Fair Work Ombudsman v Ifits Food Co Pty Ltd
[2023] FedCFamC2G 1140
•1 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v IFITS Food Co Pty Ltd [2023] FedCFamC2G 1140
File number(s): BRG 468 of 2022 Judgment of: JUDGE EGAN Date of Judgment: 1 December 2023 Catchwords: INDUSTRIAL LAW – Failure on the part of the respondent to engage in the Court process – failure by the respondent to remedy any contravention by it of the provisions of the FWA – relevant considerations concerning the imposition of a pecuniary penalty – orders accordingly. Legislation: Fair Work Act 2009 (Cth) s. 456, s. 716, s. 545, s. 547, s. 546, s.687, s. 701, s. 539, s. 700, s. 12, s. 14, s. 90 and s. 117. Cases cited: Ace Insurance Ltd v Trifunovski (No. 2) [2012] FCA 793 at [113] – [114] per Perram J.
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate & Anor [2015] HCA 46 at [55] and [110].
Fair Work Ombudsman v Promoting You Pty Ltd [2012] FMCA 58.
Fair Work Ombudsman v Yogurberry World Square [2016] FCA 1290 at [27].Kelly v Fitzpatrick [2007] FCA 1080, Tracy J at [28]
Division: Division 2 General Federal Law Number of paragraphs: 17 Date of last submission/s: 9 November 2023 Date of hearing: 8 March 2023 Place: Brisbane Solicitor for the Applicant: Rachael Seaforth, Fair Work Ombudsman. For the Respondent: No appearance ORDERS
BRG 468 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: IFITS FOOD CO PTY LTD
Respondent
ORDER MADE BY:
JUDGE EGAN
DATE OF ORDER:
1 DECEMBER 2023
IT IS ORDERED THAT:
1.Pursuant to the provisions of s. 546(1) of the Fair Work Act 2009 (Cth), within 28 days of this order, the respondent shall pay to the Consolidated Revenue Fund of the Commonwealth a pecuniary penalty in the amount of $28,021.00 in respect of its two contraventions the subject of the declarations made by the Court on 8 March 2023.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order 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
INTRODUCTION
The Applicant commenced proceedings on 27 October 2022.
By an Amended Statement of Claim filed on 21 December 2022, the Applicant sought the following relief:
15. A declaration that IFITS Food Co contravened: (a) section 716(5) of the FW Act by failing to comply with the Ford Compliance Notice; and (b) section 716(5) of the FW Act by failing to comply with the Peters Compliance Notice.
16. Orders that:
(a)pursuant to section 545(1) of the FW Act, IFITS Food Co remedy the direct effects of the contraventions set out in the Peters Compliance Notice within 28 days of this order by paying $1,279.82 to Ms Peters.
(b)Pursuant to section 545(1) of the FW Act, IFITS Food Co remedy the direct effects of the contraventions set out in the Ford Compliance Notice within 28 days of this order by paying $2,110.09 to Mr Ford.
(b)pursuant to section 547(2) of the FW Act, IFITS Food Co pay Ms Peters and Mr Ford interest on the Underpayments calculated in accordance with the applicable pre-judgment interest rate prescribed by the Federal Court of Australia within 28 days of this order;
(c)pursuant to section 546(1) of the FW Act, IFITS Food Co pay a pecuniary penalty to the Commonwealth for the contraventions declared in paragraph 15 within 28 days of this order.
(d)the Applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
(e) Such further orders as the Court considers appropriate.
On 6 March 2023, a Statement of Agreed Facts (SOAF) was filed in the Court. The SOAF was as follows:
STATEMENT OF AGREED FACTS
This Statement of Agreed Facts is made by the parties in these proceedings for the purposes of section 191 of the Evidence Act 1995 (Cth).
A. ADMITTED CONTRAVENTIONS
1. On the basis of the facts set out below, the Respondent, IFITS Food Co Pty Ltd (ACN 640 346 783) (IFITS Food Co), admits to two contraventions of section 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing without reasonable excuse to comply with two compliance notices issued pursuant to section 716(2) of the FW Act.
B. PARTIES
The Applicant
2. The Applicant, the Fair Work Ombudsman (FWO), is and was at all relevant times:
(a) a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to section 687(1) of the FW Act;
(b) a Fair Work Inspector (FWI) pursuant to section 701 of the FW Act; and
(c) a person with standing to bring these proceedings and to apply for orders for contraventions of civil remedy provisions pursuant to section 539(2) of the FW Act.
