Fair Work Ombudsman v Maroochy Sunshine Pty Ltd
[2017] FCCA 559
•24 March 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v MAROOCHY SUNSHINE PTY LTD & ANOR | [2017] FCCA 559 |
| Catchwords: INDUSTRIAL LAW – Application for imposition of pecuniary penalties – contravention of Award entitlements to basic rate of pay and loadings – penalties imposed. |
| Legislation: Fair Work Act 2009 (Cth) ss.3(b), 44, 45, 323(1), 529(2), 536(1), 539(1), 542, 545(1), 545(2), 546(2)(a), 550(1), 557(1), 712(3). |
| Cases cited: Fair Work Ombudsman v Maclean Bay Pty Ltd (No 2) [2012] FCA 557 Fair Work Ombudsman v Promoting U Pty Ltd [2012] FMCA 58 Jordan v Mornington Inn Pty Ltd (2007) 166 IR 33 Markarian v R (2005) 228 CLR 357 Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | MAROOCHY SUNSHINE PTY LTD |
| Second Respondent: | EMMANUEL BANI |
| File Number: | BRG 1035 of 2015 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 10 June 2016 |
| Date of Last Submission: | 10 June 2016 |
| Delivered at: | Brisbane |
| Delivered on: | 24 March 2017 |
REPRESENTATION
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| The Second Respondent appeared, with leave, for the First Respondent |
| The Second Respondent appeared in person |
ORDERS
The First Respondent pay a pecuniary penalty of $186,000 pursuant to s.546(1) of the Fair Work Act 2009 (Cth) for the contraventions declared in paragraph 1 of the order made on 15 March, 2016 and amended 29 April, 2016;
The Second Respondent pay pecuniary penalties of $41,300 pursuant to s.546(1) of the Fair Work Act 2009 (Cth) for his involvement in the First Respondent’s contraventions declared in paragraph 1 of the order dated 15 March, 2016 and amended 29 April, 2016;
An order pursuant to ss.545 and 546(1) of the Fair Work Act 2009 (Cth) that the First and Second Respondents, pay the penalty amounts to the Applicant within 28 days of these orders and:
(a)the Applicant will pay to the employees named in the statement of claim filed on 9 November, 2015 the amounts received in the proportionate amount to the underpayment owed to each individual employee;
(b)in the event that the Applicant receives a partial payment of the penalty amount the amounts will be distributed to the said employees in accordance with the percentage of total underpayment; and
(c)in the event that the Applicant cannot locate one or more of the said employees within 6 months of receiving the penalty amount, pay the applicable amount due to each employee who cannot be located:
(i)firstly, to other employees in proportionate amounts, until each employee’s underpayment is met;
(ii)secondly, for any residual amount, to the Commonwealth.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 1035 of 2015
| FAIR WORK OMBUDSMAN |
Applicant
And
| MAROOCHY SUNSHINE PTY LTD |
First Respondent
| EMMANUEL BANI |
Second Respondent
REASONS FOR JUDGMENT
These reasons concern the pecuniary penalties that are to be imposed upon Maroochy Sunshine Pty Ltd and Mr Bani for contravening various provisions of the Fair Work Act 2009 (Cth) and the Horticulture Award 2010. The contraventions arise from the employment by Maroochy Sunshine of 22 workers who are citizens and residents of Vanuatu. They were encouraged to work in Australia by promises of higher wages than they could hope to have earned at that time in Vanuatu. They each left their families to travel to Australia for the purposes of the work that was offered, at considerable expense.
Mr Bani was at the relevant time the sole director and shareholder of Maroochy Sunshine. He was its controlling mind and the company acted through him and no-one else. Relevantly, his acts were Maroochy Sunshine’s acts.
The promises made to the employees by Mr Bani in this case were for the most part false. Most received no wages and while in Australia they had to endure appalling treatment by Mr Bani who had received payment for the labour undertaken by the employees and payment from the Australian Government pursuant to a scheme that I shall discuss later in these reasons.
Until the penalty hearing that took place on 10 June, 2016 Maroochy Sunshine and Mr Bani did not participate in these proceedings. On 15 March, 2016 and in the absence of both Maroochy Sunshine and Mr Bani the Court made declarations that:
a)Maroochy Sunshine contravened the following provisions of the Fair Work Act 2009 (Cth):
i)s.542 by failing to pay to certain specified employees their safety net contractual entitlements;
ii)s.45 (by contravening clause 14.1 of the Horticulture Award 2010) by failing to pay those employees the requisite minimum hourly rate of pay;
iii)s.323(1) and s.45 (by contravening clause 19 of the Award) by failing to pay to those employees the minimum hourly rate in full, in money and at least monthly;
iv)s.44(1) (by contravening s.87 of the Fair Work Act) by failing to accrue annual leave entitlements to the employees;
v)s.44(1) (by contravening s. 90(2) of the Fair Work Act) and s.45 (by contravening clause 25.10 of the Award) by failing to pay those employees their accrued and untaken annual leave entitlements on termination;
vi)s.536(1) by failing to provide pay slips to the employees within one day of payment; and
vii)s.712(3) by failing to comply with a notice to produce records or documents;
b)The Second Respondent was involved in each of the contraventions admitted by Maroochy Sunshine as listed above, pursuant to s.550(1) of the Fair Work Act.
