Fair Work Ombudsman v Phiyasirikul Trading as Thai Square Warners Bay
[2021] FCCA 1943
•31 August 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v PHIYASIRIKUL TRADING AS THAI SQUARE WARNERS BAY | [2021] FCCA 1943 |
| Catchwords: INDUSTRIAL LAW – Breaches of civil remedy provisions of the Fair Work Act 2009 – imposition of pecuniary penalties – relevant considerations. |
| Legislation: Fair Work Act 2009 (Cth), ss.539, 545, 546, 547, 559, 716, 717 Crimes Act 1914 (Cth), s.4AA |
| Cases cited: Kelly v Fitzpatrick (2007) 166 IR 14 |
| Applicant: | FAIR WORK OMBUDSMAN |
| Respondent: | SUPON PHIYASIRIKUL T/A THAI SQUARE WARNERS BAY |
| File Number: | SYG 3333 of 2019 |
| Judgment of: | Judge Cameron |
| Hearing date: | Determined on the papers |
| Date of Last Submission: | 5 August 2020 |
| Delivered at: | Sydney |
| Delivered on: | 31 August 2021 |
REPRESENTATION
| Solicitor for the Applicant: | Ms J Dennis, Office of the Fair Work Ombudsman |
| The respondent appeared in person |
THE COURT DECLARES THAT:
The respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) by failing to comply with the compliance notice served on him on 26 August 2019.
THE COURT ORDERS THAT:
The respondent pay a penalty of $3,402 to the Commonwealth within twenty-eight days.
The respondent take the steps that were required by the compliance notice served on him on 26 August 2019 (“Compliance Notice”) within 28 days of this order, by:
(a)calculating the outstanding entitlements he was required to pay the employees covered by the Compliance Notice (“Employees”);
(b)calculating the outstanding superannuation contributions he was required to pay to the Employees’ nominated superannuation funds in relation to the entitlements referred to in order 2(a);
(c)paying to the applicant (on behalf of the Employees) the outstanding entitlements referred to in Order 2(a);
(d)paying to the applicant (on behalf of the Employees) interest on the amounts referred to in Order 2(a), calculated as follows:
(i)in respect of the period from 1 January to 30 June in any year – the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced; and
(ii)in respect of the period from 1 July to 31 December in any year – the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced;
(e)paying into the Employees’ nominated superannuation funds the outstanding superannuation contributions referred to in Order 2(b); and
(f)preparing and producing to the applicant a schedule outlining his calculation of the amounts referred to in Orders 2(a) and (b) and providing proof that the outstanding superannuation contributions were paid as ordered in Order 2(e).
The applicant distribute to the Employees on a pro rata basis the amounts paid pursuant to Orders (2)(c) and (d) within 180 days of the payment being made or, in the event that any of the Employees cannot be located within that period, pay those amounts to the Commonwealth pursuant to section 559 of the Fair Work Act 2009.
The applicant have liberty to apply within 90 days should the respondent not comply fully with Order 2.
The parties have liberty to apply in relation to the working out of these orders.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 3333 of 2019
| FAIR WORK OMBUDSMAN |
Applicant
And
| SUPON PHIYASIRIKUL T/A THAI SQUARE WARNERS BAY |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
The respondent operated a restaurant in Warners Bay and the applicant (“Ombudsman”) has alleged that he contravened s.716(5) of the Fair Work Act 2009 (“FW Act”) by failing to comply with the requirements of a compliance notice served on him on 26 August 2019 (“Compliance Notice”).
These reasons concern the steps that the respondent must take pursuant to and consequent upon the Compliance Notice and the penalty to be imposed on him for his contravention of the FW Act, as agreed and particularised below. The parties agreed to the matter being determined without an oral hearing.
STATEMENT OF AGREED FACTS
Agreed facts
The parties filed a Statement of Agreed Facts on 6 February 2020 in which they relevantly agreed on the following facts.
