FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v JOSEPH & ANOR | [2020] FCCA 2910 |
| Catchwords: INDUSTRIAL LAW – Fair Work Proceedings – Temporary Business Entry (Class UC) Temporary Work (Skilled) (subclass 457) visa – contravention of civil penalty provisions – wage theft – 20% discount for early contrition – the Court imposes a total pecuniary penalty on the first and second respondents – orders made. |
| Legislation: Fair Work Act 2009 (Cth), s.718A(5) Fair Work Regulations 2009 (Cth) Restaurant Industry Award 2010 |
| Cases cited: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476 Fair Work Ombudsman v Desire Food Pty Ltd and Anor [2019] FCCA 2979 Fair Work Ombudsman v NoBrace Centre Pty Ltd (in Liquidation) (ACN121 556 447) (No 2) [2019] FCCA 2970 Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown Hansen v Mt Martha Community Learning Centre Inc (No 2) [2015] FCA 1283 Jordan v Mornington Inn [2007] FCA 1384 Kelly and Fitzpatrick [2007] FCA 1080 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | REKHA THAKADIYAL JOSEPH |
| Second Respondent: | JIJO THIRUVANKAVIL ESAHAC |
| File Number: | SYG 2502 of 2019 |
| Judgment of: | Judge Humphreys |
| Hearing date: | 22 October 2020 |
| Date of Last Submission: | 22 October 2020 |
| Delivered at: | Parramatta |
| Delivered on: | 28 October 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms Brigden |
| Solicitors for the Applicant: | Legal Group - Fair Work Ombudsman |
| Counsel for the Respondents: | Mr Lee |
| Solicitors for the Respondents: | Neil Lawyers |
ORDERS
By consent, the parties seek the declarations and orders set out below.
Declarations that:
(a)Each of the Respondents’ contravened the following civil penalty provisions:
(i)Section 45 of the Fair Work Act 2009 (Cth) (“the Act”), by failing to pay Mr Kurian minimum rates of pay in accordance with clause 20 of the Restaurant Industry Award 2010 (“the Award”);
(ii)Section 45 of the Act, by failing to pay Mr Kurian Saturday penalty rates in accordance with clauses 34.1 and A.7.3 of Schedule A of the Award.
(iii)Section 45 of the Act, by failing to pay Mr Kurian Sunday penalty rates in accordance with clauses 34.1 and A.7.3 of Schedule A of the Award;
(iv)Section 45 of the Act, by failing to pay Mr Kurian public holiday penalty rates in accordance with clauses 34.1 and A. 7.3 of Schedule A of the Award;
(v)Section 45 of the Act, by failing to pay Mr Kurian overtime rates for overtime worked on a Monday to Friday, in accordance with clause 33.2(a) of the Award;
(vi)Section 45 of the Act, by failing to pay Mr Kurian overtime rates for overtime worked on a Saturday, in accordance with clause 33.2(b) of the Award;
(vii)Section 45 of the Act, by failing to pay Mr Kurian overtime rates for overtime worked on a Sunday, in accordance with clause 33.2(c) of the Award;
(viii)Section 44 of the Act, by failing to…
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- Case
- [2020] FCCA 2910
- Decision Date
CaseChat Overview and Summary
The court was required to determine the appropriate pecuniary penalties to be imposed on the Respondents for numerous contraventions. These contraventions included failing to pay Mr Kurian minimum rates of pay, penalty rates for Saturday, Sunday, and public holiday work, and overtime rates. Further contraventions involved failing to pay annual leave and personal leave entitlements, including leave loading and entitlements upon termination. The Respondents were also alleged to have unreasonably required Mr Kurian to spend amounts payable to him, failed to keep and provide accurate employee records and payslips, and provided false and misleading documents and information to a Fair Work Inspector.
By consent, the court made declarations that the Respondents had contravened the specified civil penalty provisions. The court's reasoning, as reflected in the agreed orders, acknowledged the significant underpayment of $153,352.01 to Mr Kurian, which represented approximately 66% of his minimum entitlements. The court also considered the Respondents' actions in setting up a bank account in Mr Kurian's name, making payments into it, and then withdrawing funds, as well as the deliberate concealment of underpayments and the provision of false information to a Fair Work Inspector. The court noted that Mr Kurian was vulnerable due to his visa sponsorship and residency arrangements with the Respondents.
