Fair Work Ombudsman v Jenny Global Pty Ltd
[2022] FedCFamC2G 472
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Jenny Global Pty Ltd [2022] FedCFamC2G 472
File number(s): MLG 3027 of 2021 Judgment of: JUDGE SYMONS Date of judgment: 17 June 2022 Catchwords: INDUSTRIAL LAW – Fair Work Act 2009 (Cth) (“the Act”) – application for default judgment – contraventions of ss 45 and 536(1) of the Act - whether penalty should be imposed and level of penalty to be imposed – consideration of nature and circumstances of the conduct – where absence of any contrition, corrective action or cooperation with enforcement authorities – the need for specific deterrence exaggerated in circumstances where directors found previously to have contravened workplace laws – penalty order made Legislation: Fair Work Act 2009 (Cth) ss 45, 536, 539, 545, 546, 547, 557, 559, 718A
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 44
Federal Circuit and Family Court of Australia (General Federal Law) Rules 2021 (Cth) rr 4.03, 4.04, 6.01, 6.08, 6.11 13.04, 13.05
General Retail Industry Award 2010 cll 13.2, 17, 29.2, 29.4
Crimes Act 1914 (Cth) s 4AA
Cases cited: Australian Building and Construction Commissioner v Pattinson (2022) 399 ALR 599; [2022] HCA 13
Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2006) 236 ALR 665; [2006] FCA 1427
Australian Competition and Consumer Commission v MSY Technology Pty Ltd (2012) 201 FCR 378; [2012] FCAFC 56
Construction, Forestry, Mining and Energy Union v Cahill (2010) 194 IR 461; [2010] FCAFC 39
Fair Work Ombudsman v Malevi Pty Ltd & Ors [2020] FCCA 2875
Fair Work Ombudsman v Jenni International Pty Ltd & Anor (No. 2) [2020] FCCA 2924
Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7.
Rathner, in the matter of Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626
Macquarie Bank Limited v Seagle (2005) 146 FCR 400; [2005] FCA 1239
Phonographic Performance ltd v Maitra (1998) 41 IPR 225
Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550
Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227
Division: Division 2 General Federal Law Number of paragraphs: 49 Date of last submission/s: 26 May 2022 Date of hearing: 26 May 2022 Place: Melbourne Applicant Fair Work Ombudsman Respondent No appearance ORDERS
MLG 3027 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: JENNY GLOBAL PTY LTD (ACN 617 886 727)
Respondent
ORDER MADE BY:
JUDGE SYMONS
DATE OF ORDER:
17 JUNE 2022
THE COURT DECLARES THAT:
1.Upon the admissions which the Respondent is taken to have made by reason of its default pursuant to r 13.04(2) of the Federal Circuit and Family Court of Australia (General Federal Law) Rules 2021 (Cth), the Respondent contravened the following civil remedy provisions of the Fair Work Act 2009 (Cth) (“FW Act”):
(a)section 45 of the FW Act by failing to pay Mr Dae Hee Han (“the Employee”) the minimum rate of pay for ordinary hours worked prescribed by clauses 13.2 and 17 of the General Retail Industry Award 2010 (“the Retail Award”);
(b)section 45 of the FW Act by failing to pay the Employee the casual loading prescribed by clause 13.2 of the Retail Award;
(c)section 45 of the FW Act by failing to pay the Employee the evening work penalty rate prescribed by clause 29.4(b) of the Retail Award;
(d)section 45 of the FW Act by failing to pay the Employee the public holiday penalty rate prescribed by clause 29.4(f)(i) of the Retail Award;
(e)section 45 of the FW Act by failing to pay the Employee the overtime rate applicable to casual employees prescribed by clause 29.2(c) of the Retail Award;
(f)section 45 of the FW Act by failing to pay the Employee the overtime rate applicable to casual employees on a public holiday prescribed by clause 29.2(e) of the Retail Award; and
(g)section 536(1) of the FW Act by failing to provide any pay slips to the Employee within one working day of paying an amount to the Employee in relation to the performance of work.
