Fair Work Ombudsman v Pro Install Electrical Pty Ltd

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Pro Install Electrical Pty Ltd [2022] FedCFamC2G 138

File number(s): MLG 572 of 2021
Judgment of: JUDGE MCNAB
Date of judgment: 10 February 2022
Catchwords: INDUSTRIAL LAW – FAIR WORK – failure to comply with a compliance notice – consent orders agreed to rectify non-compliance – penalty ordered – second respondent sole director of first respondent (in liquidation).  
Legislation:

Clerks – Private Sector Award 2010

Corporations Act 2001 (Cth) s 471B.

Fair Work Act 2009 (Cth) ss 545(1), 546, 547(2), 550, 716(5).

Cases cited:

Fair Work Ombudsman v Joys Childcare Limited & Anor (No 2) [2020] FCCA 2326

Kelly v Fitzpatrick [2007] FCA 1080

Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7

Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550.
Division: Division 2 General Federal Law
Number of paragraphs: 39
Date of last submission/s: 9 February 2022
Date of hearing: 10 February 2022
Place: Melbourne
Counsel for the Applicant: Ms Rebecca Preston
Solicitor for the Applicant: Rankin Business Lawyers
Counsel for the Respondents: Appeared in person

ORDERS

MLG 572 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

PRO INSTALL ELECTRICAL PTY LTD (ACN 624 691 569)

First Respondent

MR LUKE WARREN

Second Respondent

ORDER MADE BY:

JUDGE MCNAB

DATE OF ORDER:

10 FEBRUARY 2022

UPON THE ADMISSIONS MADE BY THE SECOND RESPONDENT, THE COURT DECLARES THAT:

1.The Second Respondent was involved, within the meaning of section 550 of the Fair Work Act 2009 (Cth) (“FW Act), in the contravention by the First Respondent (“Pro Install”) of section 716(5) of the FW Act by failing to comply with a compliance notice issued on 4 May 2020 (“Compliance Notice”) in respect of two former employees, Ms Amy Watson (“Ms Watson”) and Ms Ellen Hodson (“Ms Hodson”).

THE COURT ORDERS BY CONSENT THAT:

2.Pursuant to section 545(1) of the FW Act, the Second Respondent pay to the Applicant the amount of $1,914.54 on account of the amounts Pro Install was required to pay for the benefit of Ms Watson and Ms Hodson pursuant to the Compliance Notice.

3.Pursuant to section 547(2) of the FW Act, the Second respondent pay the amount of $122.49 in pre-judgment interest on the amount referred to in order 2 above.

4.The Second respondent pay the amounts referred to in orders 2 and 3 above (being the total sum of $2,037.03hin 28 days of the date of this order.

5.The Applicant, within 28 days of receiving the amount referred to in order 4 above, pay the sum of $1,282.05 to Ms Watson and the sum of $754.98 to Ms Hodson.

THE COURT ORDERS THAT:

6.Pursuant to section 546 of the FW Act, the Second Respondent pay a pecuniary penalty in the amount of $3,780 to the Commonwealth, in respect of his contravention of section 716(5) of the FW act (by operation of section 550(1)…

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Details
Case
[2022] FedCFamC2G 138
Decision Date

CaseChat Overview and Summary

The matter before the court was an application by the Fair Work Ombudsman (FWO) against Mr Luke Warren for his involvement in Pro Install Electrical Pty Ltd's contravention of s 716(5) of the Fair Work Act 2009 (FW Act). This section pertains to the failure to comply with a compliance notice issued on 4 May 2020 concerning the non-payment of wages to two former employees, Ms Watson and Ms Hodson. Mr Warren, the sole director of the company, was found to have contravened the compliance notice by not ensuring that the required payments were made. The case involved the investigation of Pro Install Electrical Pty Ltd by the FWO after receiving complaints from former employees about non-payment of wages.

The key legal issues the court had to address were whether Mr Warren was complicit in the company's failure to comply with the compliance notice and the appropriate penalty for the contravention. The court had to determine if Mr Warren, as the sole director, was responsible for the company's non-compliance with the compliance notice. Furthermore, the court needed to decide on the appropriate penalty for Mr Warren, considering the contravention and the agreed penalty amount. The court examined the evidence of the FWO's efforts to ensure compliance, Mr Warren's role in the company, and the seriousness of the contravention.

The court concluded that Mr Warren was indeed complicit in the non-compliance with the compliance notice, as evidenced by the company's pretended compliance efforts without actual payment of the required wages. The court found that the penalty agreed upon by the parties, amounting to $3,780, was appropriate given the circumstances. The court emphasised the importance of general deterrence in maintaining the integrity of the compliance notice regime. In its decision, the court ordered Mr Warren to pay the FWO the amount owed to the former employees, along with pre-judgment interest and penalties as agreed. The court also ordered that the FWO pay the owed amounts directly to the former employees.

