Fair Work Ombudsman v Kjoo Pty Ltd
[2017] FCCA 3160
•20 December 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
FAIR WORK OMBUDSMAN v KJOO PTY LTD & ORS [2017] FCCA 3160
Catchwords:
INDUSTRIAL LAW – Fair Work Act 2009 (Cth) – Fair Work Regulations 2009 (Cth) – fast food industry – admitted contraventions for underpayment of employees and creation of false and/or misleading employee records for submission to Fair Work Ombudsman involving accountant and First and Second Respondents – contravention very serious – monetary penalties imposed as well as other agreed relief.
Legislation:
Evidence Act 1995 (Cth), s.191
Fair Work Act 2009 (Cth), ss.45, 323, 535, 536, 545, 546, 550, 557
Tax Agents Services Act 2009 (Cth)
Fair Work Regulations 2009 (Cth)
Cases cited:
Commonwealth v Director, Fair Work Building Inspectorate (2015) 258 CLR 482
Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290
Kelly v Fitzpatrick [2007] FCA 1080
Markarian v R (2005) 228 CLR 357
Tax Practitioners Board v Lamede Group Pty Ltd [2016] FCA 63
Applicant: FAIR WORK OMBUDSMAN
First Respondent: KJOO PTY LTD
Second Respondent: HYO JUN KWON
Third Respondent: OK GYU LIM
File Number: SYG 1392 of 2016
Judgment of: Judge Dowdy
Hearing dates: 3 November 2016, 31 January 2017 and
1 February 2017
Delivered at: Sydney
Delivered on: 20 December 2017 REPRESENTATION
Counsel for the Applicant: Mr G Raptis
Solicitors for the Applicant: The Office of the Fair Work Ombudsman
Counsel for the Respondents: Mr B Pierce of Counsel
Solicitors for the Respondents: KWL Lawyers BY CONSENT THE COURT DECLARES AS FOLLOWS:
(1)In the events and circumstances which have happened the First Respondent, Kjoo Pty Ltd, contravened the following civil remedy provisions:
(a)section 45 of the Fair Work Act 2009 (Cth) (FW Act), by failing to pay each of Soohyun An (Ms An) and Jieun Han (Ms Han) the minimum rates of pay in accordance with cl.17 of the Fast Food Industry Award 2010 (Fast Food Award);
(b)section 45 of the FW Act, by failing to pay Ms Han and Surim Jo (Ms Jo) the required minimum junior rates of pay in accordance with cl.18 of the Fast Food Award;
(c)section 45 of the FW Act by failing to pay each of Ms Han, Ms An and Ms Jo (collectively, the Employees) the required casual loading in accordance with cl.13.2 of the Fast Food Award;
(d)section 45 of the FW Act, by failing to pay Ms Jo the required loading for all ordinary hours worked on a Saturday in accordance with cl.25.5(b) of the Fast Food Award;
(e)section 45 of the FW Act, by failing to pay Ms Jo the required loading for all ordinary hours worked on a Sunday in accordance with cl.25.5(c)(ii) of the Fast Food Award;
(f)section 45 of the FW Act, by failing to pay Ms Jo the required rate for all hours worked on a public holiday in accordance with cl.30.3 of the Fast Food Award;
(g)subsection 323(1) of the FW Act, by failing to pay each of the Employees in full;
(h)subsection 535(1) of the FW Act, by failing to make and keep employee records as prescribed by reg.3.33 of the Fair Work Regulations 1995 (Cth) (FW Regulations) in respect of the Employees;
(i)subsection 536(1) of the FW Act, by failing to provide pay slips to the Employees;
(j)subregulation 3.44(1) of the FW Regulations, by keeping employee records in relation to the Employees knowing that those records were false and/or misleading; and
(k)subregulation 3.44(6) of the FW Regulations, by making use of entries in employee records relating to the Employees, by providing those records to the Applicant, knowing that those records were false and/or misleading.
(2)In the events and circumstances which have happened the Second Respondent, Hyo Jun Kwon, was involved, pursuant to s.550 of the FW Act, in each of the contraventions committed by the First Respondent, as set out Declaration 1 above.
(3)In the events and circumstances which have happened the Third Respondent, Ok Gyu Lim, was involved, pursuant to s.550 of the FW Act, in the contraventions committed by the First Respondent, as set out in Declarations 1(j) and 1(k) above.
BY CONSENT THE COURT ORDERS AS FOLLOWS:
(4)An order pursuant to sections 545(1) and/or 545(2)(a) of the FW Act that within a period of two months, the First Respondent is to:
(a)register the Business with the Applicant's "My Account" portal at and complete the profile including the Award options;
(b)provide to the Applicant its "My Account" registration number;
(c)register the Business with the Applicant's Online Learning Centre at and complete all education courses designed for employers;
(d)download and complete for all current employees the following templates at namely:
(i)letter of engagement - casual employee;
(ii)pay slip template;
(iii)weekly time and wages records template;
(iv)record of employee details template;
(v)timesheet template; and
(e)complete the "Hiring Employees" training module in the Online Learning Centre accessible at order pursuant to s.545(1) of the FW Act that the First Respondent provide written confirmation and evidence to the Applicant of its compliance with the order in order 4 above within seven days of the timeframe specified in order 4.
(6)An order pursuant to ss.545(1) and/or 545(2)(a) of the FW Act that the Second Respondent comply with the requirements set out in (d)(i) and (d)(ii) of order 4 above in respect of any other business owned and/or operated by a body corporate of which the Second Respondent is an officer.
(7)An order that the Applicant have liberty to apply on seven days' notice in the event that any of the preceding orders are not complied with.
THE COURT FURTHER ORDERS AS FOLLOWS:
(8)The First Respondent is to pay a penalty of $161,760.00 pursuant to s.546(1) of the FW Act for its contraventions set out in Declaration 1 above.
(9)The Second Respondent is to pay a penalty of $32,352.00 pursuant to s.546(1) of the FW Act for his involvement in the contraventions set out in Declaration 1 above.
(10)The Third Respondent is to pay a penalty of $4,608.00 pursuant to s.546(1) of the FW Act for his involvement in the contraventions set out in Declarations 1(j) and 1(k) above.
(11)An order pursuant to s.546(3)(a) of the FW Act with the penalties referred to orders 8, 9 and 10 above be paid to the Consolidated Revenue Fund of the Commonwealth within 28 days of these orders.
FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEYSYG 1392 of 2016
FAIR WORK OMBUDSMAN Applicant
And
KJOO PTY LTD First Respondent
HYO JUN KWON Second Respondent
OK GYU LIM Third Respondent
REASONS FOR JUDGMENT
1.By Application and Statement of Claim filed on 1 June 2016 the Applicant sought declaratory, pecuniary and other relief against the Respondents in relation to contraventions of the Fair Work Act 2009 (Cth) (FW Act) and the Fair Work Regulations 2009 (Cth) (FW Regulations).
2.The contraventions involved failure in relation to the payment of three employees of the First Respondent.
3.The Respondents did not file defences, but rather entered into a Statement of Agreed Facts dated 19 July 2016 (SOAF) pursuant to s.191 of the Evidence Act 1995 (Cth).
4.By the SOAF the Respondents admitted to the contraventions alleged in the Statement of Claim and, except for the quantum of penalties to be imposed by the Court, all other relief has been agreed, including declaratory relief. I consider it appropriate and convenient for the SOAF to be annexed to and form part of these Reasons.
Relevant Facts and Background
5.The First Respondent (Kjoo), operated a fast food sushi take-away store (sushi shop) in Shellharbour, on the south coast of NSW.
6.The Second Respondent (Mr Kwon) is the sole director and secretary of Kjoo and its controlling mind and will and responsible for all of its operations, including with respect to the employees of Kjoo. In particular, Mr Kwon was aware that the FW Act, the FW Regulations and the Fast Food Industry Award 2010 (Fast Food Award) applied to Kjoo and its staff.
7.The Third Respondent (Mr Lim) is an accountant and registered tax agent and was the accountant of Kjoo.
8.During the period from 15 September 2014 to 31 July 2015 Kjoo employed three young ladies who were nationals of the Republic of Korea (Korea) working in Australia subject to Subclass 417 (Working Holiday) visas. They were Ms Soohyun An (Ms An), Ms Jieun Han (Ms Han) and Ms Surim Jo (Ms Jo) (collectively the Employees).
9.The Employees worked in the sushi shop and were paid between $12 and $13.50 per hour in cash and on a weekly basis. Their typical work duties included food preparation, cooking, receiving orders and moneys from customers of the sushi shop, serving meals and the sweeping and the cleaning of the sushi shop floor.
10.Prior to any of the Employees commencing employment, Mr Kwon on behalf of Kjoo entered into an Internship Agreement dated on or about 30 May 2014 with the Busan Institute of Science and Technology in Korea (Busan Institute) under which students of the Busan Institute would work with Kjoo and thus gain experience in Australia. Each of the Employees entered into a written employment agreement with Kjoo for a 12 month period at an hourly rate of $12. Further, they resided in accommodation provided by Mr Kwon at 81 Elizabeth Crescent, Flinders (Flinders Address), near Shellharbour, and an amount of $50 was deducted weekly from each of their wages. I note that there was no written agreement authorising these deductions from their wages.
Complaint and Investigation
11.On 31 July 2015 each of the Employees requested assistance from the Applicant in respect of alleged unpaid wages and entitlements arising out of their employment with Kjoo.
12.On 20 August 2015 a solicitor for Kjoo of the name Mr Seog Won Yoon (also known as Ryan Yoon) (Mr Yoon) contacted the Applicant and advised that he was the authorised representative of Kjoo and authorised to receive legal documents on its behalf.
13.On 27 August 2015 the Applicant required the production of records and documents from Kjoo. They were not provided in the permitted time period and on 15 September 2015 the Applicant issued a formal Failure to Comply with a Notice to Produce Records or Documents letter. Later in September Mr Yoon supplied to the Applicant, on behalf of Kjoo, various documents including purported PAYG Payment Summaries and Fortnightly Pay Records in respect of the Employees. However, it is admitted by all Respondents that those PAYG Payment Summaries and Fortnightly Pay Records were false and misleading and were created by Mr Lim on the instruction of Mr Kwon for Kjoo and that they incorrectly recorded the rate of remuneration paid to each of the Employees, the gross and net amounts paid to each of the Employees, the hours worked by each of the Employees and the amounts deducted from the Employees’ wages for taxation purposes.
14.In truth and in fact, pay slips were never issued to the Employees, contemporaneous time and wages records were never made or kept by Kjoo and tax was never withheld and remitted to the Australian Taxation Office from the wages of the Employees.
15.Each of Kjoo and Mr Kwon have admitted that they knew that the PAYG Payment Summaries and Fortnightly Pay Records were false and misleading at the time they were created and produced to the Applicant.
16.Mr Lim was aware that the PAYG Payment Summaries and Fortnightly Pay Records were not accurate at the time he created them for and on behalf of Kjoo under Mr Kwon’s instruction and he knew they were to be given to the Applicant. Mr Lim admits that he was an intentional participant in a contravention of reg.3.44(6) of the FW Regulations (which requires that a person must not make use of an entry in an employee record made and kept by an employer, if the person does so knowing that the entry is false or misleading) and that he aided, abetted, counselled or procured and was involved in the admitted contraventions relating to the PAYG Payment Summaries and Fortnightly Pay Records.
