Fair Work Ombudsman v Panol DC Pty Ltd
[2021] FCCA 373
•2 March 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v PANOL DC PTY LTD & ORS | [2021] FCCA 373 |
| Catchwords: INDUSTRIAL LAW – Course of conduct – course of conduct pre-dating and post-dating introduction of concept of “serious contravention” – grouping of contraventions. INDUSTRIAL LAW – Accessorial liability for breaches of civil remedy provisions of Fair Work Act 2009 – imposition of pecuniary penalties. |
| Legislation: Fair Work Act 2009, ss.45, 500, 535, 539, 545, 546, 550, 556, 557, 557A, 557B, cl.18(2) of pt.4 of sch.1 Corporations Act 2001, s.500 Crimes Act 1914, s.4AA |
| Cases cited: Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | PANOL DC PTY LTD T/A CHATIME CINEMA CITY ACN 615 544 146 |
| Second Respondent: | LEIDEN EMMANUEL PANOL |
| Third Respondent: | CARLO BENJAMIN DELA CRUZ |
| File Number: | SYG 784 of 2019 |
| Judgment of: | Judge Cameron |
| Hearing date: | 26 May 2020 |
| Date of Last Submission: | 26 May 2020 |
| Delivered at: | Sydney |
| Delivered on: | 2 March 2021 |
REPRESENTATION
| Counsel for the Applicant: | Mr M. Seck of Counsel |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| Counsel for the Respondents: | Mr N. Read of Counsel |
| Solicitors for the Respondents: | Owen Hodge |
THE COURT DECLARES THAT
The first respondent contravened section 45 of the Fair Work Act 2009:
(a)by failing to pay Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Shaodong Wu, Xi Feng, Xiao Zhang, Ying Zhang, Joshua Tran and Rebecca Feng the minimum rate of pay pursuant to clause 17 of the Fast Food Industry Award 2010;
(b)by failing to pay Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Rebecca Feng and Joshua Tran the junior minimum rate of pay pursuant to clause 18 of the Fast Food Industry Award 2010;
(c)by failing to pay Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Shaodong Wu, Xi Feng, Xiao Zhang, Ying Zhang, Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Rebecca Feng, Joshua Tran and Mariana Ishak the casual loading pursuant to clause 13.2 of the Fast Food Industry Award 2010;
(d)by failing to pay Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Joshua Tran, Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Xi Feng, Ying Zhang and Michelle Lin the public holiday penalty rate pursuant to clause 30.3 of the Fast Food Industry Award 2010;
(e)by failing to pay Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Shaodong Wu, Xi Feng, Xiao Zhang, Ying Zhang, Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Rebecca Feng, Joshua Tran, Mariana Ishak and Michelle Lin the special clothing allowance pursuant to clause 19.2(b)(ii) of the Fast Food Industry Award 2010;
The first respondent contravened section 535(2) of the Fair Work Act 2009:
(a)by failing to make and keep for seven years records which, in the case of casual employees guaranteed a rate of pay set by reference to a period of time worked, included the hours worked by the employee, pursuant to regulation 3.33(2) of the Fair Work Regulations 2009;
(b)by failing to make and keep for seven years records which, in the case of casual employees entitled to be paid a penalty rate, included the details of that entitlement, pursuant to regulation 3.33(3)(d) of the Fair Work Regulations 2009; and
(c)by failing to make and keep for seven years records which, in the case of casual employees entitled to be paid a monetary allowance, included the details of that entitlement, pursuant to regulation 3.33(3)(e) of the Fair Work Regulations 2009.
The second respondent was involved, within the meaning of section 550(2) of the Fair Work Act 2009, in the contraventions committed by first respondent referred to in declarations 1 and 2.
The third respondent was involved, within the meaning of section 550(2) of the Fair Work Act 2009, in the contraventions committed by first respondent referred to in declaration 1.
THE COURT ORDERS THAT
The first respondent pay a total penalty of $41,600.
The second respondent pay a combined penalty of $6,600.
The second respondent pay a further penalty of $3,000.
The third respondent pay a total penalty of $6,600.
Payment of the penalties ordered in order 2 be suspended until such time as the second respondent is found in any other proceeding to have committed, after the pronouncement of these orders, a contravention of the Fair Work Act 2009.
Payment of the penalties ordered in order 4 be suspended until such time as the third respondent is found in any other proceeding to have committed, after the pronouncement of these orders, a contravention of the Fair Work Act 2009.
Orders 2 and 5 be wholly discharged at the conclusion of a three year period commencing upon the pronouncement of these orders if, during that period, the second respondent has not been found in any other proceeding to have committed, after the pronouncement of these orders, a contravention of the Fair Work Act 2009.
Orders 4 and 6 be wholly discharged at the conclusion of a three year period commencing upon the pronouncement of these orders if, during that period, the third respondent has not been found in any other proceeding to have committed, after the pronouncement of these orders, a contravention of the Fair Work Act 2009.
The applicant have liberty to apply for variation of orders 2 and 5 if, in the three year period commencing upon the pronouncement of these orders, the second respondent has been found in any other proceeding to have committed, after the pronouncement of these orders, a contravention of the Fair Work Act 2009.
The applicant have liberty to apply for variation of orders 4 and 6 if, in the three year period commencing upon the pronouncement of these orders, the third respondent has been found in any other proceeding to have committed, after the pronouncement of these orders, a contravention of the Fair Work Act 2009.
The pecuniary penalties ordered in orders 1 and 3 be paid to the Consolidated Revenue Fund of the Commonwealth within 28 days.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 784 of 2019
| FAIR WORK OMBUDSMAN |
Applicant
And
| PANOL DC PTY LTD T/A CHATIME CINEMA CITY ACN 615 544 146 |
First Respondent
| LEIDEN EMMANUEL PANOL |
Second Respondent
| CARLO BENJAMIN DELA CRUZ |
Third Respondent
REASONS FOR JUDGMENT
INTRODUCTION
The first respondent (“Panol DC”) operated a franchise trading as Chatime Cinema City that sold take away bubble-teas. The second and third respondents, respectively Mr Panol and Mr Dela Cruz, were Panol DC’s only directors.
The applicant (“Ombudsman”) commenced this proceeding on 1 April 2019 alleging that Panol DC had contravened the Fair Work Act 2009 (“FW Act”) by failing to pay employees minimum weekly wages, casual loading, public holiday entitlements and special clothing allowances, as prescribed by the Fast Food Industry Award 2010 (“Award”). The Ombudsman alleged that the Mr Panol and Mr Dela Cruz were accessories to these contraventions.
The Ombudsman also alleged that Panol DC had, in contravention of the FW Act failed to make and keep records prescribed by the Fair Work Regulations 2009 (“FW Regulations”). The Ombudsman alleged that Mr Panol was an accessory to those contraventions.
In a statement of agreed facts (“SOAF”) filed on 5 July 2019, Panol DC admitted the contraventions alleged. In a second response and a further amended defence filed on 18 November 2019, Mr Panol and Mr Dela Cruz admitted the contraventions alleged against them.
On 5 March 2020, Markovic J in the Federal Court of Australia granted the Ombudsman leave pursuant to s.500 of the Corporations Act 2001 to proceed against Panol DC, which had been put into liquidation.
These reasons concern the penalties to be imposed on the respondents.
RELEVANT LEGISLATION AND INDUSTRIAL INSTRUMENT
Fair Work Act
Section 45 of the FW Act provides that a person must not contravene a term of a modern award. The Award is a modern award.
Section 539 of the FW Act provides that s.45 is a civil remedy provision. Prior to 15 September 2017, ss.45, 539(2) and 546(2) of the FW Act provided that the maximum pecuniary penalty for each contravention of a clause of a modern award was 60 penalty units for individuals and 300 penalty units for corporations. Since 15 September 2017, s.539(2) has provided that the maximum pecuniary penalty for a contravention of s.45 that was not a serious contravention under s.557A of the FW Act is 60 penalty units for individuals and 300 penalty units for corporations and for a contravention that is a serious contravention, 600 penalty units for individuals and 3,000 penalty units for corporations.
Section 535 of the FW Act relevantly provides:
535 Employer obligations in relation to employee records
(1)An employer must make, and keep for 7 years, employee records of the kind prescribed by the regulations in relation to each of its employees.
(2)The records must:
(a)if a form is prescribed by the regulations—be in that form; and
(b)include any information prescribed by the regulations.
...
Section 539 of the FW Act provides that s.535 is a civil remedy provision. Prior to 15 September 2017, ss.539(2) and 546(2) provided that the maximum pecuniary penalty for each contravention of s.535 was 30 penalty units for individuals and 150 penalty units for corporations. Since 15 September 2017, section 539(2) has provided that the maximum penalty for a contravention of s.535 that is not a serious contravention under s.557A of the FW Act is 60 penalty units for individuals and 300 penalty units for corporations and for a contravention that is a serious contravention, 600 penalty units for individuals and 3,000 penalty units for corporations.
In the period 2 January 2017 to 30 June 2017 a penalty unit was worth $180 and in the period 1 July 2017 to 26 November 2017 a penalty unit was worth $210: s.4AA Crimes Act 1914.
Section 550 of the FW Act provides:
550 Involvement in contravention treated in same way as actual contravention
(1)A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2)A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d)has conspired with others to effect the contravention.
Section 557 of the FW Act relevantly 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.
(2)The civil remedy provisions are the following:
…
(b)section 45 (which deals with contraventions of modern awards);
…
(n)subsections 535(1), (2) and (4) (which deal with employer obligations in relation to employee records);
…
Fair Work Regulations
Regulation 3.33 of the FW Regulations relevantly provides:
3.33 Records—pay
(1)For subsection 535(1) of the Act, a kind of employee record that an employer must make and keep is a record that specifies:
(a)the rate of remuneration paid to the employee; and
(b)the gross and net amounts paid to the employee; and
(c)any deductions made from the gross amount paid to the employee.
(2)If the employee is a casual or irregular part‑time employee who is guaranteed a rate of pay set by reference to a period of time worked, the record must set out the hours worked by the employee.
(3)If the employee is entitled to be paid:
(a)an incentive‑based payment; or
(b)a bonus; or
(c)a loading; or
(d)a penalty rate; or
(e)another monetary allowance or separately identifiable entitlement;
the record must set out details of the payment, bonus, loading, rate, allowance or entitlement.
Fast Food Industry Award
From mid-2016 to the end of the last full pay period commencing before 1 July 2017 clause 17 of the Award prescribed the following minimum wage rates:
Classification
Per week
Level 1
$738.80
Level 2
$783.30
Level 3 – In charge of one or no persons
$795.30
Level 3 – In charge of two or more persons
$805.00
From the beginning of the first full pay period commencing on or after 1 July 2017 until mid-2018, clause 17 of the Award prescribed the following minimum wage rates:
Classification
Per week
Level 1
$763.20
Level 2
$809.10
Level 3 – In charge of one or no persons
$821.50
Level 3 – In charge of two or more persons
$831.60
The Award also provided:
13. Casual employment
…
13.2A casual will be paid both the ordinary hourly rate paid to a full-time employee and an additional 25% of the ordinary hourly rate for a full-time employee.
…
18. Junior rates
Junior employees will be paid the following percentage of the appropriate wage rate in clause 17—Minimum weekly wages:
Age
% of weekly wage
Under 16 years of age
40
16 years of age
50
17 years of age
60
18 years of age
70
19 years of age
80
20 years of age
90
19. Allowances
…
19.2 Special clothing
…
(b)Where an employee is required to launder any special uniform, dress or other clothing, the employee will be paid the following applicable allowance:
(i) For a full-time employee—$6.25 per week;
(ii) For a part-time or casual employee—$1.25 per shift.
…
From the Award’s commencement until 30 June 2017, its cl.30 relevantly provided:
30 Public Holidays
…
30.3Work on a public holiday must be compensated by payment at the rate of 250% (275% for casual employees).
From 1 July 2017, cl.30.3 was varied by changing the rate of public holiday entitlements to:
225% (250% for casual employees, inclusive of casual loading).
