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Fair Work Ombudsman v NoBrace Centre Pty Ltd

Fair Work Ombudsman v NoBrace Centre Pty Ltd

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Case Copied 22 February 2018 41 min read

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FEDERAL CIRCUIT COURT OF AUSTRALIA

FAIRWORK OMBUDSMAN v NOBRACE CENTRE PTY LTD & ORS

[2018] FCCA 378

Catchwords:

INDUSTRIAL LAW – Applicant arrived in Australia on working holiday visa – visa due to expire – applicant seeks and obtains employer’s sponsorship on application for Temporary Work (Skilled) Visa (subclass 457) – criterion of visa application requires applicant to receive remuneration not less than $50,000 per annum – sham employment contract executed – employee pay and PAYG income tax recorded and calculated according to sham – net pay calculated and paid at lower hourly rate – employee not passive participant in sham – employee requests and obtains employer’s support for permanent visa – sale of business – employment terminated – sponsorship visa withdrawn – Ombudsman’s investigation – employee’s rate of pay below that prescribed by Award – other entitlements not paid.

INDUSTRIAL LAW – Contravention of Fair Work Act 2009 (Cth) – contravention of Fair Work Regulations 2009 (Cth) – failure to pay minimum entitlements prescribed by Health Professionals and Support Services Award 2010 – failure to pay minimum wage prescribed by award and other entitlements – unauthorised deductions from employee’s pay – failure to keep records – false and misleading records – failure to provide pay slips within one day of payment – failure to comply with notice to produce – whether reasonable excuse for non-compliance. ACCESSORIAL LIABILITY – Involvement in contravention – necessary that secondary participant had sufficiently direct and practical connection to the wrongdoing – sufficient to establish that participants were aware of material facts and circumstances constituting the contraventions – not necessary for participant to have turned their mind to legal characterisation or to the legality of the principal’s conduct – not necessary for participant to have intended result of principal’s conduct or that it might cause injury or damage – whether honest ignorance that award did not apply – intentional participant – actual knowledge – knowledge of essential elements of facts comprising primary contravention – knowledge that an award conferred certain entitlements – knowledge of the name of the particular award not necessary – knowledge of precise amount prescribed by award not necessary – knowledge of the rates being paid – wilful blindness – deliberate abstention from inquiry – negligence or recklessness not sufficient – combination of suspicious circumstances and failure to make inquiry may suffice – whether knowledge that system of payment of employee entitlements was non-compliant with Act, Regulations or Award grounds involvement in a contravention – relief – declarations granted – existence of threat of continuation of conduct not proved – no utility in injunctions.

ACCESSORIAL LIABILITY – Involvement in contravention – necessary that secondary participant had sufficiently direct and practical connection to the wrongdoing – sufficient to establish that participants were aware of material facts and circumstances constituting the contraventions – not necessary for participant to have turned their mind to legal characterisation or to the legality of the principal’s conduct – not necessary for participant to have intended result of principal’s…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] FCCA 378
Decision Date: 22 February 2018

CaseChat Overview and Summary

The Fair Work Ombudsman (the applicant) brought proceedings against NoBrace Centre Pty Ltd (the respondent) concerning alleged contraventions of the *Fair Work Act 2009* (Cth) and the *Fair Work Regulations 2009* (Cth). The dispute arose from the employment of an individual who initially arrived in Australia on a working holiday visa. This employee subsequently sought and obtained sponsorship from the respondent for a Temporary Work (Skilled) Visa (subclass 457), which required a minimum annual remuneration of $50,000. A sham employment contract was executed, and while pay and income tax were recorded at the required rate, the employee was actually paid at a lower hourly rate. The employee was not a passive participant, having requested and obtained the employer's support for a permanent visa. Following the sale of the business, the employee's employment was terminated, and the sponsorship visa was withdrawn. The Ombudsman's investigation revealed that the employee's actual rate of pay was below that prescribed by the relevant Award, and other entitlements were not paid.

The court was required to determine whether NoBrace Centre Pty Ltd had contravened the *Fair Work Act 2009* (Cth) and *Fair Work Regulations 2009* (Cth) by failing to pay minimum entitlements prescribed by the Health Professionals and Support Services Award 2010, including minimum wages, and by making unauthorised deductions from the employee's pay. Further issues included the respondent's failure to keep and provide accurate records and pay slips, and whether there was a reasonable excuse for non-compliance with a notice to produce documents. The court also considered the principles of accessorial liability, specifically the degree of connection and knowledge required for a secondary participant to be involved in contraventions.

Justice Kelly applied the principles of accessorial liability, stating that a sufficiently direct and practical connection to the wrongdoing is necessary. It is sufficient to establish that the participants were aware of the material facts and circumstances constituting the contraventions, without necessarily understanding the legal characterisation or legality of the conduct. The court clarified that intent to cause injury or damage is not required, nor is knowledge of the precise legal entitlements or award names. However, actual knowledge of the essential facts comprising the primary contravention, or wilful blindness through deliberate abstention from inquiry in the face of suspicious circumstances, could ground involvement. The court found that knowledge that the system of payment was non-compliant with the Act, Regulations, or Award could lead to involvement in a contravention.

The court granted declarations regarding the contraventions. However, it found that the existence of a threat of continuation of the conduct was not proven, and therefore, there was no utility in granting injunctions.

Orders