3. FWI Margot Pidgeon (FWI Pidgeon) was at all relevant times a FWI within the meaning of section 700 of the FW Act.
4. FWI Elizabeth McKendry (FWI McKendry) is and was at all relevant times a FWI within the meaning of section 700 of the FW Act.
The Respondent
5. The Respondent, IFITS Food Co, is and was at all relevant times:
(a) a company incorporated under the Corporations Act 2001 (Cth) since 16 April 2020;
(b)the company that operated the fast food restaurant trading as Pizza Hut located at 40-42 Albion St, Warwick in the State of Queensland;
(c) a company whose registered office was 14 Crawford St, Warwick in the State of Queensland from 3 June 2021 to 1 March 2022 (Registered Office Address);
(d) a "constitutional corporation" within the meaning of section 12 of the FW Act;
(e) a "national system employer" within the meaning of section 14 of the FW Act; and
(f) by reason of the matters pleaded in paragraphs 3(d) and 3(e), an entity to which the FW Act applied in respect of the employment of its employees.
C. ADMITTED CONTRAVENTIONS OF SECTION 716(5) OF THE FW ACT
Ford Investigation
6. On or around 7 December 2021, FWI Pidgeon commenced an investigation into IFITS Food Co's compliance with the FW Act in relation to IFITS Food Co's employment of Mr Zachary Ford (Ford Investigation).
7. Following the Ford Investigation, FWI Pidgeon formed a belief that:
(a) IFITS Food Co employed Mr Ford on a part-time basis from 1 March 2020;
(b) The FW Act and the Fast Food Industry Award 2010 (Award) applied to IFITS Food Co in relation to Mr Ford's employment;
(c) Mr Ford was paid an hourly rate of $24.33 per hour.
(d) Mr Ford's employment ended on 31 October 2021 (Ford Termination Date);
(e) Mr Ford had 65.328 hours of accrued but untaken annual leave at the Ford Termination Date and was entitled to an amount for accrued annual leave on termination; and
(f) IFITS Food Co did not pay Mr Ford any amount for accrued but untaken annual leave and annual leave loading on the termination of his employment.
8. By reason of the matters pleaded in paragraph 7, FWI Pidgeon formed a reasonable belief pursuant to section 716(1) of the FW Act that IFITS Food Co had contravened section 90(2) of the FW Act, a provision of the National Employment Standards, in respect of Mr Ford (Ford Contravention).
Peters Investigation
9. On or around 1 March 2022, FWI McKendry commenced an investigation into IFITS Food Co's compliance with the FW Act in relation to IFITS Food Co's employment of Ms Indigo Peters (Peters Investigation).
10. Following the Peters Investigation, FWI McKendry formed a belief that:
(a) IFITS Food Co employed Ms Peters on a part-time basis, working 30 hours a week, from around April 2021;
(b) The FW Act and the Award applied to IFITS Food Co in relation to Ms Peters' employment;
(c) Ms Peters was paid an hourly rate of $13.40 per hour.
(d) IFITS Food Co terminated Ms Peters' employment with immediate effect on 31 October 2021 (Peters Termination Date);
(e) Ms Peters was 17 years of age at the Peters Termination Date;
(f) Ms Peters had 55.77 hours of accrued but untaken annual leave at the Peters Termination Date and was entitled to an amount for accrued annual leave on termination;
(g) Ms Peters was entitled to be paid in lieu of notice of the termination of her employment; and
(h) IFITS Food Co did not pay Ms Peters any amount for accrued but untaken annual leave and annual leave loading or make any payment in lieu of notice of termination on the termination of her employment.
11. By reason of the matters pleaded in paragraph 10, FWI McKendry formed a reasonable belief pursuant to section 716(1) of the FW Act that IFITS Food Co had contravened the following sections of the FW Act, which are provisions of the National Employment Standards in respect of Ms Peters:
(a) section 90(2) (Peters Annual Leave Contravention); and
(b) section 117 (Peters Notice Contravention), collectively, the Peters Contraventions.
The Compliance Notices
12. On 3 February 2022, FWI Pidgeon gave IFITS Food Co a compliance notice in respect of the Ford Contravention, pursuant to section 716(2) of the FW Act (Ford Compliance Notice).
