Fair Work Ombudsman v Ross
[2021] FCCA 1966
•29 July 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Fair Work Ombudsman v Ross [2021] FCCA 1966
File number(s): BRG 659 of 2020 Judgment of: JUDGE VASTA Date of judgment: 29 July 2021 Catchwords: INDUSTRIAL – Penalty hearing – non-compliance with a compliance notice Legislation: Fair Work Act 2009 (Cth): ss 545, 546, 547, 716 Cases cited: Mason v Harrington Corp Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7
Kelly v Fitzpatrick [2007] FCA 1080
Number of paragraphs: 33 Date of last submission/s: 29 July 2021 Date of hearing: 29 July 2021 Place: Brisbane Upon submissions to Chambers by the Fair Work Ombudsman and the Respondent declining to file any submissions. ORDERS
BRG 659 of 2020 BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: MICHAEL ROSS
Respondent
ORDER MADE BY:
JUDGE VASTA
DATE OF ORDER:
29 JULY 2021
THE COURT DECLARES THAT:
A.The Respondent contravened s.716(5) of the Fair Work Act 2009 (Cth) (“the FW Act”) by failing to comply with the Compliance Notice
THE COURT ORDERS THAT:
1.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 the order by:
(a)calculating the amount each Employee should have been paid in respect of each of the entitlements for the period specified in the Compliance Notice;
(b)calculating the amount each Employee should have been paid in respect of additional superannuation contributions for the period specified in the Compliance Notice;
(c)paying the outstanding amount of entitlements the Respondent was required to pay the Employees as a result of paragraph 2(a) above to each Employee;
(d)paying the additional superannuation contributions he was required to pay on behalf of the Employees as a result of paragraph 2(b) above into the nominated Superannuation Fund of each of the Employees (or in the event that an employee has not made a nomination, to a fund in accordance with clause 32.4 of the Award);
(e)preparing and producing to the Applicant a schedule outlining its calculations of the outstanding entitlements and superannuation contributions it was required to pay the Employees as a result of paragraphs 2(a) to 2(b) above and providing proof of any amounts paid as a result of paragraphs 2(c) and 2(d) above.
2.Pursuant to section 547(2) of the FW Act, the Respondent pay interest to each of the Employees on the amounts owed pursuant to paragraph 2 above within 28 days of the order.
3.Pursuant to section 546(1) of the FW Act, within 28 days of this order, the Respondent pay a pecuniary penalty to the Commonwealth with respect to his contravention referred to in paragraph 1 above fixed in the sum of $3,000.00.
4.The Applicant have liberty to apply on seven days’ notice.
REASONS FOR JUDGMENT
(Ex tempore)JUDGE VASTA
On 18 December 2020, the Fair Work Ombudsman filed an originating application in this Court seeking declarations, orders and pecuniary penalties against the Respondent, Michael Ross.
The action sought by the Fair Work Ombudsman arose out of the Respondent’s employment of two persons about whom I will mention later in these reasons. The matter came before me on 26 February 2021 where, in Chambers, I ordered that the first court day be vacated, the parties file a statement of agreed facts, the Applicant file and serve any evidence in respect of penalty by a certain date, the respondent file and save any evidence in respect of penalty by a certain date, the Applicant file submissions by a certain date, the Respondent file submissions by a certain date and that the matter be listed for penalty hearing at 10.00AM on 29 July 2021.
On Wednesday 28 July 2021, that is yesterday, the parties wrote to my Chambers asking that the matter be heard on the papers. I agreed to that course, however decided that I would still give the judgment in the matter today.
The background of this matter is that the Respondent was an employer within the building industry. In early 2020, he had employed two persons; firstly, a person by the name of Zayn Taylor and secondly, a person by the name of Brett Brown. Both of those persons ended up leaving the employ of Mr Ross. Those persons made requests for assistance via the Fair Work Ombudsman’s customer net platform regarding their employment. The Fair Work Ombudsman was able to ascertain from both Mr Taylor and Mr Brown that they had been employed with Mr Ross.
