Fair Work Ombudsman v Le - [2018] FCCA 1578

FEDERAL CIRCUIT COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v LE & ANOR

[2018] FCCA 1578

Catchwords:
INDUSTRIAL LAW – Breach of terms of modern award and national employment standard – failure to pay minimum wage and penalties for weekend work and out of hours work – provision of false and misleading employment records – failure to provide appropriate wage slips and pay wages either weekly or fortnightly – late acceptance of liability – penalty to be imposed.

Legislation:
Fair Work Act 2009, s.3(b) & (c), 712(1), 539(2)
Crimes Act 1914 (Cth), 4AA
Acts Interpretation Act (1901) (Cth), s.15AB(1)(b)
Evidence Act (1995) (Cth), s.191

Cases cited:
Fair Work Ombudsman v Kentwood Industries Pty Ltd (No3) [2011] FCA 579
Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151
Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Kelly v Fitzpatrick [2007] 166 IR 14
Blandy v Coverdale NT Pty Ltd [2008] FCA 1533
Veen v R (No 2) (1988) 164 CLR 465
FWO v Ramsey Food Processing Pty Ltd (No 2) [2012] FCA 408
Rocky Holdings Pty Ltd & Anor v Fair Work Ombudsman [2014] FCAFC 62
FWO v NSH North Pty Ltd [2017] FCA 1301
Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412
Yorke & Anor v Lucas [1985] HCA 65; (1985) 158 CLR 661
Armstrong v Bigeni Contracting Pty Ltd & Anor [2008] FMCA 485
FWO v Australian Sales & Promotions Pty Ltd & Anor [2016] FCCA 2804
ACE Insurance Limited v Trifunovski (No 2) [2012] FCA 793
Re Porter (1989) 34 IR 179
FWO v Taj Palace Tandoori Indian Restaurant Pty Ltd & Anor [2012] FMCA 258
FWO v ECFF Pty Ltd [2014] 2996
FWO v Maclean Bay Pty Ltd (No 2) [2012] FCA 557
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543
Plancor Pty Ltd v Liquor Hospitality & Miscellaneous Union (2008) 171 FCR 357
Kelly v Fitzpatrick [2007] FCA 1080

Applicant:

FAIR WORK OMBUDSMAN

First Respondent:

MINH GIA LE

Second Respondent:

HOUSE OF POLISH CENTRAL PTY LTD

File Number:

ADG 429 of 2016

Judgment of:

Judge Brown

Hearing date:

13 February 2018

Date of Last Submission:

13 February 2018

Delivered at:

Adelaide

Delivered on:

29 June 2018

REPRESENTATION

Counsel for the Applicant:

Mr Vincent

Solicitors for the Applicant:

Office of the Fair Work Ombudsman

Counsel for the Respondents:

Mr Krips

Solicitors for the Respondents:

EMA Legal

ORDERS

It being noted that in these orders the expression “sole trader contravention period” refers to the period from 24 November 2014 to 18 October 2015; the expression “company contravention period” refers to the period from 19 October 2015 to 5 March 2016; and the expression “the Employees” refers to both Ms Baluning and Ms Peralta.

THE COURT ORDERS AS FOLLOWS:

The court declares that during the “sole trader contravention period”, the first respondent Minh Le contravened the following provisions of the Fair Work Act 2009 (Cth) (hereinafter referred to as “the Act”:
(a)section 45 of the Act, by failing to pay the Employees the minimum rate of pay prescribed by clause 17 of the Beauty Award;
(b)section 45 of the Act, by failing to pay the Employees the minimum casual loading prescribed by clause 13.2 of the Beauty Award;
(c)section 45 of the Act, by failing to pay the Employees the minimum Saturday penalty prescribed by clause 31.2(b) of the Beauty Award;
(d)section 45 of the Act, by failing to pay the Employees the minimum Sunday penalty prescribed by clause 31.2(c) of the Beauty Award;
(e)section 45 of the Act, by failing to pay Ms Peralta the minimum outside hours penalty (Monday to Friday) prescribed by clause 13.3 of the Beauty Award;
(f)section 45 of the Act, by failing to pay Ms Peralta the minimum outside hours penalty (Sunday) prescribed by clause 13.3 of the Beauty Award;
(g)subsection 536(1) of the Act, by failing to give the Employees a pay slip within one working day of paying an amount to each of those employees in relation to the performance of work;
(h)subregulation 3.44(1) of the Regulations “Fair Work Regulations 2009” (hereinafter referred to as “the Regulations”, by failing to ensure that records it was required to keep were not false or misleading to his knowledge; and
(i)subregulation 3.44(6) of the Regulations, by making use of entries in employee records, knowing those entries were false or misleading.
The court declares that during the “company contravention period”, the second respondent House of Polish Central Pty Ltd contravened the following provisions of the Act:
(a)section 45 of the Act, by failing to pay Ms Peralta the minimum rate of pay prescribed by clause 17 of the Beauty Award;
(b)section 45 of the Act, by failing to pay Ms Peralta the minimum casual loading prescribed by clause 13.2 of the Beauty Award;
(c)section 45 of the Act, by failing to pay Ms Peralta the minimum Saturday penalty prescribed by clause 31.2(b) of the Beauty Award;
(d)section 45 of the Act, by failing to pay Ms Peralta the minimum Sunday penalty prescribed by clause 31.2(c) of the Beauty Award;
(e)section 45 of the Act, by failing to pay Ms Peralta the minimum outside hours penalty (Monday to Friday) prescribed by clause 13.3 of the Beauty Award;
(f)section 45 of the Act, by failing to pay Ms Peralta the minimum outside hours penalty (Sunday) prescribed by clause 13.3 of the Beauty Award;
(g)subregulation 3.44(1) of the Regulations, by failing to ensure that records it was required to keep were not false or misleading to its knowledge; and
(h)subregulation 3.44(6) of the Regulations, by making use of entries in employee records, knowing those entries were false or misleading.
It is further declared that the first respondent, Minh Le was involved, within the meaning of subsection 550(2) of the Act, in each of the contraventions by the second respondent company as set out in paragraph 2 above.
It is ordered that the first respondent, Minh Le pay pecuniary penalties pursuant to subsection 539(3) and 546(1) of the Act for the contraventions during the:
(a)sole trader contravention period as set out in paragraph 1 above; and
(b)company contravention period as set out in paragraph 3 above in a total amount of $30,000.00.
It is ordered that the second respondent company pay pecuniary penalties pursuant to subsections 539(3) and 546(1) of the Act for the contraventions set out in paragraph 2 above in a total amount of $100,000.00.
It is ordered pursuant to subsection 546(3)(a) of the Act each Respondent pay the pecuniary penalty amounts set out in orders (4) and (5) hereof to the Commonwealth.
It is ordered pursuant to subsection 545(1) of the Act that Minh Le, within 28 days of the date of the orders herein:
(a)register with the Fair Work Ombudsman’s “My Account” portal at and complete the profile including the Award options;
(b)provide to the Fair Work Ombudsman his “My Account” registration number; and
(c)register with the Fair Work Ombudsman’s Online Learning Centre at and complete all education courses designed for employers and provide the Fair Work Ombudsman with evidence of completion of those courses within a further one month.
The Fair Work Ombudsman is granted liberty to apply on 7 days’ notice in the event that any of the preceding orders are not complied with.
The application filed 9 December 2016 is dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

ADG 429 of 2016

FAIR WORK OMBUDSMAN

Applicant

And

MINH GIA LE

First Respondent

HOUSE OF POLISH CENTRAL PTY LTD
Second Respondent

REASONS FOR JUDGMENT

Introduction

The Fair Work Ombudsman[1] commenced these proceedings against Minh Gia Le[2] and House of Polish Central Pty Ltd[3] on 9 December 2016. The proceedings are instituted pursuant to the provisions of the Fair Work 2009 Act (Cth).[4]
[1] Hereinafter referred to as “the FWO” or “the Ombudsman”
[2] Hereinafter referred to as “the first respondent” or “Mr Le”
[3] Hereinafter referred to as “the second respondent” or “House of Polish”
[4] Hereinafter referred to as “the FWA” or “the Act”
At relevant times, namely between November 2014 and October 2015, the respondents operated a business known as the House of Polish, which was a nail salon, at the Colonnades Shopping Centre in Noarlunga, a suburb of Adelaide. It provided a variety of services to its customers, including manicures, pedicures, nail extensions and other beauty industry related services.
Mr Le operated the business, as a sole trader, between 24 November 2014 and 18 October 2015. House of Polish was incorporated on 13 August 2015 and operated the House of Polish from 19 October 2015 onwards.
The FWO in its statement of claim instituting these proceedings[5] alleged that Mr Le, whilst he was a sole trader, breached provisions of the FWA relating to the award wages due to two of his employees. In addition, following the incorporation of House of Polish, it continued the breaches in question, to which breaches Mr Le has accessorial liability because he was involved in the operation of the company.
[5] See statement of claim filed 9 December 2016
The FWO also alleges the respondents did not keep appropriate wage records in respect of the employees concerned and more significantly what records were kept were materially false, so as to justify the under payment.
In all these circumstances, the Ombudsman seeks the imposition of civil penalties against both respondents. It regards the matters alleged by it, particularly the false record keeping claim, to be of the upmost gravity.
The respondents have been legally represented throughout the proceedings. In a response,[6] filed on each of their behalves, each has significantly admitted their respective culpability for infringing the relevant provisions of the FWA. Mr Le himself has borrowed money to make good the underpaid wages.
[6] See response filed 17 February 2017
As a consequence of their stance in the proceedings, the respondents have elected to formally admit their various contraventions of the FWO alleged against each of them.
In these circumstances, the proceedings before the court are concerned not with whether Mr Le and/or House of Polish are civilly liable for breaching the Act but only with the quantum of the penalty which should be imposed upon them.
In these circumstances, the parties have been able to agree upon a statement of agreed facts relating to the various breaches arising from the FWA.[7] Pursuant to section 191 of the Evidence Act (1995) (Cth) the matters agreed to in this document are taken not to be in dispute. The SOAF also contains a part which delineates the matters which are not formally admitted.
[7] See amended agreed statement of facts filed 16 October 2017, hereinafter referred to as the SOAF.
The parties disagree about the overall gravity of the offending in this matter and so about the appropriate quantum of the penalties to be imposed. There are also two other significant areas of controversy. Firstly, Mr Le has deposed that he reconstructed wage records, in response to the investigative intervention of the FWO.
He agrees, as indeed he must, that this was wrong. However, it is his position that, in so doing, he erroneously copied material from a MYOB accounting program, which he thought was accurate. In these circumstances, he asserts his conduct is more coloured by mistake rather than deceit and is therefore less culpable than it would be otherwise. The FWO does not agree. Secondly, Mr Le does not agree that he should be liable accessorily for the action of House of Polish.
These proceedings are directed towards resolving these various controversies between the parties, particularly determining what is the appropriate level of penalty, to be levied on each of the respondents concerned.

