Fair Work Ombudsman v Lycamobile Pty Ltd
[2018] FCCA 1892
•29 August 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v LYCAMOBILE PTY LTD | [2018] FCCA 1892 |
| Catchwords: INDUSTRIAL LAW – Awards – breach of award – underpayment of wages – agreed statement of facts – breaches admitted – same course of conduct – issue of penalty – whether common law grouping principles apply to contraventions –– whether respondent demonstrated contrition and cooperation – whether continuing need for deterrence – penalties imposed – whether declarations and training orders should be made. |
| Legislation: Fair Work Act 2009 (Cth) ss. 14, 45, 539, 546, 557, 577 |
| Cases cited: Fair Work Ombudsman v Lycamobile Pty Ltd [2013] FCCA 2132 Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union [2018] FCA 934 Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 |
| Applicant: | FAIR WORK OMBUDSMAN |
| Respondent: | LYCAMOBILE PTY LTD (ACN 139 717 212) |
| File Number: | SYG 3069 of 2017 |
| Judgment of: | Judge Emmett |
| Hearing date: | On the papers |
| Date of Last Submission: | 27 July 2018 |
| Delivered at: | Sydney |
| Delivered on: | 29 August 2018 |
REPRESENTATION
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Solicitors for the Respondents: | Holding Redlich |
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 3069 of 2017
| FAIR WORK OMBUDSMAN |
Applicant
And
| LYCAMOBILE PTY LTD (ACN 13 9717 212) |
Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant is a person with standing under s.539(2) of the Fair Work Act 2009 (Cth) (“the FW Act”) to apply for orders in respect of contraventions of Civil Remedy Provisions.
The Respondent is a national system employer within the meaning of s.14 of the FW Act. The Respondent engaged in the business of provision of mobile phone services to customers via a mobile virtual network utilising Telstra’s telecommunications infrastructure.
By Statement of Claim filed 4 October 2017, the Applicant sought declarations in respect of the Respondent’s conduct as well as various orders, including the payment of penalties pursuant to s. 546(1) of the FW Act.
By consent, the parties agreed that the only matter for determination was the issue of penalty and that it was appropriate to deal with that issue on the papers. These reasons for judgment have been prepared in accordance with that agreement.
The Applicant relied on the following documents:
a)Statement of Claim filed on 4 October 2018;
b)Affidavit of Ms Jeyavathani Thevakumar affirmed on 21 February 2018;
c)Affidavit of Ms Emme Jane Rodwell affirmed on 28 February 2018;
d)Submissions on penalty filed on 1 March 2018;
e)Submissions by the Applicant in Reply filed 9 April 2018;
f)An Agreed Statement of Facts filed on 29 November 2011.
In response, the Respondent relied on the following documents:
a)Affidavit of Mr Rajanesh Easwarlingam affirmed 19 January 2018;
b)Submissions on penalty filed on 29 March 2018.
Background
Between 28 February 2011 and 29 June 2011 (“the Casual Period”), Ms Thevakumar was employed by the Respondent to perform clerical and administrative duties and paid the flat rate of $15.00 per hour for all hours worked.
Between 23 May 2012 and 28 November 2015, (“the Employment Period”), the Respondent employed Ms Thevakumar on a full time basis in the position of “Administrative Staff.”
During the Employment Period, Ms Thevakumar was employed subject to a contract of employment (dated 4 June 2012) at a base salary of $33,867.60. Ms Thevakumar was required to work from 9:00am to 6:00pm as well as any additional hours reasonably requested by the Respondent.
During the Employment Period, Ms Thevakumar was routinely required to work more than 38 hours per week and was required to work on a Saturday.
The history of the payments made by the Respondent to Ms Thevakumar during the Employment Period is as follows:
·$33,867.60 per annum from on or about 23 May 2012;
·$34,856.76 per annum from 1 August 2012;
·$34,745.86 per annum from 1 July 2013;
·$36,833.04 per annum from 1 July 2014; and
·$37,742.00 per annum from 1 August 2015.
During the Employment Period, the Respondent also paid Ms Thevakumar periodic payments designated as “allowances” and “arrears,” which were in respect of hours worked on Saturdays and were paid instead of Saturday penalty rates, and to which Ms Thevakumar was otherwise entitled under the relevant modern award, being the Telecommunications Services Award 2010 (“the TS Award”).
