Fair Work Ombudsman v Hu (No 2)
[2018] FCA 1034
•12 July 2018
FEDERAL COURT OF AUSTRALIA
Fair Work Ombudsman v Hu (No 2) [2018] FCA 1034
File number: QUD 708 of 2016 Judge: RANGIAH J Date of judgment: 12 July 2018 Catchwords: INDUSTRIAL LAW – alleged contraventions of s 45 of the Fair Work Act 2009 (Cth) – piecework workers under Award – whether piecework rates enabled employees to earn minimum hourly rate – whether respondents were knowingly involved in contraventions by another entity – consideration of essential elements of contraventions – where not proved that respondents knew that employees were casual employees – respondents were not knowingly involved in contraventions Legislation: Corporations Act 2001 (Cth)
Evidence Act 1995 (Cth) ss 56, 60 and 140
Fair Work Act 2009 (Cth) ss 21, 45, 134, 138, 550 and 793
Workplace Relations Act 1996 (Cth) (repealed) s 576L
Cases cited: ASIC v Rich (2004) 213 ALR 338
Australian Building and Construction Commissioner v Parker (2017) 266 IR 340
Australian Communications and Media Authority v Mobilegate Ltd A Company Incorporated in Hong Kong (No 8) [2010] FCA 1197
Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in liq) (2015) 235 FCR 181
Banque Commerciale SA, En Liquidation v Akhil Holdings Limited (1990) 169 CLR 279
Briginshaw v Briginshaw (1938) 60 CLR 336
City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australiav Australian Competition and Consumer Commission (2007) 162 FCR 466
Dare v Pulham (1982) 148 CLR 658 at 664;
Ex parte McLean (1930) 43 CLR 472
Fair Work Ombudsman v Al Hilfi [2012] FCA 1166
Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365
Fair Work Ombudsman v Grouped Property ServicesPty Ltd [2016] FCA 1034
Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456
Fitzgerald v FJ Leonhardt Pty Ltd (1997) 189 CLR 215
Gnych v Polish Club Ltd (2015) 255 CLR 414
Gore v Australian Securities and Investments Commission (2017) 249 FCR 167
Gould v Mount Oxide Mines (in liq) (1916) 22 CLR 490
Hamzy v Tricon International Restaurants (2001) 115 FCR 78
Jones v Dunkel (1959) 101 CLR 298
Potter v Fair Work Ombudsman [2014] FCA 187
Taylor’s Central Garages (Exeter) Ltd v Roper [1951] 2 TLR 284
Telum Civil (Qld) Pty Ltd v Construction, Forestry, Mining and Energy Union [2013] FWCFB 2434
Yorke v Lucas (1983) 49 ALR 672
Date of hearing: 9-11 and 25 October 2017 Date of last submissions: 9 November 2017 (Applicant)
13 November 2017 (Second and Third Respondents)Registry: Queensland Division: Fair Work Division National Practice Area: Employment & Industrial Relations Category: Catchwords Number of paragraphs: 273 Counsel for the Applicant: Mr J Bourke QC with Ms A Coulthard Solicitor for the Applicant: Fair Work Ombudsman Counsel for the First Respondent: Mr R Brown (9–11 October 2017)
The First Respondent did not appear on 25 October 2017Solicitor for the First Respondent: Johnsons Solicitors (9–11 October 2017) Counsel for the Second and Third Respondents: Mr R Bain QC with Mr PD Tucker Solicitor for the Second and Third Respondents: HopgoodGanim Lawyers Counsel for the Intervener: Mr R Dalton Solicitor for the Intervener: Seyfarth Shaw Australia ORDERS
QUD 708 of 2016 BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: TAO HU
First Respondent
MARLAND MUSHROOMS QLD PTY LTD
Second Respondent
TROY MARLAND
Third Respondent
NATIONAL FARMERS' FEDERATION LIMITED
Intervener
JUDGE:
RANGIAH J
DATE OF ORDER:
12 JULY 2018
THE COURT ORDERS THAT:
1.The proceeding against the second and third respondents is dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
TABLE OF CONTENTS
The parties
[6]
The issues
[10]
The FWA and the Award
[16]
Whether HRS Country contravened the Award and s 45 of the FWA
[40]
The FWO’s case
[40]
Whether cl 15 of the Award prohibits an employer from entering an agreement where its terms do not comply with cl 15
[47]
The employment agreements
[50]
Identification of an hourly rate at least 15% more than the prescribed hourly rate prescribed in the Award
[57]
The pick rate required for the average competent employee to earn at least the Prescribed Hourly Rate
[61]
The characteristics of the average competent employee
[65]
The average pick rate of the average competent employee
[104]
Whether HRS Country contravened cl 15 and other provisions of the Award
[133]
Accessorial liability of Marland Mushrooms and Mr Marland
[150]
The FWO’s case
[150]
The principles
[154]
What must be proved by the FWO
[158]
Whether Mr Marland was present at the meeting with Ms Hu on 7 February 2014
[172]
Other evidence
[194]
What Mr Marland knew
[206]
Whether the Marland parties knew that HRS Country was entering into each employment agreement
[210]
Whether the Marland parties knew that HRS Country’s employees were engaged on a casual basis
[215]
Whether the Marland parties knew that HRS Country’s agreements fixed a piecework rate and that the piecework rate did not enable the average competent employee to earn at least $22.86 or $23.62 per hour
[233]
The FWO’s case against Marland Mushrooms
[257]
Whether Marland Mushrooms had knowledge of HRS Country’s system of non-compliance of cl 15 of the Award
[267]
Whether the Marland parties engaged in conduct which implicates or involves them in the contraventions, such that there is a practical connection between them and the contravention
[268]
Contraventions by Ms Hu
[270]
Conclusion
[272]
RANGIAH J:
In this proceeding, the applicant, the Fair Work Ombudsman (the FWO), alleges that each of the respondents contravened s 45 of the Fair Work Act 2009 (Cth) (the FWA) by being knowingly involved in contraventions of that provision by another entity.
The first respondent, Ms Tao Hu (Ms Hu), has admitted the contraventions alleged against her. The second respondent, Marland Mushrooms Qld Pty Ltd (Marland Mushrooms) and the third respondent, Mr Troy Marland (Mr Marland), have denied the contraventions alleged against them.
These reasons deal primarily with the FWO’s case against Marland Mushrooms and Mr Marland. It is convenient to refer to Marland Mushrooms and Mr Marland together as the Marland parties.
The National Farmers Federation has been granted leave to intervene in the proceeding on the basis that it has an interest in the proper construction of the Horticulture Award 2010 (Cth) (the Award).
I propose to commence by describing the parties and the allegations made by the FWO, before proceeding to consider whether those allegations have been proven.
The parties
Ms Hu was the sole director of HRS Country Pty Ltd (HRS Country) and its sole shareholder. HRS Country operated as a labour-hire agency. The FWO has not proceeded against HRS Country as it is now in liquidation. However, HRS Country’s conduct remains central to this proceeding.
