Fair Work Ombudsman v Local Builders Direct Pty Ltd
[2022] FedCFamC2G 1027
Federal Circuit and Family Court of Australia
(DIVISION 2)
Fair Work Ombudsman v Local Builders Direct Pty Ltd [2022] FedCFamC2G 1027
File number(s): MLG 816 of 2022 Judgment of: JUDGE MANSINI Date of judgment: 8 December 2022 Catchwords: INDUSTRIAL LAW – FAIR WORK – building industry – where First Respondent employer failed to comply with compliance notice and Second Respondent involved, in contravention of s.716(5) and s.550 of the Fair Work Act 2009 (Cth) – consideration of relevant factors as to appropriate penalty(ies) if any – where Respondents contended financial difficulty due to cost increases in materials – small business that continues to trade – alleged concern entitlements underpinning compliance notice not a true representation by former employee – alleged poor relationship with fair work inspector –Respondents claim to have been induced to cooperate with the FWO on promise of significant discount and sought discounts of 40% per contravention – declarations made and penalties ordered. Legislation: Fair Work Act 2009 (Cth) ss.90(2), 99, 117(2)(b), 117(3)(a), 539(2), 545(1), 546(1), 546(2), 547(2), 550(1), 550(2), 716(5), 793
Miscellaneous Award 2020 cl.15.1
Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25
Australian Opthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCA 8
Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner [2018] FCAFC 97
Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53
Markarian v The Queen [2005] HCA 25
Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076
Wong v The Queen [2001] HCA 64
Division: Division 2 General Federal Law Number of paragraphs: 76 Date of hearing: 28 November 2022 (on the papers in chambers) Place: Melbourne Solicitor for the Applicant: Office of the Fair Work Ombudsman Respondents: Unrepresented litigants ORDERS
MLG 816 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
ApplicantAND: LOCAL BUILDERS DIRECT PTY LTD
First RespondentANGELO ADAMO
Second Respondent
order made by:
JUDGE MANSINI
DATE OF ORDER:
8 December 2022
THE COURT DECLARES THAT:
1.Upon the admissions of Local Builders Direct Pty Ltd (the First Respondent) in these proceedings, the First Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (Act) by failing to comply with the Compliance Notice dated 26 July 2021.
2.Upon the admissions of Mr Angelo Adamo (the Second Respondent) in these proceedings, the Second Respondent was involved pursuant to section 550(1), within the meaning of section 550(2) of the Act, in the First Respondent’s contravention of section 716(5) of the Act by failing to comply with the Compliance Notice dated 26 July 2021.
THE COURT ORDERS THAT:
1.Under section 546(1) of the Act, the First Respondent pay a pecuniary penalty of $7,076.25 to the Commonwealth of Australia for the contravention declared at 1 above, within 28 days of this order.
2.Under section 546(1) of the Act, the Second Respondent pay a pecuniary penalty of $1,415.25 to the Commonwealth of Australia for the contravention declared at 2 above, within 28 days of this order.
3.The Applicant has liberty to apply on 7 days’ notice, in the event that any of the preceding orders are not complied with.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE MANSINI
Introduction
Before the Court is an application for declarations and the imposition of penalties for contraventions of the Fair Work Act 2009 (Cth) (Act).
Factual context
The relevant facts are agreed and summarised in the following paragraphs.
The Applicant is the Fair Work Ombudsman (FWO). The FWO is and was at all material times:
(a)a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to s.687(1) of the Act;
(b)a Fair Work Inspector pursuant to s.701 of the Act; and
(c)a person with standing under s.539(2) of the Act to apply for orders in respect of contraventions of civil remedy provisions under the Act.
The First Respondent, Local Builders Direct Pty Ltd, is and was at all material times:
(a)a company incorporated under the Corporations Act 2001 (Cth) and registered since 20 November 2016;
(b)a “constitutional corporation” within the meaning of s.12 of the Act;
(c)a “national system employer” within the meaning of s.14 of the Act;
(d)by reason of the matters at (a) to (c), covered by the Act in respect of its employees; and
(e)the operator of a home construction contract business, trading as “Local Builders Direct” in Gisborne, in the state of Victoria.