Background

Mr Le employed KC Baluning, to work, as a nail technician, at the House of Polish, between 24 November 2014 and 15 August 2015. Ms Baluning was born in the Philippines but has lived in Australia since November 2010. She was twenty one years of age when she started working for Mr Le. Prior to starting at the House of Polish, she worked at a fish and chip shop. She has a certificate qualification in aged care.
Mr Le also employed Margel Peralta between 12 January 2015 and 18 October 2015 to work as a nail technician, at the House of Polish. She too was born in the Philippines, arriving in Australia in November 2012. She was twenty years of age, when she commenced her employment. She can speak and read English, but is not proficient in writing the language. She has a certificate qualification in cookery.
Ms Baluning and Ms Peralta’s employment was covered by the provisions of the Hair & Beauty Industry Award 2010.[8] This Award provided minimum rates of pay for workers in the beauty industry, as well as prescribing other rates of pay for casual work and work performed outside of standard working hours, including on weekends.
[8] Hereinafter referred to as “the Award”
The FWO alleges that the respondents have underpaid Ms Baluning and Ms Peralta and breached other provisions of the Award, in the following ways:
·Failing to pay them the minimum rate of pay prescribed by the Award;
·Failing to pay them the minimum casual loading prescribed by the Award;
·Failing to pay them the minimum rate for work performed on Saturdays;
·Failing to pay them the minimum rate for work performed on Sundays;
·Failing to pay Ms Peralta the amount prescribed for the Award for working outside standard hours on work days.
The Hair & Beauty Industry Award is a modern award. Pursuant to section 45 of the FWA a person must not contravene a term of a modern award. The FWO seeks declaration that each of the respondents has breached the Award in respect of wages and loadings due to Ms Baluning and Ms Peralta.
The FWO calculates the amount of the underpayment to Ms Baluning and Ms Peralta, by both respondents, to be in an amount of $53,021.17.[9] Both underpayments were rectified on 6 December 2017, which is three days prior to the institution of the proceedings.
[9] See ASF at paragraphs 34 and 65. This is calculated as an amount of $40,925.62 relating to the period of sole trading by Mr Le [34]; and an amount of $12,095.55, whilst the House of Polish was operated by the second respondent company [65].
In addition, the FWO alleges that Mr Le failed to provide payslips to Ms Baluning and Ms Peralta, within one working day of paying their wages, in contravention of the provisions of section 536(1) of the FWA, which provides as follows:
“An employer must give a pay slip to each of its employees within one working day of paying an amount to the employee in relation to the performance of work.”
This section is designated a civil remedy provision. As such, if it is found to have been contravened, it can attract the imposition of a pecuniary penalty.
Section 535 of the FWA requires that an employer must keep records relating to its employees in a form prescribed by regulation. In this case, regulation 3.33 of the Fair Work Regulations 2009[10] is relevant. It requires employees to keep and maintain comprehensive records relating to payments made to employees in the following particulars:
·The rate of remuneration paid;
·Gross and net amounts paid;
·Deductions made from any gross amount paid;
·The hours worked by the employee concerned;
·Any penalty rate and/or loading relating to payments made.
[10] Hereinafter referred to as “the Regulations”
For obvious reasons, such records will have no utility if they are not accurate. In this context, regulation 3.44(1) of the Regulations provides as follows:
“An employer must ensure that a record that the employer is required to keep under the Act or these Regulations is not false or misleading to the employer’s knowledge.”
In addition, pursuant to regulation 3.44(6) an employer must not make use of an employee record knowing that the entry in question is false or misleading. This sub-regulation is also designated a civil remedy provision, as is regulation 3.44 (supra).
The FWO is a statutory appointment under the FWA.[11] One of the objects of the FWA is to ensure that employees, in Australia, receive regulated minimum awards of pay and are fairly and transparently treated, in their workplace, without exploitation.[12] One of the responsibilities of the FWO is to monitor compliance with the FWA.
[11] Hereinafter referred to as the FWA or the Act
[12] See FWA at section 3(b) & (c)
In addition, the FWO has a responsibility to educate, advise and assist, both employers and employees, in respect of their respective obligations, arising under the Act and, if necessary, commence proceedings, in appropriate courts, to enforce the FWA.
Pursuant to section 701 of the Act, the FWO is also a fair work inspector. The FWA empowers the Ombudsman to delegate its statutory responsibilities to Fair Work Inspectors. The Act confers upon such inspectors a number of powers in order to ensure compliance with provisions of the Act. Amongst other things, inspectors can enter work premises and require the production of employee records.[13]
[13] See FWA at section 712(1)
In addition, the FWO, as a consequence of its status as a fair work inspector, has statutory authority to bring proceedings under the Act and seek the imposition of penalties, if breaches of the FWA are established.[14]
[14] See FWA at section 539(2)
In December 2015 Ms Baluning and Ms Peralta attended the office of the FWO in Adelaide, where they met with David William Warner, who is a Fair Work Inspector and has been since 2009. Mr Warner was subsequently appointed by the FWO to investigate Ms Baluning and Ms Peralta’s complaints of having been underpaid by the respondents.[15]
[15] See affidavit of David William Warner filed 7 December 2016

Mr Warner’s evidence

Mr Warner has deposed that he has previously been involved with auditing the employer aspects of Mr Le’s business at House of Polish on two occasions prior to his involvement because of the complaints of Ms Baluning and Ms Peralta. The contraventions took place in January 2012 and March of 2015.
In respect of the incident in January 2012, Mr Warner identified an underpayment of $1,325.04, as a consequence of Mr Le having breached the award in respect of minimum hourly rates of pay and penalties to his employees. As Mr Le rectified the underpayment, the FWO took no further action against him.
Prior to the incident of March of 2015, the FWO inaugurated a campaign to educate employers, in the hair and beauty industry, about their responsibilities under Commonwealth workplace law. It being the perception of the FWO that employees in this industry were potentially vulnerable to exploitation, given the nature of the industry and the fact that many employers were small in scale and so not well placed to know their workplace obligations.
As a consequence of this, a second audit occurred in respect of Mr Le’s business and he was issued with a Notice to Produce Records of Documents pursuant to section 712 of the FWA. Such notices require the production of specified documents, particularly wage records, within fourteen days of service.
As a consequence of this process, Mr Warner identified further underpayments of $2,844.08 relating to the failure of Mr Le to pay minimum hourly rates of pay, casual loadings and Saturday penalties under the Award. Mr Warner also identified a failure to issue payslips.
As a consequence of these matters, the FWO elected to issue a formal written caution to Mr Le, in respect of his conduct of his business. The caution was issued on 3 July 2015.[16] It identified three areas of contravention, as follows:
·Section 45 of the Act, failing to pay minimum wage, for casual employees engaged as nail technicians, for ordinary hours worked;
·Section 45 of the Act, failing to pay penalty rates under the Award for work performed on a Saturday;
·Section 536 of the Act, failing to provide a payslip.
The respondents have each formally admit these matters, which have relevance to the calculation of penalties applicable in the current proceedings. Once again, the underpayments were rectified following its identification by the FWO.[17]
[16] See annexure 5 to Mr Warner’s affidavit
[17] See SOAF at [16]-[18]