13. On 26 April 2022, FWI McKendry gave IFITS Food Co a compliance notice in respect of the Peters Contraventions, pursuant to section 716(2) of the FW Act (Peters Compliance Notice).
14. The Ford Compliance Notice and the Peters Compliance Notice (Compliance Notices) were each sent to IFITS Food Co by post to the Registered Office Address and by email to [email protected].
15. Each of the Compliance Notices:
(a) was issued in accordance with section 716 of the FW Act;
(b) met the requirements of section 716(3) of the FW Act; and
(c) required IFITS Food Co to, within a reasonable time as specified in the notice:
(i) take specified action to remedy the direct effects of the identified contraventions; and
(ii) produce reasonable evidence to the FWO of compliance with the notice one week after the specified action was required.
16. The Ford Compliance Notice required IFITS Food Co to, by 3 March 2022:
(a) identify the number of hours of accrued but untaken annual leave Ms Peters had at the time her employment ended;
(b) identify the amount IFITS Food Co paid to Mr Ford in respect of accrued yet untaken annual leave entitlements at the time her employment ended;
(c) calculate the amount IFITS Food Co should have paid Mr Ford, in respect of accrued yet untaken annual leave at the time her employment ended;
(d) make a payment to Mr Ford of the difference between the amounts referred to in subparagraphs (b) and (c) above;
(e) make a record of the information and amounts referred to at subparagraphs (a) to (c) above and the amount of the payment referred to at subparagraph (d) above.
17. The Peters Compliance Notice required IFITS Food Co to, by 24 May 2022:
(a) in respect of the Peters Annual Leave Contravention:
(i) identify the number of hours of accrued but untaken annual leave Ms Peters had at the time her employment ended;
(ii) identify the amount IFITS Food Co paid to Ms Peters in respect of accrued yet untaken annual leave entitlements at the time her employment ended;
(iii) calculate the amount IFITS Food Co should have paid to Ms Peters, in respect of accrued yet untaken annual leave at the time her employment ended;
(iv) make a payment to Ms Peters of the difference between the amount referred to in subparagraphs (ii) and (iii) above; and
(v) make a record of the information and amounts referred to in (i)-(iv) above;
(b) in respect of the Peters Notice Contravention:
(i) identify the wages Ms Peters was entitled to be paid, equal to the period of notice she was entitled to receive for her employment period;
(ii) identify the amounts IFITS Food Co paid to Ms Peters for payment in lieu of notice;
(iii) calculate the amount IFITS Food Co should have paid Ms Peters for payment in lieu of notice;
(iv) make a payment to Ms Peters of the difference between the amounts referred to in subparagraphs (ii) and (iii) above; and
(v) make a record of the information and amounts referred to in subparagraphs (i)-to (iv) above.
Failure to comply with the Compliance Notices
18. IFITS Food Co admits that it:
(a) failed to take the specified action required by the Ford Compliance Notice by 3 March 2022, or at all, and to produce reasonable evidence to the FWO of compliance with the notice by 10 March 2022, or at all;
(b) failed to take the specified action required by the Peters Compliance Notice by 24 May 2022, or at all and to produce reasonable evidence to the FWO of compliance with the notice by 31 May 2022, or at all; and
(c) as a result, failed to comply with each of the Compliance Notices.
19. By reason of the matters admitted at paragraph 18 above, IFITS Food Co committed two contraventions of section 716(5) of the FW Act by failing to comply with each of the Compliance Notices.
D. AMOUNT OUTSTANDING UNDER THE COMPLIANCE NOTICES
20. The parties agree that the gross amounts payable under the Compliance Notices after the calculation of underpayments required by the Compliance Notices are:
(a) $2,110.09 to Mr Ford; and
(b) $1,279.82 to Ms Peters plus a superannuation contribution of $38.19.
E. RELIEF SOUGHT
By consent, the Parties seek the declarations and orders set out below.
21. A declaration that IFITS Food Co contravened:
(a) section 716(5) of the FW Act by failing to comply with the Ford Compliance Notice; and
(b) section 716(5) of the FW Act by failing to comply with the Peters Compliance Notice.