Marland Mushrooms has operated a mushroom farm (the Marland Farm) at Staplyton in Queensland since November 2013. Mr Marland is the sole director of Marland Mushrooms and its sole shareholder.
On 1 November 2013, HRS Country and Marland Mushrooms entered into a written agreement for HRS Country to supply labour to pick mushrooms and to do other associated tasks at the Marland Farm. Under the agreement, Marland Mushrooms agreed to pay HRS Country a fixed rate per kilogram of mushrooms picked. That rate was increased under a further agreement made on 27 January 2014.
Between 11 November 2013 and 31 August 2014, HRS Country entered into numerous written and oral employment agreements with employees. Those agreements required the employees to pick mushrooms for payment of a rate per kilogram of mushrooms picked—in other words, a piecework rate. The employees were assigned to work at the Marland Farm.
The issues
HRS Country and its employees were covered by the Award. Clause 15 of the Award allows an employer to enter into an agreement with employees for payment of a piecework rate, provided that at least the minimum piecework rate is fixed. Clause 15 also prescribes a method for determining the minimum piecework rate.
The FWO alleges that HRS Country contravened cl 15 by entering into agreements with the employees that fixed the piecework rate at less than the minimum rate and thereby contravened s 45 of the FWA. The FWO alleges that each of the respondents were “involved in” HRS Country’s contraventions, within the meaning of that expression in s 550 of the FWA, and that, consequently, the respondents also contravened s 45 of the FWA. As I have said, the Marland parties deny any such contraventions.
There are two principal issues that arise for determination:
(1)Whether HRS Country contravened cl 15 of the Award and s 45 of the FWA.
(2)Whether Marland Mushrooms and Mr Marland were knowingly involved in any such contraventions by HRS Country.
The first issue requires the Court to determine whether the piecework rates fixed under HRS Country’s employment agreements would enable the “average competent employee” to earn at least the minimum hourly rate prescribed under cl 15.2 of the Award.
The second issue requires the Court to determine whether the Marland parties knew of the essential elements of any contraventions by HRS Country and engaged in conduct which implicates or involves them in the contraventions.
It is necessary to examine the terms of the legislation and the Award before turning to these issues.
The FWA and the Award
Section 45 of the FWA provides:
45 Contravening a modern award
A person must not contravene a term of a modern award.
Note 1:This section is a civil remedy provision (see Part 4 1).
…
Section 550 of the FWA provides:
550 Involvement in contravention treated in same way as actual contravention
(1)A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
…
(2)A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d)has conspired with others to effect the contravention.
The FWO alleges that HRS Country contravened cl 15 of the Award, which provides:
15. Pieceworkers
15.1An employer and a full-time, part-time or casual employee may enter into an agreement for the employee to be paid a piecework rate. An employee on a piecework rate is a pieceworker.
15.2The piecework rate fixed by agreement between the employer and the employee must enable the average competent employee to earn at least 15% more per hour than the rate prescribed in this award for the type of employment and the classification level of the employee. The piecework rate agreed is to be paid for all work performed in accordance with the piecework agreement.
15.3The calculation of piecework rates in clause 15.2 for casual employees will include the casual loading prescribed in clause 10.4(b).
15.4An agreed piecework rate is paid instead of the minimum wages specified in clause 14–Minimum wages.
15.5The following clauses of this award do not apply to an employee on a piecework rate:
(a) Clause 22–Ordinary hours of work and rostering;
(b) Clause 24–Overtime; and
(c) Clause 24.3–Meal allowance.
15.6The employer and the individual employee must have genuinely made the piecework agreement without coercion or duress.
15.7The piecework agreement between the employer and the individual employee must be in writing and signed by the employer and the employee.
15.8The employer must give the individual employee a copy of the piecework agreement and keep it as a time and wages record.
15.9Nothing in this award guarantees an employee on a piecework rate will earn at least the minimum ordinary time weekly or hourly wage in this award for the type of employment and the classification level of the employee, as the employee’s earnings are contingent on their productivity.
…
Clause 4.1 states that the Award “covers employers throughout Australia in the horticulture industry and their employees in the classifications listed in Schedule B”. Under cl 4.7, this coverage extends to employers which supply labour on an “on-hire” basis. The “horticulture industry” is defined in cl 4.2 to include agricultural holdings in connection with harvesting, picking or packing horticultural crops. It is not in dispute that HRS Country and its employees were covered by the Award.
Under Sch B of the Award, employees are classified from Level 1 to Level 5. Level 1 is the lowest of these classifications in terms of the skills required and the minimum hourly wage prescribed. A Level 1 employee is described as an employee who, inter alia, undertakes induction training, performs routine duties essentially of a manual nature, exercises minimal judgement and works under direct supervision. The indicative duties of a Level 1 employee are described in Sch B as including fruit or vegetable picking. The employees in question in this case were Level 1 employees.
Clause 14.1 and cl 16.1 of the Award prescribe hourly rates of payment for Level 1 to Level 5 adult and junior employees respectively. However, cl 15.1 allows an employer to enter into an agreement for an employee to be paid a piecework rate instead of an hourly rate.
Section 21 of the FWA defines a “pieceworker” as, relevantly, “a national system employee to whom a modern award applies and who is defined or described in the award as a pieceworker”. Clause 15.1 of the Award states that “An employee on a piecework rate is a pieceworker”. The expression “piecework rate” is not defined in the FWA or the Award.
The Macquarie Dictionary defines “piecework” as “work done and paid for by the piece”. The Oxford English Dictionary definition is more informative, being “work for which an employee is paid according to the amount produced, rather than receiving a fixed wage”. For present purposes, it is clear that an employee whose payment consists of an amount per kilogram of fruit or vegetables that he or she picks is on a piecework rate.
Clause 15.2 of the Award provides a safeguard for pieceworkers. That safeguard is the prescription of a method of calculation of a minimum piecework rate. Clause 15.2 requires that the minimum piecework rate must “enable the average competent employee to earn at least 15% more per hour than the rate prescribed in this award”. That is consistent with s 576L of the Workplace Relations Act 1996 (Cth) (repealed) and s 134 and 138 of the FWA, which require that modern awards must provide a fair minimum safety net of terms and conditions. However, the safeguard that cl 15 provides is limited. It is concerned with fixing minimum piecework rates, but not minimum earnings. As cl 15.9 makes clear, employees’ earnings depend upon their productivity and there is no guarantee that they will earn any minimum amount or hourly rate.
Clause 15.2 requires the piecework rate to be fixed by agreement. In practical terms, this will almost invariably mean that the employer fixes the rate and the employee decides whether or not to accept it.
The piecework rate must be fixed at the time the employment agreement is entered. An employer proposing to fix a particular piecework rate must assess the adequacy of the rate by first ascertaining the hourly rate prescribed under the Award for the type of employment and the classification level of the employee and then adding 15% to that amount. The employer must then assess the hourly rate an “average competent employee” is able to earn performing the work to be done under the agreement at the proposed piecework rate. The employer must make a comparison of the two rates to ensure that the latter equals or exceeds the former.