AGREED FACTS
As recorded earlier, on 5 July 2019 the Ombudsman and Panol DC filed an SOAF. It has been reproduced in Annexure A to these reasons. In summary, the following facts were agreed between the Ombudsman and Panol DC:
a)during the relevant period, seventeen employees (“Employees”) were employed by Panol DC, of whom eight were junior employees because they were younger than twenty-one;
b)nine employees held higher education student or graduate visas;
c)the Employees’ hours were not reasonably predictable and did not average 38 hours per week;
d)the employees who took orders, operated the cash register, made drinks, washed utensils and undertook basic cleaning duties were entitled to the Award classification of Fast Food Employee Level 1;
e)some of the Employees undertook additional duties. This involved employee supervision and training, delegation of tasks and counting stock and cash. From the date that they commenced these additional duties, these Employees were entitled to the Award classification of Fast Food Employee Level 2;
f)during the assessed period, the Employees were paid a flat rate between $28.60 and $45.18 per hour on public holidays and between $13.00 and $18.55 per hour at other times.
g)the Ombudsman commenced an investigation into Panol DC’s compliance with the FW Act and FW Regulations on 21 July 2017. During the investigation the Ombudsman served Panol DC with two notices to produce and, in answer, certain documents were produced including a PowerPoint presentation named “National Roadshow Aug 2017”. This contained information about the Ombudsman, the FW Act and the Award and had been presented by the franchisor at a 25 September 2017 training session attended by Mr Panol and Mr Dela Cruz;
h)on 7 August 2018 the Ombudsman issued Panol DC with a Findings of Contravention letter after concluding that it had underpaid the Employees a total of $46,372.94 and had contravened ss.45 and 535(2) of the FW Act. Panol DC repaid the underpayments and sold the business back to the franchisor in January 2019;
In the SOAF Panol DC admitted to having contravened the Award and s.45 of the FW Act during the relevant period by failing to pay:
a)each adult employee the minimum hourly rates required by cl.17 of the Award, resulting in a total underpayment of $11,033.55;
b)all but two junior employees the minimum hourly rates required by cl.18 of the Award resulting in a total underpayment of $1,315.99;
c)all but one employee, the casual loading rates required by cl.13.2 of the Award resulting in a total underpayment of $30,828.30;
d)the Employees their public holiday entitlements as required by cl.30.3 of the Award resulting in a total underpayment of $2,765.10; and
e)the Employees a special clothing allowance as required by cl.19.2(b)(ii) of the Award in circumstances where the Employees wore and washed company-provided uniforms, resulting in a total underpayment of $430.
In the SOAF Panol DC also admitted to having contravened s.535(2) of the FW Act because it failed to record the following information in respect of each employee:
a)the hours that they worked; and
b)any penalty rate or monetary allowance applicable to them,
as required by regs.3.33(2) and 3.33(3)(d) and (e) of the FW Regulations.
Panol DC did not oppose the making of the following declarations:
(a)Declarations that the Company contravened the following civil remedy provisions:
(i)section 45 of the FW Act by failing to pay Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Shaodong Wu, Xi Feng, Xiao Zhang, Ying Zhang, Joshua Tran and Rebecca Feng the minimum rate of pay pursuant to clause 17 of the Fast Food Award;
(ii)section 45 of the FW Act by failing to pay Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Rebecca Feng and Joshua Tran the junior minimum rate of pay pursuant to clause 18 of the Fast Food Award;
(iii)section 45 of the FW Act by failing to pay Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Shaodong Wu, Xi Feng, Xiao Zhang, Ying Zhang, Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Rebecca Feng, Joshua Tran and Mariana Ishak the casual loading pursuant to clause 13.2 of the Fast Food Award;
(iv)section 45 of the FW Act by failing to pay Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Joshua Tran, Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Xi Feng, Ying Zhang and Michelle Lin the public holiday penalty rate pursuant to clause 30.3 of the Fast Food Award;
(v)section 45 of the FW Act by failing to pay the [sic] Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Shaodong Wu, Xi Feng, Xiao Zhang, Ying Zhang, Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Rebecca Feng, Joshua Tran, Mariana Ishak and Michelle Lin the special clothing allowance pursuant to clause 19.2(b)(ii) of the Fast Food Award;
(vi)section 535(2) of the FW Act, by failing to make and keep for seven years records which included information as to, if an employee is a casual employee guaranteed a rate of pay set by reference to a period of time worked, the hours worked by the employee, pursuant to regulation 3.33(2) of the FW Regulations;
(vii)section 535(2) of the FW Act, by failing to make and keep for seven years records which included information as to, if an employee is entitled to be paid a penalty rate, the details of that entitlement, pursuant to regulation 3.33(3)(d) of the FW Regulations; and
(viii)section 535(2) of the FW Act, by failing to make and keep for seven years records which included information as to, if an employee is entitled to be paid a monetary allowance, the details of that entitlement, pursuant to regulation 3.33(3)(e) of the FW Regulations.
…
As noted earlier, on 18 November 2019 Mr Panol admitted that he was involved in the above contraventions and Mr Dela Cruz admitted that he was involved in the underpayment contraventions. In their (amended) response filed on 18 November 2019, they pleaded that they did not oppose the making of declarations that:
a)Mr Panol was involved, within the meaning of s.550(2) of the FW Act, in the contraventions committed by Panol DC; and
b)Mr Dela Cruz was involved, within the meaning of s.550(2) of the FW Act, in the underpayment contraventions committed by Panol DC.
In light of these admissions, and of the evidence which will be discussed below, I find that it is appropriate to make the declarations sought.
APPLICANT’S EVIDENCE
Fair Work FWI Koo
Philip Koo (“FWI Koo”) is a Fair Work Inspector (“FWI”) and had carriage of the Ombudsman’s investigation into the respondents’ contraventions of the FW Act and FW Regulations. In his affidavits, affirmed on 23 September 2019, 16 March and 21 April 2020, FWI Koo deposed to matters relating to the investigation including, relevantly, the following:
a)the investigation commenced on or around 21 July 2017;
b)on 21 September 2017 he issued a notice to produce to Panol DC. On 7 October 2017, in response, Mr Dela Cruz produced employee contact information, welcome letters, rosters from the end of May to the start of July 2017, payslips from June 2017 and tax file number (“TFN”) declaration forms;
c)on 9 October 2017, during a telephone conversation, Mr Dela Cruz referred to actions using the words “we” and “Leiden and “I” and told FWI Koo that:
i)they did not have a registered enterprise agreement;
ii)they “decided to pay a flat rate for all hours worked except public holidays so as to provide the same pay rate to employees regardless of days worked”; and
iii)“all employees [were] casuals, despite some employees ticking the part-time box on their TFN forms”;
The file note of this conversation, to which FWI Koo was taken in cross-examination also included a notation that:
[Employer] based their pay rates on Franchisor’s power point example during training and by asking other business owners. [Employer] decided on a flat rate for all hours worked except public holidays so as to provide the same pay rate to [Employees] regardless of day worked.
FWI Koo deposed that:
a)on 15 November 2017 he notified Mr Dela Cruz that his preliminary findings were that Panol DC had contravened the Award and FW Act in respect of six employees and, amongst other things, asked it to review and calculate employee pay rates and underpayments for all employees;
b)on 5 December 2017 Mr Dela Cruz provided him with a “letter of explanation”, a spreadsheet containing estimated employee underpayments (“Underpayment Spreadsheet”) and pro-forma employment contracts for 17 to 20 year old employees.
c)on 19 December 2017, he was told during a conversation with Mr Dela Cruz that:
i)the Underpayment Spreadsheet had been based on the rosters;
ii)after Mr Panol and Mr Dela Cruz generated a roster they sent it to the Employees. The Employees would text them if they needed to make changes to it and Mr Panol and Mr Dela Cruz would alter the roster accordingly;
iii)employees were only given a welcome letter, not an employment contract;
iv)there was no supervisor or manager, instead the employees managed themselves;
v)Mr Dela Cruz attended Chatime Cinema City between December 2016 and late May 2017;
vi)Mr Panol and Mr Dela Cruz had not sought advice about wages from an accountant; and
vii)they had provided employees with offers of employment and updated pay rates by email on 18 December 2017;
d)on 9 April 2018 a telephone conference took place between him, FWI Spurrell, Mr Panol and Mr Dela Cruz during which Mr Dela Cruz expressed concern about participating in an interview:
… because of clauses in [their] contract that prohibit[ed] [them] from damaging the franchisor’s reputation
which they had seen occur at another store. Mr Panol also made the following statements:
We based figures on rosters on file. There were inconsistencies between rosters and payslips regarding hours. We looked at pay slips. Sometimes the employees changed shifts or worked extra hours. We looked at our phones for changes.
The payslips give us a true source of the information.
We have provided pay slips as we think accurately as possible.
e)included in the documents provided in response to a second notice to produce was a PDF copy of a PowerPoint presentation containing information about the FW Act and the Award; and
f)during a telephone conversation on 26 July 2018 Mr Dela Cruz told him that although they used Xero software, Mr Panol was responsible for payroll, and “amend[ed] the rosters manually and then used these manual rosters to prepare the payroll each week”.
FWI Koo deposed that Mr Panol told him during a conversation on 15 August 2018 that he expected Chatime Cinema City to make a loss.
FWI Koo’s evidence was that on 22 August 2018 Mr Panol notified him by email that the information on payslips had been rectified and now distinguished between rates for ordinary hours based on the employee’s age, Saturday and Sunday loading, overtime and annual leave loading. However, between that day and 3 September 2018, Mr Panol emailed him stating that Chatime Cinema City now employed 11 staff part-time and that:
Unfortunately, we have not taken corrective action towards this as the current state of the company does not have the capability to make the back payments.
FWI Koo deposed that searches of official records conducted by him between 18 and 20 February 2020 revealed that:
a)Mr Panol and Mr Dela Cruz were the only directors of Panol DC;
b)a liquidator had been appointed to Panol DC and on 1 November 2019 held $3.70 in a bank account;
c)the liquidator’s statutory report identified that the company owed $161,173 to Carlo and Cathy Cruz and $159,959 to Leiden and Francoise Panol.
FWI Koo’s evidence was that he obtained two reports from the Ombudsman’s Strategic Research, Analysis and Reporting Team on the take away sector and on emerging franchises. These reports indicated that:
a)the Take Away Food Services Industry was the third most common industry for disputes raised with the Ombudsman and that 1,970 disputes occurred within this sector between July 2016 and December 2018; and
b)of the seventy-six fast food, restaurant and café franchise businesses that had been audited by the Ombudsman, 78% had breached one or more workplace obligations.
Yuxin (Elaine) Chen
Ms Chen deposed that she arrived in Australia in February 2016 on a student visa and because of her visa requirements had initially found it difficult to get work. Before commencing with Panol DC in December 2016, her only paid employment had been an internship between July and September 2016 and a one day festival. Although she received some financial support from her parents, she needed to work to cover rent and living expenses while studying.
Ms Chen deposed that in December 2017, after using the pay calculator on the Ombudsman’s website, she had realised her pay rate was less than the Award rate for a casual and part-time employee and notified Mr Panol and Mr Dela Cruz of this on 12 January 2018. She deposed that Mr Dela Cruz’s response was to state that:
a)she had agreed to the $18.55 per hour pay rate;
b)she had been notified that “no leave or loading was to be paid in lieu of the agreed hourly rate and in turn they had provided [her] with training and minimum 3 hour shifts”;
c)he believed there to be no “discrepancy” regarding her pay;
d)the rosters had worked around her availability;
e)that she had been taken off the roster due because she had “taken drinks without paying for them … and had failed to abide by the rules”.
RESPONDENT’S EVIDENCE
Lawrence Chen
Lawrence Chen deposed that he used to be the Chief Financial Officer (“CFO”) of Infinite Plus Pty Ltd, now known as Chatime Australia Pty Ltd (“Chatime”). His evidence was that Chatime was the Australian franchisor of bubble milk tea franchises trading under that name and that in 2016 there had been around 70 Australian franchisees.
Mr Chen deposed that from May 2013 to April 2014, while the business was undergoing a period of expansion, he was Chatime’s head of finance and Charley Zhao was the managing director.
Mr Chen deposed that although between 2014 and April 2016 he worked elsewhere, Mr Zhao had regularly asked him to return to Chatime and in January 2016 told him that Chatime employees were being paid appropriate wages. He recommenced employment as Chatime’s CFO in April 2016. Mr Chen deposed that his position involved:
…all aspects of the financial performance of the business including analysing trends, risk and opportunities, advising the board on issues, systems and market analysis and identifying deals to increase the bottom line of the business,
but that neither he nor his team was in charge of Human Resources which was managed by Mr Zhao’s former wife, Ms Shen. He deposed that under her direction another employee, Mr Yeung, worked with franchises, providing them with advice about how to set up Chatime’s systems and practices.
Mr Chen’s evidence was that franchisees and stores had access to, and were encouraged to use, resources in the Chatime system called “T-Room” (training room). These resources included information to assist franchisees run their business, business policies and procedures, and Human Resource related documents.
Mr Chen deposed that he began correcting the practices of Chatime’s stores to ensure that the wages complied with the Award. He deposed that on 20 March 2017 all corporate stores implemented the Award. Afterwards training would be provided to franchises to bring them in line with the Award. He deposed that compliance was mandatory for all franchises and that commencing 2 August 2017 franchise training was rolled out. He deposed that presentations were held in Sydney on 20 and 25 September 2017.