THE COURT ORDERS THAT:
2.Pursuant to section 545(1) of the FW Act, the Respondent pay to the Applicant $8,860.19 in compensation for loss suffered by the Employee because of the contraventions of the FW Act declared at sub-paragraphs 1(a) to 1(f) above within 28 days of the date of this order.
3.Pursuant to section 547(2) of the FW Act, the Respondent pay to the Applicant interest on the amount in paragraph 2 above at the applicable pre-judgment interest rate within 28 days of the date of this order.
4.Pursuant to section 545(1) of the FW Act or section 44 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“FCFCA Act”) within 90 days of receiving the amounts in paragraphs 2 and 3 above or any part of these amounts, the Applicant is to seek, locate and pay the amounts to the Employee.
5.Pursuant to section 545(1) of the FW Act or section 44 of the FCFCA Act, if the Applicant is unable to locate and pay the Employee the amounts specified in paragraph 4 above within the time specified in that paragraph, the Applicant is to pay a person the amounts if:
(a)the person makes a claim for the amount in accordance with the form prescribed by the Fair Work Regulations 2009 (Cth) and section 559(3) of the FW Act; and
(b)the Applicant is satisfied that the person is entitled to the amount.
6.Pursuant to section 545(1) of the FW Act or section 44 of the FCFCA Act if a person is paid an amount in accordance with paragraph 5 above, the Applicant is also to pay the person any interest on the amount that would be payable under section 559(3A) of the FW Act if the amount were paid to the person under section 559(3) of the FW Act.
7.Pursuant to section 546(1) of the FW Act the Respondent pay a pecuniary penalty of $108,360 to the Consolidated Revenue Fund of the Commonwealth for the contraventions declared at sub-paragraphs 1(a) to 1(g) above within 28 days of the date of this order.
8.A copy of these orders be served upon the Respondent in accordance with r 6.11(2) of the Rules
9.The Applicant has liberty to apply on seven days’ notice in the event that any of the above orders are not complied with.
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
JUDGE SYMONS:
INTRODUCTION
The applicant (“the FWO”) applies under r 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (“the Rules”) for default judgment against the respondent in a proceeding the FWO has brought under the Fair Work Act 2009 (Cth) (“FW Act”).
The FWO claims that the respondent, Jenny Global Pty Ltd, contravened s 45 and s 536(1) of the FW Act and seeks orders of the Court pursuant to s 545(1) of the FW Act to reflect these contraventions.
PROCEDURAL HISTORY
The FWO commenced this proceeding on 24 November 2021 by filing an application and a statement of claim.
The matter was listed before me for directions on 3 February 2022. On this date there was no appearance by or on behalf of, the respondent. Mr Simeon, lawyer for the FWO, indicated that the application and statement of claim had been served on the respondent on 14 December 2021, at its registered office address located at Ground Floor, 342 Flinders Street, Melbourne (“registered address”). I ordered the FWO to file evidence on affidavit of the registered address of the respondent, and that subject to the receipt of this affidavit, service of all further documents in this matter would be effected by posting to the registered address. The affidavit of Mr Simeon dated 3 February 2022 (which annexed a current company search of the respondent) was filed for this purpose and satisfied me that the originating documents had been properly served on the respondent pursuant to rule 6.08(2)(a) of the Rules.
On this date I made further orders for the timetabling of the matter including that:
a.by 9 February 2022, the respondent file and serve a notice of address for service;
b.by 17 February 2022, the respondent file and serve a response to the FWO’s application and any defence to the FWO’s statement of claim;
c.the FWO file and serve any application seeking default judgment against the respondent by 25 February 2022 if the respondent failed to file its notice of address for service and response;
d.any application for default judgment together with hearing on penalty be listed for hearing on 26 May 2022.
The FWO served these orders on the respondent at the registered office on 7 February 2022. The respondent did not subsequently file any notice of address for service.