The hourly rate prescribed under the Award is not difficult to determine. For casual employees, it requires adding the casual loading of 25% prescribed in cl 10.4(b) of the Award to the hourly rate for the relevant classification prescribed in cl 14.1(a) (for adults) or cl 16.1(for juniors). An additional 15% of that total must be added. I propose to refer to the rate that is “at least 15% more per hour than the rate prescribed in this award” as “the Prescribed Hourly Rate” throughout these reasons.
Assessing the hourly rate that the average competent employee is able to earn at the piecework rate is more complex. For an employer, it involves a predictive, theoretical exercise. It requires identification of the characteristics of the hypothetical average competent employee and prediction of the pick rate of such an employee.
The intervener submits that the word “average” is a mathematical concept and imports a need for some precision in the determination of the pick rates of an average competent employee. It is true that the first definition of “average” given by the Macquarie Dictionary is “an arithmetical mean”. However, the phrase must be read as a whole and in context. As will be seen, the determination of who is an average competent employee is not a precise exercise. In my view, the word has the third meaning given by the Macquarie Dictionary of “the ordinary, normal, or typical amount, rate, quality, kind, etc.; the common run”. The average competent employee is the ordinary, normal or typical competent employee. That is not to say that mathematical averages are irrelevant to determining the pick rates and earning capacity to be attributed to such an employee.
The word “competent” is defined, relevantly, in the Macquarie Dictionary as “…suitable, or sufficient for the purpose; adequate”. It is distinguishable from “proficient”, which is defined as “well advanced or expert in any art, science or subject; skilled”. The purpose for which the employee must be suitable, sufficient or adequate is the work to be done at a piecework rate under the employment agreement.
The phrase “average competent employee” envisages the existence of a pool of hypothetical competent employees. Hypothetical employees who are not competent must be excluded from the pool. The average competent employee is selected from the pool of hypothetical competent employees.
In the case of fruit or vegetable pickers, the hourly rate the hypothetical average competent employee is enabled to earn depends upon the average quantity of fruit or vegetables such an employee would pick per hour. This requires consideration of factors both personal and external to such an employee.
Assessment of the hypothetical pick rate requires consideration of the characteristics to be attributed to the hypothetical average competent employee. The relevant personal characteristics of a hypothetical employee will include diligence, aptitude and experience. It can be taken that each employee will receive training, because the provision of induction training is a criterion for the classification as a Level 1 employee under the Award. The evidence does not suggest that mushroom picking is particularly physically demanding, so age, strength and stamina do not appear to be particularly relevant (in contrast to some other types of horticulture). It can be expected that some employees will be more motivated to maximise their income than others, so that some will be more diligent than others. As the intervener put it in a submission made to the Australian Industrial Relations Commission in 2009, the culture of field work is “work at your own pace”. It can also be expected that some mushroom pickers have greater inherent dexterity and aptitude that allows them to pick mushrooms faster than others. The employee’s level of experience is also relevant to the rate of picking. Generally, the pick rate should increase with experience.
All that can be said about diligence and aptitude is that the hypothetical average competent worker will have an average level of diligence and an average level of aptitude. Such matters can only be assessed as a matter of impression based upon ordinary human experience. The only variable personal factor that can be empirically measured is experience. A judgement can be made as to how experienced the hypothetical average competent employee will be. That judgement will be influenced by the general level of experience of the available workforce considered as a whole. In other words, the average competent employee in a less experienced workforce should be attributed with less experience, while the converse is also true. The assessment of the average competent employee must be made by reference to the workforce that is available or potentially available to the employer. An employer cannot assess who is an average competent employee by considering the competence of a workforce that is not available, such as a workforce in another country or a workforce from a different era.
It may be acknowledged that this produces an incongruity – the piecework rate may have to be set higher where there is a less experienced workforce than for a more competent one. However, that is a product of the method in cl 15.2 which makes the minimum piecework rate inversely proportional to the level of competence of the average competent employee.
A number of external factors affect the rate at which an employee can pick fruit and vegetables. Some of those factors are particular to mushroom picking. The relevant factors include the density, quantity and size of the mushrooms grown and the prevalence of unhealthy mushrooms, all of which are affected by growing conditions, as well as the nature and quality of the equipment provided. These factors require an employer setting a piecework rate to make an assessment of the conditions under which the employee can be expected to work over the period of the contract. In the present case, the employment agreements provided for the employees to work only at the Marland Farm. Thus, HRS Country was only required to consider the conditions of work at the Marland Farm.
The exercise was made more difficult for HRS Country because the Marland Farm only commenced operating in November 2013. Where there is an established farming enterprise, data about previous pick rates will no doubt assist in determining the rate of the average competent employee. At the beginning of the Marland Farm’s operation, assessment of an adequate piecework rate could only have been done by reference to more general information about probable pick rates, such as data relating to other farms.
These personal and external considerations will affect the employer’s assessment of who is an average competent employee and the hourly rate that an average competent employee is enabled to earn at the piecework rate. As will be discussed, the Court’s assessment of whether there has been a contravention of cl 15 of the Award cannot take into account the difficulties faced by an employer in performing the assessment.
I will now turn to consider the two issues for determination described earlier.
Whether HRS Country contravened the Award and s 45 of the FWA
The FWO’s case
The FWO’s further amended statement of claim alleges that “the agreements…did not comply with clause 15.2 of the Horticulture Award, and as a consequence HRS Country contravened clause 15.2 of the Horticulture Award.” It is uncertain whether the pleading alleges that HRS Country contravened the clause by entering employment agreements that provided for inadequate piecework rates, or by paying employees inadequate piecework rates.
That lack of clarity ran throughout the FWO’s case. Thus, the FWO’s amended outline of submissions describes cl 15 of the Award and then summarises the case as follows:
…The rates paid to the pieceworkers under their agreements did not meet this requirement. As a consequence, HRS Country contravened clause 15.2 of the Award.
The amended outline does not specify precisely how HRS Country is alleged to have contravened cl 15 of the Award.
However, in his closing address, senior counsel put the FWO’s case of contravention of cl 15 of the Award in two ways. First, HRS Country contravened cl 15 by entering into employment contracts which did not comply with cl 15.2. Second, HRS Country engaged in an “ongoing breach” when it failed to enter new agreements which did comply with cl 15.2.