The two persons had text messages and email communications regarding the hours of work and the rates of pay that they undertook with the Respondent, Mr Ross. There was also communication between Mr Taylor and Mr Ross, and Mr Brown and Mr Ross about outstanding pay.
On 17 February 2020, the Fair Work inspector, Mr Meehan, sent an email to the Respondent asking the Respondent to call him as a matter of urgency. The Respondent replied by email that:
I have tried to call you back if you can email me wbout [sic] my ex employees would be appreciated so I can reply…
The Fair Work inspector sent an email back to the Respondent. That email from Mr Scott Meehan read as follows:
Hi Michael
Thank you for your call and email.
We have received Requests for Assistance from 2 previous employees who have alleged that they have completed hours of work for you without payment, or only part payment.
Zayn Taylor states that he worked a total of 27.95 hours, and was paid $100 only. He further states that he is owed fuel allowance for using a private vehicle for work purposes, a distance of 50kms for the round trip.
Brett Brown alleges that he worked 42 hours and is yet to be paid.
They have both provided text messages and/or emails that show the hours that they were requested to work by you along with acknowledgment that they would be paid under PAYG and not as contractors.
As such, it has been determined that they fall under the Building and Construction General on-site Award 2010 (MA000020). Both employees have been determined as being of casual employment at level 1 (CW/ECW 1) (Level b).
Under this determination each employee was entitled to be paid an ordinary hourly rate of $27.44 along with any applicable overtime rates and allowances. I have attached a copy of the most relevant Pay Guide for your reference.
Please reply to my email by no later than 5pm, Monday 24 February 2020 providing your response to the allegations
If you wish to discuss this matter further please contact me on (07) 6404 4763 at your earliest convenience.
Regards
Scott Meehan
The Respondent did reply later that day with this email:
Hi Scott
Thank you for your email
Zayn Taylor was employed for a duration of four days. In the four days, he drove to work once and then was picked up for the other 3 so to suggest he did a round trip is absolutely absurd. He was using drugs on the worksite and selling it out the front of a client’s residential address and was terminated immediately.
He was paid for the four days he worked and he was also given a $50 fuel allowance out of good will even though he did not use his vehicle.
On termination he threatened myself and my family and my staff with threats of violence and continued calling and threatening us on numerous occasions.
He verbally abused my other staff and only stopped when threatened with police intervention.
In total, he called a total of 79 times with threats and abuse. I have all of his text messages and other staff who will verify his behaviour. Zayn Taylor has a long record with police including being raided on numerous occasions for stolen goods and cash and drugs and is currently still facing court proceedings he is not at all a trustworthy person.
Brett brown, Zayn Taylor's replacement worked for two days in total and was paid.
He came to work reaking [sic] of alcohole [sic] and was told to go home and sober up. The next day, he returned agitated and aggressive causing damage to a client's home and was terminated immediately he did not work continually having breaks every 5 minutes smoking cigarettes was warned but he continued to do this on the client's property where smoking was not allowed.
He then stole certain equipment including brushes and scrapers of paint.
He was paid and he asked for money on a daily basis as he didn't have to get to work.. My staff member Brianna Davey picked him up dropped him off I paid her for fuel.
Brett does not have a driver's licence as he crashed his car due to being drunk. I have staff who can verify this. I told him I could not continue to employ him while he was drinking and he became angry and threatening. He demanded cash payments every day would not supply a tax file number or bank account until I threatened him that he must but by then it was too late he had received money paid in cash…my staff member can verify this.
Both cases have been a disaster for me and we are fearful for our safety especially Zayn Taylor who has a long criminal record.
If I can be of any further assistance, please don’t hesitate to contact me.