In an affidavit of Mr Simeon filed on 25 February 2022, Mr Simeon deposed that attempts had been made from 25 November 2021 to 25 January 2022 to communicate via email with the director of the respondent, Ms Pui San Lee (“Ms Lee”). This included service of the application and statement of claim, as well as the notification of the first directions date, and later the hearing on default and penalty. Ms Lee was identified as director of the respondent as a result of a document updating the address of the business, lodged by the respondent with the Australian Securities and Investments Commission, some two months before the filing of this application.[1]
[1] Affidavit of Nicholas Evangelos Simeon affirmed 25 February 2022, annexure “NES-3”.
On 1 March 2022, the FWO filed an application in a case for default judgment. The FWO’s outline of submissions on default judgment and penalty were then served on the respondent at the registered address on 29 March 2022.
The respondent did not file any material responsive to the 3 February 2022 orders and did not appear when the matter came before me on 26 May 2022. On that date, Mr Simeon appeared for the FWO and made submissions on the question of whether this was an appropriate case for default judgment and whether (and in what amount) an order for pecuniary penalties should be made against the respondent.
In addition to its application and statement of claim filed on 24 November 2021, the FWO relied upon the following further documents:
(a)Affidavit of Kathleen Ben Yair sworn 16 December 2021;
(b)Affidavit of Nicholas Evangelos Simeon affirmed 3 February 2022;
(c)Affidavit of Kathleen Ben Yair sworn 18 February 2022;
(d)Affidavit of Nicholas Evangelos Simeon affirmed 25 February 2022; and
(e)Affidavit of Fair Work Inspector Isabel De Sousa Pires sworn 25 March 2022 (“FWI Pires Affidavit”).
At my request, the FWO also produced two further affidavits of Kathleen Ben Yair sworn 8 April 2022 and 24 May 2022, which provided evidence that the deponent had served on the respondent the outline of submissions on default judgment and penalty on 29 March 2022, and served correspondence from my chambers containing the listing details for the 26 May 2022 hearing on 18 May 2022.
I am satisfied in these circumstances that the respondent was properly served with these documents and had notice and knowledge if not actual, at least constructive, that the FWO would apply for default judgment and an order for pecuniary penalties on 26 May 2022 and would do so on the basis of the material identified at [10]. I am further satisfied that it was appropriate to hear and determine the FWO’s application for default judgment and penalties in the absence of an appearance from the respondent.
RULE 13.05(2)
Sub-rule 13.05(2) of the Rules applies to a respondent who “is in default”. Under r 13.04(2) of the Rules a respondent is in default if the respondent has not satisfied the applicant’s claims and the respondent has failed to do one or more of the things identified in r 13.04(2)(b) of the Rules. The things identified in r 13.04(2)(b) that are relevant to the application before me are the failure to give an address for service before the time for doing so has expired, the failure to file a response or defence before the time for doing so has expired, the failure to comply with an order of the Court in the proceeding, and the failure to defend the proceeding with due diligence.
When a respondent is in default, or when a respondent is absent from a hearing, the Court may make one of the orders set out in r 13.05(2) of the Rules. Relevant to the application before me is r 13.05(2)(c) which provides that the Court may:
if the proceeding was started by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings – give judgment against the respondent for the relief that:
i)the applicant appears entitled to on the statement of claim; and
ii)the Court is satisfied it has power to grant…
IS THE RESPONDENT IN DEFAULT?
The respondent has failed to:
(a)give a notice of address for service, whether contrary to r 6.01 of the Rules or order 3 of the 3 February 2022 orders;
(b)file and serve a response (or any defence), whether contrary to rr 4.03 and 4.04(3)(a) of the Rules, or order 4 of the 3 February 2022 orders;
(c)defend the proceeding with due diligence, including by its failure to attend the first directions hearing on 3 February 2022 and the hearing on 26 May 2022.
I am therefore satisfied that the respondent is in default within the meaning of r 13.04(2) of the Rules.