The court made orders in the terms of the minute of proposed orders, which included the payment of the owed amounts to the former employees by Mr Warren, the payment of pre-judgment interest, and the payment of the agreed penalty. The court acknowledged the significance of the contravention and the importance of maintaining the proper management of the compliance notice regime. The decision serves as a reminder of the responsibilities of directors in ensuring compliance with the FW Act and the consequences of non-compliance.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

The claim is against the Mr Luke Warren (“the Second Respondent”) for his involvement in Pro Install Electrical Pty Ltd.’s (“the First Respondent”) contravention of s 716(5) of the FW Act being its failure to comply with a compliance notice in relation to two of its former employees Ms Watson and Ms Hodson issued on 4 May 2020. BACKGROUNDInvestigation In or around March 2020, the FWO commenced an investigation into the First Respondent after receiving requests for assistance from former employee of the company, Ms Watson. Ms Watson commenced employment with the First Respondent on 1 July 2019 and her employment was terminated on 20 January 2020. Subsequently, the FWO received a further request for assistance from former employee Ms Hodson, who complained that she had received no pay from the First Respondent in respect of her short period of employment. Ms Hodson commenced employment with the First Respondent on 17 February 2022 and her employment was terminated on 21 February 2020. The materials reviewed by the FWO, including documents that the First Respondent produced to the FWO in respect of each of Ms Watson and Ms Hodson showed that:(a)consistent with their accounts, each had been employed in clerical/administrative roles. Ms Watson had performed reception and other administrative duties while Ms Hodson had performed bookkeeping duties;(b)the First Respondent had terminated each of their employment by alleging gross misconduct;(c)the termination letter provided to Ms Watson was dated 20 January 2020. It stated that Ms Watson’s last day of employment would be 27 January 2020 and that termination was to be effective immediately; and(d)the termination letter provided to Ms Hodson was dated 21 February 2020. It stated the Ms Hodson’s last day of employment would be 28 February 2020 and that termination was to be effective immediately. A Notice to Produce was issued by the FWO to the First Respondent (directed to the attention of the Second Respondent) requiring the production of all payslips, banking transactions records and other pay records in respect of Ms Watson. However, the First Respondent did not produce any such documents to the FWO. The First Respondent also did not provide any such documents in relation to Ms Hodson. A payslip provided by Ms Watson to the FWO stated the applicable award to be the Clerks – Private Sector Award 2010 (“the Clerks Award”). By reason of the matters set out above, Fair Work Inspector (“FWI”) Mr Brian Elson formed the reasonable belief that:(a)the Clerks Award had applied to both Ms Watson and Ms Hodson in their employment with the First Respondent; and(b)the First Respondent had contravened cl 23.5 of the Clerks Award in respect of each Ms Watson and Ms Hodson, by failing to pay outstanding wages to termination of employment and all other amount payable under the Clerks Award and the National Employment Standards. Clause 23.5 of the Clerks Award states:23.5 Payment on termination of employment (a)The employer must pay an employee no later than 7 days after that day on which the employee’s employment terminates:(i)the employee’s wages under this award for any complete or incomplete pay period up to the end of the day of termination; and (ii)all other amounts that are due to the employee under this award and the NES. (b)The requirement to pay wages and other amount under paragraph (a) is subject to further order of the Commission and the employer making deductions authorised by this award or the Act. Compliance Notice

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

I also regard general deterrence as very important as a means of maintaining the proper management of the compliance notice regime, which is set up for the benefit of both employers and employees.CONCLUSION Having regard to all those matters, I am of the view, that although it is quite a significant penalty and set at 60 per cent of the maximum penalty that is available to the Court, the penalty that was agreed between the parties is an appropriate penalty. The Court will make orders in the terms of the minute of proposed orders, which have been forwarded to the Court.

Ratio Decidendi

Legal Principle Established

On 17 March 2021 the FWO sent a letter outlining the ongoing non-compliance by the First Respondent to relevant persons including the Second Respondent. CONSIDERATION This matter came before me on 10 February 2020 as a hearing on liability. The First Respondent in liquidation, did not appear. The Second Respondent, who is the sole director of the First Respondent appeared before the Court. In discussions between the Court, the Second Respondent and Ms Preston, who appeared on behalf of the FWO, there was a position that was agreed to between the parties. The Second Respondent consented to orders being made for a declaration in relation to his involvement in the contravention of s 716(5) of the FW Act by failing to comply with a compliance notice issued on 4 May 2020 in respect of two former employees of the First Respondent. There is also an agreed position as stated in Orders [2]-[5] of the minute of proposed orders which are set out below:(2)Pursuant to s 545(1) of the FW Act, the Second Respondent pay to the Applicant the amount of $1,914.54 on account of the amounts the First Respondent was required to pay for the benefit of Ms Watson and Ms Hodgson, pursuant to the Compliance Notice. (3)Pursuant to s 547(2) of the FW Act, the Second Respondent pay the amount of $122.49 in pre-judgment interest on the amount referred to in Order [2] above. (4)The Second Respondent pay the amounts referred to in Orders [2] and [3] above (being the total sum of 2,037.03) within 28 days of the date of this order. (5)The FWO, the Applicant, within 28 days of receiving the amount referred to in Order [4] above, pay the sum of $1,282.05 to Ms Watson and the sum of $754.98 to Ms Hodson. The parties placed before the Court an agreed position as to the penalty for the Second Respondent in relation to the contravention of s 716(5) of the FW Act which was in the sum of $3,780. Discretion resides with the Court to determine whether that is a reasonable penalty when considering all the circumstances of this matter. The background of this matter is set out in the statement of claim filed on 26 March 2021, which I will not recite, but also in the affidavit of FWI Elson, which was sworn and filed with the Court on 22 November 2021. Mr Elson is a Fair Work Inspector who was employed in the office of the FWO, and he made an affidavit setting out the service of the Compliance Notice on 4 May 2020 and the efforts made to ensure the First Respondent complied with that notice. That evidence is set out in the background above. The evidence shows that the FWO made a concerted effort to deal with the First Respondent and the Second Respondent in relation to the matters arising from the Compliance Notice. In my view, the dealings between the parties demonstrate that the First and Second Respondent displayed a pretended compliance with the notice through the provision of pay records which, in fact, support a finding that the payments were not paid. There was promised compliance by the Second Respondent on numerous occasions, but no compliance was achieved. That is a significant matter.