Fair Work Ombudsman v New Image Photographics Pty Ltd and Anor (No.2)
[2013] FCCA 209
•8 May 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v NEW IMAGE PHOTOGRAPHICS PTY LTD & ANOR (No.2) | [2013] FCCA 209 |
| Catchwords: INDUSTRIAL LAW – Failure to pay basic wage and casual loadings – 1 casual employee at photographic business – significant underpayment of casual loading – contraventions not admitted but found against both respondents. |
| Legislation: Crimes Act 1914, s.4AA |
| Fair Work Ombudsman v Bedington [2012] FMCA 1133 Fair Work Ombudsman v Revolution Martial Arts Pty Ltd & Anor [2013] FMCA 125 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | NEW IMAGE PHOTOGRAPHICS PTY LTD (ACN 010 823 042) |
| Second Respondent: | BRYAN CHARLES BEDINGTON |
| File Number: | BRG 166 of 2012 |
| Judgment of: | Judge Jarrett |
| Hearing date: | By written submission |
| Date of Last Submission: | 1 May 2013 |
| Delivered at: | Brisbane |
| Delivered on: | 8 May 2013 |
REPRESENTATION
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Solicitors for the Respondents: | Milner Lawyers |
ORDERS
The first respondent pay a penalty for the contravention of s.185(2) of the Workplace Relations Act1996 (Cth) and item 5 of Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 in the sum of $23,100;
The first respondent pay a penalty for the contraventions of s.182(1) of the Workplace Relations Act1996 (Cth) and item 5 of Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 in the sum of $19,800;
The second respondent pay a penalty for the First Respondent’s contravention of s.185(2) of the Workplace Relations Act1996 (Cth) and item 5 of Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 in the sum of $5,280;
The second respondent pay a penalty for the First Respondent’s contravention of s.182(1) of the Workplace Relations Act1996 (Cth) and item 5 of Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 in the sum of $5,280;
The penalties ordered in orders 1 – 4 hereof be paid within 28 days of this order.
The penalties ordered in orders 1 – 4 hereof be paid to the Commonwealth.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 166 of 2012
| FAIR WORK OMBUDSMAN |
Applicant
And
| NEW IMAGES PHOTOGRAPHICS PTY LTD (ACN 010 823 042) |
First Respondent
| BRYAN CHARLES BEDINGTON |
Second Respondent
REASONS FOR JUDGMENT
On 2 April, 2003 I determined that the first respondent had:
a)during the period 3 April, 2006 to 30 June, 2009 contravened s.185(2) of the Workplace Relations Act1996 (Cth) by failing to pay casual loading to one if its employees, Ms Gail Keen;
b)during the period 8 October, 2008 to 1 July, 2009 contravened s.182(1) of the Workplace Relations Act1996 (Cth) by failing to pay the guaranteed rate of pay to Ms Keen;
c)during the period 1 July, 2009 to September, 2009 contravened item 5 of Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act2009 by failing to pay casual loading to Ms Keen.
d)during the period 1 July, 2009 to September, 2009 contravened item 5 of Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act2009 by failing to pay the guaranteed rate of pay to Ms Keen.
e)Consequently, I ordered that pursuant to s.719(6) of the Workplace Relations Act and s.545 of the Fair Work Act2009, the first respondent pay the outstanding underpayments of casual loading totalling $19,009.68 and basic wages totalling $304.82 to the estate of Ms Keen. I ordered that the first respondent pay interest on those amounts.
I also determined that the second respondent was involved in the first respondent’s contraventions as set out in paragraph 1 hereof.
I adjourned the question of the penalties to be imposed upon the respondents for written submissions. The applicant and the respondents have each filed written submissions.
These reasons relate to the penalties to be imposed upon the first and second respondents for the breaches of the Act that I have determined against them.
Maximum Penalties
Section 719(4) of the Workplace Relations Act prescribes the maximum penalty that may be imposed by this Court to be, in the case of an individual, 60 penalty units and in the case of a body corporate, 300 penalty units.
Section 4(1) of the Workplace Relations Act provides that “penalty unit” has the same meaning as in the Crimes Act1914 (Cth). Section 4AA of the Crimes Act defines a “penalty unit” to be $110 dollars (at the relevant time).
The maximum penalty that may be imposed by the Court on the first respondent (as a body corporate) for each contravention is $33,000. The maximum penalty that may be imposed by the Court on the second respondent (as an individual) for each contravention is $6,600 (except for the record keeping contravention which is $3,300).