The Second Respondent, a Mr Angelo Adamo, is and was at all relevant times:
(a)a natural person capable of being sued;
(b)the sole director and secretary of the First Respondent;
(c)the sole shareholder of the First Respondent;
(d)the operative and controlling mind of the First Respondent;
(e)responsible for the overall operation, management and control of the First Respondent;
(f)responsible for ensuring that the First Respondent complied with its legal obligations under the Act; and
(g)a person whose conduct (engaged in on behalf of the First Respondent and within the scope of his actual or apparent authority) is taken to be that of the First Respondent pursuant to s.793(1) of the Act.
On or about 2 July 2021, the FWO commenced an investigation into the First Respondent in respect of a former employee who was employed to work for the First Respondent on a part-time basis from 23 November 2020 until 8 May 2021. The investigator, Fair Work Inspector Blaec Hammond (FWO Inspector), is and was at all material times appointed under s.700 of the Act. The investigation included a discussion between FWO Inspector Hammond and the Second Respondent on 8 July 2021 and a follow up email sent on same date.
On 26 July 2021, FWO Inspector Hammond gave a compliance notice to the First Respondent. The issuing inspector having formed a reasonable belief that the First Respondent had contravened clause 15.1 of the Miscellaneous Award 2020 (Award) by failing to pay the minimum wage; s.90(2) of the Act by failing to pay accrued but untaken annual leave on termination; s.99 of the Act by failing to pay personal leave; and ss.117(2)(b) and (3)(a) of the Act by failing to make a payment in lieu of notice upon cessation of employment.
Based on the investigation outcome and during the course of these proceedings it was ultimately agreed that the former employee subject of the investigation, at the time her employment ceased, had been not paid and was owed payment for the following entitlements:
(a)23 ordinary hours worked between 30 April to 15 May 2021, pursuant to clause 15.1 of the Award;
(b)18.62 hours of accrued but untaken annual leave, pursuant to s.90(2) of the Act;
(c)4 hours of personal leave taken on 4 May 2021, pursuant to s.99 of the Act; and
(d)23 hours owed for payment in lieu of notice, pursuant to ss.117(2)(b) and (3)(a) of the Act.
By the compliance notice the First Respondent was required, by 30 August 2021, to take a range of actions to calculate and remedy the direct effects of the identified contraventions matters and keep a record of same. The FWO specified the time for production of reasonable evidence of compliance with the actions specified therein including proof of payment was by 6 September 2021.
Also on 26 July 2021, the Second Respondent forwarded the compliance notice to his then lawyer.
On 9 August 2021, the FWO Inspector called the Second Respondent and was informed by the Second Respondent that “his lawyer had advised him to pay”. The FWO Inspector’s file note of this conversation records the Second Respondent telling him that he “went to his lawyer and they gave an answer that he should pay” and that the Second Respondent said he “has paid”.
On 9 and 11 August 2021, the First Respondent in fact made payments to the employee of $509.70 and $287 (a total of $796.70) but did not give evidence of those payments to the FWO at that time. The Second Respondent deposed in his affidavit that:
36.I concede that we did not provide the evidence of these payments that was required by the Compliance Notice, which I regret.
37. Without wishing to minimise this non-compliance, I note that in paragraph 16 of Mr Hammond's Affidavit, he says he had phone conversations with [the former employee] on 9 and 11 August 2021 when she confirmed she had received the two payments in question totalling $796.70, and her confirmation has been recorded in his file notes which are Annexure BH-11.
In the course of these proceedings it was agreed that the First Respondent failed to take the specified actions in the compliance notice by 30 August 2021 and did not produce reasonable evidence of compliance with the actions specified in the compliance notice by 6 September 2021.
Also on 6 September 2021, the FWO Inspector sent a letter to the First Respondent in relation to their non-compliance with the compliance notice.
On 13 September 2021, the FWO Inspector sent a further letter to the First Respondent affording a final opportunity to rectify the non-compliance with the compliance notice.
On 8 February 2022, the FWO sent a letter to the First Respondent and its then lawyer which advised that the matter had been referred to the FWO’s legal compliance and enforcement branch for consideration of appropriate enforcement action and afforded a further opportunity to take the actions required by the compliance notice or provide any reasonable excuse for the failure to do so – by 15 February 2022.
On 17 February 2022, the Respondents’ then lawyer sent an email to the FWO which attached a spreadsheet of purported payments made to the former employee during the period of their employment with the First Respondent.
On 3 March 2022, the Second Respondent sent an email to the FWO which attached a bank transfer payments list.
On 8 March 2022, the FWO sent an email to the First Respondent and its then lawyer which confirmed that, based on the information provided, the FWO considered that a total of $582.99 gross remained owing to the former employee as part of the specified action required by the compliance notice.