PRINCIPLES
The principles guiding the exercise of this Court’s power in relation to default judgment and similar powers available to the Federal Court of Australia under its rules are well-settled. These principles include:
(a)First, r 13.05(2)(c) of the Rules “does not require proof of the claim by evidence, but only requires that – on the face of the statement of claim – there is a claim for the relief sought”.[2]
(b)Second, before the Court may make an order under r 13.05(2)(c) of the Rules it must be satisfied that the document, which the applicant has filed with the application, is on its face a “statement of claim”. A statement of claim is a pleading, which means it must comply with the rules of pleading.
(c)Third, it follows from (b) that the statement of claim must plead at least one reasonable cause of action that supports the granting of the relief the applicant seeks in the application. More particularly, “each element of the relevant civil wrong” of which the applicant complains must be “properly and discretely pleaded in the statement of claim”.[3]
(d)Fourth, although 13.05(2)(c) of the Rules does not require proof of the claim by evidence, it is permissible for the applicant to adduce evidence that is relevant to the relief sought.[4]
(e)Finally, the Court retains a discretion not to make an order under 13.05(2)(c) of the Rules even if the preconditions for making an order are satisfied.[5]
[2] Rathner, in the matter of Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626 at [9]
[3] Macquarie Bank Limited v Seagle [2005] FCA 1239 at [24]
[4] Phonographic Performance ltd v Maitra (1998) 41 IPR 225, at p 230.
[5] See the authorities decided under O 35A of the Federal Court Rules 1979 (Cth) referred to by Flick J in Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [20].
THE FWO PLEADED CASE AND CLAIM FOR RELIEF
In its statement of claim the FWO alleges the following:
(a)the respondent was at all relevant times a “constitutional corporation” and a “national system employer”, and bound by the FW Act;
(b)until in or around 4 March 2021, the respondent operated a grocery store known as “Dae Bark Mart” located at G, 342 Flinders Street, Melbourne in the State of Victoria and specialised in selling Asian foods and liquor to the public (“Business”);
(c)the respondent engaged Mr Dae Hee Han (“the employee”) as a casual Retail Employee Level 1 to perform work at the Business in the period from 7 January 2020 to 22 May 2020 (“employment period”);
(d)the General Retail Industry Award 2010 (“the Award”) covered and applied to the respondent and the employee;
(e)the employee was paid flat hourly rates between $12.00 and $16.00;
(f)the employee was entitled to be paid minimum hourly rates of $21.41 plus additional amounts for casual loading, penalties and overtime;
(g)as a result of the flat hourly rates, the employee was underpaid a total of $8,860.19 in respect of his entitlements under the Award to a minimum hourly rate, casual loading, evening and public holiday penalties and overtime;
(h)the respondent did not give the employee any payslips during the employment period;
(i)because of the matters identified at (a)-(h), the respondent contravened the following Award provisions: clauses 17 (failure to pay the minimum rate of pay for ordinary hours worked), 13.2 (failure to pay casual loading), 29.4(b) (failure to pay an evening work penalty rate for ordinary hours worked after 6.00pm Monday to Friday), 29.4(f)(i) (failure to pay penalty rate for hours worked on a public holiday), 29.2(c) (failure to pay overtime rate for casual employees on Monday to Saturday (first three hours)) and 29.2(e) (failure to pay overtime for casual employees on a public holiday).
The FWO seeks the following relief:
(a)declarations that the respondent contravened s 45 (six contraventions) and s 536(1) of the FW Act;
(b)an order pursuant to s 545(1) of the FW Act that the respondent pay compensation to the FWO (which would then be passed onto the employee) for loss suffered because of the contraventions;
(c)an order pursuant to s 547(2) of the FW Act that the respondent pay interest on the employee’s underpayment; and
(d)an order pursuant to s 546(1) that the respondent pay a pecuniary penalty to the Consolidated Revenue Fund of the Commonwealth.
TO WHAT RELIEF IS THE FWO ENTITLED?
Sections 45 and 536(1) of the FW Act are civil remedy provisions. Section 539(2) enables a Fair Work Inspector to apply to this Court for orders in relation to contraventions of s 45 and s 536. Pursuant to s 545(1) of the FW Act, the Court may make any order it considers appropriate if it satisfied that a person has contravened a civil remedy provision, including an order awarding compensation for loss that a person has suffered because of a contravention of the FW Act (s 545(2)(b) of the FW Act). Pursuant to s 547(2) of the FW Act, the Court may order payment of interest on an amount a person was required to pay under the FW Act and pursuant to section 546 of the FW Act, the Court may make a pecuniary penalty order.
