Fair Work Ombudsman v Mac-Worx Pty Ltd
[2023] FedCFamC2G 266
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Mac-Worx Pty Ltd [2023] FedCFamC2G 266
File number(s): BRG 530 of 2022 Judgment of: JUDGE VASTA Date of judgment: 6 April 2023 Catchwords: INDUSTRIAL LAW – Contraventions of Fair Work Act 2009 (Cth) – pecuniary penalty – deterrence Legislation: Building and Construction Industry (Improving Productivity) Act 2016 (Cth) s 99
Fair Work Act 2009 (Cth) s 44, s 45
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Mason v Harrington Corporation Proprietary Limited t/as Pangaea Restaurant & Bar [2007] FMCA 7
Division: Division 2 General Federal Law Number of paragraphs: 34 Date of last submission/s: 3 March 2023 Date of hearing: In Chambers on the papers Place: Brisbane Solicitor for the Applicant: Norton Rose Fulbright Counsel for the Respondent: The Respondent did not wish to provide submissions ORDERS
BRG 530 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUSDMAN
Applicant
AND: MAC-WORX PTY LTD (ACN 637 304 511)
Respondent
order made by:
JUDGE VASTA
DATE OF ORDER:
6 April 2023
THE COURT ORDERS THAT:
1.Pursuant to section 81(1)(a) of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth) (Act):
(a)the Respondent pay a pecuniary penalty of $12,500.00 to the Commonwealth for the contravention of section 99(7) of the Act for its failure to comply with the compliance notice given to the Respondent on 14 March 2022 in relation to Ziga Pirker; and
(b)the Respondent pay a pecuniary penalty of $12,500.00 to the Commonwealth for the contravention of section 99(7) of the Act for its failure to comply with the compliance notice given to the Respondent on 30 August 2022 in relation to Tiata Horn.
2.Pursuant to section 81(5) of the Act, Mac-Worx must pay the pecuniary penalty amounts ordered under Orders 1(a) and 1(b) above to the Commonwealth, within 28 days of the orders being made.
3.The Applicant have liberty to apply in the event the 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 VASTA
INTRODUCTION
On 7 June 2021, Mr Tiata Horn (“first employee”) contacted the now defunct Australian Building and Construction Commission (“the ABCC”) alleging that his employer, Mac-Worx (“the Respondent”), had failed to pay him his proper wages, allowances, redundancy and annual leave entitlements.
On 18 October 2021, Mr Ziga Pirker (“second employee”) contacted the ABCC making similar allegations against the Respondent.
The ABCC appointed Senior Inspector Kirsty Robertson to investigate these allegations.
The Investigation
Inspector Robertson found that the first employee was a permanent full-time employee of the Respondent and that his duties were consistent with that of a “construction worker” which was defined in the appropriate Award.
She found that the Respondent had failed to pay the first employee:-
·for untaken paid annual leave when his employment ceased;
·for his absence from work on a gazetted public holiday (26 April 2021);
·for 72 ordinary hours worked between 17 April 2021 and 30 April 2021;
·the relevant fares and travel allowance for each of the eight days that the first employee started and finished work on a construction site during that period;
·his redundancy entitlements when his employment ceased on 30 April 2021.
Inspector Robertson found that the second employee was a casual employee of the Respondent and that his duties were consistent with that of a CW/ECW 1 (level b) as defined in the appropriate Award.
She found that the Respondent had failed to pay the second employee:-
·for 126 hours worked during the employment period;
·a meal allowance each time that the second employee worked overtime;
·fares and travel pattern allowance for each day that the second employee started and finished work on a construction site during the employment period;
·for overtime hours worked during the employment period;
·for hours worked on Saturdays during the employment period.
Inspector Robertson noted that, whilst the amounts owed to the second employee totalled $5,542.99, the Respondent had made a partial payment of $3,000 to the second employee.
The Issuing of Compliance Notices and Aftermath
Having come to these conclusions, Inspector Robertson issued a compliance notice to the Respondent in relation to the second employee on 14 March 2022, and also issued a further compliance notice in relation to the first employee on 30 August 2022.
The compliance notices were issued pursuant to s 99(2) of the Building and Construction Industry (Improving Productivity) Act 2016 (“the BCIIP Act”).
The compliance notices set out the details of the results of the investigation which were alleged to constitute contraventions of ss 44 and 45 of the Fair Work Act 2009 (Cth) (“the FW Act”). The compliance notices explained that a failure to comply with the notice may contravene a civil remedy provision of the BCIIP Act resulting in the ABCC commencing legal action. The compliance notices set out the remedies that the Respondent had, if the Respondent wished to contest the compliance notice.
The compliance notices particularised the amounts still owed to the second employee totalling an amount of $2,542.99, and the amount owed to the first employee of $4,689.15.
The compliance notice, with respect to the second employee, stated that this amount had to be paid by 13 April 2022 and that the Respondent had to show the ABCC reasonable evidence of compliance by 20 April 2022.
On 21 April 2022, officers of the ABCC contacted the Respondent requesting details of any reasonable excuse that the Respondent had for not complying with the compliance notice. There was no reply made by the Respondent.
With respect to the first employee, the compliance notice stated that this amount had to be paid by 16 September 2022 and that the Respondent had to show the ABCC reasonable evidence of compliance by 23 September 2022.
By 27 September 2022, the Respondent had failed to comply with that notice too.