Between 1 July 2018 and 30 June 2019, the respondent operated a restaurant which employed at least fifteen employees, at least ten of whom were nineteen year or younger, four of whom were sixteen years or younger and at least two of whom held student visas. The employees were employed on a casual or full-time basis and the Restaurant Industry Award 2010 (“Award”) applied to their employment. Employees were paid the following rates:
Monday to Friday
$10.82-$12.20 per hour
Saturday
$13.52-$15.27 per hour
Sunday
$16.15-$18.33 per hour
As a result of an investigation into the respondent’s business between May and August 2019, Fair Work Inspector Cummings formed a reasonable belief that the respondent had contravened cls.20.1 (minimum wage), 13.1 (casual loading), 13.3 (minimum payment for two hours work for casual employees), 33.2 (overtime rates for full-time employees); and 34.1 (Saturday, Sunday and public holiday penalty rates) of the Award.
On 26 August 2019 the respondent was personally served with the Compliance Notice, which concerned those contraventions. At the same time, FWI Cummings outlined to the respondent the steps involved in compliance and informed him that legal action might result if he failed to comply with the notice. The Compliance Notice required the respondent to take the following actions to remedy the contraventions and it required him to do so by 26 September 2019:
(i)identifying each Employee employed by him from 1 July 2018 to 30 June 2019;
(ii)identifying the employment status, classification, hours worked by and amounts paid to each Employee between 1 July 2018 to 30 June 2019;
(iii)calculating and paying any outstanding amounts owing to each Employee, and the superannuation payable to each employee in respect of any outstanding amounts; and
(iv)preparing a schedule of outstanding amounts calculated and amounts paid to each Employee to remedy any outstanding amounts identified above; …
By 4 October 2019 he was required to show the Ombudsman reasonable evidence of his compliance with the notice by producing a schedule of calculations and payments and evidence of paying each employee the amounts they were owed.
A sample wage calculation that was provided to the respondent for guidance showed the following underpayments:
Employee
Amount underpaid according to the sample wage calculation
Ms Welfare
$228.03
Ms Grant
$173.32
Ms Turner
$426.53
Ms Connelly
$1,378.24
The respondent contravened s.716(5) of the FW Act by virtue of the fact that he:
a)paid Ms Welfare $50.00 and Ms Grant $49.54 on 25 October 2019, but did not take the steps required by the Compliance Notice and failed to produce reasonable evidence of compliance with it; and
b)having not applied for review of the notice pursuant to s.717 of the FW Act, had no reasonable excuse for failing to comply with it.
Agreed contraventions and declarations
The respondent having made those admissions, the parties consented to the Court making a declaration that the respondent contravened s.716(5) of the FW Act by failing to comply with the Compliance Notice.
The parties also consented to the Court making the following orders:
20
(a)
pursuant to section 545(1) of the FW Act, the Respondent take the steps that were required by the Compliance Notice within 28 days of this order, by:
(i) calculating the outstanding entitlements he was required to pay the Employees, including superannuation;
(ii) paying the outstanding entitlements he was required to pay the Employees referred to in paragraph 20(a)(i) above, to the FWO (on behalf of the Employees);
(iii) paying superannuation into the Employees’ nominated superannuation funds for additional superannuation contributions he was required to pay on the outstanding entitlements referred to in paragraph 20(a)(i) above (as required by clause 30.2 of the Restaurant Award); and
(iv) preparing and producing to the FWO, a schedule outlining his calculation of the outstanding entitlements he was required to pay the Employees referred to in paragraph 20(a)(i) above, and providing proof that the outstanding entitlements were rectified as set out in paragraphs 20(a)(ii) and 20(a)(iii);
(b)pursuant to section 547(2) of the FW Act, the Respondent pay interest on the amounts owed to the Employees pursuant to paragraph 20(a)(i) above, to the FWO within 28 days of this order;
(c)the FWO distribute to the Employees the amounts paid pursuant to paragraphs 20(a)(i) and 20(b) above within 180 days of the payment being made, or in the event that any of the Employees cannot be located within this timeframe, these amounts be paid to the Commonwealth of Australia pursuant to section 559 of the FW Act;
(d)pursuant to section 546(1) of the FW Act, the Respondent pay a pecuniary penalty to the Commonwealth for the contravention set out in paragraph 19 within 28 days of this order;
(e) the FWO have liberty to apply; and
(f) such further orders as the Court considers appropriate.