On 14 April 2022, proceedings were commenced by way of application and a statement of claim.
On 21 April 2022, the FWO notified the Respondents of the proceedings and reiterated that if the First Respondent was prepared to formally admit the contravention alleged in the statement of claim, the FWO would: work with the First Respondent to prepare a mutually agreed statement of facts; seek an order that the matter proceed directly to a penalty hearing; and ask that in imposing a penalty the Court take into account the admission of liability and cooperation in determining any penalty.
On 27 May 2022, the Respondents’ new lawyer approached the FWO and in that correspondence said they had been briefed that day and proposed a minute of consent orders.
On 30 May 2022, the Court received notice of a new lawyer commencing to act on behalf of both Respondents in relation to these proceedings (not the lawyer the FWO had been corresponding with previously).
On 1 June 2022, further procedural orders were made by consent in chambers.
On 28 June 2022, the Second Respondent paid the former employee $582.95 and $1.00 (a total of $583.95). It is agreed that this was an overpayment of 96 cents. The First Respondent has not sought to recover that amount.
Also on 28 June 2022, the Respondents’ lawyer corresponded with the FWO in which it was foreshadowed that the Respondents admitted to the contraventions alleged in the FWO’s statement of claim and further proposed to work together to prepare an agreed statement of facts and arrange the matter be listed for penalty hearing.
On 18 July 2022, the parties submitted a signed minute of consent orders to the Court and procedural orders were made.
On 18 August 2022, the parties filed a statement of agreed facts which, among other things, provided that:
(a) Local Builders Direct admits that it contravened section 716(5) of the Fair Work Act 2009 (Cth) (FW Act), by failing to comply with a Compliance Notice dated 26 July 2021 issued under section 716 of the FW Act (Compliance Notice).
(b)Mr Adamo admits that he was involved within the meaning of section 550(2) of the FW Act, in a contravention by Local Builders Direct of section 716(5) of the FW Act by failing to comply with the Compliance Notice.
In summary, the FWO filed the following materials on which it sought to rely:
(a)application (filed 14 April 2022);
(b)statement of claim (filed 14 April 2022);
(c)statement of agreed facts (filed 18 August 2022);
(d)affidavit of Fair Work Inspector Blaec Hammond (affirmed 2 September 2022);
(e)outline of submissions on penalty (filed 2 September 2022); and
(f)outline of submissions on penalty in reply (filed 11 October 2022).
And the Respondents filed the following materials on which they sought to rely:
(a)statement of agreed facts (filed 18 August 2022);
(b)outline of submissions on penalty (filed 21 September 2022); and
(c)affidavit of the Second Respondent (filed 21 September 2022).
On 14 November 2022, the Respondents’ lawyer sent an email to my chambers in which they foreshadowed withdrawal of representation but nonetheless sought on behalf of the Respondents that the question of penalty be decided in chambers “on the papers”, without the need for an appearance by the parties or their lawyers at Court as listed on 28 November 2022. The Court subsequently received confirmation of the FWO’s consent to this course, and required the express consent of the Second Respondent, given the lawyer’s notified intention to withdraw and the seriousness of the matter. Express consent was received by way of letter signed by the Second Respondent and dated 21 November 2022.
The Applicant filed a court book and a list of authorities on 25 and 28 November 2022.
The matter was listed for consideration in chambers, on the papers, on 28 November 2022 in accordance with the parties’ request which I accepted as appropriate in all of the circumstances.
the contraventions
Sections 716(5) and 550(1) of the Act are civil remedy provisions.
A fair work inspector may apply to this Court for orders in relation to contraventions of ss.716(5) and 550(1): s.539(2). The Court may make any order it considers appropriate where satisfied that a person has contravened a civil remedy provision: s.545(2). The Court may also make a pecuniary penalty order for such contravention: s.546.
I am satisfied that the statement of claim filed in this matter and upon which the FWO relies complies with the rules of pleading and properly pleads a cause of action that supports the grant of relief. In particular, I am satisfied that the facts alleged in the statement of claim and the admissions of the Respondents in the statement of agreed facts establish that the First Respondent contravened s.716(5) by failing to comply with the compliance notice issued by FWO Inspector Hammond on 26 July 2021; and the Second Respondent was involved pursuant to s.550(1), and within the meaning of s.550(2) of the Act, in the First Respondent’s contravention of s.716(5) of the Act by failing to comply with the compliance notice issued by FWO Inspector Hammond on 26 July 2021.
