Fair Work Ombudsman v Pure Telecom Pty Ltd

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Pure Telecom Pty Ltd [2024] FedCFamC2G 664

File number(s): SYG 311 of 2023
Judgment of: JUDGE CAMERON
Date of judgment: 25 July 2024
Catchwords:

INDUSTRIAL LAW – breaches of civil remedy provisions of the Fair Work Act 2009 (Cth) – declarations of breach – imposition of pecuniary penalties – relevant considerations.

INDUSTRIAL LAW – Fair Work Act 2009 (Cth) - Compliance notice – contravention – whether compensation for contravention available.

Legislation:

Crimes Act 1914 (Cth) s.4AA

Fair Work Act 2009 (Cth) ss. 44, 45, 90, 539, 545, 546, 550, 716, 717

Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) item 155 of sch.1
Cases cited:

ACE Insurance Ltd v Trifunovski (No 2) (2012) 215 IR 206

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157

Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450

Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (2018) 264 FCR 155

Dafallah v Fair Work Commission (2014) 225 FCR 559

Fair Work Ombudsman v Back Your Cause Pty Ltd, file BRG178/2023

Fair Work Ombudsman v Carers Portland Inc [2023] FedCFamC2G 620

Fair Work Ombudsman v Chapman [2023] FedCFamC2G 1018

Fair Work Ombudsman v Cobra Security Services Pty Ltd [2024] FedCFamC2G 336

Fair Work Ombudsman v Precise Fencing and Landscaping Pty Ltd [2023] FedCFamC2G 1235

Fair Work Ombudsman v Preach By The Beach Pty Ltd, file SYG936/2022, orders made 14 October 2022

Fair Work Ombudsman v Sails Waterfront Bar & Grill Pty Ltd (No 2) (2021) 360 FLR 421

Fair Work Ombudsman v Taing [2024] FedCFamC2G 270

Leggett v Hawkesbury Race Club Limited (No 4) (2022) 293 FCR 608
Division: Fair Work
Number of paragraphs: 75
Date of hearing: 18 June 2024
Place: Sydney
Counsel for the Applicant: Ms V. Bulut
Solicitor for the Applicant: Office of the Fair Work Ombudsman
Solicitor for the First and Second Respondents: Digital Age Lawyers

ORDERS

SYG 311 of 2023

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

FAIR WORK OMBUDSMAN

Applicant
AND:

PURE TELECOM PTY LTD (ACN 136 874 372)

First Respondent

STEVEN JOSEPH WOODS

Second Respondent

ORDER MADE BY:

JUDGE CAMERON

DATE OF ORDER:

25 JULY 2024

THE COURT DECLARES THAT:

1.The first respondent contravened s.716(5) of the Fair Work Act 2009 (Cth) by failing to comply with a compliance notice issued on 24 May 2022.

2.The second respondent was involved, within the meaning of s.550(2) of the Fair Work Act 2009 (Cth), in the first respondent’s contravention of s.716(5) of that Act.

THE COURT ORDERS THAT:

1.The first respondent

(a)pay Howard Yang the amount of $22,148.84 (Wage Underpayments) less any amounts paid since 18 June 2024, in amounts of at least those set out in Schedule A to these orders, such that no amount is outstanding by 27 February 2026;

(b)calculate and pay any additional superannuation contributions required by clause 17.2…

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Details
Case
[2024] FedCFamC2G 664
Decision Date

CaseChat Overview and Summary

In the case of Fair Work Ombudsman v Pure Telecom Pty Ltd, the Fair Work Ombudsman sought various declarations, orders, and penalties against Pure Telecom Pty Ltd and its director, Mr Woods, for contravening section 716(5) of the Fair Work Act 2009 (Cth). The dispute arose from Pure Telecom's failure to comply with a Compliance Notice issued by the Fair Work Inspector, requiring the company to calculate and rectify unpaid entitlements owed to Mr Yang, an employee. The Ombudsman alleged that Pure Telecom had failed to meet the payment obligations as specified in the Compliance Notice and subsequently did not provide any evidence of rectification. The legal issues before the court included whether Pure Telecom had contravened section 716(5) by failing to comply with the Compliance Notice and, if so, what penalties and compensation should be imposed.

