Fair Work Ombudsman v Riddhi Siddhi Pty Ltd
[2022] FedCFamC2G 457
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Riddhi Siddhi Pty Ltd [2022] FedCFamC2G 457
File number(s): BRG 604 of 2020 Judgment of: JUDGE VASTA Date of judgment: 27 May 2022 Catchwords: INDUSTRIAL LAW –Contraventions of Fair Work Act 2009 (Cth) – where contravention included the creation of false records which were difficult to disprove – pecuniary penalties Legislation: Fair Work Act 2009 (Cth): s 535, s 536, s 546(1), s 550, s 716(5), s 718A Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Mason v Harrington Corporation Proprietary Limited t/as Pangaea Restaurant & Bar [2007] FMCA 7
Division: Division 2 General Federal Law Number of paragraphs: 62 Date of last submission/s: 27 May 2022 Date of hearing: 27 May 2022 Place: Brisbane Counsel for the Applicant: Mr McMillan Solicitor for the Applicant: Fair Work Ombudsman Counsel for the Respondents: Mr Harding Solicitor for the Respondents: Macpherson Kelley ORDERS
BRG 604 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: RIDDHI SIDDHI PTY LTD ACN 132 410 890 IN ITS CAPACITY AS TRUSTEE FOR THE RIDDHI SIDDHI TRUST
First Respondent
RUCHIKA SHARMA
Second Respondent
ORDER MADE BY:
JUDGE VASTA
DATE OF ORDER:
27 MAY 2022
THE COURT ORDERS THAT:
1.Pursuant to section 546(1) of the Fair Work Act 2009 (Cth) (“FW Act”):
a. Riddhi Siddhi Pty Ltd pay a pecuniary penalty to the Commonwealth for the declared contraventions set out in Court order dated 6 May 2022 in the sum of $185,000, within 180 days of this order; and
b. Ms Ruchika Sharma pay a pecuniary penalty to the Commonwealth for her involvement within the meaning of section 550 of the FW Act in the declared contraventions by Riddhi Siddhi as set out in Court order dated 6 May 2022 in the sum of $19,000, within 180 days of this order.
2.The Applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
NOTATION:
A.That the Court will not provide a written version of the reasons for judgment delivered today, unless an appeal has been lodged or the Court has received a request in writing from either party seeking that written reasons be produced.
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 17 November 2020, the Applicant, Fair Work Ombudsman, filed an originating application in this Court asking the Court to make certain declarations against the First Respondent, Riddhi Siddhi Proprietary Limited, and the Second Respondent, Ruchika Sharma, who is, for all intents and purposes, the controlling mind of the First Respondent.
The matter proceeded to a first court date before Judge Jarrett on 12 February 2021. His Honour made the usual orders for the filing and serving of affidavits of both the Applicant and the Respondents, and His Honour also ordered that the matter go before a Registrar of this Court for mediation. The matter was to then come back before His Honour on 11 June 2021 after such mediation. The mediation did not resolve the matter, and on 11 June, His Honour made, in effect, trial directions, which led to the final direction, being that the trial would commence on 15 November 2021 and be listed for five days.
His Honour was appointed to Division 1 of this Court in mid-October 2021, which meant that he no longer had a commission that allowed him to hear this matter. The matter was transferred into my docket, and, because I had no capacity to hear the five-day matter on 15 November, on 28 October 2021, I reluctantly had to delist the trial and set it down for hearing from Monday, 23 May 2022 for five days.
In early May 2022, the parties contacted the Court and asked the Court to make a number of orders by consent which would mean that the trial need no longer take place. On 6 May 2022, I made orders in these terms. I made declarations that with regard to seven particular matters, the First and Second Respondents had contravened the Fair Work Act 2009 (Cth) (“the FW Act”). I made an order, by consent, that the First Respondent would comply with the specified action that was in the compliance notice that had been given to it, and that the trial would be vacated and the matter listed for penalty hearing today, 27 May 2022.
