Fair Work Ombudsman v HTA Farmings Pty Ltd

[2017] FCCA 1847

FEDERAL CIRCUIT COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v HTA FARMINGS PTY LTD & ANOR [2017] FCCA 1847

Catchwords:
INDUSTRIAL LAW – Awards – breach of award – contravention of FW Act – breach admitted –pecuniary penalty –penalty to be paid to the Commonwealth.

Legislation:

Fair Work Act 2009 (Cth), ss.45, 323, 535, 536, ,545, 546, 550, 557

Cases cited:
Commonwealth of Australia v Director, Fair Work Building Industry Assessment [2015] HCA 46
Mason & Harrington Corporation Pty Ltd t/as Pangea Restaurant & Bar [2007] FMCA 7

Applicant: FAIR WORK OMBUDSMAN

First Respondent: HTA FARMINGS PTY LTD ACN 158 552 295

Second Respondent: TUAN ANH LE

File Number: BRG 1100 of 2016

Judgment of: Judge Vasta

Hearing date: 20 July 2017

Date of Last Submission: 20 July 2017

Delivered at: Brisbane

Delivered on: 20 July 2017

REPRESENTATION

Counsel  for the Applicant: Ms Forsyth

Solicitors for the Applicant: Fair Work Ombudsman

Solicitors for the Respondents: Benson Lawyers

ORDERS

THE COURT DECLARES THAT:

1. The First Respondent contravened the following civil remedy provisions:

   (a)section 45 of the Fair Work Act 2009 (FW Act) by virtue of a contravention of clause 14.1 of the Horticulture Award 2010 (Award), by failing to pay Siang Ling Li an amount sufficient to meet her entitlement to the Minimum Hourly Wage prescribed by the Award;

   (b)section 45 of the FW Act by virtue of a contravention of clause 10.4(d) and A.5.4 of the Award, by failing to pay Yu Ting Huang, Tzu Ting Chiu, Yu Chun Lin, Shih Hsuan Lin and Wei Fan Han (Hourly Rate Employees) and Siang Ling Li amounts sufficient to meet their entitlement to casual loading;

   (c)section 323 of the FW Act, by failing to pay the Hourly Rate Employees and Siang Ling Li in full, in money and at least monthly;

   (d)section 535(1) of the FW Act, by failing to keep the records prescribed by regulation 3.33(2) of the Fair Work Regulations 2009 (FW Regulations); and

   (e)section 536(2) of the FW Act, by failing to issue payslips in the prescribed form and including the prescribed information.

2. The Second Respondent was involved in each of the contraventions referred to in Declaration 1 above, pursuant to section 550(1) of the FW Act.

THE COURT FURTHER ORDERS THAT:

1. Pursuant to section 545(2) of the FW Act:

   (a)the First Respondent pay the outstanding underpayment amount of $146.97 to the Applicant within 28 days of the Court’s order; and

   (b)the Applicant distributes amounts received to Siang Ling Li.

2. Pursuant to section 546(1) of the FW Act, the First Respondent pay pecuniary penalties fixed in the sum of $70,550.00 in respect of the contraventions set out at subparagraphs (a), (b), (d) and (e) of Declaration 1 above.

3. Pursuant to section 546(1) of the FW Act, the Second Respondent pay pecuniary penalties fixed in the sum of $14,110.00 in respect of each of the contraventions referred to at Order 2 above.

4. Pursuant to section 546(3)(a) of the FW Act, any pecuniary penalties ordered to be paid by the First Respondent and the Second Respondent be paid to the Commonwealth within 60 days of the Court’s orders.

5. Liberty for the Applicant to apply to the Court for the matter to be re-listed in the event that any of the Court’s orders are not complied with.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

No. BRG 1100 of 2016

FAIR WORK OMBUDSMAN

Applicant

And

HTA FARMINGS PTY LTD ACN 158 552 295

First Respondent

TUAN ANH LE

Second Respondent

REASONS FOR JUDGMENT

(Ex tempore)

1. By application and statement of claim filed in this Court on 24 November 2016, the Applicant, the Fair Work Ombudsman, has sought the imposition of pecuniary penalties upon the First Respondent, HTA Farmings Pty Ltd in relation to contraventions of the Fair Work Act 2009 (Cth) (“the FW Act”) and the Horticultural Award 2010, and also imposition of pecuniary penalties against the Second Respondent, Mr Tuan Ahn Le, who, for all intents and purposes, is the guiding force behind the First Respondent.

