Fair Work Ombudsman v Kings Fusion Pty Ltd
[2024] FedCFamC2G 379
•29 April 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Kings Fusion Pty Ltd [2024] FedCFamC2G 379
File number(s): SYG 460 of 2023 Judgment of: JUDGE OBRADOVIC Date of judgment: 29 April 2024 Catchwords: FAIR WORK – PENALTY – Non-provision of pay-slips – Non-payment of entitlements significant in themselves and in proportion to employees pay – Arose over short period of time – Failure by respondent to engage and lack of contrition – Penalty imposed for contravention of s.716(1) – Penalty imposed for contravention of s.536(1) Legislation: Fair Work Act 2009 (Cth) ss 716(5), 536(1)
Restaurant Industry Award 2020
Cases cited: Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Australian Building and Constructions Commissioner v Pattinson [2022] HCA 13
Australian Meat Industry Employees Union v Dick Stone Pty Ltd (No 2) [2022] FCA 1263
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46
CPSU v Telstra Corporation Ltd [2001] FCA 1364
Fair Work Ombudsman v Absynthe Restaurant Pty Ltd [2015] FCCA 58
Fair Work Ombudsman v AJR Nominees Pty Ltd (No.2) [2014] FCA 128
Fair Work Ombudsman v Daladontics (Vic) Pty Ltd [2014] FCCA 2571
Fair Work Ombudsman v Promoting U Pty Ltd & Anor [2012] FMCA 58
Fair Work Ombudsman v Rum Runner Trading Pty Ltd [2018] FCCA 1129
Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd [2012] FMCA 258
Fair Work Ombudsman v The Syndicate Group Pty Ltd [2015] FCCA 2847
Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7
Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249
Trade Practices Commission v CSR Ltd [1990] FCA 521
Division: Division 2 General Federal Law Number of paragraphs: 45 Date of hearing: 9 April 2024 Place: Parramatta Solicitor for the Applicant: Ms Banister of Fair Work Ombudsman Appearing for the Respondent: No appearance ORDERS
SYG 460 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: KING'S FUSION PTY LTD (ACN 639 954 831)
Respondent
ORDER MADE BY:
JUDGE OBRADOVIC
DATE OF ORDER:
29 APRIL 2024
THE COURT ORDERS THAT:
1.Pursuant to section 546(1) of the Fair Work Act 2009 (Cth) the respondent pay pecuniary penalties to the Commonwealth in respect of the contraventions declared in order 2 of the orders dated 6 December 2023 in the amount of $58,275 within 28 days of the date of this order.
2.The applicant has liberty to apply on seven days’ notice in the event the preceding order is 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 OBRADOVIC:
On 6 December 2023, the Court made declarations that the respondent, King’s Fusion Pty Ltd (ACN 639 954 831) contravened:
(a)Section 716(5) of the Fair Work Act 2009 (Cth) by failing to comply with a compliance notice dated 22 April 2022 (“Compliance Notice”); and
(b)Section 536(1) of the Act by failing to provide payslips to Ms Lamia Finjan (“Employee”) within one working day of making payment to her in relation to the performance of work;
(together “Contraventions”).
These are the Reasons for Judgment in respect of the penalty to be imposed on the respondent in respect of the Contraventions.
RELEVANT BACKGROUND
At all relevant times, the respondent operated a restaurant ‘Bayat al Tanoor’ in Yagoona, in the state of New South Wales.
The Employee worked for the respondent from 15 March 2021 to 20 June 2021.
On 1 December 2021, the Employee sought assistance from the applicant in relation to her employment. She told the applicant that she had worked a total of 296.5 hours during the period of her employment. She said that she was paid in cash for the hours she worked (as well as a payment made on her behalf to have her car fixed) and did not receive any payslips. The Employee kept her own record of the hours she worked, which she provided to the respondent.
The respondent contacted the director of the respondent, who initially disagreed with the Employee’s assertions as to underpayments, including the hours worked, but conceded that she was owed money and ultimately indicated that he would pay her what was owing by 4 January 2022.
On or about 10 January 2022, the applicant commenced an investigation into the respondent’s compliance with the Act. The investigation commenced after the Employee again requested assistance from the applicant, in respect of her pay and entitlements.
The Employee was covered by the Restaurant Industry Award 2020 (“Award”).