Leiden Panol
Purchasing Chatime Cinema City
Mr Panol deposed that he and Mr Dela Cruz had long been friends and had first discussed the idea of starting a franchise around the middle of 2016. He deposed that, prior to beginning Chatime Cinema City, he had worked in graphic design for more than twelve years but had never run a business or employed staff and did not know about the Award or the FW Act. He said that as a young man he had worked as a kitchen hand and had been paid a set wage which paid the same on weekends as during the week and he was unaware that that in Australia minimum conditions of employment applied to all employees, although he did know about annual leave, sick leave and minimum wages.
Mr Panol deposed that they were interested in applying an established business model in order to facilitate their transition into business. He said that they decided to “go with a franchise” because they were inexperienced and wanted to get training and support from the franchisor. He deposed that after exploring different franchises they chose Chatime because:
a)they liked the products;
b)the franchise was expanding nationally and internationally, with 100 Australian and 2,500 international stores; and
c)the franchise had operated in Australia for over ten years.
Mr Panol’s evidence was that he and Mr Dela Cruz were told about the availability of the Chatime Cinema City store by Ben Hemphill, Chatime’s national franchise manager, at a meeting in late 2016. He deposed that Mr Hemphill gave them documents showing the business’s wages and finances and that the rosters and wage records showed that employees were paid a flat rate. He deposed that Mr Hemphill told them of Chatime’s success, the support it provided its franchisees, that there were “multiple interested buyers” for that store and reiterated several times that Chatime had a “proven business model”. Mr Panol deposed that he became persuaded that the business would be profitable if they followed the model.
Mr Panol’s evidence was that upon discussing the possible purchase and Mr Hemphill’s documentation with an accountant, they were told it “ha[d] potential” if the current budget and operations were followed. He deposed that because they trusted Chatime’s information and had not thought it would be an issue, they did not seek verification of employees’ pay rates from a solicitor or accountant.
Mr Panol deposed that he and Mr Dela Cruz signed the franchise agreements for the Chatime Cinema City store on 30 November 2016. He deposed that the store cost $410,000 but the total cost of the business was $512,000. He agreed that Chatime’s “Franchisee Business Evaluation Model” document recommended that they seek their own legal and accounting advice but said that the need to get independent legal advice was not emphasised; the emphasis was on the model being one that could work for them. Mr Panol deposed that he and Mr Dela Cruz each advanced $131,000 towards the purchase price while the remainder came from an unsecured bank loan. They also paid $50,000 franchisor fee to access and apply Chatime’s business methods. At a subsequent meeting, Mr Antonius and Mr Zhao both spoke of Chatime’s success and “proven business model”.
Training and running the store
Mr Panol deposed that over a two day period in December 2016, Mr Yeung, assisted by Mr Hemphill, trained him and Mr Dela Cruz at the head office on Chatime’s business model and operating structure. He deposed that Mr Yeung stressed to them that consistency across all franchises was essential to keep the brand strong and told them that franchise owners “follow the strict business model”.
Mr Panol deposed that he and Mr Dela Cruz were shown the T-Room which contained training materials, rosters, manuals, template management documents and contracts. They were also shown several documents relating to employee wages, including:
a)a PowerPoint presentation on employees’ flat pay rates which differed depending on age;
b)the Chatime Cinema City store “real time rosters” which showed flat rates paid to current employees;
c)a roster forecasting template that referred to flat rates, contracts and hourly rates; and
d)an Events Ops report calculating the business’s employee costs, which listed flat rates of $17.09 per hour.
Mr Panol deposed that Mr Yeung had not mentioned special allowances or employee entitlements and told them that:
We do not pay penalty rates and as a small business you will not need to pay penalties or loadings. We pay a flat rate for all hours worked except on public holidays.
Mr Panol’s evidence was that during December 2016, while he and Mr Dela Cruz learned the business model, Chatime effectively controlled the business and helped with budgeting, rostering, ordering stock and training staff. He deposed that supervision and training by Chatime continued until mid-February 2017. In cross-examination Mr Panol agreed that he had rung the Fair Work information line in December 2016 to check advice given by Mr Yeung to the effect that paying 17 year olds the full adult rate avoided the need to pay them penalty rates and was told that there was “flexibility in [those] clauses”.
Mr Panol deposed that they were also assigned a business development manager who met with them in December 2016 to look at wages and forecasts and who was regularly present at the store to provide advice on operational and sales matters. Mr Panol’s evidence was that all finances, including store sales, overheads and wages were provided to this business development manager on a monthly basis. He deposed that they were told by Mr Yeung to “mimic the operations of the Head Office stores” once their training concluded.
Mr Panol deposed that although they managed the business together, Mr Dela Cruz generally worked as the on-site manager, whereas he worked back-office. His evidence was that at first Mr Yeung assisted Mr Dela Cruz with employee interviews and that, apart from inserting their company name and rates of pay, the employment contracts had been extracted from T-Room. He deposed that they also used Chatime’s rosters and Xero accounting software.
Mr Panol relevantly deposed:
a)that their bookkeeper looked after the tax file number forms and would contact employees if information was incorrect;
b)all template employee contracts had been downloaded from the T-Room; and
c)after he had checked and approved wages and hours it was the bookkeeper, not him, who was responsible for and processed payroll although he did sometimes provide information to the bookkeeper where a shift had changed.
Mr Panol’s evidence was that employees entered the hours worked through an individual login connected to the Xero account and, once he and Mr Dela Cruz checked and approved the hours, payments and payslips were immediately generated by the system. He deposed that their bookkeeper had been provided with the relevant pay rates and the double pay requirements for public holidays and she emailed the payslips to employees. Mr Panol deposed that their monthly reporting obligations required them to generate a payroll summary which was provided to Chatime each payroll. His evidence was that he did not recall viewing the Xero generated payslips as, once the hours had been checked, there was no reason for him to do so. He deposed that he had not been aware before these proceedings that the payslips contained a notation referring to the Award and presumed that this information was entered by their bookkeeper who had full access to Xero, authorisation to approve working hours and to make changes to system documents.
Mr Panol deposed that on or around 10 December 2016 he emailed Mr Yeung about public holiday pay rates and was directed to Chatime’s franchise rates on T-Room and told that double time applied to public holiday pay rates.
Mr Panol’s evidence was that around March 2017 Chatime Cinema City was accruing debt, they had fallen behind on their loan repayments and had discovered discrepancies between the store’s numbers and those that Chatime had provided to them. He deposed that while Mr Dela Cruz continued as a manager off-site, the business was unable to pay his wage as an on-site manager. He deposed that, upon obtaining a second valuation they discovered the store was only worth $160,000.
Mr Panol’s evidence was that in late May 2017 they attempted to sell the business due to its insufficient sales, and the difficulty that they had paying the loan and invoices for franchise fee and stock. He deposed that there had been no interested purchasers.
Mr Panol’s evidence was that on 11 September 2017 he and Mr Dela Cruz received an invitation to a compulsory head office training session. Mr Panol deposed that on 25 September 2017, he, Mr Dela Cruz and other franchise owners attended the meeting run by Mr Chen, Mr Hemphill and others. He deposed that they were informed of the Award’s pay rates. He deposed that he “could not believe” that they had been given incorrect information when buying the business and other franchise owners stared at the presentation “in disbelief”. He deposed that, from a show of hands, almost all stores had received a notice to produce or were under investigation by the Ombudsman.
Mr Panol deposed that while he and Mr Dela Cruz took action to understand what was required and to implement a plan to ensure employees were paid in accordance with the Award, it also took them some time to understand and implement the part-time, casual and penalty rates. He deposed that the business was running at a significant loss and they were attempting to implement these changes without shutting it down.
Ombudsman’s Investigation
Mr Panol deposed that they assisted the Ombudsman’s investigation by acknowledging their fault and providing documents and calculations of underpayments. By December 2017 they were paying employees in accordance with the Award.
Mr Panol deposed that he and Mr Dela Cruz accepted fault immediately on receiving a Letter of Contravention on 7 August 2018. He deposed that they made it known to FWI Koo that they intended to rectify the underpayments but could not do so at that time because of the business’s financial position. He deposed that in mid-August 2018 he told FWI Koo:
If we pay the full amount in one payment, we would have no more funds to pay for the rent due under the lease, loan expenses and any wages. Head Office and external suppliers will stop providing us with stock and we will fail our leasing agreement. We will have to close down the business and everyone will lose their jobs.
Mr Panol deposed that they were interested in a payment plan which would enable the business to continue trading while making repayments but FWI Koo failed to respond to them about this idea.
Sale of Chatime Cinema City and rectification of underpayments
Mr Panol deposed that because they were unable to pay the loan, other overdue expenses or find a purchaser they re-sold the franchise to Chatime on 31 January 2019 for $77,500. He deposed that in March 2019 Chatime had re-advertised the business for $300,000. Mr Panol’s evidence was that when the proceeds of sale became available around the middle of February 2019:
a)$48,370.15 went towards outstanding debts owed to Chatime for franchise fees and stock;
b)the remaining funds were advanced toward the business loan, rent, external invoices, payroll, BAS and superannuation; and
c)any remaining funds went toward employee’s underpayments and the total loss incurred by the business as at 10 April 2019 was $329,892 excluding legal fees.
Employee underpayments were rectified by 17 April 2019 except those of one employee whom they had trouble locating and who was paid on 2 July 2019.
Apology and acknowledgment
Mr Panol apologised for the underpayments and deposed that they had not been intentional or deliberate. He deposed that prior to the 25 September 2017 he and Mr Dela Cruz had relied upon the information in T-Room, provided to them by Mr Yeung and reported monthly to Chatime.
Mr Panol’s evidence was that they co-operated with the investigation and provided relevant documents but had declined to participate in an interview because they were concerned that this might impact their Chatime franchise agreement and result in (adverse) consequences, perhaps even the termination of the franchise agreement.
Mr Panol deposed that the business, investigation and these proceedings had impacted him and his family personally and that he had used the remaining equity in their home to rectify the underpayments and to settle other debts owed by Panol DC. He deposed that he had taken employment as a graphic designer.
Carlo Dela Cruz
Purchasing Chatime Cinema City
Mr Dela Cruz deposed that the idea of a business partnership with Mr Panol began at a gathering in 2016. He had no prior business experience.
Mr Dela Cruz deposed that they researched suitable businesses, selected Chatime and met with Mr Hemphill. He deposed that Mr Hemphill showed them how well various stores were doing as well as their turnover, figures and successes. He deposed that Mr Hemphill said that Chatime had “a proven business model for profits”. Mr Dela Cruz deposed that Mr Hemphill described Chatime Cinema City store to them as an “excellent opportunity” and provided them with various documents including a spreadsheet containing a snapshot of operating costs and a breakdown of cost to revenue ratio. Mr Dela Cruz’s evidence was that when he asked Mr Hemphill about the 27.6 per cent wage costs, Mr Hemphill said:
That is a high percentage and is not across the board. With the right ratio of employees and franchise owners working over a 60 hour week, I would expect the figure to be around 22%.
Mr Dela Cruz deposed that they both came away from the meeting excited and decided to investigate finance.
Mr Dela Cruz deposed that each of them agreed to contribute capital of $131,000 with the remaining funds coming from an unsecured business loan. Based on the projections and running costs provided by Mr Hemphill, Mr Dela Cruz expected them to be able to repay the investment in two years and thereafter make a profit. Mr Dela Cruz deposed that an accountant told them, based on the records, that Chatime Cinema City had potential if operating costs and sales remained consistent.
Mr Dela Cruz deposed that in December 2016 they purchased the business for a total of $512,000.
Training and running of the Chatime Cinema City
Mr Dela Cruz deposed that he and Mr Panol were trained at Chatime’s head office. He deposed that Mr Yeung showed them the franchise network’s business model, operational materials and various documents and tools to assist with daily operations. He deposed that Mr Yeung stressed that it was important for the network to be consistent. He deposed that they were shown the T-Room’s training materials, reference guides, rostering tools and daily reports which were downloadable and available to assist them with operations. He deposed that the T-Room also contained recruitment documents such as template employment contracts and the Head Office’s scheduled rates of pay.
Mr Dela Cruz deposed that he was shown a template spreadsheet for rostering which showed employees’ flat rates of pay. He deposed that Mr Yeung told him that all Chatime employees were paid a flat rate depending on their age and he showed him sample rates. He deposed that Mr Yeung said:
We use flat rates across all our stores for all employees. The rates are higher than Fair Work’s. Because of this we are not required to pay staff any loading for weekends or night shifts, however, we do still have to pay the public holiday rates.
Mr Dela Cruz’s evidence was that he could not recall whether Mr Yeung referred to the Award but, if he did, it was in the context of telling them that the pay rates were higher than the Award. He deposed that when he asked how to calculate public holiday rates, Mr Yeung just told him to “double it”.
