Fair Work Ombudsman v Meriel Enterprises Pty Ltd
[2023] FedCFamC2G 632
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Meriel Enterprises Pty Ltd [2023] FedCFamC2G 632
File number(s): SYG 1444 of 2022 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 20 July 2023 Catchwords: INDUSTRIAL LAW – assessment of a pecuniary penalty for contravention of s 716(5) of the Fair Work Act 2009 (Cth). Legislation: Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 12, 90(2), 539(1), 539(2), 546(1), 557A, 700, 716(2), 716(5)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 9.04
Hair and Beauty Industry Award 2010 cl 24.2
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082
Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492
Fair Work Ombudsman v VS Investment Group Pty Ltd [2013] FCCA 208
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Division: Fair Work Number of paragraphs: 32 Date of last submission/s: 4 July 2023 Date of hearing: 29 June 2023 Place: Sydney Solicitor for the Applicant: Ms F Parekh of the Office of the Fair Work Ombudsman, by telephone The Respondent: No appearance by, or on behalf of, the respondent ORDERS
SYG 1444 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: MERIEL ENTERPRISES PTY LTD (ACN 606 365 422)
Respondent
order made by:
JUDGE MANOUSARIDIS
DATE OF ORDER:
20 July 2023
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) (FW Act) the respondent pay a pecuniary penalty in the sum of $16,650 for its contravention of s 716(5) of the FW Act as declared in the orders made on 8 March 2023.
2.The respondent pay the pecuniary penalty referred to in order 1 to the Commonwealth within 28 days after the day on which these orders are pronounced.
3.The applicant have liberty to apply on 7 days’ notice in the event that any of the above orders are not complied with.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2) (g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
The applicant (FWO) applies under s 546(1) of the Fair Work Act 2009 (Cth) (FW Act) for an order that the respondent, Meriel Enterprises Pty Ltd (MEPL), pay a pecuniary penalty because MEPL contravened s 716(5) of the FW Act by failing to comply with a compliance notice dated 27 July 2021 (Compliance Notice) given under s 716(2) of the FW Act.
PROCEDURAL HISTORY
The FWO commenced this proceeding on 5 October 2022 by filing an application and a statement of claim.
On 31 October 2022, shortly before the first court date, MEPL’s sole director, Ms Meriel, copied to my Associate’s inbox the following email she sent to the FWO’s lawyer:
Can we please [a]djourn the court hearing tomorrow. I am not well physically and mentally at the moment.
On 31 October 2022, at my direction, my Associate sent an email to Ms Meriel and the lawyer for the FWO, stating that “[u]nless the parties consent, his Honour will consider any application for an adjournment at the first court date at 9:30 am on 1 November 2022”. My Associate received no response to that email. The matter came before me for a first court date on 1 November 2022. There was no appearance by or on behalf of MEPL. I nevertheless:
(a)ordered that MEPL file and serve a notice of address for service by a legal representative in accordance with r 9.04 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules) by 15 November 2022;
(b)ordered that MEPL file and serve a response and defence by 22 November 2022;
(c)ordered that the FWO file and serve any reply by 6 December 2022;
(d)listed the proceeding for a directions hearing at 9:30 am on 13 December 2022; and
(e)granted the parties liberty to apply.
At the directions hearing on 13 December 2022 I granted Ms Meriel leave to appear for MEPL. At that directions hearing I:
(a)ordered that MEPL file and serve a notice of address for service by a legal representative in accordance with r 9.04 of the GFL Rules by 20 December 2022;
(b)ordered that MEPL file and serve a response and defence by 17 January 2023;
(c)ordered that the FWO file and serve any reply by 31 January 2023;
(d)ordered that the FWO may file and serve an application for default judgment by 7 February 2023 in the event MEPL fails to comply with (a) and (b);
(e)listed the matter for a further directions hearing at 9:30 am on 8 February 2023; and
(f)granted the parties liberty to apply.
On 23 January 2023 Ms Meriel filed a notice of address for service purportedly on behalf of “Deelia Meriel Ranasinghe”.
On 6 February 2023 the lawyer for the FWO emailed my Associate requesting a four week adjournment because Ms Meriel had contacted the FWO about an “unfortunate family tragedy”. I granted the adjournment, and relisted the matter for a further directions hearing at 9:30 am on 8 March 2023.
At 5:14 pm on 7 March 2023 Ms Meriel sent an email to my Associate in which she stated a number of things, including “I can’t show up”, and “I need more time”. Ms Meriel provided the reasons for which she said she could not attend the directions hearing, and Ms Meriel supported those reasons with a video and documents. At my direction, on 8 March 2023 my Associate sent an email to Ms Meriel and the lawyer for the FWO stating I would hear submissions on the matters raised in Ms Meriel’s email at the directions hearing on 8 March 2023.