The Marland parties raised no objection to the FWO finally putting her case in this way. It may be noted that the intervener submits that the FWO’s further amended statement of claim fails to disclose a cause of action as it does not plead all necessary material facts. However, the only parties directly affected by the pleading, the respondents, have made no such complaint. Pleadings serve to apprise opposing parties of the case they are required to meet: Gould v Mount Oxide Mines (in liq) (1916) 22 CLR 490 at 517; Dare v Pulham (1982) 148 CLR 658 at 664; Banque Commerciale SA, En Liquidation v Akhil Holdings Limited (1990) 169 CLR 279 at 286. They are not an end in themselves. In the absence of support for the intervener’s submissions from the respondents, I infer that the respondents do not consider that they are disadvantaged by the form of the pleading. The intervener’s submission therefore has no practical consequence for respondents and it is unnecessary to rule upon the submission.
The FWO also contends that as the agreements did not allow HRS Country’s employees to be paid at least the minimum prescribed piecework rates, they were not “pieceworkers” and were therefore required to be paid under the provisions of the Award relevant to non-pieceworkers. This includes payment of the minimum hourly rates prescribed under cl 14.1 and 16.1 plus the casual loading. The FWO alleges that HRS Country breached those clauses by paying the employees less than those hourly rates.
The effect of s 140 of the Evidence Act 1995 (Cth) is that the Court must be satisfied that the FWO has proved its case on the balance of probabilities, but that satisfaction must be reached by taking into account the nature of the cause of action, the nature of the subject matter of the proceeding and the gravity of the matters alleged. It has been held that Dixon J’s discussion in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-363 of how the civil standard of proof operates appositely expresses the considerations which s 140(2) of the Evidence Act requires a court to take into account: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australiav Australian Competition and Consumer Commission (2007) 162 FCR 466 at [31]. In Briginshaw v Briginshaw, Dixon J said at 361–362:
The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality…[I]t is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters “reasonable satisfaction” should not be produced by inexact proofs, indefinite testimony, or indirect inferences.
Section 45 of the FWA is a civil penalty provision. A finding of contravention of that provision exposes the respondent to the imposition of civil penalties. The consequences are serious. That is a relevant matter to take into account when deciding whether the allegations have been proved to my reasonable satisfaction.
Whether cl 15 of the Award prohibits an employer from entering an agreement where its terms do not comply with cl 15
The FWO’s case proceeds on the assumption that cl 15 of the Award impliedly prohibits an employer from entering into an employment agreement providing for a piecework rate where the rate does not comply with cl 15.2. No submission was made to the contrary. Clause 14 requires that employees be paid a prescribed hourly rate, but cl 15 creates an exception. Clause 15.1 is drafted to permit an employer and an employee to enter an agreement for the payment of a piecework rate, provided that the piecework rate satisfies the requirements of cl 15.2. The corollary is that if the piecework rate is not adequate, the parties are not permitted to enter such an agreement.
I accept that an employer contravenes cl 15 of the Award by entering into an employment agreement which fixes a piecework rate that does not enable the average competent employee to earn at least the Prescribed Hourly Rate. The only relevant consideration is whether the piecework rate is less than the minimum required rate. It is irrelevant whether the employer has acted honestly or reasonably. Any difficulty faced by the employer in assessing an adequate rate is irrelevant. The intervener submits that whether the employer fails to comply with cl 15 depends upon the employer having made “an unrealistic and unduly optimistic projection of the picking capability of the average competent employee”. To the extent that the intervener may suggest that any element of fault or absence of fault enters into the issue, that submission must be rejected.
An employer fixing a piecework rate fixed in an employment agreement takes a risk that the agreement will not comply with cl 15 of the Award. If an employer is in doubt, the solution is to instead pay an hourly rate. If the employer enters an agreement that fixes a piecework rate that is too low, the employer contravenes cl 15 of the Award.
The employment agreements
The further amended statement of claim focuses upon employment agreements which HRS Country entered between 11 November 2013 and 31 August 2014. However, in his closing address, senior counsel for the FWO stated that he was “not going to cast the case” earlier than 7 February 2014. That was the date of a meeting that Mr Marland is alleged to have attended at which he is alleged to have acquired knowledge of several essential elements of HRS Country’s contraventions.
Accordingly, the FWO’s case is that the Marland parties were involved in HRS Country’s contraventions in respect of employment agreements entered in the period after 7 February 2014 and before 31 August 2014. The FWO’s case must be that HRS Country committed a separate contravention of cl 15 of the Award and s 45 of the FWA each time it entered into one of these agreements.
In the period after 7 February and before 31 August 2014, HRS Country entered into both written and oral employment agreements. There were 114 employees who commenced work at the Marland Farm during that period for whom written agreements have not been found. The FWO called evidence from five former employees of HRS Country. I infer from the evidence of those witnesses that there would be only a short period between entry into an employment agreement and the commencement of work at the Marland Farm. That is consistent with the generally transient nature of the workforce at that time. I infer that HRS Country entered oral employment agreements with the 114 employees within the period after 7 February and before 31 August 2014.
The Marland parties submit that it is not known what the contractual terms were for the employees with oral employment agreements, so the proceeding cannot succeed in respect of those agreements. However, payslips demonstrate that all HRS Country’s employees were pieceworkers and were paid not more than $0.80 per kg of mushrooms picked. Therefore, it is possible to determine whether the oral agreements complied with the minimum piecework rate requirement under cl 15 of the Award.
HRS Country entered into 215 written employment agreements in the period after 7 February and before 31 August 2014. These agreements were in a standard form, except for the following variations. The terms of the agreements generally varied between three months and 12 months. There were six agreements entered on 10 February 2014 which fixed a piecework rate of $0.75 per kg and which did not provide for an hourly rate of payment for other duties. The remainder were for $0.80 per kg picked and also provided for an hourly rate for other duties.
The written agreements entered after 10 February 2014 were each in the following form:
Employment Agreement
Dated: This Day of 2014
Between:
HRS Country Pty Ltd
ABN: 13 166 283 941(The employer)
AND
__________________
(The employee)
The employee agrees to accept employment by the employer for a term of ___ months under the terms of this agreement and as detailed in Appendix A of this agreement.
The employee will be required to pick mushrooms in Marlands Mushroom Farms QLD and conduct other farm duties from time to time associated with the mushroom picking.
Appendix A
Payment terms:
The employee will be required to work up to 4 - 6 days a week.
1.Mushroom Picker - The employee will be paid based on a per kilogram rate of mushrooms picked: $0.80/kilogram.
2. Other farm duties associated with Mushroom growing:
a. Hourly rate $16.37 /hour.
3.Nothing in this award guarantees an employee on a piecework rate will earn at least the minimum ordinary time weekly or hourly wage in this award for the tape of employment and the classification level of the employee, as the employee’s earnings are contingent on their productivity.
…
Termination
…
(b)The employee will be required to achieve a pick rate of 30kg/hr after an initial probationary period of two (2) weeks.
If the employee cannot achieve the required pick rate within the required timeframe, or consistently fails to achieve the required pick rate following the initial probationary period, the employer reserves the right to terminate the employee.
…
The FWO contends that HRS Country’s employees were casual employees within cl 10.4 of the Award. The Marland parties’ written and oral submissions do not dispute that contention. I find that they were casual employees. I will return to this issue later in these reasons.