Officers of the ABCC contacted the relevant officers of the Respondent. The Respondent proposed a payment plan of payments (for the first employee) of a weekly amount of $90.17 which would begin from 21 October 2022 until 13 October 2023 to pay the amount. The ABCC would not consider any payment plan that extended beyond three months and asked the Respondent to reconsider its payment proposal.
On 30 November 2022, the ABCC commenced the present action in this Court.
The Litigation
The matter was due to come before me, as a first court date, on 16 January 2023. The parties contacted Chambers prior to that date, and on 13 January 2023, I made a number of orders by consent.
By consent, I declared that the Respondent had contravened s 99(7) of the BCIIP Act by failing to comply with the compliance notice with respect to the first employee and I declared that the Respondent had contravened the same section by failing to comply with the compliance notice in respect of the second employee.
I ordered, pursuant to recent legislative changes, that the name of the Applicant be changed from ABCC to the Fair Work Ombudsman (“FWO”). I then made administrative orders timetabling the matter for a hearing with regards to penalty. I amended that timetable, by consent, in Chambers, on 27 February 2023.
The parties agreed for the matter to be heard on the papers.
Principles in respect of Pecuniary Penalty orders
The law in relation to assessment of pecuniary penalties has really been laid down quite comprehensively. The High Court, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3, said, at paragraph 116 of that judgment:
As has been observed, the principal object of an order that a person pay a pecuniary penalty under s 546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners. According to orthodox sentencing conceptions as they apply to the imposition of civil pecuniary penalties, specific deterrence inheres in the sting or burden which the penalty imposes on the contravener. Other things being equal, it is assumed that the greater the sting or burden of the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and thus the more likely it will be that the contravener is deterred from further contraventions; likewise, the more potent will be the example that the penalty sets for other would-be contraveners and therefore the greater the penalty's general deterrent effect. Conversely, the less the sting or burden that a penalty imposes on a contravener, the less likely it will be that the contravener is deterred from further contraventions and the less the general deterrent effect of the penalty. Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any, specific or general deterrent effect, and so it will be unlikely, or at least less likely, to achieve the specific and general deterrent effects that are the raison d'être of its imposition.
The High Court reaffirmed that principle very recently in the matter of Australian Building and Construction Commissioner v Pattinson [2022] HCA 13. The High Court said, at paragraph 46:
[46]It is important to recall that an “appropriate” penalty is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case. …
[47]The penalty that is appropriate to protect the public interest by deterring future contraventions of the Act may also be moderated by taking into account other factors … where those responsible for a contravention of the Act express genuine remorse for the contravention, it might be considered appropriate to impose only a moderate penalty because no more would be necessary to incentivise the contravenors to remain mindful of their remorse and their public expressions of that remorse to the court. Similarly, where the occasion in which a contravention occurred is unlikely to arise in the future because of changes in the membership of an industrial organisation, a modest penalty may be appropriate having regard to the reduced risk of future contraventions.
[48]It is not necessary to multiply examples further. It is sufficient to say that a court empowered by section 546 to impose an “appropriate” penalty must act fairly and reasonably for the purpose of protecting the public interest by deterring future contraventions of the Act.
In Mason v Harrington Corporation Proprietary Limited t/as Pangaea Restaurant & Bar [2007] FMCA 7, which is known as the Pangaea case, the Court went through, in effect, a number of factors the Court should be mindful of when imposing pecuniary penalties. One must be careful, though, in looking at the Pangaea case (Supra), that one does not simply look at those matters as some form of checklist to see whether or not the facts of the case with the particular factors either aggravate or mitigate the penalty. As such, the list compiled in Pangaea (Supra) is extremely useful, but it should not be a formula used by the Court to slavishly come up with some sort of almost mathematical guide for the imposition of penalties.
Notwithstanding what has been said in Pattinson (Supra), the principles in Pangea (Supra) are still apposite when looking at the circumstances of the contravention as well as the circumstances of the contravener.
Relevant Factors
The compliance notice regime in respect of the BCIIP Act is analogous to the compliance notice regime that exists within the FW Act. The benefit of the compliance notice scheme is that an employer is given notice of a breach of the FW Act. If the employer rectifies the breach, then it is as if the breach did not occur. There are no declarations made against an employer and there can be no further action for that particular contravention of the FW Act.
As previously noted, the BCIIP Act provides a mechanism by which an employer can challenge the conclusions made by the inspector.
This regime is a very quick, inexpensive and simple way to resolve issues that arise regarding underpayments in the workplace. To ensure that the integrity of such a regime is maintained, it behoves the Court to treat contraventions of the regime with condign penalties.
There has been no material put forward by the Respondent. There has been no explanation, let alone excuse, given by the Respondent for their behaviour. The Court has had to have a res ipsa locquitur attitude to the facts of this matter.
Conversely, the Respondent has not caused any additional public expenditure in these proceedings. The issue of liability was settled before the first court date which obviated the need for any actual appearance in Court. This penalty hearing has been done on the papers, which also meant that valuable Court time has not been needed to be used for this matter.
While it may be that the sums of money that were owed to the first employee and the second employee would not be categorised as large sums of money, they were significant enough for both of those employees to seek assistance.
But the purpose of the pecuniary penalty is not to deter the Respondent from underpaying their employees; the purpose of the pecuniary penalty is to deter non-compliance with the compliance notice. In this respect, contravening s 99(7) of the BCIIP Act is more serious than the underpaying of employees, because this contravention strikes at the heart of a proper industrial relations regime.
Order
Having regard to all of the matters, I am of the view that a pecuniary penalty of $12,500 for each contravention is the appropriate pecuniary penalty.
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Vasta. Associate:
Dated: 6 April 2023
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