17.On 2 October 2015 Mr Kwon commenced legal proceedings against the Employees in the Local Court of New South Wales seeking recovery of unpaid rent for their accommodation at the Flinders Address in the amount of $17,100 (the Local Court proceeding). The Flinders Address was named as the address for service of the Employees as defendants to the Local Court proceeding, notwithstanding that Mr Kwon knew at that time that the Employees had returned to Korea and were no longer resident at the Flinders Address.
18.On 5 November 2015 Mr Kwon participated in an interview with the Applicant in the presence of Mr Yoon during which Mr Kwon admitted the following:
a)he was aware of the existence and application of the Fast Food Award to the business of Kjoo from the time the business commenced operation;
b)each of the Employees performed hours of work for Kjoo on weekends and public holidays during their respective Employment Periods;
c)pay slips were never issued to the Employees during their respective employment periods;
d)time and wages records in respect of the Employees were never made and kept by Kjoo;
e)the PAYG Payment Summaries and the Fortnightly Pay Records were not accurate; and
f)the PAYG Payment Summaries and the Fortnightly Pay Records had been created in response to the Applicant’s requirement on 27 August 2015 for production of Kjoo’s records and documents (see [13] above).
19.Also on 5 November 2015 Mr Kwon sought, and ultimately obtained, Court service on the Employees in the Local Court proceeding using the Flinders Address knowing that they no longer lived there. On 9 February 2016 default judgment in the sum of $18,378.18 was entered against the Employees based on service of process upon them at the Flinders Address on 11 November 2015.
20.From on or about 1 March 2016 a new solicitor commenced to act for Kjoo and Mr Kwon by name of Mr Sung. Mr Sung advised the Applicant on that date that Kjoo was prepared to finalise the matter and pay any outstanding wages to the Employees.
21.On 21 March 2016 the Applicant required rectification by Kjoo of the underpayments to the Employees totalling $51,025.84 and this amount was paid to the Employees on 31 March 2016.
22.On 4 May 2016 Mr Kwon applied to have the default judgment of $18,378.18 set aside and the Local Court proceeding dismissed and this occurred on 6 May 2016.
23.It was then on 31 May 2016 that the Applicant commenced the present proceeding.
Admitted Contraventions
24.Kjoo admits that it contravened the following civil remedy provisions:
a)section 45 of the FW Act, by failing to pay each of Ms An and Ms Han the minimum rates of pay in accordance with cl.17 of the Fast Food Award;
b)section 45 of the FW Act, by failing to pay Ms Han and Ms Jo the required minimum junior rates of pay in accordance with cl.18 of the Fast Food Award;
c)section 45 of the FW Act by failing to pay each of the Employees the required casual loading in accordance with cl.13.2 of the Fast Food Award;
d)section 45 of the FW Act, by failing to pay Ms Jo the required loading for all ordinary hours worked on a Saturday in accordance with cl.25.5(b) of the Fast Food Award;
e)section 45 of the FW Act, by failing to pay Ms Jo the required loading for all ordinary hours worked on a Sunday in accordance with cl.25.5(c)(ii) of the Fast Food Award;
f)section 45 of the FW Act, by failing to pay Ms Jo the required rate for all hours worked on a public holiday in accordance with cl.30.3 of the Fast Food Award;
g)subsection 323(1) of the FW Act, by failing to pay each of the Employees in full;
h)subsection 535(1) of the FW Act, by failing to make and keep employee records as prescribed by reg.3.33 of the FW Regulations in respect of the Employees;
i)subsection 536(1) of the FW Act, by failing to provide pay slips to the Employees;
j)subregulation 3.44(1) of the FW Regulations, by keeping employee records in relation to the Employees knowing that those records were false and/or misleading; and
k)subregulation 3.44(6) of the FW Regulations, by making use of entries in employee records relating to the Employees, by providing those records to the Applicant, knowing that those records were false and/or misleading.
25.Mr Kwon admits that he was involved, within the meaning of s.550 of the FW Act, in each of the admitted contraventions set out in the preceding paragraph.
26.Mr Lim admits that he was involved, within the meaning of s.550 of the FW Act, in each of the admitted contraventions set out in [24(j)] and [24(k)] above.
27.The contraventions listed in [24(a)]–[24(f)] relate to general underpayment of wages to the Employees and [24(g)] refers to the accommodation payment deductions of $50 which were not permitted to be made under s.324 of the FW Act. The remaining contraventions set out in [24(h)]–[24(k)] relate to record-keeping contraventions under ss.535(1) and 536(1) of the FW Act and reg.3.44(1) and (6) of the FW Regulations.
28.In relation to the general underpayment contraventions it is admitted that the Employees were underpaid a gross amount of $51,025.84, which has now been paid to them by Kjoo. The underpayment of wages comprised the difference between the flat rates of pay between $12 and $13.50 per hour paid to the Employees in comparison with the minimum rates which they should have been paid which ranged between $16.67 and $18.99 per hour.
29.In relation to underpayment (as against the minimum award rate) of wages to the Employees there were 243 contraventions comprising an underpayment of $18,842.05 with an available maximum penalty (after grouping) of $51,000.
30.In relation to the contravention of failing to pay casual loadings to the Employees there were 222 contraventions comprising an underpayment of $21,328.16 with an available maximum penalty (after grouping) of $51,000.
31.In relation to the contravention of failing to pay Saturday loading to Ms Jo there were 20 contraventions comprising an underpayment of $646.85 with an available maximum penalty (after grouping) of $51,000.
32.In relation to the contravention of failing to pay Sunday loading to Ms Jo there were 29 contraventions comprising an underpayment of $2,909.92 with an available maximum penalty (after grouping) of $51,000.
33.In relation to the contravention of failing to pay public holiday penalty rates to Ms Jo there were 5 contraventions comprising an underpayment of $1,698.86 with an available maximum penalty (after grouping) of $51,000.
34.In relation to the contravention of failing to pay the wages of the Employees in full by making the unauthorised deductions for their accommodation at the Flinders Address there were 112 contraventions comprising an underpayment of $5,600. with an available maximum penalty (after grouping) of $51,000.
35.In relation to the contravention of failing to make and keep employee records in relation to wages and deductions and hours worked there were 18 contraventions with an available maximum penalty (after grouping) of $25,000.
36.In relation to the contravention of failing to issue pay slips to the Employees there were 112 contraventions with an available maximum penalty (after grouping) of $25,000.
37.In relation to the contravention of knowingly keeping false and misleading records in relation to the Employees there were 63 contraventions with an available maximum penalty (after grouping) of $18,000.
38.In relation to the contravention of providing false and misleading records in relation to the Employees there were 63 contraventions with an available maximum penalty (after grouping) of $18,000.
39.Accordingly, and as shown by the below table, after grouping there was for Kjoo a maximum available penalty for all contraventions of $393,000.00, for Mr Kwon $78,600 and for Mr Lim $7,200.
| Paragraphs & Groups | Contravention | Number of Contraventions | Gross Amount of Underpayments | Maximum penalty after grouping for Kjoo | Maximum penalty after grouping for Mr Kwon | Maximum penalty after grouping for Mr Lim |
| [24(a)-(b)] & [29] Group 1 | Failing to pay minimum award wages. | 243 | $18,842.05 | $51,000. | $10,200. | N/A |
| [24(c)] & [30] Group 2 | Failing to pay casual loading to the Employees. | 222 | $21,328.16 | $51,000. | $10,200. | N/A |
| [24(d)] & [31] Group 3 | Failing to pay Saturday loading to Ms Jo. | 20 | $646.85 | $51,000. | $10,200. | N/A |
| [24(e)] & [32] Group 4 | Failing to pay Sunday loading to Ms Jo. | 29 | $2,909.92 | $51,000. | $10,200. | N/A |
| [24(f)] & [33] Group 5 | Failing to pay public holiday penalty rates to Ms Jo. | 5 | $1,698.86 | $51,000. | $10,200. | N/A |
| [24(g)] & [34] Group 6 | Unauthorised deduction of rent from wages. | 112 | $5,600.00 | $51,000. | $10,200. | N/A |
| [24(h)] & [35] Group 7 | Failing to make and keep employee records. | 18 | N/A | $25,500. | $5,100. | N/A |
| [24(i)] & [36] Group 8 | Failing to issue pay slips to the Employees. | 112 | N/A | $25,500. | $5,100. | N/A |
| [24(j)] & [37] Group 9 | Knowingly keeping false and misleading records in relation to the Employees. | 63 | N/A | $18,000. | $3,600. | $3,600. |
| [24(k)] & [38] Group 10 | Providing false and misleading records in relation to the Employees. | 63 | N/A | $18,000. | $3,600. | $3,600. |
| TOTAL | $51,025.84 | $393,000. | $78,600. | $7,200. |
General Principles Guiding Exercise of Discretionary Power to Impose Penalties and Quantum of Such Penalties
40.Under s.546 of the FW Act the Court has power to order the payment of a pecuniary penalty for each of the admitted contraventions.
41.The admitted contraventions are of civil remedy provisions and the penalties to be imposed for them are to be imposed by the application of the principles relating to civil rather than criminal penalties. The purpose of a civil penalty is to promote compliance with the relevant legislative requirements. In Commonwealth v Director, Fair Work Building Inspectorate (2015) 258 CLR 482 at 506 [55] French CJ, Kiefel, Bell, Nettle and Gordon JJ said as follows:
[55] No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
“Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. ... The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.”
(citation omitted.)
42.The fixing of the quantum of penalty has repeatedly been said to be a process of “instinctive synthesis”: Markarian v R (2005) 228 CLR 357 at 373 [37]. However, a non-exhaustive range of considerations giving content to the process of “instinctive synthesis” has been approved by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080 at [14] as being:
·The nature and extent of the conduct which led to the breaches.
·The circumstances in which that conduct took place.
·The nature and extent of any loss or damage sustained as a result of the breaches.
·Whether there had been similar previous conduct by the respondent.
·Whether the breaches were properly distinct or arose out of the one course of conduct.
·The size of the business enterprise involved.
·Whether or not the breaches were deliberate.
·Whether senior management was involved in the breaches.
·Whether the party committing the breach had exhibited contrition.
·Whether the party committing the breach had taken corrective action.
·Whether the party committing the breach had cooperated with the enforcement authorities.
·The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements.
·The need for specific and general deterrence.
43.At [29] – [39] above I have referred to “grouping”. This refers to the effect of s.557 of the FW Act which provides that two or more contraventions of a term of a civil remedy provision committed by the same person and arising out of a course of conduct by that person are to constitute a single contravention. The Applicant accepted that s.557 applied to all of the admitted contraventions and it was accepted by the parties at the hearing, where Mr Raptis appeared for the Applicant and Mr Pierce of Counsel appeared for the Respondents, that the maximum penalties which the Court could impose in this case on each of the Respondents with respect to the totality of the ten “groups” of contraventions were, as may also be seen from the table at [39]:
a)$393,000 in respect of Kjoo;
b)$78,600 in respect of Mr Kwon; and
c)$7,200 in respect of Mr Lim.
