Fair Work Ombudsman v Ohmedia Melbourne - [2015] FCCA 50

FEDERAL CIRCUIT COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v OHMEDIA MELBOURNE	[2015] FCCA 50
PTY LTD & ANOR
Catchwords:

INDUSTRIAL LAW – Application for imposition of pecuniary penalties –

grouping of contraventions.

Legislation:

Fair Work Act 2009, ss.45, 535(1), 545(2)(b), 546(1), 546(3)(a), 547(2), 557,

557(1), 557(2), 559(1)

Fair Work Regulations 2009, regs.3.32, 3.33

General Retail Industry Award 2010

Cases cited:

Fair Work Ombudsman v Kensington Management Services Pty Ltd (No.2)

[2012] FMCA 586

Fair Work Ombudsman v Orwill Pty Ltd [2011] FMCA 730

Fair Work Ombudsman v Praglowski [2010] FMCA 621

Fair Work Ombudsman v Promoting U Pty Ltd [2012] FMCA 58

Fair Work Ombudsman v Sanada Investments Pty Ltd [2010] FMCA 401

Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd

(2012) FMCA 258

Fair Work Ombudsman v VS Investment Group Pty Ltd (in Liq) [2013] FCCA

208

Kelly v Fitzpatrick (2007) 166 IR 14 [2007] FCA 1080

McIver v Healey [2008] FCA 425

Workplace Ombudsman v Saya Cleaning Pty Ltd [2009] FMCA 38

Yardley v Betts (1979) 22 SASR 108

Applicant:	FAIR WORK OMBUDSMAN
First Respondent:	OHMEDIA MELBOURNE PTY LTD
Second respondent:	WEN ZHOU
File Number:	BRG 40 of 2013
Judgment of:	Judge Jarrett
Hearing date:	17 November 2014
Date of Last Submission:	17 November 2014
Delivered at:	Brisbane
Delivered on:	23 January 2015
REPRESENTATION
Solicitor for the Applicant:	Mr Fraser
Solicitors for the Applicant:	Fair Work Ombudsman

The second respondent appeared for himself and for the first respondent

ORDERS

THE COURT DECLARES THAT:

(1)

The First Respondent contravened s.45 of the Fair Work Act 2009 by

virtue of failing to pay each of the employees identified in Schedule A

to these orders:

(a)	their ordinary base rate as prescribed by the General Retail

Industry Award 2010;

(b) their casual loading prescribed for the hours worked on Mondays
to Fridays, as prescribed by the General Retail Industry Award
2010;

(c) the applicable rate for all hours worked on a Saturday, as
prescribed by the General Retail Industry Award 2010;

(d) the applicable rate for all hours worked on a Sunday, as
prescribed by the General Retail Industry Award 2010;

(2)	The First Respondent contravened s.45 of the Fair Work Act 2009 by
failing to provide Rosario Carrasco, Xuan Trang Dang and Zoreh
Zarezadehmehrizi, with a minimum shift of three hours, as prescribed
by the General Retail Industry Award 2010; and
(3)	The First Respondent contravened s.535(1) of the Fair Work Act 2009
by failing to keep records for each of the forty-five employees
identified in Schedule A, as prescribed by regulations 3.32 and 3.33 of
the Fair Work Regulations 2009.

THE COURT ORDERS THAT:

(4)

Pursuant to s.545(2)(b) of the Fair Work Act 2009, within thirty days of

the date of these orders, the First Respondent pay:

(a)	Franziska Albrecht $1,502.84;
(b)	Alaa Al-fatlawee $2,491.38;
(c)	Georgina Arrowsmith $1,432.46;
(d)	Carissa Bakker $1,159.91;
(e)	Ramprasad Baskaran $1,793.76;
(f)	Katrin Becher $1,729.60;
(g)	Lisa Berry $1,245.05;
(h)	Maria Canaveral $1,137.77;
(i)	Chun (Ambrosia) Chen $1,323.16;
(j)	Tsang Yuet (Leo) Chun $1,770.11;
(k)	Evelyn Dalgliesh $2,392.27;
(l)	Maria Roger Fernando $1,465.58;

(m) Laurent Fisson $1,717.25;

(n)	Shona Gleeson $335.34;
(o)	Helene Herbert $1,631.17;
(p)	Hsin-I (Jill) Hseih $945.99;
(q)	Jing Huang $934.53;
(r)	Abdulkhader Khajipeta $1,462.95;
(s)	Xiaonan (Roger) Li $1,447.92;
(t)	Wei (May) Liao $123.02;
(u)	Miriam Loeffler $2,747.47;
(v)	Matthew Magnus $1,462.95;
(w)	Jordi Martinez $1,097.12;
(x)	Julia Mende $753.89;
(y)	Sandra Ottenberg $1,453.03;
(z)	Sung Nak Park $774.94;

(aa) Neha Patel $1,662.24;

(bb) Audrey Quere $1,137.77;

(cc) Ken Tan $815.58;

(dd) David Tsatsa $1,160.21;

(ee)	Man Wie (Irene) Tu $763.08;
(ff)	Kakin (Sprewell) Wong $2,028.60;

