Fair Work Ombudsman v Malevi Pty Ltd & Ors
[2020] FCCA 2875
•22 October 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v MALEVI PTY LTD & ORS | [2021] FCCA 2875 |
| Catchwords: INDUSTRIAL LAW – Admitted contraventions involving underpayments, record keeping and adverse action in a café business – declarations made on admissions – accessorial liability – penalties – consent orders for education, audit and workplace notice – adverse publicity – alleged fall in turnover due to publicity – effect of the COVID-19 pandemic – claim there should be no financial penalty because the respondents have “suffered enough”. |
| Legislation: Fair Work Act 2009, ss.45, 340, 535(1), 539, 546(2), 557 Fair Work Regulations 2009, regs.3.32, 3.33(1)(a), 3.33(1)(b), 3.33(2) |
| Other: Restaurant Industry Award 2010, cll.13.1, 33.2, 34.1, 20.1 |
| Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (CFMEU) (2018) 262 CLR 157; (2018) 351 ALR 190; (2018) 92 ALJR 219; (2018) 273 IR 211; [2018] HCA 3 Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2006) 236 ALR 665; (2008) ASAL 55-176; (2007) ATPR 42-138; [2006] FCA 1427 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8 Browne v Dunn (1893) 6 R 67 (HL) Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 90 ALJR 113; (2015) 255 IR 87; (2015) 326 ALR 476; [2015] HCA 46 Construction, Forestry, Mining and Energy Union (CFMEU) v Cahill (2010) 269, ALR 1; (2010) 194 IR 461; [2010] FCAFC 39 Cousins v Merringtons Pty Ltd (No 2) [2008] VSC 340 Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228; [2001] FCA 1364 Eva v Southern Motors Box Hill Pty Ltd (1977) 15 ALR 428; (1977) 30 FLR 213; (1977) 2 TPC 64; (1977) ATPR 40-026 Fair Work Ombudsman v Amritsaria Four Ply Ltd [2016] FCCA 968 Fair Work Ombudsman v Bedington [2012] FMCA 1133 Fair Work Ombudsman v Hongyun Chinese Restaurant Pty Ltd (in liquidation) [2013] FCCA 52 Fair Work Ombudsman v Lohr (2018) 158 ALD 457; (2018) 356 ALR 424; [2018] FCA 5 Fair Work Ombudsman v Mhoney Pty Ltd [2017] FCCA 811 Fair Work Ombudsman v NSH North Pty Ltd t/a New Shanghai Charlestown (2017) 275 IR 148; [2017] FCA 130 Fair Work Ombudsman v Phua & Foo Pty Ltd [2018] FCA 137 Fair Work Ombudsman v Priority Matters Pty Ltd (no 5) [2020] FCCA 901 Fair Work Ombudsman v Samurais Paradise Pty Ltd [2017] FCCA 2013 Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 Kennewell v Atkins T/as Cardinia Waste & Recyclers [2015] FCA 716 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; (2008) 247 ALR 714; (2008) 171 IR 455; [2008] FCAFC 70 Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170 Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65 Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412; Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153; (2014) 243 IR 244; [2014] FCAFC 62 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First respondent: | MALEVI PTY LTD (ACN 612 176 066) |
| Second respondent: | STAVROS PETROULIAS |
| Third respondent: | ANASTASIA PETROULIAS |
| File number: | MLG 3205 of 2019 |
| Judgment of: | Judge Riley |
| Hearing date: | 31 August 2020 |
| Date of last submission: | 31 August 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 22 October 2020 |
REPRESENTATION
| Counsel for the applicant: | Fiona Knowles |
| Solicitors for the applicant: | Office of the Fair Work Ombudsman |
| Counsel for the respondents: | Rohan Millar |
| Solicitors for the respondents: | Law on Lydiard |
THE COURT DECLARES THAT, having regard to the admissions made by the first, second and third respondents in the statement of agreed facts filed in this proceeding:
The first respondent contravened the following civil remedy provisions:
(a)section 45 of the Fair Work Act 2009 (“the Act”), by failing to pay 49 employees the applicable adult hourly rates for each ordinary hour they worked, in contravention of clause 20.1 of the Restaurant Industry Award 2010 (“the Award”);
(b)section 45 of the Act by failing to pay 71 employees the applicable casual loading for each ordinary hour they worked, in contravention of clause 13.1 of the Award;
(c)section 45 of the Act by failing to pay 60 employees the Saturday penalty for each ordinary hour they worked on a Saturday, in contravention of clause 34.1 of the Award;
(d)section 45 of the Act by failing to pay 54 employees the Sunday penalty for each ordinary hour they worked on a Sunday, in contravention of clause 34.1 of the Award;
(e)section 45 of the Act by failing to pay 46 employees the public holiday penalty for each ordinary hour they worked on a public holiday, in contravention of clause 34.1 of the Award;
(f)section 45 of the Act by failing to pay 14 employees the casual overtime rates for each hour in excess of ordinary hours, in contravention of clauses 13.2 and 33.2 of the Award;
(g)section 340(1)(a) of the Act, by taking adverse action against Miles McEldowney because he exercised a workplace right to make a complaint or inquiry in relation to his employment and/or proposed to exercise his workplace right to initiate or participate in proceedings under a workplace law;
(h)section 340(1)(a) of the Act, by taking adverse action against Miles McEldowney because he had a workplace right by reason that he was entitled to the benefit of, or under, a workplace instrument;
(i)section 340(1)(b) of the Act, by taking adverse action against Miles McEldowney to prevent him from exercising a workplace right to make a complaint or inquiry in relation to his employment, and/or a workplace right to initiate or participate in proceedings under a workplace law; and
(j)section 535(1) of the Act, by falling to make and keep records as required by regulations 3.32 and 3.33 of the Fair Work Regulations 2009 (“the Regulations”).
The second respondent was involved, pursuant to section 550 of the Act, in each of the contraventions committed by the first respondent set out in declaration 1.
The third respondent was involved, pursuant to section 550 of the Act, in the contraventions committed by the first respondent set out in:
(a)declarations 1(a) to (f) from August 2017 onwards; and
(b)declarations 1(g) to (i).
THE COURT ORDERS BY CONSENT THAT:
Pursuant to section 545(2)(b) of the Act, the first and second respondents (for amounts owed from April 2017 to August 2017) and the first, second and third respondents (for amounts owed from August 2017 onwards), jointly and severally, pay to the applicant, to be distributed to each of the underpaid employees, the total of $180,641.58, less any amounts already paid.
Pursuant to section 547(2) of the Act, the first and second respondents (for amounts owed from April 2017 to August 2017) and first, second and third respondents (for amounts owed from August 2017 onwards), jointly and severally, pay interest on the underpayments.
THE COURT ORDERS THAT:
The first, second and third respondents pay to the applicant the amounts required to be paid by orders 4 and 5 within 90 days.
THE COURT ORDERS BY CONSENT THAT:
Pursuant to section 545(1) of the Act, the first respondent make contributions on behalf of the underpaid employees to their nominated superannuation funds, or alternatively to an authorised superannuation clearing house, at the superannuation guarantee charge rate prescribed in relation to the underpayments.