22. Orders that:
(a) pursuant to section 545(1) of the FW Act, IFITS Food Co remedy the direct effects of the contraventions set out in the Peters Compliance Notice by paying $1,279.82 to Ms Peters within 28 days of this order.
(b) Pursuant to section 545(1) of the FW Act, IFITS Food Co remedy the direct effects of the contraventions set out in the Ford Compliance Notice by paying $2,110.09 to Mr Ford within 28 days of this order.
(c) pursuant to section 547(2) of the FW Act, IFITS Food Co pay to Ms Peters and Mr Ford interest on the amounts referred to in paragraphs 22(a) and (b) above, calculated in accordance with the applicable pre-judgment interest rate prescribed by the Federal Court of Australia, within 28 days of this order;
(d) pursuant to section 546(1) of the FW Act, IFITS Food Co pay a pecuniary penalty to the Commonwealth for the contraventions declared in paragraphs 21(a) and (b) within 28 days of this order.
(e) the Applicant have liberty to apply on seven days' notice in the event that any of the preceding orders are not complied with.
(f) Such further orders as the Court considers appropriate.
On 8 March 2023, the Court made consent declarations and orders as follows:
IT IS DECLARED, BY CONSENT, THAT:
1. The Respondent contravened:
(a) section 716(5) of the Fair Work Act 2009 (Cth) (‘the Act’) by failing to comply with a compliance notice given to the Respondent on 3 February 2022 in relation to the employment of Mr Zachary Ford (‘Ford Compliance Notice’); and
(b) section 716(5) of the Act by failing to comply with a compliance notice given to the Respondent on 26 April 2022 in relation to the employment of Ms Indigo Peters (‘Peters Compliance Notice’).
AND IT IS ORDERED, BY CONSENT, THAT:
2. Pursuant to section 545(1) of the Act, the Respondent remedy the direct effects of the contraventions set out in the Ford Compliance Notice by paying $2,110.09 to Mr Zachary Ford before 4:00pm on 5 April 2023.
3. Pursuant to section 545(1) of the Act, the Respondent remedy the direct effects of the contraventions set out in the Peters Compliance Notice by paying $1,279.82 to Ms Indigo Peters before 4:00pm on 5 April 2023.
4. Pursuant to section 547(2) of the Act, the Respondent pay to Mr Zachary Ford interest of $113.00 and to Ms Indigo Peters interest of $57.00 in accordance with the applicable pre-judgment interest rate prescribed by the Federal Court of Australia before 4:00pm on 5 April 2023.
5. The Respondent file and serve a notice of address for service before 4:00pm on 8 March 2023.
6. The Applicant file and serve any affidavit evidence in respect of penalty before 4:00pm on 28 March 2023.
7. The Respondent file and serve any affidavit evidence in respect of penalty on or before 14 April 2023.
8. The Applicant file and serve any affidavit evidence in reply and its submissions in respect of penalty before 4:00pm on 28 April 2023.
9. The Respondent file and serve any submissions in respect of penalty before 4:00pm on 12 May 2023.
10. The parties are to confer regarding whether they agree on the mater being determined on the papers, and advise the Court if they seek by consent that the matter be determined on the papers before 4:00pm on 19 May 2023.
11. The matter otherwise be listed for a hearing on the issue of penalty at 9:45am AEST on 24 August 2023 in the Federal Circuit and Family Court of Australia, sitting at Brisbane.
12. Each party have liberty to apply on the giving of three (3) days’ notice, each to the other.
In breach of the Orders of the Court made on 8 March 2023, the Respondent:
(a)Did not make any payment to Mr Ford or Ms Peters; and
(b)Failed to provide the Applicant with any evidence that any of the actions required by the Ford Compliance Notice or the Peters Compliance Notice had been complied with.
It was agreed between the parties that the parties were content to have the Court determine the question of the imposition of pecuniary penalties on the papers.
RELEVANT CONSIDERATIONS
The respondent had not filed a Notice of Address for Service as required by paragraph 5 of the Order of the Court made on 8 March 2023, nor had the Respondent filed any affidavit evidence or written submissions as respectively required by paragraphs 7 and 9 of such Order.
The respondent has generally failed to engage with the Court process save for its participation in the preparation of the SOAF.