Identification of an hourly rate at least 15% more than the prescribed hourly rate prescribed in the Award
The FWO’s case depends upon proving that HRS Country’s employment agreements fixed piecework rates that did not enable the average competent employee to earn at least the Prescribed Hourly Rate. The minimum hourly rates are fixed under cl 14.1 of the Award for adults and cl 16.1 for juveniles. A casual loading of 25% under cl 10.4(b) is required to be added. Another 15% of that total must also be added.
It is convenient to proceed on the basis of applying adult rates, since the vast majority of employees were adults. However, I will specifically consider junior rates in relation to one employee later in these reasons.
There was an increase in the minimum hourly rate prescribed under cl 14.1 that took effect from 7 July 2014. It is not in dispute that cl 15.2 required the piecework rate to be fixed at a level that would enable the average competent adult employee to earn at least the following hourly rates:
(1)from 7 February 2014 to 6 July 2014 — $22.86 per hour;
(2)from 7 July to 31 August 2014 — $23.62 per hour.
The issue is whether the piecework rates fixed by HRS Country were adequate to enable the average competent employee to earn at least the Prescribed Hourly Rate of $22.86 or $23.62 per hour on average over the period of each employment agreement.
The pick rate required for the average competent employee to earn at least the Prescribed Hourly Rate
The rate payable by HRS Country under the relevant employment agreements in the period after 7 February and before 31 August 2014 was either $0.75 per kg or $0.80 per kg.
The average competent employee would have had to pick the following quantities of mushrooms per hour in order to be able to earn at least the Prescribed Hourly Rate:
(1)At $0.75 per kg — from 7 February to 6 July 2014 — 30.48 kg per hour;
(2)At $0.80 per kg — from 7 February to 6 July 2014 — 28.58 kg per hour;
(3)At $0.80 per kg — from 7 July 2014 to 31 August 2014 — 29.53 kg per hour.
It is convenient to generally use the lowest (and most favourable for the respondents) of these required pick rates, namely 28.58 kg per hour in these reasons.
The FWO seeks to prove that the pick rate for the average competent employee would not be at least 28.58 kg per hour and, therefore, such an employee was not enabled to earn at least the Prescribed Hourly Rate. The FWO has attempted to do so by using data concerning actual pick rates at the Marland Farm for the period from 1 January 2014 to 31 August 2014. This period will be referred to as “the Assessment Period”.
The characteristics of the average competent employee
The Court must make an assessment of how much the hypothetical average competent worker was enabled to earn per hour at the piecework rate when performing the duties contemplated under each employment agreement. As the allegation of contravention of cl 15 of the Award is entering into employment agreements which fixed inadequate piecework rates, the assessment must be made as at the time of entry into each employment agreement. It is necessary to make the assessment in retrospect. However, the assessment must then look forward from the time of entry into each agreement and take into account the work that the hypothetical employee would do and the conditions that would be encountered during the period of the employment agreement.
As I have indicated, the assessment of how much the hypothetical average competent worker was enabled to earn per hour at the piecework rate depends upon the pick rate attributed to the employee, which is influenced by factors both personal and external to the employee. In this case, the external factors to be considered concern the density and quality of the mushroom crop that would be available to be picked and the working conditions and equipment that would be provided to the employees at the Marland Farm. Ms Sharon Stevula, a supervisor at the Marland Farm, was called by the Marland parties and gave evidence as to these matters.
The Marland Farm is a large, modern and well-organised facility. There are 24 growing rooms within a single building. The carbon dioxide levels, humidity and temperature within the growing rooms can be controlled.
Mushrooms are grown in soil contained in large metal trays. The trays are placed in long rows of metal racks that are divided into sections. Each rack has up to six tiers. Employees pick from the bottom two tiers while sitting on stools and reach the higher tiers by standing on adjustable metal platforms. Employees known as “Box Boys” would arrive earlier than the pickers and set up trolleys and picking carts.
Ms Stevula deposed that mushrooms take about two weeks to grow, but once they start to come through the soil, they increase in size very quickly. The ideal size is 50–55 mm across the cup of the mushroom. There is a window of 18 hours to pick mushrooms at their optimum size and condition. Smaller mushrooms can be picked, but it is easiest to pick mushrooms that are the optimum size.
Ms Stevula deposed that mushrooms grow in “flushes”. The growth is usually most dense in the first flush. The second flush comes through a few days after the first flush has been picked, and the third a few days after the second. The soil is discarded after the third flush.
Ms Stevula gave evidence regarding the proper mushroom picking technique. The technique requires holding, in one hand, two or three mushrooms at a time, and removing them from the growing tray with a gentle twisting motion. The mushroom stalk must be cut with a knife after it has been picked.
The system of work was generally for an employee to work within a section of a row and pick mushrooms from each tier of that section in turn. For example, an employee might start by picking mushrooms from the top tier while standing on the metal platform. After the employee finished the top tier, a Box Boy would lower the platform to allow the employee to pick from the next tier down, and so on.
The employees would place the picked mushrooms into a cardboard box sitting on a trolley, with the cup of the mushroom facing upwards. When a box was filled, the box would be taken away by the Box Boys to be weighed by weigh line staff.
The FWO called five employees who worked at the Marland Farm during the Assessment Period to give evidence. Two of these witnesses complained that the metal platforms on which the mushroom pickers stood were too narrow and unstable and that the spaces between the racks did not allow much room for the employees to move. However, I am not satisfied that these factors had any detrimental effect upon picking rates.
Mushrooms that were “unhealthy” would be placed in a separate box. These were either infected or too large and dried out. Ms Ting-Jung Huang deposes that the pickers were not paid for picking infected mushrooms. This is consistent with Ms Stevula’s evidence that infected mushrooms were “thrown out, and not put in boxes and weighed”. Employees were paid less for picking the dried out mushrooms because they were lighter. There is some controversy in the evidence as to the frequency with which unhealthy mushrooms appeared, particularly those that were infected. Ms Stevula recalls “only a few incidences of infected mushrooms” during the Assessment Period. The evidence of Ms Weng-Sheng Wu indicates that there were often infected mushrooms. It is not possible to reach any definite conclusion as to the frequency with which infected mushrooms appeared. I am satisfied that they made some difference, but a fairly small difference overall, to average pick rates during the Assessment Period.
The mushroom pickers were also engaged in the task of “separation” from time to time. This required the pickers to pick some smaller mushrooms in order to give others space to grow. These were also placed into cardboard boxes and weighed, but the pick rates for these mushrooms were lower as they were smaller. Sometimes, pickers would also be required to spend time “cleaning” the soil to remove remanent stalks. I am satisfied that these tasks made some moderate contribution to reducing average pick rates.
