Fair Work Ombudsman v Maleha Newaz Pty Ltd
[2010] FMCA 422
•26 May 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v MALEHA NEWAZ PTY LTD & ANOR | [2010] FMCA 422 |
| INDUSTRIAL LAW – FAIR WORK – Breach of the Workplace Relations Act 1996 – deliberate breach of the Act – underpayment of receptionist – threat to dismiss if a complaint was lodged – quantification of penalty – factors to be considered in a penalty assessment. |
| Bankruptcy Act 1966 Clerical Employees Award 2002 Fair Work Act 2009 Fair Work Transitional and Consequential Amendments Act 2009 Fair Work Traditional Provisions and Consequential Amendments Act 2009 Workplace Relations Act1996 |
| Cotis v Macpherson [2007] FMCA 2060 CPSU v Telstra Corporation Limited (2001) 108 IR 228 Fair Work Ombudsman v Primrose Development [2009] FMCA 632 Glenn Jordan v Mornington Inn Pty Ltd [2007] FCA 1384 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Pearce v The Queen (1998) 194 CLR 610 Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65 Printing and Kindred Industries Union & Ors v Vista Paper Products Pty Ltd & Anor (1994) 127 ALR 673 Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 Smith v Prescott & Ors [2008] FMCA 1672 Workplace Ombudsman v Saya Cleaning [2009] FMCA 38 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | MALEHA NEWAZ PTY LTD T/AS PHYSIO PLUS PHYSIOTHERAPY AND SPORTS INJURY CLINIC |
| Second Respondent: | SABA AHAMMAD |
| File Number: | BRG 997 of 2009 |
| Judgment of: | Burnett FM |
| Hearing date: | 26 May 2010 |
| Date of Last Submission: | 26 May 2010 |
| Delivered at: | Brisbane |
| Delivered on: | 26 May 2010 |
REPRESENTATION
| Counsel for the Applicant: | Ms G.B. Dann |
| Solicitors for the Applicant: | Clayton Utz |
| Counsel for the Respondent: |
| Solicitors for the Respondent: | Hopper Green York |
ORDERS
The First Respondent contravened section 792(1)(a) of the Workplace Relations Act 1996 (Cth) (WR Act), for the prohibited reason set out in section 793(1)(j) of the WR Act.
The First Respondent contravened section 792(1)(a) of the WR Act, for the prohibited reason set out in section 793(1)(i) of the WR Act.
The Second Respondent contravened section 792(1)(a) of the WR Act, for the prohibited reason set out in section 793(1)(j) of the WR Act.
The Second Respondent contravened section 792(1)(a) of the WR Act, for the prohibited reason set out in section 793(1)(i) of the WR Act.
Pursuant to section 807(1)(a) of the WR Act, the First Respondent pay a pecuniary penalty in the amount of $13,000.00 in respect of the contraventions of section 792(1)(a) of the WR Act, for the prohibited reasons set out in sections 793(1)(j) and 793(1)(i) of the WR Act.
Pursuant to section 807(1)(a) of the WR Act, the Second Respondent pay a pecuniary penalty in the amount of $2,700.00 in respect of the contraventions of section 792(1)(a) of the WR Act, for the prohibited reasons set out in sections 793(1)(j) and 793(1)(i) of the WR Act.
Pursuant to section 807(1)(b) of the WR Act the First and/or Second Respondent pay Stephanie Pastusin the amount of $5,482.64 as compensation for damage suffered as a result of the contraventions of section 792(1)(a) of the WR Act.
Pursuant to section 841 of the WR Act, the penalties referred to in Orders (5) and (6) above be paid into the Consolidated Revenue Fund of the Commonwealth of Australia within 30 days of the date of this order.
The First and/or Second Respondent pay the amount referred to in Order (7) above to Ms Pastusin within 30 days of the date of this order.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 997 of 2009
| FAIR WORK OMBUDSMAN |
Applicant
And
| MALEHA NEWAZ PTY LTD T/AS PHYSIO PLUS PHYSIOTHERAPY AND SPORTS INJURY CLINIC |
First Respondent
| SABA AHAMMAD |
Second Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This application relates to the conduct of the first and second respondents between 16 April 2007 and 7 February 2009. The facts arose prior to 1 July 2009 when the legislative regime changed. At the relevant time the Workplace Relations Act1996 (the WR Act) applied to the conduct of the first and second respondents and by force of Schedule 2 Part III Item 11 of the Fair Work Transitional Provisions and Consequential Amendments Act 2009, the matter is now picked up by the Fair Work Act 2009.