The court found that Pure Telecom had indeed contravened section 716(5) of the FW Act by failing to comply with the Compliance Notice. The court detailed that despite multiple reminders and extensions, Pure Telecom did not make the required payments to Mr Yang until after legal proceedings had commenced. The court also noted that Pure Telecom's calculations of the amounts owed were incorrect and did not account for all entitlements. The court further concluded that the purpose of the civil penalties under the FW Act is deterrence, not compensation, and that the penalties should be sufficient to deter both the contravener and others from similar conduct.

The court ordered Pure Telecom to pay Mr Yang his outstanding wage and superannuation entitlements, with Mr Woods personally liable to make good any default by Pure Telecom. Additionally, Pure Telecom was ordered to pay a penalty of $7,000, and Mr Woods was ordered to pay a penalty of $1,400. These penalties were determined based on the seriousness of the contravention and the need to deter future non-compliance. The orders reflect the court's intention to ensure compliance with workplace laws and to provide a deterrent against similar breaches in the future.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Contravention of s.716(5) having been found, attention turns to the questions of penalties and compensation.APPLICANT’S EVIDENCE Leigh Pace FWI Pace was a Fair Work Inspector appointed under the FW Act. In his affidavit affirmed on 16 January 2024, FWI Pace deposed that: (a)on 24 May 2022 he sent both Pure Telecom and Mr Woods the Compliance Notice which required Pure Telecom to:(i)calculate Mr Yang’s entitlements under the Award and the FW Act in respect of his minimum wage, annual leave on termination and annual leave loading entitlements;(ii)“rectify” those amounts by 25 October 2022; and(iii)provide evidence of those calculations and rectifications by 1 November 2022;(b)on 8 June 2022 he received a telephone call from Mr Woods who sought further information concerning undertaking compliance with the notice;(c)on 13 October 2022 Mr Woods sent an email to FWI Pace stating he was unable to meet the requirements of the Compliance Notice as he could not pay the required amount in full by the due date. The email read in part:Hi Leigh,Thankyou for the follow up I am working through the calls emails and messages Etc. after returning from children’s term leave commitments I have been working very closely with my accountant Ronald Alexander Of Platinum One Accountants for most of this year in stabilising the business This important matter has been receiving the attention it deserves.However, and unfortunately despite my best efforts – at this time I am unable to meet the compliance notice requested payment in full By the due date I have advice pending from other financial professionals and support staff However this is not likely to change my ability to satisfy this demand on time I would be pleased if you could advise on what the best and worst case scenarios might look like Given my inability to pay in full and on time …(d)on 2 November 2022 FWI Pace sent an email to Mr Woods attaching a Failure to Comply Notice. The email read in part: Please note that if the Employer does not provide a reasonable excuse for its failure to comply with the Compliance Notice, the Fair Work Ombudsman (FWO) may commence legal action against the Employer, and any persons involved in its failure to comply with the Compliance Notice, without further notice.Failure to comply with a compliance notice is a contravention under section 716(5) of the Fair Work Act 2009 (Cth). A court may order a maximum penalty of $6,660 in respect of an individual or $33,300 in respect of a body corporate for each failure to comply with a compliance notice.If legal action is taken against the Employer, in addition to seeking civil penalties, FWO may seek to recover any outstanding monies which the Compliance Notice required the Employer to pay. …(e)on 15 November 2022 FWI Pace received correspondence from Pure Telecom’s external accountant, Mr Alexander, setting out the company’s calculation of the amounts it considered were owed to Mr Yang;(f)FWI Pace concluded that Pure Telecom’s calculations had incorrectly reduced the proposed amount said to be owed to Mr Yang by setting off his travel allowance payments;(g)in correspondence sent on 30 November 2022, FWI Pace informed Mr Alexander and Mr Woods that their calculations were incorrect, provided them with the correct figures, the total being $48,460.94, and advised them that he would allow Pure Telecom further time to make payment arrangements for the amounts outstanding and would defer until 7 December 2022 his decision concerning whether to commence legal proceedings;(h)Pure Telecom did not make any additional payments to Mr Yang prior to 7 December 2022;(i)on 13 January 2023 Ms Clemens, a solicitor employed by the Ombudsman, sent the respondents letters entitled “Litigation to commence without further notice”. The letter warned that the Ombudsman intended to commence enforcement proceedings and that:Corrective action is a matter taken into account by the Courts when considering any penalty. Evidence of rectification of the contraventions and corrective action to ensure compliance with workplace laws is a matter that the FWO would ask the Court to consider as a factor in mitigation of any penalty.… (j)On 2 February 2023 Ms Clemens had a telephone conversation with Mr Woods concerning the conduct and potential outcomes of any legal proceeding commenced against him. (k)Ms Clemens sent an email to Mr Woods on 9 February 2023 which read in part:I note you have not provided me with any receipts for any payments to Mr Yang following our meeting last week. As I informed you during that meeting, the Fair Work Ombudsman (FWO) will take any payments into consideration.The FWO intends to commence proceedings very shortly because, based on Pure Telecom Pty Ltd (Company)’s continuing failure to make any payments required by the compliance notice issued to it on 24 May 2022 (Compliance Notice), which have been outstanding since at least 1 November 2022, it is the FWO’s view there is no other way to ensure the Company takes the steps that were required by the Compliance Notice. (l)between 10 February and 28 March 2023 Pure Telecom made 7 payments to Mr Yang totalling $3,750;(m)as of 22 February 2023, Pure Telecom had not paid the full amount required by the Compliance Notice nor provided a proposed payment plan. The Ombudsman commenced this proceeding on 23 February 2023;(n)on 14 September 2023, following mediation, the parties entered into a payment plan in respect of Mr Yang’s unpaid annual leave entitlements. A copy of that agreement was annexed to his affidavit; and(o)the parties did not, however, reach agreement on the amount owed to Mr Yang in respect of minimum wages.