There is evidence that the employees would sometimes be required to undertake tasks, such as cleaning the floors, for which they would not be paid. The employment agreements entered after 10 February 2014 envisaged that employees may perform tasks other than mushroom picking and provided for payment of hourly rates for such tasks. Such employees ought to have been paid an hourly rate for such duties. Any unpaid time spent on those tasks ought to be included in the calculation of average pick rates, since the employees would otherwise have been able to pick mushrooms and earn the piecework rate. It is difficult, on the evidence available, to give any real estimate as to how much time these additional tasks would take in an average shift. I am satisfied, however, that these tasks made only a small difference overall to average pick rates.
There was also complaint about delays while waiting to wash down trolleys and other equipment at the end of a shift. I accept there could be delays of more than a few minutes at times, but I am not satisfied that the delays were generally long enough to make any real difference to average pick rates.
Of course, the accumulation of several factors that made a small contribution to pick rates must have made a somewhat larger difference in combination. It is only possible to say, as a matter of impression, that these factors in combination affected average pick rates to a moderate degree.
There is evidence from Ms Jia-Sing Chen that the quantity of the crop was not stable and could vary in quantity. Ms Stevula’s evidence indicates that the number of pickers assigned work for a particular day was adjusted according to the growth rate, volume and size of mushrooms. On the afternoon before, Ms Stevula would make a judgement as to the numbers of employees required for the following day. This obviously involved an element of prediction of growth rates and density by Ms Stevula. I accept Ms Chen’s evidence that sometimes “mushrooms did not grow properly” and that this affected pick rates.
There is no evidence that there were changes to the growing conditions at Marland Farms or to the equipment provided in the Assessment Period that could have affected the picking rate of the average competent employee. Therefore, the external factors affecting the picking rates of such an employee (other than growth rates and density) can be taken as being consistent throughout the Assessment Period.
The hypothetical average competent employee can be regarded as being of average diligence and having average aptitude. However, the level of experience that should be attributed to the average competent employee is controversial.
Ms Stevula deposed that the skills required to become a competent picker involve three particular elements. First, a competent picker must be able to recognise the size of an ideal mushroom by sight. Second, the competent picker must be able to remove the mushrooms without touching them too much or holding them too firmly, so that they do not become bruised. Third, the competent mushroom picker must be able to pick, cut and place the mushroom into the box without transferring soil onto the mushrooms already in the box. In my opinion, there must also be a fourth skill—the ability to work at an adequate pace in the context of a commercial operation where there is a limited window of time to pick the crop.
Ms Stevula deposed, and the Marland parties submit, that “new starters”, who have no experience, need approximately four to twelve weeks of training. Under cross-examination, she stated that supervisors would constantly be with pickers and would monitor multiple pickers at any one time. When asked what training was required after two weeks, she stated that “some people get confused on still what size to pick, what boxes to put them in”.
Ms Stevula also deposed that it usually takes about three months to become “a reasonable picker”, by which she meant “able to pick 30kg of 50 to 55 mm button mushrooms per hour in a first flush”. I do not understand her to have been expressing the opinion that it usually takes about three months to become a competent picker in the sense I have described, namely suitable, sufficient for the purpose or adequate. I understand her evidence to be that it takes four to twelve weeks of training to become a competent picker. She can be understood as expressing the opinion that, at present, the average competent employee is one who has at least three months’ experience.
Three of the witnesses called by the FWO who had worked at the Marland Farm gave evidence as to the training they received. Ms Chen had worked as a mushroom picker in another farm for approximately six months before moving to the Marland Farm. After a week working as a mushroom picker at the Marland Farm, she was promoted to the position of trainer and began training new employees how to pick mushrooms. She deposed that most employees were able to learn how to pick mushrooms by lunchtime on their first day and that a newly arrived worker would receive approximately half-a-day of training. Within one to two weeks an employee would know the right size of mushroom to pick, how to cut the stem properly and how to put mushrooms in the box properly. In her opinion, it would take about two weeks on average for a picker to become a “good” mushroom picker. By “good”, I understand her to mean competent.
Ms Chen’s evidence was consistent with the evidence given by two other witnesses called by the FWO. Ms Jian Jing-Sin worked at the Marland Farm for a month. Under cross-examination, she stated that she received approximately two hours of training and that she “got the hang of it…very quickly”. In re-examination, she stated that she was able to do her job well “almost immediately”, and that her supervisor admired her work and explicitly praised her for it.
Ms Huang gave evidence that the new employees would receive instructions about the different steps involved in the work on day one and begin “actual work” the next day. She added that it took her a week to do “really well” at the job.
I consider the evidence of Ms Chen, Ms Jing-Sin and Ms Huang upon these issues to have been given honestly and reliably. I accept that Ms Jing-Sin and Ms Huang were able to perform the work competently within a week of commencing. That does not necessarily mean the same is true of all or most other employees, but their evidence does tend to support the evidence of Ms Chen.
I prefer the evidence of Ms Chen that it would take about two weeks for mushroom pickers to become competent to the evidence of Ms Stevula that they would need four to twelve weeks of training. I prefer Ms Chen’s evidence for the following reasons.
The skills described by Ms Stevula to become a competent mushroom picker are skills that, in my opinion, most manual workers could quickly acquire. The tasks of identifying mushrooms of the optimum size, picking them without bruising them, and ensuring that the soil is removed are objectively straight-forward. The relative simplicity of the tasks is reflected in the classification of mushroom pickers at Level 1, the lowest level, under the Award. An employee at this level receives training, performs routine duties and exercises minimal judgement. It is likely to take some further time to acquire a reasonable level of speed, but the repetitive nature of the task suggests that this would generally occur within two weeks, not the four to twelve weeks suggested by Ms Stevula.
Ms Chen’s opinion is supported by statements made by Ms Monique Southgate, a supervisor at the Marland Farm, in a record of interview with Inspector Kim De Iacovo. Ms Southgate said:
No, some – most people can pick it up pretty quick, but it’s just the same as any job. You have pickers, or people, that come and they’re never going to get it, but, you know, it’s fairly easy. We try and help them as much as we can, you know. It just – like I say, it depends on every person, you know, but I would say generally after a week or two you should pretty much know what you’re doing.
Under cross-examination, Ms Stevula denied that mushroom picking is essentially a simple task, and in fact, stated that in some cases it may be quite complex. That is not supported by her evidence as to the limited skills that are required. I formed the impression that Ms Stevula was inclined to overstate the complexity of the task involved and to overstate the level of training and experience required. I am not satisfied as to the reliability of her evidence as to these matters.
Ms Stevula seemed to conflate training with ongoing supervision. While it can be expected that there would initially be some crossover between training and supervision, it seems improbable that training would continue for up to twelve weeks.
It must be remembered that the issue presently being considered is the level of experience required for a mushroom picker to become “competent”. A competent employee is one who is suitable, sufficient or adequate for the purpose of picking mushrooms at a commercial farm, in this case, the Marland Farm. In my opinion, the Marland parties’ submissions tended to confuse the level of skill required to be a competent mushroom picker with the level of skill needed to be proficient.