The background to the matter is this. The First Respondent is a corporate entity that, for these purposes, ran at the time a business that serviced a number of outlets under the trading name of Vege Rama. The company had a number of outlets, the main one being at 75 Berwick Street at Fortitude Valley, but also there were outlets at Anzac Square, the Myer Centre and at Carindale Shopping Centre. The outlets in the city and at Carindale were in effect fast food-type outlets, and the main outlet at Fortitude Valley was where all of the meals were cooked, prepared and distributed out to those other outlets. The Fortitude Valley premises also had its own outlet there as well.
A person by the name of Sailesh Paudyal, whom I will refer to as “the employee” for the balance of these Reasons, is a person who came to Australia on 14 January 2018. He was here as a dependant on his wife’s student visa. As such, he was permitted to stay in the country while his wife had a student visa and complied with that visa, but he, too, had to comply with certain visa requirements. One of those requirements was that he be allowed to work, but his work could be no more than 20 hours per week.
He had been in Australia for nearly three months and began looking to find work. A friend of the employee’s wife happened to work at Vege Rama. That friend gave the employee the name of Cedric Collomb and his contact details. Mr Collomb was a manager working for the First Respondent.
The employee sent an email to Mr Collomb, and, after a three-hour trial on one particular day, Mr Collomb then told the employee that he was hired. The employee filled out the employment contract and filled out also the tax file number declaration form and bank account details. The employee said that Mr Collomb told him that he would be paid $11 an hour for the hours he worked, and this was because he was not experienced and he did not have the skills to be paid more. Mr Collomb told him that he would be given a roster each week and that he needed to give Mr Collomb his availability to work.
What ended up occurring was that the employee was asked to fill in a time sheet. The time sheet was a blank document that was created by the First Respondent, and the employee would fill in when it was that he began work, when it was that he had a break, and when it was that he finished work.
The employee said that he actually ended up working 10 or 11 hours each day and was working six days a week. His hours would commence between 6.30 am and 9.30 am, and he would finish between 5.30 pm and 10.30 pm. With regard to the time sheets, Mr Collomb was the person who said to him, words to the effect, “This is the time sheet. Fill in this time sheet with your name, start time to sign in to work, finish times to sign out of work and break times on every day you work, and the time sheet will be kept on the right side of the entrance to the kitchen on a shelf.” The employee complied with those directions.
The employee deposed that another staff member also told him that sometimes Mr Collomb got the pay amounts wrong, so that he – the employee – should take photos for his own records. He began to do that and took a photo of all of the weekly time sheets that he submitted to the First Respondent.
The employee said that he did not ever receive a payslip and had no idea what he was being paid, but he knew that it was about $11 an hour. He said that he had raised the fact that he was getting more experience and wanted to be paid more. Soon after this, he noticed that his pay must have increased to about $12 an hour but was never told why his pay increased. He said that just before his employment finished, he was told that his pay rate would be increased to $12.50 or $13 an hour.
He said that his employment finished on 9 August 2019, when he was asked to pay for a blender that had broken during his work in the kitchen. He was told that money had been deducted from his pay to cover that cost. The employee said that he told Mr Collomb he did not want to pay for that amount, and that was his last day of work.
On 13 August 2019, he called the Fair Work Ombudsman’s info line and filled out a request for assistance. From that time, the Fair Work Ombudsman then commenced an investigation. The employee handed over the photographs of the handwritten time sheets that he had.
On 4 October 2019, the Fair Work Inspector went to the premises of the First Respondent and personally handed a “notice to produce” to the Second Respondent. The notice to produce required the First Respondent to produce records and documents relating to the employee’s employment and issued a warning that the First Respondent may be liable to a civil remedy for giving false or misleading information.
The First Respondent produced a number of documents by email on 23 October 2019 and produced more documents on 4 November 2019. What was produced were time records that showed that the Applicant worked a certain number of hours and payslips that accorded with those certain number of hours and showed a pay rate at the Award rate, including all appropriate penalties, such that the amount paid according to the payslips in reference to the time records would equate to what it is that the employee was paid.