The first respondent pay penalties pursuant to section 546(1) of the Act in respect of the contraventions set out in declaration 1.
The second respondent pay penalties pursuant to section 546(1) of the Act for his involvement in the first respondent’s contraventions of the Act as set out in declaration 2.
The third respondent pay penalties pursuant to section 546(1) of the Act for her involvement in the first respondent’s contraventions of the Act as set out in declaration 3.
THE COURT ORDERS THAT:
The first respondent pay total penalties of $169,596.00.
The second respondent pay total penalties of $33,919.20.
The third respondent pay total penalties of $29,030.40.
Pursuant to section 546(3)(a) of the Act, the first, second and third respondents pay their respective penalty amounts to the Commonwealth of Australia by 30 June 2021, or by such later date as the parties agree in writing prior to 15 June 2021.
THE COURT ORDERS BY CONSENT THAT:
Pursuant to section 545(1) of the Act, within three months, the first respondent, at its expense, engage a suitably qualified compliance professional or legal practitioner with expertise in workplace relations law to conduct training for the second and third respondents in relation to compliance with:
(a)wages and work-related entitlements under the Award;
(b)general protections provisions contained in Part 3-1 of the Act; and
(c)record keeping obligations detailed in the Act and the Regulations; and
within seven days of completion of the training, the first respondent notify the applicant in writing of the name(s) of the person(s) who conducted the training, and the topics covered in the training.
Pursuant to section 545(1) of the Act, the first respondent, within two months, display a notice at the Barry Café that can be easily viewed by all employees (Workplace Notice) on the following terms:
(a)the Workplace Notice contain:
(a)information on the minimum rate of pay, penalty rates and overtime entitlements under the Award;
(b)information on the general protections provisions contained in Part 3 – 1 of the Act;
(c)information about how employees can access the Fair Work Ombudsman’s “Record My Hours” smart phone application; and
(d)information on how to contact the Fair Work Ombudsman;
(b)the Workplace Notice be in a form approved by the applicant at least seven days prior to the first respondent displaying the Workplace Notice;
(c)the first respondent provide proof of the display of the Workplace Notice to the applicant within 14 days of the Workplace Notice being approved by the applicant; and
(d)the Workplace Notice be displayed continuously for a period of one year.
Pursuant to section 545(1) of the Act, within a period of two months, each of the second respondent and the third respondent:
(a)register the business conducted at the Barry Café with the applicant's ‘My Account’ portal at and complete the profile including the Award options;
(b)provide to the applicant its ‘My Account’ customer reference number; and
(c)register the business with the applicant's online learning centre at and complete all education courses designed for employers.
Pursuant to section 545(1) of the Act, the first respondent, at its own expense, engage a third party, or third parties, with appropriate qualifications in accounting and workplace relations to undertake an audit of the business on the following terms:
(a)the audit period be the first accounting quarter commencing after the making of these orders;
(b)the audit be completed within 30 days of the end of the audit period;
(c)the audit apply to all employees employed by the business at any time during the audit period;
(d)the audit assess the first respondent’s compliance with respect to wages and monetary entitlements under the Award and record keeping obligations under the Act and the Regulations;
(e)within 14 days of the audit being completed, the first respondent rectify any contraventions identified in the audit with respect to the business; and
(f)within 30 days of the audit being completed, the first respondent provide to the applicant the results of the audit, including written details of any contraventions identified in the audit and evidence of rectification by the first respondent of any contraventions(s) identified in the audit.
The applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders is not complied with.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 3205 of 2019
| FAIR WORK OMBUDSMAN |
Applicant
And
| MALEVI PTY LTD (ACN 612 176 066) |
First respondent
And
| STAVROS PETROULIAS |
Second respondent
And
| ANASTASIA PETROULIAS |
Third respondent
REASONS FOR JUDGMENT
Introduction
This is an application for declarations and orders in respect of certain admitted contraventions of:
a)the Fair Work Act 2009 (“the Act”);
b)the Fair Work Regulations 2009 (“the Regulations”); and
c)the Restaurant Industry Award 2010 (“the Award”),
and the penalties to be imposed for those contraventions.
The parties filed a statement of agreed facts and an addendum to the statement of agreed facts, which contained certain corrections to the original statement of agreed facts. My deputy associate has combined the two documents. The result is the corrected statement of agreed facts which is attached to these reasons as annexure A.
The applicant’s outline of submissions on penalty filed on 28 February 2020 provided the following background to the matter:
6.The First Respondent (Company) is and was, at relevant times, the operator of a café business trading as Barry Café in Northcote Victoria.5 The Company was the employer of 98 employees (Employees) during the Assessment Period in respect of whom contraventions of the FW Act and the Award are admitted.6
5SOAF at paras 2 and 4(f).
6SOAF at paras 2, 4(g) and [28], [33], [38], [43], [48] and [53].
7.During the Assessment Period, the Company underpaid seventy-three Employees (Underpayment Employees) a total of $180,666.81 arising from multiple contraventions of section 45 of the FW Act by failing to pay the minimum hourly rate, casual loading, Saturday rates, Sunday rates, public holiday rates of pay and casual overtime rates.7
7SOAF at paras 13, 55 and [28], [33], [38], [43], [48] and [53].
8.The Company contravened section 535(1) of the FW Act by failing to keep records of the actual rate of remuneration, the gross and net amounts paid and the hours of work for casual employees in respect of ten employees and, in respect of twenty-seven employees, failed to keep records of the employees’ name, employment type and the date that the employees’ employment began.8
8SOAF at paras 80 and 83 and see Table 3 of the SOAF.
9.The Company contravened section 340(1)(a) of the FW Act by taking adverse action against an employee, Miles McEldowney, by not allocating him any further shifts at the Business for the reasons, or for reasons which included the reasons, that:
(a)Mr McEldowney had a workplace right, in that he was entitled to the benefit of, or under, a workplace instrument;
(b)exercised his workplace right to make a complaint or inquiry in relation to his employment; and
(c)proposed to exercise his workplace right to initiate, or participate in, proceedings under a workplace law, namely a small claims application under the FW Act.9
9SOAF at paras 72, 73 and 74.
10.Further, the Company took the above adverse action against Mr McEldowney to, or for reasons including to, prevent him from exercising his workplace right to the benefit of, or under, a workplace instrument, namely to be paid in accordance with an award, and to prevent him from exercising his workplace right to initiate, or participate in, proceedings under a workplace law, namely a small claims application under the FW Act.10
10SOAF at paras 75 and 76.
11.The Second Respondent (Mr Petroulias), being a director and shareholder and the secretary of the Company, and a person involved in the operations and management of the Business, including the engagement and overall management of the Employees, admits that he was involved in the underpayment, record keeping and adverse action contraventions pursuant to section 550(2) of the FW Act.11
11SOAF at paras 88, 92 and 96.