The applicant in this instance is a fair work inspector pursuant to section 701 of the Fair Work Act and has the functions provided by section 682 of the Fair Work Act which include commencing proceedings to enforce Commonwealth Workplace Relations legislation and may make or continue an application that would have been made or commenced by a workplace inspector under the WR Act in relation to conduct that occurred prior to 1 July 2009.
He has standing to apply to the court for orders under section 807(1)(a) of the WR Act relating to the imposition of pecuniary penalties in relation to contraventions of section 792(1)(a) of the WR Act and under section 807(1)(b) of the WR Act requiring payment for compensation for damages suffered as a result of contraventions under section 792(1)(a) of the WR Act.
The first respondent in this instance was at all material times a registered proprietary company incorporated in Queensland. It was capable of being sued and was an employer within the meaning of section 61 of the WR Act. At that time it operated a business of providing physiotherapy and related services from premises located at Shop 5, Metropol Shopping Centre, corner of Creek and Pine Mountain Road, Carindale, Queensland.
The second respondent is, and was at the relevant time, the secretary of the first respondent. He was married to Maleha Newaz who was a director and secretary of the first respondent. She was a physiotherapist and, for all intents and purposes, it appears she was the alter ego of the first respondent. The second respondent was at the relevant time responsible for all employment matters within the first respondent including the determination of rates of pay and all other terms and conditions of employment not excluding recruitment activities. He was involved and responsible for payroll and for the financial management of the business including GST and taxation. Employees of the first respondent approached the second respondent in relation to details of employment-related matters and the first respondent would also deal with employment related matters on a general level. His wife, Mrs Newaz, would defer to him on wage-related matters connected with the first respondent.
At the relevant time, the first respondent employed a Ms Stephanie Marie Pastusin. She was employed as a receptionist on a casual basis. At that time the first respondent was bound by the Clerical Employees Award State 2002 (Qld) which continued to operate as a NAPSA in respect of clerical staff employed by it. At the relevant time, a NAPSA was an industrial instrument within the meaning of section 779 of the WR Act.
Pastusin commenced employment with the first respondent on 16 April 2007 and towards the end of 2009 – by reason of her becoming suspicious of her rates of pay – made inquiries of an agency which remains unidentified, regarding her minimum entitlements in respect of her employment with the first respondent. The agency was described as the Department of Employment but no such creature exists and one can only speculate as to the formal agency with whom she made contact. But, in any event, it appears uncontroversially to have been a governmental agency.
The person with whom she spoke would likely have been an officer from either the Workplace Ombudsman, the Queensland Department of Employment and Industrial Relations or the Queensland Workplace Rights Office. They were all persons or bodies that had capacity under an industrial law to seek compliance with the industrial law or the observance of the person’s rights under an industrial instrument for the purposes of section 793(1)(j) of the WR Act. The fact that an employee sought to contact such an agency is not in dispute and in fact it constitutes one of the agreed facts in the case.
As a result of her inquiries the employee obtained a copy of an award summary sheet which is published by Wageline and summarised her entitlements under the NAPSA. It seems that following that, on or about 4 November 2008, she then wrote to Newaz and the second respondent and proposed to them that they re-evaluate her wages and that she be paid in accordance with level two pay rates set out in the Wageline summary sheet which had been provided to her. The letter, which she forwarded on 4 November 2008 making this request, enclosed a copy of the Wageline summary sheet.
On 6 November 2008 the second respondent sent an email to her in response to her letter. It stated, inter alia, (including various typographical and syntax errors):
“Stephy,
Thanks for your letter. You presented good case. But from my point of view, I thing [sic] your Hourly rate market standard and well presented according to your job you done for Physio Plus.
Physio Plus is a Company, can make decision including wages and rate its own right. I will usually review wages once a year, June each year. My next task to review wage Jun 2009 which around long 7 moths away. Given the economic condition, slow in growth, it is hard for me to increase your hourly rate to any one includes yourself at the stage. But you can consider following options up to you make decision,
· Stay as it is, we are happy with you, wait for June 2009 for review which is long way.