The court ordered that the Respondents be jointly and severally liable to pay $153,352.01 plus interest to the Applicant for distribution to Mr Kurian. Furthermore, the First Respondent was ordered to pay pecuniary penalties of $63,600, and the Second Respondent was ordered to pay pecuniary penalties of $55,600, to the Consolidated Revenue Fund of the Commonwealth of Australia. These penalties were imposed in respect of the contraventions admitted by the parties.
Orders
Orders of the court
By consent, the parties seek the declarations and orders set out below.
1.
Declarations that:
(a) Each of the Respondents’ contravened the following civil penalty provisions:
(i) Section 45 of the Fair Work Act 2009 (Cth) (“the Act”), by failing to pay Mr Kurian minimum rates of pay in accordance with clause 20 of the Restaurant Industry Award 2010 (“the Award”);
(ii) Section 45 of the Act, by failing to pay Mr Kurian Saturday penalty rates in accordance with clauses 34.1 and A.7.3 of Schedule A of the Award.
(iii) Section 45 of the Act, by failing to pay Mr Kurian Sunday penalty rates in accordance with clauses 34.1 and A.7.3 of Schedule A of the Award;
(iv) Section 45 of the Act, by failing to pay Mr Kurian public holiday penalty rates in accordance with clauses 34.1 and A. 7.3 of Schedule A of the Award;
(v) Section 45 of the Act, by failing to pay Mr Kurian overtime rates for overtime worked on a Monday to Friday, in accordance with clause 33.2(a) of the Award;
(vi) Section 45 of the Act, by failing to pay Mr Kurian overtime rates for overtime worked on a Saturday, in accordance with clause 33.2(b) of the Award;
(vii) Section 45 of the Act, by failing to pay Mr Kurian overtime rates for overtime worked on a Sunday, in accordance with clause 33.2(c) of the Award;
(viii) Section 44 of the Act, by failing to pay Mr Kurian for annual leave taken in accordance with section 90(1) of the Act;
(ix) Section 45 of the Act, by failing to pay Mr Kurian annual leave loading entitlements in accordance with clause 35.2(b) of the Award;
(x) Section 44 of the Act, by failing to pay Mr Kurian annual leave entitlements upon termination of employment in accordance with section 90(2) of the Act;
(xi) Section 44 of the Act, by failing to pay Mr Kurian for personal leave taken in accordance with section 99 of the Act;
(xii) Section 325 of the Act, by unreasonably requiring Mr Kurian to spend amounts payable to him in relation to the performance of work;
(xiii) Section 535(1) of the Act, by failing to make, and keep for seven years, employee records of the kind prescribed by the Fair Work Regulations 2009 (Cth) (“the Regulations”) in relation to Mr Kurian;
(xiv) Sub-regulation 3.44(1) of the Regulations, by failing to ensure records the Respondents were required to keep under the Act and Regulations in respect of Mr Kurian were not false and misleading;
(xv) Sub-regulation 3.44(6) of the Regulations, by making use of entries in an employee record made and kept for Sub division 1 of Chapter 3, Part 3-6, Division 3 of the Regulations, knowing that the entries were false or misleading;
(xvi) Section 536(1) of the Act, by failing to provide Mr Kurian with a pay slip within one working day of paying an amount to him in relation to the performance of work;
(xvii) Section 536(2) of the Act, by failing to provide Mr Kurian with a pay slip including information prescribed by the Regulations;
(b) The First Respondent contravened section 718A(1) of the Act, by giving false or misleading documents and/or false or misleading information to a Fair Work Inspector exercising powers or performing functions under or in connection with the Act.
2.