LEGISLATION
Section 716 of the FW Act relevantly provides:
716 Compliance notices
Application of this section
(1)This section applies if an inspector reasonably believes that a person has contravened one or more of the following:
…
(b)a term of a modern award;
…
Giving a notice
(2)The inspector may, except as provided by subsection (4), give the person a notice requiring the person to do either or both of the following within such reasonable time as is specified in the notice:
(a)take specified action to remedy the direct effects of the contravention referred to in subsection (1);
(b)produce reasonable evidence of the person’s compliance with the notice.
(3) The notice must also:
(c)set out brief details of the contravention; and
(d)explain that a failure to comply with the notice may contravene a civil remedy provision; and
…
(f)set out any other matters prescribed by the regulations.
…
Relationship with civil remedy provisions
(4A)An inspector must not apply for an order under Division 2 of Part 4-1 in relation to a contravention of a civil remedy provision by a person if:
(a)the inspector has given the person a notice in relation to the contravention; and
(b)either of the following subparagraphs applies:
(i) the notice has not been withdrawn, and the person has complied with the notice;
…
(4B)A person who complies with a notice in relation to a contravention of a civil remedy provision is not taken:
(a) to have admitted to contravening the provision; or
(b) to have been found to have contravened the provision.
Person must not fail to comply with notice
(5)A person must not fail to comply with a notice given under this section.
…
Section 717 of the FW Act provides:
717 Review of compliance notices
(1)A person who has been given a notice under section 716 may apply to the Federal Court, the Federal Circuit Court or an eligible State or Territory Court for a review of the notice on either or both of the following grounds:
(a)the person has not committed a contravention set out in the notice;
(b)the notice does not comply with subsection 716(2) or (3).
(2)At any time after the application has been made, the court may stay the operation of the notice on the terms and conditions that the court considers appropriate.
(3)The court may confirm, cancel or vary the notice after reviewing it.
Section 716(5) of the FW Act is a civil remedy provision: s.539(2) of the FW Act. Pursuant to ss.539(2) and 546(2) of the FW Act, the maximum pecuniary penalty that can be imposed for an individual’s breach of s.716(5) is 30 penalty units. In the period between the date for compliance with the Compliance Notice, 4 October 2019, and the commencement of this proceeding, 17 December 2019, a penalty unit was worth $210: s.4AA Crimes Act 1914.
EVIDENCE
The Ombudsman relied upon the affidavit of FWI Cummings affirmed 27 February 2020. No objection was made to the Ombudsman relying on the affidavit and I will treat it has having been read. I accept what it says. FWI Cummings deposed that:
a)the investigation began on 8 May 2019 following a request for assistance by one of the Employees, alleging underpayment;
b)the investigation included a visit to the business’s premise and two notices to produce documents, issued on 8 May 2019 and 12 June 2019 respectively. She deposed that the respondent provided a completed entity information form on 22 May 2019 and attended the Ombudsman’s office in Newcastle on 30 May 2019 and 27 June 2019 to provide documentation and on 11 June 2019 to meet with her and another inspector;
c)on 26 August 2019, at the Ombudsman’s office in Newcastle, she provided the respondent with the Compliance Notice. The Compliance Notice identified contraventions of the Award during the period 1 July 2018 to 30 June 2019 and required the respondent to identify each employee he employed in that period, calculate any underpayments and superannuation owing to employees, rectify those amounts by 26 September 2019, and provide the Ombudsman with evidence of his compliance by 4 October 2019. At that meeting the respondent was given a detailed explanation of the Award contraventions that had been identified, of the notice’s covering letter and of the actions the Ombudsman might take if the notice was not complied with, such as legal action. She deposed that the respondent told her that he understood the notice and the actions he needed to take and would comply. She deposed that she provided the respondent with a FWO pay guide and sample payments for four of the Employees and told him that he would need to do calculations for the other employees;
d)she exchanged the following emails with the respondent:
i)on 21 September 2019 the respondent informed her that he could not find his roster book but would locate it upon his 10 October 2020 return to Australia from Thailand, where he had had to travel owing to the death of his sister;
ii)on 23 September 2019 she requested that by 10 October 2019 he provide whatever calculations and information he had completed and in the intervening period pay any employees for whom he had completed calculations. The respondent did not respond;