There was no appearance by or on behalf of MEPL at the directions hearing, and MEPL failed to comply with orders 1 and 2 of the orders I made on 13 December 2022.[1] On 8 March 2023, therefore, the FWO applied for default judgment, in response to which I made a declaration that MEPL contravened s 716(5) of the FW Act by failing to comply with the requirements of the Compliance Notice. I also ordered that the FWO and MEPL file and serve evidence and submissions on the question of penalty, and listed the matter for hearing on the question of penalty at 10:15 am on 29 June 2023.
[1] Although Ms Meriel filed a notice of address for service, it was not a notice of address for service on behalf of MEPL, or by a legal representative, as required by order 1.
On 11 April 2023 Ms Meriel sent to my Associate an email in which she stated that “[m]y mental health is not good right now, I’m trying to get through this difficult time, loosing [sic] dad and also my daughters [sic] health”. Ms Meriel attached documents to support these statements. At my direction, my Associate confirmed receipt of Ms Meriel’s email and its attachments, and copied in the lawyer for the FWO.
On 8 May 2023 Ms Meriel again emailed my Associate and requested that “someone from the [C]ourt … call [her] to help [her]” with the proceeding. On my instruction, my Associate sent the following email to Ms Meriel (copied to the FWO):
Any matter the respondent wishes to raise in relation to this matter should be raised at the hearing which is scheduled for 10:15 am on 29 June 2023, such listing to proceed by telephone.
MEPL did not file and serve evidence and submissions on penalty; nor was there any appearance by or on behalf of MEPL at the hearing on 29 June 2023. Accordingly, on 29 June 2023, I heard the FWO’s submissions on the question of penalty.
FACTS
I made the declaration on 8 March 2023 on the basis of the facts alleged in the statement of claim which, given the declaration made, are taken to be admitted by MEPL. Those facts are as follows:
(a)MEPL is and was at all relevant times the operator of a beauty therapy clinic located at Baulkham Hills trading as Meei Clinic (Business).
(b)In or around July 2021, the FWO commenced an investigation into MEPL in relation to the employment of Ms Wasserburger (Employee). Ms May (FWI), a Fair Work Inspector appointed by the FWO under s 700 of the FW Act, had carriage of the investigation.
(c)Following the investigation, the FWI formed a belief that MEPL employed the Employee on a part-time basis from 25 March 2021 to 4 June 2021; the Hair and Beauty Industry Award 2010 (Award) applied to MEPL in relation to the Employee; the Employee was classified as a “Level 6 Hair and Beauty Employee” as defined in the Award; MEPL did not pay the Employee her minimum wage entitlement for all ordinary hours worked between 22 April 2021 and 4 June 2021 (Part-time Minimum Wage Entitlement); MEPL did not pay the Employee her penalty rate entitlement for all ordinary hours worked on a Saturday between 22 April 2021 and 4 June 2021 (Part-time Saturday Penalty Rate Entitlement); and MEPL did not pay the Employee her accrued annual leave entitlements, including annual leave loading, on termination of the Employee’s employment on around 4 June 2021, or at all (Annual Leave on Termination Entitlement).
(d)As a result of the matters in subparagraph (c), the FWI formed the reasonable belief that MEPL, between 22 April 2021 and 4 June 2021 (Period), contravened clauses 12.7, 17, 31.2(c), and 33.3(b)(i) of the Award, and s 90(2) of the FW Act (Contraventions).
(e)On 27 July 2021 the FWI gave MEPL the Compliance Notice pursuant to s 716(2) of the FW Act in relation to the Contraventions.
(f)The Compliance Notice required MEPL to:
(i)take the following action by 18 August 2021 to remedy the direct effects of the Contraventions (Specified Action):
(A)identify the number of annual leave hours the Employee would have accrued at the termination of the Employee’s part-time employment;
(B)identify the amount MEPL paid to the Employee in relation to annual leave on termination of her part-time employment;
(C)calculate the amount MEPL should have paid to the Employee, inclusive of annual leave loading, in relation to her Annual Leave on Termination Entitlement;
(D)make a payment to the Employee of the difference between the amounts in (f)(i)(B) and (f)(i)(C) immediately above;
(E)make a record of the information and amounts referred to in (f)(i)(B) and (f)(i)(C) and amount of the payment referred to in (f)(i)(D) immediately above;
(F)identify the hours the Employee worked for MEPL during the Period;
(G)identify the amount MEPL paid the Employee during the Period in relation to her Part-time Minimum Wage Entitlement and Part-time Saturday Penalty Rate Entitlement;
(H)calculate the amount MEPL should have paid to the Employee during the Period in relation to her Part-time Minimum Wage Entitlement and the Part-time Saturday Penalty Rate Entitlement;
(I)make a payment to the Employee of the difference between the amount referred to in (f)(i)(G) and the amount referred to in (f)(i)(H) immediately above;
(J)make a record of the information and amounts referred to in (f)(i)(G) and (f)(i)(H) and the amount referred to in (f)(i)(I) immediately above;
(K)calculate additional superannuation contributions required by cl 24.2 of the Award in relation to the amounts required to be paid to the Employee at (f)(i)(I) above;
(L)pay the additional superannuation contributions referred to in (f)(i)(I) above to the Employee’s superannuation fund; and
(ii)produce reasonable evidence to the FWO of its compliance with the Compliance Notice by 25 August 2021, by producing:
(A)a schedule that sets out in relation to the Employee the information referred to at (f)(i)(E), (f)(i)(J), and the additional superannuation contributions calculated at (f)(i)(K); and
(B)proof that full payment has been made to the Employee.