(gg) Zoreh Zarezadehmehrizi $2,280.51;

(hh) Qian (Coco) Zhang $2,646.31;

(ii)	Fang Fang $1,595.18;
(jj)	Ya Li (Isabella) Han $788.53;

(kk) Mingxuan (Susie) Sui $1,232.30;

(ll)	Ha Hong (Harmony) Vuong $189.99;

(mm)	Yunifei (Fergie) Yang $1,553.09;

(nn) Zhen Liu $204.55;

(oo) Yiwei (Lesley) Sun $311.29;
(pp) Xiaowei Zhao $31.50;

(qq) Qiong Ying (Annabelle) Zhou $867.38;

(rr)	Rosario Carrasco $1,261.46; and
(ss)	Xuan Trang Dang $2,284.39.

(5)

Pursuant to s.547(2) of the Fair Work Act 2009 the First Respondent

pay interest on the amounts ordered to be paid in order 4 hereof.

(6)

Pursuant to s.546(1) of the Fair Work Act 2009 the First Respondent

pay a pecuniary penalty of $85,000 in respect of the contraventions the

subject of the declarations above.

(7)

Pursuant to s.546(1) of the Fair Work Act 2009 the Second Respondent

pay a pecuniary penalty of $15,000 in respect of his involvement in the

First Respondent’s contraventions the subject of the declarations set out

above.

(8)

Pursuant to s.546(3)(a) of the Fair Work Act 2009 all pecuniary

penalties imposed be paid to the Commonwealth within 30 days of the

date of these orders;

(9)

Pursuant to s.559(1) of the Fair Work Act 2009 any unpaid monies and

interest owing to any person specified in order 4 hereof who cannot be

located, or who has not been paid within thirty days of the date of this

order be paid into the Consolidated Revenue Fund of the

Commonwealth.

FEDERAL CIRCUIT COURT

OF AUSTRALIA

AT BRISBANE

BRG 40 of 2013

FAIR WORK OMBUDSMAN

Applicant

And

OHMEDIA MELBOURNE PTY LTD

First Respondent

WEN ZHOU

Second Respondent

REASONS FOR JUDGMENT

By this application, the Fair Work Ombudsman alleges that the first
respondent has breached certain obligations cast upon it by the Fair
Work Act 2009 (Cth) and is thereby liable to the imposition of
pecuniary penalties for those breaches. The applicant alleges that the
second respondent was involved in the first respondent’s
contraventions and is also liable to the imposition of pecuniary
penalties for those breaches.
The respondents admit the allegations against them. The Court’s task
is to determine the penalties that ought to be imposed upon each
respondent for those breaches.
I have been assisted in this matter by the extensive written submissions
filed on behalf of the applicant. The second respondent presented a
short written submission on the day of the hearing on behalf of both the
first and second respondents.

Background

The parties have filed a statement of agreed facts. What follows by
way of background is drawn largely from that statement. None of what
follows is controversial.
The first respondent carried on an advertising, exhibition and cultural
exchange business in Melbourne, Victoria. Part of its business
involved an arrangement with a third party, Lycamobile Pty Ltd, to
recruit and provide staff to Lycamobile to promote the products of
Lycamobile.
The second respondent is, and was at all material times, one of three
directors of the first respondent. He was one of three secretaries and a
shareholder of the first respondent. The parties agree that he was
actively in control of the day-to-day management, direction and control
of the first respondent’s operations. He was principally responsible for:

a) establishing the arrangement with Lycamobile by which the first

respondent recruited and provided staff to Lycamobile;

b) invoicing Lycamobile for the work performed by the first
respondent under the arrangement;

c) engaging employees of the first respondent that were then
provided to Lycamobile pursuant to the first respondent’s
arrangements with Lycamobile;

d) determining the terms and conditions of, and the wage rates
payable to, those employees;

e) organising the payment of wages to the first respondent’s
employees.

The second respondent supervised the day to day operations of the first
respondent’s employees that were engaged to provide labour and
services to Lycamobile in Melbourne. The first respondent also
employed people to perform work in Adelaide, Sydney and Brisbane
under the arrangements with Lycamobile and the second respondent
was responsible for engaging others who recruited and supervised, on
behalf of the first respondent, those employees. For that purpose the second respondent specified the terms and conditions under which
those others were to engage employees, on behalf of the first
respondent, to perform work in Adelaide, Sydney and Brisbane under
the arrangements with Lycamobile.
The second respondent was responsible for ensuring that the first
respondent complied with its obligations to employees under the Fair
Work Act.