Following the investigation, on 22 April 2022, the applicant issued the respondent with the Compliance Notice, requiring the respondent to:
(a)Remedy the direct effects of the Contraventions by 27 May 2022, by taking the following specified actions:
(i)Identify the number of hours worked by the Employee during her period of employment;
(ii)Identify the amount that the respondent paid to the Employee during that period;
(iii)Calculate the amount the respondent should have paid to the Employee during the period she was employed pursuant to the Award;
(iv)Pay the Employee the difference between the amounts she was paid and the amounts she should have been paid pursuant to the Award;
(v)Make a record of the information and the amounts rectified;
(vi)Calculate any additional superannuation contributions as required by the Award in respect of the underpayment and paying any such additional superannuation contributions to the Employee’s chosen superannuation fund; and
(b)Produce to the applicant, by 3 June 2022, reasonable evidence of the respondent’s compliance with the Compliance Notice, by producing the record of rectification and proof of payment.
The respondent did not comply with the Compliance Notice. Indeed, the respondent failed to take the actions specified in the Compliance Notice and did not produce any evidence of having taken such action.
During the time she was employed, the Employee was paid by the respondent five cash payments only, as well as a payment made on her behalf to have her car fixed. The respondent did not give the Employee any pay slips, including as required by the Act within one day of paying her.
On 17 March 2023, the applicant commenced these proceedings.
On 6 December 2023, in addition to entering default judgment against the respondent and making the declarations referred to in [1] above, the Court ordered the respondent to take the steps required by the Compliance Notice within 28 days.
The respondent has failed to take the steps required.
CONSIDERATION
Principles Relevant to the Determination of Penalty
The primary purpose of a pecuniary penalty is to promote the public interest in compliance. It is ‘to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act.’[1] The ‘price’ must be such that it is not regarded by the contravener as an ‘acceptable cost of doing business.’[2]
[1] Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 (“FW Building Industry Inspectorate”) at [55], citing Trade Practices Commission v CSR Ltd [1990] FCA 521.
[2] FW Building Industry Inspectorate at [55] and [110], citing Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249.
The greater the impact of the penalty on the contravener, the more potent will be the example that the penalty sets for other potential contraveners. Likewise, it will be more likely that the contravener will seek to avoid the risk of subjection to further penalties and be deterred from further contravention.[3]
[3] Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union [2018] HCA 3 at [116].
Penalties should however be just and appropriate,[4] and a penalty should not be oppressive or crushing.[5]
[4] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 (“McAlary-Smith”) at [95] citing CPSU v Telstra Corporation Ltd [2001] FCA 1364.
[5] Kelly v Fitzpatrick [2007] FCA 1080 (“Kelly”) at [30].
Factors Relevant to Penalty
The relevant factors going to penalty have been identified as follows:[6]
[6] Kelly at [14] adopting Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 at [26]-[59].
(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;
(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;
(j)Whether the party committing the breach had taken corrective action;
(k)Whether the party committing the breach had cooperated with the enforcement authorities;
(l)The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(m)The need for specific and general deterrence.
Consideration of the well-known penalty factors is to be undertaken within the overarching consideration of what penalty will achieve the principal object of deterrence, both specific and general. These factors are well-settled, but not a ‘rigid catalogue of matters for attention.’[7]
[7] McAlary-Smith at [88] to [91].
The identified factors, while a convenient checklist, do not restrict the Court in the exercise of its discretion.
The penalty should be no more and no less than is necessary to achieve the purpose to deter the wrongdoer from engaging in contraventions of a like kind and to deter others who might be tempted to contravene. The penalty should be no more than might be considered to be reasonably necessary to deter further contraventions of a like kind.[8]
[8] Australian Meat Industry Employees Union v Dick Stone Pty Ltd (No 2) [2022] FCA 1263 at [25] (“Dick Stone”), citations omitted.
The imposition of the maximum penalty is appropriate where it is considered necessary for the purpose of deterrence even if the nature of the conduct does not fall into the most serious category of wrongdoing.[9]
DETERMINATION
[9] Dick Stone at [29] citing Australian Building and Constructions Commissioner v Pattinson [2022] HCA 13.
Nature, extent and circumstances of the conduct
The respondent’s Contraventions arose in circumstances where it knew that it owed the Employee her pay and entitlements under the Award. Despite such knowledge, the respondent failed to rectify the underpayment not only when approached by the Employee to do so, but also after the applicant approached it with the complaint, after the Compliance Notice was issued, and after Court orders were made.
In addition, the respondent’s failure to provide payslips denied the Employee the opportunity to monitor her wages and ensure that they were paid correctly. This is particularly significant in circumstances where there was some disagreement between the Employee and the respondent when the matter was first raised by the applicant, as to the agreed rate of pay and the hours worked.
The respondent has not meaningfully engaged in these proceedings.