2. The evidence before me shows this; that around 2012, the First Respondent operated a labour hire business in the horticultural industry.  That business supplied workers to farms in Queensland, including one particular farm called the Pinata Farm, located in Caboolture. 

3. The setting of pay rates for employees and so on was the responsibility of the First Respondent only, not the company that hired them.  In effect, the farm itself would pay a sum of money to the First Respondent and the First Respondent would then give them persons who would work at the farm.  But the First Respondent was the one who was responsible for paying of the wages.

4. Between 15 May 2015 and 30 September 2015, the First Respondent employed 265 employees.  Those persons performed duties including picking, sorting, grading, packing, harvesting and maintaining strawberries.  It seems that at least 143 of those employees were overseas workers who were temporarily residing in Australia pursuant to some form of visa.

5. The problem with the investigation that the Fair Work Ombudsman undertook regarding the First Respondent, was that the First Respondent kept very little records of what was actually happening.  There were notices to produce that were given to the First Respondent, first on 14 August 2015 and secondly on 23 September 2015, but the records supplied only comprise 162 employee detail forms, and those were not given until 9 November 2015.

6. It seems that the company did not make and keep records of hours worked for the employees.

7. The only records available to the Fair Work Ombudsman, upon which they could assess the entitlements, were picking records, packing records, which don’t identify the relevant employee necessarily and daily timesheets for six employees that show a start, a break and finish times, and position and names for those employees, and that was for only a limited amount of time. The Fair Work Obudsman were also given some invoices.  All of those records were supplied by the farm, Pinata Farm, rather than the two Respondents. 

8. As a result of this, the Fair Work Ombudsman was unable to assess what entitlements were due and whether or not they were given properly, in relation to 259 of the 265 employees.  The Fair Work Ombudsman attempted to contact all 162 of the employees of whom that they were given some detail, and they received a selection of payslips from 20 employees that showed the total amount paid relative to the number of squares or flats or snack packs of strawberries that the employee packed for the relevant week. But such did not detail the hours worked or what the relevant pay scale was.

9. Of those payslips that were received, only six of these could be relied upon to assess entitlements and so there had to then be a comparing of payslips for the six employees that the Fair Work Ombudsman had identified, with the daily timesheets and packing records that were supplied by the Pinata Farm to be able to make any assessment of underpayments. 

10. Now, five of the employees were paid hourly rates, which, at certain periods, did not include casual loading.  One employee, Xian Ling Li, also known as Lilian, was paid piecework rates.  Now, the piecework rates did not correlate to any piecework agreement that could be seen to ensure that the piecework agreement, as it were, complied with the minimum requirements noted for such agreements under the Award. 

11. With regard to Lilian, it seems that she was paid $14.77 per hour in the period for which she was underpaid, when the Award prescribed a payment of a minimum rate of $16.87 an hour and $4.22 per hour in casual loading.  One then looks at what that means.  It seems that Lilian was underpaid a total of $48.83 in respect of her minimum hourly wages and $98.12 in respect of her casual loading. 

12. With regard to the other assessed employees, the five others for which the Fair Work Ombudsman was able to get some form of records, the Fair Work Ombudsman could not tell whether or not those five were paid properly as far as the minimum hourly wages were concerned, but it was obvious that they were not paid the $4.22 (which then increased to $4.32) per hour of casual loading.  It seems that the underpayments there were:

    a)employee 1, $41.60;

    b)employee 2, $41.60;

    c)employee 3, $24.97;

    d)employee 4, $41.60;

    e)employee 5, $19.51.

13. That means that there was an underpayment of $169.29 to those other employees and a total of $146.97 underpaid to the employee, Lilian.  The First Respondent has rectified the underpayment of the $169.29 to the five employees, but has not rectified any money to Lilian, and she has been underpaid $146.97.  The investigations show that there was a failure by the First Respondent to pay the employees in full and in money and at least monthly; I will talk more about that a little bit later.

14. What became quite clear from this investigation is that there was a complete and utter failure to make and keep employee records with regard to hours worked and also with regard to any piecemeal agreements, and that there was a failure to issue payslips which included all prescribed information.  To the credit of the First and Second Respondents, they have not sought to contest the allegations made by the Fair Work Ombudsman, and this matter proceeded directly to a penalty hearing after the first court date in which the parties appeared before me. 

15. The Respondents have, together with the Fair Work Ombudsman, compiled an agreed statement of facts, and the solicitor for the two Respondents has appeared today and not sought to cavil with the factual aspects, but has instead implored me to look upon the contraventions with a degree of sympathy and, in effect, mercy.

