Fair Work Ombudsman v Queensland Xray Group Pty Ltd
[2022] FedCFamC2G 191
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Queensland Xray Group Pty Ltd [2022] FedCFamC2G 191
File number(s): BRG 251 of 2021 Judgment of: JUDGE VASTA Date of judgment: 9 March 2022 Catchwords: INDUSTRIAL LAW – breach of s 716(5)of the Fair Work Act 2009 (Cth) – employer non-payout of accrued leave - Assessment of pecuniary penalties Legislation: Fair Work Act 2009 (Cth):s 716 Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Mason & Harrington Corporation Pty Ltd t/as Pangea Restaurant & Bar [2007] FMCA 7
Division: Division 2 General Federal Law Number of paragraphs: 43 Date of last submission/s: 7 March 2022 Date of hearing: 7 March 2022 Place: Brisbane Solicitor for the Applicant: Norton Rose Fulbright Solicitor for the Respondent: The Respondent appearing on its own behalf by Mr White ORDERS
BRG 251 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: QUEENSLAND XRAY GROUP PTY LTD
Respondent
ORDER MADE BY:
JUDGE VASTA
DATE OF ORDER:
9 MARCH 2022
THE COURT DECLARES THAT:
1.The Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (“FW Act”) by failing to comply with the Compliance Notice given to the Respondent on 18 December 2020.
THE COURT ORDERS THAT:
2.Pursuant to section 546(1) of the FW Act, the Respondent pay a pecuniary penalty of $15,000 to the Commonwealth for the contravention of section 716(5) of the FW Act, within 180 days of this order.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
(EX TEMPORE)JUDGE VASTA
On 18 June 2021 the Fair Work Ombudsman filed an originating application in this Court seeking the Court order compliance with a compliance notice that had been issued on 18 December 2020, a declaration that the Respondent had contravened s 716 of the Fair Work Act Act 2009 (Cth) (“the FW Act”) in that it had not complied with the compliance notice, and that the Court impose pecuniary penalties for that contravention.
The matter arose in this way. The Respondent company has been incorporated under the Corporations Act, and registered since 21 October 2010. It operates a radiology centre trading as Uniradiology, and it is located at Southport, however, it does have its registered office at an address in Victoria.
The company employed a woman by the name of Rosemary, and I won’t use her surname in this matter. Rosemary was employed as a fulltime CT general radiographer between 27 February 2020 and 12 October 2020. Rosemary was a work visa holder, and so was allowed to stay in this country so long as she remained employed by the Respondent; the Respondent being an approved employer under the provisions of the Migration Act 1958 (Cth).
Rosemary resigned from the Respondent in September 2020, giving the Respondent four weeks’ notice which she worked out. When her employment ended on 12 October 2020, she had accrued 56.24 hours of untaken annual leave. This meant that she had payable to her $2,808.49 gross or $1,820.49 net. When her final pay was given to her, the amount of $269.08 was the only payment made for her accrued leave. A deduction of $1541.41 from her final pay had been made by the Respondent; therefore the Respondent had failed to pay the employee’s accrued leave on termination of employment in accordance with s 90 of the FW Act, and cl 26.1 of the Health Award.
Rosemary sought assistance from the Fair Work Ombudsman. The Fair Work Ombudsman made their investigations, and found exactly what I have just said, had occurred. As the Respondent was in contravention of the FW Act, the Fair Work Inspector decided to issue a compliance notice. A compliance notice is a shorthand way of being able to resolve matters so that litigation need not take place.
In the explanatory memorandum to the Act, or to the Bill, the power to issue a compliance notice was included in the legislation so that there would be the provision of a mechanism for dealing with non-compliance with minimum entitlements as an alternative to commencing the litigation for a breach of the underlying contravention. They are a mechanism for the efficient, and cost effective rectification of identified contraventions of the FW Act which included underpayments to employees.
If an employer complies with the compliance notice, then the Fair Work Ombudsman, and anyone else, is prevented from bringing civil remedy proceedings against it in respect of the underlying contraventions. If there is compliance, the employer would not be taken to have admitted to the contravention and not be taken to have actually contravened the civil remedy provisions in respect of the underlying contraventions, and so there can’t be any declarations made.
However, if a person fails to comply with the compliance notice, then action can be taken, and not only can the matters be enforced by the Court, but pecuniary penalties can also be awarded.
The Fair Work Ombudsman (through the Fair Work inspector) issued the compliance notice on 21 December 2020, and did so by sending it by Express Post to the registered office of the Respondent, and by sending it by email to Mr Bevan White, who is the sole director of the Respondent, and to Mr Robert Vandermeer who was the operations manager for the Respondent.