It is common ground that during the Employment Period, the Respondent was required to pay Ms Thevakumar a total of $16,736.36 in respect of overtime worked. It is also common ground that the Respondent only paid Ms Thevakumar a total of $11,472.09 on account of overtime hours worked.
The Respondent conceded that it contravened s. 45 of the FW Act in that Ms Thevakumar was underpaid an amount of $5,264.27 with respect to her entitlements to overtime rates during the Employment Period under cl. 21.1 of the TS Award. It is the Respondent’s failure to pay the Applicant that entitlement that is the subject of this penalty judgement.
Applicant’s Investigation
The history of the Applicant’s investigation is the subject of agreed facts as follows:
“23. On 21 April 2016, the Applicant received a Request For Assistance (RFA) from Ms Thevakumar alleging the non-payment of her overtime entitlement under the Modern Award during her Employment Period.
24. In May 2016, the Applicant commenced an investigation into the conduct alleged in the RFA (Investigation). Fair Work Inspector Rebecca Brain (FWI Brain) and Fair Work Inspector David Dixon (FWI Dixon) were responsible for the Investigation.
25. On 27 May 2016, FWI Dixon requested the voluntary production of records relating to the employment of Ms Thevakumar from the First Respondent.
26. On 10 June 2016, Mr Joshua Morkos, Human Resources Manager for the First Respondent (Mr Morkos), produced records to FWI Dixon in relation to Ms Thevakumar's employment.
27. On 23 June 2016, FWI Dixon issued the First Respondent with a Notice to Produce Records or Documents (NTP) pursuant to section 712 of the FW Act (June NTP).
28. On 19 July 2016, Mr Morkos, on behalf of the First Respondent, provided records in relation to Ms Thevakumar's employment in response to the June NTP.
29. On 25 November 2016, Mr Rajesh Easwarlingam, at that time one of two directors of the First Respondent, participated on a voluntary basis in a recorded interview with FWI Brain.
30. On 24 January 2017, FWI Dixon issued the First Respondent with a second NTP pursuant to section 712 of the FW Act (January NTP).
31. On 14 February 2017, Mr Easwarlingam, on behalf of the First Respondent, responded to the January NTP and provided records in relation to Ms Thevakumar's employment.
32. On 30 May 2017, FWI Brain issued a Contravention Letter to the First Respondent setting out her findings that the First Respondent had contravened terms of the Modern Award and underpaid Ms Thevakumar the amount of $6,889.75.
33. The underpayments identified in the Contravention Letter included underpayments that occurred during the Casual Period arising from the First Respondent failing to pay Ms Thevakumar her full entitlement to minimum rates of pay, casual loading and overtime rates under the Modern Award.
34. The parties acknowledge that the underpayments identified in the Contravention Letter in relation to the Casual Period occurred outside the relevant limitation period and are not contraventions alleged in these proceedings.
35. On 9 June 2017, FWI Brain provided the First Respondent with Ms Thevakumar's bank details and advised that the amount of $6,889.75 (gross) (Rectification Amount) was required to be paid to Ms Thevakumar by 14 June 2017.
36. The First Respondent paid the full Rectification Amount to Ms Thevakumar on 13 June 2017.
37. On 15 September 2017, Ashleigh Littlewood, a lawyer employed by the Applicant, sent a letter to the First Respondent advising that the Applicant intended to commence litigation against it.”