44.A further relevant factor is that this case involves the “fast-food” industry which has been notorious in recent years for employers underpaying staff. In Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290 at [26] – [27] Flick J said:
[26] The need for general deterrence arises by reason of the fact that the employees concerned were employed in the “fast-food” industry, where:
• employees are commonly employed on a casual basis;
and where:
• employees are commonly vulnerable by reason of their age, limited education and limited English communication skills.
[27] Albeit only one of the considerations to be taken into account in fixing the quantum of penalties, the relevance of both specific and general deterrence assumes some considerable importance on the facts of the present case. The importance of general deterrence includes the need to ensure that any penalty that may be imposed is not seen as “the cost of doing business”.
Respondents’ Submissions on Penalty
45.Mr Pierce did not suggest any specific monetary amounts as appropriate penalties. Rather, he submitted at a general level that low-range penalties were appropriate in relation to all of the Respondents. He pointed out that the Court should be astute not to double count or punish twice for the same conduct.
46.Further, he asked me to take into account the following matters in assessing penalty, which I have:
a)the Internship Agreement with the Busan Institute (see [10] above) had a legitimate basis and the initiative for the Employees coming to Australia from South Korea was that of the Busan Institute, rather than Kjoo and Mr Kwon;
b)the Employees received vocational and educational training in Australia, and other benefits such as a $3,000 subsidy, a return flight to South Korea and free food;
c)the Employees were not particularly vulnerable in comparison with many other workers in Australia;
d)there was evidence to the effect that Mr Yoon had badly advised Kjoo and Mr Kwon, in particular with respect to the commencement by Mr Kwon against the Employees of the Local Court Proceeding. Further, after Mr Yoon ceased advising Kjoo and Mr Kwon they commenced to fully and meaningfully cooperate with the Applicant;
e)the accommodation provided by Mr Kwon to the Employees at the Flinders Address was a significant benefit to the Employees;
f)the Employees have now been paid the Total Underpayment Amount of $51,025.84 and at the time of the underpayments there was no evidence that the Employees were thereby caused any particular hardship;
g)there were certain ameliorating aspects in relation to the creation of the false and misleading documents: see [38]–[41] of the Respondents’ Submissions on Penalty;
h)the Respondents have cooperated with the Applicant on making timely admissions, full reparation and Kjoo and Mr Kwon have expressed contrition. The admissions have saved Court hearing time; and
i)Mr Lim acted for no benefit to himself and his involvement was limited and his actions were based on information that he was told.
47.I note that I do not consider that the monetary penalties that I am going to impose include any aspect of double punishment. The penalties for individuals under the FW Act are quite different and lower for individuals than for companies and I have assessed the culpability and appropriate monetary penalty individually and in the context established by the possible prescribed maximum penalty.
48.I reject the submission that low range penalties are appropriate in this case. Nevertheless, the matters urged by Mr Pierce as recorded in [46] above, together with the fact that it has not been suggested that any of the Respondents have been guilty of prior contraventions of the FW Act and the Applicant’s concession that the Respondents have, albeit belatedly, cooperated and admitted to their contravening conduct, have led me to the view that a discount of 20% on penalties should be applied. The Respondents have evinced a sufficient willingness to facilitate the course of justice and acceptance of responsibility for their actions such as justifies a 20% discount.
Kjoo
49.I regard the contraventions by Kjoo as very serious indeed. They resulted from a calculated and deliberate decision to engage the services of the Employees with a view to advancing its financial position to the cost and detriment of the Employees.
50.Whilst it would appear that the initiative for the employment of the Employees by Kjoo came first from the Busan Institute, Kjoo seized the opportunity provided by the Busan Institute’s willingness to provide the Employees and pay for their airfare to Australia to employ them below the Fast Food Award’s requirements and did so deliberately and in the teeth of Kjoo’s knowledge, through Mr Kwon, that the Fast Food Award had applied to Kjoo’s business since the time that Kjoo commenced trading in or around the end of 2012. Mr Kwon has admitted that at all material times he was aware of the Fast Food Award and its application to the business of Kjoo and that minimum wages and entitlement to penalty rates existed under that award and that Kjoo was required to pay the Employees in full.
51.The economic motivation for Kjoo underpaying the Employees was made clear in Mr Kwon’s affidavit of 11 August 2016 in the following paragraphs:
8.At the time of making this conversation, I was opening the second takeaway shop at Shellharbour and was under financial pressure At the time, I was working long hours (seven days per week as I still am), and I wanted to expand my business. I was uncertain about the economic viability of doing so.
9. I know this is wrong but in my own mind, and simply to explain what happened, in my weakness at the time, I managed to justify what I did, due to the fact that it was not my initiative, the fact that it was a voluntary arrangement, I was providing what I considered to be very reasonable accommodation, and the financial and other benefits that the students were receiving. I also found it would good for me to hire these students from Korea, as I could instruct them in the same language that I speak.
10. I want to say that I am sorry that I allowed this to occur. I was a willing participant in it and what I did was wrong against the law.
48.I truly regret that I made a judgment of paying less and underpaid wages to the three employees and am sorry that I did not comply with the Australian workplace laws. I foolishly let an opportunity that I did not initiate get the better of me and persuaded myself into self justifications for what I was doing at the time…..
52.I am therefore dealing here with a deliberate, intentional and informed decision by Kjoo, through Mr Kwon, to underpay the Employees to gain a financial advantage for its business. The underpayments were not the result of accident or negligence. The deliberate targeting of the Employees for underpayment is emphasised by the fact that all other employees of businesses associated with Mr Kwon had been paid according to Australian law. Presumably the targeting for underpayment of the Employees was to some extent the result of their vulnerability. I do not exaggerate that vulnerability, but they were young and outside of the country they were born and raised in and they were in Australia under the auspices of the Busan Institute of which they were students. English was not their first language and they had a degree of dependence on Mr Kwon by reason of the accommodation provided by him at the Flinders Address.
53.The gravity of the underpayment of the Employees is exacerbated by Kjoo’s deliberate failure to make and keep true and accurate employee records in relation to the Employees and failing to provide pay slips to them. However, to top all this, when the Applicant first began to investigate possible breaches of the FW Act and FW Regulations Kjoo, through Mr Kwong, deliberately and knowingly caused to be created the PAYG Payment Summaries and Fortnightly Pay Records for each of the Employees which were false and misleading and incorrectly recorded:
a)the rate of remuneration paid to each of the Employees;
b)the gross and net amounts paid to each of the Employees;
c)the hours worked by each of the Employees; and
d)the amounts deducted from the Employees’ wages.
54.I regard the creation of this false documentation and its submission to the Applicant as if they were true and correct as constituting the highest level of dishonesty.
55.Kjoo was also in breach of s.323(1) of the FW Act by failing to pay the wages of the three Employees in full by reason of its unauthorised deduction of $50 weekly from the wages of each of the Employees, totalling an amount of $5,600. I regard these breaches as a serious matter, albeit at a lower level of seriousness than the other contraventions with respect to underpayment. This is because in this instance the Employees at least derived some benefit by way of the provision of accommodation.
56.Under all of the circumstances and having regard to my very adverse view of the conduct of Kjoo in relation to the contraventions, I am of the view that I should impose a penalty on Kjoo of $161,760, calculated as follows:
Penalty Calculations for Kjoo
Group
Possible Maximum Penalty After Grouping
Imposed Percentage of Maximum Penalty
Quantum of Imposed Percentage of Maximum Penalty
Less 20% Discount
Final
Penalty ImposedGroup 1
$51,000.
70%
$35,700.
$28,560.
Group 2
$51,000.
80%
$40,800.
$32,640.
Group 3
$51,000.
20%
$10,200.
$8,160.
Group 4
$51,000.
30%
$15,300.
$12,240.
Group 5
$51,000.
30%
$15,300.
$12,240.
Group 6
$51,000.
30%
$15,300.
$12,240.
Group 7
$25,500.
80%
$20,400.
$16,320.
Group 8
$25,500.
80%
$20,400.
$16,320.
Group 9
$18,000.
80%
$14,400.
$11,520.
Group 10
$18,000.
80%
$14,400.
$11,520.
TOTALS
$393,000.
$202,200.
$161,760.
57.I note that I have regarded the contraventions comprising Groups 3 to 6 as of a less serious nature because of the relative smallness of the underpayments. Nevertheless, I still consider them to be serious contraventions because of their deliberate nature.
58.I further note that for the reasons given below a discount of 20% on the penalties would be appropriate for Kjoo and Mr Kwon and Mr Lim.
Mr Kwon
59.All of the contraventions of Kjoo were directed by Mr Kwon. He was their architect, responsible for instructing and authorising Mr Lim to create the false and misleading PAYG Payment Summaries and Fortnightly Pay Records and caused them to be provided to the Applicant as if they were true and correct records.
60.Under the FW Act, however, there are different and much lower penalties for individuals than for corporations and hence the agreed maximum penalty which can be imposed upon Mr Kwon is $78,600. I consider that I should impose a penalty of $32,352, calculated as follows:
Penalty Calculations for Mr Kwon
Group
Possible Maximum Penalty After Grouping
Imposed Percentage of Maximum Penalty
Quantum of Imposed Percentage of Maximum Penalty
Less 20% Discount
Final
Penalty ImposedGroup 1
$10,200.
70%
$7,140.
$5,712.
Group 2
$10,200.
80%
$8,160.
$6,528.
Group 3
$10,200.
20%
$2,040.
$1,632.
Group 4
$10,200.
30%
$3,060.
$2,448.
Group 5
$10,200.
30%
$3,060.
$2,448.
Group 6
$10,200.
30%
$3,060.
$2,448.
Group 7
$5,100.
80%
$4,080.
$3,264.
Group 8
$5,100.
80%
$4,080.
$3,264.
Group 9
$3,600.
80%
$2,880.
$2,304.
Group 10
$3,600.
80%
$2,880.
$2,304.
TOTALS
$78,600.
$40,440.
$32,352.
Mr Lim
61.Mr Lim was at all material times a practising accountant and a fellow of the Institute of Public Accountants. He was born in Korea, but he became an accountant in Australia on 1 September 2007. Since 8 February 2011 he has been a registered tax agent under the Tax Agents Services Act 2009 (Cth). At all material times he was the accountant of Kjoo.
62.Mr Lim has made the admissions concerning his conduct set out in [133]–[140] of the SOAF, the substantive effect of which are summarised at [16] above. At paragraph 6 of his affidavit of 11 August 2016 he admits that it was he himself who prepared the PAYG Payment Summaries and Fortnightly Pay Records: see also [13]–[14] above. He knew that these documents were false and misleading and that they were to be provided, as they were, to the Applicant and that he thereby aided, abetted, counselled or procured and/or was knowingly concerned in, or a party to, the contraventions admitted by Kjoo as set out in [122] and [128] of the SOAF.
63.In these circumstances Mr Lim has breached the fundamental obligation of those who practise a profession, namely in the words of Francis Bacon, “not to descend into any course that is corrupt or unworthy”: see Dixon CJ extra-judicially in Jesting Pilate (1965) at 134. He has used his professional knowledge and skill to deliberately and knowingly prepare false and misleading documents on behalf of his client which were calculated to mislead and deceive the Applicant when, as he knew they would be, they were submitted by Kjoo and Mr Kwon to the Applicant. His conduct in this regard merits the most serious condemnation.