Mr Dela Cruz’s evidence was that Mr Yeung appeared confident, an expert and frequently referred to his prior experience with other franchises. He deposed that they applied all of Mr Yeung’s operational advice because there was no reason to doubt what they had been told. He deposed that given Chatime’s operational size and his own lack of experience as an employer, he perceived Chatime as “experts” and thought that they could simply apply the Chatime model.
Mr Dela Cruz deposed that he and Mr Panol would help one another but that he would manage the store’s daily operations while Mr Panol would manage rostering and finances.
Mr Dela Cruz deposed that Chatime Cinema City was his first experience of interviewing or employing staff and Mr Yeung taught him how to conduct interviews. His evidence was that Mr Yeung attended approximately five interviews between December 2016 and February 2017 to ensure he followed Chatime’s model, included the right information and did not forget anything.
Mr Dela Cruz deposed that Mr Yeung instructed him to raise remuneration at the conclusion of an interview and to ask the interviewee’s age. He deposed that the phrase “you will be paid in accordance with your age” was an approach which he copied from Mr Yeung. He deposed that his recollection was that he did not refer to the Award or a minimum wage. Mr Dela Cruz deposed that Mr Yeung had attended Elaine Chen’s interview because it took place in December 2016 when they were being trained by Chatime. He deposed that, based on the information provided to him by Mr Yeung, he would have stated that the rate was higher than the Fair Work rate. Mr Dela Cruz deposed that he gave the interviewees the same information that Mr Yeung had provided him in training. He deposed that he advised prospective employees that for a probationary period of four weeks they would be paid a training rate and if successful thereafter a higher rate dependant on their age.
Mr Dela Cruz deposed that Chatime supervised their operations for the first two months of trading and that Mr Yeung and the business development manager supervised staff training, wages, forecasting and any issues arising. He also deposed that Mr Yeung or the business development manager attended the store daily for the first month and twice a week thereafter. His evidence was that Chatime Cinema City received weekly visits from the business development manager until September 2018.
Mr Dela Cruz deposed that he first became aware of problems with the numbers provided to them by Chatime about four months into business. He deposed that invoices began to accrue, the business went backwards and Chatime regularly reminded them that deliveries of stock were cash on delivery. Mr Dela Cruz deposed that after analysis he realised that the operating figures given in their meetings with Chatime were different from the business’s real running costs and so to minimise operational costs he worked fourteen hour days, which impacted his family.
Mr Dela Cruz deposed that the franchise agreement required them to purchase all stock through the franchisor’s suppliers and that, on many occasions Chatime threatened to withhold their weekly delivery without which they would have been unable to trade. He deposed that, in March 2017, he had several discussions with Mr Hemphill and the business development manager seeking, unsuccessfully, the temporary waiver of some fees.
Mr Dela Cruz’s evidence was that around the same time he sought a valuation of the store from a broker because they were considering selling the business. He deposed that the broker advised that Chatime Cinema City was worth $160,000 and he realised that the remainder of the lease had no profit potential. He deposed that he “felt cheated and fooled”.
Mr Dela Cruz deposed that Chatime Cinema City’s financial position was so poor that after three months he and Mr Panol concluded that he should no longer be paid a wage or employed as an in-house manager. He deposed that as a result of a low volume of sales and high overheads this was the only way for them to cut costs. He deposed that in April 2017 he obtained a contract managing insurance claims but continued to manage the business outside of his work hours and that he and Mr Panol were considering selling the store.
Mr Dela Cruz deposed that employees identified on the rosters with an “s” were the contact persons when neither he nor Mr Panol were on site. He deposed that this became more important in May 2017 once he stopped working for Chatime Cinema City. He deposed that at the time he was not aware that they had to pay employees with extra responsibilities more and that had he known this, he would not have appointed half of the employees to the position of supervisor when the business was losing money.
Mr Dela Cruz deposed that during 2017 FWI Koo notified him that Chatime Cinema City was being assessed and that he would be asking for information such as team rosters, forms, contracts and all employee payslips. Mr Dela Cruz deposed that he told FWI Koo that they were happy to assist and provide him the information required. FWI Koo said:
We are here to help with your business’s compliance and provide any support needed.
Mr Dela Cruz’s evidence was that in or around July 2017 he and Mr Panol were invited to a training session for a new payroll software system which was to be implemented across the franchise. He deposed that on 24 September 2017 Mr Chen and other Chatime Head Office employees presented the training to Mr Dela Cruz, Mr Panol and other franchisees. Mr Dela Cruz deposed that Mr Chen started by talking of the Ombudsman and minimum wage rates which “confused” him because the invitation had not mentioned this topic. His evidence was that “half the people in the room” raised their hands when Mr Chen asked whether they had been investigated by the Ombudsman. He deposed that Mr Chen then presented information about minimum rates and entitlements. Mr Dela Cruz deposed that he “couldn’t believe the information that was shown” which was unlike the information provided in their December 2016 training by Mr Yeung and also differed from the model and systems that their store had implemented based on Mr Yeung and other’s direction.
Mr Dela Cruz deposed that he and Mr Panol conferred after the meeting about what steps they could take. He deposed that they “took some time” to understand the requirements and because Chatime Cinema City was losing money daily, how they could apply the changes while decreasing the effects such changes had on the business. Mr Dela Cruz’s evidence was that throughout this period they complied and co-operated with FWI Koo’s requests. He deposed that he and Mr Panol were working hard to keep the store operational and by December 2017 the pay rates were compliant.
Mr Dela Cruz’s evidence was that he provided FWI Koo with contracts downloaded from T-Room as an example of information they had received from Chatime. In respect of their conversation with FWI Koo on 19 December 2017, Mr Dela Cruz deposed:
a)that they used spreadsheets to create rosters based on Mr Yeung’s training. He deposed that staff notified them by text message of any changes to the roster and they advised staff of changes after the spreadsheet had been updated;
b)he did not recall telling FWI Koo that they had no contracts and deposed that their Welcome Letter had been adapted from the T-Room version by including their company name and higher pay rates; and
c)he only worked in the store until May 2017 and thereafter was employed elsewhere.
Mr Dela Cruz deposed that during their conversation on 9 April 2018, he told FWI Koo and FWI Spurrell that they had paid employees flat rates based on what Mr Yeung had told them about “how [they] should operate the rosters according to [Chatime’s] business model”. His evidence was that FWI Koo and FWI Spurrell asked them questions about Chatime and the information provided to them and so he thought that this was who they were interested in investigating. He deposed that the inspectors “pressured” them to provide an interview because it was in their “best interests” to do so. He deposed that he and Mr Panol were concerned about doing so because they were worried about breaching their franchise agreement. He also told them that their rates had been based on those provided by Chatime but they decided to pay more because Mr Yeung said that that would “attract better employees”.
Mr Dela Cruz deposed that they were given a notice of contravention on or around 7 August 2018 and soon after he notified FWI Koo that:
The business is deep in debt. Leiden and I are working on a plan to rectify the issues, and ensuring we have enough staff to keep running.
Mr Dela Cruz’s evidence was that FWI Koo gave him and Mr Panol the opportunity to provide a recorded interview and stressed that it would be advantageous for them to do so because of the contraventions. Mr Dela Cruz deposed that, at the time, he was anxious that Chatime would perceive them giving an interview as a franchise agreement breach and was scared they might lose Chatime Cinema City. He deposed that neither he nor Mr Panol chose to provide an interview.
Sale of Chatime Cinema City
Mr Dela Cruz’s evidence was that they decided to sell the business as soon as possible after receiving the notice of contravention. He deposed that he was “extremely stressed” and it was having an impact on his family and his financial position. He deposed that they unsuccessfully advertised the store with an agency and on Gumtree.
Mr Dela Cruz’s evidence was that he contacted Mr Chen about the situation in December 2018 and he and Mr Panol eventually accepted Chatime’s offer to re-purchase the franchise for $77,500. He deposed that their debts to Chatime were $48,370.15. He deposed that on 31 January 2019 they resold the business to Chatime, but that settlement was delayed. He deposed that after paying invoices there had been no funds remaining to make the repayments and Panol DC’s debts were $299,413 as at 10 April 2019.
Apology and acknowledgment
Mr Dela Cruz deposed that he was “very sorry” for the underpayments. He deposed that, although it was not his intention to do so, as the business’s manager and director he should not have let this occur. He deposed that he wrongly presumed that Chatime’s information had been correct and, because he saw Mr Yeung as an industry expert, trusted and was reassured by the information provided by him. He deposed that, in hindsight, they should have verified whether Chatime Head Office’s information was correct.
Mr Dela Cruz deposed that he and Mr Panol had never missed a payroll date and felt that they maintained a good work culture and received positive feedback from staff upon leaving the business. His evidence was that he and Mr Panol both contributed personal funds to meet the underpayment sums which involved, for him, borrowing $20,000 from his parents. He deposed that they apologised personally via email to each underpaid employee.
CONSIDERATION
The preceding summary of the parties’ evidence sets out the facts I find in this case, subject to the admissions contained in the SOAF and in the further amended defence which I accept.
The question of penalty is to be determined as follows:
a)the Court is to identify the separate contraventions involved. Each contravention of a separate obligation in the Award and the FW Act is a separate contravention: Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 at 223; Kelly v Fitzpatrick (2007) 166 IR 14 at 17 [11]; McIver v Healey [2008] FCA 425 at [16]; Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153 at 159 [13]; Fair Work Ombudsman v Lohr [2018] FCA 5 at [29];
b)the Court should consider whether contraventions resulting from any particular course of conduct ought to be treated as a single contravention under s.557(1) of the FW Act or any of them (“course of conduct”);
c)because a contravener should not be penalised twice for what is, in substance, the same conduct, to the extent that two or more contraventions arise out of the same course of conduct or the one transaction, that fact should be taken into account when considering whether a “concurrent” or single penalty should apply to those contraventions: Johnson v The Queen (2004) 78 ALJR 616 at [4]-[5]; Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151 at [61] - [63]. Australian Competition and Consumer Commission v Yazaki Corporation (2018) 262 FCR 243 at 294-296 [226]-[234], (the “course of conduct” principle). These considerations are distinct from the totality principle: Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at 396 – 398 [41]-[46] (per Stone and Buchanan JJ);
d)to the extent that particular conduct may attract penalties under two or more Federal statutory provisions, the Court should have regard to the operation of s.556 of the FW Act which protects parties from civil double jeopardy: see Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner [2019] FCAFC 201. The parties did not contend that s.556 was engaged in this case;
e)the Court should determine an appropriate penalty to impose in respect of each contravention that is to be penalised (whether a single contravention, a course of conduct or group of contraventions) having regard to all of the circumstances of the case; and
f)having fixed an appropriate penalty for each contravention or group of contraventions, the Court should consider the aggregate penalty to determine whether it is an appropriate response to the contravening conduct: Kelly v Fitzpatrick at 21 - 22 [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560, (the “totality principle”).
As Tracey J said in Kelly v Fitzpatrick at 18-19 [14], in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Mowbray FM identified “a non-exhaustive range of considerations to which regard may be had in determining whether particular conduct calls for the imposition of a penalty, and if it does the amount of the penalty”. Justice Tracey adopted those considerations, describing them as follows:
· The nature and extent of the conduct which led to the breaches.
· The circumstances in which that conduct took place.
· The nature and extent of any loss or damage sustained as a result of the breaches.
· Whether there had been similar previous conduct by the respondent.
· Whether the breaches were properly distinct or arose out of the one course of conduct.
· The size of the business enterprise involved.
· Whether or not the breaches were deliberate.
· Whether senior management was involved in the breaches.
· Whether the party committing the breach had exhibited contrition.
· Whether the party committing the breach had taken corrective action.
· Whether the party committing the breach had cooperated with the enforcement authorities.
· The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
· The need for specific and general deterrence.
Considerations relevant to this case are:
· The nature, extent and circumstances of the conduct which led to the breaches;
· Whether there had been similar previous conduct by the respondent;
· Whether the breaches were properly distinct or arose out of the one course of conduct;
· The size of the business enterprise involved;
· The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements;
· Whether the party committing the breach had exhibited contrition, had taken corrective action and had co-operated with the enforcement authorities;
· The need for specific and general deterrence; and
· The respondents’ personal and financial circumstances.
Nature, extent and circumstances of the contraventions
The agreed contraventions have been set out earlier in these reasons. In brief, they:
a)concerned underpayment and record-keeping breaches of the Award over a period of close to eleven months;
b)impacted seventeen casual employees, including junior employees, who were variously employed at the Level 1 and Level 2 Award classifications; and
c)occurred because the Employees were paid flat rates and were not paid a special clothing uniform allowance.