On first glance, it would seem that all was in order, however the hours recorded in these records were completely different to the time records that were produced by the First Respondent to the Applicant. The Fair Work Ombudsman relied upon the handwritten documents.
The First Respondent did not acknowledge that those handwritten documents were documents that showed what the employee had worked, but instead tried to explain away the handwritten documents as the employee informing the First Respondent what his availability to work was in any given week.
The Fair Work Ombudsman had the metadata from each of those photographs, so that it showed that the photographs were taken when it was that the employee said that he had handed the time sheets over. The photographs showed that they were on the blank time sheets that had actually been produced by the First Respondent, which would be strange for the First Respondent to produce a pro forma document so employees could inform them of availability.
But more importantly, the employee’s go card showed the trips that the employee made from his home to the premises of the First Respondent and when it was that he made the next trip from the premises of the First Respondent back home. Those records matched the handwritten records.
Also, the employee had his GPS locator from Google Maps attached to his Google phone, which gave a record of where it was that the employee had been for a period of at least six months. Those Google records matched the handwritten records and, because of this, the Fair Work Ombudsman could properly rely upon the records of the employee as true records of the hours he worked.
The Fair Work Inspector issued a compliance notice to the First Respondent and the Second Respondent which mandated that the First Respondent must rectify the payments that were to be made properly to the employee. The notice was given on 30 April 2020, and it required the action to be taken by 1 June 2020.
The compliance notice was not complied with, and the inspectors were told, in effect, by the First Respondent that they had no intention of complying with the compliance notice because it was based upon lies that were given by the employee.
That is then what led to the litigation being commenced in this Court on 17 November 2020. It would seem that this attitude of the First and Second Respondent did not change once litigation commenced. The defence of the First and Second Respondent is, in effect, a denial that the employee worked the hours that were stipulated in the handwritten time sheets. This was the issue for the trial that was to take place in November 2021, and it was to be the issue in the trial before me that was to begin Monday of this week.
It has been explained to me that the First and Second Respondent had a change of solicitor to the current representatives in about April 2022. These solicitors, who are extremely experienced, understood the gravity of the situation, the risible nature of the defence that was going to be proffered, and the inevitability of the failure of the defence. They moved very quickly to consult with the Applicant, which led to the orders that I made on 6 May 2022.
But even more than that, the First and Second Respondents ensured that they complied with the compliance notice, and the employee was paid the amount of money, which was about $59,000, and that the Second Respondent ensured that the First Respondent now was totally compliant in making sure that all employees were paid according to the Award rates and that their times of work are dutifully and properly recorded.
However, the First and Second Respondents have still contravened the FW Act in a very serious way, and, as my orders of 6 May 2022 demonstrate, have committed seven particular contraventions of the Act.
Those acts are
·a contravention of s 716(5) of FW Act by failing to comply with the compliance notice issued on 30 April 2020;
·a contravention of s 718A of the FW Act by providing payslips to the Fair Work Ombudsman that it knew were false or misleading on 23 October 2019;
·contravening s 718A of the FW Act by providing time records to the Fair Work Ombudsman that it knew were false or misleading on 23 October 2019;
·contravening s 718A of the FW Act by providing further time records to the Fair Work Ombudsman that it knew were false or misleading on 4 November 2019;
·contravening s 536(3) of the FW Act by giving payslips to the employee that it knew were false or misleading;
·by contravening s 536(2) of the FW Act by failing to include information prescribed by the regulations in the payslips that were provided to the employee; and
·contravening s 535(4) of the FW Act by making and keeping records that it knew were false or misleading.
On the facts before me, it is easy to infer that the First Respondent and Second Respondent created a fiction by having an employee tell them what hours it was that he worked and paying them well below the Award rate. Having calculated the amount that they would pay the employee, using the figure of either $11 or $12 an hour for each hour worked, the First and Second Respondents came up with a gross or net figure that was paid to the employee. The First and Second Respondent would then make a fiction using the Award rates with penalties, and then calculating how many hours that would equate to if properly paid, and creating records that matched those contrived figures.