In December of 2015, Ms Peralta approached the FWO because she was concerned that she was not being paid appropriately by House of Polish. Mr Warner was nominated to investigate her complaint. Ms Baluning also attended at the FWO offices around the same time.
Both Ms Baluning and Ms Peralta were able to provide Mr Warner with a number of documents, which each had compiled during the period of their employment.
In Ms Baluning’s case, she supplied her personal calendar for the period between November 2014 and August 2015. In Ms Peralta’s case she supplied her personal diary for the period between 11 January 2015 and 5 March 2016.
As a consequence of his contact with Ms Baluning and Ms Peralta, Mr Warner issued further Notices to Produce Records or Documents to both Mr Le and House of Polish requiring each of them to provide work records to him. The Notices to Produce were issued on 29 February and 4 March 2016 respectively.
Mr Le subsequently requested a time extension to comply with the Notices to Produce. On 21 March 2016, Mr Le, on both his own behalf and that of House of Polish supplied records, which purported to be the hours of work of both Ms Baluning and Ms Peralta, as well as other employees of the business.
It is Mr Warner’s evidence, which is accepted by both respondents, that when he compared the records supplied to him by Ms Baluning and Ms Peralta, with the records supplied by Mr Le, he discovered that the employers’ records indicated that the two employees concerned worked significantly less hours than recorded in their own records. Mr Warner also had bank records and some payslips to support his findings.
As a consequence of his findings, Mr Warner formally wrote to Mr Le, in both his personal capacity and as a director of House of Polish Central Pty Ltd, on 21 September 2016, in order to detail the audit findings made by him.[18] These findings can be summarised as follows:
[18] See annexure 27 to Mr Warner’s affidavit
·Ms Baluning commenced working at Mr Le’s nail salon on 24 November 214 and ceased her employment on 25 July 2015;
·Ms Peralta commenced on 12 July 2015 and ceased her employment on 5 March 2016;
·Neither employee had any formal qualifications as a nail technician and each undertook on the job training.
·As a consequence, Mr Warner concluded that both women were employed as unqualified nail technicians rather than apprentices;
·The second respondent operated the House of Polish Nail Salon from 19 October 2015 onwards;
·The ordinary hours of work, pursuant to the Award, are:
·7:00am – 9:00pm, Monday to Friday;
·7:00am to 6:00pm, on Saturdays;
·10:00am to 5:00pm, on Sunday;
·Employees are entitled to receive 50% of the base rate of pay for work performed by casual employees outside ordinary hours on Monday to Saturday and 100% loading for work performed outside ordinary hours on a Sunday;
·The appropriate classification, under the Award, for both Ms Baluning and Ms Peralta was level 2, unqualified nail technician. Initially the minimum base rate of pay was $18.97 per hour, which after 1 July 2015 increased to $19.44;
·Both were to be regarded as casual employees;
·The Award allows for a casual loading of 25%, for ordinary hours of work, performed between Monday and Friday;
·The Award allows a loading of 33% for work performed on a Saturday;
·The Award allows a loading of 100% for work performed on a Sunday;
·The Award allows a penalty rate of double time and a half for work performed on a public holiday.
Mr Warner concluded that both Ms Baluning and Ms Peralta had been underpaid in respect of their base rate, as unqualified nail technicians, by firstly Mr Le between 12 January 2015 and 13 August 2015; thereafter Ms Peralta alone had been underpaid by House of Polish.
Mr Warner also concluded that the employees had been underpaid in respect of their entitlement to casual loading and in respect of Saturday and Sunday penalties and other work performed outside of work hours.
In the period since Mr Warner performed his calculation and advised Mr Le of them formally, the parties have agreed upon a schedule of the underpayments made to both employees by Mr Le (the sole trader period) and by the company to Ms Peralta alone (the company period).
These calculations are as follows:
Table 1 - Underpayments to Ms Baluning during the Sole Trader Contravention
Period 1 =1 July 2014- 5 July 2015; Period 2 =6 July 2015 = 30 June 2016

A	B	C	D	E
Entitlement	Period	Hourly rate	Hours	Entitlement	Amount paid	Underpayment
Minimum hourly rate (ordinary hours)	Period 1	$18.97	968	$18,362.96	$8,420.55	$11,261.07
Minimum hourly rate (ordinary hours)	Period 2	$19.44	121.33	$2,358.66	$1,040.00	$11,261.07
Casual loading	Period 1	$4.74	766.50	$3,633.21	$0.00	$4,113.52
Casual loading	Period 2	$4.86	98.83	$480.31	$0.00	$4,113.52
Saturday penalties	Period 1	$6.26	157.50	$985.95	$0.00	$1,130.40
Saturday penalties	Period 2	$6.42	22.50	$144.45	$0.00	$1,130.40
Sunday penalties	Period 1	$18.97	44	$834.72	$0.00	$834.68
Sunday penalties	Period 2	$19.44	0	0	$0.00	$834.68
Total						$17,339.67

Table 2 - Underpayments to Ms Peralta during the Sole Trader Contravention Period
Period 1 =1 July 2014- 5 July 2015; Period 2 =6 July 2015 = 30 June 2016

A	B	C	D	E
Entitlement	Period	Hourly rate	Hours	Entitlement	Amount paid	Underpayment
Minimum hourly rate (ordinary hours)	Period 1	$18.97	953.99	$18,097.19	$6,827.08	$14,864.64
Minimum hourly rate (ordinary hours)	Period 2	$19.44	359.59	$6,990.43	$3,395.90	$14,864.64
Casual loading	Period 1	$4.74	705.33	$3,343.26	$0.00	$4,597.58
Casual loading	Period 2	$4.86	258.09	$1,254.32	$0.00	$4,597.58
Saturday penalties	Period 1	$6.26	136.74	$855.99	$0.00	$1,247.61
Saturday penalties	Period 2	$6.42	61.00	$391.62	$0.00	$1,247.61
Sunday penalties	Period 1	$18.97	106.50	$2,020.31	$0.00	$2,768.75
Sunday penalties	Period 2	$19.44	38.50	$748.44	$0.00	$2,768.75
Outside hours (Monday to Friday)	Period 1	$9.49	2.34	$22.21	$0.00	$34.36
Outside hours (Monday to Friday)	Period 2	$9.72	1.25	$12.15	$0.00	$34.36
Outside hours (Sunday)	Period 1	$18.97	3.08	$58.43	$0.00	$73.01
Outside hours (Sunday)	Period 2	$19.44	0.75	$14.58	$0.00	$73.01
Total						$23,585.95

Table 3 - Underpayments to Ms Peralta during the Company Contravention Period
Period 2 = 6 July 2015- 30 June 2016

A	B	C	D	E
Entitlement	Period	Hourly rate	Hours	Entitlement	Amount paid	Underpayment
Minimum hourly rate (ordinary hours)	Period 2	$19.44	844.33	$16,413.78	$9,991.25	$6,422.53
Casual loading	Period 2	$4.86	630.50	$3064.23	83.32	$2,980.91
Saturday penalties	Period 2	$6.42	112.50	$722.25	$0.00	$722.25
Sunday penalties	Period 2	$19.44	100	$1944.00	$0.00	$1,944.00
Outside hours (Sunday)	Period 2	$19.44	1.33	$25.86	$0.00	$25.86
Total						$12,095.55

Both respondents have formally admitted these calculations. As previously indicated, the underpayments in total amount to $53,021.17, of which $17,339.67 was due to Ms Baluning; with $35,681.50 being due to Ms Peralta.
Mr Warner has also calculated the difference between the hours worked by Ms Peralta and Ms Baluning as recorded by Mr Le; and those recorded by the two employees.[19] The disparities are, in my view, significant and markedly favour the employer. This of course is reflected in the amounts of underpayment calculated above.
[19] See affidavit of David William Warner filed 15 December 2017 at paragraphs 25 - 27
As a consequence of the audit undertaken by him, Mr Warner gave Mr Le the opportunity to take part in a formal record of interview with him. This interview took place on 23 August 2016.

Ms Baluning’s evidence

Ms Baluning has deposed that she started working at Mr Le’s nail salon on 24 November 2014. It was her practice to mark her calendar with an X when she had worked a particular day. As previously indicated, she provided her calendar to Mr Warner who utilised it to compare with the records supplied by Mr Le.
Ms Baluning has also deposed that she did not always receive payslips and when she did, the hours of work recorded upon them, did not accord with the hours she believed she had worked.

Ms Peralta’s evidence

Ms Peralta has deposed that she generally worked 5 to 7 days each week for between 40 and 50 hours. In respect of payslips, she deposes as follows:
“From the time I commenced my employment until around July 2015 I did not receive pay slips.
Because of this I was not always able to tell my rate of pay. I know that for my first week of work I was paid $90 in cash and thereafter my rate of pay increased up to around $100 per day, but varied from week to week.[20]
[20] See Ms Peralta’s affidavit of evidence filed 19 May 2017 at paragraph 26
Ms Peralta’s evidence is that she was meticulous in recording her hours of work in her personal diaries. She did this because one of her teachers, at TAFE, had advised her of the utility of such a practice.
I accept the submission of counsel for the FWO that particularly without Ms Peralta’s records, the industrial regulator would not have been able to establish the underpayments in question and moreover would not have been in a position to have established the erroneous nature of the records subsequently submitted by Mr Le.
In this context, in my view, it is a significant factor that the respondents each employed several other employees, who were not as meticulous as either Ms Baluning or Ms Peralta in keeping some form of independent record of hours worked. As a consequence, the FWO has not been able to establish any other breaches of the applicable legislation so far as other employees of the respondents are concerned.