64.Accordingly I consider that I should impose a penalty on Mr Lim of $4,608.00, calculated as follows:
Penalty Calculations for Mr Lim
Group
Possible Maximum Penalty After Grouping
Imposed Percentage of Maximum Penalty
Quantum of Imposed Percentage of Maximum Penalty
Less 20% Discount
Final
Penalty ImposedGroup 9
$3,600.00
80%
$2,880.00
$2,304.00
Group 10
$3,600.00
80%
$2,880.00
$2,304.00
TOTALS
$7,200.00
$5,670.00
$4,608.00
Totality Principle
65.For the purposes of the totality principle I have considered whether or not the penalties I have regarded as appropriate to impose for each contravention are appropriate to the entire and total contravening conduct. In my view the appropriate overall penalties could certainly not be any less but are sufficient, if only just sufficient. They are sufficient in totality to deter repetition by the Respondents as well as others who might be inclined to contravene the FW Act in a similar fashion. They are required by the objective seriousness of the contraventions in themselves. They are not oppressive or crushing.
Further matter
66.I record that on the first day of the hearing there was objection by Mr Raptis to the reading by Mr Pierce of portions of the affidavit of Mr Kwon sworn 10 August 2016, namely:
a)the second and third sentences of paragraph 33;
b)part of paragraph 34; and
c)the whole of paragraph 38.
67.The basis of the objection was that if those parts of the affidavit were read they would offend s.191(2)(b) of the Evidence Act 1995 (Cth) in that they would have the effect of adducing evidence which contradicted or qualified the facts agreed to in the SOAF. Mr Pierce accordingly sought leave of the Court under s.191(2)(b) to read the portions of the affidavit of Mr Kwon to which Mr Raptis had objected.
68.However, in the end and after debate Mr Raptis did not continue to press his objections having regard to the decision of Dowsett J in Tax Practitioners Board v Lamede Group Pty Ltd [2016] FCA 63 to which I drew his attention and in which his Honour found that evidence led in mitigation did not “contradict” or “qualify” the statement of facts agreed between the parties in that case.
Conclusion
69.In the result the total penalty imposed for the contraventions on Kjoo, Mr Kwon and Mr Lim will be $198,720.00.
I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of Judge Dowdy
Date: 20 December 2017
ANNEXURE
IN THE FEDERAL CIRCUIT COURT File number: SYG1392/2016
OF AUSTRALIA
SYDNEY REGISTRY
FAIR WORK DIVISIONFAIR WORK OMBUDSMAN
ApplicantKJOO PTY LTD
(ACN 158 834 989)
First RespondentHYO JUN KWON
Second RespondentOK GYU LIM
Third RespondentSTATEMENT OF AGREED FACTS
This Statement of Agreed Facts (SOAF) is made by the Applicant and each of the First Respondent, the Second Respondent and the Third Respondent (collectively, the Respondents) in these proceedings for the purposes of section 191 of the Evidence Act 1995 (Cth).
The parties agree as set out below.
PART A: THE PARTIES
Applicant
1.The Applicant in this matter is the Fair Work Ombudsman. The Applicant has standing and authority to bring these proceedings pursuant to Part 4-1 of the Fair Work Act 2009 (Cth) (FW Act) and to apply for orders in relation to contraventions of the FW Act and Fair Work Regulations 2009 (Cth) (FW Regulations).
The First Respondent
2.The First Respondent, Kjoo Pty Ltd (ACN 158 834 989), is and was at all material times:
(a)since 6 June 2012, a company incorporated under the provisions of the Corporations Act 2001 (Cth);
(b)able to sue and be sued in its corporate name;
(c)a “constitutional corporation” within the meaning of section 12 of the FW Act;
(d)a “national system employer” within the meaning of section 14 of the FW Act; and
(e)an entity operating a fast food sushi take away store trading as “Masaki” which is located in the food court of the Stockland Shellharbour Shopping Centre at Shop 1116, 211 Lake Entrance Road, Shellharbour, in the State of New South Wales (Business).
Second Respondent
3.The Second Respondent, Mr Hyo Jun Kwon, is and was at all material times:
(a)also known as “John Kwon”;
(b)the sole director and secretary of the First Respondent;
(c)a shareholder of the First Respondent, holding one-half of the ordinary shares;
(d)since 17 February 2014, the sole director and secretary of Kumju Pty Ltd, an Australian proprietary company that operates a pop-up store trading as ‘Masaki’, located on the ground level of the Stockland Shellharbour Shopping Centre at Shop K109, 211 Lake Entrance Road, Shellharbour, in the State of New South Wales;
(e)since 13 October 2015, the sole director and secretary of KMH Management Pty Ltd, an Australian proprietary company that operates a sushi take away establishment trading as ‘Maru 1’, located on Level 1 of the Westfield Miranda Shopping Centre at 600 Kingsway, Miranda, in the State of New South Wales;
(f)responsible for interviewing each of the Employees on behalf the First Respondent;
(g)responsible for determining the location at which each of the Employees would complete their duties for the First Respondent;
(h)aware of the nature of the duties performed by each of the Employees for the First Respondent;
(i)responsible for the overall direction, management and supervision of the First Respondent’s operations in relation to industrial instruments and arrangements, setting and adjusting pay rates, and determining wages and conditions of employment, including in respect of the Employees;
(j)responsible for the payroll functions of the First Respondent, including the payment of wages to each of the Employees on behalf of the First Respondent;
(k)aware of the hours worked by each of the Employees for the First Respondent by reason of having collected the rosters from the Business at the end of each week during the respective periods of employment of the Employees;
(l)aware that the FW Act and FW Regulations covered the First Respondent and the Employees;
(m)aware that the Fast Food Industry Award 2010 (Modern Award) applied to the First Respondent’s Business and the Employees;
(n)aware that minimum wages and entitlements to penalty rates and loadings existed under the Modern Award;
(o)aware that the First Respondent was required to pay the Employees in full;
(p)aware that the First Respondent was required to keep particular records under the FW Regulations;
(q)aware that the First Respondent was required to issue pay slips to its employees;
(r)by reason of the matters admitted in this paragraph, a person responsible in a practical sense for ensuring that the First Respondent complied with its legal obligations to its employees under the FW Act and FW Regulations;
(s)by reason of subsection 793(1) of the FW Act, a person whose conduct was conduct engaged in by the First Respondent, as it was engaged in on behalf of the First Respondent and was within the scope of his actual or apparent authority; and
(t)by reason of subsection 793(2) of the FW Act, a person whose state of mind was the state of mind of the First Respondent, for conduct engaged in within the scope of his actual or apparent authority.
Third Respondent
4.The Third Respondent, Mr Ok Gyu Lim, is and was at all material times:
(a)a natural person capable of being sued;
(b)a practising accountant;
(c)a Fellow of the Institute of Public Accountants;
(d)since 8 February 2011, a registered tax agent under the Tax Agent Services Act 2009 (Cth);
(e)since 29 August 2007, a director and company secretary of Hanlim Pty. Ltd. (ACN 127 287 530), an entity which operates an accountancy firm trading as “Hanlim” and located at Level 5, Suite 10, Strathfield Plaza, 11 The Boulevarde, Strathfield, in the State of New South Wales; and
(f)the accountant of the First Respondent.
PART B: BACKGROUND FACTS
Employment of the Employees
Details of the Employees
5.During the following periods of time (Employment Periods), the First Respondent employed each of the following persons (collectively, the Employees):
(a)Ms Soohyun An (Ms An) - from 15 September 2014 to 31 July 2015;
(b)Ms Jieun Han (Ms Han) - from 8 December 2014 to 30 July 2015; and
(c)Ms Surim Jo (Ms Jo) - from 8 December 2014 to 31 July 2015.
6.At all times during their respective Employment Periods, each of the Employees:
(a)was a national of the Republic of Korea;
(b)worked in Australia subject to a subclass 417 (Working Holiday) visa; and
(c)during the periods listed in Column 2 of the table below which encompass the respective Employment Period, was of the age specified in Column 3.
Column 1 Column 2 Column 3 Employee Period Age Ms An Employment Period 21 years Ms Han 8 December 2014 to 20 July 2015 20 years 21 July 2015 to 30 July 2015 21 years Ms Jo Employment Period 20 years
Purported “Internship Agreement”
7.Prior to the Employment Periods, on or about 30 May 2014, the Second Respondent, on behalf of the First Respondent, entered into an ‘Internship Agreement’ with the Busan Institute of Science and Technology in the Republic of Korea (Internship Agreement), through which the Employees were employed by the First Respondent during their respective Employment Periods.
8.The arrangement under which the Employees were employed by the First Respondent, pursuant to the Internship Agreement, was not:
(a)a placement undertaken with the First Respondent for which the Employees were entitled to be paid no remuneration;
(b)undertaken as a requirement of any education or training course for the Employees; and
(c)authorised by any law or administrative arrangement of the Commonwealth of Australia, or any State or Territory.
9.By reason of the matters agreed in paragraph 8 above, the arrangement under which each of the Employees were employed by the First Respondent, pursuant to the Internship Agreement, was not a “vocational placement” within the meaning of section 12 of the FW Act.
Employment Agreement
10.At or about the time that their respective Employment Periods commenced, each of the Employees entered into a written “Employment Agreement” with the First Respondent (Employment Agreement) in the following manner:
(a)Ms An signed her Employment Agreement, dated 15 September 2014, after having commenced working at the Business, and the Second Respondent signed Ms An’s Employment Agreement in or about September 2014, prior to Ms An signing it;
(b)in or about late December 2014, Ms Han signed her Employment Agreement, dated 8 December 2014, and the Second Respondent signed Ms Han’s Employment Agreement at the same time as Ms Han; and
(c)in or about January 2015, Ms Jo signed her Employment Agreement, dated 8 December 2014, and the Second Respondent signed Ms Jo’s Employment Agreement in or about January 2015.
11.There were terms of Ms An’s Employment Agreement that Ms An would be:
(a)employed for a 12 month period commencing on 15 September 2014 and concluding on 14 September 2015;
(b)paid $12.00 per hour;
(c)working 8 hours per day and 48 hours per week;
(d)entitled to one day of leave per week; and
(e)provided with meals and a uniform.
12.There were terms of their respective Employment Agreements that Ms Han and Ms Jo would each:
(a)be employed for a 12 month period commencing on 8 December 2014 and concluding on 7 December 2015; and
(b)be subject to the same terms and conditions of employment with the First Respondent as those set out at subparagraphs 11(b) to 11(e) above.
Training and place of performance of duties
13.At the commencement of their respective Employment Periods, each of the Employees undertook a two-week paid period of training (Training Period) at the direction of the Second Respondent, in which:
(a)Ms An completed the Training Period at the Business;
(b)Ms Han completed the Training Period at the “Masaki” store operated by the Second Respondent’s brother-in-law, Mr Jongsil Lee, under a separate company in the Wollongong Central Shopping Centre in the State of New South Wales (Wollongong store); and
(c)Ms Jo completed the first week of training at the Wollongong store and the second week of training at the Business.
14.At the conclusion of the Training Period, the Employees performed their respective work duties for the First Respondent at the Business for the remainder of their respective Employment Periods.