An important aspect of this matter was the unquestioned reliance by the respondents on advice received from Mr Yeung of Chatime. The Ombudsman submitted that although reliance on professional advice might justify mitigation of a penalty, reliance on advice from an employee, employees or another employer would not and, in any event, reliance on Mr Yeung’s advice had not been reasonable. The respondents argued that, given their inexperience, it had not been unreasonable of them to rely on the advice of the franchisor and, in particular, its Mr Yeung.
Discussion
At the outset it should be recorded that the respondents accepted that they were not excused from their legal obligations as a result of their reliance on Chatime but rather submitted that taking Chatime’s guidance as to systems and rates of pay was reasonable given their inexperience in business.
The evidence did not indicate that Mr Yeung was qualified to give advice on human resources or workplace relations but it also did not indicate that the respondents were aware of this or had any reason to doubt the accuracy of the advice they were given. The fact that their search for independent counsel did not go beyond obtaining an accountant’s advice on the financial prospects of the proposed enterprise does not suggest that they were avoiding information regarding their obligations as employers. In that regard, the suggestion that the respondents obtain independent advice, made in a document dealing with financial issues, does not advance this discussion given that that document had no obvious relevance to the matters currently under consideration, namely compliance with industrial statutes. As there was no obvious link between the two, the fact that that suggestion was not acted on is not, in my view, evidence of a conscious or reckless disregard by the respondents of their obligations to their employees.
Similarly, the fact that Mr Panol had contacted the Fair Work Infoline on 14 December 2016 does not advance the Ombudsman’s arguments because I accept Mr Panol’s explanation of that call. His apparent appreciation that there was some legal structure associated with pay entitlements does not detract from his evidence that he relied on Chatime’s advice on the appropriate system to implement. It should be noted in this connection that his evidence was to the effect that what he was told by the Fair Work Infoline was not inconsistent with what Mr Yeung had told him.
It was implicit in that and other conduct that the respondents were aware that they were not obliged to act on all the advice they received from Chatime. It can also be accepted that prior to acquiring the Chatime franchise, Messrs Panol and Dela Cruz had been employees. However, those matters do not mean that the respondents’ understanding of employment law and their obligations under it had reached a level sufficient for them to know, without further advice or study, how to discharge their duties as employers.
I accept that Messrs Panol and Dela Cruz chose a franchise model because of the support it purportedly offered and so it is unsurprising that they took the franchisor’s advice. Consequently, although the Ombudsman submitted that the respondents’ reliance on Chatime’s advice should be given no substantive weight in mitigation of penalty, I conclude that to do so would be unfair and unrealistic. Given the respondents’ lack of experience, their dependence on the franchisor is unsurprising and unexceptional. I accept that the respondents had a genuine belief that what they were doing was correct even though it seems clear that they were misled by Chatime as to their responsibilities.
Nevertheless, those facts cannot wholly excuse the respondents’ failures. It should be remembered that, uninformed and naive as they were, the respondents were nevertheless in a position of advantage vis à vis the Employees who were lower paid workers to whom the underpayments would have been significant and who were, through youth, inexperience and necessitousness, or through any one of those characteristics, vulnerable to an incomplete observance of their rights.
Further, the respondents’ failure to keep records cannot be explained as the underpayment contraventions have been explained because that failure has not been shown to have arisen from reliance on Chatime’s practices. Rather, it appears to have arisen from a lack of curiosity on the respondent’s part as to the existence of any legal requirements in that connection.
Finally, I have not overlooked the respondents’ further contraventions after they were informed at the September 2017 presentation that they were underpaying their staff, in that those contraventions continued until December 2017. One can appreciate the difficult financial position in which the respondents found themselves but they made a choice to continue with the business even though it meant that they were knowingly underpaying the Employees.
Similar previous conduct
I accept that this was the respondents’ first contravention of the FW Act and I note that they submitted that they should therefore be allowed a substantial discount on penalty.
This is a matter to which the Court will have regard.
Were the contraventions were properly distinct
Section 557(1) of the FW Act provides that multiple contraventions of certain of the Act’s civil penalty provisions can be treated as a single contravention if, relevantly, they arose out of a particular course of conduct. The respondents’ contraventions can be dealt with in that manner. However, the period in which the contraventions were committed overlapped with the 15 September 2017 commencement of the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 which introduced the concept of a serious contravention together with the greater maximum penalty that attaches to such breaches. Clause 18(2) of pt.4 of sch.1 to the FW Act provides in that regard that a contravention constituted by a course of conduct occurring before 15 September 2017 is deemed to be one particular course of conduct contravention while a contravention constituted by the same course of conduct continuing after the start of 15 September 2017 is deemed to be a separate course of conduct contravention. The effect of the amendment and the consequential provision is that contraventions that occurred before 15 September 2017 and those that occurred after that date but which nevertheless arose out of the same decisions only became distinct contraventions because of a legislative amendment.
The Ombudsman submitted that it was open to the Court to group two discrete but consecutive and linked contraventions together, and fitting to apply a single penalty to both, a submission that the respondents supported. The grouping principle aims to prevent a contravener from being punished more than once for the same conduct: Fair Work Ombudsman v Tiger Telco Pty Ltd (in liq) [2012] FCA 479 at [24], Fair Work Ombudsman v Lifestyle SA Pty Ltd at [61]-[63]. That general principle must yield to contrary legislative intention but no intention of that sort is manifested in cl.18(2) of pt.4 of sch.1 to the FW Act, which relevantly provides:
18 Application of amendments—increasing maximum penalties for contraventions of certain civil remedy provisions
(1)Sections 539, 557A and 557B of the amended Act apply in relation to conduct engaged in on or after the commencement of this Part.
(2) If:
(a)conduct was engaged in by a person before and after that commencement; and
(b)the conduct is part of a course of conduct referred to in subsection 557(1);
the conduct engaged in before that commencement is to be treated as constituting a separate contravention from the conduct engaged in after that commencement for the purposes of section 557.
…
That clause provides that there are, in cases of particular conduct continuing over 15 September 2017, two contraventions. It does not say that there must be two penalties. In Pearce v The Queen (1998) 194 CLR 610, McHugh, Hayne and Callinan said at 623 [40]:
To the extent to which two offences of which an offender stands convicted contain common elements, it would be wrong to punish that offender twice for the commission of the elements that are common. No doubt that general principle must yield to any contrary legislative intention, but the punishment to be exacted should reflect what an offender has done; it should not be affected by the way in which the boundaries of particular offences are drawn. Often those boundaries will be drawn in a way that means that offences overlap. To punish an offender twice if conduct falls in that area of overlap would be to punish offenders according to the accidents of legislative history, rather than according to their just deserts.
Grouped by reference to discrete courses of conduct, the contraventions committed by Panol DC and Mr Panol were:
a)failure to pay minimum weekly wage in contravention of cl.17 of the Award and s.45 of the FW Act;
b)failure to pay junior rates in contravention of cl.18 of the Award and s.45 of the FW Act;
c)failure to pay casual loading in contravention of cl.13.2 of the Award and s.45 of the FW Act;
d)failure to pay the public holiday penalty rate in contravention of cl.30.3 of the Award and s.45 of the FW Act;
e)failure to pay the special clothing allowance in contravention of cl.19.2(b)(ii) of the Award and s.45 of the FW Act;
f)failure to make and keep employee records required by reg.3.33(2) of the FW Regulations, in contravention of s.535(2) of the FW Act;
g)failure to make and keep employee records required by reg.3.33(3)(d) of the FW Regulations, in contravention of s.535(2) of the FW Act; and
h)failure to make and keep employee records required by reg.33(3)(e) of the FW Regulations, in contravention of s.535(2) of the FW Act.
Similarly grouped, the contraventions committed by Mr Dela Cruz were:
a)failure to pay minimum weekly wage in contravention of cl.17 of the Award and s.45 of the FW Act;
b)failure to pay junior rates in contravention of cl.18 of the Award and s.45 of the FW Act;
c)failure to pay casual loading in contravention of cl.13.2 of the Award; and s.45 of the FW Act;
d)failure to pay the public holiday penalty rate in contravention of cl.30.3 of the Award and s.45 of the FW Act; and
e)failure to pay the special clothing allowance in contravention of cl.19.2(b)(ii) of the Award and s.45 of the FW Act.
The Ombudsman additionally submitted that it was open to the Court to consider further grouping the contraventions as follows:
a)the three contraventions of s.535(2) of the FW Act resulting from the first and second respondents’ failure to make or keep the records prescribed by reg.3.22(2), 3.33(3)(d) and 3.33(3)(e) of the FW Regulations; and
b)the respondents’ failure to pay minimum rates of pay, whether adult rates under cl.17 of the Award or junior rates under cl.18 of the Award.
The respondents supported that submission.
I accept those additional submissions. Consequently, the contraventions in respect of which penalties will be considered are:
a)in respect of Panol DC and Mr Panol:
i)failure to pay minimum weekly wages, in contravention of s.45 of the FW Act;
ii)failure to pay casual loading in contravention of cl.13.2 of the Award and s.45 of the FW Act;
iii)failure to pay the public holiday penalty rate in contravention of cl.30.3 of the Award and s.45 of the FW Act;
iv)failure to pay the special clothing allowance in contravention of cl.19.2(b)(ii) of the Award and s.45 of the FW Act; and
v)failure to make and keep employee records required by the FW Regulations, in contravention of s.535(2) of the FW Act;
b)in respect of Mr Dela Cruz:
i)failure to pay minimum weekly wages, in contravention of s.45 of the FW Act;
ii)failure to pay casual loading in contravention of cl.13.2 of the Award and s.45 of the FW Act;
iii)failure to pay the public holiday penalty rate in contravention of cl.30.3 of the Award and s.45 of the FW Act; and
iv)failure to pay the special clothing allowance in contravention of cl.19.2(b)(ii) of the Award and s.45 of the FW Act.
Size of the business
The respondents submitted that the Court should have regard to the fact that the business was small.
An enterprise with large resources is less likely than a small business to have an excuse for failing to inform itself of the requirements of industrial laws and instruments relevant to its fields of endeavour but the smallness of an enterprise is insufficient, alone, to excuse ignorance of such matters. In this case no evidence was adduced to suggest that the size of Panol DC’s operation or Messrs Panol and Dela Cruz’s limited means imposed any material restriction on their ability to inform themselves of their obligations or to act in accordance with them.
Involvement of senior management
This consideration has been included in these reasons because the Ombudsman contended that it was relevant to the setting of penalties, submitting that Messrs Panol and Dela Crus were the only two directors of Panol DC. I do not agree that this consideration is relevant as submitted but, in light of the Ombudsman’s submissions, reference must be made to it.
The contraventions occurred with the admitted participation and knowledge of both Mr Panol and Mr Dela Cruz but Panol DC was a tiny company with a tiny operation that comprised only them and a number of part time or casual staff. Consequently, “senior management” is something of a misnomer as far as they are concerned. It might be relevant to penalty that a contravention by an organisation of some size was committed by members of its senior management rather than by “relatively junior staff acting within the scope of their authority”: Construction, Forestry, Mining and Energy Union v Coal and Allied Operations Pty Ltd (No 2) (1999) 94 IR 231 at 232-233 [11]; see also NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 292, but that was not this case.
Given Panol DC’s size, the fact that Messrs Panol and Dela Cruz were its directors has no particular significance for the setting of penalties.
The need to ensure compliance with minimum standard
By failing to pay a minimum wage to the Employees, the respondents breached one of the FW Act’s main objects, namely to “… [ensure] a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders”. If appropriate records are not kept, the maintenance of those minimum terms is hampered because their absence helps to create “a structure within which breaches of the industrial laws can easily be perpetrated”: Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd [2012] FMCA 258 at [67]
The Ombudsman submitted that the respondents’ admitted failure to keep appropriate records made it impossible for her to assess accurately the Employees’ penalty entitlements for evening and weekends worked. As the Ombudsman submitted, that was a serious breach.
Co-operation, contrition and corrective action
The Ombudsman conceded that the Court should give weight to the co-operation that the respondents provided throughout her investigation but submitted that any discount applied to Messrs Panol and Dela Cruz’s admissions should be less than that of Panol DC. This was because Panol DC’s admissions of liability were made shortly after the commencement of the proceeding whereas Messrs Panol and Dela Cruz only made admissions just prior to the scheduled contraventions hearing. The respondents agreed that the timing of their admissions would bear on any discount on penalty that might be afforded them.