Mr Le’s evidence

Mr Le was born on 3 July 1975 in Saigon, Vietnam. He moved to Australia in 1991 and is now an Australian citizen. I accept Vietnamese is his first language and, although he speaks English with reasonable fluency, he has some difficulty in understanding complex concepts, when expressed in English.
Mr Le has been involved in the nail salon business for a number of years, initially operating as a franchisee of an American nail company. He commenced his own business, at the Colonnades Shopping Centre, in 2015. There is no controversy that initially he operated the business as a sole trader, but from October 2015, the company incorporated by him – House of Polish Central Pty Ltd – took over the running of the business. Mr Le was the company’s sole director.
Mr Le’s evidence is uncontroversial that he managed the House of Polish business, both when he was a sole trader and later after the second respondent had assumed control. In particular, he allocated the hours of work of each staff member and calculated their respective pay.
His evidence is that he did so from a budget, prepared in advance, using an Excel spreadsheet, stored on his computer. On this spreadsheet were recorded the specific number of hours of work to be allocated to each employee for the forthcoming work.
As previously indicated, as a consequence of Mr Warner’s investigations, both respondents were subject to a notice to produce documents, which were served on them in the early part of 2016.
Mr Le has deposed that, between Christmas of 2015 and the receipt of the notice, he experienced a cyber attack, which caused him to lose all the records and information stored in his computer, particularly the budget documents, which showed the specific number of hours allocated to each employee.[21]
[21] See affidavit of Mr Le filed 23 June 2017 at paragraph 55-58
Mr Le has further deposed that he did not know that he was required to complete records that showed the hours each of his employees worked. Independently of the records asserted to have been lost by him, Mr Le utilised a MYOB software program to calculate his payroll.
As the MYOB data was stored outside his computer, he has deposed that it was not lost during the cyber attack. In this context, Mr Le deposes as follows:
“Although they were not records of actual hours worked, the Budget documents would complement the MYOB information in identifying the hours of work of each employee in a given week.”
It is the effect of Mr Le’s evidence that he was alarmed by the Notice to Produce and did not know how to respond to it. In this context, he has deposed as follows:
“The Notices to Produce required us to produce documents including records as to the hours the Employees worked. I did not have any complete records that showed the hours the Employees worked. I had not known that I needed to keep them. None of my previous contact with FWO had involved record keeping. The only source of information I had about the hours employees worked was what was stored in the MYOB payroll software. … I used the information in MYOB about how many hours employees had been paid for and combined it with my own knowledge of work arrangements in the shop. created a series of documents that showed the hours and days of work of the Employees. then took these to the store and asked all employees to sign them if they agreed.
In creating those documents I did what I thought I needed to do to comply with the Notices. … I now realise doing it that way was a serious mistake. I have learned about my record-keeping obligations and would never again create any documents after being required to produce things to anyone.
I did what I did because I did not know what to do but knew that I had to comply with the Notices. The Notices both refer to serious penalties for failing to comply which I found intimidating. I was scared that I would get into trouble if I did not have some of the records I needed to show. I understand now that I should simply have given FWO what documents I did have and told them upfront that I had nothing further to provide.
I am very sorry for what I did in relation to records. I understood from my lawyers that the law is not entirely clear about some of the record keeping rules but I then decided not to contest the allegations and I ask the Court to take my explanation into account.”[22]
[22] See affidavit of Mr Le filed 20 November 2017 at [22] – [25]
In his affidavit material, Mr Le has expressed his remorse for the admitted omissions in respect of his employee records. He accepts that those records were wrong but disputes any assertion that he compiled the records with a view to deliberately misleading the FWO. In these circumstances, he contends that this is a factor relevant to the calculation of penalty arising in respect of the contravention of regulation 3.44(6).
It is Mr Le’s evidence that the House of Polish business was not financially profitable. In the financial year ending 2017 its turnover was approximately $570,000.00, but it had significant overheads, the largest being wages ($220,000.00) and rent ($180,000.00). As a consequence, he asserts its profit for the year was $66,694.00.[23]
[23] Ibid at paragraph 28
It is further Mr Le’s evidence that the business has financially deteriorated during the first half of the current financial year. As such, he does not regard House of Polish Central Pty Ltd to be a profitable company.
In addition, he has deposed that the nail business is a competitive one. As such, the business is not in a position to increase its prices. As a consequence Mr Le has deposed that the business does not offer much of a margin for profit. As at November of 2017, the business was one month behind in its rent.
Mr Le has previously owned two other nail salons. One of which was sold at a loss and one for a small profit. He has a personal tax debt of approximately $47,000.00.
Mr Le owns an investment property in Woodville West, which is subject to mortgage leaving him with an equity of approximately $110,000.00. He has not provided evidence in respect of any other significant asset owned by him. He deposes that he does not draw a wage from the business, but receives a distribution of its profits, which are not currently significant.
As previously indicated, Mr Le borrowed money to rectify the underpayment of wages to Ms Baluning and Ms Peralta. The overall effect of his evidence is that he is not in a strong financial position. He has also deposed that he underpaid the employees concerned because he was under the misconception that they could be regarded as being apprentices because of their lack of prior experience, as nail technicians, and the fact that they were receiving on-the-job training.

Issues in contention

The parties are in dispute about the manner in which the various contributions should be grouped and the severity of the offending overall, particularly in regards to the record keeping offences. In this regard, the FWO contends as follows:
·Mr Le has committed nine offences, which require separate penalties under the Act;
·House of Polish has committed seven provisions of the Act, which require separate penalties;
·Mr Le, as the sole director and shareholder of House of Polish, has accessorial responsibility for each of the companies breaches;
·In these circumstances, penalties should be imposed on Mr Le in respect of sixteen contraventions;
·Each of the contraventions, particularly the record keeping counts, must be regarded as serious in nature, warranting significant penalties;
·Given the respondents have a prior history of non-compliance and continue to operate in the beauty industry, there is a need to impose penalties which reflect the need for specific deterrence.
In these circumstances, the FWO has calculated that the maximum penalty potentially available to be imposed on Mr Le is $138,600.00. It proposes that a penalty of $70,992.00 be imposed, which is 49.3% of this amount.[24]
[24] See annexure A: table 1 to the applicants submissions on penalty
In respect of House of Polish, the FWO has calculated the maximum possible penalty to be $306,000.00. It seeks the imposition of a total penalty, in respect of the seven counts, of $162,280.00, which is 52.71% of this sum.[25]
[25] Ibid at table 2
On the other hand, counsel for Mr Le and House of Polish contends as follows:
·The nine counts affecting Mr Le should be grouped, on the basis of common elements, so that there are seven offences to which penalties attach;
·On the basis of his cooperation and guilty plea, there should be a discount of 25% to the penalty relevant to each of these offences;
·The offending should not be categorised as being particularly serious and should be calculated by reference to a range of between 10% and 20%, of the adjusted maximum;
·So far as House of Polish is concerned, the offending should be grouped into six offences;
·Again, a discount of 25% should apply to the maximum on the basis of cooperation;
·The range of penalty should be between 10% and 20% of the adjusted maximum.
It is also the submission of counsel for Mr Le’s that to impose fines on his client, on the basis of accessorial liability, would result in him being punished twice for the same course of conduct, which would be unfair. This is because the evidence indicates that Mr Le’s interests and those of his family are essentially inseparable from those of the company.
In all these circumstances, it is clear that the parties have very different views as to the applicable penalty range, in this case. Counsel for Mr Le and House of Polish submits that the range, so far as Mr Le is concerned, is between $4,725.00 and $9,450.00; and for the company between $21,600.00 and $43,200.00.[26]
[26] See respondents submissions on penalty at pages 18-19

The legal provisions applicable

The objects of the Fair Work Act are set out in section 3. Amongst these is the following:
“ensuring a guaranteed safety net of fair, relevant and enforceable minimum wages and conditions through the National Employment Standards, modern awards and national minimum wage orders;” [FWA section 3(b)]