12.The Third Respondent (Ms Petroulias), being a director and shareholder of the Company, and a person involved in the operations and management of the Business, including the engagement and overall management of the Employees, admits that she was involved in the underpayment and the adverse action contraventions pursuant to section 550(2) of the FW Act.12
12SOAF at paras 8, 101, for the period of the Assessment Period from August 2017, for the underpayment contraventions, and para 105.
Proposed declarations and orders
The parties agreed that the court should make declarations and orders as follows (CB673-675):
THE COURT DECLARES THAT:
1.The First Respondent contravened the following civil remedy provisions:
(a)section 45 of the FW Act, by failing to pay the Minimum Rate Employees the applicable adult hourly rates for each ordinary hour they worked, in contravention of clause 20.1 of the Award;
(b)section 45 of the FW Act by failing to pay the Casual Loading Employees the applicable casual loading for each ordinary hour they worked, in contravention of clause 13.1 of the Award;
(c)section 45 of the FW Act by failing to pay the Saturday Penalty Employees the Saturday penalty for each ordinary hour they worked on a Saturday, in contravention of clause 34.1 of the Award;
(d)section 45 of the FW Act by failing to pay the Sunday Penalty Employees the Sunday penalty for each ordinary hour they worked on a Sunday, in contravention of clause 34.1 of the Award;
(e)section 45 of the FW Act by failing to pay the Public Holiday Penalty Employees the Public Holiday penalty for each ordinary hour they worked on a Public Holiday, in contravention of clause 34.1 of the Award;
(f)section 45 of the FW Act by failing to pay the Casual Overtime Employees the casual overtime rates for each hour in excess of ordinary hours, in contravention of clauses 13.2 and 33.2 of the Award;
(g)section 340(1)(a) of the FW Act, by taking adverse action against Miles McEldowney because he exercised a workplace right to make a complaint or inquiry in relation to his employment and/or proposed to exercise his workplace right to initiate or participate in proceedings under a workplace law;
(h)section 340(1)(a) of the FW Act, by taking adverse action against Miles McEldowney because he had a workplace right by reason that he was entitled to the benefit of, or under, a workplace instrument;
(i)section 340(1)(b) of the FW Act, by taking adverse action against Miles McEldowney to prevent him from exercising: a workplace right to make a complaint or inquiry in relation to his employment, and/or a workplace right to initiate or participate in proceedings under a workplace law; and
(j)section 535(1) of the FW Act, by falling to make and keep records as required by regulations 3.32 and 3.33 of the FW Regulations.
2.The Second Respondent was involved, pursuant to section 550 of the FW Act, in each of the contraventions committed by the First Respondent set out in paragraph 1 above.
3.The Third Respondent was involved, pursuant to section 550 of the FW Act, in the contraventions committed by the First Respondent set out in:
(a)paragraphs 1(a) to (f) from August 2017 onwards; and
(b)paragraphs1(g) to (i).
THE COURT ORDERS THAT
4.Pursuant to section 545(2)(b) of the FW Act, the First Respondent, Second Respondent and Third Respondent (for amounts owed from August 2017 onwards), jointly and severally, pay to the Applicant, to be distributed to each of the Underpayment Employees, the total of $180,641.58 less any amounts already paid, within a period to be fixed by the Court.
5.Pursuant to section 547(2) of the FW Act that the First Respondent, Second Respondent and Third Respondent (for amounts owed from August 2017 onwards), jointly and severally, pay interest on the amount referred to in paragraph 4 above.
6.Pursuant to section 545(1) of the FW Act, that within a period to be fixed by the Court, the First Respondent make contributions on behalf of the Underpayment Employees to their nominated superannuation funds, or alternatively to an authorised superannuation clearing house, at the superannuation guarantee charge rate prescribed in relation to the amount in paragraph 4 above.
7.The First Respondent pay penalties pursuant to section 546(1) of the FW Act in respect of the contraventions set out in paragraph 1 above.
8.The Second Respondent pay penalties pursuant to section 546(1) of the FW Act for his involvement in the First Respondent’s contraventions of the FW Act as declared in paragraph 2 above.
9.The Third Respondent pay penalties pursuant to section 546(1) of the FW Act for her involvement in the First Respondent’s contraventions of the FW Act as declared in paragraph 3 above.
10.Pursuant to section 546(3)(a) of the FW Act, the First, Second and Third Respondents pay their respective penalty amounts to the Commonwealth within a period to be fixed by the Court.
11.Pursuant to section 545(1) of the FW Act, within three months of the date of the Court’s orders, the First Respondent, at its expense, engage a suitably qualified compliance professional or legal practitioner with expertise in workplace relations law to conduct training for the Second Respondent and Third Respondent, in relation to compliance with:
(a)wages and work-related entitlements under the Award;
(b)general protections provisions contained in Part 3-1 of the FW Act;
(c)record keeping obligations detailed in the FW Act and FW Regulations; and
(d)within seven days of completion of the training, the First Respondent will notify the Applicant in writing of the name(s) of the person(s) who conducted the training, and the topics covered in the training.
12.Pursuant to section 545(1) of the FW Act, the First Respondent will, within a period of two months of the date of the Court’s order, display a notice in the Business that can be easily viewed by all employees (Workplace Notice) on the following terms:
(a)the Workplace Notice must contain:
(i) information on the minimum rate of pay, penalty rates and overtime entitlements under the Award;
(ii) information on the general protections provisions contained in Part 3 – 1 of the FW Act;
(iii) information about how employees can access the Fair Work Ombudsman’s “Record My Hours” smart phone application; and
(iv) information on how to contact the Fair Work Ombudsman;
(b)the Workplace Notice must be in a form approved by the Applicant at least seven days prior to the First Respondent displaying the Workplace Notice;
(c)the First Respondent will provide proof of the display of the Workplace Notice to the Applicant within 14 days of the Workplace Notice being approved by the Applicant; and
(d)the Workplace Notice must be displayed continuously for a period of one year.
13.Pursuant to section 545(1) of the FW Act, within a period of two months of the date of the Court’s order, each of the Second Respondent and the Third Respondent will:
(a)register the Business with the Applicant's ‘My Account’ portal atError! Hyperlink reference not valid.and complete the profile including the Award options;
(b)provide to the Applicant its ‘My Account’ Customer Reference Number; and
(c)register the Business with the Applicant's Online Learning Centre at and complete all education courses designed for employers.
14.Pursuant to section 545(1) of the FW Act, the First Respondent will, at its own expense, engage a third party, or third parties, with appropriate qualifications in accounting and workplace relations to undertake an audit of the Business on the following terms:
(a)the audit period will be the first accounting quarter commencing after the making of the Court’s orders;
(b)the audit is to be completed within 30 days of the end of the audit period;
(c)the audit will apply to all employees employed by the Business at any time during the audit period;
(d)the audit will assess the First Respondent’s compliance with respect to wages and monetary entitlements under the Award and record keeping obligations under the FW Act and FW Regulations;
(e)within 14 days of the audit being completed, the First Respondent will rectify any contraventions identified in the audit with respect to the Business; and
(f)within 30 days of the audit being completed, the First Respondent will provide to the Applicant the results of the audit, including written details of any contraventions identified in the audit and evidence of rectification by the First Respondent of any contraventions(s) identified in the audit.