16. The law in relation to assessment of pecuniary penalties has really been laid down quite comprehensively.  As Ms Forsyth submitted, the High Court, in Commonwealth of Australia v Director, Fair Work Building Industry Assessment [2015] HCA 46, have said at paragraph 55 of that judgment,

    “No less importantly, whereas criminal penalties import notions of retribution[74] 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[75]:

    ‘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.’”

17. In the Mason & Harrington Corporation Pty Ltd t/as Pangea Restaurant & Bar [2007] FMCA 7 (“the Pangea Case”), the Court went through, in effect, a number of factors that Courts should be mindful of when imposing pecuniary penalties. One must be careful though, in looking at the Pangaea case, that one doesn’t simply look at those matters as some form of checklist to see whether or not the facts of the case, with the particular factors, either aggravate or mitigate the penalty. 

18. As such, the list compiled in Pangaea is extremely useful, but it should not be a formula used by the Court to slavishly come up with some sort of almost mathematical guide for the imposition of penalties. 

19. In this case, there are five contraventions, when one pulls them all together, that the Respondents have admitted to breaching. They are:

    a)the failure to pay minimum rates of pay; 

    b)failure to pay casual loading; 

    c)failure to pay in full, in money, and at least monthly; 

    d)failure to make and keep records of hours worked by casual employees;  and

    e)failure to issue payslips, including the prescribed information. 

20. Those five areas can be grouped together as five distinct penalty types pursuant to s.557 of the FW Act.

21. I accept the submission of Ms Forsyth that, notwithstanding that the penalty at the beginning of the period was a penalty unit equalling $170.00, at a point just short of the midway of the complained period the penalty unit sum changed to $180.00.  As these contraventions are grouped together and are ongoing breaches, it does seem to me that I should look at the penalty unit being $180.00 for these five contraventions, and, therefore, fix the maximum penalties in such a manner.

22. Quite properly, the Fair Work Ombudsman has looked at the third of those breaches, that is, the failure to pay in full, in money and at least monthly as a matter that really, whilst it is a contravention, should not be one that attracts penalty simply because the facts of such a contravention are really captured by the contraventions that are the first and second contraventions.

23. For that reason, I have determined that the maximum penalty for the failure to pay the minimum rates of pay is $54,000.00.  The maximum penalty for the failure to pay minimum loading is $54,000.00.  The maximum penalty for failure to keep the records is $27,000.00.  And the failure to provide proper payslips is $27,000.00.  That gives a total maximum penalty of $162,000.00.  That total is for the First Respondent. For the Second Respondent, the totals are a fifth of those totals, so that is $32,400.00. 

24. Now, having fixed those, I now look at those factors that are relevant to my determination.  I’ve already gone through the circumstances of the contraventions.  One of the matters that I find to be of great relevance here is the way in which the Second Respondent and, by extension, the First Respondent have reacted to previous interventions by the Fair Work Ombudsman.  Whilst the Respondents have not previously been the subject of legal proceedings brought by the Fair Work Ombudsman, they still have come to the adverse attention of the Fair Work Ombudsman in the past.

25. In September 2013, the Fair Work Ombudsman made a site visit to the premises of the First Respondent and conducted an inspection.  On 17 December 2013, the Fair Work Ombudsman issued a letter of caution to the First Respondent, which was addressed to the Second Respondent. 

26. Amongst other things, that letter:

    a)confirmed the application of the Horticultural Award 2010;

    b)identified contraventions, including, in relation to the Award, a failure to have written piecework agreements with the employees and the non-payment of casual loading; and

    c)identified record-keeping contraventions of the Fair Work Regulations, including a failure to make and keep employee records, a failure to issue payslips within one working day of payment, and a failure to issue payslips in the prescribed form with the prescribed content.

27. The Second Respondent was provided with a further opportunity to remedy those same issues at another site visit on 26 March 2015.  On that occasion, he signed a compliance commitment form, committing to do so.  However, by the time the Fair Work inspectors conducted a further site visit to Pinata Farm and to Mr Le on 13 and 14 August 2015 respectively, there were no piecework agreements in place with the employees, and yet they were purportedly being paid in accordance with such agreements.

28. The Fair Work Ombudsman also received a complaint from an employee of the First Respondent on 10 June 2015, alleging non-payment for time worked and non-provision of payslips. When one looks at that background, these breaches cannot be described in terms of being inadvertent, being a mistake or being an oversight. It does seem to be quite a deliberate thumbing of the nose of the mandatory requirements imposed upon employers by the FW Act.