While I accept that some employees may never become competent mushroom pickers, the simplicity of the tasks suggests that there will be few people who do not become competent after two weeks. On the other hand, there may be many employees who become competent within a week or so. Those employees would more than compensate for those who never become competent.
I have indicated that cl 15 of the Award envisages a pool of competent employees from which the average competent employee will be selected. In my opinion, employees with about two weeks’ experience can be considered competent. It follows that those with less than two weeks’ experience can be regarded as less than competent and should be excluded from this pool.
It is then necessary to identify, from that pool of competent employees, the characteristics of the average competent employee. Such an employee will be one who can be regarded as the ordinary, normal or typical competent employee. In particular, it is relevant to determine the level of experience to be attributed to the average competent employee.
Assessment of the required level of experience must take into account that the workforce will consist of a mixture of transient employees and longer term employees. During the period from November 2013 to August 2014, the workforce was quite transient and inexperienced. Ms Stevula has deposed that there were problems with getting “enough pickers with enough experience” during that period. She commented that there were then a lot of Taiwanese backpackers and that many of them did not work for very long at the Marland Farm. During re-examination, she said that most of them were on working holiday visas and were backpacking. Those comments do not seem confined to employees provided by HRS Country, but apply more generally to the whole of the workforce at the Marland Farm in that period.
Ms Stevula joined the Marland farm from another farm. She said that a few experienced workers also came to the Marland Farm from the same farm. Ms Stevula has 20 years’ experience working on mushroom farms and is able to pick between 30 and 70 kg of mushrooms per hour, depending upon the type of mushroom, size and flush, and how focused she is. However, she was employed as a supervisor, rather than a picker, at the Marland Farm. She says the fastest picker currently at the Marland Farm can pick over 80 kg per hour depending on the type of mushroom, size and flush. That employee seems to be particularly proficient.
It seems that some of the employees who started working at the Marland Farm during the Assessment Period have stayed on. The fact that Marland Farms had been operating for some 3½ years by the time of the trial is consistent with the workforce becoming more stable and experienced. The Marland parties’ submission that the workforce is now more stable and less transient than during the Assessment Period is consistent with the evidence.
The workforce available to work at the Marland Farm between November 2013 and August 2014 (even excluding employees with less than two weeks’ experience) was, as a whole, less stable and less experienced than the present workforce.
However, the assessment of the earnings of the average competent employee at the piecework rate must be made at the time when each employment agreement was entered into between 7 February and 31 August 2014. This requires an assessment of the general level of competence of the workforce at that time, which is partly reflected in the general level of experience of the workforce. That assessment requires an evaluative judgement involving a degree of impression. It is not a precise exercise. I consider that at the times when the employment agreements were entered, the average competent employee should be taken to be an employee with about three months’ experience of picking mushrooms.
The average pick rate of the average competent employee
The FWO has not attempted to specifically identify the average pick rate of the average competent employee at the time of entry into each of the employment agreements. The FWO relies on the pick rate data for the Marland Farm for the Assessment Period and submits that the data demonstrates that none of HRS Country’s employees consistently picked enough mushrooms in the Assessment Period to earn at least the Prescribed Hourly Rate. The submission continues that it can be inferred that when the employment agreements were entered, the piecework rates were fixed at levels that did not enable the average competent employee to earn at least the Prescribed Hourly Rate.
The intervener submits that the inference sought to be drawn by the FWO is not open. It submits that there is no logical causal link between the picking outcomes and non-compliance with cl 15 of the Award, which must be determined at the times of entry into the employment agreements. The intervener submits, alternatively, that the pick rate data does not provide a reliable guide as to the picking capacity of the average competent employee at the relevant points in time. The intervener submits that such picking capacity must be determined by reference to the conditions prevailing and reasonably forecast at the time that the piece rate is fixed by agreement.
The Marland parties submit that the FWO’s case is wrongly premised on the inference that because the employees achieved the pick rate contemplated under cl 15 of the Award on only a small percentage of occasions, the piecework rate fixed was inadequate to enable an average competent employee to earn at least the Prescribed Hourly Rate. They do not submit that the data is incapable of allowing such an inference to be drawn, but submit that it ought not be drawn. The Marland parties submit that the vast preponderance of employees during the Assessment Period were transient, unskilled workers. They submit that picking rates improved when HRS Country began to employ more local workers, rather than short-term visa holders. They submit that while conditions have not changed since the Assessment Period, recent pick rate data from Marland Mushrooms shows that many workers are achieving pick rates in excess of 30 kg per hour, which is more reflective of the pick rate of the average competent employee.
The FWO’s case is that HRS Country contravened cl 15 of the Award by entering into employment agreements which fixed inadequate piecework rates between 7 February and 31 August 2014. It is necessary for the Court to determine, at the pick rate attributed to the hypothetical average employee, whether the piecework rates that were fixed would enable that employee to earn at least the Prescribed Hourly Rate. That determination must be made at the time of entry into each agreement and by reference to the duties required under the employment agreement over the term of the agreement.
However, the exercise to be undertaken by the Court differs in one important respect from that done by the employer when the employer fixes the rate. The employer’s exercise is entirely predictive and can only be based upon information known or available to the employer. On the other hand, the Court’s determination is made in retrospect and, therefore, can be made with the benefit of information now known but which was not known or available to the employer. That information can include actual pick rates over the whole or part of the period of employment. It is open to the Court to use such data because the question is not concerned with the reasonableness of the employer’s forecast or the difficulty in making such a forecast. The question for the Court is limited to the adequacy of the piecework rates fixed under the agreements—if the rates were too low, cl 15 of the Award was contravened. Contrary to the intervener’s submission, later picking outcomes can be relevant to proof of a breach at an earlier time.
At some point in time after 7 February and before 31 August 2014, as more and more pick rate data became available to Marland Mushrooms, an analysis of the data would have revealed that the average competent picker would pick less than 28.58 kg per hour. That was likely to have become apparent by about June 2014 when the data for a sufficient body of employees with three months’ experience emerged. However, I cannot infer from the evidence that Mr Marland conducted such an analysis and thereby acquired such knowledge, or that he acquired that knowledge through wilful blindness. The data was kept for the benefit of HRS Country to allow it to calculate the wages to be paid to each employee. The Marland parties did not have any direct interest in analysing the pick rates – they had already agreed to pay a fixed rate to HRS Country, which would not vary according to pick rates. Their direct interest was in having the mushrooms picked, and as long as that occurred, the pick rates achieved did not matter. Again, drawing a Jones v Dunkel inference does not enable me to infer that Mr Marland had actual knowledge of the average pick rate to be attributed to the average competent employee.