15.The Applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied.
16.Such further or other orders as the Court thinks fit.
There has been authority in the past to the effect that it is not appropriate for a court to make declarations based on admissions. However, in Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2006) 236 ALR 665; (2008) ASAL 55-176; (2007) ATPR 42-138; [2006] FCA 1427, Kiefel J, as her Honour then was, considered at paragraphs 52 to 59 the rationale for the previous approach taken by the courts. Her Honour came to the view that the previous approach may no longer be warranted, particularly in public interest cases such as this, and particularly if the declarations are preceded by a statement that they are made upon admissions.
In all the circumstances of this case, I am satisfied that it is appropriate to make declarations substantially in the terms proposed by the parties on the basis of the admissions made by the respondents, and on the basis that the declarations will be preceded by an appropriate preamble. Those declarations will be made accordingly.
Subject to the determination of penalty, I also consider that it is appropriate to make orders substantially in the terms proposed by the parties.
Proposed penalties
The parties were in strenuous disagreement about the amount of the penalties to be imposed.
The applicant sought aggregate penalties, after allowing a 10% discount for admissions, and a 20-30% discount for the effects of the COVID-19 pandemic, as follows:
a)for the first respondent, $142,884 to $195,048;
b)for the second respondent, $28,577 to $39,009.60; and
c)for the third respondent, $20,638.80 to $29,030.40.
The respondents submitted that there should be no financial penalty imposed on them because they had suffered enough. The respondents noted that they had consented to orders for an audit, education and a workplace notice, and had committed to repaying the underpayments of $180,641.58, less the amounts they had already repaid.
There was no clear evidence of the amount of the underpayments that the respondents had already repaid, the applicant suggesting it might be about $30,000 and the third respondent suggesting it might be about $50,000. The outstanding balance of the underpayments is therefore thought to be in the region of about $130,000 to $150,000.
The parties were also in dispute about when the outstanding underpayments should be required to be repaid. The applicant submitted that the court should require those amounts to be repaid within 90 days, because the employees had already been without their rightful entitlements for over two years. The respondents said that they should be required to pay the balance of the underpayments as soon as the business of the first respondent allows. The respondents noted that their business was closed due to the COVID-19 pandemic, and was unlikely to reopen until the restrictions were reduced to stage 2. The issue of when the underpayments should be repaid is dealt with below.
The parties were basically in agreement that the penalties, if any, should be paid by 30 June 2021, or within such further time as the parties agreed.
Approach to determining penalty
Bromwich J summarised the proper approach to determining penalty in cases such as this in Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown (2017) 275 IR 148; [2017] FCA 1301 at [36] as follows:
(1)Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2)Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3)Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
(4)Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5)Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23]. [71] and [102].
A convenient checklist of the factors that the court might consider in determining penalty include the matters that were identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at [26]-[59] and adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [14]. That list is as follows, (with paragraph letters inserted):
(a)The nature and extent of the conduct which led to the breaches.
(b)The circumstances in which that conduct took place.
(c)The nature and extent of any loss or damage sustained as a result of the breaches.
(d)Whether there had been similar previous conduct by the respondent.
(e)Whether the breaches were properly distinct or arose out of the one course of conduct.
(f)The size of the business enterprise involved.
(g)Whether or not the breaches were deliberate.
(h)Whether senior management was involved in the breaches.
(i)Whether the party committing the breach had exhibited contrition.
(j)Whether the party committing the breach had taken corrective action.
(k)Whether the party committing the breach had cooperated with the enforcement authorities.
(l)The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements.
(m)The need for specific and general deterrence.
The court must, of course, be mindful of the caution expressed by Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8 at [91] as follows:
Check lists of this kind can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations. There is no suggestion in the present case that the learned magistrate made any relevant error in her identification of the matters which she should consider in fixing penalties.
The court will consider the circumstances of the case under the various headings suggested by Mowbray FM, and then consider whether any other matters are relevant.
Agreement on evidence
The parties advised the court at the commencement of the hearing that they had entered into an agreement in the following terms:
a)the applicant will not make any submission that the ruling in Browne v Dunn (1893) 6 R 67 (HL) would require the respondents to cross-examine her witnesses;
b)none of the respondents will make a submission that the rule in Browne v Dunn would require the applicant to cross-examine the respondents’ witnesses;
c)no submissions will be made that the lack of cross-examination of witnesses should result in any additional weight being given to that evidence, or that the evidence should be accepted because it is unchallenged; and
d)the parties are free to refer to parts of evidence in the court book, which may result in inferences being drawn about other parts of the evidence, without objection.
Step 1: identifying the breaches
In the year from 17 April 2017 to 15 April 2018 (“the assessment period”), the first respondent breached:
a)s.45 of the Act by failing to pay:
i)49 employees minimum rates for ordinary hours worked in contravention of clause 20.1 of the Award;
ii)71 employees a casual loading in contravention of clause 13.1 of the Award;
iii)60 employees Saturday penalties in contravention of clause 34.1 of the Award;
iv)54 employees Sunday penalties in contravention of clause 34.1 of the Award;
v)46 employees public holiday penalties in contravention of clause 34.1 of the Award;
vi)14 employees casual overtime rates in contravention of clause 13.2 and 33.2 of the Award;
b)s.340 of the Act by taking adverse action against Miles McEldowney, consisting of not giving him any more casual shifts:
i)because he exercised a workplace right to make a complaint or inquiry in relation to his employment and/or proposed to exercise his workplace right to initiate or participate in proceedings under a workplace law;
ii)because he had a workplace right by reason that he was entitled to the benefit of, or under, a workplace instrument; and
iii)to prevent him from exercising a workplace right to make a complaint or inquiry in relation to his employment, and/or a workplace right to initiate or participate in proceedings under a workplace law; and
c)s.535(1) of the Act by failing to make and keep records of:
i)each employee’s gross and net amounts paid, as required by reg. 3.33(1)(a) of the Regulations;
ii)each employee’s actual rate of remuneration, as required by reg. 3.33(1)(b) of the Regulations;
iii)each casual employee’s hours of work, as required by reg. 3.33(2) of the Regulations; and
iv)each employee’s name, employment type and commencement date, as required by reg. 3.32 of the Regulations.
The second respondent was involved in all of those breaches for the whole of the assessment period.
The third respondent was involved in the breaches of:
a)s.45 of the Act that occurred from August 2017 to 15 April 2018; and
b)s.340 of the Act.
Step 2: single course of conduct
Section 557 of the Act provides that two or more contraventions of s.45 and s.535 of the Act are to be taken to constitute a single contravention if the contraventions:
a)were committed by the same person; and
b)arose out of a course of conduct by that person.
The applicant argued that the course of conduct provisions allowed the court to treat all of the contraventions of a particular obligation under the Award or the Regulations as a single contravention of that particular obligation. In the applicant’s submission, applying the course of conduct provisions, there were:
a)six contraventions of s.45 of the Act;
b)three contraventions of s.340 of the Act; and
c)four contraventions of s.535 of the Act.