Effect of s.577 of the FW Act
The Court’s approach to the imposition of penalties is accurately summarised in the Applicant’s written submissions as follows:
“19. The Court’s power to impose penalties resides in section 546(1) of the FW Act. The FWO submits that the following principles should be taken into account in determining the appropriate penalties:
(a) Firstly, the Court should identify the “separate contraventions”. Each breach of an obligation found in the TS Award is a separate contravention of section 45 of the FW Act and a “civil remedy provision” for the purposes of section 539(2) of the FW Act;[1]
(b) Secondly, the Court should consider whether section 557 of the FW Act applies to multiple contraventions of an applicable provision;
(c) Thirdly, the Court should ensure that the respondent is not punished more than once for the same conduct by considering whether it is necessary to further “group” together contraventions where the contraventions arose from the same transaction or unlawful conduct or involve a legal or factual overlap that requires a recognition in the quantum of penalty;
(d) Fourthly, the Court should fix an appropriate penalty for each single or grouped contravention, taking into account all relevant circumstances; and
(e) Finally, the Court should apply the “totality principle” by considering whether the aggregate penalty is an appropriate response to the conduct which led to the contraventions.[2] The Court should apply an “instinctive synthesis” in making this assessment.[3]”
[1] Gibbs v The Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 at 223 cited in McIver v Healey [2008] FCA 425 at [16]-[18]
[2] See Kelly v Fitzpatrick [2007] FCA 1080 at [30] (Tracey J) (Kelly); Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 (Merringtons), at [23] (Gray J), [71] (Graham J) and [102] (Buchanan J)
[3] Merringtons, supra, at [27] (Gray J), at [54]-[55] and [78] (Graham J)
Section 557(1) and (3) of the FW Act are as follows:
Course of conduct
(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.
(3) Subsection (1) does not apply to a contravention of a civil remedy provision that is committed by a person after a court has imposed a pecuniary penalty on the person for an earlier contravention of the provision.
In Fair Work Ombudsman v Lycamobile Pty Ltd [2013] FCCA 2132 (“the 2013 Decision”), the Court ordered the Respondent to pay a total penalty of $59,400.00 for contraventions of the General Retail Industry Award 2010 and the TS Award. The penalty was for contravening cl. 21.1 of the TS Award and that was the same provision that is the subject of the proceeding before this Court. The 2013 Decision was in respect of 9 different employees. The Respondent was penalised $6,600.00 in respect of each employee.
The Applicant submits that the Respondent contravened cl. 21.1 of the TS Award in respect of Ms Thevakumar during 32 separate paid periods as follows:
(a) 7 were before the 2013 Decision (Pre-Penalty Contraventions); and
(b) 25 were after the 2013 Decision (Post-Penalty Contraventions).
The Respondent submitted that the Court should exercise its discretion to treat the Post-Penalty Contraventions as one and as the only contravention; or, alternatively, that the Pre-Penalty Contraventions and the Post-Penalty Contraventions should be treated as one contravention pursuant to the common law grouping principles, given they arise from the same conduct.
The Applicant submitted that ss.557(1) and (3) of the FW Act operate to impose a greater penalty upon a Respondent who has re-offended after having already been penalised by a court for the same contravention.
The Applicant conceded that it is appropriate to group the 25 Post-Penalty Contraventions as a single contravention because each contravention stems from the same course of conduct, being the decision not to pay Ms Thevakumar overtime rates for work in excess of 38 hours a week, despite the requirements of cl. 21.1 of the TS Award (see Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union [2018] FCA 934 Jagot J at [14]).
The Applicant submitted that the Pre-Penalty Contraventions and the Post-Penalty Contraventions are two groups of contraventions, each of which requires the imposition of a penalty.
The Respondent submitted that the conduct the subject of the 2013 Decision was a course of conduct that covered the Pre-Penalty Contraventions in the case before this Court. For the reasons below, I do not accept that contention.
I accept the Applicant’s submission that the Respondent’s bare assertion that the facts relating to the Pre-Penalty Contraventions are the same as those in the 2013 Decision (albeit in relation to a different employee) is insufficient to establish a course of conduct for the purposes of s. 557(1) of the FW Act. In support the Applicant referred to Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 where Katzmann J said as follows at [437]:
“Sadly, in the present case little or no attempt was made to identify “the same criminality” involved in the various contraventions. Similarity of subject matter, which appears to be the basis of the Ombudsman’s suggested groupings and the approach taken in some of the judgments to which I have referred, is not or at least not necessarily synonymous with similarity of “criminality”. In my respectful opinion, the Full Court in FWBII v CFMEU correctly recognised (at [46]) that what was said in Cahill “may have been erroneously interpreted by some as justifying single global penalties where there is a course of conduct”.”