Consequent upon those declarations, the Court ordered that:
a)Maroochy Sunshine pay the safety net contractual entitlement amounts to the employees – a total payment of $77,649.16.
b)Maroochy Sunshine and Mr Bani notify the Applicant in writing of:
i)the First or Second Respondent employing employees, whether by Maroochy Sunshine or by another business or entity in which the Second Respondent is an officer or employee;
ii)the First or Second Respondent engaging any persons through the Seasonal Worker Program or who are subject to any other type of Australian visa; and/or
iii)the acquisition of any business interest by Maroochy Sunshine or Second Respondent that employs employees;
within 30 days of the above actions being taken for a period of two years from the date of the Court’s orders, pursuant to section 545(1) of the Fair Work Act.
Neither Maroochy Sunshine nor Mr Bani have applied to have those orders set aside because they were made in their absence. Neither has made any indication that they do not accept that the making of the declarations was appropriate.
The application was adjourned for the purposes of a hearing to determine the penalty to be imposed upon Maroochy Sunshine, as the employer and Mr Bani as an accessory, for those contraventions. These reasons explain the penalties I have determined to impose upon each of the respondent for those contraventions.
The conduct of Maroochy Sunshine and Mr Bani in this matter is very serious. As I have attempted to explain in the following reasons, this case concerns the serious exploitation of vulnerable foreign workers lured to work in Australia by false promises about the amount of work available to those workers and the amounts they might earn from that work. The contraventions are of the most basic of the employees’ workplace rights.
The Fair Work Ombudsman submits that this is a case deserving of penalties that are at the upper limits of the maximums that might be imposed. I agree.
Background
The Seasonal Worker Program is a Commonwealth Government initiative with two purposes, namely:
a)to provide foreign aid to the participating countries, through the provision of seasonal work to their participating citizens; and
b)to meet the needs of seasonal employment in regional areas in Australia where, due to the fluctuating needs of the industry and the geographic isolation of many areas, there is difficulty obtaining sufficient workers to perform this low skilled work.
The Seasonal Worker Program has a range of minimum requirements and is fundamentally a program which relies on and requires compliance with Australian workplace laws. The Seasonal Worker Program guarantees a seasonal worker a minimum average of 30 hours of paid work per week.
A seasonal worker must be employed by an approved sponsoring employer. Approval is given by the Department of Employment, Education and Workplace Relations. To become an approved employer, a candidate must have their application assessed and approved by both the Department of Employment, Education and Workplace Relations and the Department of Immigration and Border Protection. A sponsoring employer must also enter into a Deed of Agreement with the Department of Employment, Education and Workplace Relations, be a party to a Special Programme Agreement and be a Special Programme Sponsor with the Department of Immigration and Border Protection. The effect of those requirements is that the employer applying for approval must necessarily understand the requirements of the program which compels compliance with Australian workplace laws in all respects.
There are a number of requirements cast upon employers under the Seasonal Worker Program. For example, an employer is required to be responsible for the first A$500 of international and domestic travel expenditure for each employee under the program. An employer is able to recoup amounts over this contribution through deductions to the remuneration paid to the employees.
An employee employed by an approved sponsoring employer pursuant to the Seasonal Worker Program is granted a Special Program (subclass 416) (Business) visa.
In 2014 and 2015 Maroochy Sunshine conducted a labour hire business contracting labour to farmers in Queensland. It was an approved Special Program Sponsor and an Approved Employer for the purposes of the Seasonal Worker Program.
Mr Bani was and continues to be, the sole director of Maroochy Sunshine. He was at all times responsible for the running of Maroochy Sunshine’s business, Maroochy Sunshine’s involvement in the Seasonal Worker Program and the engagement of employees for Maroochy Sunshine’s business.
Since 10 January, 2013 Mr Bani has also been the director and secretary of another company, Pacific Crop Harvesting Pty Ltd. Mr Bani has been the sole director and secretary of Pacific Crop Harvesting since 2 June, 2014.
This case concerns the employment of 22 individuals by Maroochy Sunshine over the period from 21 July, 2014 to 11 September, 2014. They were employed to undertake seasonal work in the horticulture industry in Queensland. Each is a citizen and resident of Vanuatu.
The evidence shows that sometime in early 2014, probably March, some of the employees met individually, and then collectively, with an employment agent named David Abel who was based in Vanuatu. That agent put the then potential employees in contact with Mr Bani. In May, 2014 Mr Bani visited Vanuatu and conducted a workshop about working in Australia. Up to 70 men attended the workshop. Mr Bani attracted considerable interest.