9.            Between 14 March, 2011 and 7 April, 2011 the first respondent employed 45 employees on a casual basis to perform work for
Lycamobile pursuant to the first respondent’s arrangements with
Lycamobile. Most of the employees worked in Queensland. Some
worked in South Australia, some in Victoria and two worked in New
South Wales.
10.          The employees duties, when performing work for Lycamobile, included:

a) setting up stalls outside of supermarkets and promoting the sale of Lycamobile prepaid SIM cards and top up vouchers;
b) distributing pamphlet material;
c) providing information and advice to potential customers; and
d) directing any interested customers to the service desk inside the supermarket to purchase Lycamobile products.
11.          The parties agree that the General Retail Industry Award 2010 applied to the employment of each of the employees. Each of the employees
was classified as ‘Retail Employee Level 1’ for the purposes of the
Award. Thirty-six of the employees were adult employees for the
purposes of the Award in that they were over 21 years of age. The
remaining nine employees were under 21 years of age and so were
junior employees for the purpose of the Award.

The first respondent was required to pay the employees in accordance
with the Award. The pay rates applicable to each employee were
derived from the Award and the industrial instruments drawn upon by
the Award. Different rates applied to adult and junior employees. Different rates also applied to employees who worked in different
States. The relevant pay rates for the employees in each of the States
in which they worked were ultimately derived from:

a) for each of the Queensland based employees, the Retail Industry
Award – State 2004;

b) for each of the Victorian based employees, the Shop, Distributive
and Allied Employee’s Association – Victoria Shops Interim
Award 2000;

c) for each of the South Australian based employees, the Retail
Industry (South Australia) Award; and

d) for each of the New South Wales based employees, the Shop
employees (State Award).

Particulars of each employee, the rates of pay to which they were
entitled, the amounts they were in fact paid and some other matters are
set out in Schedule A to these reasons.

The contraventions

The contraventions to which the first and second respondents each
admit fall into three broad categories. The first category is
contraventions of s.45 of the Fair Work Act by failing to pay prescribed
remuneration and in particular:

a) the prescribed hourly base rate of pay;
b) the prescribed casual leave loading;
c) the prescribed hourly rate of pay for work performed on
Saturdays; and

d) the prescribed hourly rate of pay for work performed on Sundays.

The second category is contraventions of s.45 of the Fair Work Act by
failing to provide a minimum shift of three hours to three of the
employees.
Particulars of the amounts that the first respondent was required to pay
the employees and the amounts that it did in fact pay to them are set out in Schedule A to these reasons. The parties agree that, in total, the
first respondent underpaid the employees the amount of $59,145.43.
The underpayment has not been rectified by the first or second
respondents.
The third category is contraventions of s.535(1) of the Fair Work Act in
that the first respondent failed to keep employee records as prescribed
by regs. 3.32 and 3.33 of the Fair Work Regulations 2009, namely:

a) for the purposes of reg. 3.32, records of:
i)       the name of the employer and the names of the employees;
ii)      the Australian Business Number of the employer;
iii)     the date on which the employees’ employment began;
iv)     whether the employee’s employment was full-time or part-
time; and
v)     whether the employee’s employment was permanent,
temporary or casual.

b) for the purposes of reg. 3.33, records of:

i) the rate of remuneration paid to the employees;
ii) the gross and net amounts paid to the employees;
iii) any deductions made from the gross amount paid to the
employees;

iv) the hours worked by the employees; and
v) the details of the employee’s entitlements to loadings and
penalty rates.

