrical trades apprenticeship a year into it. Further, his evidence is that his unfair dismissal usually came up in interviews when asked why he left his last employer. Mr Lamacq’s evidence is that, “without the compensation from [his] dismissal it meant [he] had to live off of [his] savings and [his] partner’s part-time income” and that “it was stressful and having the money would have made it easier”.
The respondent is a sole trader and was involved in each part of the business he operated including that he ran the business and was in charge of incoming jobs, outgoing jobs and stock. The respondent ran the business from his home address where he had an office and stored equipment for electrical jobs in his garage. The evidence of Mr Lamacq is that the respondent set his rate of pay and that Mr Lamacq provided his hours sheets to the respondent by email each week.
According to the evidence and the applicant’s submissions (I have nothing from the respondent) the respondent did not pay the Fair Work Commission order as he disputed that it was valid and also claimed he did not have capacity to pay. The capacity of the respondent to pay the Fair Work Commission order was considered by the Fair Work Commission Full Bench when considering whether to give permission to appeal, finding that the respondent’s circumstances did “not support a view that he is unable to comply with the Deputy President’s order”: Smerff Electrical v Jordan Lamacq [2019] FWCFB 1767 at [19]-[20].
The respondent has not taken corrective action, shown contrition, cooperated or made admissions. Rather, the respondent has shown disregard and contempt for the applicant and the Fair Work Commission.
Deterrence, both specific and general, is the “principal and indeed only” objective of pecuniary penalties under the Fair Work Act: Commonwealth of Australia v Director of the FWBII (2015) 258 CLR 482 at 506 [55]; CFMMEU v ABCC (2018) 264 FCR 155 at 167 [19]; Australian Building and Construction Commissioner v CFMMEU [2020] FCA 549 at [26]. Retribution, denunciation and rehabilitation have no part to play.
The penalties in this case must be set at a level such that it would be likely to act as a deterrent to preventing similar contraventions by like-minded persons. It must have the necessary “sting or burden” to secure “the specific and general deterrent effects that are the raison d’être of its imposition”: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at [116].
The respondent currently holds a contractor licence trading under the name “Smerff Electrical” which expires on 28 August, 2021. The respondent is also registered as an individual/sole trader. Given this, the applicant argues that it is important that penalties in this matter be imposed at a level that makes the contravening conduct clearly unprofitable and the prospect of future contraventions unlikely. I accept that submission.
FIXING OF PENALTY
The respondent’s conduct in this case is egregious. The failure to pay Mr Lamacq according to his award entitlements is objectively serious. The amount of the underpayment is significant.
The failure to abide the Fair Work Commissions order and the open contempt demonstrated by the respondent to that order call for a significant penalty. As was observed in Fair Work Ombudsman v Port Douglas Investments As Trustee For The Theo Sourlos Family Trust & Anor [2018] FCCA 488 at [46]:
The Court must, in imposing penalty, make a very loud statement that the Fair Work Commission must be respected. Section 405 must be a section by which the Court shows its absolute displeasure at any disrespect shown by any party towards the Fair Work Commission.
Having regard to the above matters I consider that the following penalties are appropriate in respect of the contraventions before the Court:
(a)for the failure to comply with Fair Work Commission order $11,250;
(b)failure to pay minimum wages $7,000;
(c)failure to pay casual loading $7,000;
(d)failure to pay industry allowance $3,000;
(e)failure to pay overtime $4,000;
(f)failure to make superannuation contributions $4,000
Total $36,250
The aggregate penalty must not be crushing or oppressive, but it must also be commensurate with the seriousness of the conduct engaged in by the respondent. As I have set out above, this case is particularly serious given the failure to comply with the order of the Fair Work Commission. There is no evidence before me of the financial circumstances of the respondent. Nonetheless it is appropriate to reduce the total penalty to $30,000. I consider that such a penalty is a proportionate response to the offending conduct in this case.
There will be orders accordingly.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jarrett. Dated: 24 September 2021
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