Duties and hours of work
15.At all times during their respective Employment Periods, each of the Employees:
(a)performed the following duties for the First Respondent:
(i) food preparation;
(ii) cooking;
(iii) making sushi and rice paper rolls;
(iv) preparing bento sets;
(v) receiving orders and monies from customers;
(vi) serving meals and/or beverages to customers; and
(vii) sweeping and cleaning of the shop floor;
(b)generally worked between four and six days per week;
(c)worked varied and fluctuating hours for the First Respondent;
(d)worked in excess of an average of 38 hours per week overall, and in some weeks worked less than 38 hours; and
(e)was employed by the First Respondent on a casual basis.
The Employees’ wages
16.The Employees were paid the following flat hourly rates by the First Respondent for all hours of work performed during the periods specified in the table below:
Employee Hourly rate paid Period Ms An $12.00 15 September 2014 to 19 October 2014 $13.00 20 October 2014 to 22 March 2015 $13.50 23 March 2015 to 31 July 2015 Ms Han $12.00 8 December 2014 to 15 February 2015 $13.00 16 February 2015 to 5 July 2015 $13.50 6 July 2015 to 30 July 2015 Ms Jo $12.00 8 December 2014 to 15 February 2015 $13.00 16 February 2015 to 5 July 2015 $13.50 6 July 2015 to 31 July 2015
17.The Employees’ wages were paid in cash and on a weekly basis.
18.The Employees were paid in accordance with the hours reflected in the weekly roster that was kept at the Business premises and collected each week by the Second Respondent.
19.At all material times the First Respondent did not withhold any PAYG tax in respect of the Employees’ wages during their respective Employment Periods.
Accommodation
20.During the periods set out in Column 2 of the table below, and for the total number of weeks specified in Column 3, the Employees resided in accommodation provided by the Second Respondent, located at 81 Elizabeth Circuit, Flinders, in the State of New South Wales (Flinders Address), and had the amount of $50.00 deducted each week from their wages by the Second Respondent, on behalf of the First Respondent, over the course of such periods.
Column 1 Column 2 Column 3 Employee Period Total Number of Weeks Ms An 15 September 2014 to 24 May 2015 45 1 June 2015 to 31 July 2015 Ms Han Employment Period 34 Ms Jo 8 December 2014 to 18 January 2015 33 26 January 2015 to 31 July 2015
21.None of the Employees entered into any written agreement, under which they agreed to have deductions made from their wages for the purposes of rent.
Investigation and production of records
22.On 31 July 2015, each of the Employees lodged a Request for Assistance form with the office of the Applicant, in respect of unpaid wages and entitlements arising from their respective Employment Periods with the First Respondent (Complaints).
23.On 20 August 2015, Fair Work Inspector Wang (FWI Wang) was contacted by Mr Seog Won Yoon, also known as “Ryan Yoon” (Mr Yoon), who was, at the time, a solicitor from El Khan Legal. Mr Yoon informed FWI Wang that he was the authorised representative of the First Respondent, and was permitted to receive legal documents on behalf of the First Respondent.
24.On 27 August 2015, FWI Wang served a Notice to Produce Records or Documents, pursuant to section 712 of the FW Act and dated 27 August 2015 on the First Respondent, through Mr Yoon, seeking the production of various records and documents in respect of the Employees’ employment with the First Respondent, including time and wages records, by no later than 5 p.m. on 11 September 2015 (August NTP).
25.On 14 September 2015, FWI Wang sent email correspondence to Mr Yoon informing him that the First Respondent had failed to comply with the August NTP. Mr Yoon replied, seeking a one week extension for the provision of the requested records and documents because the Third Respondent was still arranging for the items to be assembled. FWI Wang told Mr Yoon that a formal extension could not be provided.
26.On 15 September 2015, Fair Work Inspector Annie Lee (FWI Lee) issued the First Respondent, through Mr Yoon, a Failure to Comply with a Notice to Produce Records or Documents letter (Failure to Comply with August NTP).
27.In or about September 2015, in response to the August NTP, the Second Respondent, on behalf of the First Respondent, instructed the Third Respondent to create:
(a)PAYG payment summaries for the financial year ending 30 June 2015 in respect of each of the Employees (PAYG Payment Summaries); and
(b)fortnightly pay slips covering the respective Employment Periods of each of the Employees (Fortnightly Pay Records).
28.On 17 September 2015, Mr Yoon supplied by email to FWI Lee, on behalf of the First Respondent and in response to the August NTP:
(a)the PAYG Payment Summaries;
(b)the Internship Agreement;
(c)the Employment Agreements in respect of each of the Employees; and
(d)the Fortnightly Pay Records in respect of Ms An and Ms Jo.
29.In the same email as referred to in paragraph 28 above, Mr Yoon stated that the reason for the delay in complying with the August NTP arose from the Third Respondent not being able to attend to the matter within the timeframe provided in the August NTP.
30.On 18 September 2015, FWI Lee told Mr Yoon by email correspondence that a number of the requested items in the August NTP, such as timesheets and records of hours worked, had not been provided in the email correspondence from Mr Yoon referred to in paragraph 28 above.
31.On 29 September 2015, Mr Yoon contacted FWI Lee by telephone and:
(a)said that the First Respondent had never retained the outstanding records from the August NTP. FWI Lee told Mr Yoon that the Fortnightly Pay Records in respect of Ms Han had not been provided to the Applicant as part of the email correspondence from Mr Yoon referred to in paragraph 27 above;
(b)said that legal proceedings were “underway” against the Employees for breach of contract;
(c)asked whether the FWO could pass on the Employees’ contact details, in response to which FWI Lee said that her understanding was that the Employees may have returned home to South Korea; and
(d)said that the FWO should contact the Employees and let them know that legal proceedings were underway.
32.On 29 September 2015, subsequent to the telephone call referred to in paragraph 31 above, Mr Yoon supplied FWI Lee, by email correspondence, with the Fortnightly Pay Records in respect of Ms Han on behalf of the First Respondent and in response to the August NTP.
33.On 2 October 2015, the Second Respondent commenced legal proceedings against the Employees (case number 2015/00288282) in the Local Court of New South Wales, seeking recovery of unpaid rent monies (for accommodation at the Flinders Address described in paragraph 20 above) in the amount of $17,100.00 allegedly owing to the Second Respondent (Local Court Proceedings).
34.The Statement of Claim for the Local Court Proceedings (Local Court SOC) listed the Flinders Address (described at paragraph 20 above) as the address for service for the Employees, as the Defendants in the Local Court Proceeding.
35.On 2 November 2015, Mr Yoon had a telephone conversation with FWI Wang, in which:
(a)Mr Yoon said that the Second Respondent had commenced the Local Court Proceedings;
(b)Mr Yoon said that, on 29 September 2015, FWI Lee had told him that the employees were not in Australia and again asked the FWO to pass on a message to the Employees that the Local Court Proceedings had been commenced; and
(c)FWI Wang said that she did not think that the FWO needed to pass on the message to the Employees.
36.On 5 November 2015, the Second Respondent participated in a recorded interview with FWI Wang, in the presence of Mr Yoon, during which he informed FWI Wang that:
(a)he was aware of the existence and application of the Modern Award to the Business from the time the Business commenced operation;
(b)each of the Employees performed hours of work for the First Respondent on weekends and public holidays during their respective Employment Periods;
(c)pay slips were never issued to the Employees during their respective Employment Periods;
(d)time and wages records in respect of the Employees were never made and kept by the First Respondent;
(e)the PAYG Payment Summaries and the Fortnightly Pay Records were not accurate; and
(f)the PAYG Payment Summaries and the Fortnightly Pay Records had been created in response to the August NTP for production to the Applicant.
37.Immediately following the recorded interview in paragraph 36 above, FWI Wang had a conversation with Mr Yoon in which:
(a)Mr Yoon again asked FWI Wang to provide the addresses of the Employees so he could serve the Local Court Proceedings on the Employees, to tell the Employees that the Local Court Proceedings had been commenced, or to serve the Local Court Proceedings on the Employees; and
(b)FWI Wang told Mr Yoon that this was not her job.
38.On 5 November 2015, the Second Respondent, through Mr Yoon, sought “Court service” on the Employees in the Local Court Proceedings using the Flinders Address, in the knowledge (based on the conversations at paragraphs 31, 35 and 37 above) that the Employees were not located there.
39.On 10 November 2015, Mr Yoon told FWI Wang by telephone that the PAYG Payment Summaries and the Fortnightly Pay Records were prepared only for the purpose of being provided to the Applicant in response to the August NTP.
40.On 16 November 2015, Mr Yoon told Fair Work Inspector Craig Dangerfield (FWI Dangerfield) by telephone that pay slips were never issued to the Employees and informed him of the Local Court Proceedings.
41.On 8 December 2015, FWI Wang issued the First Respondent, through Mr Yoon, a second Notice to Produce Records or Documents letter (pursuant to section 712 of the FW Act (December NTP) in respect of all employees of the First Respondent for the period between 1 July 2015 and 31 July 2015, requiring production of the requested records and documents by 5 p.m. on 4 January 2016.
42.On 7 January 2016, FWI Wang issued the First Respondent, through Mr Yoon, a Failure to Comply with a Notice to Produce Records or Documents letter in respect of the December NTP (Failure to Comply with December NTP).
43.On 29 January 2016, FWI Wang contacted the Third Respondent by telephone and arranged an appointment at the Third Respondent’s office to discuss the Applicant’s investigation of the First Respondent.
44.On 4 February 2016, Mr Yoon advised FWI Wang by email correspondence that the First Respondent never kept any record of wages paid to the Employees, and he provided a copy of the Local Court SOC.
45.On 4 February 2016, FWI Wang issued the Third Respondent with a Requirement to Produce Records or Documents pursuant to subsection 709(d) of the FW Act (February Immediate NTP), a Notice to Produce Records or Documents pursuant to section 712 of the FW Act, and a letter offering the Third Respondent an opportunity to participate in a recorded interview.
46.In response to the February Immediate NTP and on the same day, the Third Respondent supplied FWI Wang with the following items:
(a)an email from Mr Yoon to the Third Respondent, sent on 8 September 2015, which attached a copy of the August NTP;
(b)meeting notes taken by the Third Respondent from a meeting between the Second Respondent and the Third Respondent;
(c)the PAYG Payment Summaries;
(d)the Fortnightly Pay Records; and
(e)an email from Mr Yoon to the Third Respondent, sent on 17 January 2016.
47.On 4 February 2016, FWI Wang and Fair Work Inspector Ying Zheng (FWI Zheng) conducted a non-recorded meeting with the Third Respondent in which the Third Respondent informed FWIs Wang and Zheng that he produced the PAYG Payment Summaries and the Fortnightly Pay Records based on averaged estimates provided by the Second Respondent as to the hours worked and the wages earned by the Employees during their respective Employment Periods.
48.On 9 February 2016, the Third Respondent sent an email to FWI Wang in which he:
(a)declined the interview offer referred to in paragraph 45 above; and
(b)stated that the PAYG Payment Summaries and the Fortnightly Pay Records were made on behalf of the First Respondent under the instructions of the Second Respondent.
49.On 9 February 2016, in the Local Court Proceedings:
(a)the Second Respondent instructed Mr Yoon to seek default judgment based on service on the Employees at the Flinders Address by way of court service on 11 November 2015; and
(b)the Local Court of New South Wales gave default judgment against the Employees and ordered that they pay the sum of $18,378.18 to the Second Respondent (Default Judgment Order).