Twenty-two men were employed by Maroochy Sunshine following Mr Bani’s promotional tour of Vanuatu. Each entered into a written employment contract with Maroochy Sunshine, which was executed by Mr Bani on Maroochy Sunshine’s behalf. The employment contracts were all made at about the same time – 28 May, 2014. They are all in the same terms and in summary, provide that:
a)the employment would commence on 2 June, 2014 and be for a period of six months, subject to a successful visa application;
b)the employee would be met by Mr Bani on arrival in Brisbane airport and be transported by bus to their accommodation and then to the initial place of work;
c)officers of Maroochy Sunshine, Fair Work Australia and the Australian Workers Union would provide an “on arrival” briefing about various matters including banking procedures, living costs, work ethics and expectations and how to communicate with Maroochy Sunshine in case of an emergency or problems;
d)the employee would be paid $150 to cover initial shopping expenses which would have to be repaid over time;
e)the employee’s pay would be in accordance with the Australian Horticulture Award 2010 Level 1 fulltime employee – an hourly rate of $16.37 per hour;
f)the employee would be paid superannuation contributions and taxation would be deducted from wages;
g)accommodation and transport would be provided at a cost of A$100 and A$42 respectively per week;
h)the normal working week would be 30 hours for the period of six months;
i)the employee would work for a specified farmer and would be accommodated at a specified address at Helidon, Queensland; and
j)the employee’s work would consist of vine pruning, harvesting, picking and packing, trimming/rolling and planting.
I have evidence, in affidavit form, from five of the 22 employees. Each gave a similar account of the circumstances leading up to their employment by Maroochy Sunshine. Each gave evidence that:
a)the prospect of the work offered by Maroochy Sunshine and Mr Bani was attractive because of the assurance of far higher entitlements than was on offer in Vanuatu;
b)they had very limited understanding of Australian workplace laws;
c)the offer of employment was accompanied by information prescribed to be given to a prospective employee by the Seasonal Worker Program which gave the employment offer credibility; and
d)competition in the employees’ own country for the limited positions on offer meant that the employees readily accepted whatever terms were put, with limited understanding of them.
The employees generally wanted to work in Australia because they thought that they would be able to earn good money to support their families in comparison to what they could earn working in Vanuatu. For example:
a)Mr Silas Aru gave evidence that he wanted to work in Australia because he thought that he would be able to earn good money to support his family and help pay school fees, in comparison with what he could earn for farm work or government work in Vanuatu;
b)Mr Jacobson Malsokle gave evidence that he did not want to miss out on the chance to work in Australia. He wanted to be able to support his family, pay school fees and build his family a house;
c)Mr Augustus Arubuti gave evidence that he was told he would earn a lot of money in Australia. As a bus driver in Vanuatu he earned around A$200 to A$300 per fortnight;
d)Mr Olen Daruhi gave evidence that he wanted to work in Australia because he would be paid more money in Australia than Vanuatu and he could better support his family. His monthly wage in Vanuatu is approximately A$300; and
e)Mr Ross Kalulu gave evidence that he wanted to earn more money for his family to build his family a house.
The employment agreements provided that the employees would be paid $16.37 per hour and would work 30 hours per week. Mr Aru says that he was happy to be paid $16 per hour for at least 30 hours work a week. To him, this was a lot of money compared with what he would earn as a farmer or government worker in Vanuatu, which was around A$150 per week.
To participate in the Seasonal Workers Program with Maroochy Sunshine, the employees were each required to fund the costs of obtaining a work visa, airfares, medical check-up, police check and pocket money for their time in Australia. The employees were informed of this requirement at the workshop run by Mr Bani. However, most of the employees did not have that amount available to them and it was necessary for them to take out a loan with the National Bank of Vanuatu to cover those costs.
However, some of the employees, including Mr Aru and Mr Malsokle also paid amounts equivalent to A$1,500 and A$1,400 in early March, 2014 when they had met with the employment agent Abel. They did so on the assurance that it would secure their names at the top of the list. Mr Aru was given a receipt for the payment of this money signed by on behalf of Pacific Crop Harvesting Pty Ltd. These amounts were never repaid to Mr Aru or Mr Malsokle.
Mr Aru gave evidence that it had taken him about five months to save that amount from his business. Mr Malsokle gave evidence that he earns about A$205 per fortnight. The payment of the loan amount of A$1,400 was a lot of money. Mr Arubuti gave evidence that it would take him three to four months working as a bus driver to earn the amount of his loan.
The employees did not receive any of the loan money into their own bank accounts.
From the outset things did not go as the employees had hoped. There was no on-arrival briefing with Fair Work Australia or the Australian Workers Union for any of the employees.
When they arrived, they were met by Mr Bani and taken to accommodation at Helidon Spa Resort at Helidon in south-east Queensland. Mr Bani dropped the employees off at Helidon and then left. Helidon is located beside the Warrego highway in a rural location between Brisbane and Toowoomba. One of the employees, Mr Arubuti describes it as being “in the middle of nowhere”. There was no television, no shops nearby except for a small shop at Helidon. There was no other form of entertainment nearby. The employees did not have any transport of their own.
They did not receive any pocket money on arrival in Australia, or at any time during their employment. The failure to pay the employees their pocket money meant that they did not have any money to buy food when they arrived in Australia. Mr Daruhi also gave evidence that he could not call his family to tell them he had arrived in Australia because he had no money. When he dropped the employees at Helidon, Mr Bani did not initially leave any food with them. He later returned and left enough food for three days only.