The Applicant submitted that the factual elements the subject of the 2013 Decision and the Pre-Penalty Contraventions are distinguishable and the criminality of the Respondent is distinct. The Applicant referred to the following facts in relation to the Pre-Penalty contraventions:
“The Applicant submits the factual elements of the 2013 Contravention (Decision) and the Pre-Penalty Contraventions are distinguishable and the criminality of the Respondent is distinct. The Applicant draws the Court’s attention to the fact that the Pre-Penalty Contraventions:
(a) relate to Ms Thevakumar who worked at premises in Parramatta NSW, while the 2013 Contraventions relate to Christine Shermila Anthony (Ms Anthony) who worked at premises in Brisbane;[4]
(b) occurred over different time periods to that of the 2013 Contravention (being 23 May 2012 to 8 February 2013 versus 18 February 2011 to 2 July 2011);[5] and
(c) arose from Ms Thevakumar being paid an annual salary plus “arrears and allowances” payments for additional time worked on Saturdays which were insufficient to meet her entitlement to overtime rates in the TS Award. In contrast, the 2013 Contravention (Decision) arose from Ms Anthony being paid flat rates of $15 per hour from 18 February 2011 to 28 February 2011 and $14.17 per hour from 1 March 2011 to 2 July 2011 (when derived from her monthly payments).[6]”
[4] Previous SOAF, [15]
[5] Previous SOAF, [8](f)
[6] Previous SOC, [64]
The Applicant submitted that given the temporal and geographic differences and the different remuneration schemes, the Pre-Penalty Contraventions did not arise from a single decision or a single course of conduct as did the contraventions the subject of the 2013 Decision.
The Post-Penalty contraventions occurred in the context of the Respondent having been found to have contravened cl. 21.1(a) of the TS Award as reflected in the 2013 Decision. Further, the Respondent continued to deny Ms Thevakumar her entitlement to overtime pay.
Accordingly, I accept that it is appropriate that two separate penalties be imposed in respect of the Pre-Penalty Contraventions and the Post-Penalty Contraventions as two distinct contraventions, rather than applying the common law grouping principles.
Penalty Considerations
The maximum penalty in respect the Pre-Penalty Contraventions and the Post-Penalty Contraventions are set out in the Applicant’s submissions as follows:
36. The maximum penalty that may be imposed for contraventions of the FW Act is defined by reference to “penalty units” within the meaning of section 4AA of the Crimes Act 1914 (Cth) (Crimes Act).[7]
37. The value of the penalty unit, as defined by section 4AA of the Crimes Act was:
[7] Section 539(2) of the FW Act prescribes the maximum penalty that may be imposed by this Court for a contravention of each of the civil penalty provisions specified in the table in that section. Section 546(2) of the FW Act prescribes that a pecuniary penalty imposed by this Court must not be more than five times the maximum number of penalty units referred to in column 4 of the table in subsection 539(2) in respect of a corporation. Section 12 of the FW Act provides that “penalty unit” has the same meaning as section 4AA of the Crimes Act.
(a) $110 for the period 7 April 1997 to 28 December 2012;
(b) $170 for the period 28 December 2012 to 31 July 2015; and
(c) $180 for the period 31 July 2015 to 1 July 2017.
38. The Pre-Penalty Contraventions occurred between 23 May 2012 and 8 February 2013, thus spanning both the $110 and $170 penalty unit periods.
39. Similarly, the Post-Penalty Contraventions occurred between 9 February 2013 and 28 November 2015, spanning both the $170 and $180 penalty unit periods.
40. In Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) (GPS Decision),[8] Katzmann J considered whether the higher penalty unit could apply in circumstances where contraventions occurred both before and after a penalty unit increase. Her Honour noted the observations of the Court of Criminal Appeal in R v White,[9] that there was no reason why a higher penalty (in a criminal context) should only apply where the conduct being penalised first occurred after an increase. Her Honour went on to conclude that “by parity of reasoning … that principle applies to contraventions of the FW Act involving a course of conduct which began both before the amendment and continued after it came into effect”[10] and applied the increased penalty amount to each group of contraventions that spanned multiple periods, while taking into account in the determination of the penalty the fact that the lower amount applied for a part of the period.[11]”
[8] [2017] FCA 557 (24 May 2017).
[9] Unreported, BC9101745, NSWCCA (25 July 1991).
[10] GPS Decision at [396]-[398].
[11] GPS Decision at [401].
Consistent with the GPS Decision, it is appropriate to apply the higher penalty unit values of:
(a)$170 to the Pre-Penalty Group Contraventions; and
(b)$180 to the Post-Penalty Group Contraventions.