The respondents argued that all of the underpayment contraventions, being the contraventions of s.45 of the Act:
largely came down to the same broad issue, being the payment of a flat rate to the identified employees.
The respondents argued further that:
[the contraventions] may well be distinct breaches for the purposes of assessing penalties, but there is a common thread passing through the breaches which is the payment of a flat rate, and one must be careful to ensure there is not a duplication of penalties.
The respondents argued further that:
the failure to pay penalty rates on public holidays is effectively the same breach [as] the failure to pay penalty rates for weekend work, not warranting a separate penalty.
The applicant noted numerous authorities that supported her view of the course of conduct provisions, namely, Construction, Forestry, Mining and Energy Union (CFMEU) v Cahill (2010) 269, ALR 1; (2010) 194 IR 461; [2010] FCAFC 39, Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153; (2014) 243 IR 244; [2014] FCAFC 62, Fair Work Ombudsman v Phua & Foo Pty Ltd [2018] FCA 137, Fair Work Ombudsman v Lohr (2018) 158 ALD 457; (2018) 356 ALR 424; [2018] FCA 5, Fair Work Ombudsman v Samurais Paradise Pty Ltd [2017] FCCA 2013, Fair Work Ombudsman v Mhoney Pty Ltd [2017] FCCA 811.
Applying those authorities, I accept the applicant’s position on the course of conduct provisions in relation to the underpayments.
Step 3: grouped breaches
In addition, the applicant considered that:
a)the Saturday and Sunday penalty rate contraventions should be grouped as a single contravention;
b)all of the record keeping contraventions should be grouped as a single contravention; and
c)there should be only one penalty for the three adverse action contraventions.
I accept the applicant’s view on these matters. Technically, the three adverse action breaches were separate, because there were three different prohibited reasons for the adverse action. However, there was only one adverse action. In these circumstances, it is appropriate to treat the three breaches as a single contravention. The Saturday and Sunday penalty rate breaches were again technically separate, but they were substantially similar in nature. Consequently, it is appropriate to treat them as a single breach, although it is a substantial concession on the applicant’s part. Similarly, the record keeping contraventions are technically distinct. However, I am prepared to accept the applicant’s concession in this regard.
Consequently, the contraventions in respect of which penalties are to be considered are the seven contraventions consisting of the contravention of:
a)s.45 of the Act by failing to pay 49 employees minimum rates for ordinary hours worked in contravention of clause 20.1 of the Award;
b)s.45 of the Act by failing to pay 71 employees a casual loading in contravention of clause 13.1 of the Award;
c)s.45 of the Act by failing to pay 60 employees Saturday penalties and 54 employees Sunday penalties in contravention of clause 34.1 of the Award;
d)s.45 of the Act by failing to pay 46 employees public holiday penalties in contravention of clause 34.1 of the Award;
e)s.45 of the Act by failing to pay 14 employees casual overtime rates in contravention of clause 13.2 and 33.2 of the Award;
f)s.340 of the Act by taking adverse action against Miles McEldowney, consisting of not giving him any more casual shifts; and
g)s.535(1) of the Act by failing to make and keep records.
Step 4: the appropriate penalty for the breaches
a. the nature and extent of the conduct which led to the breaches
The underpayments amounted to over $180,000 in a one year period and affected 98 employees. This is a very substantial underpayment, both in terms of the dollar value and the number of employees affected.
However, in relation to the first contravention, which concerned the failure to pay minimum base rates for ordinary hours, the respondents submitted that the underpayment was marginal. They said that they paid employees a flat rate of between $18 and $25 per hour, when the Award required minimum base rates for ordinary hours of between $17.70 and $19.53, depending on the classification of the particular employee. They said that there were 49 employees affected by this contravention, which led to underpayments totalling $8,662.59, or about $177 each on average.
The respondents also noted that they had about 50 other employees who did not receive less than the base rate for ordinary hours stipulated by the Award. The respondents described the loss to each employee for the contravention in relation to base rates for ordinary hours as modest.
However, if the 49 people who were each underpaid $177 should have been paid $19.53 per hour, they have each worked for about nine hours for free. Including all 49 of them, the respondents would have received about 441 hours of free labour.
A loss of $177 per employee probably seems very little to the second and third respondents, who, on their own admission, were in a financial position to spend $2.2 million to buy the business. However, it is presumably a significant amount of money for people who have to wait on tables and prepare food in a fairly basic café to be able to put food on their own tables.
The respondents acknowledged that the penalty rate and casual loading underpayments were more substantial, but said that the weekend penalty rates of 150% and public holiday penalty rates of 250% have been subject to review. The penalty rate and casual loading underpayments certainly were more substantial. They amounted to about $170,000.
If the respondents’ submission in relation to the review of penalty rates and casual loadings was meant to indicate that the penalty and casual loading rates were excessive and it was therefore understandable that the respondents did not pay them, then the submission is misconceived. The respondents were obliged to comply with the law as it stood at the time. The Award was part of the law at the relevant time. Compliance with it was not optional.
The first respondent failed to keep records for:
a)10 employees in relation to the actual rate of remuneration, the gross and net amounts paid and the hours of work; and
b)27 employees in relation to the employees’ name, employment type and the date that the employees’ employment began.
The respondents noted that they kept the required records for the vast majority of their employees. That was not disputed. The respondents submitted, and I accept, that the fact that they kept the required records for the vast majority of their employees reduces the seriousness of the record keeping contraventions.
The respondents also submitted that they outsourced their record keeping obligations to a bookkeeper, and assumed she was keeping the required records. They submitted that their record keeping contraventions were at the less serious end of the spectrum, because their failure was merely to double check that the bookkeeper was maintaining the required records.
However, there is no evidence that the second respondent checked even once that the bookkeeper was maintaining the required records. That was his responsibility. It is not sufficient for an employer to say that record keeping was outsourced, and wash his hands of the whole issue. The employer is obliged to meet the record keeping requirements, and, if he chooses to outsource compliance with those requirements, he is obliged to ensure through appropriate systems and quality control that the requirements are being met. I do not accept that outsourcing record keeping functions to a bookkeeper reduces an employer’s responsibility at all.
The respondents also submitted that the record keeping contraventions related mostly to people who were given a one hour trial, but who did not work out, and who were therefore not given a contract of employment. The respondents submitted that therefore the record keeping contraventions were low level contraventions. The respondents conceded that, if a person is engaged for an hour, as a trial, they are nevertheless an employee and the record keeping obligations apply.
The applicant said that not all of the record keeping contraventions concerned people who did a one hour trial but who were not then given a contract of employment. However, it seems to be the case that most of the record keeping contraventions did relate to people who only did a one hour trial. I accept that this means that the record keeping contraventions were at the lower end of the scale.