iii)on 21 October 2019 she requested that the respondent urgently finalise his calculations and produce proof of payment(s);
iv)on 22 October 2019 the respondent informed her he had not read his emails due to poor health and stated:
… I didn't read email for many days so when I see your email today I immediately reply and I check the underpaid of Emma that you gave it to me that she work on 6/5/2019-12/5/2019 (You mark in yellow high light) that one I already paid $192.31 on 14/5/2019 and 13/5/2019-19/5/2019 I already paid that one too $131.17 on 24/5/2019
Most of my staffs are happy and sign accepted of the rate we pay because they are young students never work in any restaurant before we train from don't know anything to know how to work in the restaurant so they can have income by themselves don't need to ask money from parent
Most of them are happy the rate and they write there paid by themselves except some people that not agree with these So I want to pay the under paid to the people (eg. Sarah) that not accept the old rate but the others are happy and accept the old rate
But now since 1 July 2019 I update the pay rate as you gave me the sheets and I used the STP and send pay slip to all of my payees so from now everything are up to date. …
(errors in original)
She informed the respondent that employers and employees could not agree on pay rates less than those of the Award and that failure to comply with the Compliance Notice might result in legal action;
v)further emails regarding the sample calculations followed between 24 and 30 October;
vi)on 25 October 2019 the respondent provided confirmation that $50.00 and $49.54 had been paid to Ms Welfare and Ms Grant respectively;
vii)on 5 November 2019 the respondent told FWI Cummings that he had:
…calculated all the current staff that underpayment by using there copy that sent to me so it should be complete by the end of this week or early next week and I will let you know. (errors in original)
viii)on 11 December 2019 she informed the respondent that the matter had been referred to the Ombudsman’s legal department because he had sent no further correspondence. He did not respond to that email.
e)she deposed that after this proceeding was commenced on 17 December 2019, she had seen further email correspondence between the respondent and the Ombudsman’s solicitors including emails dated:
i)1 February 2020 where the respondent attached a spreadsheet of underpayment calculations for 10 employees for the period 3 September 2018 and 30 June 2019;
ii)11 February 2020 where the Ombudsman’s solicitor reiterated the requirements of the Compliance Notice and stated that no evidence of compliance had yet been received;
iii)13 February 2020 when the respondent showed payment of $144.09 to one employee whom, he said, had been made aware of the underpayment;
iv)14 February 2020 to which the respondent attached a second spreadsheet of underpayment calculations regarding 12 employees for the period 3 September 2018 and 30 June 2019. The Ombudsman’s solicitor responded the same day informing the respondent that the Compliance Notice required calculations for all of the Employees.
FWI Cummings deposed that at the time of her affidavit, the respondent had neither completed the calculations nor made the payments required by the Compliance Notice.
FWI Cummings deposed that she had accessed and read the Ombudsman’s Industry profile and FWO interactions, Cafes and Restaurants Industry report which summarised workplace law compliance within that industry. She deposed that the report indicated that:
(a)from July 2016 to December 2018, the FWO completed 5,984 physical or online requests for assistance (Dispute Forms) from workers in the cafe and restaurant industry, being 9.8% of all Dispute Forms completed in that period;
(b)Dispute Forms for the cafe and restaurant industry were completed at an average rate of 42.3 Dispute Forms per 1000 businesses, compared to an average of 15.5 Dispute Forms per 1000 businesses across all industries;
(c)Young workers (15-24 years of age) made up 40.2% of employment in the industry and accounted for 40.4% of completed disputes in the cafe and restaurant industry;
(d)of those Dispute Forms completed, 23% related to underpayments of hourly rates, 15% related to not being paid for time worked and 18% related to underpayment or non-payment of weekend or public holiday penalty; and
(e)36% of Dispute Forms completed for the cafe and restaurant industry were from workers who held visas, (such as working holiday visas, international student visas or migrant worker visas) compared to 19.5% of Dispute Forms completed across all industries being from workers who held visas.
FWI Cummings deposed that land title searches that she conducted on 14 February 2020 showed that the respondent was the owner or part owner of seven properties whose combined market value was estimated to exceed $2.3 million. The title searches annexed to FWI Cummings’s affidavit indicate that three of those properties, owned solely by the respondent but of less value than the other properties, were unencumbered by mortgages.