Many thanks
Michael Ross
The Fair Work inspector decided to issue a compliance notice to the Respondent under s 716(2) of the Fair Work Act 2009 (Cth) (“the FW Act”) by causing it to be personally served on the Respondent at his residence. The compliance notice is annexed to the affidavit of the Fair Work inspector and is in the usual terms. The contraventions detailed are these at paragraph 6, 7, 8 and 9 of the notice, which state as follows:
6. The Employer employed Zayn Taylor and Brett Brown (the Employees) during the period 6 January 2020 and 21 January 2021 (Period).
7. The Employees were employed on a casual basis as Construction Workers Level 1 (Level b) under the Award.
8. The Employer contravened the Award as set out in the table below.
No
Clause
Details of contravention(s)
(a)
Clause 19.1
Minimum Wage contravention
For Failing to pay the Employees the applicable minimum wage for their classification (Minimum Wage Entitlement)
(b)
Clause 14.5
Casual Loading Contravention
Failing to pay the Employees a casual loading of 25% in respect of ordinary hours worked (Casual Loading Entitlement)
(c)
Clause 21.1
Special Allowance contravention
Failing to pay the Employees the applicable Special Allowance of $7.70 per week (Special Allowance Entitlement)
(d)
Clause 21.1
Industry Allowance Contravention
Failing to pay the Employees the applicable Industry Allowance rate of 3.7% of the weekly standard rate per week (Industry Allowance EntitlementB)
Required action under this Compliance Notice
9. In accordance with section 716(2) of the FW Act, I require you by 3 August 2020 to:
Step 1 - calculate and rectify underpayments.
(a) in respect of the contravention referred to in row (a) of the table above:
(i) in respect of the Employees:
1. identify the number of hours the Employees worked during the Period in respect of which the Minimum Wage Entitlement and Casual Loading Entitlement was required to be paid by the Award (Hours)
2. identify the amount the Employer paid to the Employees during the Period in respect of the Minimum Wage Entitlement and Casual loading Entitlement
3. calculate the amount the Employer should have paid to the Employees during the Period in respect of the Minimum Wage Entitlement and Casual Loading Entitlement
4. make a payment to the Employees of the difference between the amount referred to in (2) and the amount referred to in (3) immediately above
5. make a record of the information and amounts referred to in (1) to (3) and the amount of the payment referred to in (4) immediately above (Underpayment Rectification Information)
(b) repeat the same process described in Step 1 (a) for the contraventions referred to in rows (c) to (d) of the table above applying the Speical [sic] Allowance Entitlement and Industry Allowance Entitlement per week as specified by· clause 21.1 and 21.2 of the Award.
Step 2 - Superannuation.
(c) calculate additional superannuation contributions required by clause 32.2 of the Award in respect of the amounts required to be paid to the Employees as a result of Step 1
(d) in relation to each employee who is owed such additional superannuation contributions, pay such additional superannuation contributions to the chosen Superannuation Fund of the employee. Reasonable evidence of steps taken to comply with this Compliance Notice
Reasonable evidence of steps taken to comply with this Compliance Notice
10. ln accordance with section 716(2) of the FW Act, I require you to produce the following reasonable evidence of your compliance with the actions specified in paragraph 9 above:
(a) a schedule that sets out:
(i) the full name of the Employees
(ii)in relation to the Employees, and in respect of each contravention that concerns the Employees, the Underpayment Rectification Information
(iii) in relation to the Employees, the additional superannuation contributions calculated for the Employees and paid to the Employees' Superannuation Fund in accordance with Step 2
(b) proof that full payment has been made to the Employees of the payment(s) required to be made by Step 1 and Step 2, such as a bank transfer showing the transfer of funds to the employee and their Superannuation Fund.
11. The evidence, referred to above must be provided to the Fair Work Ombudsman by 10 August 2020 by email to [email protected]
12. You may be liable to a civil penalty or other civil remedy under the FW Act if you give false or misleading information or produce false or misleading documents in response to this Compliance Notice. You may also be liable for a criminal offence under the Criminal Code (Cth) if you do so.