29. The enterprise itself is not a small enterprise, having employed 265 people during the four and a-half month period identified by the Applicant.  So when one is looking at an enterprise of that type, one would think that a great deal of the expenditure of such an enterprise would be the payment of wages for those 265 persons. 

30. It is no secret that there is a competitive market for labour for farms, and that such employment, because it is rural employment, is extremely attractive to persons who have come over to this country and do have a visa that allows them to work for a certain period of time. 

31. The Federal Government gives incentives with the working visas where employment is conducted in rural centres and there are quite a number of advantages for persons who are visiting Australia to take up such work.  As such, government regulators, such as the Fair Work Ombudsman, must be vigilant to ensure that persons who would have little, if no, knowledge of the Australian industrial relations regime are not exploited, because, with such incentives, persons on such visas would be ripe for such exploitation.  And if they are exploited, it is a duty of the Courts to come down hard upon such exploitation.

32. It may be said that for the person Lilian to be $146.97 short in the overall payment does not seem to be a great deal.  Of course, all of these things are relative.  The person Lilian would be a minimum wage worker, and $146.00 is, to a person on the minimum wage, is a not insubstantial sum.  But if one then extrapolated that, that if a business had 200 employees and that business were chronically underpaying the employees $150.00, over this four and a half month period, a bottom line $30,000.00 can be saved by the business by not properly paying wages.

33. When one looks at the payment of wages as being the greatest expenditure for such a company such as the First Respondent, even small amounts not being properly paid to workers can make a very big difference to that company’s bottom line and put them in a position where they are unfairly advantaged against companies and farms and employers who are paying the proper payments to the workers. 

34. So it cannot be said that a shortfall of $146.00 is trifling and not all that serious. Such a statement does not take into account the domino effect of such payments, and is minimising the mischief that the FW Act is trying to eliminate in cases such as this.

35. It’s obvious that the Second Respondent, Mr Le, was, really, the voice behind the corporate curtain of the First Respondent, and so, therefore, the actions of the company are really actions of Mr Le, and the actions of Mr Le are the actions of the company. 

36. Whilst there has been very good cooperation, as I have already noted, there has not been a level of contrition; this is especially so when one considers the history of the matter and the fact that, even if one looks at $146.97 as not being a large sum, the employee Lilian has still not been repaid.  And, obviously, the issues of specific and general deterrence do loom large in this matter.

37. I take an extremely serious view of this case especially with regard to the non-provision of payslips and the non-keeping of records.  This matter is certainly, in my view, in the worst category of matters that come before this Court in relation to breaches of the provision to keep proper records. 

38. In this matter, I would impose upon the First Respondent the following penalties.

39. In relation to the contravention of failure to pay the minimum weekly wage, I would impose a penalty of $18,000.00 on the First Respondent.

40. For the failure to pay casual loading, I would impose a penalty of $18,000. 

41. On the contravention for failing to make and keep a record of hours worked by casual employees, as I say, I think this is in the worst category, I would impose a penalty of the maximum $27,000.00. 

42. For the failure to issue payslips, including all prescribed information, I would impose a penalty of $20,000.00. 

1. Those latter two amounts really reflect the seriousness with which the court views such conduct by the Respondents.  That would mean a total of $83,000.00. 

2. As I have said before, there has been a level of cooperation.  Whilst Mr Bui has valiantly attempted to persuade me that the cooperation is even greater, I am not of the view that the cooperation has really been as great as he maintains.  There is very little room for the Respondents to move on this, given the evidence, and all they have done is simply accept the matters before the Court and not contested the facts.  But they have done little else.

3. When I look at what has been filed before the Court, neither of the Respondents has filed any material at all before the Court to try and either explain or mitigate their behaviour.  It has simply been left to Mr Bui to come here and advocate in a valiant way, as I say.  But there has been, as I say, little in the realm of cooperation.  The money, $146.97, still has not been repaid to the employee Lilian. 

4. I would normally have given a discount which would be less than the 15 per cent.  But given that the 15 per cent is what the Fair Work Ombudsman has asked, I feel that I should accede in this case to their very generous assessment of the value of the cooperation. 

5. In all respects, everything that I say with regard to the company also applies to the Second Respondent, and his penalties will be in the same proportion as that of the company.  Those totals will be discounted by 15%.

6. I therefore make the declarations that the Fair Work Ombudsman has asked from me in paragraph 1 of the draft order, and paragraph 2.

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Judge Vasta.

Date: 8 August 2017