Fair Work Ombudsman v Neubauer

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Federal Circuit and Family Court of Australia

(DIVISION 2)

Fair Work Ombudsman v Neubauer [2023] FedCFamC2G 150

File number(s): ADG 356 of 2021
Judgment of: JUDGE BROWN
Date of judgment: 3 March 2023
Catchwords: INDUSTRIAL LAW – FAIR WORK – penalty hearing – failure to comply with issued Compliance Notice – employer provided false and misleading payslip – legislative purpose of compliance notice – calculation of penalty – matters to be considered  
Legislation:

Crimes Act 1914 (Cth) s 4AA

Fair Work Act 2009 (Cth) ss 3, 90(2), 117(2)(b), 536(3), 539, 557, 639(2), 681, 682, 701, 706, 712(1), 716, 717(1)

Federal Circuit & Family Court of Australia (Division 2) (General Federal Law) Rules 2021 Div 13.2

Clerks – Private Sector Award 2020  
Cases cited:

Australian Building and Construction Commissioner v Pattinson [2022] HCA 13

Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8

Blandy v Coverdale NT Pty Ltd [2008] FCA 1533

Fair Work Ombudsman v Corporation Sun Pty Ltd [2020] FCCA 2849

Fair Work Ombudsman v Darna Pty Ltd [2015] FCCA 709

Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 3) [2011] FCA 579

Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151

Fair Work Ombudsman v Maclean Bay Pty Ltd (No 2) [2012] FCA 557

Fair Work Ombudsman v Matcraft Pty Ltd [2021] FCCA 272

Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd & Anor [2012] FMCA 258

Fair Work Ombudsman v Trek North Tours & Anor (No 2) [2015] FCCA 1801

Fair Work Ombudsman v Yogurberry World Square [2016] FCA 1290

Kelly v Fitzpatrick [2007] FCA 1080

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7

Mornington Inn Pty Ltd v Jordon [2008] FCAFC 70

Minister for Immigration & Citizenship v Li (2013) 249 CLR 332

Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65

Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412

Veen v R (No 2) (1988) 164 CLR 465

Division: Division 2 General Federal Law
Number of paragraphs: 98
Date of hearing: 3 February 2023
Date of last submission: 22 February 2023
Place: Adelaide
Counsel for the Applicant: Ms Walker SC
Solicitor for the Applicant: HWL Ebsworth
Respondent: No appearance

ORDERS

ADG 356 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

JOSEF SAMUEL NEUBAUER

Respondent

order made by:

JUDGE BROWN

DATE OF ORDER:

3 March 2023

THE COURT DECLARES THAT:

A.the Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (“the Act”), by failing to comply with the Compliance Notice; and

B.The Respondent contravened section 536(3) of the Act, by knowingly providing Mr de Souza with pay slips which displayed false or misleading information.

THE COURT ORDERS THAT:

1.Pursuant to section 545(1) of the Act, the Respondent take the steps that were required by the Compliance Notice within 28 days of this order by:

(a)calculating and paying to Mr de Souza the amounts it was required to pay to Mr de…

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Details
Case
[2023] FedCFamC2G 150
Decision Date

CaseChat Overview and Summary

The Fair Work Ombudsman (FWO) brought proceedings against Josef Neubauer, who operated a cleaning business in Adelaide. The FWO alleged that Mr Neubauer employed an individual, Kleyton Ferreira de Souza, who was dismissed without proper notice and was not paid his final wage instalment or accrued annual leave. The FWO argued that Mr Neubauer had breached industrial law, specifically the Clerks – Private Sector Award 2020, and sought penalties for these breaches. The court was required to determine whether Mr Neubauer had indeed breached the award, and if so, what penalty should be imposed for these breaches.

The court examined the evidence presented by the FWO, including the investigation by Fair Work Inspector Ms Emma Warren, who concluded that Mr de Souza had not been paid in accordance with the award. The court considered the seriousness of the breaches, the lack of cooperation and contrition from Mr Neubauer, and the need for both general and specific deterrence. The FWO argued that a penalty of $13,986.00 was appropriate to achieve these objectives. The court agreed with the FWO's submission, noting that employers must adhere to industrial instruments regardless of their size or financial difficulty.

In light of the evidence and submissions, the court found that Mr Neubauer had breached the award and ordered him to pay a penalty of $13,986.00. The court emphasised the importance of compliance with industrial laws and the need for deterrence to prevent similar breaches in the future. The court's decision underscores the FWO's role in enforcing industrial laws and protecting employees' rights.