I am satisfied that the statement of claim filed in this matter and upon which the applicant relies complies with the rules of pleading and properly pleads a cause of action that supports the granting of relief. In particular, I am satisfied that the facts alleged in the statement of claim establish that the respondent contravened s 45 and s 536(1) of the FW Act.
SHOULD DECLARATIONS BE MADE?
It is not in doubt that this Court has a wide discretion to make declarations, including in circumstances where due to its default, the respondent is deemed to have made admissions. In this respect, there is no requirement, as there once was, for there to be a proper contradictor before declaratory relief can be granted. The requirement for a contradictor is met if there is a party who had an interest to oppose the declaratory relief that was being sought.[6] However, it has been recognised that in exercising appropriate caution when considering declaratory relief, the particular characteristics of an application for default judgment should be borne in mind. In particular, default judgment is given on the basis of the claim as pleaded by the applicant and in the absence of a defence or contradictory evidence. Accordingly, it is appropriate to make clear, as the FWO has proposed, that there has been no adjudication on the merits of the applicant’s claims by including wording in the declaration to the effect that the declarations are made “upon admissions which the respondent in question is taken to have made consequent upon its non-compliance with the requirements of the rules of Court”, as suggested by Kiefel J, as her Honour then was, in Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2006] FCA 1427 at [59].
[6] Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56 at [30] per Greenwood, Logan and Yates JJ.
Although there is room to doubt whether, in fact, declarations serve the educative and cautionary purpose that the FWO attributes to them (that presupposes that meaningful numbers of employers read and understand the import of judgments and orders made), I am satisfied that this is an appropriate case for declaratory relief, if for no other reason than to record the Court’s disapproval of the contravening conduct.
ORDERS REQUIRING THE RESPONDENT TO RECTIFY UNDERPAYMENT
I am satisfied that it is appropriate to make orders that require the respondent to pay compensation to the FWO (who is then to locate and make the payment to the employee) for loss suffered by the employee because of the contraventions of the FW Act and that interest be paid on this amount.
PECUNIARY PENALTY
Grouping
The statutory course of conduct provision under s 557(1) recognises that two or more contraventions of a civil remedy provision of the FW Act are taken to constitute a single contravention if:
(a)the contraventions are committed by the same person; and
(b)the contraventions arose out of a single course of conduct by the person.
Where these conditions are satisfied, the Court is required to impose one penalty for multiple contraventions.
It is not disputed by the FWO that the respondent is entitled to the benefit of s 557(1) of the FW Act in respect of the repeated contraventions of the same obligation under the Award and this is reflected in the FWO’s table of proposed grouping. However, grouping of separate provisions of the Award is not available under s 557.
Under the common law course of conduct principle, it is open to the Court to group multiple contraventions of different obligations under the Award if they arise from a course of conduct with “common elements”. This principle operates to ensure that an offender is not punished twice for what is essentially “the same criminality”.[7] The FWO submits, and I accept, that it is appropriate to group the overtime contraventions under cl 29.2(c) and cl 29.2(e) based on the fact that they are linked in terms of both the factual and legal elements of these contraventions. Otherwise, there is to be no further grouping.
[7] Construction, Forestry, Mining and Energy Union v Cahill (2010) 194 IR 461; [2010] FCAFC 39 (Cahill), [39], cited in Parker v ABCC, [268].