An order that:
(a) Pursuant to section 545(1) of the Act, the Respondents are jointly and severally liable to pay $153,352.01 to the Applicant, within 28 days of the date of the order;
(b) Pursuant to section 547(2) of the Act, the Respondents are jointly and severally liable to pay interest on the amount of $153,352.01, to be paid to the Applicant, within 28 days of the order;
(c) The applicant distribute the amounts paid, in accordance with order (2)(a) and (2)(b) above to Mr Kurian;
(d) Pursuant to section 546(1) of the Act, the First Respondent pay pecuniary penalties in respect of each of the contraventions set in the amount of $63,600, to be paid to the Consolidated Revenue Fund of the Commonwealth of Australia, within 28 days of the order;
(e) Pursuant to section 546(1) of the Act, the Second Respondent pay pecuniary penalties in respect of each of the contraventions set in the amount of $55,600, to be paid to the Consolidated Revenue Fund of the Commonwealth of Australia, within 28 days of the order;
(f) The applicant has liberty to apply on seven days’ notice in the event the preceding orders are not complied with.
FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT PARRAMATTA
SYG 2502 of 2019
FAIR WORK OMBUDSMAN
Applicant
And
REKHA THAKADIYAL JOSEPH
First Respondent
JIJO THIRUVANKAVIL ESAHAC
Second Respondent
REASONS FOR JUDGMENT
Introduction.
1.
The respondent’s operated a business known as the “Blue Moon Restaurant” in Wentworthville, New South Wales. Blue Moon Restaurant is an Indian cuisine restaurant that provides both sit down and take away meals. The first and second respondents’ (“the respondents”) operated the business in a partnership.
2.
In October 2013 the respondents entered in to an agreement with a Mr Kurian. Mr Kurian is an Indian national. Mr Kurian was to be employed in the position of Café and Restaurant Manager with a contractual salary of $54,000 per annum. Mr Kurian’s hours of work were a minimum of 38 hours per week with a 40 minute paid lunchbreak each day. The respondents agreed to sponsor Mr Kurian for a Temporary Business Entry (Class UC) Temporary Work (Skilled) (subclass 457) visa to migrate to Australia. Following the grant of his visa, Mr Kurian arrived in Australia in late December 2013. Mr Kurian resided with the respondents from the date of his arrival until March 2016.
3.
During Mr Kurian’s employment with the respondents, he was significantly underpaid by reference to the relevant Restaurant Industry Award 2010 (“the Award”) for the very long hours that he worked.
4.
During the time that Mr Kurian worked for the respondents, a bank account was opened in his name and a bank card was issued to operate the account. The respondents caused regular payments to be made into the bank account which Mr Kurian did not have access to. Amounts were withdrawn from the account by the respondents and instead, Mr Kurian was paid cash, usually in fortnightly instalments between March 2014 to April 2015 $400.00 per week and there after until December 2015, $450.00 per week.
5.
From late December 2015, until Mr Kurian ceased employment with the respondents, he had access to the bank account card, however he was required to make repayments to the respondents totalling $820.00.
6.
Following Mr Kurian ceasing employment with the respondents, he complained to the Fair Work Ombudsman. An investigation commenced. In a Statement of Agreed Facts filed with the Court, the respondents have admitted to underpaying Mr Kurian the amount of $153,352.01. Further admissions have been made in relation to contraventions of payslip and record keeping obligations under the Fair Work Act 2009 (Cth) (“the Act”) and Fair Work Regulations 2009 (Cth) (“the Regulations”) and providing false and misleading documents or information to a Fair Work Inspector.
7.
By consent, the parties seek from the Court a number of declarations and orders in relation to breaches of the Award, the Act and the Regulations. These orders include payment by the respondents jointly and severally of the amount of $153,352.01 to Mr Kurian together with interest. The Court is also asked to set pecuniary penalties in respect of the first and second respondents for their actions which have been outlined above.
8.
There is an agreement between the parties as to the majority of the orders to be made by the Court, together with the amount of compensation to be paid to Mr Kurian. As a result, the only issue for the Court to determine, is the appropriate pecuniary penalties to be ordered by the Court in respect of each of the respondents.
The Applicant’s Submissions
9.