The Court has a wide discretion to make declarations. Having regard to the admissions of the Respondents and in the particular circumstances of this case, I am satisfied that this is an appropriate case for declaratory relief, if for no other reason than to record the Court’s disapproval of the contravening conduct.
Approach to the determination of penalties
The Court’s power to impose pecuniary penalties in respect of the established contravention resides in s.546(1) of the Act.
Section 546(1) permits the Court to impose a pecuniary penalty “that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision”.
As I have earlier considered with regard to the admissions of the Respondents, that state of satisfaction exists. It falls to determine what level of penalty (if any) is appropriate as against the Respondents in light of the established contraventions.
The single contravention of s.716(5) by the First Respondent, being a corporation, attracts a maximum penalty of $33,300. The Second Respondent also engaged in a single contravention by his involvement pursuant to s.550(1) which, for an individual, attracts a maximum penalty of $6,660: s.546(2) and s.539(2). The FWO submitted a recommended penalty range of between $11,988 to $14,985 (40% - 50%) in relation to the First Respondent and $2,376 to $2,970 (40% - 50%) in relation to the Second Respondent.
Factors relevant to the Court’s discretion
As recently affirmed by the High Court of Australia, the purpose of a civil penalty under the regime provided by the Act is primarily, if not wholly, protective in the promotion of the public interest in compliance with the provisions of the Act and in (general and specific) deterrence of further contraventions.[1] An “appropriate” penalty being one that “strikes a reasonable balance between oppressive severity and the need for deterrence in a particular case”.[2]
[1] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, [15]-[16] (Pattinson) citing the plurality in (the Agreed Penalties Case) and French J in Trade Practices Commission v CSR Ltd [1990] FCA 762.
[2] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, [41].
The task of assessing what amount to impose involves the selection of a figure taking into account all factors relevant to the particular case.[3] The oft cited decision of French J in Trade Practices Commission v CSR Ltd[4] listed those factors relevant to an overall assessment of penalty, restated by the Full Court in CFMMEU v ABCC:
..the nature, character and seriousness of the conduct; the loss and damage caused; the circumstances in which the conduct took place; the size of the contravener and its degree of power; the deliberateness of the conduct and the time over which it occurred; the degree of involvement of senior officials or management; the culture of the organisation as to compliance or contravention; and, any co-operation with the regulator and contrition.[5]
[3] Wong v The Queen [2001] HCA 64; (2001) 207 CLR 582, 611, [75] (Gaudron, Gummow and Hayne JJ); Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357, 373-375, [37] (Gleeson CJ, Gummow, Hayne and Callinan JJ); Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; (2018) 260 FCR 68, 84, [55] (Allsop CJ, Davies and Wigney JJ); Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25, 36 [44] (Jagot, Yates and Bromwicgh JJ) as cited by Snaden J at [26] in Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654.
[4] [1990] FCA 762; [1991] ATPR 41-076 at [42].
[5] [2018] FCAFC 97 at [20].
This is not an exhaustive list. Further, each case warrants an “idiosyncratic” approach and a careful analysis of all relevant circumstances - as was stated in Australian Ophthalmic 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.[6]
[6] Australian Opthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCA 8 at [12] (Graham J).
I consider the present matter in light of those well-established principles.
Nature of the contravening conduct
The relevant conduct in the present case is the First Respondent’s failure to comply with the compliance notice dated 26 July 2021 and the Second Respondent’s involvement in that non-compliance having been responsible to ensure that the First Respondent complied with its obligations under the Act at the relevant times. Compliance with the compliance notice required the First Respondent to prepare certain calculations and take the specified remedial action by 30 August 2021 and to provide reasonable proof of this to the FWO by 6 September 2021.
The Respondents had made a payment to the former employee in the amount of $509.70 on 9 August 2021 and $287 on 11 August 2022 (totalling $796.70) but that was not the full amount required by the compliance notice and the Respondents did not provide evidence of this to the FWO or reasonable excuse as the compliance notice itself required (or, indeed, until some 7 months after the time for compliance had passed). In this respect, it matters not that the FWO might have learned through another source of a payment made to the former employee. The requirements of the compliance notice were not met by the due date specified on the face of the compliance notice.
Nor were those requirements met by the further two extended dates for further compliance that the FWO offered in its letters of 13 September 2021 and 8 February 2021.
The part payment before the due date represents partial compliance but can not properly be characterised as compliance.