Factors relevant to penalty
I have been referred to a number of authorities by the FWO, in particular the decision of Kelly v Fitzpatrick [2007] FCA 1080 where, at [14], Tracey J adopted what were described as “a non-exhaustive list of factors relevant to the imposition of a penalty” summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7. Those factors include:
(a)the nature and extent of the conduct which led to the breaches;
(b)the circumstances in which that conduct took place;
(c)the nature and extent of any loss or damage sustained as a result of the breaches;
(d)whether there had been similar previous conduct by the respondent/s;
(e)whether the breaches were properly distinct or arose out of the one course of conduct;
(f)the size of the business enterprise involved;
(g)whether or not the breaches were deliberate;
(h)whether senior management was involved in the breaches;
(i)whether the party committing the breach had exhibited contrition, taken corrective action and co-operated with the enforcement authorities;
(j)the need to ensure compliance with minimum standards by provision of an effective means for an investigation and enforcement of employee entitlements; and
(k)the need for specific and general deterrence.
While this summary is a convenient checklist, it does not prescribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion.[8] The discretion remains at large.
[8] Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550.
Although the FWO’s written submissions traversed a number of these factors, in oral submissions the FWO placed emphasis on certain matters specific to three penalty factors. I will turn to these first.
Deterrence
Mr Simeon, who appeared on behalf of the FWO at the penalty hearing, submitted that as the High Court had recently emphasised, unlike criminal sentences, civil penalties are imposed primarily if not solely for the purpose of deterrence.[9]
[9] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 at [15]
It was submitted that general deterrence must serve a purpose such that the penalty is not regarded by others as just “the cost of doing business”. The FWO produced a “Fair Work Ombudsman Industry profile and FWO Interactions Retail Trade” report for the period of July 2017 to December 2021, in support of the submission that as non-compliance was an issue of concern in the retail industry (accounting for 8.9% of all disputes received by the FWO, 21% of which were in relation to visa holders) there was an enhanced imperative for general deterrence. I accept this to be so.
The FWO submitted that specific deterrence is also a significant consideration in this matter, particularly in light of the fact that a company search of the respondent (produced by Mr Simeon on the day of the penalty hearing) demonstrates that the business remains registered.[10]
[10] Affidavit of Nicholas Simeon dated 26 May 2022, annexure “NES-7”.
Whilst the respondent corporate entity itself has not been the subject of any prior proceedings, the FWO submitted that those responsible for its conduct have an extensive history of non-compliance. Ms Lee, the current (and at different times, historically)[11] company director, has (since 27 September 2019) been the director of another company, Jenni International.[12] This is relevant because on 18 October 2019, Judge McNab (as he then was) made orders for payment of compensation to two employees of Jenni International and also imposed a penalty of $90,000 on Jenni International in respect of contraventions that concerned failures to pay the employees’ entitlements under the Award, including (as is the case here), minimum rates of pay, evening and public holiday penalty rates and overtime.[13] The judgment identified Jenni International as the then-operator of “Dae Bark Mart”.[14]
[11] Company records indicate that Ms Lee held the position of director of the respondent from 21 December 2017 to 1 September 2019; from 17 January to 1 February 2020; and since 1 May 2020.
[12] FWI Pires Affidavit, [17] and annexure “ISP-10”.
[13] Fair Work Ombudsman v Jenni International Pty Ltd & Anor (No. 2) [2020] FCCA 2924.
[14] Fair Work Ombudsman v Jenni International Pty Ltd & Anor (No. 2) [2020] FCCA 2924 at [2].
Additionally, on 23 February 2021, Judge Blake found Ms Lee to be liable as an accessory in the contravention of a compliance notice by Jenni International, and also found that Ms Lee had contravened s 718A of the FW Act by producing a medical certificate to a Fair Work Inspector knowing, or being reckless as to whether, it was false or misleading.[15]
[15] FWI Pires Affidavit at [21] and annexure “ISP-12”.