This object contains the gravamen of the FWO’s submissions regarding the overall seriousness of the offending, by the respondents, in this matter. It contends that the respondents have comprehensively failed in their obligations to Ms Baluning and Ms Peralta to provide to them each with the minimum level of remuneration required by the award and so provide each of the individuals concerned with a legislative mandated safety net, so far as their pay and conditions were concerned.
In this context, the FWO relies on the fact that Mr Le paid each of the employees concerned at the rate of $12.00 per hour, when the minimum hourly rate applicable, even for a first year adult apprentice, was $15.71 per hour, to which various penalties applied. In these circumstances, the FWO would categorise the offending as being both serious and either reckless or deliberate.
The above objective is taken up by a specific objective, in respect of the implementation of a system of modern awards, which is contained in section 134 of the Act. It is to ensure a fair and relevant minimum safety net in terms of the provision of conditions relevant to employment. Amongst other things, it is to ensure additional remuneration for overtime; work on weekends; and public holidays [section 134(1) (da)].
As previously indicated, the Hair & Beauty Award 2010 is a modern award and applies to employers/employees in the hair and beauty industry.
The award specifies minimum rates of pay; loading for casual employees; penalty rates for work on Saturdays, Sunday and public holidays; and payment for work performed outside of prescribed hours.
As previously indicated, section 45 of the FWA prohibits a person contravening a term of a modern award. In this case, it is implicit from the state of agreed facts, that the parties agree that the following breaches of the modern award, applicable to the circumstances of this case, have occurred:
·Mr Le – section 45, failing to employees the minimum rate of pay;
·Mr Le – section 45, failing to pay employees the minimum casual loading;
·Mr Le – section 45, failing to pay employees the minimum Saturday penalty rate;
·Mr Le – section 45, failing to pay employees the minimum Sunday penalty rate;
·Mr Le – section 45, failing to pay Ms Peralta the minimum outside hours penalty (Monday to Friday);
·Mr Le – section 45, failing to pay Ms Peralta the minimum outside hours penalty (Sunday);
“section 45 of the FW Act, by failing to pay the Employees the minimum rate of pay prescribed by clause 17 of the Hair and Beauty Industry Award 2010 (Beauty Award)
section 45 of the FW Act, by failing to pay the Employees the minimum casual loading prescribed by clause 13.2 of the Beauty Award;
section 45 of the FWAct, by failing to pay the Employees the minimum Saturday penalty prescribed by clause 31.2(b) of the Beauty Award;
section 45 of the FWAct, by failing to pay the Employees the minimum Sunday penalty prescribed by clause 31.2(c) of the Beauty Award;
section 45 of the FWAct, by failing to pay Ms Peralta the minimum outside hours penalty (Monday to Friday) prescribed by clause 13.3 of the Beauty Award;
section 45 of the FWAct, by failing to pay Ms Peralta the minimum outside hours penalty (Sunday) prescribed by clause 13.3 of the Beauty Award;[27]
section 45 of the FW Act, by failing to pay Ms Peralta the minimum rate of pay prescribed by clause 17 of the Beauty Award;
section 45 of the FW Act, by failing to pay Ms Peralta the minimum casual loading prescribed by clause 13.2 of the Beauty Award;
section 45 of the FW Act, by failing to pay Ms Peralta the minimum Saturday penalty prescribed by clause 31.2(b) of the Beauty Award;
section 45 of the FW Act, by failing to pay Ms Peralta the minimum Sunday penalty prescribed by clause 31.2(c) of the Beauty Award;
section 45 of the FWAct, by failing to pay Ms Peralta the minimum outside hours penalty (Sunday) prescribed by clause 13.3 of the Beauty Award;[28]
[27] See Applicant’s outline of submissions on penalty - page 2 – i-vi
[28] Ibid at page 2 – House of Polish
In addition, it is agreed that Mr Le has contravened section 536(1) of the Act, in respect of the provision of payslips.
Finally, the FWO seeks the imposition of penalties, by both Mr Le and the company, in respect of the breaches of sub-regulations 3.44(1) and 3.44(6) of the regulations, in respect of the failure to keep proper wage records and there improper utilisation by each respondent.
Sub-regulation 3.44(6) reads as follows:
“A person must not make use of an entry in an employee record made and kept by an employer for this subdivision if the person does so knowing that the entry is false or misleading.”
All of these offences are described as being civil remedy provisions. Pursuant to section 539(2) offences in contravention of section 45 attract a maximum penalty of sixty penalty units. The same section prescribes a maximum penalty, for offences arising under section 536(1), relating to payslips, to be thirty penalty units. The maximum penalty in respect of a breach of sub-regulations 3.44(1) and 3.44(6) is twenty penalty units, in each case. At relevant times, a penalty unit amounted to $180.00.[29]
[29] See section 4AA of the Crimes Act 1914 (Cth)
Pursuant to the provisions of section 546(2)(b) of the FWA, if the person who has committed the offence in question is a body corporate, the maximum penalty is to be multiplied by five.
Accordingly, the maximum penalty applicable to Mr Le, for each of the section 45 infringements, as advocated by the FWO, is $10,800.00; and for House of Polish, $54,000.00. In respect of the payslip count, the maximum penalty is $5,400.00, which is applicable only to Mr Le.
In respect of each of the wage record counts, the maximum penalty is $3,600.00 for Mr Le and $18,000.00 for House of Polish. Mr Le’s liability in respect of the offences committed by House of Polish arises by virtue of section 550(1) of the FWA. The section, as a whole, reads as follows:
“(1)   A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2)     A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a)     has aided, abetted, counselled or procured the contravention; or
(b)     has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d)     has conspired with others to effect the contravention.
The approach, which the court is required to take, in respect of these contravention proceedings, has been delineated in a number of decisions of the Federal Court.[30]
[30] See Fair Work Ombudsman v Kentwood Industries Pty Ltd (No3) [2011] FCA 579 per McKerracher J applied in Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151 at [42] per Mansfield J
The process can be summarised as follows:
·The court should identify each separate contravention, arising from a breach of either the applicable award or the FWA itself. Pursuant to section 539(2) each such contravention is a distinct incident for penalty purposes;
·The court should determine whether any of these incidents arise in a single course of conduct, within the terms envisaged by section 557(1);
·Then give consideration as to whether any of these contraventions contain elements and factor this into considering what is an appropriate penalty, in all the circumstances, for each contravention;
·Thereafter, the court should fix an appropriate penalty for each single or group contravention, taking into account all relevant circumstances;
·Finally, the court should apply the totality principle. This final step constitutes a review of the aggregate penalty thus far calculated and envisages a consideration of whether such a penalty is an appropriate response to the conduct, which lead to the various contraventions in question. This case has been described as a process of instinctive synthesis.[31]
[31] Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [55] per Graham J
The totality principle arises when a court is called upon to sentence an individual, as here, in respect of a number of identifiable offences. It is directed to a review of the penalties imposed, in total, in respect of individual offences to determine whether those penalties, in aggregate, constitute a just and appropriate penalty, in all the circumstances arising. As indicated earlier, it has been characterised as a process of intuitive synthesis best summarised in the well-known line from The Mikado “the punishment must fit the crime.”
Gray J in Australian Opthalmic Supplies Pty Ltd said as follows:
“What is required is to determine an appropriate level of penalty for each contravention, as if it were a separate offence, and then look at the aggregate of those penalties in the light of the overall conduct of the [offender], to form a view as to whether that aggregate [is] out of proportion to that overall conduct.”[32]
[32] Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (supra) at [23]
Regardless of these considerations, the fundamental task, for the court, is to determine, from all the factual circumstances arising, the gravity or seriousness of the offending, which it is called upon to penalise. Again there is general agreement between the parties as to the considerations relevant to this task, which has been delineated in a number of decisions of both this court and the Federal Court.[33]
[33] See Mason v Harrington Corporation Pty Ltd [2007] FMCA 7; Kelly v Fitzpatrick [2007] 166 IR 14 at [14]; Blandy v Coverdale NT Pty Ltd [2008] FCA 1533 at [23]
The considerations are as follows:
·The nature and extent of the conduct which led to the breaches;
·The circumstances in which the conduct took place;
·The nature and extent of any loss or damage sustained as a result of the breaches;
·Whether there has 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 breaches has exhibited contrition;
·Whether the party committing the breaches has taken corrective action;
·Whether the party committing the breaches has 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; and
·The need for specific and general deterrence.
The court needs to be careful not to apply a formulaic approach to the imposition of penalties or attempt to extrapolate the penalties imposed in one case to the circumstances of another. Each case involving the imposition of a civil penalty warrants an idiosyncratic approach and a careful analysis of all relevant circumstances. As was stated in Australian Opthalmic Supplies:
“Penalties are not a matter of precedent. The choice of penalty must be dictated by the individual circumstances of a case, not by a line by line comparison with another case.”[34]
[34] Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (supra) at [12]
Clearly the check-list, as enumerated above, is useful. It is not to be regarded as an exhaustive list of factors to be considered. The ultimate control on any sentence is that it must be proportionate to the offence committed. A court is not permitted to impose a sentence greater than is warranted by the objective circumstances of the offending.[35]
[35] See Veen v R (No 2) (1988) 164 CLR 465 at 472
As indicated above, the legislative provisions relating to how contraventions arising under the FWA are to be grouped for the purposes of calculation of penalty are contained in section 557(1) of the FWA, which reads as follows:
“(1)   For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:
(a)     the contraventions are committed by the same person; and
(b)     the contraventions arose out of a course of conduct by the person.
The FWO accepts that the incidents of contravention, relating to both Ms Baluning and Ms Peralta, amount to one course of conduct. Accordingly, it does not seek parallel penalties relating to each individual employee. It does not however accept that there has been one course of conduct in respect of the underpayment per se. Rather it contends that each individual contravention of the award, by both Mr Le and House of Polish must be sentenced individually.
In Blandy v Coverdale NT Pty Ltd[36] Reeves J was dealing with the legislative precursor of the FWA. He made some comments regarding how matters were to be grouped for the purposes of the imposition of civil penalties. He observed that “each separate obligation found in an award is to be regarded as a separate ‘term’.
[36] Blandy v Coverdale NT Pty Ltd [2008] FCA 1533 at [56]
In this context, whether a separate obligation is to be regarded as a separate obligation is to be determined by reference to whether “it is in substance a different obligation. Further, in my view significantly, His Honour went on to say:
“…where different terms impose cumulative obligations or obligations that substantially overlap, that may be taken into account by imposing a nominal (or no) penalty for some breaches and a substantial penalty for others…”
In FWO v Ramsey Food Processing Pty Ltd (No 2) Buchanan J considered the application of section 719(2) of the Workplace Relations Act, the legislative predecessor of section 557. He said as follows:
“On one view, the failure to make any of the required payments arose from a single course of conduct. They all arose from a determination by the respondents that no payment would be made upon the termination of employment of any of the employees, or the employees as a group. However, this approach gives insufficient attention to the separate legal character of the three forms of obligation earlier identified. I am satisfied that each of those forms of obligation requires separate recognition. I am not, however, satisfied that each individual example of defiance of an obligation is permitted separate recognition. In my view the individual examples, constituted by the failure to make payments to particular individual employees, arise out of a course of conduct in each of the three instances. Any penalty must be assessed taking that into account.”[37]
[37] FWO v Ramsey Food Processing Pty Ltd (No 2) [2012] FCA 408 at [2] The passage was approved by the Full Court in Rocky Holdings [2014] FCAFC 62 at [18]
As Reeves J observed, this can be achieved, in appropriate cases, by imposing nominal sentences in the case of cumulative breaches. This is the approach adopted by the FWO in its submissions on penalty.
The leading case, on the application of section 557 is the Full Court authority of Rocky Holdings Pty Ltd & Anor v Fair Work Ombudsman.[38] This was a case broadly analogous to the current one in the sense that the appellant employer concerned had admitted numerous breaches of a modern award in respect of such things as the payment of penalty rates for work on Saturdays and public holidays in contravention of section 45 of the FWA, in respect of multiple employees.
[38] Rocky Holdings Pty Ltd & Anor v Fair Work Ombudsman [2014] FCAFC 62
In Rocky Holdings the Full Court did not accept that these various incidents of breach were to be regarded as a single course of conduct, referral to a common incident of the employer breaching the applicable modern award per se. The Full Court’s reasoning, in my view, can be summarised as follows:
·The key legislative intent of the FWA is to ensure, through an effective penalty regime, compliance with the minimum terms of relevant modern awards, not to reduce the number of contraventions of civil penalty provisions; see [12].
·It is the provision of the Act, set out in subsection 557 (2), which is relevant to the course of conduct delineated in subsection (1); see [13].
·Subsections (1) and (2) are ambiguous. They are capable of referring to the existence of the identified provision or the substance of the identified provision. As such, it is acceptable to have regard to the relevant Explanatory Memorandum, in resolving the ambiguity;[39] see [14].
·The object and purpose of section 557 is to ensure that an offender is not punished twice for what is essentially the same criminality. What is or is not the same criminality is an exercise requiring close consideration. However bare identity of motive is seldom sufficient to establish the same criminality in separate and distinct acts of offending; see [18].
·It is wrong to characterise the various contraventions of the modern award in question as being merely particulars of an overall breach of section 45; see [24].
·It potentially confusing to apply principles dealing with the punishment and sentencing of criminal offences to the application of civil penalties; see [25].
·Such an analysis has the prospect of leading to arbitrary and capricious outcomes. By way of example an employer who had contravened a wide range of award provisions, leading to widespread underpayment of a number of employees would be subject to the same maximum penalty as an employer who had contravened one award provision, in respect of one employee on one occasion. This is counter-intuitive; see [26].
[39] See Acts Interpretation Act (1901) (Cth) at section 15AB(1)(b)
Of these reasons, in my view, the last one is the one most applicable to the circumstances of the current case. The court must beware of groupings of offences, which lead to capricious or artificial outcomes, bearing in mind that each contravention relates to a separate and distinct breach of a term of the FWA.
In any event, no matter how the various counts are ultimately cut and diced the court’s fundamental obligation is to impose a penalty in keeping with the overall seriousness of the offending in question. In this case, I am satisfied that the respondents have comprehensively failed to supply significant elements of the minimum terms of employment, to which Ms Baluning and Ms Peralta were entitled. As such, there has been a total failure of the industrial safety net.
In these circumstances, I propose to group the various offences arising under section 45 of the Act separately, as advocated by the FWO. I will adopt the same approach in respect of the two regulatory offences. Thereafter, I will consider whether it is appropriate that lesser penalties be imposed for similar offences arising under the Act.