The contraventions occurred notwithstanding the FWO’s various efforts to: notify the Respondents of the compliance notice and the due date for compliance; to extend the date for compliance on 2 separate occasions; and to advise of the likely consequences of non-compliance including the risk of legal proceedings and the imposition of a pecuniary penalty of up to $33,300 for the corporation and up to $6,660 for an individual. In this respect, it may be noted that the Second Respondent contended that his relationship with the FWO Inspector, whom he perceived to essentially “harass” him with multiple communications prior to the first date of compliance, contributed to the circumstances of the non-compliance. This was strongly denied by the FWO, and not understood to be seriously pressed given the absence of evidence of any inappropriate behaviour. In any event, in my view, an allegation about a poor relationship with a fair work inspector, without more, is not a basis to absolve or excuse an employer from their compliance obligations. Further, accepting that it were the case that the FWO gave regular reminders then - in the context of the FWO’s role as regulator - that it might regularly remind an employer of their obligations before commencing litigation of this kind would appear entirely consistent with its overarching statutory functions.
The subject matter of the compliance notice was the underpayment of one former employee in the total amount of $1,379.69 for various contraventions of the Award and the Act. The total amount was in fact partly rectified prior to the (later) time for compliance such that the amount of $582.99 remained outstanding until its rectification some 10 months later on 28 June 2022. The Second Respondent filed an affidavit in which he swore to his “concern” that the entitlements claimed by the former employee and referenced in the compliance notice were not a true representation of the hours actually worked as to attract the payment obligations in the Award and the Act. Yet he did not take that up with the FWO at the relevant times and has now admitted to the specific amounts that were owed in contravention of the Award and various provisions of the Act. Taken at its highest, that suggestion bears out the difficulty for an employer that does not have robust record-keeping or time-recording systems but falls short of establishing a reasonable excuse for the issues underlying the compliance notice or for the non-compliance with the notice itself (which is not understood to be pressed, in any event, given the admitted contraventions). The circumstances which gave rise to the compliance notice should be taken into account in determining penalty in this case.
It is also relevant that this is not a case where there is a history of prior contraventions of the Act, by either Respondent.
Loss
In this case, the former employee’s entitlements crystallised prior to 8 May 2021 and then there was the period of non-compliance with the compliance notice which extended for some 10 months until the rectifying payment was made. This lapse of time was of reasonable duration and meant that the former employee was denied their lawful entitlements in the intervening period. The underpayments have now been rectified and there is no extant loss on the part of the former employee. There is also the wastage of public resources in pursuit of this matter including by commencing this litigation. These are all factors are to be taken into account in consideration of the penalty in the present case.
Although it was not clear on the face of the Respondents’ submissions, it was at least the FWO’s understanding that the Respondents sought to claim their loss in legal fees incurred in defence of this matter as relevant to the Court’s consideration of loss when assessing the appropriate penalty(ies) (if any). For completeness, if that were the Respondents’ argument, I would accept the FWO’s submission that the Respondents’ legal costs expended in defence of the compliance notice including this litigation are not properly to be taken into account in fixing the penalty(ies). The question of loss in this context is focussed on the loss sustained by others as a result of the breaches by the Respondents and, in any event, the Act provides that each party bears their own costs in the ordinary course.
Deliberateness
There is no question that the Second Respondent was aware of the compliance notice and indeed provided a copy to his then lawyer on the day of its issue. The compliance notice itself made plain the likely consequence of failure to comply. I have earlier concluded that the partial compliance, which was not established by production of evidence to the FWO, did not constitute compliance.
As earlier referenced, the Second Respondent also put on affidavit his “concern” that the entitlements claimed in the compliance notice were not actually owed to the former employee but did not take that up with the FWO at the relevant times and has now admitted to the specific amounts that were owed in contravention of the Award and various provisions of the Act. Without more, any concern the Respondents held in this respect does not assist in dissuading my view that the contravention was deliberate.
On the materials before the Court, the decision of the Second Respondent not to ensure the First Respondent’s full compliance with the notice (at least for the period up to 28 June 2022) was deliberate. Furthermore, the conduct of the First Respondent, in the face of repeated interaction with the FWO, in failing to satisfy the compliance notice was also deliberate.
Size of the business, management involvement and financial circumstances
At the time of the final submissions in this matter, the First Respondent continued to trade in the building industry and employed a small number (one full time and one part time employee).