There was no response to the compliance notice. There has been no response, even to this day, with the compliance notice. The Fair Work inspector made multiple attempts to contact the Respondent by telephone. On 25 August 2020, the Fair Work Inspector left a voicemail message.
On 28 August 2020, an email was sent to the email address of the Respondent. The Fair Work Inspector received a response that the email was undeliverable. On the same day, the Fair Work Inspector caused a “failure to comply with compliance notice” letter to be sent by post to the home address and the work address of the Respondent. Both items of correspondence were returned to sender.
Another email was sent to the email address of the Respondent. Again, the Fair Work Inspector received a notice back saying that the email was undeliverable. The Fair Work Ombudsman, again, caused a letter to be sent by Express Post to the home address of the Respondent requiring action. There was no response to that last bit of correspondence sent on 18 September 2020. It was not returned as a “return to sender”.
Because there was no response, the Fair Work Ombudsman commenced these proceedings. As I had earlier outlined, the parties were able to cooperate, and the matter was listed for a penalty hearing with the Applicant and Respondent agreeing to the forms of other orders.
However, the Respondent has not filed any material in this matter. The Respondent has not given to the Fair Work Ombudsman any of the other texts messages, and so on, that he had spoken about in his email of 17 February 2020. It must, also, be said that the Fair Work Ombudsman did not ask for those specific items to be sent to them. But the Court asked the Respondent to file material and nothing was filed, not even any submissions.
The Respondent, apart from emails where he has said that he agrees with the course proposed by the Fair Work Ombudsman with regard to this matter being heard on the papers, has not, in any way, engaged with this process. Therefore, the facts as it is that I have outlined are the only facts upon which I can proceed with in determining penalty.
The Fair Work Ombudsman has sought the following orders, and the Respondent has agreed to those orders. Firstly, a declaration that the Respondent had contravened s 716 of the FW Act by failing to comply with the compliance notice, and consented to orders that the Court would order that the Respondent take steps that were required by the compliance notice; that being set out in paragraphs A to E of the compliance notice; that, pursuant to s 547 of the FW Act, the Respondent pay interest to each of the employees within 28 days of the order; and, that the Respondent pay a pecuniary to the Commonwealth.
The task for this Court is to decide what amount should be payable by way of the pecuniary penalty. The pecuniary penalty is to be imposed because the Respondent failed to comply with the compliance notice. As I have said, the failure to comply with that notice is a contravention if the failure to comply is not done within the specified time in the notice.
The circumstances that aggravate this matter is that there has been no compliance at all, and apart from the email that has been sent on 17 February 2020, there has really been no correspondence or even attempts to justify the actions of the Respondent. It may be that the Respondent does feel aggrieved that this process has occurred, but the point is that the two workers did do work for the Respondent and they need to be paid according to law. If it is that the two workers were summarily dismissed, and it would seem properly summarily dismissed, there must still be a reckoning of what hours were worked, and what payments were made.
It may be that the payments were made in cash. But, apart from the Respondent saying in that email that the payments were in cash, there is no record of what the amounts in cash were, so that one could perform the exercise of mathematically marrying those up with what it was that the Respondent was obliged to pay. It may even be when those matters are done, that the Respondent has paid either or both of those workers more than what they were entitled to be paid, but there is simply a dearth of material as to whether that has been done.
This is the reason why the Court has made the orders to which the two parties have consented.
The gravamen of this action by the Respondent is that he was given a lawful direction from a government authority to do something, and he simply did not do it. He has given no excuse for not doing it.
The principles guiding a Court setting of penalty have been spoken of in many previous cases. Again, quite correctly, the Applicant has referred me to Mason v Harrington Corp Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 where Mowbray FM, as he then was, gave a non-exhaustive list of factors that the Court might consider in determining penalty. That list was adopted by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080.
Whilst those factors are properly identified, those factors should not be seen as some form of checklist to be somehow ticked or crossed in determining penalties, so that there can somehow be some form of mathematical formula. One must judge each case on its own merits.