CONSIDERATION
Section 716 of the FW Act provides that when contravention of a prescribed instrument is identified, a compliance notice may be employed to call upon the contravener to remedy the direct effects of the contravention. In broad terms, if that is done and demonstrated, such compliance prevents the Ombudsman from applying for penalties, compensation, interest or other relevant orders: s.716(4A). Also, such compliance does not operate as an admission or as a finding of contravention: s.716(4B).
Although the evidence does not indicate that it was made clear to the respondent that compliance with the notice would mean that the Ombudsman could not later bring proceedings against him based on his underpayment of employee entitlements, the probable consequence of failure to comply with the requirements of the notice was made clear. It is perhaps unfortunate that the Compliance Notice’s covering letter did not convey the message in a positive as well as in a negative way, but the respondent was nevertheless given an opportunity to remedy his underpayment contraventions and yet he still failed to do what was plainly required by the FW Act, the Award and the Compliance Notice.
In that connection, despite the respondent’s various contraventions of his wages and superannuation obligations, I acknowledge that this proceeding is concerned with the single contravention of s.716(5) that arises out of the respondent’s failure to comply with the Contravention Notice. As the respondent is an individual, the maximum penalty for his contravention is $6,300. When determining the appropriate penalty to impose, regard should be had to all of the circumstances of the case, guided by the various discretionary considerations discussed in authorities such as Kelly v Fitzpatrick (2007) 166 IR 14, in order to arrive at a single result that is an instinctive synthesis of those various factors.
The nature of the contravention appears clearly from the statement of agreed facts as do its circumstances. The respondent was served with the Compliance Notice which set out what was required of him. The notice was explained to him, he was given time to comply, including a subsequent extension of time, but only partial compliance was effected. This was in circumstances where a very large percentage of the respondent’s workforce were under 20 years of age and two of the employees held student visas. A degree of vulnerability can be assumed.
The respondent’s failure to comply with the Compliance Notice has caused the Ombudsman to spend time and money bringing this proceeding and it has also engaged the Court’s time. Compliance would have avoided that and the respondent has not led any evidence which would explain his failure in that regard. I note that he has not sought to contest the Ombudsman’s evidence which indicates that he is not without financial resources, notwithstanding the size of the business.
The respondent has co-operated with the Ombudsman to a limited degree in that he has made the calculations and payment referred to above. However, the calculations did not cover the whole of the period in issue and there is no evidence of other payments having been made. In those circumstances, that co-operation has been of practically no material value and does not warrant any discount of the penalty. I do note however that the respondent has agreed facts and has consented to the agreed declaration and orders, all of which has simplified this proceeding. Even so, his conduct does not evidence contrition or recognition of wrongdoing and so I will allow a discount on penalty of only 10%, which relates to the admissions in the statement of agreed facts and consent to orders and a declaration.
In connection with the issues of contrition and co-operation, the compliance notice system appears to be an efficient way for the Ombudsman to secure cost-effective compliance with industrial instruments. Once breaches have been identified, a compliance notice can multiply the effect of the work done by the Ombudsman’s inspectors by, such as in this case, requiring the contraveners themselves to identify all their contraventions and then to correct them, saving inspectors much time and effort. It is also advantageous to contraveners because, once properly addressed, the compliance notice prevents further action by the Ombudsman in relation to the matters it has raised. In the circumstances of this case, where the evidence does not indicate that any attempt was made to challenge the correctness of the notice by an application for review under s.717 of the FW Act, the respondent’s failure to take advantage of the notice and to address the contraventions it identified undermines that scheme and, given that the notice was based on unresolved underlying contraventions of other provisions of the FW Act, suggests unwillingness prior to what approximates the settlement of this proceeding, to comply with the requirements of industrial law and the maintenance of minimum standards. For those reasons, the penalty to be imposed should include an element for specific deterrence and also general deterrence, particularly in light of the fact that the industry in which the respondent operated is notorious for its underpayment of employees. The penalty to be imposed should mark the Court’s disapproval of that conduct.
In all the circumstances, and after applying a 10% discount on penalty, I consider a just and appropriate penalty in this case to be $3,402.
CONCLUSION
The respondent is to pay a penalty of $3,402 to the Commonwealth within twenty-eight days.
There will be a declaration and orders in accordance with the agreement of the parties quoted earlier at [9] and [10].
I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Judge Cameron
Associate:
Date: 31 August 2021
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