Having broadly described the contraventions, it is necessary to identify
each of the separate contraventions involved. Each breach of an
obligation is a separate contravention. The breaches in the present
application are numerous and have not been quantified. They span
across 45 employees but the time over which the breaches occurred
was short – only a period of 3 weeks or so. However, each time an employee was not paid the correct rate of pay or loading, there was a
separate contravention. In addition, there were at least 90
contraventions of the record keeping regulations.
However, it is necessary to consider whether a number of the
contraventions might be dealt with as one pursuant to s.557 of the Fair
Work Act. That section provides:
557 Course of conduct
(1) For the purposes of this Part, 2 or more contraventions of a
civil remedy provision referred to in subsection (2) are, subject to
subsection (3), taken to constitute a single contravention if:
(a) the contraventions are committed by the same person;
and
(b) the contraventions arose out of a course of conduct by
the person.
Sections 45 and 535(1) of the Fair Work Act are referred to in s.557(2)
of the Fair Work Act and so, s.557(1) has application.
The applicant submits that the first respondent is entitled to the benefit
of s.557(1) in relation to the repeated breaches of the same provision in
respect of each employee. For instance, the multiple contraventions of
the base rate provision arising from the failure to pay an employee’s
base rate of pay should be treated as a single contravention in respect
of that employee. I accept that submission. Section s.557(1) of the Act
permits the aggregation of multiple contraventions of s.45 of the Act
where those contraventions arise from a breach of the same term of a
relevant award. Thus, the contraventions in this case that arise from
the failure to pay the correct base rate of pay in respect of a particular
employee, for example, might be aggregated. But they should not be
aggregated with contraventions of s.45 of the Act that arise from the
failure to observe another term of the award, such as that providing for
casual loading.
The applicant contends that “it is appropriate to apply the statutory
course of conduct principle to the multiple breaches of each provision
in respect of the employees.” I am not sure what that means. If it
means that I should treat as one, multiple breaches of the same award provision committed in respect of the same employee, I accept that
submission as I have set out above. If it means that I should treat as
one, multiple breaches of the same award provision committed in
respect of more than one employee, I reject that submission. In Fair
Work Ombudsman v VS Investment Group Pty Ltd (in Liq) [2013]
FCCA 208, at [19], I reasoned:
Moreover, in my view s.557(1) does not require the Court to treat
the alleged contraventions of s.45 of the Fair Work Act (by failure
to pay basic rates of pay for example) in respect of multiple
employees, as one contravention. The failure to pay a basic rate
of pay to one employee over time might properly be seen as a
course of conduct. However, the failure to pay a basic rate of pay
to a number of employees should not, in my view, be seen as a
“course of conduct” for the purposes of s.557(1) unless it is the
result of a single decision made by the employer. The failures to
pay basic rates of pay to a number of different employees are
several and separate courses of conduct in respect of each
employee which is dependent upon the decision made in respect
of that employee. So much seems to be accepted by the approach
of Marshall J in McIver v Healey (above).
Here there is no evidence before me as to whether the contraventions in
respect of all of the employees were the result of a single decision by
the first respondent which applied across the employment of all the
relevant employees (unlike for example, Fair Work Ombudsman v
Praglowski [2010] FMCA 621). In that respect, in the absence of an
agreement between the parties about the matter, there must be an
evidential onus upon the respondents to place before the Court
evidence which would permit the Court to find that the multiple
contraventions were the result of a single decision which was
implemented in respect of the employment of each employee. In the
absence of evidence to that effect, it is difficult to infer that the relevant
contraventions arose out of a course of conduct by the first respondent.
There is no such evidence in this case and the issue is not answered by
the facts that have been agreed between the parties.
The record keeping contraventions might be conveniently grouped into
two groups pursuant to s.557(1) of the Act. In respect of each of the
regulations that has been contravened, it is easily inferred that the
multiple contraventions are the result of a course of conduct on the part of the first respondent – a single decision taken about how it would
conduct its business. The multiple contraventions of each of the
relevant regulations should be taken to constitute a single contravention
of each regulation.
On my reckoning there are 278 separate contraventions having applied
s.577(1) of the Act. The particulars are set out in Schedule B to these
reasons.
However, aside from the operation of s.557(1) of the Act, the Court
may, as a matter of discretion, further group together contraventions
(not otherwise to be treated as one pursuant to s.557(1) of the Act) to
the extent that two or more contraventions have common elements or
overlap in some material way. Where that is so, those common
elements might be taken into account when considering an appropriate
penalty in all the circumstances for each contravention or course of
conduct. It is open to the Court to group separate contraventions
together where those various contraventions may be said to overlap
with each other and involve potential punishment of the respondents
for the same or similar conduct: Fair Work Ombudsman v Kensington
Management Services Pty Ltd (No.2) [2012] FMCA 586 at [16] – [19].
Where contraventions are grouped together in such a way, the multiple
contraventions remain (unlike a grouping under s.557(1) where the
contraventions are treated as one contravention alone), but different
penalties might be fixed for different contraventions within the group
so that any overlap or commonality is taken into account.
Accordingly, a penalty might be imposed for one contravention and no
penalty or different penalties (usually lesser in amount) imposed for the
others. The approach of Marshall J in McIver v Healey [2008] FCA
425 is an illustration of the application of this principle.

The applicant submits that based on the particular circumstances of this
case, the following contraventions have sufficient similarity or overlap
in the factual circumstances to be appropriately grouped together and
accordingly, the Court should consider imposing penalties for the
following seven contraventions:

a) contraventions of s.45 of the Fair Work Act by virtue of failing to
pay adult employees their ordinary base rate as prescribed by
clause 17 of the Award;

b) contraventions of s.45 of the Fair Work Act by virtue of failing to
pay junior employees their ordinary base rate as prescribed by
clause 18 of the Award;

c) contraventions of s.45 of the Fair Work Act by virtue of failing to
pay casual loading for week day work as prescribed by clause
13.2 of the Award;

d) contraventions of s.45 of the Fair Work Act by virtue of failing to
pay Saturday rates (both base rate and casual loading) as
prescribed by clause 13.2 of the Award;

e) contraventions of s.45 of the Fair Work Act by virtue of failing to
pay Sunday rates (both base rate and casual loading) as prescribed
by 13.2 and 29.4(c) of the Award;

f) contraventions of s.45 by virtue of failing to provide Rosario
Carrasco, Xuan Trang Dang and Zoreh Zarezadehmehrizi with a
minimum shift of three hours as prescribed by clause 13.4 of the
Award; and

g) contraventions of s.535(1) of the Fair Work Act by failing to keep
records for each of the employees as prescribed by regs. 3.32 and
3.33 of the Regulations.

In my view, however, it is inappropriate to group the wage-related
contraventions in that way because:

a) the obligations to pay basic rates of pay, casual loading and
weekend rates are all separate and distinct obligations arising
under separate and distinction statutory or legislative provisions
which relate to each individual employee;

b) there is no evidence that establishes that the terms and conditions
of the employment of each of the employees was the same and
was the result of a single decision by the first respondent to employ all of the employees on the same terms and conditions;
and

c) whilst the contraventions might be further aggregated into groups,
that further grouping is for the purpose of fixing an appropriate
penalty in respect of each of the contraventions. The further
aggregation is not undertaken for the purpose of defining each
contravention with which the Court has to deal.