(g)MEPL failed to take the Specified Action by 18 August 2021, and did not produce reasonable evidence of compliance with the Compliance Notice by 25 August 2021.
(h)For the reasons in (g) MEPL failed to comply with the Compliance Notice.
(i)For the reasons in (c) to (h) MEPL contravened s 716(5) of the FW Act.
The FWO read a number of affidavits at the hearing on penalty. Further, Ms Parekh, who appeared for the FWO, informed me that Ms Meriel had made repayments totalling $1,125 to the Employee but $370.50 remained outstanding. On 4 July 2023, however, Ms Parekh emailed my Associate and stated the following:
At the penalty hearing we advised his Honour that Ms Meriel the director of Meriel Enterprises Pty Ltd made repayments totalling $1125 to the [E]mployee...
We wish to update the Court that Ms Meriel made a final payment of $370.50 to [the Employee] after the hearing on Thursday 29 June 2023. The FWO has confirmed that [the Employee] has received a total of $1870.50 and this rectifies the underpayment amount under the Compliance Notice.
The $1,125 Ms Parekh at the hearing said had been paid to the Employee and the “final payment of $370.50” Ms Parekh in her email said had been paid to the Employee do not add up to the “total of $1870.50” Ms Parekh says the Employee has received which “rectifies the underpayment amount under the Compliance Notice”. I will nevertheless proceed on the basis that the FWO had assessed the total underpayment to be $1,870.50,[2] and that, as stated in Ms Parekh’s email, the Employee had been paid a total of $1,870.50.
PENALTY
[2] Affidavit F T Parekh 02.03.2023, annexure “FTP-7”
Power and principles
Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”.[3] That expression is defined in s 539(1) of the FW Act to include the provisions identified in column 1 of the table to s 539(2) of the FW Act. Subsection 716(5) is in column 1 of the table to s 539(2) of the FW Act.
[3] I repeat in this and the following 4 paragraphs much of what I said in Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082, at [33]-[38]
Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)” and, if the person is a body corporate, must not be more than five times “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”. The maximum penalty units for a contravention of s 716(5) of the FW Act as at 18 August 2021, being the day by which MEPL was required to carry out the Specified Action, are 30 penalty units for an individual, and 150 penalty units for a body corporate. (This excludes “serious contraventions”, as defined in s 557A of the FW Act.) Section 12 of the FW Act provides that “penalty unit” has the meaning given by s 4AA of the Crimes Act 1914 (Cth). The penalty unit provided for by s 4AA of that Act as at 18 August 2021 was $222. Thus, $33,300 is the maximum penalty MEPL may be ordered to pay for its contravention of s 716(5) of the FW Act.
The approach of most judges when assessing penalties for a single contravention of a provision of the FW Act is to take into account the non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick,[4] which his Honour adopted from the judgment of Mowbray FM in Mason v Harrington Corporation Pty Ltd. [5] Those considerations are:
[4] Kelly v Fitzpatrick [2007] FCA 1080, at [14]
[5] Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
(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; and
(m)the need for specific and general deterrence.
Although these factors have been identified and applied as relevant to the assessment of penalties, they do not constitute a “rigid catalogue of matters for attention”.[6]
[6] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8, at [91] (Buchanan J)
Also relevant is the maximum penalty for the contravention provided for by the FW Act; and here I refer to the following passage from the judgment of Flick J in The BKH Contractors Case (No 2):[7]
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed . . . .
[7] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563, at [19]
Nature, extent, circumstances, and deliberateness of the contravening conduct
The contravention consisted in MEPL failing to comply with the requirements of the Compliance Notice by 18 August 2021. That remains the case, even though, almost two years after it was given the Compliance Notice, MEPL has paid in full the amounts the FWO assessed MEPL owed the Employee. MEPL has not complied with the requirements of the Compliance Notice to the extent it requires MEPL to identify, among other things, the hours the Employee worked, and the amount of annual leave that would have accrued.