In this way, the records, if it were that they were perused, would show that an employee would have worked a proper amount of hours and been paid properly for those hours. The First and Second Respondent were able to get away with this because they had created those records, and there was nothing that would be demonstrative that the records created by them were false.
If it were not for the employee having the sense to take photographs of each of the time sheets, if it were not for the employee going to work via public transport and using a go card, and if it were not for the employee having a Google phone that was able to GPS-track his movements for over six months, the scheme, or device, used by the First and Second Respondents would never have unravelled as it has now.
It is in looking at all of that background that the Court must decide what the appropriate pecuniary penalty should be.
The law in relation to assessment of pecuniary penalties has really been laid down quite comprehensively. The High Court, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3, said, at paragraph 116 of that judgment:
As has been observed, the principal object of an order that a person pay a pecuniary penalty under s 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 conceptions as they apply to the imposition of civil pecuniary penalties, specific deterrence inheres 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 will be 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 effect 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, and 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.
The High Court reaffirmed that principle very recently in the matter of Australian Building and Construction Commissioner v Pattinson [2022] HCA 13. The High Court said, at paragraph 46:
[46]It is important to recall that an “appropriate” penalty is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case. …
[47]The penalty that is appropriate to protect the public interest by deterring future contraventions of the Act may also be moderated by taking into account other factors … where those responsible for a contravention of the Act express genuine remorse for the contravention, it might be considered appropriate to impose only a moderate penalty because no more would be necessary to incentivise the contravenors to remain mindful of their remorse and their public expressions of that remorse to the court. Similarly, where the occasion in which a contravention occurred is unlikely to arise in the future because of changes in the membership of an industrial organisation, a modest penalty may be appropriate having regard to the reduced risk of future contraventions.
[48]It is not necessary to multiply examples further. It is sufficient to say that a court empowered by section 546 to impose an “appropriate” penalty must act fairly and reasonably for the purpose of protecting the public interest by deterring future contraventions of the Act.
In Mason v Harrington Corporation Proprietary Limited t/as Pangaea Restaurant & Bar [2007] FMCA 7, which is known as the Pangaea case, the Court went through, in effect, a number of factors the Court should be mindful of when imposing pecuniary penalties. One must be careful, though, in looking at the Pangaea case (Supra), that one does not simply look at those matters as some form of checklist to see whether or not the facts of the case with the particular factors either aggravate or mitigate the penalty. As such, the list compiled in Pangaea (Supra) is extremely useful, but it should not be a formula used by the Court to slavishly come up with some sort of almost mathematical guide for the imposition of penalties.
In this case, the aspect of deterrence looms large. In fact, it might seem that it overshadows almost everything else. The severity and seriousness of what the First and Second Respondent have done cannot be overstated. This was a deception that went to the heart of the fair industrial and employment system of this country. The First and Second Respondents knew exactly what needed to be done and what should have been done, and that is why they contrived their records so that it would be easily shown that they could pretend that they had done what their duty was to do.
This was a device that, as I have said probably twice already during the course of these reasons, was extremely difficult to detect. The need for the Court to impose a deterrent penalty, not just specifically but, very importantly, generally to all others who may be tempted to somehow pervert what it is that the FW Act is doing with regard to the proper balance between the rights of employers and the rights of employees, must be made clear. The Courts will simply not tolerate such brazen contraventions of the intentions of the Commonwealth Parliament.
As far as giving those false records then to the Fair Work Ombudsman, such could be described as an attempt to obfuscate the truth and to ensure that any proper investigation was never able to be pursued. For this reason, the contraventions of s 718A FW Act are, in my opinion, in the worst category of contraventions of this sort.