The adverse action contravention concerned one employee. The adverse action occurred for three prohibited reasons, but was a single adverse action, consisting of not giving Mr McEldowney any more casual shifts. The adverse action was very significant for Mr McEldowney, because it meant that he lost his job.
b. the circumstances in which that conduct took place
The employees were relatively unskilled and low paid workers who no doubt relied on their minimum entitlements. Most were under 25 years of age. Some were foreign nationals in Australia on visas. As such, the applicant argued, the employees were vulnerable workers whose vulnerability was exploited by the respondents. The applicant argued further that the exploitation of vulnerable workers should be treated as aggravating conduct on the part of the respondents.
The respondents argued that the mere age and visa status of the employees was not enough to show that the respondents exploited their vulnerability. The respondents relied on Fair Work Ombudsman v AmritsariaFour Pty Ltd [2016] FCCA 968 where Judge Smith said:
60.The evidence of the vulnerability of the employees was sketchy. In their complaints to the applicant, both Mr Yousaf and Mr Ahmed claimed that they were new to this country and jobless. Mr Yousaf claimed that he had found it difficult to find a job. I accept that this was the case and that this made them both vulnerable to exploitation. However, I do not think that this goes very far. Many employees are vulnerable to a certain extent and for different reasons: age, employment experience, financial needs, lack of control of recordkeeping, and lack of knowledge of workplace rights. As Lucev FM (as his Honour then was) said in Fair Work Ombudsman v Ultra Tune Australia Ltd (2012) 225 IR 326; [2012] FMCA 560 at 336 [14], one cannot simply assume that because an employee is a foreign national, he or she is unfamiliar with Australia’s labour practices, or more vulnerable to underpayment or exploitation than any other employee.
61.In a sense, to give too much weight to such vulnerability (that is to say, at that level of generality) is to ignore the fact that the workplace laws are intended to protect employees to a certain extent. There is an element of double-counting involved in the applicant’s submission to the contrary. It may, of course, be different if the evidence were to have gone further.
With respect, I beg to differ. Granted, foreign nationals in Australia on visas are not necessarily unfamiliar with Australia’s workplace laws. However, they are in a somewhat tenuous position, often with less social support than most Australian citizens and where misunderstanding their rights and obligations can lead to them being deported. This prima facie makes them susceptible to exploitation in the workplace. Similarly, young workers often do not have the experience or financial strength to enable them to take a stand against unfair work practices. This prima facie makes them susceptible to exploitation.
Since Ultra Tune and Amritsaria were decided, the scourge of wage underpayments, or wage theft as it is now commonly known, has become more widely publicised and understood. To the extent that earlier cases decided in this court seek to minimise the effect of the vulnerability of employees on the ability of employers to exploit them, the earlier cases, in my view, should not be followed.
The respondents submitted that the allegations of exploitation were overblown and one needed to maintain a sense of perspective. However, the raw figures show the scale of how much the respondents exploited vulnerable employees. They were exploited to the tune of about $180,000. That is a lot of money, by the standards of most members of our community.
The respondents conceded that the first respondent employed many young people and many foreign nationals but then said, that’s the hospitality sector. That is the very point sought to be made by the applicant. Young people and foreign nationals frequently work in the hospitality sector because they are vulnerable, and can be persuaded to work for under award wages and can thus be exploited. One does not see a lot of 40 year old, male, Australian citizens working as employees in hospitality, because, in general, 40 year old, male, Australian citizens are not so gullible, desperate or otherwise as susceptible to exploitation as young people and foreign nationals.
For this reason, I depart from Judge Smith’s view in Amritsaria in relation to double counting. The basic penalty would apply for underpaying, for example, a 40 year old, male, Australian citizen. An extra penalty applies for underpaying vulnerable workers, because their exploitation is an aggravating circumstance. It is not double counting.
In my view, the respondents in this case did exploit the vulnerability of the first respondent’s employees. The exploitation consisted of the vulnerable employees being paid less, and in some cases much less, than their lawful entitlements. That fits the definition of exploitation on the Oxford Lexico website, which defines exploitation to mean:
The action or fact of treating someone unfairly in order to benefit from their work.[1]
[1]Oxford Lexico, Meaning of exploitation in English (Web Page) <
That is exactly what the respondents did in this case. Their exploitation of vulnerable employees is an aggravating factor.
In relation to the second and third respondents’ circumstances, they are a brother and sister. The second respondent came to Australia from Greece as a 14 year old with his parents. The third respondent came with them as a 17 year old. The second respondent attended school in Australia but the third respondent did not. The third respondent is now sixty-six years old. The second respondent is now sixty-three years old.
Before buying the Barry Café business as a going concern with effect from 29 August 2016, the second and third respondents had been in small family businesses, but did not employ outside staff.
The second and third respondents were both directors of the first respondent, and were equal shareholders with their sister, Ourania, who did not participate in the management of the business. She suffers from epilepsy. The second and third respondents and their sister all live with their elderly parents, and the second and third respondents care for their parents and sister.
The second respondent claimed in paragraph 18 of his affidavit sworn on 28 January 2020 that, before April 2018, when the applicant commenced her investigation:
I was unaware of any Award or minimum wage obligation that we had. I had no awareness of penalty rates or casual loadings or other Award based obligations.
Perhaps because those claims were contradicted by Mr McEldowney’s emails that showed that, in August 2017, Mr McEldowney had brought to the first respondent’s attention its obligations under the Award, the second respondent sought to amend his affidavit to read:
I was unaware of
anythe specific Award or minimum wage obligation that we had. I had no awareness of the specific penalty rates or casual loadings or other Award based obligations. (emphasis added)Those amendments were made by consent pursuant to orders made on 20 April 2020.
The third respondent said in her affidavit sworn on 31 January 2020 that she was:
not familiar with Award obligations such as penalty rates, casual loadings and the like.
The first version of paragraph 18 of the second respondent’s affidavit was completely implausible. The existence of penalty rates and casual loadings are matters of common knowledge in Australia.
On the other hand, I do not have any difficulty accepting that the second respondent did not know the specifics of the Award, and that the third respondent was not familiar with the Award obligations. No one would know the specifics of the Award, or be familiar with the Award obligations, unless they checked the Award.
However, as this court said in Fair Work Ombudsman v Hongyun Chinese Restaurant Pty Ltd (in liquidation) [2013] FCCA 52 at [46]:
… it is incumbent upon employers to make all necessary enquiries to ascertain their employees’ proper entitlements and pay their employees at the proper rates.
That is, the second and third respondents, as the controlling minds of the first respondent, were obliged to make it their business to find out the specifics of the Award and become familiar with the Award.
It is not open to employers to plead ignorance, or throw their hands in the air and say it is all too difficult. Employers are required by law to either gain a working knowledge of their obligations under the applicable Award, or engage suitable professional assistance.
In the present case, the respondents said that they outsourced their payroll obligations to a bookkeeper, who had worked for the previous owners of the business. They said that she had paid employees flat rates under the previous owners, and continued to do so when they took over the business. The second respondent said that when a new employee started, he would tell the bookkeeper what his or her flat rate was to be. With existing and new employees, he would tell the bookkeeper how many hours they had worked, and the bookkeeper would pay them accordingly.