In the circumstances, the maximum penalty the Court can impose is:
(a)$51,000 for the Pre-Penalty Group Contraventions; and
(b)$54,000 for the Post-Penalty Group Contraventions.
The Applicant contends that a total penalty in the range of $29,760.00 to $38,160.00 is a meaningful penalty in light of the 2013 Decision, the respondent’s reckless disregard of its obligations, the involvement of senior management in the contraventions and the strong need for general and specific deterrence. The Applicant accepts that a discount should apply for the Respondent’s cooperation and corrective action. The Applicant submits that 20% is an appropriate discount to be applied to the relevant maximum penalty.
It is well accepted that the approach to penalties in workplace relations law involves the Court starting with a determination of the maximum penalty for each contravention followed by consideration of how the present circumstances might be compared to a worse possible case (see Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 at [80] per Stone and Buchanan JJ); Markarian v R (2005) 228 CLR 357 at [30]–[31]).
In relation to the Post-Penalty contraventions, in determining the level of culpability of the Respondent it is relevant that the Respondent failed to take appropriate corrective action within the workplace to ensure proper compliance with Australian workplace laws until the complaint was made by Ms Thevakumar. On the other hand, the total amount of underpayments over a 3 year period are small and involve only one employee and some overtime was paid to Ms Thevakumar over that period. In the circumstances and having regard to the 2013 Decision which penalised similar conduct, the Post-Penalty Contraventions are in the mid-range of culpability.
The Pre-Penalty Contraventions are at the lower end of culpability having regard to the amounts involved, the relatively short time of 8 months over which the contraventions occurred, and the fact that the shortfall was remedied in the course of determining the 2013 Decision.
A convenient checklist of considerations in imposing a penalty was set out in Mason v Harrington Corporation Pty Ltd t/as Pangea Restaurant & Bar [2007] FMCA 7 at [26]-[59] and adopted by Tracey J in Kelly V Fitzpatrick [2007] FCA 1080 at [30]. However, it must be remembered that whilst a convenient checklist, it does not prescribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion in imposing a penalty.
The following relevant factors in the case before this Court are considered below.
(a) Nature, Extent and Impact of Contravening Conduct
It is common ground that Ms Thevakumar was required to work in excess of 38 hours per week with no additional remuneration to compensate her. I accept this may have impacted on her stress and fatigue in balancing work and family life and a loss of time that she had to spend with her two children and husband.
The Respondent was aware of her concerns about her working hours, yet failed either to reduce her hours to 38 hours per week, or to compensate her properly for the overtime she had worked. As stated above, the total underpayment was $5,264.27, albeit over 4 years.
The Respondent submitted that it is the Australian arm of a global mobile virtual network operated business trading under the Lycamobile brand, whose headquarters are in London in the United Kingdom. The Respondent relies on a number of service companies based near the London headquarters to provide operations support services, including in administrative, legal, human resources, information technology and financial services. As a result, the Respondent submitted that its Australian based staff were focused on the sale and provision of telecommunication services rather than direct management of award related requirements. The Respondent submitted that any decisions or proposals with significant strategic or financial implications (such as increase to salaries) were notified to the Respondent’s headquarters for comment and approval prior to implementation.
The Respondent submitted that it did not deliberately or maliciously set out to contravene its obligations under s.45 of the FW Act and, as soon as it received notice of the Applicant’s investigation into the underpayment allegation, the Respondent worked with the Applicant to determine the correct entitlements payable to Ms Thevakumar under the FW Act and the TS Award.
However, the circumstances of the contraventions belie a diligence and vigilance on the part of the Respondent to ensure that it was paying Ms Thevakumar the correct entitlements, particularly in light of having been penalised for similar conduct in respect of a different employee in the 2013 Decision, for which it paid a court ordered penalty. That is not an acceptable standard of responsibility by the Respondent to the discharge of its obligations to its employees.
In the circumstances, I accept the Applicant’s submission that any mistake in paying Ms Thevakumar her due entitlements was the result of the Respondent’s recklessness rather than mere accident. As referred to above, the Respondent complied with the orders made as a result of the 2013 Decision and paid the penalty. However, one does not gain any benefit in the form of amelioration of any further penalty simply by having complied with a previous court order to the same effect. The seriousness of the Respondent’s conduct is only aggravated by its similar previous conduct resulting in the payment by it of a penalty.