· Or if you thing, your wage rate paid by Physio Plus not correct, it is your right to contest your case by write down letter to Dept. of Employment. If Dept. think we should pay more that we paid now, I am very happy to pay back or whatever Dept. ask to do, I will follow that. But in that case, you have to terminate your employment with Physio Plus by yourself or by me by giving standard 1-2 weeks notice etc smoothly with mutual respect your privacy or our standard.
I myself or Physio Plus still happy to give good reference because you worth for that.
Given the sensitivity of the case between you and Physio Plus. For further communication, Please Email me or give my following number or Postal address: PO Box 1885 Carindale Qld 4152 for further communication.
Regards,
Saba Ahammad
PJS ACCOUNTANTS”
It is agreed that, by sending the email of 6 November 2008, the second respondent acknowledged that he had the authority to review and increase wages on behalf of the first respondent, but he refused to provide the employee with her entitlements under the NAPSA, and he confirmed that if the employee wished to make inquiries or complain further about her rate of pay and or pursue her entitlements under the NAPSA, she must resign or her employment would be terminated. The employee understood the email to mean precisely that – that is – that her request for a review was declined and if she wished to pursue it, she would either have to resign or be sacked. See her affidavit at paragraph 20.
On 6 January 2009, the employee then tendered her resignation from her employment with the first respondent in order to pursue her entitlements under the NAPSA. On 7 January she lodged a wages and conditions claim form with the applicant and on 7 February the employee’s resignation took effect and her employment with the first respondent ceased. In broad terms, the relevant legislative framework which applies to this contravention is as follows:
First, section 792(1) of the WR Act provides that:
“An employer must not, for a prohibited reason, or for reasons that include a prohibited reason, do or threaten to do any of the following:
(a) dismiss an employee;
(b) injure an employee in his or her employment;
(c) alter the position of an employee to the employee’s prejudice;
(d) refuse to employ another person as an employee;
(e) discriminate against another person in the terms or conditions on which the employer offers to employ the other person as an employee.”
The prohibited reasons for the purposes of section 792(1) are set out in section 793 of the WR Act and relevantly section 793 provides:
“(1) Conduct referred to section 792(1) or (5) is for a prohibited reason if it is carried out because the employee, independent contractor or other person concerned:
(i) is entitled to the benefit of an industrial instrument, an order of an industrial body or the Australian Fair Pay and Condition Standard; or
(j) has made or proposes to make an inquiry or complaint to a person or body having the capacity under an industrial law to seek:
(i) compliance with that law; or
(ii) the observance of a person’s rights under an industrial instrument.”
Section 792(4) of the WR Act provides:
“An employer does not contravene subsection (1) because of paragraph 793(1)(i) unless the entitlement described in that paragraph is the sole or dominant reason for the employer doing any of the things described in paragraphs (1)(a), (b), (c), (d) and (e) of this section”.
Section 792(2) of the WR Act provides that section 792(1) is a civil remedy provision. The applicant has standing to bring this proceeding pursuant to section 807 of the WR Act and to seek orders imposing pecuniary penalties in relation to contraventions of section 792 and orders requiring payment of compensation for damage suffered as a result of contraventions of section 792. In that regard, section 807 then provides:
“(1)The court, on application by an eligible person, may make one or more of the following orders in relation to a person (the defendant) who has contravened the civil remedy provision of this part:
(a) an order imposing a pecuniary penalty on the defendant;
(b) an order requiring the defendant to pay a specified amount to another person as compensation for damage suffered by the person as a result of the contravention;
(c) any other order that the court considers appropriate.
This court is, for the purposes of the Act, defined as a court under section 779 and section 807(4) of the Act provides that “each of the following is an eligible person for the purposes of this section; (a) a workplace inspector; (b) a person affected by the contravention; or (c) a person prescribed by the regulations for the purposes of this paragraph”. As earlier noted, these proceedings are governed by the transitional provisions contained in the Fair Work Transitional and Consequential Amendments Act 2009 and are properly drawn and continued in the name of the Fair Work Ombudsman.
So far as the contraventions are concerned; first the contravention is by the first respondent. At the relevant time, the second respondent was acting as an officer, director, employee and or agent of the first respondent within the scope of his actual or apparent authority. So that – in accordance with section 826(2) of the WR Act – the conduct engaged in by the second respondent was also taken to be engaged in by the first respondent.