This may be so. However, obviously, the second and third respondents were obliged to tell the bookkeeper not only the total hours each employee had worked, but also when they had worked, so that the bookkeeper could work out the applicable penalty rates and casual loadings. Also, the second and third respondents were obliged to tell the bookkeeper to pay employees in accordance with the Award, as a minimum.
The respondents also claimed that the employees were receiving tips and free meals. However, these bonuses do not offset the employer’s obligations under the Award.
The circumstances of the adverse action contraventions were that until August 2017, Mr McEldowney had been working 15 to 30 hours per week at the Barry Café. He emailed the first respondent in August 2017, saying that:
a)his flat rate of $18 per hour was well below the Award rate;
b)he was entitled to different rates for weekday, weekend, and public holiday work;
c)he was entitled to back pay;
d)the first respondent could find information about its obligations on the applicant’s website; and
e)if he did not receive a response within 10 days, he may lodge a small claims application.
The first respondent’s response was to stop allocating any shifts to Mr McEldowney. The applicant submitted that the first respondent’s punishment of Mr McEldowney by not allocating him any further shifts was highly aggravating and warranted a substantial penalty.
Moreover, although Mr McEldowney clearly and expressly advised the first respondent in August 2017 that its system of paying employees flat rates was below their Award entitlements, the first respondent continued to apply the flat rates system at least until the applicant commenced her investigation of the first respondent in April 2018. The period between August 2017, when Mr McEldowney sent his emails, and April 2018 is a period of eight months. It is two thirds of the period during which the underpayments occurred. The respondents cannot pretend that they had no knowledge of the applicability of the Award for two thirds of the period during which they underpaid employees.
The respondents admitted that the first respondent took adverse action against Mr McEldowney for prohibited reasons, but attempted to persuade the court that, in truth, Mr McEldowney was not given any more shifts because he was spending too long on personal calls and was not interacting with staff in the manner he should have. These matters were not raised with Mr McEldowney prior to the cessation of his employment.
Due to the agreement between the parties, the court was not given the opportunity to see the witnesses under cross-examination. However, in view of:
a)the timing of the first respondent not giving Mr McEldowney any more shifts after he complained;
b)there being no substantiation that there were performance issues with Mr McEldowney (such as an email or text giving him a warning); and
c)the fundamental dishonesty involved in deliberately[2] underpaying employees,
[2] The deliberate nature of the underpayments is discussed below.
I do not accept the second respondent’s explanation for the first respondent ceasing to give Mr McEldowney any more shifts.
I accept that the first respondent was punitive towards Mr McEldowney, and that is an aggravating circumstance in this matter.
c. the nature and extent of any loss or damage sustained
The first respondent underpaid a total of 98 employees a total of $180,641.58 in the approximately one year from 17 April 2017 to 15 April 2018. Instead of paying the employees penalty rates and overtime rates as required by the Award, the first respondent paid the employees a flat rate of between $18 and $25 per hour. In many cases, that was less than the minimum hourly rate specified in the Award for ordinary hours.
The average underpayment was about $1,850 per employee. However, the actual underpayments per employee ranged from $31.73 in one case to $12,315.02 in another. In the latter case, the sum of $12,315.02 represented 36% of that particular employee’s total entitlement for the year.
Mr McEldowney lost his job.
Because the first respondent did not keep the required records, the applicant has been put to a considerable amount of effort to ascertain the precise extent of the loss or damage, and it remains open to some doubt.
d. whether there had been similar previous conduct
It was not suggested that the respondents had engaged in any similar conduct previously.
e. whether the breaches arose out of the one course of conduct
This point has already been addressed.
f. the size of the business enterprise involved
The first respondent employed a total of 107 employees during the almost one year from 17 April 2017 to 15 April 2018.
The applicant argued that the business run by the first respondent should be characterised as a medium sized business. The respondents argued that it should be characterised as a small business.
In my view, the business should be characterised as a small business. Although the first respondent had 107 employees during the relevant period, the reality is that many of them worked much less than full time. Indeed, many of the 107 employees worked only for one hour, as a trial, and were not kept on.
Whether a business is a small business or a medium business depends more on the full-time equivalent status of its employees than the raw number of them.
In any event, as Tracey J said in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [28]:
No 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” (citation omitted)
Similarly, in Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412, this court said at [27]:
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. …
g. whether or not the breaches were deliberate
The second and third respondents admitted in the statement of agreed facts that they knew that the payments made to employees were insufficient to meet the first respondent’s obligations under the Award, in the second respondent’s case, throughout the assessment period, and in the third respondent’s case, from at least August 2017, when Mr McEldowney sent his emails.
Nevertheless, the respondents submitted that the underpayments were not deliberate, because they did not know about their Award obligations until the applicant began her investigation in April 2018.
I have accepted that the second and third respondents did not know the specifics of their obligations under the Award. However, in August 2017, when Mr McEldowney sent his emails, they were well and truly on notice that they were not meeting their obligations under the Award. They did not immediately take corrective action, but instead continued with their underpayments.
I also consider that the second respondent knew throughout the whole of the assessment period that the first respondent was making under Award payments. He conceded as much in the statement of agreed facts. Moreover, I find the respondents’ claims of naivety to be implausible and I reject them.
For these reasons, I consider that the underpayment contraventions were deliberate. I also note that this is not a case where the respondents tried to pay award wages but by mistake applied the wrong award, or applied an out of date award. The respondents in the present case knew they were not paying award wages.
The adverse action, in not giving Mr McEldowney any more shifts after he raised issues with underpayments was obviously deliberate. The second and third respondents knew exactly what they were doing when they decided not to give Mr McEldowney any more shifts.
The record keeping defaults, in my view, were also deliberate, in the sense that the respondents did not instruct their bookkeeper to ensure that she complied with all legal obligations. That is a very simple instruction to give, and would have avoided the whole disaster that the respondents now find themselves in.
h. whether senior management was involved in the breach
The respondents argued that it was artificial to enquire whether senior management was involved in the breach, because there were no middle or junior managers involved in the breach.
However, that submission misses the point. The point is that if senior managers were involved, the contravention is likely to have been systemic and entrenched in the organisation, rather than the action of a rogue or incompetent or misguided employee.
In the present case, the second and third respondents were the senior managers of the first respondent, both of them being directors of the first respondent and the active day to day managers of its business. The contraventions were systemic and entrenched.
contrition, corrective action and co-operation with the authorities
The respondents have cooperated with the authorities by agreeing to the court making the declarations and orders set out above, and by agreeing to the many facts set out in the statement of agreed facts.
The respondents were slow to provide records to the applicant, but eventually did so, albeit in a piecemeal fashion.
The respondents made full admissions about the adverse action, but sought to diminish their responsibility by saying that there were additional, legitimate reasons for it. As discussed above, I do not accept the truth of those claims. I consider that running this argument undermines the respondents’ claims of contrition, which is discussed further below.
The orders that will be made by consent include orders for education on employers’ obligations, a workplace notice advising employees of their rights under the Award, and a future audit to ascertain whether the first respondent has complied with its obligations during that future period. These steps constitute corrective action, as far as they go.