The maximum penalty that might be imposed upon the first respondent is $148,500 (4 x $33,000). The maximum penalty that might be imposed upon the second respondent is $26,400.
Grouping of contraventions
There are two different types of contravention found against the first respondent – non-payment of casual loading and non-payment of basic minimum wages. For each type there are two time periods that are relevant as set out above. Each time the first respondent failed to pay the casual loading to which Ms Keen was entitled, it committed a contravention of the relevant provision – either pursuant to the Workplace Relations Act or the Transitional Act. So too, when it failed to pay the basic rate of pay. The contraventions are numerous.
However, by reason of s.719(2) of the Workplace Relations Act, where 2 or more breaches of an applicable provision are committed by the same person and the breaches arose out of a course of conduct by the person, the breaches are to be taken to constitute a single breach of the term. The contraventions in this proceeding are contraventions of an applicable provision for the purposes of s.719(1) of the Act.
Applying s.719(1) it is appropriate to treat the contraventions of the requirement to pay casual loading as one contravention and the failure to pay the basic rates of pay as another single contravention.
Moreover, it is open to the Court to group separate contraventions together where the contraventions may be said to overlap with each other or involve the potential punishment of the respondent for the same or substantially similar conduct.
The applicant accepts that where contraventions have common elements, this should be taken into account in considering an appropriate penalty to ensure that the respondent is not punished more than once for the same or substantially similar conduct.
The applicant submits that the contraventions should be grouped into two categories for each respondent:
a)failure to pay casual loading – s.185(2) of the Workplace Relations Act – 3 April 2006 to 30 June 2009 and Item 5 of Schedule 16 of the Transitional Act – 1 July 2009 to September 2009; and
b)failure to pay the guaranteed rate of pay – s.182(1) of the Workplace Relations Act – 8 October 2008 to 1 July 2009 and Item 5 of Schedule 16 of the Transitional Act – 1 July 2009 to September 2009.
The respondents submit that the contraventions of the Workplace Relations Act and the Transitional Act should be grouped, however, they suggest that the two types of contraventions have a common element in that they arose from the total hourly rate of pay paid to Ms Keen. The respondent submits that the Court, when considering the grouping should take into account the common elements of those two contraventions and the respondents should not be penalised more than once for the same conduct that arises from a common element or course of conduct. Accordingly, the respondents suggest that the contraventions should be seen as one single contravention.
In my view, however, it is appropriate to group the contraventions into two groups – one relating to the failure to pay casual loading and the other relating to the failure to pay the requisite basic rate of pay. They are distinct contraventions of different provisions conferring entitlements upon the relevant employee. It is inappropriate to group them all as one contravention.
Adopting those groupings, the maximum penalty for the first respondent is $66,000 and the maximum penalty for the second respondent is $13,200.
The matters going to penalty
As I set out in my earlier reasons for judgment, the first respondent operated a Photographic Business. Ms Keen performed telemarketing and administrative duties. The first respondent failed to pay Ms Keen the casual loading to which she was entitled and, for a period, the basic rate of pay to which she was entitled.
I accept the applicant’s submission that the contraventions in this matter represent a failure to provide basic and important entitlements under workplace relations legislation. The purpose of the legislation is to provide a safety net which ensures adequate minimum entitlements to employees, particularly those who are in low income roles. The legislation is also designed to provide an even playing field for all employers with regard to employment costs. The contraventions of these fundamental entitlements undermine the workplace relations regime as a whole and demonstrate a disregard for the respondents’ statutory obligations.
However, it is important to recognise that for a large proportion of the relevant period under consideration in this matter, the first respondent paid Ms Keen in excess of the basic rate of pay to which she was entitled. It did not, however, pay her the relevant casual loading. Over time, increases in the basic rate of pay meant that her rate of pay from the first respondent fell below that minimum rate.
The respondents argue that the nature and extent of the conduct which led to the breach is not conduct which constitutes a deliberate attempt to avoid the first respondent’s obligations. Rather, the respondents assert that Ms Keen was employed to work certain hours and it was reasonable for the respondent to believe that she was being paid correctly for hours worked. The difficulty with that argument, however, is that the respondents did not call any evidence from the person who was responsible for the payment of the employees’ wages. The business had an accountant who authorised wages for the employees after their time sheets were checked and settled by a supervisor, but that person was not called to give evidence about the source of the information used to calculate the employees’ wages and other entitlements.
Moreover, the respondents argue that the underpayment arose from an unusual situation where Ms Keen was given a dispensation to start work from her manager earlier then every other employee. Whilst that might be so, it has little do with the case. What the first respondent failed to do was to pay Ms Keen the correct rates – it had nothing to do with when she started or finished work or when she was authorised to start work.