Even so, regard should also be had to the considerable degree of co-operation that the respondents gave the Ombudsman during the course of her investigation and to the fact that, apart from one underpayment corrected on 2 July 2019, all underpayments had been corrected by 17 April 2019. The Ombudsman remarked on the time that had passed since the respondents were first alerted to the underpayments but did not acknowledge the uncontested fact that Messrs Panol and Dela Cruz had suffered a significant financial blow and had limited resources. It is also not apparent, absent the combined application of s.545(2)(b), which concerns Court-ordered compensation for loss caused by a contravention, and s.500, which deems an accessory to a contravention to have committed that contravention, whether Messrs Panol and Dela Cruz had any obligation beyond a moral one to pay wages owed by Panol DC. In any event, the wages were paid.
Further, when doing so, Messrs Panol and Dela Cruz said to their former employees:
Hello,
I hope you've been well.
As you aware by now, The Fair Work Ombudsman in 2017 conducted an audit on wages within our company. Since then we have been cooperating with FWO to resolve any underpayment found.
As your previous employer we wish to apologise that this had happened and through our cooperation with FWO the amounts of your underpayment has been finalised and the amount we have been instructed to pay will be paid into your account within 48 hours of this email.
Again we apologise that this incident occurred and we thank you again for your efforts during your employment.
Wishing you the very best
Leiden and Carlo
The parties disagreed on whether Messrs Panol and Dela Cruz’s expressions of regret and remorse were sincere and the respondents argued that no legitimate distinction could be drawn between Panol DC and its directors in terms of the expression of remorse. Notwithstanding the Ombudsman’ submissions, the evidence supports a conclusion that the expressions of regret were genuine. While not abject, the apology to the Employees was clear enough and not qualified. As to its timing, I note that it followed the sale of the business back to the franchisor which produced some funds. While the delay was regrettable, the evidence does not suggest that the respondents had prevaricated over making good the underpayments and had been constrained only by their own limited resources which required them to borrow to be able to make the payments.
Messrs Panol and Dela Cruz have also expressed regret in their affidavits. They were not cross-examined on those statements.
Having regard to all these matters, I consider it appropriate to apply a discount of 35% to Panol DC’s penalty and 25% to Messrs Panol and Dela Cruz’s penalties.
Deterrence
The respondents have corrected the underpayments and appear to have exited the fast food industry. On that basis I conclude that the penalties to be imposed do not need to include an element for specific deterrence.
However, I accept the Ombudsman’s submission in relation to the need for general deterrence that there are extensive non-compliance issues across the Take Away Food Services Industry and that there is a need to communicate to employers a no-tolerance policy of underpayment and record-keeping contraventions, particularly as that industry employs a vulnerable workforce of visa holders. I also accept the Ombudsman’s further submission that there are significant levels of non-compliance within the franchise sector and the penalty to be imposed on the respondents should recognise this and underline the necessity for franchisees to comply with the workplace laws in Australia.
The respondents submitted in this connection that the weight given to general deterrence should not impose a “crush[ing]” penalty on them or make them scapegoats.
The respondents also submitted that the Ombudsman’s publication of the matter ought to reduce the need for general deterrence and should be factored into the imposition of any penalties. However, the relevant issue is the deterrent effect of the penalty to be imposed. The effect of prior publicity concerning the Ombudsman’s investigation and its consequences is only incidental to that and should not affect the penalty which would otherwise be imposed.
The respondents’ personal and financial circumstances
The respondents submitted that Messrs Panol and Dela Cruz had young families, had lost their savings, had experienced substantial personal impact and that any penalty on them would affect them significantly. So much may be accepted, but as the respondents’ conduct had significant impact on vulnerable employees which Messrs Panol and Dela Cruz could have avoided, those matters have not have played a significant part in determining what pecuniary penalties the contraventions should attract.
Penalties
Although the first respondent is in liquidation, a penalty may be imposed on it even if it is unlikely that it will ever be paid, if to impose it would send a clear message of deterrence to other franchise and fast food industry employers: Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2007) 161 FCR 513 at 519 [19]-[21].
The parties offered different possible approaches to the setting of the penalties, to which I have had regard. In determining the penalties to be imposed I have also had regard to the principle of proportionality, the purposes of sentencing and the task of instinctive synthesis of various factors into a single result which were discussed by Barker J in Australian Building & Construction Commissioner v Construction, Forestry, Mining & Energy Union (No 2) (2010) 199 IR 373 at 376 [4]-[7]. I have also had regard to the fact that until 15 September 2017 the maximum pecuniary penalty for each contravention of s.535 was 30 penalty units for individuals and 150 penalty units for corporations, figures which doubled on that day, and to the fact that in the period 2 January 2017 to 30 June 2017 the value of a penalty unit was $180 rather than $210 as it was at the end of the period of contraventions: Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 at [396]–[401]. I consider the appropriate penalties to be:
Panol DC Provision(s) contravened Gross Penalty 35% discount Net penalty Failure to pay the Employees their minimum weekly wages, in contravention of s.45 of the FW Act 15,000 5,250 9,750 Failure to pay casual loading in contravention of cl.13.2 of the Award; and s.45 of the FW Act 18,000 6,300 11,700 Failure to pay the public holiday penalty rate in contravention of cl.30.3 of the Award and s.45 of the FW Act 7,000 2,450 4,550 Failure to pay the special clothing allowance in contravention of cl.19.2(b)(ii) of the Award and s.45 of the FW Act 4,000 1,400 2,600 Failure to make and keep employee records required by the FW Regulations, in contravention of s.535(2) of the FW Act 20,000 7,000 13,000 TOTAL 64,000 22,400 41,600
Mr Panol Provision(s) contravened Gross Penalty 25% discount Net penalty Failure to pay the Employees their minimum weekly wages, in contravention of s.45 of the FW Act 3,000 750 2,250 Failure to pay casual loading in contravention of cl.13.2 of the Award; and s.45 of the FW Act 3,600 900 2,700 Failure to pay the public holiday penalty rate in contravention of cl.30.3 of the Award and s.45 of the FW Act 1,400 350 1,050 Failure to pay the special clothing allowance in contravention of cl.19.2(b)(ii) of the Award and s.45 of the FW Act 800 200 600 Failure to make and keep employee records required by the FW Regulations, in contravention of s.535(2) of the FW Act 4,000 1,000 3,000 TOTAL 12,800 3,200 9,600
Mr Dela Cruz Provision(s) contravened Gross Penalty 25% discount Net penalty Failure to pay the Employees their minimum weekly wages, in contravention of s.45 of the FW Act 3,000 750 2,250 Failure to pay casual loading in contravention of cl.13.2 of the Award; and s.45 of the FW Act 3,600 900 2,700 Failure to pay the public holiday penalty rate in contravention of cl.30.3 of the Award and s.45 of the FW Act 1,400 350 1,050 Failure to pay the special clothing allowance in contravention of cl.19.2(b)(ii) of the Award and s.45 of the FW Act 800 200 600 TOTAL 8,800 2,200 6,600
The penalties total $41,600, $9,600 and $6,600 for Panol DC, Mr Panol and Mr Dela Cruz respectively. I believe that such totals are just and appropriate.
However, I am also of the view that the penalties imposed on Messrs Panol and Dela Cruz for the underpayment contraventions in which they were involved should be suspended and potentially set aside after three years. I have reached this conclusion because these were their first contraventions of the FW Act, they have left the fast food industry and are unlikely to return to it and because I accept that their institution of a regime of underpayment of the Employees was unintentional and arose from Messrs Panol and Dela Cruz’s uninformed reliance on Chatime’s advice. In some respects, they were victims too.
The Ombudsman sought additional orders which assumed that the respondents would be continuing in business. As they are not, it is not necessary to make those orders.
CONCLUSION
There will be declarations of the sort referred to earlier in these reasons.
There will also be orders for the payment of the penalties identified and for the suspension and possible discharge of some of those penalties if Mr Panol and Mr Dela Cruz commit no further contraventions of the FW Act in the next three years.
I certify that the preceding one hundred and thirty-six (136) paragraphs are a true copy of the reasons for judgment of Judge Cameron
Associate:
Date: 2 March 2021
ANNEXURE A
STATEMENT OF AGREED FACTS
This Statement of Agreed Facts (SOAF) is an agreed document between the applicant, the Fair Work Ombudsman (FWO), and the First Respondent, Panol DC Pty Ltd trading as "Chatime Cinema City” (Company) (collectively, the Parties), and in accordance with section 191 of the Evidence Act 1995 (Cth).
A. THE APPLICATION
On 30 March 2019, the FWO filed an Application and Statement of Claim in this Court against the Company, Mr Panol and Mr Dela Cruz, in respect of various contraventions of the Fair Work Act 2009 (FW Act) and the Fast Food Industry Award 2010 (Fast Food Award).
B. ADMITTED CONTRAVENTIONS
On the basis of the facts set out below, the Company admits to contravening the following civil remedy provisions of the FW Act:
a)section 45 of the FW Act by failing to pay Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Shaodong Wu, Xi Feng, Xiao Zhang, Ying Zhang, Joshua Tran and Rebecca Feng the minimum rate of pay pursuant to clause 17 of the Fast Food Award;
b)section 45 of the FW Act by failing to pay Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Rebecca Feng and Joshua Tran the junior minimum rate of pay pursuant to clause 18 of the Fast Food Award;
c)section 45 of the FW Act by failing to pay Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Shaodong Wu, Xi Feng, Xiao Zhang, Ying Zhang, Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Rebecca Feng, Joshua Tran and Mariana Ishak the casual loading pursuant to clause 13.2 of the Fast Food Award;
d)section 45 of the FW Act by failing to pay Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Joshua Tran, Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Xi Feng, Ying Zhang and Michelle Lin the public holiday penalty rate pursuant to clause 30.3 of the Fast Food Award;
e)section 45 of the FW Act by failing to pay Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Shaodong Wu, Xi Feng, Xiao Zhang, Ying Zhang, Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Rebecca Feng, Joshua Tran, Mariana Ishak and Michelle Lin the special clothing allowance pursuant to clause 19.2(b)(ii) of the Fast Food Award;
f)section 535(2) of the FW Act, by failing to make and keep for seven years records which included information as to, if an employee is a casual employee guaranteed a rate of pay set by reference to a period of time worked, the hours worked by the employee, pursuant to regulation 3.33(2) of the FW Regulations;
g)section 535(2) of the FW Act, by failing to make and keep for seven years records which included information as to, if an employee is entitled to be paid a penalty rate, the details of that entitlement, pursuant to regulation 3.33(3)(d) of the FW Regulations; and
h)section 535(2) of the FW Act, by failing to make and keep for seven years records which included information as to, if an employee is entitled to be paid a monetary allowance, the details of that entitlement, pursuant to regulation 3.33(3)(e) of the FW Regulations.
C. THE PARTIES
The Applicant
The Applicant is and was at all relevant times:
a)a statutory appointee of the Commonwealth appointed by the Governor-General, pursuant to section 687(1) of the FW Act;
b)a Fair Work Inspector pursuant to section 701 of the FW Act; and
c)a person with standing to apply for orders in respect of contraventions of civil remedy provisions under the FW Act pursuant to section 539(2) of the FW Act.
The First Respondent
The First Respondent, the Company, is and was at all relevant times:
a)a proprietary limited company incorporated under the Corporations Act 2001 (Cth) and registered since 25 October 2016, and
b)a constitutional corporation within the meaning of section 12 of the FW Act; and
c)a company whose directors were the Second Respondent, Mr Leiden Panol and the Third Respondent, Mr Carlo Dela Cruz.
At all relevant times, the Company was:
a)an entity operating a shop selling bubble-teas predominantly for takeaway, located at Shop 1, 505 George Street, Sydney, New South Wales and trading as "Chatime Cinema City" (Business);
b)a franchise under the "Chatime" brand, pursuant to an agreement with Infinite Plus Pty Ltd dated 30 November 2016 and effective from 29 November 2016; and
c)the employer of the 17 employees referred to in paragraph 6 below (Employees) during various periods from 2 January 2017 to 26 November 2017 (Assessed Employment Periods).