There was a dispute about the amount of corrective action that the respondents have taken in relation to the underpayments. The applicant said from the bar table that she thought that the respondents had repaid about $30,000 of the approximately $180,000 in underpayments. The respondents said from the bar table that they thought they had repaid about $50,000 in underpayments One way or another, there is about $130,000 to $150,000 remaining unpaid. That is, employees of the first respondent did about $130,000 to $150,000 worth of work between 17 April 2017 and 15 April 2018 for which they have still not been paid, more than two years later.
Table 8: Public Holiday penalty underpayments Column A Column B Column C Column D Column E No Employee Name Number of ordinary hours Total entitlement Amount paid Underpayment Continued 42. Taylor Ranston 7.83 $382.50 $141.00 $241.50 43. Tzu-Ya "Johanna" Huang 17.25
$815.58
$345.00
$470.58
44. Victor Tanant 21.08 $959.92 $543.22 $416.70 45. Yuxuan "Shirely" Li 6
$292.98
$120.00
$172.98
46. Zali Bordin 7.75 $366.42 $139.50 $226.92 47. Total - $44,811.00 $18,748.03 $26,062.97
Table 9: Casual overtime rates underpayments Column A Column B Column C Column D Column E Column F Column G No Employee Name Number of overtime hours worked (Mon to Fri) Number of overtime hours worked (Saturday) Number of overtime hours worked (Sunday) Total entitlement Amount paid Underpayment 1 Marzieh "Aida"
Massoumi0
1
8
$346_66 $162 .00 $184 ,66 2. Alexandra Crowe 0 0 6 $234.37 $108 '.00 $ 126 _37 3. Anna Lanaford 0 2 0 $58_14 $36,00 $22,14 4. Cristian Penagos Pardo 0
0
23
$898.38
$506.00
$392,38
5 Damien Kelertas 0 6 21.5 $1 ,064.40 $656.50 $407.90 6 Evlyn Kok-Mccosker 0.5 8.25 19. 25 $1,079 _06 $504.00 $575.06 7 Hannah Paletu·a 0 6 43.33 $1,917.20 $986.65 $930.55 8. Hardiinder Koour 0 9.58 23 $1 206 ,9 9 $586 _50 $620.49 9 Hitoe "Suzy' Okada Suzuki 0
0
75
$175.77
$90.00
$85.77
10 Jane Butler 0 1 92 5.67 $286_86 $ 136 _50 $150.36 11 JuYouna "Jessi" Choi 13 17 35-82 2.08 $1,827.13 '$1 ,123-48 $70 3,65 12. Manvir "Montv" Sinah 16 25 40 84 725 $4 922.08 $2.980.38 $1,941 70 13. OliviaWvatt 0 0 2.75 $107.42 $53 71 $53.71 1 4 _ Suian Khada 0 0 2 $75.24 $36 00 $39.24 15. Total - - $14,199.70 $7,965.72 $6,233.98
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Table 10 Total Underpayment Amounts Column A Column B Column C Column D I Column E Column F Column G Column H 'No Employee name Base Rate Underpayment Casual Loading Underpayment Saturday Rate Underpayment Sunday Rate Underpayment Public Holiday Underpayment Overtime Underpayment Total Underpayment Continued 30 . Jack Cahill $0.00 $271 18 $349.46 $292.97 $0.00 $0.00 $913.61 31. James Lea $0.00 $2,548 .70 $1,978.52 $2,426 .65 $389.20 $0.00 $7 343.07 32. Jane Butler $451 .19 $1,324.18 $744.19 $899.30 $1.118.74 $150_36 $4 747.96 33. Janine Acciolv Freitas $33 10 $112-24 $161.97 $45.20 $0.00 SO.OD $352.51 34. Jenny Richter $145 79 $431.47 $354.07 $356.89 $0.00 $0.00 $1 288.22 35 , Jerome Fontesse $0.00 $1.315.17 $0.00 $0.00 $0.00 $0.00 $1 315.17 36. Jessica Coaaer $5.01 $1,175.94 $1,428 38 $1.085.85 $468.49 $0.00 $4163.67 37. Jimena Covacevich $9.95 $31.72 $118.65 $0.00 $0.00 $0.00 $160.32 38. Jukvuno "Lucv" Hono $0 .00 $132 66. $ 288_32 $0.00 $0.00 $0.00 $420.98 39. JuYouno "Jessi" Choi $12 33 $5,218.31 $2.393.58 $627.42 $1,121 .89 $703.65 $10,0 77.18 40. Karin lchihashi $0 00 $55 ,00 $45.78 $49.05 $0.00 $0.00 $149.83 41 Katherine "Maisie" Watson $0 00 $694.79 $528.02 $583.84 $484.23 $0.00 $2 290.88 42. Kiara Kuz-Fevi $46 97 $475.49 $69.53 $1 143.68 $310.20 $0.00 $2 045.87 43. Kondal "Reddv" Kontham $27.47 $1,040,53 $0.00 $0.00 $0.00 $0.00 $1,068.00 44. Liam Donald $41.98 $138.67 $81.93 $0.00 $477.87 $0.00 $740.45 45. Lilian "Lil" Stirlina $463.45 $1,574.95 $1.858.94 $1,398.44 $692.39 $0.00 $5,988.17 46. LukeAraal $10 00 $316 ,68 SO. DO $343 -20 $559.26 $0.00 $1,229.14 47 Manish Tanwar $86 _69 $508 78 $0.00 $0.00 $0.00 $0.00 $596.47 48. Manvir "Montv" Sinoh $27217 $1,97502 $902.22 $1 ,900.82 $2.161.20 $1,941.70 $9,153.13 49 , Matthew Bourke $105 96 $539.70 $343.29 $354.59 $958.60 $0.00 $2 302.14 50. Michael Gaaer $0.00 $215.07 $52.31 $154.95 $42.9.66 $0.00 $851.99 51. Miles McEldownev $277.84 $1,138.31 $861.90 $489.57 $417 24 $0 ,00 $3,184.86 52 Nicole Missen $ 32.10 $97.60 $88.52 $84.75 $0.00 $0.00 $302.97 53. Oliver Malcolm $0 .00 $ 31 73 $0.00 $0.00 $0.00 $0.00 $31.73 54. Olivia Brigden $291.75 $676 .60 $681.55 $502.34 $0.00 $0.00 $2,152.24 55 OliviaWvatt $0 00 $788 17 $241-83 $346 _84 $959.59 $53.71 $2,390.14 56 Peter Cutruol 55 _00 $ 243, 53 $101 , 8 4 $ 239 60 so 00 so.co $589.97 57 Preetam Baniva $0 .00 $2 ,415.84 SO. OD $0.00 $0 00 $0.00 $2 415.84 58. Ravauth Efigeti $37 .57 $ 235.40 $0.00 $0.00 $0 00 $0,00 $272.97 59 Sam Hali-Havon $0.00 $412.70 $333 42 $365.63 $0 00 $0,00 $1,111.75
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