Where a party has failed to comply with orders of the Court, or where a party has otherwise failed to show contrition for its contraventions of the provisions of the Fair Work Act 2009, such actions ought appropriately result in a higher pecuniary penalty being imposed than in circumstances where orders of the Court had been complied with, and where real expressions of contrition had been observed. There is no evidence that the respondent has taken any action to change its recalcitrant behaviour. [1]
[1] Ace Insurance Ltd v Trifunovski (No. 2) [2012] FCA 793 at [113] – [114] per Perram J.
On the question of general deterrence, in Kelly v Fitzpatrick [2007] FCA 1080, Tracy J at [28] said as follows:
28. The respondents have expressed contrition and have put in place mechanisms which are designed to ensure that there will be no repetition of the breaches which have led to the present proceeding. Specific deterrence does not, therefore, loom large as a consideration in determining penalty. It does not follow that the need for general deterrence may be disregarded. As Finkelstein J said in CPSU v Telstra Corporation Limited (2001) 108 IR 228 at 231: “even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law’s disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct …” No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does not it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction “must be imposed at a meaningful level”: see Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd [2001] ATPR 41-815 at [13].
It has been held that though a penalty ought to be commensurate with the seriousness of the conduct engaged in, such penalty should not be crushing or oppressive. [2]
[2] Fair Work Ombudsman v Promoting You Pty Ltd [2012] FMCA 58.
The primary purpose for the imposition of pecuniary penalties is to achieve deterrence, both specific and general. The imposition of a penalty should promote community compliance with the provisions of the Fair Work Act 2009, as well as demonstrate that in the event of there being contraventions, penalties relevantly imposed are of a sufficient amount so as to deter others from similarly being involved in contravening conduct. [3]
[3] Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate & Anor [2015] HCA
Any penalty to be imposed must not be seen by the community as being a transactional cost of doing business. [4]
[4] Fair Work Ombudsman v Yogurberry World Square [2016] FCA 1290 at [27].
In terms of the respondent’s lack of engagement in the processes of the Court, and in respect of the penalty to be imposed, the Court agrees with the submissions made on behalf of the Applicant at [39] – [44] of its written submissions filed on 27 April 2023, which relevantly were as follows:
39. The Respondent did not engage with the Applicant at all during the Ford Investigation and the Peters Investigation. The Respondent has subsequently engaged with the Respondent during the litigation process, and at the date these submissions were filed, the Respondent has admitted the contraventions, entered into a Statement of Agreed Facts with the Applicant and co-operated with the Applicant to avoid unnecessary court hearings.
40. However, the Applicant submits that the above co-operation needs to be considered in light of the Respondent’s continual failure to take any of the actions required of it by the Compliance Notices or the Orders and, as a result of those failures, amounts to which the Employees would be entitled remain outstanding.
41. In the circumstances, the Applicant submits that a discount of 15% for the Respondent’s co- operation appropriate.
F. RECOMMENDED PENALTY
42. The Applicant submits that in the all the circumstances, given the nature of the contravention, the factual basis which informed the Compliance Notices being issued, and the co-operation of the Respondent, penalties set out in annexure A would be appropriate in this case.
43. Having fixed an appropriate penalty for each contravention, the Court should take a final look at the aggregate penalty to determine whether it is an appropriate response to the conduct which led to the breaches, and is not oppressive or crushing.38 Whilst the penalty imposed must not be crushing or oppressive, it must nevertheless bear relativity to the seriousness of the conduct.39
44. The above approach gives arise to a penalty of $28,021.95 in respect of the Respondent. This penalty includes a small totality discount.
The penalty to be imposed in the amount of $28,021.00 is as reflected in the following table:
ANNEXURE A – APPLICANT’S PROPOSED PENALTY
Maximum Penalty for
Contravention(s) of section 716(5)FWO
Proposed PenaltyDiscount for co-operation Proposed Totality Discount Proposed Total Penalty Ford $33,300.00 50% 15% 10% $12,737.25 Compliance ($16,650.00) Notice Peters $33,300.00 60% 15% 10% $15,284.70 Compliance ($19,980.00) Notice Total $66,600.00 $36,630.00 15% 10% $28,021.95
It is appropriate that the said sum of $28,021.00 be paid to the consolidated revenue fund of the Commonwealth in respect of the two contraventions of s. 716(5) of the Fair Work Act 2009, as declared by the Court on 8 March 2023.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Egan. Associate:
Dated: 30 November 2023
46 at [55] and [110].
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