I will assume, contrary to the finding that I have made, that Mr Marland knew that HRS Country was continuing to enter agreements which provided for a piecework rate of $0.80 per kg. At that rate, it was necessary for employees to be able to pick 28.58 kg per hour in order to be able to earn at least $22.86 per hour and, from 7 July 2014, 29.53 kg per hour to earn at least $23.62 per hour. From his statements to the Fair Work Inspectors, I infer that Mr Marland believed that the average competent employee could pick between 25 to 30 kg per hour. The pick rate required for the average competent employee to earn at least $22.86 or $23.62 per hour was towards the top of Mr Marland’s range, but still within that range. The determination of the pick rate to be attributed to the average competent employee is, as I have said, a far from precise exercise. When it comes to the attribution of knowledge, some leeway has to be allowed for imprecision and differing opinions on that issue. The consequence is that I am not satisfied that it has been proven that Mr Marland had actual knowledge that the piecework rate did not allow the average competent employee to earn at least $22.86 or $23.62 per hour under the relevant employment agreements.
I therefore conclude that the FWO’s case that Mr Marland was knowingly involved in HRS Country’s contraventions of s 45 of the FWA must fail.
The FWO’s case against Marland Mushrooms
Although the FWO’s case that Marland Mushrooms was knowingly involved in HRS Country’s contraventions relies very substantially, upon proof of the knowledge of Mr Marland, the FWO also relies upon the knowledge of Mr McKeon.
I do not think that the chain of emails between Mr McKeon and Ms Hu in October and November 2014 assists the FWO’s case. Those emails were sent a significant time after the relevant employment agreements were entered by HRS Country between 7 February and 31 August 2014. Those emails do not by themselves suggest any knowledge by Mr McKeon at the relevant times of the piecework rate or that the pick rate attributed to the average competent employee would not allow such an employee to earn at least $22.86 of $23.62 per hour.
The strongest evidence for the FWO in respect of Mr McKeon’s knowledge is his email of 19 June 2014. The email stated:
Hello Tao
I have attached a file for you to send to Fair Work. Print the pages then re scan them and save on your computer before you send it on. DO NOT forward this email.
It is not what they have asked for but will serve its purpose for now.
If they say this is not what we asked for use the “we don’t speak English good” excuse and indicate that you will contact Dave McKeon at Marlands to help you get the info you need.
In the meantime I am continuing to prepare the as sought figures.
That email was sent in the context of the FWO’s investigation of allegations of underpayment of employees by HRS Country. In the email Mr McKeon encouraged Ms Hu to engage in subterfuge or deception in its dealings with the FWO. Mr McKeon forwarded data concerning pick rates which he confirmed was not the information that the FWO had asked for. He also encouraged Ms Hu to dishonestly use what he called the, “‘we don’t speak English good’ excuse”. I say dishonest because Ms Hu’s emails to Mr McKeon and statements to Inspector De Iacovo indicate that her English was good.
The material that was attached to Mr McKeon’s email was six pages of pick rate data for the period from 13 to 18 June 2014. As I have said, the employees chosen seem to have been those with higher pick rates. The average pick rate over those six days was 21.58 kg per hour.
I infer from the fact that Mr McKeon’s email encouraged Ms Hu to engage in subterfuge and deception of the FWO that he was concerned that the FWO would consider the piecework rate to be inadequate. It was against Marland Mushroom’s interests for any such finding to be made, at least because it might be forced to pay a higher rate for labour in the future. I infer that Mr McKeon chose pick rate data that he thought would best assist HRS Country. Despite that, the data revealed an average pick rate of only 21.58 kg per hour.
Marland Mushrooms must be attributed with the knowledge of Mr Marland that at 7 February 2014, HRS Country had been paying a piecework rate of $0.80 per kg. The content of the email of 19 June 2014 suggests that Mr McKeon did not merely have a suspicion that HRS Country’s piecework rate was inadequate, but knew it was inadequate. I infer that that was why he encouraged Ms Hu to engage in such subterfuge and deception. I infer from Mr McKeon’s email that he knew that whatever piecework rate was being paid by HRS Country (which must have been less than $1.05 per kg), it was inadequate to allow the average competent employee to earn at least $22.85 per hour at a pick rate in the vicinity of 21.58 kg per hour. I am assisted in drawing that inference by Mr McKeon’s failure to give evidence. Mr McKeon was present in Court during the hearing and no explanation was provided for his absence from the witness box.
Marland Mushrooms is taken under s 793 of the FWA to have the knowledge of Mr McKeon. Accordingly, I conclude that Marland Mushrooms knew from 14 June 2014 that HRS Country was continuing to enter employment agreements which fixed a piecework rate that was insufficient to enable the average competent employee to earn at least $22.85 per hour and at least $23.62 from 7 July 2014.
There remain two gaps in the FWO’s case. First, Mr McKeon’s knowledge can only be attributed to Marland Mushrooms in respect of contracts entered in the period from 14 June to 31 August 2014. It does not assist the FWO in respect of the employment agreements entered before that time.
Second, and fatally, the evidence does not demonstrate that Mr McKeon knew that HRS Country’s employees were employed as casual employees. Neither has it been proven that Mr Marland had that knowledge. The FWO did not submit that any other employee of Marland Mushrooms had that knowledge. Accordingly, the FWO has not demonstrated that Marland Mushrooms had knowledge of this essential element of HRS Country’s contraventions.
Whether Marland Mushrooms had knowledge of HRS Country’s system of non-compliance of cl 15 of the Award
I indicated earlier that I would return to the question of whether Marland Mushrooms had knowledge of HRS Country’s system of non-compliance of cl 15 of the Award. In light of my conclusion that the Marland parties did not have knowledge of an essential element of HRS Country’s contraventions, they did not have knowledge of HRS Country’s system of non-compliance.
Whether the Marland parties engaged in conduct which implicates or involves them in the contraventions, such that there is a practical connection between them and the contravention
If I had found that the Marland parties had actual knowledge of each essential element of HRS Country’s contraventions, I would have found that they engaged in conduct which implicates or involves them in the contraventions, such that there is a practical connection between them and the contraventions.
I would have found that the Marland parties did so by encouraging HRS Country to engage in a system of entering employment agreements that contravened cl 15 of the Award by continuing to make work available to the employees of HRS Country.
Contraventions by Ms Hu
Ms Hu has admitted each of the contraventions alleged by the FWO. Those contraventions were in the period from 13 November 2014 to 31 August 2014.
Counsel for Ms Hu submitted that if it were found that HRS Country did not contravene cl 15 of the Award, Ms Hu’s admissions should be disregarded and the proceeding against her should be dismissed. That issue does not arise as I have found that HRS Country did contravene cl 15 in respect of employment agreements it entered after 7 February and before 31 August 2014, and it has not been necessary to make findings in respect of earlier agreements.
Conclusion
I have found that the Marland parties were not knowingly involved in HRS Country’s contraventions of s 45 of the FWA. Therefore, the proceeding must be dismissed against those parties.
It will be necessary to make procedural orders to facilitate the hearing of the FWO’s application for declarations, penalties and compensation against Ms Hu.
I certify that the preceding two hundred and seventy-three (273) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rangiah. Associate:
Dated: 12 July 2018
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