D. BACKGROUND AND INVESTIGATION
The Employees
Names and ages and visa conditions of the Employees
During the Assessed Employment Periods, the Company employed the following 17 Employees to work at the Business between the following dates:
Employee
Assessed Employment Period
Shaodong “Clark” Wu (Clark)
2 January to 24 September 2017
Yuxin "Elaine" Chen (Elaine)
2 January to 5 November 2017
Michelle Lin (Michelle)
2 January to 30 July 2017
Jasmine Yiamkati (Jasmine)
2 January to 26 November 2017
Rebecca Feng (Rebecca)
2 January to 26 November 2017
Alfred "King" Esguerra (King)
2 January to 26 November 2017
Canxiaoyu "Bella" Zhu (Bella)
2 January to 26 November 2017
Jia "Xara" Yuen (Xara)
2 January to 19 November 2017
Chris Tran (Chris)
2 January to 26 November 2017
Mariana Ishak (Mariana)
2 January to 26 November 2017
Anna Tran (Anna)
4 January to 26 November 2017
Hoi "Helen" Tam (Helen)
4 January to 26 November 2017
Joshua Tran (Joshua)
5 January to 26 November 2017
Dongming "Anthony" Bai (Anthony)
27 March to 18 June 2017
Ying "Bianca" Zhang (Bianca)
3 April to 26 November 2017
Xiao "Kate" Zhang (Kate)
5 April to 26 November 2017
Xi "Iris" Feng (Iris)
15 April to 27 August 2017
Eight of the Employees (collectively, the Junior Employees) were 20 years old or younger At various times during the Assessed Employment Periods:
Employee
Age/s during assessed Employment Period
Michelle
16 years old, 17 years old from 13 November 2017
Chris
19 years old
Mariana
18 years old, 19 years old from 8 January 2017
Anna
18 years old, 19 years old from 24 March 2017
Jasmine
19 years old, 20 years old from 23 October 2017
Elaine
19 years old, 20 years old from 8 April 2017
Rebecca
20 years old until 17 August 2017
Joshua
20 years old until 14 October 2017
Save for the Junior Employees, each of the remaining Employees was older than 20 years of age at all times during the Assessed Employment Periods. These Employees collectively, including Rebecca and Joshua for the portion of their Assessed Employment Periods where they were 20 years old or older, are referred to hereafter as the Adult Employees.
During the Assessed Employment Periods nine of the Employees, being Elaine, King, Bella, Anthony, Helen, Xara, Iris, Kate and Clark, were resident in Australia subject to visa conditions. Elaine, King, Bella, Anthony, Helen, Xara, Iris and Kate held Higher Education Student visas (subclass 573) and Clark held a Temporary Graduate visa (subclass 485).
Engagement of the Employees
Each of the Employees did not work an average of 38 hours per week and did not work reasonably predictable hours of work during the Assessed Employment Periods.
Duties performed by the Employees
During the Assessed Employment Periods, Michelle, Mariana, Anna, Anthony, Clark, Iris, Kate and Bianca performed the following duties at the Business for the Company:
a)taking orders;
b)operating the cash register;
c)making drinks;
d)washing utensils; and
e)basic cleaning.
In addition to the duties listed at paragraph 11 above, at various times during the Assessed Employment Periods, Chris, Jasmine, Elaine, Rebecca, Joshua, King, Bella, Helena and Xara either supervised or trained employees and also performed some or all of the following duties at the Business for the Company:
a)delegating tasks;
b)counting stock; and
c)counting cash.
Hourly rates paid to the Employees
During the Assessed Employment Periods, the Company paid the Employees flat hourly rates of pay of:
a)between $13.00 and $18.55 for all hours worked except on public holidays; and
b)between $28.60 and $45.18 for hours worked on public holidays.
Structure of the Company
Mr Panol and Mr Dela Cruz were the only directors of the Company.
Investigation
During the period from 21 July 2017 to 7 August 2018, the FWO carried out an investigation of the Company to determine its compliance with the FW Act and FW Regulations.
On 21 September 2017, Fair Work Inspector Philip Khoo (FWI Khoo) issued the Company with a Notice to Produce Records or Documents (First NTP) pursuant to section 712(1) of the FW Act, requesting documents relating to all employees of the Business for the period from 1 to 30 June 2017.
On 7 October 2017, Mr Dela Cruz responded to the First NTP on behalf of the Company and produced documents including "Payroll Journal / Payslips" and rosters.
On 15 January 2018, FWI Khoo emailed the Company and requested additional documents.
On 22 January 2018, Mr Dela Cruz, on behalf of the Company, responded to FWI Khoo's email of 15 January 2018 and provided pay slips and rosters for the period from 2 January 2017 to 26 November 2017 (Payroll Records).
On 6 June 2018, FWI Khoo issued the Company with a further NTP (Second NTP) pursuant to section 712(1) of the FW Act, seeking production of records or documents pertaining to the Company's franchise and financial records.
In several emails between 20 and 27 June 2018, Mr Panol responded to the Second NTP on behalf of the Company and produced documents including a PowerPoint presentation including the Chatime logo titled "National Roadshow Aug 2017." The PowerPoint presentation included information on the Applicant, the FW Act and the Fast Food Award. The PowerPoint presentation formed part of training delivered to Mr Panel and Mr Dela Cruz by Infinite Plus Pty Ltd, the franchisor, on 25 September 2017.
On 7 August 2018, FWI Khoo issued a "Findings of contravention" letter to the Company determining that the Company had contravened sections 45 and 535(2) of the FW Act and underpaid the Employees a total of $46,372.94 (Total Underpayment).
The Company rectified the Total Underpayment.
The Business was sold to Infinite Plus Pty Ltd in January 2019.
E. RELEVANT LEGISLATION AND INDUSTRIAL INSTRUMENT
At all material times:
a)the Company was a national system employer within the meaning of section 14(1)(a) of the FW Act;
b)each of the Employees was a national system employee within the meaning of section 13 of the FW Act; and
c)the Company was bound by the FW Act and FW Regulations in respect of the employment of the Employees.
At all material times, the Fast Food Award covered and applied to the Company with respect to the employment of each of the Employees.
By reason of the matters agreed at paragraphs 11 and 26 above, during their respective Assessed Employment Periods, each of the Employees below were entitled to be classified as "Fast Food Employee Level 1" under the Fast Food Award (Level 1 Employee):
a)Michelle – Level 1 Employee;
b)Mariana – Level 1 Employee;
c)Anna – Level 1 Employee;
d)Anthony – Level 1 Employee;
e)Clark – Level 1 Employee;
f)Iris – Level 1 Employee;
g)Kate – Level 1 Employee; and
h)Bianca – Level 1 Employee.
By reason of the matters agreed at paragraphs 12 and 26 above, during their respective Assessed Employment Periods nine of the Employees were entitled to be classified as "Fast Food Employee Level 2" under the Fast Food Award (Level 2 Employee) from the dates outlined below:
a)Chris – Level 1 Employee, Level 2 Employee from 10 January 2017;
b)Jasmine – Level 1 Employee, Level 2 Employee from 9 January 2017;
c)Elaine – Level 1 Employee, Level 2 Employee from 10 April 2017;
d)Rebecca – Level 1 Employee, Level 2 Employee from 11 January 2017;
e)Joshua – Level 1 Employee, Level 2 Employee from 9 May 2017;
f)King – Level 1 Employee, Level 2 Employee from 10 January 2017;
g)Bella – Level 1 Employee, Level 2 Employee from 8 March 2017;
h)Helen – Level 1 Employee, Level 2 Employee from 13 April 2017; and
i)Xara – Level 1 Employee, Level 2 Employee from 9 January 2017.
By reason of the matters agreed at paragraph 10 above, each of the Employees was properly engaged by the Company as a casual employee under the Fast Food Award.
F. ADMITTED UNDERPAYMENT CONTRAVENTIONS
Failure to pay minimum weekly wage in contravention of clause 17 of the Fast Food Award
By reason of the matters agreed at paragraphs 6, 8 and 25 to 28 above, during the Assessed Employment Periods, the Company was required to pay the Adult Employees the following minimum hourly rates of pay for each ordinary hour of work, pursuant to clause 17 of the Fast Food Award, amounting to:
a)$19.44 per hour for Level 1 Employees and $20.61 per hour for Level 2 Employees during the period from 2 January 2017 to 30 June 2017; and
b)$20.08 per hour for Level 1 Employees and $21.29 per hour for Level 2 Employees during the period from 1 July 2017 to 26 November 2017.
During the Assessed Employment Periods, each of the Adult Employees:
a)worked the total number of ordinary hours in column 2 in Table 1;
b)were entitled to be paid the total amounts in respect of minimum rates of pay by the Company for ordinary hours worked in column 3 in Table 1;
c)by reason of the payment of the flat rates as agreed at paragraph 13 above, were paid the amounts in column 4 in Table 1 by the Company for ordinary hours worked; and
d)were underpaid the amounts in column 5 in Table 1 in respect of minimum rates of pay.
Table 1 - Minimum weekly wage underpayments
| Employee | Total Ordinary Hours Worked | Minimum weekly wage entitlement | Paid | Underpayment |
| King | 602.33 | $12,459.87 | $11,173.28 | $1,286.59 |
| Bella | 543.50 | $11,174.45 | $10,000.31 | $1,174.14 |
| Anthony | 102 | $1,982.88 | $1,494.00 | $488.88 |
| Helen | 787 | $16,126.92 | $14,066.35 | $2,060.57 |
| Xara | 670.50 | $13,954.20 | $12,370.41 | $1,583.79 |
| Clark | 326.50 | $6,430.68 | $5,240.06 | $1,190.62 |
| Iris | 248 | $4,862.08 | $3,896.61 | $965.47 |
| Kate | 296.50 | $5,893.24 | $5,113.11 | $780.13 |
| Bianca | 408 | $8,115.52 | $7,082.07 | $1,033.45 |
| Rebecca | 89.5 | $1,905.46 | $1,660.23 | $245.23 |
| Joshua | 82 | $1,745.78 | $1,521.10 | $224.68 |
| TOTAL | $11,033.55 | |||
By reason of the matters agreed to at paragraphs 30 to 31 above, the Company contravened section 45 of the FW Act by failing to pay each of the Adult Employees the minimum rate of pay in accordance with clause 17 of the Fast Food Award.
Failure to pay junior rates in contravention of clause 18 of the Fast Food Award
By reason of the matters agreed to at paragraphs 6, 7 and 25 to 28 above, during the Assessed Employment Periods, the Company was required to pay each of the Junior Employees the following junior minimum rates of pay in Table 2 for ordinary hours of work, being a percentage of the adult minimum wage, pursuant to clause 18 of the Fast Food Award.
Table 2 - Junior rates of pay
| Age and percentage of adult weekly wage | Percentage of adult weekly wage | Junior rate of pay | |
| 2 Jan – 30 June 2017 | 1 July – 26 Nov 2017 | ||
| Under 16 years | 40% | Level 1 - $7.78 Level 2 - $8.25 | Level 1 - $8.03 Level 2 - $8.52 |
| 16 years | 50% | Level 1 - $9.72 Level 2 - $10.31 | Level 1 - $10.04 Level 2 - $10.65 |
| 17 years | 60% | Level 1 - $11.67 Level 2 - $12.37 | Level 1 - $12.05 Level 2 - $12. 78 |
| 18 years | 70% | Level 1 - $13.61 Level 2 - $14.43 | Level 1 - $14.06 Level 2 - $14.90 |
| 19 years | 80% | Level 1 - $15.55 Level 2 - $16.49 | Level 1 - $16.07 Level 2 - $17.03 |
| 20 years | 90% | Level 1 - $17.50 Level 2 - $18.55 | Level 1 - $18.08 Level 2 - $19.16 |
During the Assessed Employment Periods, each of the Junior Employees (save for Michelle and Mariana):
a)worked the total number of ordinary hours in column 2 in Table 3;
b)were entitled to be paid the total amounts in column 3 in Table 3 in respect of junior minimum rates of pay by the Company for ordinary hours worked;
c)by reason of the payment of the flat rates as agreed at paragraph 13 above, were paid the amounts in column 4 in Table 3 by the Company for ordinary hours worked; and
d)were underpaid the amounts in column 5 in Table 3 in respect of junior minimum rates of pay.
Table 3 - Junior rates of pay underpayments
| Employee | Hours Worked | Junior rate entitlement | Paid | Underpayment |
| Chris | 551 | $9,120.38 | $9,114.18 | $6.20 |
| Anna | 501.5 | $7,759.68 | $7,560.93 | $198.75 |
| Jasmine | 444.25 | $7,372.20 | $7,361.81 | $10.39 |
| Elaine | 495 | $8,769.60 | $8,610.43 | $159.17 |
| Rebecca | 392 | $7,283.61 | $6,900.05 | $383.56 |
| Joshua | 611 | $11,331.64 | $10,773.72 | $557.92 |
| TOTAL | $1,315.99 | |||
By reason of the matters agreed in paragraphs 33 to 34 above, the Company contravened section 45 of the FW Act by failing to pay each of the Junior Employees, save for Michelle and Mariana, the junior minimum rate of pay for ordinary hours in accordance with clause 18 of the Fast Food Award.
Failure to pay casual loading in contravention of clause 13.2 of the Fast Food Award
By reason of the matters agreed at paragraphs 6 to 8 above and 25 to 29 above, during the Assessed Employment Periods the Company was required to pay the Employees the following additional 25% casual loadings in addition to the ordinary hourly rate for hours worked Monday to Saturday in Table 4, pursuant to clause 13.2 of the Fast Food Award.