Orders

Orders of the court

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Background

Background to the litigation

This would result in a fine of $13,986.00, which counsel for the FWO, Ms Walker of Senior Counsel submits is in keeping with the overall seriousness of the relevant breaches of the industrial law and congruent for the need for both general and specific deterrence.BACKGROUND The FWO alleges that the respondent operated a cleaning business known as City Central Cleaning from premises located in Pulteney Street, Adelaide. In the course of operating this business, Mr Neubauer employed Kleyton Ferreira de Souza, on a part-time basis, as an administrative assistant, between 16 October 2020 and 8 February 2021. In early February of 2021, Mr de Souza complained to the office of the FWO that he had been dismissed by the respondent without proper notice. More significantly, Mr de Souza asserted that Mr Neubauer had failed to pay him his final wage instalment and his accrued annual leave, when he had been dismissed. The office of the FWO appointed a Fair Work Inspector, Ms Emma Warren to investigate Mr de Souza’s complaints. Ms Warren determined that Mr de Souza’s employment was covered by the provisions of a modern award, Clerks – Private Sector Award 2020.[4][4] Hereinafter referred to as “the Award”. During the course of Ms Warren’s investigation, Mr de Souza provided her with his relevant bank records; emails passing between him and Mr Neubauer; his timesheet; and relevantly a payslip dated 12 February 2021.[5] As a consequence of her interview with Mr de Souza and her inspection of the documents provided, Ms Warren concluded that Mr de Souza had not been paid in accordance with the Award.[5] See Annexure ELW-7 to the Affidavit of Ms Warren filed 29 September 2022. Mr de Souza’s final payslip indicated that he was employed by City Central Cleaning of 186 Pulteney Street, Adelaide. Under the employer designation, on the payslip, is an Australian Business Number. Ms Warren searched the relevant business number and discovered that it was registered to a Josef Neubauer, who was born on 13 October 1951. Accordingly, at relevant times, this person was aged in his late sixties.[6][6] It is convenient to refer to him as Mr Neubauer Senior in these reasons for judgment. In June of 2021, Ms Warren contacted Mr Neubauer Senior, who advised her that he had no connection with City Central Cleaning and thus no knowledge of Mr de Souza’s employment. On request, Mr Neubauer Senior provided the FWO with a recent photograph of himself. Later enquiries undertaken by Ms Warren indicate that Mr Neubauer Senior and the respondent are father and son, but are currently estranged. Ms Warren also obtained a photograph of the respondent and requested Mr de Souza compare it with the photograph of Mr Neubauer Senior. Mr de Souza confirmed that he had been employed by the former. As a consequence of her investigation, Ms Warren formed the belief that Mr de Souza had not been paid his proper entitlement pursuant to the Award. In particular, she reached the following conclusions:·Mr de Souza had not been paid the weekly rate prescribed by the Award for the ordinary hours worked by him;·Mr de Souza had not been paid his accrued annual leave in contravention of section 90(2) of the FWA; and·Mr de Souza had not been paid the prerequisite amount, in lieu of notice, on the termination of his employment, in contravention of section 117(2)(b) of the FWA.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

In these circumstances, I adopt the comments of Driver FM in Rajagopalan v BM Sydney Building Materials Pty Ltd as follows: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.[27][27] Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at [27]. Corrective action, cooperation and contrition The respondent has not cooperated with the proceedings to any degree whatsoever and has expressed scant contrition, if any at all. He maintained to the Court that it was his father who was responsible for the operation of the relevant business, not him. After indicating to Mr de Souza that he should not worry about getting paid, Mr Neubauer did nothing. Obviously the most effective way for the respondent to demonstrate cooperation and contrition would have been to pay Mr de Souza the relatively modest amount of money which was due to him. The calculation of the sum was set out to Mr Neubauer by Mr Whetlor. It had no effect.Deterrence Deterrence has two aspects – general deterrence directed towards the community as a whole, and specific deterrence directed towards the individual concerned whose conduct is to be sanctioned. As the High Court has recently indicated, issues of deterrence must be accorded primacy in the imposition of any civil penalty. In my view, both aspects are significant in the current matter. Mr Neubauer is a young person. The tone of his communications to Mr de Souza is that he sees himself as having something of an entrepreneurial bent. He acknowledges having run a commercial cleaning business for around four years. Such business employ unskilled workers, who are potentially open to exploitation by the unscrupulous. In this context, I accept Ms Walker’s submission regarding the issue:The Respondent's deliberate refusal to meet his obligations under the FW Act despite the numerous attempts of the Applicant to encourage him to do so, in circumstances where he admits that Mr de Souza is owed unpaid wages, as well as his selective engagement with the Applicant and the Court makes it plain that there is a need for specific deterrence. The Applicant submits that it should therefore be given very significant weight in the determination of penalty.[28][28] See Applicant’s submissions on Penalty filed 27 October 2022 at [48]. In Fair Work Ombudsman v Darna Pty Ltd,[29] Judge Hartnett said as follows in respect of the importance of the Compliance Notice process in the industrial regulatory system in this county:The Explanatory Memorandum to the Fair Work Bill 2008 (Cth) provides that compliance notices were designed to be another option to deal with non-compliance instead of pursuing court proceedings. It was to be a less costly and less time consuming procedure. Section 716 of the FW Act allows a person to whom a compliance notice is issued an opportunity to rectify an under payment without being subject to civil remedy provisions. The First Respondent’s failure to comply with the Compliance Notice issued has, in these proceedings, caused the Applicant and the Court to spend time and public funds in dealing with civil remedy proceedings which would not have been necessary had compliance occurred.[30][29] Fair Work Ombudsman v Darna Pty Ltd & Anor [2015] FCCA 709.[30] Fair Work Ombudsman v Darna Pty Ltd & Anor [2015] FCCA 709 at [11].