There is no evidence from either respondent explaining the basis upon
which each of the employees were paid or the way in which they were
paid. There is no explanation as to why the correct rates and loadings
were not paid. The evidence is simply silent on those issues. It is
difficult, therefore, to say whether there is any commonality or overlap
in respect of the wage-related contraventions, both in relation to each
individual employee (base rates, casual loadings and penalty rates) and
as between multiple employees. It is difficult to conclude that there is
some overlap in culpability when it is difficult to define the nature and
the extent of the culpable behaviour.

Consideration of Penalties

The maximum penalties that may be imposed by the Court upon the
first respondent (as a body corporate) and the second respondent (as an
individual) for each contravention of an applicable provision or civil
remedy provision are as follows:

a) s.45 of the Fair Work Act:
i) 300 penalty units (or $33,000) for each contravention by the
first respondent;
ii) 60 penalty units (or $6,600) for each contravention by the
second respondent; and

b) s.535 of the Fair Work Act:

i) 150 penalty units (or $16,500) for each contravention by the
first respondent;

ii) 30 penalty units (or $3,300) for each contravention by the
second respondent.

The admitted contraventions represent a serious failure to afford the
relevant 45 employees their minimum entitlements provided for in the
Award. Thirty-seven of the employees were not, and have not been,
paid at all. I accept that the purpose of the legislation is to provide a
safety net which ensures adequate minimum entitlements to employees.
The legislation is also designed to provide an even playing field for all
employers with regard to employment costs. Contraventions of these
fundamental entitlements undermine the workplace relations regime as
a whole and demonstrate a disregard for the respondents’ statutory
obligations.
As the applicant points out, in a competitive service industry such as
retail, where labour costs are a significant portion of a business’s
operating expenses, those businesses that do not comply with
workplace laws gain a competitive advantage over those employers
who do meet their lawful obligations.
Whilst the first respondent’s conduct in contravention of the Act
spanned a period of just under 3.5 weeks, the conduct was nonetheless
significant because:

a) it represented the entire period of each of the employees’
employment with the first respondent;

b) it concerned 45 employees and was plainly not a one-off episode
that involved only one or a small number of employees;

c) the conduct has resulted in a significant, combined underpayment
across the employees concerned.

The applicant submits that the employees “were vulnerable by reason
of their age and background”. The majority of the employees were
foreign citizens working in Australia pursuant to a variety of visas.
Nine of the employees were under the age of 21 at the time of the
contraventions. The work was lowly paid and largely unskilled.
I accept that young age and ethnic or cultural background may go
towards establishing that an employee is potentially vulnerable to
improper practices by their employer. I accept that the cases
demonstrate that those characteristics mean that a particular employee
concerned might be of a vulnerable class: see, for example, Fair Work
Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd (2012)
FMCA 258, Fair Work Ombudsman v Orwill Pty Ltd (2011) FMCA
730; Fair Work Ombudsman v Sanada Investments Pty Ltd [2010]
FMCA 401 at [60].
It is important that potentially vulnerable employees have their
entitlements met. But no more or less so than employees who might
not be similarly categorised. Employers should understand very
clearly that employees, whether within a “vulnerable” class or
otherwise, are not available for exploitation and are entitled to all of the
protections offered by the Fair Work Act.
Whether an employee or group of employees is within a “vulnerable
class” is not to the point. What is to the point is whether an employer
has in fact exploited a particular employee’s vulnerability. That
enquiry will be answered by any direct evidence that bears upon that
issue and any inferences reasonably available from the evidence
otherwise before the Court. The nature and extent of the
contraventions admitted, or found proved, will be relevant. For
example, a minor contravention or one that is technical in nature in
respect of a “vulnerable employee” that occurs by oversight or the
conscientious implementation of qualified advice might not lead to the
conclusion that the employer has exploited the vulnerabilities of a
particular employee or group of employees. Membership of a class of
“vulnerable employees” is not particularly relevant in those
circumstances.
On the other hand, the facts may show that the employer has treated an
employee, or a particular group of employees, in such a way that it is
easy to conclude that the employer’s conduct was designed to exploit
real or perceived vulnerabilities of those employees. The conclusion
on this issue, however, must depend upon the evidence and the
inferences that might be drawn from the evidence, and not upon the
mere categorisation of an employee as within a “vulnerable” class.
Here there is no direct evidence that would support the submission that
the first respondent has exploited the vulnerabilities of the junior
employees, or those who were present in this country on a visa.
Indeed, the inference to be drawn from what little evidence there is, is
that such vulnerabilities were not exploited because it seems that even employees who were not on visas and who were not junior employees
suffered in the same way as those employees who did fall into those
categories.
The underpayments in this case total $59,145.43. I accept the
applicant’s submission that the underpayment to the 45 employees is
significant. Thirty-seven of the employees have not been paid at all for
the work they have performed. Of the employees who were paid, the
underpayments represent a significant proportion of the wages to which
they were entitled. In that respect, the examples highlighted by the
applicant are instructive:

a) Fang Fang was underpaid $1,595.18 representing 72.37% of his
entitlement;

b) Ha Hong (Harmony) Wong was underpaid $189.99 representing
68.34% of her entitlement;

c) Yunifei Yan was underpaid $1,553.09 representing 65.78% of her
entitlement; and

d) Mingxuan Sui was underpaid $1,232.30 representing 65.02% of
her entitlement.