Further, Mr Jordan Shan (“Mr Shan”), a former director of Jenni International and the respondent company, was also found to have been involved in Jenni International’s contraventions of the FW Act referred to in [35] above and an order was made that he pay pecuniary penalties in the amount of $33,100 reflecting his involvement. Judge McNab found that the conduct of both Jenni International and Mr Shan was deliberate and involved a number of employees where the underpayment of their entitlements was significant. His Honour also noted, in respect of Mr Shan, that the underpayment of entitlements “occurred where [Mr Shan] is a highly educated person and had previously occupied a senior position as an Associate Professor of Applied Economics at Victoria University”.[16]
[16] Fair Work Ombudsman v Jenni International Pty Ltd & Anor (No. 2) [2020] FCCA 2924 at [75]
While Mr Shan was only a director of the respondent for a period of one day that coincided with the employment period, the FWO nonetheless submits that the evidence shows Mr Shan held an active management role in the respondent throughout the employment period, including by being associated with the company’s liquor licence, being the sole signatory and contact person for the business bank account, and signing off text messages to employees as “boss”. The FWO submits that both Ms Lee and Mr Shan, on behalf of the respondent, have demonstrated a disregard for their obligations under the FW Act and both have failed to take heed of the Court’s findings and warnings in the previous two (related) proceedings.
Nature, extent and circumstances of the conduct, deliberateness and loss
The employee was paid flat rates of between $9.41 and $5.41 per hour less than the basic minimum hourly rate. These rates were grossly below the levels fixed by the Fair Work Commission as the appropriate minimum for the retail industry. The FWO submitted that while the total underpayment amount of $8,860.19 might be considered modest it was important to recall that it represented earnings over an employment period of four and a half months. In this context, it was not insubstantial. The underpayment amount represented 46% of the employee’s total entitlement for the employment period, meaning he was only paid just over half (54%) of the amount he was entitled to.
Mr Simeon invited the Court to recognise the employee’s vulnerability as a key feature of the case. The employee was a South Korean national who had arrived in Australia one month before commencing employment with no previous work experience in Australia and limited English language skills. The FWO submitted that it is well acknowledged that temporary foreign workers are more vulnerable to contraventions of workplace laws in the hospitality sector[17] and the penalty imposed should be sufficiently reflective of this.
[17] See Fair Work Ombudsman v Malevi Pty Ltd & Ors [2020] FCCA 2875 at [48]-[49]
Ensuring compliance with minimum standards
The FWO submitted that compliance with minimum standards assists to maintain a level playing field for all employers in an industry with respect to wages and that employers who fail to comply with minimum obligations gain an unfair advantage over those who do. The respondent’s failure to comply with minimum standards operated to undermine the FW Act’s enforcement framework and gave effect to a prioritisation of the respondent’s own interests at the expense of the employee’s minimum entitlements.
Specifically in relation to the respondent’s failure to provide payslips, the FWO submitted that payslips are a significant tool and entitlement for employees in assisting them to understand how their pay is calculated, without which they are significantly disempowered.
CONSIDERATION
To recapitulate, the FWO contends that there should be six groups of offences, for the purpose of calculating penalty as is reflected in the table which is annexure A to this judgment. Adopting this approach, which I consider properly takes account of s 557(1) of the FW Act and the common law “course of conduct” principle, creates a maximum penalty of $378,000.[18]
[18] The maximum penalty for each contravention is 300 penalty units: ss 539(2) and 546(2) of the FW Act. At the relevant time, the value of a penalty unit was $210: s 4AA Crimes Act 1914 (Cth)
While the FWO does not invite the Court to impose a penalty of this magnitude, it does make the submission that the maximum penalty remains relevant as an indication of the legislature’s view of the seriousness of the conduct, and as part of a comparative exercise of determining where the contraventions sit as a “yardstick” against the maximum. The FWO invites the Court to impose an aggregate penalty in the range of $107,100 to $135,450 (adopting the methodology set out in annexure A) which attaches greater weight to the contraventions that involve a failure to pay a minimum rate of pay, the failure to pay casual loading and the failure to give the employee pay slips. In arithmetical terms, the FWO seeks a penalty of between 28% and 36% of the maximum. The FWO submits, having regard to the considerations identified at [32] to [42] above, that a penalty in this range is appropriate.