By engaging in the conduct that I have just outlined, the first respondent through the actions of the second respondent, dismissed or threatened to dismiss the employee for a reason that she made or proposed to make an inquiry to a person or body having the capacity under an industrial law to seek compliance with the industrial law or the observance of a person’s rights under an industrial instrument in contravention of section 792(1)(a) for the previous reasons set out in section 793(1)(j) of the Act.
By engaging in that conduct, the first respondent dismissed or threatened to dismiss, the employee for a reason that she was entitled to the benefit of an industrial instrument which was in contravention of section 792(1)(a) for the prohibited reasons set out in section 793(1)(j) of the WR Act.
Concerning the second respondent; for the purposes of section 728(2) of the Act, the second respondent was involved in the contraventions because he aided or abetted, counselled or procured the contravention and/or by his direct act was knowingly concerned in or party to the contravention.
He did so by engaging in the conduct which I have detailed above in that he dismissed or threatened to dismiss the employee for the reason that she made or proposed to make an inquiry to a person or body having the capacity under an industrial law to seek compliance with the industrial law or the observance of a person’s right under an industrial instrument in contravention of 792(1)(b) for the prohibited reasons set out in section 793(1)(j) of the Act.
Further, by engaging in conduct, as I have outlined above, the second respondent dismissed or threatened to dismiss the employee for the reason that she was entitled to the benefit of an industrial instrument in contravention of section 792(1)(a) for the prohibited reasons set out in section 793(1)(i) of the Act. As I have noted in the history, her employment ceased on 7 February 2009 and her loss, aside from loss from underpayment of wages, continued as a consequence of the contraventions until she was able to secure further employment, which occurred in about May 2009.
The evidence is, and it is accepted, that that loss has a quantum of $5,482.64. So much is admitted in the consent orders or the proposed consent orders (Exhibit 1). On 7 January 2009, the employee lodged a wages and conditions claim form with the applicant seeking to pursue the underpayment. Following an investigation into the underpayment claim, a representative of the applicant determined that in fact she had been underpaid a sum of $7,092.90 during her employment.
The quantum of underpayment is accepted to represent a significant sum in the context of her earnings during her period of employment with the first respondent when compared against the basic periodic rates of pay she was entitled to under the NAPSA throughout that employment period. That underpayment has been resolved by the payment to her on 1 May 2009 of a sum of $7,092.90.
In furtherance of the investigation, the applicant’s representatives sought to conduct an interview on 14 August 2009 with the second respondent in relation to the contraventions which were then alleged. On 17 August a representative of the applicant had a telephone conversation with an employee of the first respondent in response to which the representative of the applicant asked to speak with Ms Newaz directly but was advised that Ms Newaz did not have time to speak with her and that the second respondent was handling the matter.
On 17 August a representative of the applicant then wrote to Ms Newaz in her capacity of the director of the first respondent and invited her to participate in an interview in relation to the contraventions. A response was received to that correspondence on 24 August 2009. In her response Ms Newaz stated as follows:
“Dear Renee,
In response to your letter regarding your investigation into the case that Saber Ahammad sent an email to Stephanie Pastusin, I do not believe a recorded interview should be required by myself for the reasons stated below.
The email has nothing to do with me. Stephanie sent the email to Saber, which he opened, and immediately replied to himself without consulting with me, as can be determined from the time and date of the emails.
I never have, and never will, authorize such a response. Saber has already indicated to you that he was acting independently, and out of anger. This is because Stephanie was requesting yet another payrise, despite two factors of which she was well aware. One was that she had been given a payrise only 6 months previously. The other was despite Stephanie receiving numerous verbal warnings regarding her unacceptable behaviour at work, especially regarding her emotional bullying and intimidation of new staff employed in the previous few months, and her negative attitude to helping other team members in tasks that were part of her duties. These warnings were given by both myself and my Senior Administration officer, Juanita Druissi (from whom a letter of declaration regarding this fact is available on request). As I had to speak to Stephanie regarding this issue on many occasions over the preceeding few months, which Saber was aware, we were not of the opinion that she deserved yet another payrise unless these behaviours ceased, nor within such a short time as we had other administration staff who were also due for performance reviews.