The respondent’s conduct in failing to pay the Employee in circumstances outlined at [23] above, as well as its failure to engage in the proceedings, demonstrates a serious and deliberate disregard for its obligations under the Act. It also demonstrates a serious and deliberate disregard for the authority of the applicant.
Size of Business and Involvement of Senior Management
There is no evidence as to the size of the respondent’s business nor its financial circumstances.
The applicant’s communication about the Compliance Notice was with the then director of the respondent, who it was incumbent upon to ensure the respondent’s compliance with the Act, the Compliance Notice, and ensuring the respondent’s employees were paid their wages and entitlements in accordance with the law.
Corrective action and cooperation
The respondent has not taken any corrective action. It has failed to engage in these proceedings, and it has failed to show any contrition at all.
Nature and extent of loss
In total, the Employee received the benefit of $2,200 ($1,200 in 5 cash payments and $1,000 towards getting her car fixed paid directly to the service provider). She should have been paid $7,412 over the course of the period of her employment.
As such, the Employee was underpaid by approximately $5,200. This is a significant amount, not only of itself, but also proportionally to the Employee’s pay.
The underpayment of such a significant amount arose over a short period of time. The Employee left her employment because she was not being paid properly and thereafter kept missing out on the benefit of her wages as the underpayment has never been made good.
Need to ensure compliance with minimum standards and enforcement of employee entitlements
One of the principal objects of the Act is to provide a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions for all employees. A compliance notice is intended to act as a means of ensuring compliance with the Act without the need to go to Court.[10] Where a person does not comply with a compliance notice, they undermine that purpose[11] and can be seen as ‘undermin[ing] the FW Act’s enforcement framework, and the safety net of entitlements it is designed to protect.’[12]
[10] Fair Work Ombudsman v Rum Runner Trading Pty Ltd [2018] FCCA 1129 at [86] (“Rum Runner”) citing Fair Work Ombudsman v The Syndicate Group Pty Ltd [2015] FCCA 2847 at [27]; Fair Work Ombudsman v Absynthe Restaurant Pty Ltd [2015] FCCA 58 at [36].
[11] Rum Runner at [110].
[12] Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492 at [78]. See also Fair Work Ombudsman v Daladontics (Vic) Pty Ltd [2014] FCCA 2571 at [23].
Not to comply with the requirement to issue proper payslips is to leave the employees significantly disempowered, creating a structure within which breaches of industrial laws can easily be perpetrated.[13]
[13] Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd [2012] FMCA 258 at [67].
Deterrence
There is a need for both specific and general deterrence in respect of the matters before the Court.
Specific deterrence is aimed at ensuring that the contravener does not take the risk of engaging in such conduct in the future.[14] For reasons earlier, but particularly at [23]-[26] above, there is a need for specific deterrence in this matter.
[14] Fair Work Ombudsman v AJR Nominees Pty Ltd (No.2) [2014] FCA 128 at [50].
Course of Conduct and Grouping
Section 557(1) of the Act, which applies to s.536(1), provides that two or more contraventions of a civil remedy provision are to be treated as a single contravention where that contravention was committed by the same person and arose out of the same conduct. Therefore, the five occasions the respondent failed to provide to the Employee a payslip within one working day of making payment, will be taken to constitute a single contravention.
Otherwise, the Contraventions will not be grouped due to their separate legal character, which involve distinct obligations under the Act.
The Penalty to be Imposed
The maximum penalties the Court may impose for the Contraventions are $33,300 and $66,600 relating to ss.716(5) and 536(1) respectively.
The penalty imposed must be proportionate to the conduct engaged in by the respondent and not have the effect of exonerating the conduct.[15]
[15] Kelly at [30]; McAlary-Smith at [23] per Gray J, at [66]-[73] per Graham J, at [98]-[102] per Buchanan J; Fair Work Ombudsman v Promoting U Pty Ltd & Anor [2012] FMCA 58 at [55]- [57].
Taking all of the relevant considerations into account, the Court finds that the contravention was serious and warrants a penalty which reflects the seriousness of the conduct.
In respect of the contravention of s.716(5) of the Act it is appropriate that a penalty of $18,315 be imposed.[16]
[16] 55% of the maximum.
In respect of the contravention of s.536(1) of the Act it is appropriate that a penalty of $39,960 be imposed.[17]
[17] 60% of the maximum.
Therefore, the penalties to be imposed total $58,275.[18] In all of the circumstances, given the respondent’s conduct, the penalty, while significant so as to bear relativity to the seriousness of the conduct, is not oppressive or crushing.
[18] No further discount for totality applied
The Court so orders.
I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Obradovic. Associate: C.Foley
Dated: 29 April 2024
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