Having carefully reviewed the material before the Court, I consider that the breaches of the Award and the FW Act committed by the respondent should be regarded as serious and that a penalty should be imposed in the maximum amount sought in each case by the FWO. While I accept that the respondent has not technically been involved in previous breaches of workplace laws, the evidence discloses that individuals who were closely connected with the respondent and its operations have been found liable for similar contraventions and in remarkably similar circumstances. These earlier contraventions involved the operation of the Dae Bark Mart from the same premises as the Business and concerned the employment of a vulnerable cohort of employee within an industry that is notorious for its lack of non-compliance. The conduct of the respondent, in effect, involved a continuation (albeit through different corporate machinery) of the same behaviour that, on two separate occasions, warranted the censure and intervention of the FWO and this Court.
The conduct of the respondent is especially egregious in circumstances where the employee concerned had characteristics that made him vulnerable to an unscrupulous operator and where the respondent has taken no corrective action, including, so as to redress the underpayment. The employee remains out of funds which represented to him almost 50% of his entitlement over the employment period and the respondent, although not apparently operating the Business, remains registered.
While, playing devil’s advocate, it might be said that the failure of the respondent to engage at all in this proceeding, allowed the FWO to proceed with a default judgment application and for the Court to determine it on that basis, involving, possibly, some (modest) time-saving, this is a false analysis (and economy). The FWO was still required to establish a prima facie case of breach and to adduce evidence and make submissions directed at penalty. The Court was required to hear and determine the application. More importantly, the failure to engage is not evidence of cooperation or contrition. It instead points to an indifference and disdain for legal and regulatory process that was also a feature of the FWO’s investigation and which is particularly troubling having regard to the history of non-compliance identified above. It is significant that in this case, the FWO determined that the respondent had contravened workplace laws solely by relying on the information and assistance provided by the employee and through information obtained from third parties to whom notices to produce were issued. The respondent failed entirely to involve itself in the investigation process, notwithstanding it was best placed to shed light on its employment practices.
Having fixed the penalty in the amount of $135,450, the final task for the Court is to step back and consider whether, in aggregate, the penalty imposed represents an appropriate response to the conduct, which led to the various breaches in question.
In this regard, the silence on the part of the respondent means that the Court is left almost entirely unenlightened as to the circumstances in which the breaches occurred. The Court, for the same reason, has no information that sheds light on the fiscal health of the respondent. It is difficult in these circumstances to meaningfully apply considerations of proportionality so as to be satisfied that the penalty is not crushing. The FWO submits that it is appropriate to apply a discount of 20%. Although there is a degree of arbitrariness about this, I will accept this figure and make this deduction in circumstances where the conduct that is the subject of the application, although injurious, was directed at a single employee and concerned a relatively brief period of time and because it appears uncontroversial that the respondent operated a small business. It is only in this limited respect that it might be said that the penalty (otherwise imposed) is disproportionate. The Court will therefore order that the respondent pay a pecuniary penalty in the amount of $108,360,
I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Symons. Associate:
Dated: 17 June 2022
ANNEXURE A
Contravention Maximum penalty Percentage range Penalty amount sought 1.
s.45 – failure to pay minimum rate of pay pursuant to clauses 13.2 and 17 of the Award
$63,000
50%-60%
$31,500 - $37,800
2.
s.45 – failure to pay casual loading pursuant to clause 13.2 of the Award
$63,000
50%-60%
$31,500 - $37,800
3.
s.45 – failure to pay evening penalty pursuant to clause 29.4(b) of the Award
$63,000
10%-15%
$6,300-$9,450
4.
s.45 – failure to pay public holiday penalty pursuant to cl 29.4(f)(i) of the Award
$63,000
10%-15%
$6,300-$9,450
5.
s.45 – failure to pay overtime Monday to Saturday prescribed by clause 29.2(c) and overtime on a public holiday pursuant to clause 29.2(e) of the Award
$63,000
10%-15%
$6,300-$9,450
6.
s.536(1) – failure to give pay slips
$63,000
40%-50%
$25,200 - $31,500
TOTAL INDIVIDUAL PENALTIES:
$107,100-$135,450
PENALTY WITH 20% TOTALITY REDUCTION:
$85,680 - $108,360
0
13
0