The compliance notice required the Respondent to make a payment to Rosemary of the net amount of $1,551.41 by 15 January, and to produce reasonable evidence of compliance with the compliance notice by 22 January 2021 by providing proof that full payment had been made to the employee, including a payslip and a bank transaction report.
There was no compliance with the notice. Nothing had been paid to Rosemary by 15 January 2021, and there was certainly no reasonable evidence of compliance given to the Fair Work Inspector by 22 January 2021.
If it is that a person who was given a compliance notice wishes to have a review of that compliance notice, in effect, if that person disputes what is in the compliance notice, then there is a mechanism pursuant to s 717 of the FW Act for that to occur. There was never any application for a review of the compliance notice made by the Respondent.
On 28 January 2021, the Fair Work Inspector sent a Failure to Comply letter, again sending it to Mr White, and to Mr Vandermeer. That Failure to Comply letter did a number of things; it noted the failure to comply with the compliance notice, it requested that the Fair Work Ombudsman be advised within seven days if there was a reasonable excuse for not complying with the compliance notice, it said that, if there was no reasonable excuse, then the Fair Work Ombudsman may commence legal action against the Respondent without further notice, and, it noted that the failure to comply with a compliance notice is a contravention and that the court may order a maximum penalty of $33,300.00 to be paid by the Respondent for the failure to comply.
The letter also noted that if legal action is taken against the Respondent, in addition to seeking the civil penalties, the Fair Work Ombudsman might seek to recover any outstanding monies that the Respondent had to pay in accordance with the compliance notice. The letter also encouraged the Respondent to obtain independent legal advice in respect of the matter (and, in particular, what the contents of that failure to comply letter had encapsulated), and requested that Mr White or Mr Vandermeer contact the Fair Work Inspector if they wished to discuss the letter or clarify any of the issues that were in the letter.
On 4 February 2021, Mr Vandermeer responded. He responded by email, and he copied in Mr White, and also a person by the name of Michael Webb. Michael Webb held himself out to be the solicitor for the Respondent company. In that email, Mr Vandermeer said that the position of the Respondent was that
(a)Rosemary had breached her employment contract with the Respondent, and
(b)the Respondent considered that it could, and would,
(i)rely on Rosemary’s breach of her employment contract;
(ii)recover its wasted costs by deducting those costs from the salary, pursuant to a provision of the employment contract recording the employee’s agreement to deductions from salary of monies which the employee may owe on account to the Respondent; and
(iii)instruct their solicitor to defend the matter if it were that the Fair Work Ombudsman continued to press it.
On 19 February 2021, the Fair Work Inspector emailed both Mr Vandermeer and Mr White regarding the failure to comply with the compliance notice. In that email, the Fair Work inspector informed the Respondent company that the matter would be referred to the legal group for consideration of litigation. The FWO stated again that the compliance notice set out a number of actions which had not occurred and stated that the Respondent had not provided any reasonable excuse for its failure to comply with the compliance notice. The FWO invited the Respondent to provide additional information that was available to assist the Fair Work Ombudsman to determine the appropriate enforcement action within seven days, and that such information could include confirmation of any intention to rectify the contravention by complying with the compliance notice. The FWO asked the Respondent company to ensure it provided evidence in support of any claims.
On 26 February 2021, Mr Vandermeer responded to the Fair Work Inspector’s email, and again, Mr White and Mr Webb were copied into this email. Mr Vandermeer referred to that email from the Fair Work Inspector and stated that the Respondent’s position had been explained to the Fair Work Ombudsman a number of times in both telephone calls and emails.
He referred to a discussion that occurred on 5 February 2021 where, to another Fair Work Inspector, Mr Vandermeer had explained the Respondent’s position, and said that the Respondent had received legal advice, and that the Respondent accepted that legal advice and was following that advice.
Mr Vandermeer also raised concerns regarding that other Fair Work Inspector’s request for a copy of the legal advice provided to the Respondent. He said, from the outset, he had been clear in stating the Respondent’s position on the matter, and that he was “growing weary of the repetitive nature of these requests, emails and phone calls” from the Fair Work Inspector’s Office. He said that such conduct was unprofessional, and verging on harassment, and that he was considering making a formal complaint. He noted, as well, that his email was being copied to the solicitor for the Respondent.
On 1 March 2021, the Fair Work Inspector emailed Mr Vandermeer, and copied in Mr Webb and Mr White. In that email, the Inspector explained that it was the general procedure of the Office of the Fair Work Ombudsman to invite compliance with the compliance notice, and that where the notice had not been complied with, then the Fair Work Ombudsman would issue a Failure to Comply Notice. They then follow up with another email stating that the matter would be referred to the legal group, and that these communications are to provide the Respondent, and any other business that was in the position that the Respondent was, with sufficient opportunities, and time to review their positions before litigation.