Some of the employees did bring some money with them to Australia, but they all largely relied on the expectation of earning whilst they were here. For example:
a)Mr Aru gave evidence that he brought some money with him to Australia but only the equivalent of A$25. He thought that he would receive his pocket money once he arrived in Australia and so gave his spare money to his children before he left Vanuatu;
b)Mr Arubuti gave evidence that he brought around A$200 cash with him as emergency spending money. He expected to receive his pocket money when he arrived at Brisbane airport but did not. Mr Arubuti’s emergency money was spent on food for the employees during the period from 21 July to 1 August, 2014.
Many of the employees have limited education and skills, as well as very limited understanding of workplace laws in Australia. For example, two employees only completed year 10 in school and another two only completed year 6.
Most of the employees had been employed in Vanuatu on their family farms or in other unskilled occupations. Some of the employees cannot read English very well and that limited their ability to read the documents presented to them by Mr Bani. They were all plainly naïve when it came to their entitlements under Australian workplace laws.
Work was not immediately available when the employees arrived in Helidon. It was a few days before they were taken to work at a local farm. Until that happened Mr Bani bought the employees some food from time to time, but the evidence is that it was never enough and it did not last long. Mr Daruhi gave evidence that the day after he arrived at Helidon he did not have anything to eat at all.
Mr Aru gave evidence that during the period of 21 to 25 July, 2014 and 29 to 30 July, 2014 he was working at a farm called Keller Farm. He did not always have food to eat. Sometimes for lunch he would have half a sandwich, but on other occasions he had no food. Some days he had food for dinner. He remembers cooking and eating some pumpkins and potatoes that the employees had been given at Keller Farm for dinner and that was all that he had to eat all day. He felt hungry a lot of the time.
On 30 July, 2014 the manager of the Helidon Resort Spa ejected some of the employees out of their rooms because “the rent has not been paid; you need to get out”. The affected employees packed their bags and waited outside for approximately five hours until Mr Bani arrived in the afternoon and called another person, John Tau (who incidentally had been at the workshop in Vanuatu), to organise the rent payments. The owner was placated and the employees allowed to re-occupy their rooms.
There was not always work for all of the employees at once. For example, Mr Malsokle did not start work until 2 August, 2014. Mr Aru did not work between 31 July and 11 August, 2014. The employees waited at Helidon for Mr Bani. Mr Tau had given some of them about $150 in cash each. No other payment was made.
In the early evening of 12 August, 2014 the employees left Helidon in two buses, bound for a new farm in the Bundaberg region. Two of the employees, Mr Daruhi and Mr Kalulu gave evidence that they had to “sneak out” of Helidon because Mr Bani had not paid the rent. The buses took the employees first to Sunnybank and, from there, to Childers. Mr Kalulu gave evidence that they had to leave their bags at a house in Sunnybank because there was not enough room in the buses for the employees and their bags. They drove to Childers and the trip took approximately five to six hours. When they arrived Mr Bani said to them that “We are stopping here tonight. There is no hotel here so you will need to sleep on the bus until morning”.
The employees had no clean clothes because they had been told to leave their bags at the house in Sunnybank. They were not to get access to their belongings for another two days.
In the morning the employees were taken to “Frank and Sam’s” tomato farm. They worked the full day picking tomatoes. They were not given any breakfast or any other food or drink throughout the day. Mr Aru, Mr Malsokle and Mr Arubuti were so hungry that they resorted to eating some of the tomatoes they were picking.
Most of the employees spent the rest of August in the Bundaberg area, working for some of the time picking tomatoes and not working at other times. They stayed at a backpackers’ hostel in Bundaberg called Cellblock. Mr Aru, Mr Malsokle and Mr Arubuti gave evidence that they each received three payments of $40, $30 and $50 to buy food during this period. He thought the money came from the farmer Frank on whose farm he was then working. Mr Daruhi gave evidence that he received one cash payment of $40 from the farmers Sam and Frank to buy food.
Mr Aru says that there were still a number of days while he stayed at Cellblock when he had no food other than a piece of bread and water to drink.
Some of the employees were arranged other work in Caboolture on a strawberry farm and picking cucumbers or zucchini on a farm in Gatton.
Others were sent back to Helidon. Mr Kalulu and Mr Daruhi gave evidence that on 19 August, 2014 six of the employees (including them) were sent from Childers back to Gatton to work at Keller Farm. They took the smaller of the two buses. It ran out of fuel on the journey. They had to wait on the side of the road for 1.5 hours until Mr Bani came with fuel. The employees did not have any money to buy fuel themselves.
After working during that day, they were taken by Mr Bani to one of his friend’s houses to stay the night. The six employees all slept in a small bedroom that night, either in chairs or on the floor.
Mr Kalulu gave evidence that on the night of 19 August, 2014 they spent the night at “Michael’s house”. Michael was apparently a friend of Mr Bani. They worked in Gatton the following day and returned to Michael’s house that afternoon. One of the employees called Mr Bani to say that they did not want to stay at Michael’s house. Mr Bani took them to his house in Sunnybank. There were not enough beds for the six employees so Mr Kalulu slept in the bus.