50.On 22 February 2016, Mr Yoon advised FWI Wang that he no longer represented the First Respondent, and instead the file would be transferring to Leximus Lawyers (Leximus).
51.On 1 March 2016, Jason Sung of Leximus (Mr Sung) sent email correspondence to FWI Wang, in which he:
(a)advised that the First Respondent was prepared to finalise the matter, including payment of any outstanding wages owing to the Employees; and
(b)included a copy of the Default Judgment Order.
52.On 10 March 2016, the Second Respondent, the Second Respondent’s wife, Myung Jung Lee (Mrs Lee) and Mr Sung participated in a non-recorded interview with FWIs Wang and Zheng.
53.On 15 March 2016, Mr Sung provided FWI Wang with a letter addressed to FWI Wang from the Second Respondent, dated 14 March 2016, in which the Second Respondent stated his intention to pay any outstanding amounts owing to the Employees.
54.On 21 March 2016, FWI Wang issued the First Respondent, through Mr Sung, a Findings of Contravention letter which outlined the findings of her investigation of the Complaints (Contravention Letter) and required rectification of $51,025.84 (gross) being the underpayments to the Employees (Total Underpayment Amount), by the close of business on 7 April 2016.
55.On 24 March 2016, the Second Respondent, Mrs Lee and Mr Sung attended a non-recorded meeting with FWIs Wang, Dangerfield and Zheng to discuss the Contravention Letter.
56.On the same day, subsequent to the non-recorded meeting referred to in paragraph 55 above, Mr Sung sent an email to FWI Wang in which he advised that:
(a)the First Respondent would rectify the Total Underpayment Amount; and
(b)his office would, on behalf of the Second Respondent, apply to have the Default Judgment Order set aside.
57.On 31 March 2016, the First Respondent rectified the Total Underpayment Amount in full.
58.On 4 May 2016, Leximus, on behalf of the Second Respondent, applied to have the Default Judgment Order set aside and the Local Court Proceedings dismissed.
59.On 6 May 2016, the Local Court of New South Wales set aside the Default Judgment Order and dismissed the Local Court Proceedings.
60.On 31 May 2016, the Applicant commenced these proceedings (SYG1392/2016) against the Respondents.
PART C: LEGISLATIVE AND MODERN AWARD COVERAGE
61.At all material times during each Employee’s respective Employment Period:
(a)the First Respondent was bound by the FW Act, the FW Regulations and the Modern Award in respect of the employment of each of the Employees;
(b)each of the Employees was a “national system employee” within the meaning of section 13 of the FW Act; and
(c)each of the Employees was properly classified as a “Fast Food Employee Level 1” under clause B.1 of Schedule B of the Modern Award.
PART D: ADMITTED CONTRAVENTIONS
62.The First Respondent admits that it contravened the following civil remedy provisions:
(a)section 45 of the FW Act, by failing to pay Ms An and Ms Han the minimum rates of pay in accordance with clause 17 of the Fast Food Industry Award 2010 (Modern Award);
(b)section 45 of the FW Act, by failing to pay Ms Han and Ms Jo the required minimum junior rates of pay in accordance with clause 18 of the Modern Award;
(c)section 45 of the FW Act by failing to pay each of the Employees their required casual loading in accordance with clause 13.2 of the Modern Award;
(d)section 45 of the FW Act, by failing to pay Ms Jo the required loading for all ordinary hours worked on a Saturday in accordance with subclause 25.5(b) of the Modern Award;
(e)section 45 of the FW Act, by failing to pay Ms Jo the required loading for all ordinary hours worked on a Sunday in accordance with subclause 25.5(c)(ii) of the Modern Award;
(f)section 45 of the FW Act, by failing to pay Ms Jo the required rate for all hours worked on a public holiday in accordance with clause 30.3 of the Modern Award;
(g)subsection 323(1) of the FW Act, by failing to pay each of the Employees in full;
(h)subsection 535(1) of the FW Act, by failing to make and keep employee records as prescribed by regulation 3.33 of the Fair Work Regulations 2009 (Cth) (FW Regulations) in respect of the Employees;
(i)subsection 536(1) of the FW Act, by failing to provide pay slips to the Employees;
(j)subregulation 3.44(1) of the FW Regulations, by keeping employee records in relation to the Employees knowing that those records were false and misleading; and
(k)subregulation 3.44(6) of the FW Regulations, by making use of entries in employee records relating to the Employees, by providing those records to the Applicant, knowing that those records were false and misleading,
(collectively, Admitted Contraventions).
63.The Second Respondent admits that he was involved, within the meaning of section 550 of the FW Act, in each of the Admitted Contraventions set out in paragraph 62 above.
64.The Third Respondent admits that he was involved, within the meaning of section 550 of the FW Act, in each of the contraventions set out in subparagraphs 62(j) and 62(k) above of the Admitted Contraventions.
Underpayment contraventions
Contraventions of clause 17 of the Fast Food Award – failure to pay minimum rates of pay
65.Clause 17 of the Modern Award provides that employees covered by the Modern Award are required to be paid a minimum wage.
66.By reason of the matters admitted in paragraph 61 above, during the periods set out in Column 2 of the table below, the First Respondent was required to pay Ms An and Ms Han the minimum hourly rate in accordance with clause 17 of the Modern Award as set out in Column 3 of the table below:
Column 1 Column 2 Column 3 Employee Period Minimum Hourly Rate Ms An 15 September 2014 to 5 July 2015 $18.52 6 July 2015 to 31 July 2015 $18.99 Ms Han 27 July 2015 to 30 July 2015. $18.99
67.During the periods set out in Column 2 of the table below, Ms An and Ms Han worked the ordinary hours specified in Column 3 and were entitled to be paid the amounts contained in Column 4 by the First Respondent:
Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Employee Period Ordinary hours worked Entitlement Amount Paid Total Underpayment Ms An Employment Period 2,073.50 $38,480.65 $28,846.75 $9,633.90 Ms Han 27 July 2015 to 30 July 2015 28.50 $541.22 $415.00 $126.22
68.During the periods set out in Column 2 of the table in paragraph 67 above, Ms An and Ms Han were paid the amounts listed in Column 5 of the same table.
69.By reason of the matters admitted in paragraphs 16 and 65 to 68 above, the First Respondent failed to pay Ms An and Ms Han the minimum rate of pay pursuant to clause 17 of the Fast Food Award for ordinary hours worked during the period listed in Column 2 of the table in paragraph 67 above, thereby causing Ms An and Ms Han to be underpaid the amounts contained in Column 6 of the same table.
70.By reason of the matters admitted in paragraph 69 above, the First Respondent contravened:
(a)clause 17 of the Modern Award; and
(b)thereby contravened section 45 of the FW Act, which is a civil remedy provision under subsection 539(2) of the FW Act.
Contraventions of clause 18 of the Fast Food Award – failure to pay minimum rates of pay for junior employees
71.By reason of the matters admitted in subparagraph 6(c) and paragraph 61 above, during the periods set out in Column 2 of the table below, the First Respondent was required to pay Ms Jo and Ms Han 90% of the Fast Food Employee Level 1 minimum rate in accordance with clause 18 of the Modern Award as set out in column 3 below:
Column 1 Column 2 Column 3 Employee Period Minimum Hourly Rate Ms Han 8 December 2014 to 5 July 2015 $16.67 6 July 2015 to 26 July 2015 $17.09 Ms Jo 8 December 2014 to 5 July 2015 $16.67 6 July 2015 to 31 July 2015 $17.09
72.During the periods set out in Column 2 of the table below, Ms Han and Ms Jo worked the ordinary hours set out in Column 3 and were entitled to be paid the amounts contained in Column 4 by the First Respondent:
Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Employee Period Ordinary hours worked Entitlement Amount Paid Total Underpayment Ms Han 8 December 2014 to 26 July 2015 1,568.50 $26,201.08 $21,170.00 $5,031.08 Ms Jo Employment Period 1,432.50 $23,942.78 $19,891.93 $4,050.85
73.During the periods set out in Column 2 of the table in paragraph 72 above, Ms Han and Ms Jo were paid the amounts listed in Column 5 of the same table.
74.By reason of the matters admitted in paragraphs 16 and 71 to 73 above, the First Respondent failed to pay Ms Han and Ms Jo the minimum rate of pay pursuant to clause 18 of the Fast Food Award for ordinary hours worked during the period listed in Column 2 of the table in paragraph 72 above, thereby causing Ms Han and Ms Jo to be underpaid the amounts contained in Column 6 of the same table.
75.By reason of the matters admitted in paragraph 74 above, the First Respondent contravened:
(a)clause 18 of the Modern Award; and
(b)thereby contravened section 45 of the FW Act, which is a civil remedy provision under subsection 539(2) of the FW Act.
Contraventions of clause 13.2 of the Fast Food Award – failure to pay the casual loading
76.Clause 13.2 of the Fast Food Award provides that casual employees are required to be paid an additional 25% of the ordinary hourly rate for a full-time employee.
77.By reason of the matters admitted in subparagraph 15(e) and paragraph 61 above, during the periods set out in Column 2 of the table below, the First Respondent was required to pay each of the Employees the casual loading in Column 3 for ordinary hours of work performed on Monday to Saturday, on top of the minimum hourly rate, in accordance with clause 13.2 of the Modern Award:
Column 1 Column 2 Column 3 Employee Period Casual loading per hour Ms An 15 September 2014 to 5 July 2015 $4.63 6 July 2015 to 31 July 2015 $4.75 Ms Han 8 December 2014 to 5 July 2015 $4.17 6 July 2015 to 26 July 2015 $4.27 27 July 2015 to 30 July 2015 $4.75 Ms Jo 8 December 2014 to 5 July 2015 $4.17 6 July 2015 to 31 July 2015 $4.27 78.During their respective Employment Periods, the Employees worked the ordinary hours set out in Column 2 of the table below in respect of which the casual loading was required to be paid, and they were entitled to be paid the amounts contained in Column 3 with respect to the casual loading:
Column 1 Column 2 Column 3 Column 4 Column 5 Employee Ordinary hours worked on Monday to Saturday Entitlement Amount Paid Total Underpayment Ms An 2,073.50 $9,620.59 $0.00 $9,620.59 Ms Han 1,597 $6,688.93 $0.00 $6,688.93 Ms Jo 1,200.50 $5,018.64 $0.00 $5,018.64
79.During the Employees’ respective Employment Periods, the First Respondent did not pay the Employees any additional amount with respect to the casual loading, as set out in column 4 of the table in paragraph 78 above.
80.By reason of the matters admitted in paragraphs 16 and 76 to 79 above, the First Respondent underpaid each of the Employees the amounts listed in Column 5 of the table in paragraph 78 above in respect of their entitlement to the casual loading payable under clause 13.2 of the Modern Award.
81.By reason of the matters admitted in paragraph 80 above, the First Respondent contravened:
(a)clause 13.2 of the Fast Food Award; and
(b)thereby contravened section 45 of the FW Act, which is a civil remedy provision under subsection 539(2) of the FW Act.
Contraventions of subclause 25.5(b) of the Fast Food Award – failure to pay the Saturday loading
82.Subclause 25.5(b) of the Fast Food Award provides that a casual employee will be paid an additional 25% loading on top of the 25% casual loading for ordinary hours worked on a Saturday.