Nature and extent of the conduct leading to the breaches

The parties have fundamentally different views of the overall gravity of the offending in question. Mr Kripps, on behalf of Mr Le, characterises his client as an unsophisticated business person, who was labouring under the difficulty of speaking English particularly well. In these circumstances, it is submitted that he had some difficulty in grappling with the intricacies of the award in question and its application to his business and its employees.
I do not accept that this is the case. In both 2011 and 2015, Mr Le had his obligations under the award drawn to his attention. In particular, in 2015, it was found that Mr Le had underpaid six employees, in respect of the payment of weekend penalties, overtime and other allowances, in contravention of the same award.

In addition, I accept that Mr Le could have accessed the relevant award through the FWO’s website. As such, he would have been able to inform himself that any notion that the applicable rate of pay was $12.00 per hour would not have been available to him.
Mr Le has operated nail salons, in Australia, for a significant period of time. He also engages in an industry which, by its nature, requires workers to work at times, when other members of the public are at leisure – that is at weekends and out of regular business hours.
Given his previous involvement with the FWO, I do not accept that Mr Le could be ignorant of such matters or generally mistaken about what was the appropriate level of pay, particularly given that he knew the FWO oversaw such matters and it was open to him to inquire of the regulator as to what his obligations were.
In all these circumstances, in my view, this offending was not inadvertent, particularly given the previous involvement of the FWO with the business. As such, in my view, I am required to give significant credence to the FWO’s submission that both Mr Le and the company elected to take “a risk and place their own financial interests ahead of compliance with the law.”[40]
[40] See applicant’s written submissions on penalty at paragraph 26
In particular, I do not accept Mr Le’s contention that he did not know how apprenticeship or traineeship programs worked. Even it if this assertion is correct, it was Mr Le’s responsibility to make sure that he did. In my view, the evidence indicates that Mr Le chose to pay the two employees concerned, who are to be regarded as vulnerable in nature, given they each come from a non-English speaking background, a bare minimum level of remuneration.
Mr Le has formally admitted the false record contraventions arising under sub-regulations 3.44(1) & (6). It is his position that the records were incorrect but it was not his intention to mislead Mr Warner. Rather, he asserts that in his attempt to re-construct the allegedly destroyed records, he made mistakes, which he has subsequently acknowledged. In these circumstances, he asserts his own culpability is reduced.
I accept that Mr Le did not have a high level of administrative support in discharging his employer functions at House of Polish. However, he must be regarded as a relatively experienced small business operator, who was accustomed to hiring and paying staff in an enterprise which operated outside of conventional hours. Given the nature of the business, the workforce was likely to be fairly fluid and unsophisticated in nature. These are factors which indicate a greater need for more rather than less rigour in the keeping of employment records. Near enough is not sufficient.
Apart from his assertion of the fact by Mr Le, there is no evidence of the cyberattack and the alleged loss, by him, of central employment records. In these circumstances, I am somewhat doubtful of this explanation. The fact remains Mr Le was aware that he was embarking on a wholesale reconstruction of records over a seven month period. It is also noteworthy that this reconstruction favoured the employer rather than the employees by a marked degree – between ten and twenty hours.
In addition, Mr Le was not to know that Ms Peralta, in particular, had kept her own independent records of the time worked by her, against which Mr Le’s reconstruction could be checked. I consider it more likely than not Mr Le did not believe that his reconstruction would or could be subject to any form of independent verification.
In these circumstances, I have reached the conclusion that the reconstruction was deliberately and deceitfully motivated. I reject the contention that it was an attempt to get to the right result through any misguided objectives. Mr Le’s intent was, more likely than not to deceive Mr Warner on the basis that he (Mr Le) considered it highly improbable that he could be found out.

Deliberateness

Mr Le has been personally involved with the FWO on two prior occasions. Accordingly, in my view, it must be the case that he was aware of his responsibilities under the Award and equally significantly knew whom to ask, if he was in doubt about any aspect of these matters.
The first and second audits both involved the failure to pay minimum rates and weekend penalties, under the same award as is relevant to these proceedings. Accordingly, Mr Le cannot be described as a neophyte in terms of the application of the Award to his business nor, in my view, can his failure to pay the applicable rates be described as inadvertent.
Further, I do not accept Mr Le’s submission that he considered he was able to pay Ms Baluning and Ms Peralta $12.00 per hour because they were tantamount to being apprentices has any validity. This is less than the rate payable for first year apprentices. I accept the submission of counsel for the FWO that it was readily open to Mr Le to check the applicable pay guides on the FWO’s website, which would have revealed to him the rates of pay for unqualified beauticians – the category applicable to both Ms Baluning and Ms Peralta.
Mr Le recreated records for a period of seven months, which favoured him. It is an extensive period, not a matter of a few days, which might possibly be accepted as an explicable aberration relating to circumstances. As previously indicated, I accept Mr Le fabricated the records in the expectation that there would be no other records available to the FWO against which they could be compared.
This course of conduct must be considered deliberate and as an exacerbation of the seriousness of the offending. It was conduct designed to deceive the industrial regulator so that Mr Le could evade responsibility for under paying two member of his staff for a significant period of time.
Although Mr Le is not to be penalised for offences in respect of which he has not been charged. It is relevant, in my view, that Mr Le employed other staff members, who were not as fastidious as Ms Baluning and Ms Peralta in keeping records. As such, it is not possible for the FWO to ascertain whether these additional employees have been paid the entitlements due to them.
The purpose of the legislation is clear. Employers are required to keep detailed and comprehensive records in order to ensure that employee are paid what is due to them and, if necessary, this can be checked by the relevant regulator. In the case of Mr Le, there has been a comprehensive failure of this safeguard, which is solely attributable to Mr Le.
In FWO v NSH North Pty Ltd Bromwich J said as follows:
“The unavoidable inference is that the creation and production of the false employment records was designed to conceal the primary breaches and thereby thwart the FWO investigation.”[41]
I respectfully adopt these comments as being apposite to the situation arising in the current matter.
[41] FWO v NSH North Pty Ltd [2017] FCA 1301 at [2]

Nature and extent of the loss suffered

In my view, the amount of underpayment incurred by Ms Baluning and Ms Peralta – a sum of approximately $52,000.00 – must be regarded as significant. It was over 30% of what the employees were due, during the sole trader period and was 45% so far as the company contravention period and Ms Peralta was concerned.

Size of the business and capacity to pay financial penalties

I accept Mr Le is not a wealthy person. He has modest assets and the various businesses operated by him have not generated a large level of income. I consider it something of an overstatement that his equity of $110,000.00 in the Woodville property is described as “property portfolio”.
These are relevant considerations. Any fine levied on Mr Le will hurt because he is not a wealthy person. However, I also accept that the quantum of the penalty to be imposed must be both reflective of the wrongdoing concerned and of sufficient quantum to be meaningful.
It is well established that is no excuse for an offender to rely on the fact that he/she is the operator of a small business. To the contrary, the court must bear in mind that small businesses of one form or another represent a large component of employers in this country.
In these circumstances, I adopt the comments of Driver FM (as his Honour then was) in Rajagopalan v BM Sydney Building Materials Pty Ltd as follows:
“Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to the Court’s consideration of penalty.”

Involvement of senior management

Mr Le is the sole director of House of Polish and the person responsible for its direction, management and control. As such, for obvious reasons, he was integral to every decision made by the company, as he was both its hands and brain.
In this context, it is appropriate to consider the operation of section 550 (1) of the Act to Mr Le. The section provides that a person who is “involved in” the contravention of a civil remedy provision is to be taken as having contravened that provision and so be liable for the imposition of a penalty under section 546 of the Act.
Subsection 2 of the section provides a definitive list of circumstances in which a person is be treated as being involved in a contravention. In the present case placita (c) is applicable. It speaks of a person being knowingly concerned in or a party to the contravention.
The relevant authorities[43] show that in order for a person to have accessorial liability, under section 550 of the FWA, he or she must be a knowing participant or in other words:
[43] Yorke & Anor v Lucas [1985] HCA 65; (1985) 158 CLR 661 at pp 666 and 667; Armstrong v Bigeni Contracting Pty Ltd & Anor [2008] FMCA 485 at 23.
“must have knowledge of the essential facts constituting the contravention;
must be knowingly concerned in the contravention;
must be an intentional participant in the contravention based on actual not constructive knowledge of the essential facts constituting the contravention – although constructive knowledge may be sufficient under section 550(2)(c) in cases of wilful blindness; and
need not know that the matters in question constituted a contravention.”
The FWO submits that Mr Le was involved in the contraventions of the Act by House of Polish because he:
·is and was during the relevant period the sole director of the company;
·was the person contacted by Mr Warner to deal with the investigative functions of the FWO in respect of the company;
·had the active day to day management and control of all the company employees; and
·was the person responsible for determining and setting wage rates and conditions for its employees.
In these circumstances, I have no difficulty in reaching the conclusion that Mr Le has accessorial liability for the contraventions of House of Polish. However, given the close relationship between Mr Le and the company – they are in practical terms interchangeable – I acknowledge that I must be careful not to impose an unduly harsh penalty on Mr Le for these offences, which will have the consequence of penalising him both twice and pursuant to a far higher schedule of fines applicable to corporations.
In addition, the submission made on behalf of the respondents, by Mr Krips, that they operated a small family business, without a specialist HR department and other managerial support, is axiomatically correct. As such, I accept that this criterion is not highly relevant. As indicated above, size of an enterprise is not of itself a relevant consideration in determining penalty.
In my view, in assessing the accessorial penalties, it will be relevant that I bear in mind the risk of imposing a duly harsh penalty on Mr Le, given the nature of his overlapping relationship with House of Polish and the totality of any penalty to be imposed. In addition, as Reeves J observed in Blandy v Coverdale NT Pty Ltd[44] it is open to the court to impose nominal penalties in appropriate cases, whilst recognising the essential autonomy of individual counts.
[44] Blandy v Coverdale NT Pty Ltd (supra)