Please clear up this issue immediately, as this issue has nothing to do with me, nor my company Maleha Fatema Newaz Pty Ltd Trading as Physio Plus-Physiotherapy and Sports Injury Clinic. I will not have my name, nor my company name, tarnished.
Lastly, my personal view is that Stephanie Pastusin has been harassing us with one issue after another since her resignation, and rewarding her would only cause an employee like her to keep making trouble for any future employer, and be detrimental to the running of a small business such as ourselves, when we are just trying to run a business and employing numerous Australians in the process, thus helping keep the overall economy on an everyday basis. I will certainly be taking your final decision into account before employing any future staff.
I look forward to your positive reply.”
Aside from the matter of dealing with the response to the Fair Work Ombudsman the letter is illuminating in that it appears, at least in terms of its description of the employee, that it is in stark contrast to that email which was written by the second respondent. In any event, there was subsequently an interview conducted between the applicant and the second respondent which largely addressed matters and ultimately lead to the course of conduct in this proceeding.
It is agreed, in this instance, by all parties that there should be various orders. Those orders are detailed in exhibit 1 and I will not rehearse them at this point.
In terms now of penalty, section 807(2) of the WR Act enables the court to order a person who has contravened section 792(1) of the Act to pay a pecuniary penalty up to 60 penalty units for an individual and 300 penalty units for a corporation. A penalty unit is defined by reference to the Crimes Act 1914 at $110. Accordingly, those penalties translate into a maximum penalty of $33,000 for the first respondent and $6,600 for the second respondent.
In terms of the approach to determining penalty, the first step, of course, for the court is to identify the separate contraventions involved. Secondly, to the extent that there may be two or more contraventions that have common elements, that matter should be taken into account when considering what is an appropriate penalty in all the circumstances for each contravention. The respondents should not be penalised more than once for the same conduct, and the penalties imposed by the court should be an appropriate response to what the respondents did. This task is distinct from and precedes the final application of the totality principle.
Thirdly, the court will then consider an appropriate penalty to impose for each contravention having regard to all the circumstances of the case, and then finally, having fixed an appropriate penalty for each contravention, the court should consider the aggregate penalty to determine whether it is an appropriate overall response to the conduct which led to the breaches, and should then apply instinctive synthesis in making this assessment.
Insofar as factors relevant to penalty are concerned, the matters have been well settled and it is now commonly accepted that the matters identified are in the decision of Mason v Harrington Corporation Limited[1], which has been subject to subsequent approval. That authority articulates the relevant criteria, although non-exhaustive, that ought be considered, and I will deal with those in seriatim.
[1] [2007] FMCA 7
Commencing with the first, the nature and extent of the conduct. The respondents engaged in conduct which constituted a threat to the employee for reasons which are prohibited under the freedom of association provisions in the WR Act. The conduct occurred on one occasion and was in relation to one employee. The respondent does not challenge this, and the applicant correctly asserts that although there might be seen to be discrete acts, in this instance, two discrete acts, the facts should be construed as a continuous course of conduct giving rising to one contravention. That is consistent with the principles expressed by the High Court in the decision of Pearce v The Queen[2], where in particular McHugh, Hayne and Callinan JJ at paragraph 40 stated:
“To the extent to which two offences of which an offender stands convicted contain common elements, it would be wrong to punish that offender twice for the commission of the elements that are common.”
[2] (1998) 194 CLR 610
No doubt that general principle must yield to any contrary legislative intention, but the principle to be extracted should reflect what an offender has done. It should not be affected by the way in which the boundaries of particular offences are drawn. Often those boundaries will be drawn in a way which means that offences overlap. To punish an offender twice if conduct falls in the area of overlap would be to punish offenders according to the accidents of legislative history rather than according to their just desserts. As I have noted, I accept the submission by the applicant that this matter should be treated as a continuum and be punished accordingly.
Next, the circumstances in which the conduct took place. The contraventions occurred in circumstances where the employee had raised legitimate concerns and questions in respect of her remuneration with the respondents. The respondents’ response to her queries was to send her an email which clearly formed part of the contravening conduct. The conduct of the respondents can only be interpreted as action designed to silence the employee, and was clearly aimed at preventing her from seeking to enforce her entitlements under law.