The email also said that the email of Mr Vandermeer had been forwarded onto management considering that there was going to be a complaint about the way in which the Fair Work Inspectors were conducting themselves.
That seemed to be the last that there was as far as communication between the Fair Work Inspectors and the Respondent. The matter obviously did go to the legal section. There was no compliance with the compliance notice, and really the Fair Work Ombudsman had no option but to launch these proceedings on 18 June 2021.
On 2 August 2021, some six weeks later, the Respondent’s new legal representative advised that the Respondent would pay the amount of $1541.41 within seven days, and that amount was paid to Rosemary. The Respondent has not, from that date onwards, claimed that there was any form of reasonable excuse for their behaviour.
If one looks at the matter, there are a number of aspects of the behaviour of the Respondent that really call their ethics into question. As previously noted, Rosemary is a visa recipient, and therefore relies on the employment of her, by the Respondent, to continue living in this country. The Respondent, through Mr Vandermeer, has said that Rosemary needed to escape her previous employer because that previous employer was, to use the vernacular, ripping her off.
The Respondent, through Mr Vandermeer, made an application to be an approved employer sponsor, and to employ Rosemary as a radiologist. To make such an application, the Respondent needed to pay an application fee which was apparently in the order of $1,500. Mr Vandermeer states, in his affidavit, that he had told Rosemary that, if she left the employment of the Respondent before the expiration of 12 months, she would need to pay back the Respondent whatever money it had expended in applying to be an employer sponsor with the Department of Immigration.
Whilst it is that Mr Vandermeer states that in his affidavit, there is nothing in any of the written material that supports this; there is no letter to Rosemary from the Respondent setting out that this was a particular term; there is nothing in the employment contract that states that this is a particular term. There was a general clause in the employment contract which one would see in many employment contracts that states that if the employee owes money to the employer, then the employer can deduct that money. This standard clause is usually applied to where there has been a mistake in overpayments, and the employer is able to deduct money from a subsequent pay so that the ledger is properly balanced. Mr Vandermeer was attempting to use that clause to justify the retention of the $1551.
When it was that Rosemary queried the matter, Mr Vandermeer wrote this:
The deduction of $1551.41 which was the cost of nominating you for sponsorship, and the TSS SAF levy, which are both wasted costs due to your decision to end your employment before the sponsorship period ended, we are very disappointed after all the effort and assistance we gave you, that you treated us so poorly, and could not be upfront with me, or with Bevan (being Mr White), whom you saw several times each week. We continued your employment through COVID without any government support, and yet you still decided to leave us without any discussion whatsoever.
The office manager (Mr Vandermeer) is equating the payment for sponsorship, with the Department of Immigration, as a debt owed by the employee to the employer. Such is absolutely reprehensible. I have no doubt, and it was confirmed by Mr White before me today, that the cost of nominating the Applicant would have been a business cost which had been marked as a deduction for the company.
Given that the visa application was made in early 2020, and Rosemary did not leave the employee until October 2020, it would have been a business cost incurred in the tax year 2019/2020, and would have been part of the statement of accounts. The company not only gained the benefit of an employee (that it could not ordinarily have because she was not an Australian citizen), but it also gained the benefit of that expense being able to be used in a way for it to be paying less tax. To then make out that such is a debt owed by the employee to the Respondent just cannot be countenanced.
It is one of the most immoral acts that one can see perpetrated by an employer, but even more remarkable is that there’s no pro-rata diminution of that debt. In other words, as far as Mr Vandermeer was concerned, if it cost $1500, and the company did not get 12 months’ work out of the employee, that at any time that the employee had resigned or left employment, they would be liable for the whole amount. Such thinking is totally unconscionable.
The response of Mr Vandermeer was belligerent. He stood steadfastly to “legal advice” but would not name who had given him that legal advice or what the legal advice was. Obviously, it was not written legal advice (because it would not be worth the paper upon which it was printed), and even more obviously, Mr Vandermeer did not want to disclose who verbally gave him such advice because any person who is even remotely concerned with business would realise that such advice would not be worth the air in which it was expressed by voice!
But nevertheless, Mr Vandermeer kept up this moral outrage that he had confected, even to the point where Fair Work Inspectors, who were trying to simply do their job and point out the legalities, were threatened with complaints of harassment, and unprofessional conduct. It is clear from the looking at all the circumstances here, there was only one person who was acting unprofessionally, and it certainly was not either of the Fair Work Inspectors.
Mr White, who is appearing for the company today, by leave given to him from the Court, has explained that he is embarrassedand has apologised profusely. Mr White said that he cannot understand how the matter came to this and that he left it all in the hands of Mr Vandermeer. To use the vernacular, Mr Vandermeer was the Office Manager, and it was a case of “why have a dog if you’ve got to bark yourself”, which is why Mr White did not enter the arena until it was that the Fair Work Ombudsman commenced proceedings. Upon the commencement of the proceedings, Mr White says that he received other legal advice, and that legal advice caused him to make the payments as soon as possible. He appears today as he says “to throw himself on the mercy of the Court”.