83.By reason of the matters admitted in paragraph 61 above, during the periods set out in Column 2 of the table below, the First Respondent was required to pay Ms Jo the amounts in Column 3 in respect of the Saturday loading, in accordance with subclause 25.5(b) of the Modern Award:
Column 1 Column 2 Column 3 Employee Period Saturday loading Ms Jo 8 December 2014 to 5 July 2015 $4.17 6 July 2015 to 31 July 2015 $4.28
84.During her Employment Period, Ms Jo worked the total number of ordinary hours on a Saturday as set out in Column 2 of the table below in respect of which the Saturday loading was required to be paid, and she was entitled to be paid the amounts contained in Column 3 by the First Respondent with respect to the Saturday loading:
Column 1 Column 2 Column 3 Column 4 Column 5 Employee Ordinary hours worked on Saturday Saturday loading entitlement Amount Paid Total Underpayment Ms Jo 154.50 $646.85 $0.00 $646.85
85.During Ms Jo’s Employment Period, the First Respondent did not pay Ms Jo any additional amount with respect to the Saturday loading, as set out in column 4 of the table in paragraph 84 above.
86.By reason of the matters admitted in paragraphs 16 and 82 to 85 above, the First Respondent underpaid Ms Jo the amount set out in Column 5 of the table in paragraph 84 above in respect of her entitlement to the Saturday loading payable under subclause 25.5(b) of the Modern Award.
87.By reason of the matters admitted in paragraph 86 above, the First Respondent contravened:
(a)subclause 25.5(b) of the Modern Award; and
(b)thereby contravened section 45 of the FW Act, which is a civil remedy provision under subsection 539(2) of the FW Act.
Contraventions of subclause 25.5(c)(ii) of the Modern Award – failure to pay the Sunday loading
88.Subclause 25.5(c)(ii) of the Fast Food Award provides that a casual employee will be paid a 75% loading (inclusive of the 25% casual loading) for all hours worked on a Sunday.
89.By reason of the matters admitted in paragraph 61 above, during the periods set out in Column 2 of the table below, the First Respondent was required to pay Ms Jo the amounts in Column 3 in respect of the Sunday loading, in accordance with subclause 25.5(c)(ii) of the Fast Food Award:
Column 1 Column 2 Column 3 Employee Period Sunday loading Ms Jo 8 December 2014 to 5 July 2015 $12.51 6 July 2015 to 31 July 2015 $12.82
90.During her Employment Period, Ms Jo worked the total number of ordinary hours on a Sunday as set out in Column 2 of the table below in respect of which the Sunday loading was required to be paid, and she was entitled to be paid the amounts contained in Column 3 by the First Respondent with respect to the Sunday loading:
Column 1 Column 2 Column 3 Column 4 Column 5 Employee Ordinary hours worked on Sunday Sunday loading entitlement Amount Paid Total Underpayment Ms Jo 232 $2,909.92 $0.00 $2,909.92
91.During Ms Jo’s Employment Period, the First Respondent did not pay Ms Jo any additional amount with respect to the Sunday loading, as reflected in column 4 of the table in paragraph 90 above.
92.By reason of the matters admitted in paragraphs 16 and 88 to 91 above, the First Respondent underpaid Ms Jo the amount listed in Column 5 of the table in paragraph 90 above in respect of her entitlement to the Sunday loading payable under subclause 25.5(c)(ii) of the Modern Award.
93.By reason of the matters admitted in paragraph 92 above the First Respondent contravened:
(a)subclause 25.5(c)(ii) of the Modern Award; and
(b)thereby contravened section 45 of the FW Act, which is a civil remedy provision under subsection 539(2) of the FW Act.
Contraventions of clause 30.3 of the Fast Food Award – failure to pay the public holiday rate
94.Clause 30.3 of the Modern Award provides that a casual employee will be paid at the rate of 275% for hours worked on a public holiday.
95.By reason of the matters admitted in paragraph 61 above, during the periods set out in Column 2 of the table below, the First Respondent was required to pay Ms Jo the amounts in Column 3 in respect of the public holiday rate, in accordance with clause 30.3 of the Fast Food Award:
Column 1 Column 2 Column 3 Employee Period Public holiday rate Ms Jo 8 December 2014 to 5 July 2015 $45.85 6 July 2015 to 31 July 2015 $47.00
96.During her Employment Period, Ms Jo worked the total number of ordinary hours on a public holiday as set out in Column 2 of the table below in respect of which the public holiday rate was required to be paid, and she was entitled to be paid the total amount contained in Column 3 by the First Respondent with respect to the public holiday rate:
Column 1 Column 2 Column 3 Column 4 Column 5 Employee Ordinary hours worked on a public holiday Public holiday loading entitlement Amount Paid Total Underpayment Ms Jo 40.5 $1,856.93 $158.07 $1,698.86
97.During Ms Jo’s Employment Period, the First Respondent paid Ms Jo the total amount specified in column 4 of the table in paragraph 96 above in respect of work performed on a public holiday.
98.By reason of the matters admitted in paragraphs 16 and 94 to 97 above, the First Respondent underpaid Ms Jo the amount listed in Column 5 of the table in paragraph 96 above in respect of her entitlement to the public holiday rate payable under clause 30.3 of the Modern Award.
99.By reason of the matters admitted in paragraph 98 above, the First Respondent contravened:
(a)clause 30.3 of the Modern Award; and
(b)thereby contravened section 45 of the FW Act.
Contraventions of subsection 323(1) of the FW Act – failure to pay the Employees’ wages in full
100.The First Respondent was required by subsection 323(1)(a) of the FW Act to pay the Employees in full in respect of work performed during their respective Employment Periods.
101.By reason of the matters admitted in paragraph 20 above, on the number of occasions set out in Column 4 of the table below, the First Respondent deducted the amount of $50.00 from the Employees’ weekly wages as set out in Column 3 (Deductions) during the periods set out in Column 2:
Column 1 Column 2 Column 3 Column 4 Column 5 Employee Period Weekly amount deducted Total number of deductions Total monetary amount of deductions Ms An 15 September 2014 to 24 May 2015 $50.00 45 $2,250.00 1 June 2015 to 31 July 2015 Ms Han Employment Period $50.00 34 $1,700.00 Ms Jo 8 December 2014 to 18 January 2015 $50.00 33 $1,650.00 26 January 2015 to 31 July 2015
102.The First Respondent described each of the Deductions as “rent pay” on the respective envelopes into which the residual amount of each of the Employees’ wages following the Deduction was placed by the Second Respondent and thereafter provided to the Employees.
103.The Deductions were not permitted deductions within the meaning of section 324 of the FW Act.
104.By reason of the matters admitted in paragraphs 100 to 103 above, the First Respondent:
(a)failed to pay the Employees in full, the total amounts set out in Column 5 of the table in paragraph 101 above; and
(b)thereby contravened subsection 323(1) of the FW Act.
Total underpayment and rectification
105.By reason of the contraventions matters admitted in paragraphs 70, 75, 81, 87, 93, 99 and 104 above, the First Respondent caused the Employees to be underpaid the Total Underpayment Amount as set out in the table below:
Column 1 Column 2 Column 3 Column 4 Column 5 Entitlement Ms An Ms Han Ms Jo TOTAL Minimum rates of pay $9,633.90 $126.22 $9,760.12 Minimum junior rates of pay $5,031.08 $4,050.85 $9,081.93 Casual loading (Monday to Saturday) $9,620.59 $6,688.93 $5,018.64 $21,328.16 Saturday penalty loading $646.85 $646.85 Sunday penalty loading $2,909.92 $2,909.92 Public holiday rate $1,698.86 $1,698.86 Unauthorised deductions $2,250.00 $1,700.00 $1,650.00 $5,600.00 TOTAL UNDERPAYMENT AMOUNT $21,504.49 $13,546.23 $15,975.12 $51,025.84 Rectification payment 31 March 2016 $21,504.49 (gross) $13,546.23 (gross) $15,975.12 (gross) $51,025.84 (gross) CURRENT TOTAL UNDERPAYMENT AMOUNT $0.00 $0.00 $0.00 $0.00
106.The First Respondent repaid the Total Underpayment Amount to each of the Employees on 31 March 2016, as set out in the table in paragraph 105 above.
Record-keeping contraventions
Contraventions of subsection 535(1) of the FW Act – failing to make and keep records as prescribed by the FW Regulations
107.At all material times, the First Respondent was required by subsection 535(1) of the FW Act to make, and to keep for a period of 7 years, a record in accordance with regulation 3.33 of the FW Regulations recording, inter alia:
(a)the rate of remuneration paid to each of the Employees, per subregulation 3.33(1)(a);
(b)the gross and net amounts paid to each of the Employees, per subregulation 3.33(1)(b);
(c)any deductions made from the gross and net amounts paid to each of the Employees; per subregulation 3.33(1)(c);
(d)the hours of work worked by each of the Employees, per subregulation 3.33(2);
(e)the loadings which each of the Employees were entitled to be paid, per subregulation 3.33(3)(c); and
(f)the penalty rates which each of the Employees were entitled to be paid, per subregulation 3.33(3)(d).
108.The First Respondent did not make and keep records in relation to any of the matters referred to in paragraph 107 above in respect of each of the Employees.
109.By reason of the matters admitted in paragraphs 107 and 108 above, the First Respondent:
(a)failed to make and keep records in respect of the Employees as prescribed by subregulations 3.33(1)(a), 3.33(1)(b), 3.33(1)(c), 3.33(2), 3.33(3)(c) and 3.33(3)(d) of the FW Regulations; and
(b)thereby contravened subsection 535(1) of the FW Act.
Contraventions of subsection 536(1) of the FW Act – failing to issue pay slips
110.At all material times, the First Respondent was required to provide each of the Employees with pay slips within one day of paying an amount to each of them in relation to the performance of work, in accordance with section 536 of the FW Act.
111.The First Respondent failed to provide the Employees with any corresponding pay slips during their respective Employment Periods for payments made to each of the Employees in relation to the performance of work.
112.By reason of the matters admitted in paragraphs 110 and 111 above, the First Respondent contravened subsection 536(1) of the FW Act.
Contraventions of subregulation 3.44(1) of the FW Regulations – failing to keep records that are not false or misleading
113.At all material times, the First Respondent was required by subregulation 3.44(1) of the FW Regulations to ensure that a record it was required to keep under the FW Act or the FW Regulations was not false or misleading to its knowledge.
114.Pursuant to the matters admitted in paragraph 24 above, the August NTP issued to the First Respondent, through Mr Yoon, required, inter alia, all time and wages records relating to each of the Employees.
115.In response to the August NTP, the First Respondent caused to be created the Fortnightly Pay Records in respect of each of the Employees which covered their respective Employment Periods and contained, inter alia, the following identical information:
(a)the Employees were each paid $1,640.00 (gross) and $1,400.00 (net) by the First Respondent each and every fortnight during their respective Employment Periods;
(b)the sum of $240.00 was withheld by the First Respondent from each of the Employees’ gross wages each and every fortnight during their respective Employment Periods as the amount of PAYG withholding tax that would have been payable to the Australian Tax Office;
(c)a nil amount was deducted from the Employees’ wages each and every fortnight during their respective Employment Periods;
(d)the Employees were each paid at the rate of $16.40 per hour for all hours worked during their respective Employment Periods; and
(e)the Employees each worked 100 hours per fortnight for every fortnight during their respective Employment Periods.