All of the employees were deprived and remain deprived of the
amounts to which they were legitimately entitled. I accept that they are
significant amounts to forgo over such short periods of time. The
underpayments have remained outstanding for over 3 and half years.
The first respondent has received a benefit from the underpayments.
The first respondent has not rectified the underpayments despite being
issued with a contravention letter by the applicant on 7 December,
2011.
The applicant also submits that the failure to keep records is
significant. I agree. The failure to keep adequate records undermines
the applicant’s ability to investigate and ensure compliance with
minimum standards. As the applicant points out, in Fair Work
Ombudsman v Orwill Pty Ltd [2011] FMCA 730 at [21] the Court
found:
[21] The consequences of contravening conduct may include loss
of, or damage to, the relevant statutory objective. That is,
“conduct ... [which] undermines the utility and effectiveness of a
fundamental object” of, in this case, the WR Act and WR
Regulations. In this case, the failure to make and maintain
various records and to issue payslips undermines the utility and
effectiveness of the purpose of Part 19 of the WR Regulations
which provides for “the inspection of records by workplace
inspectors”. The statutory purpose of the WR Regulations ties in
with the purposes for which the powers of workplace inspectors
can be exercised under s.169 of the WR Act, those purposes
including determination of whether various industrial instruments
and minimum standards and entitlements, and the requirements of
the WR Act and WR Regulations themselves, are being observed.
Manifestly, failure to make and maintain records in relation to
employee entitlements, undermines the utility and effectiveness of
workplace inspectors, and their ability to determine whether or
not there has been compliance with minimum standards and
industrial instruments, and the provision of effective means for
investigation and enforcement of employee entitlements.
The first respondent has not previously been the subject of proceedings
brought by the applicant or its predecessors for contraventions of
workplace laws.
The second respondent presented a short written submission on behalf
of the first respondent and himself. It seems to suggest that the first
respondent’s business is, or was, of relatively modest size. Even if that
is so, it is of little moment. In Kelly v Fitzpatrick (2007) 166 IR 14
[2007] FCA 1080 at [28] Tracy J stated:
No less than large corporate employees, small businesses have an
obligation to meet minimum employment standards and their
employees, rightly, have an expectation that this will occur.
When it does not it will, normally, be necessary to make the
failure by imposing an appropriate monetary sanction. Such a
sanction “must be imposed at a meaningful level”: see Australian
Competition and Consumer Commission v ABB Transmission
and Distribution Ltd [2001] ATPR 41-815 at [13].
Further, in Workplace Ombudsman v Saya Cleaning Pty Ltd [2009]
FMCA 38 at [27] to [28] Simpson FM (as his Honour then was) said:
27. In Rajagopalan v BM Sydney Building Materials Pty Ltd
[2007] FMCA 1412 at paras 27 to 29 it was said:
“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 a Court’s consideration of penalty.”
28. Notwithstanding financial hardship that an employer may be
experiencing, in Lynch v Buckley Sawmills Pty Ltd [1984] FCA
306; (1984) 3 FCR 503, 508, Keely J said:
“In this connection it is important that the respondent – and other
employers bound by the award or by other awards under the Act
– understand the importance of complying with an award and it
follows that any decision taken by them which is regarded as
affecting their obligation to comply with particular provisions of
the award or the award generally should only be taken after
careful consideration. They must not be left under the impression
that in times of financial difficulty they can breach an award
made under the Act either with impunity or in the belief that no
substantial penalty will be imposed in respect of a breach found
by a court to have been committed.”
Moreover, the second respondent’s submissions suggest that his
financial position and that of the first respondent is not very good.
Regardless, the Court should mark its disapproval of the first
respondent’s conduct and set a significant penalty which serves as a
warning to others. As the applicant points out, in Fair Work
Ombudsman v Promoting U Pty Ltd [2012] FMCA 58, the Court said:
… the 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.
Should the respondents file evidence regarding their financial
position the Applicant will have regard to such material and
reserves its rights, where appropriate, to make a brief further
submission as to this issue. It is noted that the impact of financial
position, where proved by evidence, to the extent that it has
bearing on the reason for the contraventions or the respondents’
present capacity to meet a particular penalty, must be
appropriately balanced with the other factors relevant to the
determination of penalty.
The contraventions here were deliberate in the sense that the second
respondent’s submission lead to the conclusion that he was at least
reckless in relation to the responsibilities of the first respondent as an
employer. He submitted that he arrived in Australia in early 2008. At
that time, because of his age (he does not say what it was) and “lacking
knowledge of relevant laws and regulations” he was “lacking of
awareness in regards to business operations and legal risks for the
company”. He claims that he and the first respondent were
“manipulated and deceived by LYCA MOBILE such a mature and
large companies, which led to all sorts of errors committed after.”
Three things can be said about these submissions namely:

a) a lack of knowledge of the relevant workplace laws is no excuse;
b) given the admitted lack of knowledge on the part of the second
respondent, it behoved him to seek out and obtain relevant advice
about the first respondent’s obligations – there is no evidence that
he did so; and

c) there is no evidence at all upon which the Court might form the
conclusion that the first or second respondents were manipulated
or deceived by Lycamobile.