The Second Respondent is the sole director and was by his own admission in a position to ensure the First Respondent’s compliance with the compliance notice and involved in the First Respondent’s contravention.
The Second Respondent filed an affidavit which included a statement that the First Respondent entity is under financial strain on account of cost increases for materials. There is also evidence of a $45,000 loan which is said to have been taken out for the purpose of assisting with paying employee wages.
Taking this evidence at its highest, the First Respondent has established its capacity to rectify the amount owed to the former employee (having already done so, on 28 June 2022) and otherwise has not established any serious difficulty with paying a penalty if ordered. In any event, the size and financial circumstances of the business do not excuse an employer of its obligations to comply with workplace laws.
Corrective action, cooperation with the FWO and contrition
It must be acknowledged that the Respondents have engaged with the FWO and attended to partial compliance with the compliance notice before its due date and the remaining corrective action was taken on 28 June 2022 (being 10 months after the due date and 2 months after the commencement of these proceedings).
Further, the Respondents have spared some cost and complexity by working with the FWO to submit an agreed statement of facts, their admissions and approach to the litigation. The Respondents have submitted that they did so on encouragement of the FWO who had communicated that the Courts have previously recognised a significant discount in penalty may be appropriate where respondents have made admissions early in the course of an investigation or proceedings and have cooperated.
There is at least a statement in written evidence of the Second Respondent’s “regret” and the Respondents’ lawyer submitted that contraventions of this kind are a ‘one-off’ and unlikely to ever occur again even if no penalties were imposed on them.
These are all matters I consider relevant and find that a discount of 15% ought be applied to any penalty(ies) ordered. In so finding, for completeness, I consider the FWO’s submitted discount of 10% not reflective of the extent of cooperation in the present case and the Respondents’ submitted discount of 40% excessive where it has engaged in a relatively cursory and unnecessarily defensive (distinct from contrite) way – and not soon enough as to avoid the commencement of these proceedings.
To the extent it was contended that the Respondents incurred legal costs in that process, I do not consider that relevant to the question of the Respondents’ corrective action, cooperation with the FWO and contrition nor of itself a basis for applying a reduction of any penalty(ies).
Compliance with minimum standards
A further and important consideration in this case is the need for compliance with the statutory framework. The statutory framework concerning compliance notices is an important mechanism for an inspector to deal with non-compliance with minimum entitlements in the Act as an alternative to commencing litigation. It also provides a means of early resolution and rectification without penalty.
The failure to comply with a statutory notice issued by the FWO is serious and such conduct ultimately undermines the Act’s enforcement framework and the safety net of entitlements it is designed to protect.
Deterrence
The principles and importance of general and specific deterrence were commonly accepted by the FWO and the Respondents in this matter.
In my view, there is a need for general deterrence in this matter, to emphasise the importance of an effective compliance framework and at a sufficient level to impress upon other employers the importance of complying with the legal obligations owed to their employees.
I have had regard to the expression of some regret and eventual rectification of the non-compliance with the compliance notice. The Respondents claimed this was a ‘one-off’ incident of non-compliance and it was unlikely to happen again. However, this is also a case where there is a need for specific deterrence, particularly in circumstances where the First Respondent continues to trade and employ persons, and the Second Respondent remains its sole director. I have also had regard to the materials before the Court about the Respondents’ conduct in this matter, which is the only matter of its kind to date but which demonstrates eventual compliance at a relatively late stage, after Court proceedings had commenced, and lacks depth in terms of contrition or evidence of how future contraventions will be avoided.
The appropriate penalty
When all of the above factors are considered, I am satisfied that it is appropriate to impose a pecuniary penalty on the First Respondent for its contravention of s.716(5) and on the Second Respondent for his involvement in that contravention pursuant to s.550(1) of the Act.
Weighing the various competing factors, I consider it appropriate to fix the penalty at 25% of the maximum for each of the First and Second Respondents, less a 15% reduction on account of the corrective action, cooperation and contrition demonstrated in accordance with my finding above; in the amounts of $7,076.25 and $1,415.25, respectively.
In my view, this is a proportionate response to the respective contraventions of ss.716(5) and 550(1) and strikes a reasonable balance between oppressive severity and the need for both general and specific deterrence in this particular case.
The FWO sought an order that the penalty be payable to the Commonwealth of Australia within 28 days of these orders.
For the above reasons, I will make declarations and orders accordingly.
I certify that the preceding seventy-six (76) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansini. Associate:
Dated: 8 December 2022
0
9
0