In September, 2014 members of the South Sea Islander Association collected most of the employees from their accommodation in Bundaberg. Mr Aru gave evidence that after this occurred he received a call on his mobile from Mr Bani that he did not answer. He then received a text from Mr Bani that said “Why you people are not responding. I will send the Police to check you out”.
Mr Daruhi gave evidence that:
a)after three weeks in Australia he pressed Mr Bani for his pocket money and wages. Mr Bani would get angry and scream at him. He did not pay him any of the money owed;
b)on an occasion at Mr Bani’s house he asked for payment of the pocket money. Mr Daruhi said that he would talk to DEEWR and say that Mr Bani had stolen his money. Mr Bani was very angry and started to scream at him;
c)he told Mr Bani he wanted to go home. Mr Bani got angry and said words to the effect that he would call the police to take him (Mr Daruhi) to jail and then he would be sent home; and
d)Mr Kalulu gave evidence that he asked Mr Bani for payment of his wages and was told “Stop asking questions about payment. If you keep asking I will send you back to Vanuatu”. He says that he was scared he would be sent home and stopped asking Mr Bani about his pay.
The evidence of all the employees was that they were worried about not having enough work to do. There were periods of time when they had to wait at Helidon for Mr Bani to tell them what work to do, leaving them uncertain about their situation. They were also very worried about being paid. Mr Bani reacted badly whenever he was asked about payment or wages.
After the employees were rescued from Mr Bani and Maroochy Sunshine they secured other work for farms in the Gatton area. They were paid directly by the farmers.
In September, 2014 the Fair Work Ombudsman received a “Referral Form” from the Department of Employment, Education and Workplace Relations in relation to Maroochy Sunshine. It contained allegations that Maroochy Sunshine did not pay its seasonal workers correctly and did not comply with the requirements of the Department of Employment’s Seasonal Worker Program. The complaints had been raised with the Department of Employment by the Government of Vanuatu and the employees.
The Applicant commenced an investigation of the complaints raised in the Department’s referral. Based on all the documentation provided to the Applicant during its investigation, the Applicant determined that Maroochy Sunshine had underpaid the employees a total of $77,649.16.
The employees’ experiences in Australia have had a profound impact upon them. Mr Aru gave evidence that:
a)he is still very upset by his experience working for Maroochy Sunshine and Mr Bani. He thought that the Seasonal Workers Program would be a good way for him to make money for his family and send it home to support them but he was not able to do that;
b)working for Maroochy Sunshine was like “slavery times”. He had never before experienced working a full day without even a cup of tea and only being fed tomatoes; and
c)he will never forget how he was treated by Mr Bani.
Mr Malsokle gave evidence that:
a)he is still very upset by his experience working for Maroochy Sunshine and Mr Bani. He thought that he would earn more money in Australia than he could in Vanuatu. Instead he only received $50 cash from Mr Bani;
b)he is upset that Mr Bani did not treat him properly when he was in Australia. He feels that Mr Bani lied to him about how he would be treated;
c)he could not build a house and support his family because he was not paid; and
d)he is in debt because he is still repaying the loan he took out to finance his travel.
Mr Arubuti gave evidence that:
a)he is still very upset by his experience working for Maroochy Sunshine and Mr Bani. He thought that the seasonal workers program would be a good way for him to make money;
b)he earned no money, had very little food and no control over his life. He did not know what was happening or whether he would be working each day;
c)he did not think he would be treated this way in Australia. His wife is upset by his treatment; and
d)he was not paid and was left in debt. He has continued to have to make repayments on his loan and has about A$900 left to repay.
Mr Daruhi gave evidence that:
a)he is still repaying his loan. He has to pay about A$100 each month, with A$1000 still outstanding;
b)he felt upset that he did not always have food to eat and no money to buy food;
c)he was upset and embarrassed when he returned to Vanuatu because he thought that he would come back with lots of money to help his family but he came back worse off financially; and
d)he feels disappointed by Mr Bani’s treatment of him and the other workers, not expecting that he would come to Australia and not be paid for his work or have enough food to eat.
Mr Kalulu gave evidence that he:
a)is still very upset by his experiences working for Maroochy Sunshine and Mr Bani. When he agreed to come to Australia he thought he would make money and be looked after. He was not paid for his time;
b)was scared of Mr Bani at times because Mr Bani threatened to send him back to Vanuatu after asking to be paid;
c)was not able to build his family a house, which is why he had wanted to work in Australia in the first place; and
d)he has not been able to afford to repay his loan. He has been given three years to repay the loan.
Contraventions
The declarations made in this case specify eight contraventions. Only seven are liable to attract a pecuniary penalty. Section 542 of the Fair Work Act is not a civil penalty provision and so, no penalty may be imposed in respect of its contravention. It does, however, provide the foundation for the order that Maroochy Sunshine pay to the employees their safety net contractual entitlements that was made on 15 March, 2016.
The remaining seven contraventions that are the subject of the Court’s declarations made on 15 March, 2016 belie the extent of the contraventions. I have set out the facts above. The Applicant has adopted an approach which has reduced multiple contraventions, both in respect of a each employee and across all of the employees, to one contravention. Thus, the failure to pay one of the employees his basic hourly rate over the employment period (which constitutes multiple contraventions) has been reduced to one, which in turn has been considered with similar contraventions across all employees, to be one single contravention to pay the minimum hourly rate. I am not critical of that approach – it is an approach mandated by s.557(1) of the Act given the circumstances of this case. But it is important to understand that behind these six contraventions lays extensive conduct which has adversely affected the lives of the 22 employees and their families.