Decision

Reasons for decision

That provision would appear to put it beyond doubt that the Court may order a Person to make a payment required by a compliance notice and, presumably, to allow credit for any part-satisfaction of such an obligation. However, as the point was not argued I take the matter no further.CONCLUSION There will be declarations that the respondents contravened s.716(5) of the FW Act by failing to comply with the Compliance Notice. There will also be orders that Pure Telecom pay to or for the benefit of Mr Yang his outstanding wage entitlements in accordance with the schedule found in Schedule A to these reasons, and also his outstanding superannuation entitlements, and provide the Ombudsman with reasonable evidence that it has done so. Mr Woods will be ordered to make good any default in payment by Pure Telecom. Finally, Pure Telecom will be ordered to pay the Commonwealth a penalty of $7,000 within 28 days of it paying the last of Mr Yang’s unpaid wages or by 26 March 2026, whichever is earlier, and Mr Woods will be ordered to pay the Commonwealth a penalty of $1,400 at the same time.

Ratio Decidendi

Legal Principle Established

Mr Woods deposed that these issues caused him difficulty in obtaining appropriate legal representation and adequately responding to the Ombudsman’s requirements. His evidence was that he did not receive advice and representation until early 2024.CONSIDERATION Relevant legislation At the time this proceeding was commenced, the FW Act relevantly provided:545 Orders that can be made by particular courts Federal Court and Federal Circuit and Family Court of Australia (Division 2) (1) The Federal Court or the Federal Circuit and Family Court of Australia (Division 2) may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision. (2) Without limiting subsection (1), orders the Federal Court or Federal Circuit and Family Court of Australia (Division 2) may make include the following: (a) an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention; (b) an order awarding compensation for loss that a person has suffered because of the contravention; (c) an order for reinstatement of a person. …. Time limit for orders in relation to underpayments (5) A court must not make an order under this section in relation to an underpayment that relates to a period that is more than 6 years before the proceedings concerned commenced.…546 Pecuniary penalty orders (1)The Federal Court, the Federal Circuit and Family Court of Australia (Division 2) or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.…PenaltiesRelevant principles The purpose of civil penalties of the sort available under the FW Act is deterrence, not compensation: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at 195 [116]; Dafallah v Fair Work Commission (2014) 225 FCR 559 at 593 [140]. In Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (2018) 264 FCR 155, the Full Court of the Federal Court said:It is unnecessary to engage in any extended discussion of principle. Of particular significance is the recognition that deterrence (general and specific) is the principal and indeed only object of the imposition of a penalty — to put a price on contravention that is sufficiently high to deter repetition by the contravener and others who might be tempted to contravene the Act: French J in Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076 at 52,152, cited by the plurality in Commonwealth v Director of the Fair Work Building Industry Inspectorate (Civil Penalties Case) [2015] HCA 46; (2015) 258 CLR 482 at [55]. ... (at 167 [19]) 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 Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450 at 460-461 [18]-[19], in order to arrive at a single result that is an instinctive synthesis of those various factors. DiscussionThe nature and extent of the contravening conduct