Contrition and corrective action

In his affidavit material, Mr Le has expressed remorse for his conduct and indicated that he will not breach the law again in respect of fair work matters. However, it is significant that the FWO has extended leniency to Mr Le in the past, in respect of its prior involvement with his business affairs and this involvement did not result in a cessation of improper wage fixing practices on his part, notwithstanding the fact that he was on notice he would be liable to prosecution, if further transgressions were discovered.
It is a more significant factor that Mr Le has borrowed monies to ensure that Ms Baluning and Ms Peralta have been paid their proper entitlements in full. In my view such payment are the most obvious mechanism by which the respondents can make amendments for their conduct, which was highly prejudicial to two vulnerable employees. However, I also the FWO’s submission that such payments are ultimately “nothing more than the late performance” of what was legally required of Mr Le in the first place.[45]
[45] FWO v Australian Sales & Promotions Pty Ltd & Anor [2016] FCCA 2804 at [82]
The payments were made after the industrial regulator had discovered the transgressions in question, largely as a consequence of its access to the records kept by Ms Peralta, of which Mr Le was ignorant. It also occurred after the FWO had been involved with Mr Le on two prior occasions.
In these circumstances, it is only to be expected that the court would ask itself whether this action is a true demonstration of regret, shame and sympathy on the part of the respondents or merely an exercise in damage control, in the face of inevitable sanction.[46] I note that the rectification payments were made before the actual institution of proceedings.
[46] ACE Insurance Limited v Trifunovski (No 2) [2012] FCA 793 at [113] – [114] per Perram J
In addition, although the case involved initially a contest in respect of liability, Mr Le has acknowledged his wrongdoing and a full hearing has been avoided. He has, however, attempted to challenge the full extent of his transgressions, in my view, in respect of the false recording keeping offences and the underpayment ones.
In all the circumstances of the case, in my view, this is not a case where there has been any unusual degree of contrition. Rather, once apprehended, there has been a level of admission and rectification, which occurred only because of the involvement of the industrial regulator.

Co-operation

Initially, as indicated above, Mr Le sought to challenge the charge relating to the keeping of false records. This occurred after he had produced deceptive records in respect of the notice to produce served upon him. He did not make a clean breast of it when the notice to produce was served and indicate to Mr Warner that he had no records to produce.
Rather, he attempted to deceive Mr Warner, with an elaborate sham of records, which grossly favoured him. Mr Krips has submitted that there is a lack of authority regarding what is meant by the expression false or misleading in the industrial law context. In particular, whether something more is required than the record in question was wrong and in particular that the maker of the record intended to mislead any intended reader or person affected by it.
In my view, the distinction is a fine one. As Bromwich J observed in NSH North Pty Ltd employers create sham records in order to avoid the scrutiny of the industrial regulator. In my view, such conduct must be regarded as being diametrically opposed, in nature, to cooperation with the industrial regulator. It must be regarded as conduct the intent was of which was to frustrate to proper regulation.
Rather, the conduct was designed to have the appearance of cooperation, whilst in reality it was designed to conceal the employer’s true conduct. In these circumstance the records can only be regarded as a sham. It make no logical sense to categorise the records, created by Mr Le, as being some sort of well-intentioned but mistaken sham, arising from his personal circumstances, as the Mr Le has attempted to do, in order to reduce his culpability.
As Gray J colourfully stated in Re Porter, an employer
“….cannot create something which has every feature of a rooster, but call it a duck and insist that everybody else recognise it as a duck…” [47]
The same is true of false records. They are false for a purpose, which is to deceive. Mr Le was close to getting away with his deception. As indicated above, in my view, it is a very significant factor that Mr Le’s deception came to light only because Ms Peralta had kept her own records, unbeknownst to Mr Le. Otherwise, Mr Warner is likely to have accepted the records provided by Mr Le as being correct and the underpayments would have gone undiscovered.
[47] Re Porter (1989) 34 IR 179 at 184
In my view, this is not a case where the respondents indicated, from an early stage, their indication to acknowledge their culpability. Rather, it was only after the proceedings had been fixed for a liability hearing that the respondents changed their positions, which was approximately 12 months after the institution of the proceedings in question.
The FWO proposes a penalty discount of 20% in respect of each of the underpayment counts to reflect the admissions made and the fact that the two employees in question have been paid their entitlements. However, the FWO asserts that the discount in respect of the false record counts should be significantly less, being around 5%.
On the other hand, Mr Krips submits that a discount of 25% should be imposed in respect of all of the counts to reflect the admissions made and the fact that the community was spared the expense of a full liability hearing.

Compliance with minimum standards and extent of the loss

As previously indicated, one of the objects of the FWA is to ensure that the employees have the benefit of a “safety net”, which ensures they receive their minimum entitlements and the terms of any relevant award are followed. In this case, neither Ms Baluning nor Ms Peralta received the benefit of this safety net and each was significantly underpaid.
Given that both employees must be categorised as modest wage earners, the combined total of their underpayment – in the vicinity of $52,000 – must be considered a very significant sum and therefore a serious contravention of the FWA.
The provision of appropriate and correct payslips is also an essential component of a fair system of wage regulation. Employees, particularly vulnerable ones, are entitled to know what they have been paid and how specifically their wages are broken down.
Such employees need to know this information promptly so that they can query any areas of uncertainty and sort out any misunderstandings. On a basic level, they need to be able to budget and make properly informed decisions about whether they will elect to continue to work in a particular manner, such as on weekends and at night time.
In this context, I respectfully adopt what was said by Judge Reithmuller in FWO v Taj Palace Tandoori Indian Restaurant Pty Ltd & Anor[48] as follows:
“Without proper payslips, employees are significantly disempowered, creating a structure within which breaches of the industrial laws can easily be perpetrated.”
[48] FWO v Taj Palace Tandoori Indian Restaurant Pty Ltd & Anor [2012] FMCA 258 at [67]
The obligation to keep and use accurate records is central to the achievement of the overall objectives of the FWA. In blunt terms it enables the industrial regulator to oversee the obligations of employers and determine whether those obligations have been met or, if not, whether this is a matter of inadvertence or deliberation. In this context, I respectfully adopt the comments of Judge Hartnett in FWO v ECFF Pty Ltd[49] as follows:
“… the creation of false time and wage books by the respondents was particularly disturbing behaviour, worthy of significant reprimand.”
[49] FWO v ECFF Pty Ltd [2014] 2996 at [35]

In this case, Mr Le fabricated employment records over a period of approximately seven months. In my view, the evidence indicates that he went to some lengths in his attempts to deceive the industrial regulator. If his deception had been successful, it is likely to have been the case that neither Ms Baluning nor Ms Peralta would have received what they would have been entitled to by way of remuneration from House of Polish. It was because of the foresight of Ms Peralta that Mr Le’s deception was discovered.
Although I am not entitled to penalise the respondent’s conduct in respect of other employees, who are not the subject of these proceedings, in my view, it is relevant that both Mr Le and House of Polish were accustomed to employing unsophisticated individuals, who are likely not to have had a great deal of familiarity with award provisions and other matters relating to their industrial entitlements.
As such, such individuals are unlikely to have been as assiduous as Ms Peralta in keeping their own independent records. As such, in circumstances where an employer has kept false records, they are not in a position to easily challenge those records. In my view, considerations of this type, require the court to impose a significant penalty in respect of this offence in particular, which should be relevant to both specific and general deterrents.

Similar previous conduct

It is a significant factor that both respondents have previously come to the notice of the FWO, in respect of breaches of the same award, on two separate occasions. This notice lead to the FWO providing Mr Le with a formal warning and a direction that he rectify underpayments made to other employees, whose circumstances were broadly analogous to those of Ms Baluning and Ms Peralta.
In these circumstances, Mr Le cannot claim to have been naively unaware of the FWO and its functions in the workplace, including his own. As such, in my view, it is open to me to reach the conclusion that Mr Le elected to take a risk, so far as the payment of his employees was concerned, so that he could draw more income from the business, modest as that income was likely to be.

General deterrence

One of the central purposes of imposing a civil penalty, in proceedings such as these, is to deter other employers from embarking on a similar course of conduct to that engaged upon by the transgressing employer. In FWO v Maclean Bay Pty Ltd (No 2) Marshall J said as follows:
“It is important to ensure that the protection afforded by the Act to employees are real and effective and properly enforced. The need for general deterrence cannot be understated. Rights are a mere shell unless respected.” [50]
[50] FWO v Maclean Bay Pty Ltd (No 2) [2012] FCA 557 at [29]
The role of general deterrence in fixing appropriate penalty is demonstrated by what Lander J said in Ponzio v B & P Caelli Constructions Pty Ltd[51] namely:
“In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend…. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty... “(citations removed)
[51] Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [93] approved by Mansfield J in Lifestyle SA (supra) at [154]
In my view, in this particular case, issues of general deterrence loom large. This is a case concerning compliance with minimum employment standards applicable to two vulnerable employees. In addition, there was an elaborate subterfuge occasioned against the FWO designed to frustrate its essential investigative functions, which was only foiled by the foresight of one of these employees.
It is important to deter other employees from not paying the minimum wage safety net or paying employees the required loading arising for work performed on weekends and out of hours.
In addition, it is essential to the workings of the FWA that a message be sent about the requirement that proper wage records be maintained and there will be no tolerance for any cheating in respect of them. In this context, the essential task of the court is to impose a penalty of such a quantum that it is likely to act as a deterrent to prevent similar offending in future by individuals in similar circumstances to those of the current respondents.
It is the submission of the FWO that the beauty industry is one in which there is a high prevalence of award breaches. This stems from the nature of the industry, which involves a widely dispersed workforce, which is not likely to be highly aware of its rights and the obligations of those employing it. In this context, Mr Warner has deposed that the beauty industry is the fourth highest ranked industry, in terms of disputes lodged with the FWO.
As I found, Mr Le’s provision of false and misleading records to the FWO was deliberate and therefore a serious contravention of the Act. In my view, a sufficient penalty needs to be imposed, in this case, in order to reinforce, for prospective errant employers, that any disregard of their legal obligations, so far as the underpayment of wages is concerned and the keeping of inaccurate records, is unacceptable.
Although I must be careful not to impose crushing penalties on either respondent, I must not lose sight of the need for a significant level of general deterrence given the serious nature of the contraventions arising in this case.