In this matter, it seems to me that deterrence is the most significant factor. As I have previously said, the system of industrial relations in this country depends upon there being a respect for an institution such as the Fair Work Ombudsman. As correctly determined by the Fair Work Ombudsman, no matter what the circumstances of the end of the employment were, the fact is that the two workers did complete work and the Respondent needed to properly compensate them for that work. The Respondent needed to show to the Ombudsman what it was that was actually paid and how that was calculated, so that this could be compared to what should have been paid under the Building and Construction General on-site Award 2010 (MA000020) (“the Award”).
For any employer to treat a compliance notice in such a cavalier fashion invites stern denunciation from the Court. I have looked at the nature, extent and circumstances of the conduct, even taking into account what the Respondent has said about the circumstances of the employment. The statements I have already made are matters of absolute principle within the Australian industrial relations landscape. One does not know whether there has been a loss to the workers because of the allegation by the Respondent that he did pay them in cash. It may very well be, as I have said, that the Respondent may have paid them too much. So it is very difficult to calculate the nature and extent of the loss.
If it were that the Respondent had said that he had paid a certain amount and this was disputed by the two workers, the Court could easily have determined as a matter of credibility who the Court believed or accepted. But this was not done. One does not know the size of the business of the Respondent. One could take an educated guess that if the business email is now giving notices that emails sent to it are undeliverable and that correspondence sent to the work address of the Respondent are returned and marked “return to sender”, that it may be that the Respondent’s business is no longer a going concern. Be that as it may, the state of the business does not excuse the non-compliance. As I say, I have no evidence as to the size or the state of the business, I am only speculating. But none of those matters, it seemed to me, are any great factor in determining the appropriate penalty.
As to matters such as contrition, corrective action and cooperation, all that the Court can look at is that the Respondent has not really wanted to do anything to engage in this matter. Whether one can call that cooperation or simply a desire not to waste any time or money in this matter is really just “grist for the mill”, and I do not wish to delve too deeply into that. All I can say is that my sitting in Court and delivering judgment today is the first time that this matter has actually needed to be mentioned in open Court. That has meant a great deal of saving of time, both for the Applicant, the Fair Work Ombudsman, and the Court itself and I will recognise that in the penalty that I will impose.
However, I have no information as to whether there is any true contrition or corrective action on behalf of the Respondent.
When I weigh up all of those circumstances and looking at everything that I have already mentioned during the course of these reasons, I have had regard to the following factors. Firstly, the maximum penalty for this offence is $6,300. There is no record of any previous misdeeds by the Respondent, and I have taken the view that up until this point, he has had an unblemished record with regard to relations with employees and compliance with the obligations under the Award. I also note that he has, according to the emails that he has sent, a number of other employees. None of those employees has made any complaint about the Respondent not meeting his obligations under the Award or in any other respect with the FW Act. I note the cooperation that has been afforded by the Respondent, as I have already spoken.
But as I say, the most important aspect of this matter is that the Respondent has wilfully defied the lawful request of the government agency to comply with the terms of the Award and the FW Act. The Court is now going to make orders in similar terms to those of the compliance notice; in effect, the compliance notice now has the imprimatur of a Court - so that it has been stepped up quite a deal more.
The Fair Work Ombudsman has submitted that a penalty of $3,402 to $3,969 is an appropriate penalty. They have made that submission saying that there should be a 10 per cent discount because of the cooperation, and that the offending of the Respondent is one that is worth about 60 to 70 per cent of the penalty range.
I note that the Fair Work Ombudsman likes to make the submissions in the formulaic way that it goes. However, I am of the view that it is better for me to look at what sort of - and I use the word “criminality” - has been established by the actions of the Respondent and then look at the mitigating circumstances.
In my view, this is an offence that would cause me to believe that a penalty of $4,000 was appropriate. However, given the cooperation, given the lack of previous negative notifications about the Respondent in an industrial relations landscape, I am of the view that this sum should be discounted by a sum of $1,000.
I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Vasta. Dated: 3 September 2021
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