The Applicant submits that it is appropriate to further group the remaining seven contraventions into five because there are some contraventions which have common elements. I accept that the contraventions relating to the failure to pay the minimum rate of pay and the contravention relating to paying the employees’ wages in full and at least monthly have common elements. I also accept that the contravention relating to the failure to pay annual leave on termination pursuant to the Fair Work Act and the failure to pay those entitlements pursuant to the Award share common elements.
Consideration
When the employees arrived in Australia and for the duration of their employment they were fully reliant on Mr Bani to provide transport, accommodation, food, and work. However, the employees were either not paid at all, or were paid minimal amounts (totalling $1,100) and then, not by Mr Bani or on his behalf, but most likely by the farmers on whose farms the employees were working. The conditions provided by Maroochy Sunshine meant that the employees were isolated and often without proper food or accommodation. Their limited means and isolated location left them with few alternative options to provide for their own immediate needs. The failure of Maroochy Sunshine and Mr Bani to comply with the terms of the Seasonal Worker Program or the Fair Work Act regarding payment of wages meant that the employees were at times deprived of the appropriate basic living standards expected in Australia.
None of the employees were paid what they were entitled to be paid, either under their respective employment agreement or under the Award that governed their employment. Thirteen employees received no payment at all. Nominal cash payments of either $50 or $150 in total per employee, to a total of $1,100 were made to nine of the employees during their stay in Australia.
Maroochy Sunshine and Mr Bani treated these employees egregiously and he played on the promise of superior employment and returns which excited the prospect of these employees providing for their families in a way they could not have envisaged if they did not take up the opportunity Mr Bani was offering. The evidence indicates that the employees were mistreated and treated aggressively when they enquired about their lawful entitlements. I accept that this exploitation of their situation is a significant aggravating factor in this case.
The amount withheld from the employees is $77,649.16. It accumulated over a three month period. I have already made an order about the payment of those sums to them. The amount is still outstanding and it seems unlikely that these amounts will ever be paid.
The Applicant submits that the nature and extent of the loss suffered by the employees was extremely significant and warrants the imposition of a significant penalty because:
a)it involves contraventions of minimum standards including those of the most fundamental kind, being the payment of wages and entitlements;
b)the underpayments resulted from Maroochy Sunshine failing to pay the employees any wages at all during the employment, which had a severe impact on their ability to meet their daily needs;
c)the employees were in all ways totally reliant on Maroochy Sunshine and Mr Bani for every aspect of their day to day living;
d)the employees were all visa workers who came to Australia to work for Maroochy Sunshine under the Seasonal Workers Program, with the purpose of earning better wages than would be possible in Vanuatu and bettering the position of their families; and
e)Maroochy Sunshine had the benefit of the underpayment to the detriment of the employees.
I accept those submissions.
Further, Maroochy Sunshine did not issue payslips to the employees. That is serious because:
a)it frustrates the ability for an employee to know and hold an employer to account for their minimum entitlements;
b)it frustrates the ability of the regulator to investigate the employees’ entitlements, including requiring significant resources to be expended on Fair Work Inspectors conducting extensive investigations, including obtaining and analysing multiple sources of evidence. In this case it required Inspectors to conduct 27 recorded interviews to try to determine what entitlements arose and whether they were met;
c)the lack of recording can limit the regulator’s ability to assess and claim for entitlements, or to specifically quantify the pleaded Award contraventions as would usually occur.
The evidence shows that Maroochy Sunshine and Mr Bani’s conduct has had a profound impact on the employees, both whilst in Australia and subsequently. I am confident that Mr Bani, and through him Maroochy Sunshine, was aware of that impact, due to their understanding of the employees’ situations, both here and at home. Maroochy Sunshine and Mr Bani could have ceased the contravening conduct at any time and prevented or limited the impact; but did not avail themselves of that option. I agree that this conduct calls for an appropriately high penalty.
I accept the Applicant’s submission that Maroochy Sunshine and Mr Bani’s conduct is completely at odds with the purposes for which the Seasonal Worker Program was established. The failure to pay the employees has meant that they did not return financial benefits to Vanuatu, which directly undermines the foreign aid purpose of that scheme.
Maroochy Sunshine and Mr Bani have not previously been the subject of court proceedings by the Applicant for contraventions of workplace laws. However, the evidence demonstrates that Mr Bani was and remains involved in Pacific Crop Harvesting Pty Ltd, a business in relation to which the Applicant received complaints from seven employees in June, 2014 alleging the underpayment of minimum hourly rates of pay under the Award and failure to provide pay slips in compliance with the Fair Work Regulations. Mr Bani dealt with these complaints with the Applicant during the period that he was arranging for the employees to come to Australia and according to the evidence received specific warning of his obligations in the week prior to their arrival. I accept that this evidence underscores the knowledge that Mr Bani and through him Maroochy Sunshine had of the obligations owed to the employees.