I accept the Applicant’s submission that following the 2013 Decision, it is egregious that the Respondent failed to take steps that would have ensured compliance and maintained a business structure that would not result in the contraventions found by the Court of the FW Act.
The Respondent’s conduct following the 2013 Decision has lead the Court to find that the Respondent did not take its obligations to its employees sufficiently seriously. Lycamobile did not seek any professional advice in relation to complying with minimum terms and conditions of employment in respect of its employees, following the 2013 Decision. No specialist human resources staff was employed until 1 June 2015, being 2 years after the 2013 Decision. Further, that engagement was subsequent to Ms Thevakumar’s complaint in relation to working overtime hours.
The senior management of the Respondent was advised of Ms Thevakumar’s entitlements under the TS Award. However, it is of significant concern that United Kingdom management of the Respondent may have been unaware of the details of the 2013 Decision prior to the applicant’s investigation of this matter.
It is completely unacceptable for a company that has been the subject of adverse court findings and a civil penalty for non-compliance with workplace laws, to fail to disseminate that information about the outcome to key decision makers; and further fail to ensure that education about, and compliance with, workplace laws be placed front and centre of the business practices. Such is the minimum standard of an employer’s responsibility to its employees.
(b) Size and Financial Circumstances of the Company
The Respondent’s presence in Australia is modest as reflected by the 22 employees presently employed. However, I accept that the Respondent is the Australian arm of a global network trading under the Lycamobile brand. There is otherwise limited evidence about the size and financial circumstances of the Respondent.
(c) Cooperation, Contrition and Corrective Action
It is common ground that the Respondent was cooperative during the investigation of this matter; fully rectified the underpayment including alleged underpayment for the Casual Period in 13 June 2017; and, ensured full time staff no longer work more than 37.5 hours per week. The Respondent has also engaged Employsure until November 2020 to ensure compliance with its workplace obligations. Those steps are further expanded upon by the Respondent in its written submissions as follows:
“67. Specifically to address and correct the non-compliant overtime practice, since late 2016 the Respondent standardised the ordinary hours of permanent full-time staff to 37.5 hours per week from Monday to Friday and no longer requires permanent staff to work overtime.
68. In addition, the Respondent no longer conducts its regular business on weekends. Occasionally the Respondent may engage labour-hire workers for promotional work on a weekend or public holiday, for example at an event or festival. In those circumstances, the Respondent adopts the following process:
(a) Approval is obtained from headquarters in the UK before engaging workers to perform weekend or public holiday work;
(b) Once approval is obtained, the workers are engaged via a labour-hire agency;
(c) A timesheet recording the work performed is signed off by the Respondent; and
(d) The Respondent pays the relevant labour-hire agency for the work performed at the appropriate weekend or public holiday rate payable under the modern award.
69. The Respondent initiated a recruitment campaign to hire a senior HR Manager to be based in Sydney (Australia Head Office) in order to supplement the HR support received from Lycamobile headquarters in London. As a result of that campaign the Respondent recruited Mr Joshua Morkos who started work with the Respondent on 1 June 2015. Mr Morkos was responsible for all aspects of HR, created a framework for health and safety and was the contact person for all employees and management. Mr Morkos was also in charge ofthe employee life-cycle management including disciplinary processes and dismissals.
70. Mr Morkos left the employment of the Respondent on 22 September 2016. From 2 November 2016 the Respondent engaged external workplace relations experts Employsure to provide employment law related advice and support. Since that time the Respondent has consulted with Employsure to ensure compliance with its obligations under relevant legislation and modern awards and strictly follows their advice in all HR and employment law-related matters. In November 2017 the Respondent's contract with Employsure was been renewed and signed for another 3 year period until November 2020.
71. The Respondent has also agreed with the Applicant to undertake workplace compliance training for employees whose duties relate to the management of employees, the administration of payroll, and the administration and compliance with Australian workplace laws, within 6 weeks after the proceedings come to an end. The training will relate to compliance with the FW Act and the TS Award, including the Respondent's obligations in respect of minimum wages, overtime rates and weekend penalty rates.”