He says that he is a small employer. He has always tried to do the right thing. He said that when the Fair Work Ombudsman launched these proceedings, there was publicity given to that fact, and that publicity has hurt the Respondent. Mr White steadfastly gives his word that this will not happen again.
It seems to me that there is very little in the way of mitigation that can be found in this matter. It is simply not a case where the Court can look upon what has happened, and say, “Well, they acted on legal advice.” As I have already pointed out, there has been no evidence put before me, by either Mr White or Mr Vandermeer, as to what that legal advice was, and who had given it so that they can say that their excuse was that, “We actually did think that we were acting on legal advice.” That, therefore, cannot be a matter of mitigation. It could be a matter of professional negligence as to the person who gave that legal advice, and whether Mr White or the company wishes to take action, because of that, is a matter for Mr White, but it is not a matter that will enter into the considerations of this Court for the reasons I have already stated.
The principles regarding the imposition of pecuniary penalties for contraventions of civil remedy provisions has been fairly well settled. It has been encapsulated in what the High Court said in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3 at paragraph 116 where the Court said:
As has been observed, the principal object of an order that a person pay a pecuniary penalty under section 546 is deterrence, specific deterrence of the contravener, and by his or her example, general deterrence of other would be contraveners. According to orthodox sentencing concessions, as they apply to the imposition of civil pecuniary penalties, specific deterrence appears in the sting or burden which the penalty imposes on the contravener. Other things being equal it is assumed that the greater the sting or burden of the penalty the more likely it is that the contravener will seek to avoid the risk of subjection to further penalties, and thus the more likely it will be that the contravener is deterred from further contraventions. Likewise, the more potent will be the example that the penalty sets for other would be contraveners, and therefore the greater the penalty’s general deterrent effect; conversely, the less the sting or burden that a penalty imposes on a contravener, the less likely it will be that the contravener is deterred from further contraventions, and the less the general deterrent aspect of the penalty. Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any specific or general deterrent effect, so it will be unlikely, or at least less likely to achieve the specific and general deterrent effects that are the raison d’être of its imposition.
In the Mason & Harrington Corporation Pty Ltd t/as Pangea Restaurant & Bar [2007] FMCA 7, the Court listed a number of factors that must be taken into account when looking at the proper imposition of a penalty, however, notwithstanding the approval by higher courts of what was said in that case, the Court must be careful that it simply does not look at those factors, and try and compare, and contrast those factors with previous cases in which those factors were looked at, and then come to a tick-a-box mathematical calculation as to what the appropriate penalty is. These matters are matters of proper use of the sentencing discretion
Whilst there has been some debate as to when it was that emails were sent, and when it was that these were received, I have not taken into consideration any of that material because the only reason that the Respondent did not comply with the notice was that it was holding onto the notion that it was justified in doing what it did. I take into consideration all of those matters that I have previously mentioned that go to setting where this matter is in terms of contraventions for non-compliance of compliance notices. For the reasons I have gone through it is in the highest bracket.
I take into account that, according to Mr White, as soon as he became involved, and, in effect, over-rode the appalling decision making of Mr Vandermeer, that he himself got this matter to a point where he accepted that the Respondent had been in the wrong the whole time. He acknowledged that, from October 2020 until August 2021, the Respondent had done the wrong thing. I also take into account that as soon as he realised that the Respondent had done the wrong thing, which was after the commencement of these proceedings, that Mr White tried to rectify things as soon as he possibly could. He hasn’t told me whether Mr Vandermeer is still with the company or not, and that is really beside the point.
Mr White has said that the company will no longer be relying upon advice from Melbourne, and that he, Mr White, is personally supervising everything that happens at the business in Southport. He is therefore submitting to me that there has been contrition shown, and rectification in the manner in which the business conducts itself so that contraventions of the sort that have happened here will not occur again.
But as the High Court said, the purpose of the imposition of civil penalties is to deter persons from contravening the FW Act, and, in this case, to deter specifically and generally non-compliance with compliance notices. For that reason a very strong message needs to be sent by the Court, notwithstanding all of the matters that Mr White has urged upon me on behalf of the company.
This was a very deliberate non-compliance with the compliance notice by the Respondent. This was an attitude of “We dare you to take action against us.” This was, as I have said, a belligerent stance that the Respondent, knowing that it had done something wrong, aggressively kept saying that it hadn’t done anything wrong.
It seems to me that in all the circumstances a penalty of $15,000 ought be imposed.
I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Vasta. Dated: 12 April 2022
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