116.In response to the August NTP, the First Respondent caused to be created the PAYG Payment Summaries in respect of each of the Employees which contained the following information:
(a)in respect of Ms Han and Ms Jo, they were each paid the total amount of $22,960.00 (gross) during the 2014/15 financial year and each had the total amount of $3,360.00 withheld from the aforementioned gross total as the amount of PAYG withholding tax that would have been payable to the Australian Tax Office for the 2014/15 financial year; and
(b)in respect of Ms An, she was paid the total amount of $32,800.00 (gross) during the 2014/15 financial year and had the total amount of $4,800.00 withheld from the aforementioned gross amount as the amount of PAYG withholding tax that would have been payable to the Australian Tax Office for the 2014/15 financial year.
117.The Fortnightly Pay Records and the PAYG Payment Summaries were created after the August NTP was served and produced to the Applicant as a record that the First Respondent was required to keep under the FW Act or the FW Regulations.
118.The Fortnightly Pay Records and the PAYG Payment Summaries were created for and on behalf of the First Respondent by the Third Respondent at the direction and under the instruction of the Second Respondent.
119.By reason of the matters admitted in paragraphs 15(c), 15(d), 16, 19 and 20 above, the Fortnightly Pay Records and the PAYG Payment Summaries were false and misleading in that they incorrectly recorded:
(a)the rate of remuneration paid to each of the Employees;
(b)the gross and net amounts paid to each of the Employees;
(c)the hours worked by each of the Employees; and
(d)the amounts deducted from the Employees’ wages.
120.When the First Respondent caused the Fortnightly Pay Records and the PAYG Payment Summaries to be made and kept, the First Respondent knew that the said records were false and misleading:
(a)because of the matters admitted in paragraphs 3, 15(c), 15(d), 16, 19, 20 and 36 above; and
(b)because the Second Respondent was acting within the scope of his actual or apparent authority in directing the Third Respondent to create the records.
121.By reason of subsection 793(2) of the FW Act, the state of mind of the Second Respondent was, at the relevant time, the state of mind of the First Respondent.
122.By reason of the matters admitted at paragraphs 107 and 113 to 121 above, the First Respondent contravened subregulation 3.44(1) of the FW Regulations.
Contraventions of subregulation 3.44(6) of the FW Regulations – making use of false or misleading records
123.At all material times, the First Respondent was required by subregulation 3.44(6) of the FW Regulations to not make use of an entry in an employee record that it was required to make and keep under Subdivision 1 of Division 3 of Part 3-6 of the FW Regulations, if it did so knowing that the entry was false or misleading.
124.Pursuant to regulation 3.33 of the FW Regulations and in respect of the Employees, the First Respondent was required to make and keep records of the kind outlined in paragraph 107 above.
125.By reason of the matters admitted at paragraphs 27 and 32 above, the First Respondent produced to the Applicant, through Mr Yoon:
(a)the Fortnightly Pay Records on 17 September 2015 and 29 September 2015; and
(b)the PAYG Payment Summaries on 17 September 2015.
126.By reason of the matters admitted at paragraphs 114 to 117, the First Respondent made use of the Fortnightly Pay Records and PAYG Summaries when it produced these records to the Applicant in response to the August NTP, and by doing so, represented to the Applicant that they were true and accurate records of the First Respondent.
127.By reason of the matters admitted at paragraphs 117 to 121 above, at the time of producing the Fortnightly Pay Records and the PAYG Payment Summaries to the Applicant, the First Respondent knew that the entries in these records in respect of the Employees were false and misleading in that they incorrectly recorded the information specified in paragraph 119 above.
128.By reason of the matters admitted at paragraphs 123 to 127 above, the First Respondent contravened subregulation 3.44(6) of the FW Regulations.
PART E: ACCESSORIAL LIABILITY
The Second Respondent
129.The Second Respondent was the person who, on behalf of the First Respondent, engaged the services of the Third Respondent and Mr Yoon during and in relation to the Applicant’s investigation of the First Respondent, and in doing so:
(a)provided instructions to the Third Respondent as to the hours worked, rate of pay received, and total fortnightly wages earned by the Employees during their respective Employment Periods;
(b)instructed the Third Respondent to make the PAYG Payment Summaries and Fortnightly Pay Records in or about September 2015, as agreed in paragraph 27 above; and
(c)instructed the Third Respondent, through Mr Yoon. to provide the PAYG Payment Summaries and Fortnightly Pay Records to the FWO, through Mr Yoon, on 17 September 2015 and 29 September 2015, as agreed in paragraphs 28 and 32 above, based on the information in sub-paragraph 129(a) above.
130.At all material times (including by reason of the matters admitted in paragraphs 3, 63 and 129 above), the Second Respondent:
(a)had actual knowledge of the factual matters which comprise each of the Admitted Contraventions; and
(b)was an intentional participant in the factual matters which comprise each of the Admitted Contraventions.
131.By reason of the matters admitted in paragraphs 3, 63 and 130 above, the Second Respondent:
(a)aided, abetted, counselled or procured; and/or
(b)was, by his acts or omissions, directly or indirectly, knowingly concerned in or a party to the Admitted Contraventions.
132.By reason of the matters admitted in paragraphs 129 to 131 above, the Second Respondent was involved, within the meaning of subsection 550(2) of the FW Act, in each of the Admitted Contraventions, and by reason of subsection 550(1) of the FW Act, is taken to have committed the Admitted Contraventions.
The Third Respondent
133.The Third Respondent was aware that the First Respondent was issued the August NTP in respect of the Employees’ employment with the First Respondent.
134.On or about 8 September 2015, the Third Respondent received a copy of the August NTP from Mr Yoon.
135.The Third Respondent was aware of the nature of the records or documents required for production to the Applicant pursuant to the August NTP, and the reasons for such production.
136.The Third Respondent was aware that the PAYG Payment Summaries and Fortnightly Pay Records were not accurate, for the reasons agreed in paragraphs 115 to 119 above.
137.The Third Respondent knew that the PAYG Summaries and Fortnightly Pay Records were provided to the Applicant.
138.By reason of the matters admitted in paragraphs 4, 64, 118 and 133 to 137 above, the Third Respondent:
(a)had actual knowledge of the factual matters which comprise the contraventions admitted by the First Respondent, as set out in paragraphs 122 and 128 above; and
(b)was an intentional participant in the factual matters which comprise the contraventions admitted by the First Respondent, as set out in paragraphs 122 and 128 above.
139.By reason of the matters admitted in paragraph 138 above, the Third Respondent:
(a)aided, abetted, counselled or procured; and/or
(b)was, by his acts or omissions, directly or indirectly, knowingly concerned in or a party to the contraventions admitted by the First Respondent, as set out in paragraphs 122 and 128 above.
140.By reason of the matters admitted in paragraphs 133 to 139 above, the Third Respondent was involved, within the meaning of subsection 550(2) of the FW Act, in the contraventions admitted by the First Respondent as set out in paragraphs 122 and 128 above, and by reason of subsection 550(1) of the FW Act, is taken to have committed those contraventions.
PART F: DECLARATIONS AND ORDERS SOUGHT
141.The Parties consent to the making of the following declarations:
(a)Declarations that the First Respondent contravened:
(i) section 45 of the FW Act, by failing to pay Ms An and Ms Han the minimum rates of pay in accordance with clause 17 of the Modern Award;
(ii) section 45 of the FW Act, by failing to pay Ms Han and Ms Jo the required minimum junior rates of pay in accordance with clause 18 of the Modern Award;
(iii) section 45 of the FW Act by failing to pay each of the Employees their required casual loading in accordance with clause 13.2 of the Modern Award;
(iv) section 45 of the FW Act, by failing to pay Ms Jo the required loading for all ordinary hours worked on a Saturday in accordance with subclause 25.5(b) of the Modern Award;
(v) section 45 of the FW Act, by failing to pay Ms Jo the required loading for all ordinary hours worked on a Sunday in accordance with subclause 25.5(c)(ii) of the Modern Award;
(vi) section 45 of the FW Act, by failing to pay Ms Jo the required rate for all hours worked on a public holiday in accordance with clause 30.3 of the Modern Award;
(vii) subsection 323(1) of the FW Act, by failing to pay each of the Employees in full;
(viii) subsection 535(1) of the FW Act, by failing to make and keep employee records as prescribed by regulation 3.33 of the FW Regulations in respect of the Employees;
(ix) subsection 536(1) of the FW Act, by failing to provide pay slips to the Employees;
(x) subregulation 3.44(1) of the FW Regulations, by keeping employee records in relation to the Employees knowing that those records were false and/or misleading; and
(xi) subregulation 3.44(6) of the FW Regulations, by making use of entries in employee records relating to the Employees, by providing those records to the Applicant, knowing that those records were false and/or misleading.
(b)A declaration that the Second Respondent was involved in each of the First Respondent’s contraventions identified in subparagraph 141(a) above, pursuant to subsection 550(1) of the FW Act.
(c)A declaration that the Third Respondent was involved in the First Respondent’s contraventions identified in subparagraphs 141(a)(x) and 141(a)(xi) above, pursuant to subsection 550(1) of the FW Act.
142.The Parties consent to the making of the following orders:
(a)An order that the First Respondent pay penalties pursuant to subsection 546(1) of the FW Act in respect of the contraventions identified in subparagraph 141(a) above;
(b)An order that the Second Respondent pay penalties pursuant to subsection 546(1) of the FW Act in respect of his involvement in the contraventions identified in subparagraph 141(a) above;
(c)An orders that the Third Respondent pay penalties pursuant to subsection 546(1) of the FW Act in respect of his involvement in the contraventions identified in subparagraphs 141(a)(x) and 141(a)(xi) above;
(d)An order pursuant to subsection 546(3)(a) of the FW Act that the penalties referred to in subparagraphs 142(a) to 142(c) above be paid to the Consolidated Revenue Fund of the Commonwealth within 28 days of being ordered.
(e)An order pursuant to subsections 545(1) and/or 545(2)(a) of the FW Act that within a period of two months, the First Respondent is to:
(i) register the Business with the Applicant's "My Account" portal at and complete the profile including the Award options;
(ii) provide to the Applicant its "My Account" registration number;
(iii) register the Business with the Applicant's Online Learning Centre at and complete all education courses designed for employers;
(iv) download and complete for all current employees the following templates at
(A)letter of engagement − casual employee;
(B)pay slip template;
(C)weekly time and wages records template;
(D)record of employee details template; and
(E)timesheet template; and
(v) complete the "Hiring employees" training module in the Online Learning Centre accessible at order pursuant to subsection 545(1) of the FW Act that the First Respondent provide written confirmation and evidence to the Applicant of its compliance with the order in subparagraph 142(e) above within seven days of the timeframe specified in subparagraph 142(e).
(g)An order pursuant to subsections 545(1) and/or 545(2)(a) of the FW Act that the Second Respondent comply with the requirements set out in subparagraphs 142(e) and 142(f) above in respect of any other business owned and/or operated by a body corporate of which the Second Respondent is an officer.
(h)An order that the Applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
(i)Such further orders as the Court deems appropriate.
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