I accept that the total underpayment of $19,314.50 is significant given that the contraventions only concern one employee. Ms Keen (and subsequently her estate) was deprived of the financial benefits which timely payment of the correct wages and entitlements would have provided. The respondents have received a benefit from the underpayment.
On 29 November, 2012 the second respondent was penalised for being ‘involved in’ contraventions of the Fair Work Act: Fair Work Ombudsman v Bedington [2012] FMCA 1133. In that case, I imposed pecuniary penalties upon the second respondent for breaches of:
a)s.357 of the Fair Work Act (sham contracting);
b)s.44 of the Fair Work Act (accrued annual leave on termination); and
c)s.45 of the Fair Work Act (accrued annual leave loading on termination).
On 29 November 2012, the second respondent was ordered to pay and has paid, a total penalty of $17,820.
I take into account that the underpayment in this matter arose out of a single course of conduct, namely, the decision to pay Ms Keen a total hourly rate of pay.
The respondents submit that the first respondent carried on a medium sized business employing approximately twenty employees at the relevant time. It had no dedicated human resources department. No complaints were raised about the treatment of any other staff member employed by the first respondent.
The applicant acknowledges that the respondents may not have deliberately set out to contravene the Workplace Relations Act. I accept that their actions, however, demonstrated at least a reckless disregard for the first respondent’s statutory obligations.
It was incumbent upon the first respondent to ensure that its employees are paid in accordance with the law. The applicant submits the first respondent was negligent as to ascertaining and complying with its obligations as an employer.
At the relevant time, the second respondent was the sole Director and Secretary of the first respondent. He had control of and directed the first respondent’s operations. I found that he was ‘involved in’ the contraventions outlined above.
I accept that the first respondent partially co-operated with the applicant in the course of the investigation. The first respondent only partially complied with a Notice to Produce issued on 7 December, 2009 by the applicant.
The Notice to Produce requested all records and documents relating to time worked and wages paid to Ms Keen for the period 18 July, 2002 to 26 August, 2009. On 18 December, 2009 the first respondent provided certain documents and in particular:
a)two pages entitled ‘Staff Enquiry’ which provides details of Ms Keen’s monthly pay periods from 30 June, 2003 through to 30 September, 2007; and
b)seventeen pages entitled ‘New Image Photographics Pty Ltd, Payroll Transaction Detail, August 1, 2007 through September 3, 2009’ which provides details of Ms Keen’s paycheques.
I accept that the records provided did not indicate how many hours Ms Keen worked in the period or her hourly rate of pay. I accept that the first respondent did not provide any of Ms Keen’s payslips for the period. Fair Work Inspector Burns had to go back to the employee, Ms Keen, to obtain employment records that should have been provided by the Respondents in response to the Notice to Produce.
On 24 March, 2010 the second respondent provided some additional employment documents and in particular three payment summaries and Ms Keen’s computer login records.
The second respondent did not respond to FWI Burns’ offer to participate in a recorded interview on 27 July, 2010.
The case advanced by the respondents at trial was that Ms Keen:
a)was not employed by the first respondent but by another company; and
b)in any event, had been paid all that she was entitled to be paid because the hours of work for which she had claimed were beyond those that she was authorised to work.
Indeed, it was even faintly suggested by the second respondent that Ms Keen was perpetrating a fraud on the first respondent by claiming for hours of work that she did not in fact perform.
I accept that the first respondent made a payment during the course of the investigation by the applicant as pleaded in the statement of claim. That payment was modest, and was based upon the first, or possibly the second, respondents view that Ms Keen had been paid all that she was entitled to be paid, when clearly she had not. Apart from that payment part way through the investigation, there was no other evidence of any contrition by the respondents and there is no expression of contrition by the respondents in their penalty submissions. It is relevant to record, however, that the amount of the underpayment has now been paid to Ms Keen’s estate, as ordered.
Deterrence has a role to play in the process of fixing an appropriate penalty. The respondents submit that the second respondent is retiring and shutting down his (which I take to be a reference to the first respondent’s) business. However, the applicant argues that given that this is the second respondent’s second contravention of the workplace relations legislation there is a strong need for specific deterrence in this case.
I accept that neither the first respondent nor the second respondent should be left in any doubt that underpayment of wages and entitlements is not acceptable.