Specific deterrence

Considerations relevant to specific deterrence focus on the individual circumstances of the offender concerned and require some degree of prognostication as to the likelihood of re-offending. The most reliable tool for such prognostication is usually the attitude expressed by the party in question.[52]
[52] See Plancor Pty Ltd v Liquor Hospitality & Miscellaneous Union (2008) 171 FCR 357 at [37] per Gray J
In this context, Mr Le has indicated, in his affidavit material, that “there will be no further contraventions”.[53] Sadly, the fact that Mr Le has been given warnings in the past significant undercuts the credence which can be given to this assertion. However, I also accept that these particular proceedings, given their moment, are likely to have a more salutary effect on Mr Le than his previous involvement with the FWO.
[53] See Mr Le’s affidavit at [54]
In this context, it is Mr Le’s evidence that he has engaged readily with outside advice, particularly in the form of his accountant, to ensure his ongoing compliance with the FWA in whatever future employment activities are undertaken by him.
In this context, I note that Mr Le has a history of operating small businesses, particularly in the beauty industry. Given this history, the court must give earnest consideration to the need to deter Mr Le, in future, from breaching either the award relevant in these proceedings or other awards germane to any future business activity to be undertaken by him.

The calculation of penalties and conclusions

It has been said that the task of sentencing is one of the hardest judicial tasks, as it requires the synthesis of competing consideration to arrive at a penalty, which is just and appropriate. Necessarily it is a process of intuitive synthesis. It is useful to think in terms of percentages, but sentencing is not a purely arithmetical process.
It is necessary for me to calculate the financial penalties for nine offences for Mr Le personally; seven offences for the company alone; and seven accessorial offences, for Mr Le relating to the company period. I am required to look at the penalties imposed in respect of each of these groups of offending, in aggregate to determine whether they represent an appropriate response to the conduct, which led to the breaches. I must also bear in mind that the penalties, in total, must not be oppressive or crushing. Rather they must be proportionate to the conduct engaged in by the respondents.
The inevitable tension between these two considerations encapsulates the particular difficulty of this matter. I regard the conduct of the respondents as being extremely serious and requiring a heavy level of censure. The two individuals concerned were significantly under-payed and so deprived of the benefits of the industrial safety net.
They did not receive the benefit of the relevant award, which provided them with protection in an industry, which is dispersed in nature and whose employees are not usually sophisticated persons, in respect of their entitlements.
In additions, the hours worked in the beauty industry are often performed outside of conventional working hours and, as such, the relevant award recognises the burdens arising from employment in it. Ms Baluning and Ms Peralta both originated overseas. Employees from overseas very often, in my view, also have a greater potential to be exploited by unscrupulous employers.
Mr Le has been engaged, as an employer, in the nail and beauty industry, for a reasonably extensive period of time. Most significantly, this is not the first time he has fallen foul of the industrial regulator. In the past, he has been able to escape prosecution for similar breaches of the provisions of the FWA and be cautioned in lieu. Accordingly, Mr Le cannot, in my view be regarded as a neophyte in terms of obligations as an employer.
Most significantly, he deliberately manufactured employment records in order to conceal his conduct from the relevant fair work inspector tasked to investigate his business affairs. It was only through happenstance that his deception was discovered, otherwise he would have escaped liability. In my view this offence is far and away the most serious and must be penalised in a meaningful way in recognition of its significance, both for the community, other employers and for Mr Le personally.
On the other hand, the respondent is a not sophisticated business person. He and the company of which he is the guiding hand operate a modest enterprise. The Commonwealth Parliament has inaugurated a broad range of penalties for the offences in question. Clearly, the top of this range must be reserved for the most serious examples of breach, including repeat offenders.
In terms of corporate offenders, I must also bear in mind the wide range of corporate employers – from publically listed corporations, with huge payrolls, deep corporate pockets and ready access to all manner of legal and accounting advice – to small mum & dad business, providing modest services to members of the general public.
For the former, a fine, even a large one, may be regarded as merely an incident of doing business and a consequence of cutting corners in order to maximise profits for owners, on the basis of a calculated risk its wrongdoing will escape detection.
For the latter, a large fine may be crippling and result in the loss of economic security for a family who depends upon the company concerned for all their financial support. I would, however, be naïve to consider that many small enterprises can be resurrected phoenix-like in slightly different guise, regardless of the extent of any fine imposed.
In these circumstances, I am satisfied that greater penalties must be imposed on the company, in recognition of the penalty structure for corporations. I am also cognisant of the risk of imposing a double penalty on Mr Le, for the accessorial offences, given he is the sole force behind House of Polish. However, as outlined above, I accept that they must be given a separate penalty.
In these circumstances, I propose allowing a significant discount of 20% as proposed by the FWO as a consequence of the acceptance of liability and will start with a 50% of the discounted amount for the most serious award breaches, which relate to the failure to pay the minimum rate and the requisite casual loading. Thereafter impose 25% of the discounted maximum for the weekend penalties and 20% for the outside hours loading offences.
I regard the payslip offence as serious and will impose 50% of the discounted maximum. Finally, in respect of the two record keeping offences, in the light of their seriousness, very significant penalties must be imposed by reference to the maximum penalty arising under the regulations, which is $3,600.00.
Following this exercise I will be provided with a form of template, to which I will then apply the principles of totality, if necessary, to each of the groups of offending.
In respect of Mr Le, I calculate the following penalties:

Section 45

Minimum rates of pay

$4,320.00

Section 45

Casual loading

$4,320.00

Section 45

Saturday penalty rates

$2,160.00

Section 45

Sunday penalty rates

$2,160.00

Section 45

Outside hours loading

$1,728.00

Section 45

Outside hours loading (Sunday)

$1,728.00

Section 536(1)

Failure to issue payslips

$2,160.00

Reg 3.44(1)

Keep false/ misleading records

$2,736.00

Reg 3.44(6)

Make use of false records

$2,736.00

Total

$24,048.00

In respect of the company, I propose to apply the same rationale but which must also reflect the larger maximums applicable. In respect of House of Polish, I propose to apply the following penalties:

Section 45

Minimum rate of pay

$21,600.00

Section 45

Casual loading

$21,600.00

Section 45

Saturday penalty

$10,800.00

Section 45

Sunday penalty

$10,800.00

Section 45

Outside hours loading

$8,640.00

Reg 3.44(1)

Keep false/ misleading records

$13,680.00

Reg 3.44(6)

Make use of false records

$13,680.00

Total

$100,800.00

In respect of the accessorial liability of Mr Le, bearing in mind the injustice of imposing a double penalty and the fact that he has been penalised in respect of analogous offences already, I calculate the following penalties, which arise by reference to individual penalties which are divided in half to reflect the fines already imposed on Mr Le:

Section 45

Minimum rate of pay

$2,160.00

Section 45

Casual loading

$2,160.00

Section 45

Saturday penalty

$1,080.00

Section 45

Sunday penalty

$1,080.00

Section 45

Outside hours loading

$864.00

Reg 3.44(1)

Keep false/ misleading records

$1,368.00

Reg 3.44(6)

Make use of false records

$1,368.00

Total

$10,080.00

The next step is to look at the aggregate of the penalties in total and consider whether the total penalty is an appropriate one when the circumstances of the offending are considered. As previously indicated this has been described as a process of intuitive synthesis. Does the total penalty appear to be correct in aggregate?
In Kelly v Fitzpatrick Tracey J considered what he termed the orthodox position was for the court to determine the appropriate penalty for each contravention and then consider the aggregate figure to ensure “that it was an appropriate response to the conduct which led to the breaches.”[54]
[54] Kelly v Fitzpatrick [2007] FCA 1080 at [30]
In my assessment, a penalty of $100,000.00 in aggregate, is an appropriate on for House of Polish; and one in aggregate of $30,000.00 is appropriate for Mr Le. These are significant sums, but are, in my assessment proportionate to the serious conduct, which led to the breaches.
Pursuant to section 546(3) of the Act, the court may order the payment of any penalty imposed to be paid to the Commonwealth; a particular organisation; or a particular person. In this case, the FWO seeks that the penalties be paid to the Commonwealth. Given the prosecution has been funded by the FWO, it is obviously appropriate that this course should be adopted.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.

I certify that the preceding two hundred and two (202) paragraphs are a true copy of the reasons for judgment of Judge Brown

Date: 29 June 2018

[42] Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at [27].

Section 45	Minimum rates of pay	$4,320.00
Section 45	Casual loading	$4,320.00
Section 45	Saturday penalty rates	$2,160.00
Section 45	Sunday penalty rates	$2,160.00
Section 45	Outside hours loading	$1,728.00
Section 45	Outside hours loading (Sunday)	$1,728.00
Section 536(1)	Failure to issue payslips	$2,160.00
Reg 3.44(1)	Keep false/ misleading records	$2,736.00
Reg 3.44(6)	Make use of false records	$2,736.00
Total	$24,048.00

Section 45	Minimum rate of pay	$21,600.00
Section 45	Casual loading	$21,600.00
Section 45	Saturday penalty	$10,800.00
Section 45	Sunday penalty	$10,800.00
Section 45	Outside hours loading	$8,640.00
Reg 3.44(1)	Keep false/ misleading records	$13,680.00
Reg 3.44(6)	Make use of false records	$13,680.00
Total	$100,800.00