I do not think that the respondents’ actions were deliberate in the sense
that the second respondent set out to intentionally breach the Act. But
employing others in the circumstances described by the second
respondent in his written submissions without even a cursory
understanding of the relevant “laws and regulations” was fraught and
demanded that the respondents take some steps to inform themselves
about their obligations. There is no evidence that they sought out that
advice. That was clearly reckless.
There is no evidence to suggest that the failure to pay the employees
their correct entitlements was a mistake or was inadvertent. The failure
to remedy the underpayments is consistent with the proposition that the
contraventions were at the very least reckless.
The first and second respondents have expressed no genuine remorse
or contrition. There has been no suggestion from either about how the
underpayments might be addressed.
The second respondent was at the relevant times a director and
secretary of the first respondent and made the decisions regarding the
day to day running of the first respondent’s business. The second
respondent was involved in each of the contraventions by the first
respondent. There is no evidence that the contraventions were
attributable to any other person or agent.
The applicant acknowledges that the first respondent and second
respondent have demonstrated co-operation to enable this matter to
proceed by way of a statement of agreed facts. The respondents
admitted the contraventions after the proceedings were commenced.
The applicant submits that ensuring compliance with minimum
standards is a very important consideration in this case. I accept that
submission. One of the objects of the Fair Work Act is the
maintenance of an effective safety net of minimum terms and
conditions, and effective enforcement mechanisms. It is imperative for
the Court to impose a penalty that reinforces the fundamental
importance of compliance with the safety net of entitlements specified
by the National Employment Standards and the general protection
provisions of the Fair Work Act.
It is well-established that the need for specific and general deterrence is
a factor that is relevant to the imposition of a penalty under the Fair
Work Act. In cases such as the present, general deterrence is of
particular importance. An appropriate penalty will act as a deterrent to
others who might be likely to offend: Yardley v Betts (1979) 22 SASR
108.
The applicant submits that the conduct in this matter is objectively
serious and has not been mitigated through rectification, contrition or
other ameliorating circumstances. The penalties in this case should be
imposed on a meaningful level so as to deter other employers from
committing similar contraventions. The first and second respondent,
and employers more generally, should be left in no doubt that failing to
comply with minimum obligations will not be tolerated by the Court. I
accept those submissions.

Penalty

There is considerable overlap amongst the nature and extent of the
contraventions between the employees. Each of the employees have
been denied them basic rates of pay and casual loading. Those rates
vary depending upon when the relevant work was performed (weekend
work attracts different rates and loadings). But the offending conduct
across the employees bears the same character and culpability.

In those circumstances, I intend to impose penalties upon the first and
second respondents for each of the contraventions of the wage-related
conditions (save for the minimum shift hours contraventions) for a
representative employee and to impose no further penalty in respect of
all other employees. The representative I have chosen is Franziska
Albrecht, an employee based in Queensland. There are five separate
contraventions in respect of Ms Albrecht:

a) failure to pay her the base rate to which she was entitled for
weekday work;

b) failure to pay her casual loading upon the base rate to which she
was entitled for weekday work;

c) failure to pay her the base rate to which she was entitled for
Saturday work;

d) failure to pay her the penalty rate to which she was entitled for
Saturday work;

e) failure to pay her casual loading upon the base rate to which she
was entitled for Saturday work;

f) failure to pay her the base rate to which she was entitled for
Sunday work; and

g) failure to pay her the penalty rate to which she was entitled for
Sunday work.

In my view, a penalty fixed at half of the maximum penalty is
appropriate to take into account:

a) The seriousness of the first respondent’s conduct;
b) The first respondent’s lack of contrition and remorse;
c) The first respondent’s failure to remedy the underpayments;
d) The failure of the first respondent to adequately explain the
contraventions; and

e) The cooperation afforded by the first respondent with the
applicant and the investigation.