There is no evidence before me about the size and financial circumstances of Maroochy Sunshine or Mr Bani. Maroochy Sunshine is not presently trading. In submissions Mr Bani told me that he was in poor financial circumstances and had no capacity to pay any penalty.
As to that matter, in Jordan v Mornington Inn Pty Ltd (2007) 166 IR 33 Heerey J was required to determine the appropriate penalties to be imposed on an employer for admitted contraventions of ss.400(5) and 792 of the Workplace Relations Act 1996 (Cth). His Honour stated:
As to the respondent’s own financial position, however, in considering the size of a penalty, capacity to pay is of less relevance than the objective of general deterrence: Leahy (No 2) at [9]. In any event, to the extent that financial hardship might mitigate what would otherwise be an appropriate penalty, such an argument would need to be based on evidence. Apart from the income figures mentioned above, which were advanced from the Bar table, no such evidence was forthcoming.
His Honour’s words were described on appeal as being “unimpeachable”: Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [69].
The evidence clearly establishes that these contraventions were deliberate. Mr Bani and Maroochy Sunshine through him had knowledge of the Award and knew full well of Maroochy Sunshine’s obligations towards the employees. They are expressly set out in the employment contract that each employee was required to sign by Mr Bani.
Moreover, the process by which Maroochy Sunshine and Mr Bani gained access to the Seasonal Worker Program required them to apply and agree to the terms of the scheme, the program documents and the terms of the contracts to be proffered to potential employees.
Further, the evidence demonstrates that only one week prior to the employees’ arrival in Australia, Mr Bani participated in a recorded interview with Fair Work Inspectors, in which he was provided with specific warnings about the need to comply with minimum entitlement and payslip requirements. It is obvious that Maroochy Sunshine and Mr Bani did not heed the warning in any respect.
Maroochy Sunshine and Mr Bani knew that the employees were not being paid during their time in Australia and rather than ceasing the arrangement to minimise the employees’ loss, they chose to continue. The conduct only ceased because the employees were removed, part way through their stay.
As outlined at paragraphs 63 to 66 above when employees sought payment, Mr Bani was evasive, or worse, aggressive in rejecting their requests and requiring them to continue to work.
The offending conduct was clearly designed to exploit this group of vulnerable workers.
There is no evidence of contrition or regret on the part of either Maroochy Sunshine or Mr Bani. Moreover, the failure by Maroochy Sunshine and Mr Bani to meaningfully participate in this proceeding and the Applicant’s investigation demonstrates a lack of acceptance of responsibility or contrition for their actions.
There is no evidence that Maroochy Sunshine and Mr Bani have co-operated either during the investigation of this matter by the Applicant or after these proceedings were commenced.
On 16 September, 2014 a Notice to Produce Records or Documents was personally served on Mr Bani requiring him to produce documents relating to the employees. Mr Bani signed a receipt of service confirming receipt of the Notice. Despite that Mr Bani failed to comply with the Notice even though he acknowledged the existence of the requested records.
On 11 December, 2014 Mr Bani advised Fair Work Inspector King that he had deliberately withheld records but that he would provide the documents. Mr Bani did not provide the requested documents and did not provide a reasonable excuse for not doing so.
Mr Bani failed to attend appointments with the Fair Work Inspector King who was investigating this matter. Mr Bani did not participate in a Record of Interview.
There is no basis in the evidence to think that Maroochy Sunshine and Mr Bani should be afforded any discount on penalty, given their lack of co-operation in the Applicant’s investigation and in these proceedings.
Compliance with minimum standards is an important consideration in the present case for the following reasons:
a)one of the stated principal objects of the Fair Work Act is the preservation of an effective safety net for employee entitlements and effective enforcement mechanisms;
b)it is vital to ensure compliance with the safety net of awards to create an even playing field and ensure all employees are appropriately remunerated for the work they perform; and
c)the substantial penalties set by the legislature for contraventions of the Fair Work Act reinforce the importance placed on compliance with minimum standards.
In any business where labour is a significant factor, but particularly in the case of a labour hire business, any contravening conduct which reduces (or in this instance, removes) wage costs provides direct financial gain for that employer and therefore provides a competitive advantage for non-compliant employers over those who do comply. This is particularly concerning in the context of Maroochy Sunshine and Mr Bani’s participation in a Commonwealth program specifically designed to ensure compliance.
The setting of a penalty in respect of contravening conduct clearly marks the seriousness with which the public regards such compliance, and is designed to act as a deterrent, by imposing serious financial consequences for non-compliance. That is one of the main purposes of imposing a penalty. General deterrence is important in this case. Employers should be in no doubt that they have a positive obligation to ensure compliance with the obligations they owe to their employees under the law. That is so whether their employees are Australian citizens or foreign nationals working in Australia on a temporary basis. The penalty in this case needs to remove the temptation, obviously felt by Mr Bani in this case, to identify a cohort of vulnerable workers who might be seen as an easy target. I am reminded by the Applicant that in Fair Work Ombudsman v Maclean Bay Pty Ltd (No 2) [2012] FCA 557, Marshall J observed:
It is important to ensure that the protections provided by the [Fair Work Act] to employees are real and effective and properly enforced. The need for general deterrence cannot be understated. Rights are a mere shell unless they are respected.