I note the employee was a part-time employee and casually employed. She was a student, and one might infer from the circumstances that she was somewhat more vulnerable to this conduct than others. She clearly understood, and I accept, reasonably inferred from the email that if she wanted to pursue or complain any further about issues concerning her rates of pay, her employment would come to an end. I think the facts in this case constitute an almost unconscionable abuse of power in the employer/employee relationship.
The employee’s concerns quite clearly were legitimate. So much is demonstrated by the facts which have come to light since the termination of her employment and the inquiry conducted by the Workplace Ombudsman. That inquiry, as I earlier noted, demonstrated a significant underpayment of pay which occurred over a period of almost two years. I note, of course, in passing, that that underpayment has since been rectified by the full repayment, which occurred on about 1 May 2009.
Next, is the nature and extent of any loss or damage sustained. Aside from the underpayment, the only other loss or damage sustained was the financial loss which the employee sustained following her resignation from her employment as a direct consequence of the respondent’s conduct. After her resignation took effect she was unable to gain alternative employment for a period of about 15 and a half weeks, during which time she suffered a loss of income of $5,482.64, that being the amount of the average weekly remuneration she would have received had she continued in her employment with the first respondent. An order is sought for the payment of that sum and there is no opposition to such an order being made.
Next, is similar previous conduct. It is common between the parties that there have been no previous contraventions in respect of this sort of conduct.
Next, whether the breaches were distinct or arose out of one course of conduct. As I have earlier stated, this is a matter which appears to me to arise out of one course of conduct and will be penalised accordingly.
Next, is the size of the entity in question. The first respondent operated a physiotherapy and sports injury clinic business at Carindale which provides physiotherapy and related health services. It is not in contention that the business continues to operate today. In fact, although there has been no financial information proffered through the course of this hearing, one can infer from the number of employees that continue to be employed by the business that it continues in its operation, and although it is made out as a small business, it is not one which is completely insubstantial.
Although there is limited evidence as to the size of the business, and to say limited is to be generous in that description, the applicant does acknowledge the business does not appear to be large. That does not, however, absolve the respondent of its legal responsibilities to comply with the law in relation to the employment of its employees. I think in this instance it is appropriate to more fully express the legal position in relation to the sorts of entities. In Workplace Ombudsman v Saya Cleaning[3], Simpson FM provided a summary of the law. He observed:
“The first respondent is a small company and, I infer, has very few if any assets. However as Justice Tracey said in Kelly v Fitzpatrick (supra):
‘o less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does not it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction must be imposed at a meaningful level.’”
[3] [2009] FMCA 38
Further, in Rajagopalan v BM Sydney Building Materials Pty Ltd[4] it was said:
“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.”
[4] [2007] FMCA 1412
Accordingly, it is clearly the position that – irrespective of size – the first respondent was required, and continues to be required, to comply with its obligations under the award and the Act, and that its size provides no excuse for non-compliance. Furthermore, its financial situation should have no impact on the assessment of penalty. So much was emphasised in decisions such as Printing and Kindred Industries Union & Ors v Vista Paper Products Pty Ltd & Anor[5], where it was noted by Wilcox J at 686 that:
“In determining what monetary penalty to impose on an offender it is usual for a court to take into account the offender’s capacity to pay. A monetary sum that would constitute a reasonable penalty to a person of average income might by unduly oppressive if imposed on an impecunious person.”
[5] (1994) 127 ALR 673
However, his Honour’s remarks are in my view tempered somewhat by the observations of the court in Fair Work Ombudsman v Primrose Development[6], where it was noted at 73 that:
“…financial resources of a contravener are factors to be considered and the impact of those ‘…upon the setting of penalty is in each case a matter for consideration of the particular circumstances of the size and financial resources of the contravener, plus the other factors which are relevant.’”
[6] [2009] FMCA 632
Finally, in GlennJordan v Mornington Inn Pty Ltd[7] Heerey J at 99 noted:
“As to the respondent’s own financial position, however, in considering the size of the penalty, capacity to pay is of less relevance than the objective of general deterrence.”
[7] [2007] FCA 1384
So while it is the fact that, albeit the evidence is scant, the respondent may not have significant financial resources, it is not a matter which overall conclusively informs the decision-making process in this instance. That is particularly so in circumstances where I have not been afforded sufficient evidence to enable me to put this consideration into any particularly informed evidentiary framework.