The total penalty for these contraventions is $115,000.
Similarly, a penalty needs to be imposed for the contraventions of the
provision relating to minimum shift requirements. Adopting a similar
approach, I assess a penalty of half of the maximum available penalty
for a further contravention of s.45 of the Act that relates to the failure
of the first respondent to meet the minimum shift requirements for
Zoreh Zarezadehmehrizi, an employee based in Queensland. That is an
additional penalty of $16,500. In respect of the other two employees in
respect of whom similar contraventions were committed, I impose no
further penalty.
In respect of the first respondent’s contraventions of s.535(1) of the
Act, I assess a further penalty of $11,550 (or 35% of the maximum
penalty that could be imposed). I have imposed a lesser percentage of
penalty to take into account the fact that the first respondent did keep
some records that related to the employees, although they did not
sufficiently record all of the matters required by the Regulations. I
assess one penalty in respect of the two contraventions.
The aggregate penalty is $143,550.
There is no evidence before me about the financial position of either
the first or second respondents. As I have said above, the second
respondent’s submissions tended to suggest that neither the first nor the
second respondents are in a particularly sound financial position. In
the absence of evidence, however, it is impossible to know.
It is important to avoid the imposition of a penalty at a level that would
be likely to be crushing. That needs to be balanced, however, with the
purposes discussed above for the imposition of a penalty.
In my view, and having regard to the above assessments, an aggregate
penalty of $85,000 for the first respondent is an appropriate response to
the contraventions.
The second respondent was involved in the contraventions. In my
view an adequate response to his involvement is to impose a penalty
assessed in the same way as the penalties for the first respondent was
assessed. That is to say, a penalty of 50% of the maximum in respect
of eight contraventions ($3,300), and a penalty 35% of the maximum in
respect of the final contravention ($2,310).
That is an aggregate penalty of $25,410.00. Adopting the same
approach to the penalty imposed upon the first respondent, the
aggregate penalty should be reduced to $15,000.
Accordingly, I make the orders set out at the commencement of these
reasons.

I certify that the preceding seventy-one (71) paragraphs are a true copy of

the reasons for judgment of Judge Jarrett

Associate:

Date: 23 January 2015

Schedule A

Schedule B – The Contraventions

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e	te	o	y	y	y	B	P	m	n	e
y
lo	a
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p	se	su	tu	tu	tu	d	d	ta	p
n	n	in
m	a	a	a	a	a	u	u	o	m
E	B	C	S	S	S	S	S	M	T	e

Franziska Albrecht	√	√	√	√	√	√	√	7
Alaa Al-fatlawee	√	√	√	√	√	√	√	7
Georgina	√	√	√	√	√	√	√	7
Arrowsmith
Carissa Bakker	√	√	√	√	√	√	√	7
Ramprasad	√	√	√	√	√	5
Baskaran
Katrin Becher	√	√	√	√	√	√	√	7
Lisa Berry	√	√	√	√	√	5
Maria Canaveral	√	√	√	√	√	√	√	7
Chun (Ambrosia)	√	√	√	√	√	√	√	7
Chen
Tsang Yuet (Leo)	√	√	√	√	√	√	√	7
Chun
Evelyn Dalgliesh	√	√	√	√	√	√	√	7
Maria Roger	√	√	√	√	√	√	√	7
Fernando
Laurent Fisson	√	√	√	√	√	5
Shona Gleeson	√	√	2
Helene Herbert	√	√	√	√	√	5
Hsin-I (Jill) Hseih	√	√	√	√	√	5
Jing Huang	√	√	√	√	√	√	√	7
Abdulkhader	√	√	√	√	√	√	√	7
Khajipeta
Xiaonan (Roger) Li	√	√	√	√	√	5
Wei (May) Liao	√	√	2
Miriam Loeffler	√	√	√	√	√	√	√	7
Matthew Magnus	√	√	√	√	√	√	√	7
Jordi Martinez	√	√	√	√	√	√	√	7
Julia Mende	√	√	√	√	√	√	√	7
Sandra Ottenberg	√	√	√	√	√	5
Sung Nak Park	√	√	√	√	√	5
Neha Patel	√	√	√	√	√	√	√	7
Audrey Quere	√	√	√	√	√	√	√	7
Ken Tan	√	√	√	√	√	5
David Tsatsa	√	√	√	√	√	√	√	7
Man Wie (Irene) Tu	√	√	√	√	√	5
Kakin (Sprewell)	√	√	√	√	√	√	√	7
Wong

Zoreh	√	√	√	√	√	√	√	√	8
Zarezadehmehrizi
Qian (Coco) Zhang	√	√	√	√	√	√	√	7
Fang Fang	√	√	√	√	√	√	√	7
Ya Li (Isabella) Han	√	√	2
Mingxuan (Susie)	√	√	√	√	√	√	√	7
Sui
Ha Hong (Harmony)	√	√	2
Vuong
Yunifei (Fergie)	√	√	√	√	√	√	√	7
Yang
Zhen Liu	√	√	√	√	√	√	√	7
Yi Wei (Lesley) Sun	√	√	√	√	√	5
Xiaowei Zhao	√	√	√	√	4
Qiong Ying	√	√	√	√	√	√	√	7
(Annabelle) Zhou
Rosario Carrasco	√	√	√	√	√	√	√	√	8
Xuan Trang Dang	√	√	√	√	√	√	√	√	8
Record Keeping	2
Contraventions

Total	275
Contraventions

iv)	the hours worked by the employees; and
v)	the details of the employee’s entitlements to loadings and
penalty rates.

ii)	30 penalty units (or $3,300) for each contravention by the
second respondent.

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