The applicant notes that the contraventions of the relevant Award, Act and Regulations include the following:
· Failing to pay minimum rates of pay in accordance with the Award;
· Failing to pay Saturday penalty rates;
· Failing to pay Sunday penalty rates;
· Failing to pay public holiday penalty rates;
· Failing to pay applicable overtime rates for work on a Monday to Friday;
· Failing to pay relevant overtime rates for work on a Saturday;
· Failing to pay relevant overtime rates for work on a Sunday;
· Failing to pay annual leave;
· Failing to pay annual leave loading entitlements;
· Failing to pay annual leave entitlements upon the termination of employment;
· Failing to pay personal leave entitlements;
· Unreasonably requiring Mr Kurian to spend amounts payable to him in relation to the performance of work;
· Failing to make, and keep, employee records as prescribed;
· Failing to ensure the records the respondents were required to keep were not false or misleading;
· Making entries in an employee record that were false or misleading;
· Failing to provide Mr Kurian with a payslip within one working day of paying him an amount in relation to the performance of work; and
· Failing to provide Mr Kurian with a payslip that included information prescribed by the Regulations.
10.
The applicant notes that Mr Kurian was a foreign national from India who came to Australia on a 457 Visa with the respondents as his sponsor. Mr Kurian was employed initially as a kitchen hand and then as a cook. During Mr Kurian’s time with respondents he worked initially 13 hours per day on Mondays and 14.5 hours on Wednesdays to Sundays during the period December 2013 to April 2014. During the period of May 2014 to December 2015, Mr Kurian worked 12 hours per day, six days per week. During the period December 2015 to the end of his employment, in March 2016 Mr Kurian worked 11 hours per day, six days per week.
11.
The actions of the respondents were made in circumstances where Mr Kurian was vulnerable to exploitation, as his Temporary Business Entry (Class UC) Temporary Work (Skilled) (subclass 457) visa was subject to sponsorship by the respondents and Mr Kurian was residing with the respondents.
12.
The record keeping and pay slips contraventions admitted by the respondents are submitted to be significant, because they limited Mr Kurian’s ability to check his lawful entitlements as well as the Fair Work Ombudsman’s ability to investigate the matter.
13.
The payroll records that were produced to the Fair Work Ombudsman were such that the respondents knew that the entries in the records were false because they did not record the actual payments made to Mr Kurian.
14.
The first respondent also knowingly created and produced a false calendar, purporting to record the hours worked by Mr Kurian, after they were given a warning pursuant to s 718A(5) of the Act that they may be liable to a civil penalty for giving false and misleading information or producing false and misleading documents to a Fair Work Inspector. The applicant submitted that the production of these false and misleading records had a real impact on the capacity of the Fair Work Ombudsman to efficiently carry out its statutory role and resulted in the Fair Work Ombudsman having to rely on information provided by third parties, including other employees of the respondents, in order to determine whether Mr Kurian had been paid in accordance with relevant workplace laws.
15.
The applicant submitted that the extent of the loss suffered by Mr Kurian of $153,352.01 is significant and the underpayment represented approximately 66% of his minimum entitlements during the employment period. The applicant submitted that the negative impacts of the underpayment and long hours that Mr Kurian worked included stress, tiredness and being scared to speak up and ask for higher wages for fear that the respondents would cause his visa to be cancelled.
16.
The applicant notes that the underpayment was rectified on 5 August 2020, more than four years after Mr Kurian’s employment period ended.
17.
The applicant submitted that the respondents’ actions were a deliberate decision to set up a system to pay Mr Kurian below his entitlements. The setting up of the bank account in Mr Kurian’s name, together with the making of payments into it and the withdrawal of those funds by the respondents is particularly concerning. The deliberate nature of actively concealing the underpayments made to Mr Kurian and the provision of false information to the Fair Work Inspector is a significant factor in the assessment of the appropriate penalties.
18.
The respondents operated a partnership in respect of the Blue Moon restaurant, and accordingly, the actions involve the highest level of mismanagement within the employer of Mr Kurian.
19.
In relation to the size of business and the capacity to pay, it is well-established that the size and financial circumstances of an employer do not exculpate contraventions of workplace laws: Kelly and Fitzpatrick [2007] FCA 1080 (“Kelly”) at [28]. Small businesses have the same obligation as larger employers to meet minimum employment standards and therefore penalties are meaningful level should be imposed regardless of the employer size or financial position: (see Kelly) at [28]. The applicant acknowledges that the financial circumstances of a respondent may be a relevant consideration in determining an appropriate penalty and whether the size of the penalty is “meaningful”; see Hansen v Mt Martha Community Learning Centre Inc (No 2) [2015] FCA 1283 at [5].
20.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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