The Applicant submits that the steps taken by the Respondent are no more than the late performance of its duty. However, as stated above, the Applicant further accepts that it is appropriate that a discount of 20% of the maximum penalty the Court may impose apply on the basis that the Respondent has taken steps to change its work practices and to facilitate the course of justice.
In my view, the steps taken by the Respondent are both necessary and comprehensive and reflect a recognition by the Respondent, albeit late, of its duty to understand and implement Australia’s workplace laws in its employment of personnel. In imposing penalties, the steps taken by the Respondent entitle the Respondent to recognition of the comprehensive nature of those steps.
In the circumstances, I accept the Respondent’s submission that a discount of 25% of the maximum penalty the Court may impose in respect of the contravention would be appropriate to reflect the contrition and cooperation demonstrated by the Respondent.
(d) Deterrence
In relation to specific deterrence, the Applicant accepts that the risk of the Respondent reoffending is lessened by the corrective action that it has taken. However, the Applicant submits that specific deterrence still weighs in favour of imposing a meaningful penalty.
Having regard to the opportunity the Respondent had to put in place adequate systems to ensure full compliance following the 2013 Decision, I am satisfied that there is a continuing need for deterrence given the complete failure of the Respondent to meet its obligations following the 2013 Decision.
The respondent’s conduct following the 2013 Decision demonstrates the importance of general deterrence in imposing any penalty on the Respondents. I accept that a meaningful penalty is one that sends a message to employers and the public at large that repeat offending is serious and should be treated as such by the Court. It is a highly relevant factor in determining an appropriate penalty.
I accept the Applicant’s submission that imposing a meaningful penalty will reinforce that it is incumbent on employers that have been found to have breached workplace laws (and indeed all employers) to understand fully the nature of those obligations; and, to take corrective action in relation to implementation and compliance with Australian workplace laws as soon as practicable, particularly in respect of a company that continues to operate.
(e) Totality
It is well accepted that penalties should not be crushing or oppressive, but must be proportionate to the conduct engaged in by the Respondent and not have the effect of exonerating the conduct. The Court is required to come to a conclusion as to the appropriate penalty that ought to be imposed and then to consider as a matter of intuitive synthesis what an appropriate penalty should be (see Kelly, supra, at [30]; Merringtons, supra, at [23] (Gray J), [66]-[73] (Graham J), [98]-[102] (Buchanan J); Fair Work Ombudsman v Promoting U Pty Ltd & Anor [2012] FMCA 58 at [55]).
I accept the Respondent’s submission that the contravening conduct resulted in the underpayment of the relatively modest sum of $5,264.27. However, it occurred in the context of the 2013 Decision in respect of which a penalty had already been imposed on the Respondent for similar conduct, albeit in relation to different employees. The imposition of that penalty appeared to have little effect on the Respondent’s recognition of its workplace responsibilities and the implementation of practices, until the complaint was received by the Applicant from Ms Thevakumar.
Having discounted the maximum penalty for the Pre-Penalty Contraventions by 25% from $51,000 to $38,250 in recognition of the contrition and cooperation of the Respondent, and having found the culpability to be at the lower end, for the reasons referred to above, a penalty of $5,000.00 should be imposed in respect of the Pre-Penalty Contraventions,.
Having discounted the maximum penalty for the Post-Penalty Contraventions by 25% from $54,000 to $40,500 in recognition of the contrition and cooperation of the Respondent, and having found the culpability to be at the mid-range for the reasons referred to above, and having regard to the fact that the Post-Penalty Contraventions involve 25 breaches, a penalty of $20,000.00 should be imposed in respect of the Post-Penalty Contraventions.
Conclusions
In the circumstances, I am satisfied that a total penalty of $25,000.00 should be imposed on the Respondent and paid into consolidated revenue.
In circumstances where the Respondent was penalised for similar contraventions in respect of other employees in 2013, there is a public interest in declaring the current contravention of the Respondent. Accordingly, in addition to the penalties imposed, a declaration should also be made that the Respondent has contravened s.45 of the FW Act by failing to pay Ms Thevakumar the applicable overtime rates prescribed in cl. 21.1 of the TS Award.
Appropriate training orders should also be considered to ensure workplace relations compliance training is undertaken by the Respondent.
I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of Judge Emmett
Date: 29 August 2018
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