General deterrence is also important. The applicant submits that it will almost always be a significant factor in fixing a pecuniary penalty for contraventions of the workplace relations legislation. I agree. A clear message needs to be sent to employers generally that underpayment of wages and entitlements is unacceptable. It is imperative that the correct entitlements for employees be paid and that steps be taken by all employers, irrespective of the size of their enterprise, to properly ascertain and comply with minimum statutory requirements.
One final matter was raised by the respondents in mitigation of penalty.
On 18 April, 2012 and 13 June, 2012 the applicant published the media releases concerning this application.
The media release of 18 April, 2012 was published less than 2 months after the proceedings had commenced. At the time the release was published the applicant was aware that the position of the respondents was that if there was any shortfall in wages owing to Ms Keen it would be paid. I accept that there is no reference to that proposition whatsoever in the release. Moreover, I accept that the release incorrectly asserted that the applicant was “prosecuting” the respondents. The proceedings commenced by the applicant are for the imposition of a civil penalty. The word “prosecuting” can have different meanings, but in the context in which it was used in the release, the implication arising from it is of some criminality on the part of the respondents. Given the context, that is an inference that is fairly open.
The media release of 13 June, 2012 also incorrectly stated that the second respondent was being “prosecuted”. That release stated that:
It is the Fair Work Ombudsman’s second prosecution case against Mr Bedington. Earlier this year, the Fair Work Ombudsman launched a prosecution alleging Mr Bedington was involved in underpaying a worker more than $19,000.
I accept that this statement is misleading. The Fair Work Ombudsman has not prosecuted Mr Bedington as alleged or at all. The release plainly identified the respondents and from where the respondents business was operated.
In Fair Work Ombudsman v Revolution Martial Arts Pty Ltd & Anor [2013] FMCA 125 F. Turner FM (as he then was) said:
The Court finds that the FWO issued a media release on 30 August 2012 (see Exhibit R1) and should have shown greater restraint in the wording of the media release which was calculated to allow identification of the respondents and for them to be subject to public derision and contempt. Mr Millar referred to the judgment of Hansen J in Cousins v Merringtons Pty Ltd & Anor (No 2) [2008] VSC 340 that where a media release is issued:
... before the trial “appropriate restraint in tone and content is required” to avoid the defendants suffering damage that would not have occurred had the media release been fair and accurate. The Court finds that it was not necessary for the media release to state the address of RMA or of Mr Auty; that allowed identification of the respondents and for them to be subject to public derision and contempt.
The Court has regard to the decision in Fair Work Ombudsman v Cleaners New South Wales Pty Ltd [2009] FMCA 683 at [25] that embarrassment from publicity is a penalty in itself. The Court has regard to this in assessing the aggregate penalties to be imposed. In Fair Work Ombudsman v Stewarts Transport & Logistics Pty Ltd & Ors [2010] FMCA 905 at [82] it was accepted that media attention is “no doubt embarrassing”. Ms Carter accepts that some embarrassment may be taken into account in setting penalty (T p.43, l.19).
I take into account the misleading nature of the media releases in assessing the penalty to be imposed on the respondents.
The Penalties
Having regard to the above matters, I conclude that the contraventions in this matter by the first respondent are serious. They occurred over a long period of time and relate to basic entitlements. There was a distinct lack of cooperation by the first respondent with the applicant’s investigation. There was no acknowledgment by the first respondent of its culpability. However, the contraventions relate to only one employee and the gravity of the contraventions are lessened by the rectification of the underpayment by the first respondent.
The applicant draws a distinction in his submissions between the contravention relating to the casual loading and the contraventions relating to the basic rate of pay. Although it might have been a matter of good luck more than good management that the underpayment of the basic rate of pay was not more than it was (no attention seems to have been paid by the respondents to the statutory entitlements of the employee) I am persuaded that I should treat them differently.
In my view, an appropriate penalty for the first respondent in respect of the contravention relating to the casual loading is 70% of the maximum or $23,100.00. In respect of the contravention relating to the underpayment of the basic rate of pay, an appropriate penalty is 60% of the maximum or $19,800.
The second respondent took no responsibility for the first respondent’s contraventions, and, as I said before, even suggested that Ms Keen was attempting to perpetrate a fraud upon either the first respondent or the company that the second respondent said was her employer (New Image Beauty Salons Pty Ltd). His conduct is serious and he has been found to have been involved in contraventions of the workplace relations legislations before. I see no reason to draw a distinction between the contraventions found to have been committed by the first respondent and in which he was involved. In my view, a penalty of 80% of the maximum in respect of both contraventions is appropriate. That is a total of $5,280 for each contravention ($10,560 in total).
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of Judge Jarrett
Date: 8 May 2013
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