Next, is the deliberateness of the contraventions. The issue of whether the breach is deliberate was considered in Cotis v Macpherson[8], where the court noted:
“In issue in this matter is whether the identified breaches were deliberate. I do not think that they were deliberate in the sense of Mr Macpherson setting out with an intention to breach the Workplace Relations Act. However, the facts compel the conclusion that Mr Macpherson was at least reckless in relation to the responsibilities of his company and himself as an employer. Mr Macpherson was made aware of some of the breaches by employees whilst the business was still in operation. He also acknowledged the breaches to the inspector following the closure of the business. Mr Macpherson has no contest with the evidence provided by Ms Cotis.”
[8] [2007] FMCA 2060
It is submitted, on behalf of the respondents, that they did not set out to deliberately breach the Act, but the fact remains that on the evidence their contraventions were at least reckless in their disregard for the respondents’ statutory obligations. Those statutory obligations are matters which any responsible employer ought to have been aware of and has a duty to make himself aware of. It follows that in failing to make himself aware there is, by inference, deliberateness by omission, if not indeed by commission.
The involvement of senior management.
The conduct which constituted the contraventions of section 792(1)(a) of the Act were engaged in by the second respondent as an officer of the first respondent. I use the term “officer,” of course, in its broader sense. At all material times the second respondent was a secretary of the first respondent and was responsible for payroll, financial management and employment matters within the first respondent excluding recruitment. It is submitted on behalf of the applicant that the involvement of the second respondent in the contraventions equates to that of senior management, and I accept that submission as correct, particularly having regard to the position of the second respondent.
Next, are questions of contrition, corrective action and cooperation with the enforcement authorities. There is some evidence in this case of contrition on account of the admissions which can be found in the records of interview made between the applicant and the second respondent. However, it is noted and submitted there is no evidence of any apology or show of contrition having been made to the employee, and no evidence to demonstrate any corrective action by the respondents to ensure such contraventions do not occur in the future.
The applicant acknowledges that since the initial contact with the then Workplace Ombudsman the respondents have demonstrated some level of cooperation, and so much is apparent from the record. For instance, the underpayments have been attended to by payment in full of the underpayments. The second respondent participated in an interview with the representatives of the applicant, but it is also clear that the cooperation has not been entirely unconditional. So much was of course evident from the matter I earlier described, which was addressed by Newaz to the representatives of the applicant in declining an invitation to participate in a record of interview.
In Mornington Inn v Jordan (supra) at 76 the majority noted that:
“As Branson J has pointed out the rationale for providing a discount for an early plea of guilty in a criminal case does not apply neatly to a case, such as the present, where a civil penalty is sought and the case proceeds on pleadings. Nevertheless, in our view, it should be accepted, for the same reasons as given in Cameron, that a discount should not be available simply because a respondent has spared the community the cost of a contested trial. Rather, the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice.”
In this case, while it is accepted on the part of the applicant that there should be some substantial discount on account of cooperation, the applicant also contends the discount should not be as great as one might otherwise expect, having regard to the conduct of the respondents in this instance. So much appears to be consistent with the views expressed by the majority in Mornington Inn v Jordan. It follows that in my view, while there ought be some substantial discount on account of cooperation afforded to the respondent in this case, it should not be as substantial, as that given to a party who fully cooperates given the degree of cooperation in this instance.
Next, the matter of ensuring compliance. The principle object of the Act is set out in section 3 of the Act and relevantly states:
“The principle object of this Act is to provide a framework for cooperative workplace relations which promotes the economic prosperity and welfare of the people of Australia by –“
relevantly –
“(c) providing an economically sustainable safety net of minimum wages and conditions for those whose employment is regulated by the Act.”
and:
“(f) ensuring compliance with minimum standards, industrial instruments and bargaining processes by providing effective means for the investigation and enforcement of
(i) employee entitlements; and
(ii) the rights and obligations of employers and employees and their organisations
(j) ensuring freedom of association, including the rights of employees and employers to join an organisation or association of their choice or not to join an organisation or association.”
The objects of Part 16 of the Act in which section 792 appears, and set out at section 778, are as follows:
“In addition to the object set out in section 3 this part has the following objects:
a) To ensure that employers, employees and independent contractors are free to become, or not to become, members of industrial associations.
b) To ensure that employers, employees and independent contractors are not discriminated against or victimised because they are, or are not, members or officers of industrial associations.
c) To provide effective relief to employers, employees and independent contractors who are prevented or inhibited from exercising their rights to freedom of association.
d) To provide effective remedies to penalise and deter other persons who engage in conduct which prevents or inhibits employers, employees or independent contractors from exercising their rights to freedom of association.”