The failure to provide payslips and the making of false records are also extremely serious. However, as I echo what has been submitted to me, as bad as that is, it is nowhere as bad as then making the conscious decision to use them – to use the vernacular – to throw the Fair Work Ombudsman off the scent of what it is that you have truly done. Those matters are also very serious.
As far as the failure to comply with the compliance notice, that is a serious matter in and of itself, but is hardly in the worst category of failing to comply with compliance notices that have come before this Court.
There are many mitigating factors in this case. There is remorse. Whilst it is that the remorse is something that was demonstrated very late in the piece, it is fair to say that one can correlate the expression of remorse with the coming on board of new solicitors for the First and Second Respondent.
When it is that the solicitors explained to the Second Respondent exactly what had been going on and exactly how serious the matter was, there was an almost immediate approach to the Fair Work Ombudsman so that the orders that I made on 5 May 2022 could be made as quickly as possible. Still, it would have been better to have seen that remorse displayed as soon as the Fair Work Ombudsman filed the application back in December 2020.
There has now been compliance with the compliance notice. The employee was owed a lot of money, and he has been paid. I do note that this was not easy for the First and Second Respondents, and they did not have the ready cash to be able to make such payments, but, through a number of endeavours and borrowings, they have been able to make good what they should have made good back in June 2020. Nevertheless, it is a very concrete expression of remorse.
The First and Second Respondents have never come to the attention of the Fair Work Ombudsman before. There have been no other instances where they have breached the FW Act, and they have been otherwise employers that have not come to any adverse attention.
The Second Respondent has given evidence of how the business has now changed. The business now ensures that all employees have their time worked properly recorded and that it is the true hours that are worked that are calculated against what the appropriate award rates and penalties are, and that determines how much the employee is paid, rather than the employee being paid an amount and then other figures being contrived to come to that payment result. This form of remediation of the business is something that is a positive step for the First and Second Respondents.
There has been cooperation, as I have spoken about, to the extent that I have already mentioned.
I also take into account the size of the business, and I note that the business has contracted. It now only has the main Fortitude Valley outlet plus a store in Anzac Square. The business had been hit very hard by COVID-19, where its ready clientele disappeared because of government restrictions that had been put in place.
The Second Respondent is in effect a self-made person. She started the business from nothing and has built it up to a going concern, and this brush with the Fair Work Ombudsman has caused her to really think about how it is that she wants to do business, and has affected how she will do business in the future.
There are a number of positive things that one can see with regard to the First and the Second Respondent, though, in the end, they can only play an appropriate role in the fixing, by this Court, of the appropriate penalties.
The maximum penalties for the First Respondent total $346,500. In keeping with the way that I have viewed the seriousness of these seven contraventions, and looking at all of the mitigating factors, I make the following pecuniary penalty awards.
For the first contravention, of failing to comply with a compliance notice, I award a pecuniary penalty of $15,000.
With regard to the second contravention, of providing false or misleading documents to a Fair Work inspector, I impose a pecuniary penalty of $50,000.
On the third contravention, of providing false or misleading documents to a Fair Work inspector with regard to the time records, I impose a pecuniary penalty of $55,000.
With regard to the fourth contravention, which was providing false or misleading documents to a Fair Work inspector, I impose a pecuniary penalty of $30,000.
With regard to the fifth contravention, of giving false or misleading payslips to an employee with regard to the hours, I impose a pecuniary penalty of $15,000.
As a result of the submissions that have been made, I decline to impose any penalty for the sixth contravention.
For the seventh contravention, that of making and keeping false or misleading records, I impose a penalty of $20,000.
That is a total of $185,000.
With regard to the Second Respondent, I impose a penalty with regard to the failing to comply with a compliance notice of $4,000.
For the next three contraventions, under s 718 for contravention two, I impose a penalty of $5000.
For the third contravention, I impose a penalty of $6000 and for the fourth contravention, I impose a penalty of $4000.
This is a total of $19,000.
I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Vasta. Associate:
Dated: 10 June 2022
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