Table 4 - Casual loading rates of pay
| Age | Level 1 | Level 2 | ||
| 2 Jan 2017 – 2 July 2017 | 3 July 2017 – 26 November 2017 | 2 Jan 2017 – 2 July 2016 | 3 July 2017 – 26 November 2017 | |
| 16 | $2.43 | $2.51 | $2.58 | $2.66 |
| 17 | $2.92 | $3.01 | $3.09 | $3.20 |
| 18 | $3.40 | $3.52 | $3.61 | $3.73 |
| 19 | $3.89 | $4.02 | $4.12 | $4.26 |
| 20 | $4.38 | $4.52 | $4.64 | $4.79 |
| 21 and older | $4.86 | $5.02 | $5.15 | $5.32 |
During the Assessed Employment Periods, each of the Employees (save for Michelle):
a)worked the total number of ordinary hours in column 2 in Table 5;
b)were entitled to be paid the total amounts in column 3 in Table 5 in respect of casual loading by the Company for ordinary hours worked;
c)by reason of the payment of the flat rates agreed at paragraph 13 above, were paid the amounts in column 4 in Table 5 by the Company attributable to casual loading; and
d)were underpaid the amounts in respect of casual loading in column 5 in Table 5.
Table 5 - Casual loading underpayments
| Employee | Hours to which casual loading applied | Total entitlement for casual loading | Paid | Underpayment |
| Chris | 551 | $2,279.69 | $1,066.70 | $1,212.99 |
| Mariana | 448.42 | $1,762.94 | $1,184 | $578.94 |
| Anna | 501.5 | $1,940.73 | $1,147.37 | $793.36 |
| Jasmine | 444.25 | $1,842.69 | $849.77 | $992.92 |
| Elaine | 495 | $2,193.10 | $424.49 | $1,768.61 |
| Rebecca | 481.5 | $2,297.89 | $295.04 | $2,002.85 |
| Joshua | 693 | $3,270.39 | $32.55 | $3,237.84 |
| King | 602.33 | $3,113.60 | Nil | $3,113.60 |
| Bella | 543.5 | $2,792.59 | Nil | $2,792.59 |
| Anthony | 102 | $495.72 | Nil | $495.72 |
| Xara | 670.5 | $3,487.02 | Nil | $3,487.02 |
| Clark | 326.5 | $1,607.67 | Nil | $1,607.67 |
| Iris | 248 | $1,215.53 | Nil | $1,211.57 |
| Kate | 296.5 | $1,473.31 | Nil | $1,473.31 |
| Bianca | 408 | $2,028.88 | Nil | $2,028.88 |
| TOTAL | $30,828.30 | |||
By reason of the matters agreed in paragraphs 36 to 37 above, the Company contravened section 45 of the FW Act by failing to pay each of the Employees, save for Michelle, the additional 25% casual loading in accordance with clause 13.2 of the Fast Food Award.
Failure to pay the public holiday penalty rate in contravention of clause 30.3 of the Fast Food Award
By reason of the matters agreed in paragraphs 6 to 8 above and 25 to 29 above, during the Assessed Employment Periods, the Company was required to pay the Employees the following penalty rates for all ordinary hours worked on a public holiday, pursuant to clause 30.3 of the Fast Food Award:
Table 6 - Penalty rates of pay
| Age | Level 1 | Level 2 | ||
| 2 Jan 2017 – 2 July 2017 | 3 July 2017 – 26 November 2017 | 2 Jan 2017 – 2 July 2016 | 3 July 2017 – 26 November 2017 | |
| 16 | $26.73 | $25.10 | $28.35 | $26.63 |
| 17 | $32.09 | $30.13 | $34.02 | $31.95 |
| 18 | $37.43 | $35.15 | $39.68 | $37.25 |
| 19 | $42.76 | $40.18 | $45.35 | $42.58 |
| 20 | $48.13 | 45.20 | $51.01 | $47.90 |
| Adult | $53.46 | $50.20 | $56.68 | $53.23 |
During the Assessed Employment Periods, the Employees below (together, the Public Holiday Employees) worked ordinary hours on public holidays:
a)Jasmine - additional day, in lieu of New Year's Day falling on a Sunday (2 January 2017);
b)Chris, Jasmine, King, Bella, Helen - Australia Day (26 January 2017);
c)Michelle, King, Iris, Helen, Chris, Bella, Xara - Good Friday (14 April 2017);
d)Elaine, Joshua, King, Anthony, Iris, Michelle - Easter Saturday (15 April 2017);
e)Elaine, Anthony, Iris, Michelle, Anna, Chris, Joshua - Easter Sunday (16 April 2017);
f)Anthony, Michelle - Easter Monday (17 April 2017);
g)Michelle, King, Helen, Xara - Anzac Day (25 April 2017);
h)Elaine, King, Bianca - Queen's Birthday (12 June 2017); and
i)Joshua - Labour Day (2 October 2017).
During the Assessed Employment Periods, each of the Public Holiday Employees:
a)worked the total number of ordinary hours on public holidays in column 2 in Table 7;
b)were entitled to be paid the following total amounts in column 3 in Table 7 in respect of public holiday penalty rates by the Company for ordinary hours worked on public holidays;
c)by reason of the payment of the flat rates agreed at paragraph 13 above, were paid the amounts in column 4 in Table 7 by the Company in respect of ordinary hours worked on public holidays; and
d)were underpaid the amounts in column 5 in Table 7 in respect of public holiday penalty rates.
Table 7 - Public Holiday underpayments
| Employee | Total hours worked on public holidays | Public holiday penalty rate entitlement | Paid | Underpayment |
| Michelle | 30 | $801.91 | $800.92 | $0.99 |
| Chris | 16.50 | $748.28 | $632.56 | $115.72 |
| Anna | 5.50 | $235.18 | $206.25 | $28.93 |
| Jasmine | 12 | $527.37 | $489.73 | $37.64 |
| Elaine | 23.50 | $1,198.74 | $918.51 | $280.23 |
| Joshua | 20 | $961.45 | $744.05 | $217.40 |
| King | 36.33 | $2,059.37 | $1,462.98 | $596.39 |
| Bella | 19 | $1,057.60 | $727.16 | $330.44 |
| Anthony | 13 | $694.98 | $465 | $229.98 |
| Helen | 16.50 | $920.73 | $632.17 | $288.56 |
| Xara | 11 | $623.48 | $428.51 | $194.97 |
| Iris | 15 | $801.90 | $491.04 | $310.86 |
| Bianca | 6.50 | $347.49 | $214.50 | $132.99 |
| TOTAL | $2,765.10 | |||
By reason of the matters agreed at paragraphs 39 to 41 above, the Company contravened section 45 of the FW Act by failing to pay each of the Public Holiday Employees public holiday penalty rates for ordinary hours worked on public holiday hours, in accordance with clause 30.3 of the Fast Food Award.
Failure to pay the special clothing allowance in contravention of clause 19.2(b)(ii) of the Fast Food Award
By reason of the matters agreed at paragraphs 25 and 26 above, the Company was required to pay each of the Employees a special clothing allowance of $1.25 per shift for each shift worked where they were required to launder any special uniform, dress or other clothing, pursuant to clause 19.2(b)(ii) of the Fast Food Award.
During the Assessed Employment Periods, the Employees were provided with uniforms by the Company and laundered their own uniforms.
During the Assessed Employment Periods, by reason of the payment of the flat rates as agreed at paragraph 13 above, the Company did not pay the Employees any amounts towards a special clothing allowance.
During the Assessed Employment Periods, each of the Employees:
a)worked at least the total number of shifts in column 2 in Table 8 where the special clothing allowance was payable;
b)were entitled to be paid the following total amounts in column 3 in Table 8 in respect of the special clothing allowance; and
c)pursuant to the matters agreed in paragraph 45 above, were underpaid those total amounts of the special clothing allowance entitlement in column 3 in Table 8.
Table 8 – Special clothing allowance entitlement and underpayment
| Employee | Number of shifts | Special clothing allowance entitlement and underpayment |
| Michelle | 15 | $18.75 |
| Chris | 25 | $31.25 |
| Mariana | 23 | $28.75 |
| Anna | 24 | $30 |
| Jasmine | 32 | $40 |
| Elaine | 22 | $27.50 |
| Rebecca | 23 | $28.75 |
| Joshua | 22 | $27.50 |
| King | 21 | $26.25 |
| Bella | 24 | $30 |
| Anthony | 7 | $8.75 |
| Helen | 26 | $32.50 |
| Xara | 23 | $28.75 |
| Clark | 12 | $15 |
| Iris | 12 | $15 |
| Kate | 15 | $18.75 |
| Bianca | 18 | $22.50 |
| TOTAL | $430.00 | |
By reason of the matters agreed at paragraphs 43 to 46 above, the Company contravened section 45 of the FW Act by failing to pay each of the Employees the special clothing allowance for each shift worked in accordance with clause 19.2(b)(ii) of the Fast Food Award.
G. ADMITTED RECORD KEEPING CONTRAVENTIONS
Failure to make and keep employee records under section 535(2) of the FW Act
Pursuant to section 535(2) of the FW Act, the Company was required to include information prescribed by the FW Regulations in employee records for each of its employees.
Pursuant to regulation 3.33 of the FW Regulations, the Company was required to include the following information in records relating to each of the Employees:
a)as casual employees who are guaranteed rates of pay set by reference to periods of time worked, the record was required to set out the hours worked by each of the Employees under regulation 3.33(2); and
b)as employees who are entitled to be paid, relevantly, a penalty rate or monetary allowance, the record was required to set out details of that entitlement for each of the Employees under regulations 3.33(3)(d) and (e).
During the Assessed Employment Periods, the Company did not keep records in respect of each of the Employees which included the information in paragraph 49 above and as prescribed in regulations 3.33(2), 3.33(3)(d) and 3.33(3(e) of the FW Regulations.
By reason of the matters agreed at paragraphs 48 to 50 above, the Company contravened section 535(2) of the FW Act by failing to set out the information in records relating to each of the Employees, as prescribed by regulations 3.33(2), 3.33(3)(d) and 3.33(3)(e) of the FW Regulations.
H. ORDERS
The Company does not oppose the Court making the following declarations and orders:
a)Declarations that the Company contravened the following civil remedy provisions:
i)section 45 of the FW Act by failing to pay Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Shaodong Wu, Xi Feng, Xiao Zhang, Ying Zhang, Joshua Tran and Rebecca Feng the minimum rate of pay pursuant to clause 17 of the Fast Food Award;
ii)section 45 of the FW Act by failing to pay Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Rebecca Feng and Joshua Tran the junior minimum rate of pay pursuant to clause 18 of the Fast Food Award;
iii)section 45 of the FW Act by failing to pay Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Shaodong Wu, Xi Feng, Xiao Zhang, Ying Zhang, Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Rebecca Feng, Joshua Tran and Mariana Ishak the casual loading pursuant to clause 13.2 of the Fast Food Award;
iv)section 45 of the FW Act by failing to pay Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Joshua Tran, Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Xi Feng, Ying Zhang and Michelle Lin the public holiday penalty rate pursuant to clause 30.3 of the Fast Food Award;
v)section 45 of the FW Act by failing to pay the Alfred Esguerra, Canxiaoyu Zhu, Dongming Bai, Hoi Tam, Jia Yuen, Shaodong Wu, Xi Feng, Xiao Zhang, Ying Zhang, Chris Tran, Anna Tran, Jasmine Yiamkati, Yuxin Chen, Rebecca Feng, Joshua Tran, Mariana Ishak and Michelle Lin the special clothing allowance pursuant to clause 19.2(b)(ii) of the Fast Food Award;
vi)section 535(2) of the FW Act, by failing to make and keep for seven years records which included information as to, if an employee is a casual employee guaranteed a rate of pay set by reference to a period of time worked, the hours worked by the employee, pursuant to regulation 3.33(2) of the FW Regulations;
vii)section 535(2) of the FW Act, by failing to make and keep for seven years records which included information as to, if an employee is entitled to be paid a penalty rate, the details of that entitlement, pursuant to regulation 3.33(3)(d) of the FW Regulations; and
viii)section 535(2) of the FW Act, by failing to make and keep for seven years records which included information as to, if an employee is entitled to be paid a monetary allowance, the details of that entitlement, pursuant to regulation 3.33(3)(e) of the FW Regulations.
b)Orders pursuant to section 546(1) of the FW Act that the Company pay penalties pursuant in an amount to be fixed by the Court for the contraventions of the FW Act set out in paragraph 52 above.
c)Orders pursuant to section 546(3)(a) of the FW Act that any pecuniary penalties imposed on the Company to be paid to the Consolidated Revenue Fund of the Commonwealth within 28 days of the Court's orders.
d)An order that the FWO have liberty to apply on seven days' notice in the event that any of the preceding orders are not complied with.
e)Such further or other orders as the Court thinks fit.
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