So far as those freedom of association provisions are concerned O’Sullivan FM noted in Smith v Prescott[9], the threats the second respondent has accepted responsibility for strike at the heart of the legislative scheme of the WR Act. It is important that all employees, particularly young employees, be protected from conduct that infringes that protection embodied in the freedom of association provisions of the WR Act.
[9] [2008] FMCA 1672
It is also important that employees can discuss employment arrangements with employers free from any unlawful threats to their entitlements under the relevant award or other provisions of the WR Act.
It was submitted on behalf of the applicants that the actions taken against the employee for prohibitive reasons are contrary to the observance of the safety net minimums and the freedom to associate which the Act is designed to protect.
The importance of employees exercising their rights to freedom of association continue to be recognised under the new Act and it follows that I accept that submission.
It is, in my view, a significant right which I think the court ought to be anxious to protect, and that protection, of course, is in part afforded by the imposition of significant penalties which would be designed to deter like-minded persons from engaging in this sort of conduct.
Next, is the need for deterrence. The penalties imposed in this matter must reflect the need for both general and specific deterrence as Lander J noted in Ponzio v B & P Caelli Constructions Pty Ltd[10]. There are three purposes, at least, for imposing a penalty; punishment, deterrence and rehabilitation.
[10] [2007] FCAFC 65
The punishment must be proportionate to the offence and in accordance with the prevailing standards of punishment. Therefore the circumstances of the offence, or contravention, are especially important. The penalty must recognise a need for deterrence both personal and general. In regard to personal deterrence an assessment must be made of the risk of re-offending. 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 would be the paramount factor in fixing the penalty. In some cases, although hardly in the instance of this contravention, rehabilitation is an important factor.
I note that the first respondent continues to operate the business and the second respondent continues to hold the position of secretary in the first respondent. In my view there is, to some extent, a need for some specific deterrence in this case. That, of course, would involve the imposition of an appropriate but not oppressive penalty on the respondents to deter them from engaging in similar conduct in the future.
Here, however, a general deterrent is also an important objective. As I have noted the penalty should be such as to deter not only the particular offender but others who may be disposed to engage in prohibited conduct of this kind. One can see generally the observations in the CPSU v Telstra Corporation Limited[11].
[11] (2001) 108 IR 228
In doing so I am mindful, of course, that there is a need for the penalty to have that desired affect it must be imposed at a meaningful level. It should, therefore, deter not only the respondent but also other employers and their officers from threatening to dismiss their employees for reasons that are prohibited by law. To that end, the respondent submits that I should take particular note of the fact that here there is only one breach and that the breach is in fact more one by omission. That is a failure to check the conditions, however, to my mind, that is, of course, the very point.
Employers like the respondent need to be vigilant in relation to their responsibilities under workplace relations law and the imposition of penalties serve to achieve that purpose. So far as the totality principle is concerned, of course, in this instance there is only one contravention alleged so there is no need to address that in any particular manner.
That leads then to the question of an imposition of what might be described as an appropriate range of penalty. The ranges which have been advanced by each of the parties are as follows: for the applicant it submitted that a total penalty in the range of $10,000 to $16,500 should be imposed on the first respondent and $2,000 to $3,300 in respect of the second respondent.
For the respondent it’s contended that the penalties should be in the range of $2,000 to $5,000 and $1,000 to $1,500 respectively. As I have already noted the respondent, particularly, advances issues in relation to the circumstances of the contravention and to the financial position of the respondent in justifying its submissions. I disagree. I think these are significant contraventions, particularly because of the freedom of association issues involved.
I think that the range submitted on behalf of the applicant is an appropriate range. In that regard I have been helpfully informed by the comparative authorities provided by the applicant in annexure A to its submissions.
In all of the circumstances I think the appropriate penalties are appropriate so far as the first respondent is concerned a penalty in the sum of $13,000. In respect of the second respondent a penalty in the sum of $2,700. The penalties should be paid within 30 days.
There are other orders which are to be made by consent and we can deal with those matters formally then.
I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of Burnett FM
Date: 8 July 2010
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