General deterrence is of high importance in this case, in particular to emphasise:
a)for employers in the labour hire and horticulture industries, which rely heavily on transient workers, that compliance is not optional and that underpaying workers ultimately will not be financially advantageous;
b)for employers of workers in Australia on temporary visas, that deliberate exploitation of such workers is unacceptable; and
c)for participants in programs such as the Seasonal Worker Program which are aimed at providing employment (and foreign aid through such employment) and meeting specific gaps in Australian workplaces, that the conditions of the program are set for the purpose of ensuring compliance with workplace laws, and deliberate flouting of the program’s clear requirements to the detriment of employees and the program’s outcomes, will be met with strong penalties.
There is an added requirement here to ensure confidence in the Seasonal Worker Program. A deterrent penalty is needed to ensure the integrity of the Seasonal Worker Program due to the significant public interest and benefit in the program.
So too specific deterrence is important in this case, particularly directed at Mr Bani in light of Maroochy Sunshine’s non-trading status and the prospect that Mr Bani will continue to ignore industrial laws. That is likely I think given:
a)the deliberateness of the contraventions; whereby even recent warnings to comply, and the clear structure of the Seasonal Worker Program requirements, did not deter the very blatant conduct; and
b)the complete absence of remorse, rectification, or cooperation, indicating a lack of responsibility for the conduct and a disregard for the authority of the regulator.
There is need to impose penalties at a level which makes the contravening conduct unprofitable and to make the prospect of future contraventions commercially undesirable.
Maximum Penalties
Sections 539(2) and 546(2)(a) of the Fair Work Act prescribe the maximum penalties that may be imposed for contraventions of civil penalty provisions. The maximum penalty that may be imposed by the Court upon Maroochy Sunshine and Mr Bani are as follows:
a)for Maroochy Sunshine, a maximum penalty of $331,500; and
b)for Mr Bani, a maximum penalty of $66,300.
My calculation of the maximum penalties differs from those submitted by the Fair Work Ombudsman because I have not “grouped” the contraventions as suggested by the Applicant. Rather, I intend to take account of the common elements of the contraventions when I fix the penalty for individual contraventions.
The maximum penalties “taken and balanced with all of the other relevant factors [do provide] a yardstick”: Markarian v R (2005) 228 CLR 357 at [31] per Gleeson CJ, Gummow, Hayne and Callinan JJ.
Fixing of penalties
It is difficult to imagine more egregious conduct than that exhibited by Maroochy Sunshine and Mr Bani in this matter. Whilst I am cognisant of the admonition that the maximum penalty should be reserved for the worst case and it is likely that there will be worse cases of offending than that at hand, it is difficult to envisage that in this case. I accept the Applicant’s submission that the conduct here is approaching the worst example of contraventions of this type. The conduct demonstrates a complete disregard for Commonwealth workplace laws.
Having regard to the matters I have canvassed in these reasons, I consider that the following penalties should be fixed:
Contravention First Respondent Second Respondent Minimum rate of pay
Clause 14.1 of the Modern Award$41,000 $9,200 Failure to pay in full and at least monthly
Section 323(1) of the Fair Work Act and clause 19 of the Modern Award
No penalty No penalty Failure to accrue annual leave
Section 87 of the Fair Work Act$41,000 $9,200 Failure to pay accrued annual leave on termination
Section 90(2) of the Fair Work Act
$41,000 $9,200 Failure to pay accrued annual leave on termination
Clause 25.10 of the Modern Award
No penalty No penalty Failure to provide payslips Section 536(1) of the Fair Work Act $22,000 $4,500 Failure to comply with a NTP Section 712(3) of the Fair Work Act $45,900 $9,200 Total $186,000 $41,300
I have determined not to impose penalties in respect of those contraventions so identified in the table above because of the common elements between each of the contraventions and those that immediately preceded it in the table.
Having fixed an appropriate penalty for each course of conduct, it is appropriate to look at the aggregate penalty to determine whether it is an appropriate response to the conduct which led to the contraventions, and is not oppressive or crushing. Whilst the penalty imposed must not have that effect, it must nevertheless bear relativity to the seriousness of the conduct engaged in by Maroochy Sunshine and Mr Bani.
In Fair Work Ombudsman v Promoting U Pty Ltd, Burchardt FM (as his Honour then was) observed:
…Respondents cannot hope to have their conduct in effect exonerated by the Court merely because they are impecunious. Parliament has set significant penalties for the sort of contraventions that the Respondents engaged in and I do not think it is appropriate for the totality principle to operate simply to ensure that penalties are imposed in suitably insignificant amounts to meet the Respondents’ capacity to pay.
I am satisfied that no further reduction in the aggregate penalty is necessary or appropriate in this case.
I make the orders set out at the commencement of these reasons.
I certify that the preceding one hundred and two (102) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 24 March, 2017.
Date: 24 March 2017
Key Legal Topics
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Employment Law
Legal Concepts
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Breach
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Penalty
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Remedies
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