I accept, on the basis of the materials she sent to my Associate and the FWO, that Ms Meriel, the sole director of MEPL, laboured under difficulties. But is it unclear from the material Ms Meriel sent whether those conditions existed at the time MEPL was given the Compliance Notice. Further, even if those conditions did exist at the time MEPL was given the Compliance Notice, it is not apparent that these conditions explain MEPL’s not being able to comply with the requirements of the Compliance Notice before 5 October 2022, when the FWO commenced this proceeding. In those circumstances, I am satisfied that MEPL’s failure to comply with the requirements of the Compliance Notice manifested a conscious disregard by MEPL of its obligations to comply with the Compliance Notice.
The following passage from the judgment of Judge Emmett in Fair Work Ombudsman v Viper Industries Pty Ltd applies to the nature of Ms Meriel’s contravention of s 716(5) of the FW Act.[8]
The Respondents’ intentional failure to comply with a mandatory notice issued by the workplace regulator is “conduct ... [which] undermines the utility and effectiveness of a fundamental object” [of] the FW Act. The failure to comply undermines and frustrates the powers conferred on Fair Work Inspectors, which are conferred for the purposes of providing an effective means of enforcing compliance with lawful minimum entitlements. There is a significant cost to the public by reason of the need to bring this matter before the court to enforce compliance.
[8] Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492, at [7]
These matters point to assessing penalty at the higher end of the scale.
Nature and extent of loss occasioned by contravention
The FWO has assessed the amount of MEPL’s underpayment of the Employee to be $1,870.50.[9] That is a significant amount. The loss that flowed from MEPL’s failure to comply with the Compliance Notice was to withhold from the Employee payment of her entitlements from 18 August 2021 (being the day by which MEPL was required to comply with the Compliance Notice) to around 4 July 2023 when Ms Parekh informed my Associate by email that MEPL had paid the last instalment.
[9] Affidavit F T Parekh 02.03.2023, annexure “FTP-7”
Deterrence
MEPL no longer appears to be trading; but it remains registered. For that reason, the penalty should include an element for specific deterrence.
As for general deterrence, I refer to what Judge Jarrett said in Fair Work Ombudsman v VS Investment Group Pty Ltd:[10]
The failure to comply with a notice properly issued by the applicant in the course of its investigations and the discharge of its statutory functions is serious. Recipients of such notices should be left under no misapprehension about their obligations to comply with those notices.
[10] Fair Work Ombudsman v VS Investment Group Pty Ltd [2013] FCCA 208, at [51]
The FWO relies on data contained in an industry profile for the “Hairdressing and Beauty Services” industry (Industry) from July 2020 to June 2022,[11] which shows that 15% of disputes in the Industry involve termination of employment, 14% involve wages and conditions, and 10% involve an underpayment of an hourly rate.[12] On that basis, the FWO submits that there is a need to send a message to employers generally, and to businesses of the sort MEPL conducted in particular, that a failure to comply with a compliance notice will not be tolerated by the FWO, the community, and the Court. I agree.
[11] Affidavit of Ms N May 27.04.2023, [19], annexure “NM-8”
[12] Applicant’s Submissions on Penalty, [20]
Contrition, corrective action, and cooperation
As I have noted, Ms Meriel has paid the amount owing to the Employee. This did not occur, however, until after the FWO commenced this proceeding, which the FWO did after the FWO repeatedly, but in vain, attempted to engage with MEPL to discuss a payment plan to remedy the suspected contraventions of the FW Act specified in the Compliance Notice.[13] Further, other than Ms Meriel filing a notice of address for service purportedly on her own behalf, MEPL has not taken any steps in the proceeding, other than to seek adjournments.
[13] Applicant’s Submissions on Penalty, [33]-[37]
Assessment
The FWO submits that a penalty in the range of 50% to 60% of the maximum penalty would be appropriate. Given MEPL has rectified the underpayments, admittedly almost two years after it was given the Compliance Notice, I am satisfied that a penalty of $16,650, being 50% of the maximum penalty, is the appropriate penalty MEPL should be ordered to pay for its contravention of s 716(5) of the FW Act.
DISPOSITION
I will order that MEPL pay a pecuniary penalty of $16,650, and that it pay this amount to the Commonwealth within 28 days after the day on which I pronounce my orders.
I will reserve to the FWO liberty to apply on seven days’ notice if MEPL does not pay the pecuniary penalty I propose to order she pay.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 20 July 2023
0
6
0