Fair Work Ombudsman v Safecorp Security Group Pty Ltd and Anor (No.3)
[2019] FCCA 1756
•28 June 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v SAFECORP SECURITY GROUP PTY LTD & ANOR (No.3) | [2019] FCCA 1756 |
| Catchwords: INDUSTRIAL LAW – Hearing of proceeding remitted by Federal Court after appeal – whether first respondent contravened terms of award and therefore s.45 of the Fair Work Act 2009 (Cth) (FW Act) – whether second respondent involved in those contraventions – pecuniary penalties assessed and ordered. |
| Legislation: Crimes Act 1914 (Cth), s.4AA |
| Cases cited: Australian Building & Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | SAFECORP SECURITY GROUP PTY LTD ACN 153 771 898 |
| Second Respondent: | JOHN LOHR |
| File Number: | SYG 2379 of 2013 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 9 May 2018 |
| Date of Last Submission: | 15 May 2018 |
| Delivered at: | Sydney |
| Delivered on: | 28 June 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Darams |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| No appearance by, or on behalf of the First Respondent. |
| Second Respondent in person. |
DECLARATIONS
The first respondent, Safecorp Security Group Pty Ltd, contravened s.45 of the Fair Work Act 2009 (FW Act) by breaching cl.10.5(b), cl.15.6, cl.22.3, and cl.23.3 of the Securities Services Industries Award 2010 (Award) and items A.5.4 and A.7.3 of Schedule A to the Award as follows:
Term of award
Description
Cl.10.5(b), item A.5.4 of Schedule A
Failure to pay casual loading
Cl.15.1(a), cl.15.6
Failure to pay broken shift allowance
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for night work
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for permanent night work
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for Saturday work
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for Sunday work
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for public holiday work
Cl.23.3
Failure to pay overtime penalties for Monday to Friday overtime
Cl.23.3
Failure to pay overtime penalties for Saturday overtime
Cl.23.3
Failure to pay overtime penalties for Sunday overtime
Cl.23.3
Failure to pay overtime penalties for public holiday overtime
In addition to being involved in the contraventions by Safecorp Security Pty Ltd of s.45 of the FW Act as declared in the declarations made on 28 February 2017, and, for that reason, pursuant to s.550(1) of the FW Act, is taken to have contravened s.45 of the FW Act, the second respondent, Mr John Lohr, was involved in the contraventions of s.45 of the FW Act by the first respondent, Safecorp Security Group Pty Ltd, referred to in the declaration made in paragraph 1 of these orders and, for that reason, pursuant to s.550(1) of the FW Act, is taken to have contravened s.45 of the FW Act.
ORDERS
Pursuant to s.546(1) of the FW Act, the second respondent, Mr John Lohr, pay pecuniary penalties in the sum of $39,090 for his contraventions of s.45 of the FW Act referred to in paragraph 2 of these orders.
Pursuant to s.546(3) of the FW Act the second respondent, Mr John Lohr, pay the pecuniary penalties referred to in order 3 to the applicant within 28 days after the date these orders are pronounced (Relevant Period), and that he do so on the following terms:
(a)within 14 days of the payment of the pecuniary penalties to the applicant, the applicant pay to such of the employees of Safecorp Security Pty Ltd and of the first respondent, Safecorp Security Group Pty Ltd, as are referred to in the statement of claim, and whose location the applicant is able to ascertain within the Relevant Period, the pecuniary penalties in amounts proportionate to their outstanding underpayments; and
(b)to the extent the applicant is unable to locate within the Relevant Period any of the employees referred to in (a), the applicant pay the pecuniary penalties to the Consolidated Revenue Fund of the Commonwealth in amounts proportionate to the outstanding underpayments of those employees whom the applicant has been unable to locate.
The parties have liberty to apply on such notice as the circumstances warrant in relation to the implementation of these orders, or in relation to the extension of the times provided for in order 4, whether or not the times provided for in order 4 have expired.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2379 of 2013
| FAIR WORK OMBUDSMAN |
Applicant
And
| SAFECORP SECURITY GROUP PTY LTD ACN 153 771 898 |
First Respondent
| JOHN LOHR |
Second Respondent
REASONS FOR JUDGMENT
Introduction
On the basis of reasons I published on 28 February 2017 (earlier reasons), I made declarations that the second respondent, Mr Lohr, was involved in a number of contraventions by Safecorp Security Pty Ltd (old SSG) of s.45 the Fair Work Act 2009 (Cth) (FW Act) and that he was also involved in contraventions by the first respondent, Safecorp Security Group Pty Ltd (SSG), of s.536(1) of the FW Act, and I ordered that Mr Lohr pay pecuniary penalties for those contraventions.[1] I also in effect dismissed those parts of the statement of claim that alleged Mr Lohr was involved in contraventions by SSG of s.45 of the FW Act. I did so because I had ruled the FWO required leave to reopen her case against Mr Lohr to adduce evidence of SSG’s contraventions of s.45 of the FW Act, and I dismissed an application the FWO brought seeking such leave.
[1] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348
On 12 January 2018 Bromwich J set aside the orders I made dismissing the FWO’s application to reopen her case, and also the penalties I had ordered Mr Lohr pay for his involvement in old SSG’s contraventions of s.45 of the FW Act; and his Honour remitted the proceeding to me for rehearing in accordance with his Honour’s reasons.[2] Bromwich J did not disturb the declarations concerning Mr Lohr’s involvement in old SSG’s contravention of s.45 of the FW Act or his involvement in SSG’s contraventions of s.536(1) of the FW Act, or the order that Mr Lohr pay a pecuniary penalty for his involvement in SSG’s contraventions of s.536(1) of the FW Act.
[2] Fair Work Ombudsman v Lohr [2018] FCA 5
The matter came before me for directions on 20 February 2018. On that day I raised with counsel for the FWO the question whether I should not set aside the declarations I made against SSG on 7 November 2014 in default of SSG filing a defence, and I otherwise set down for hearing on 8 May 2018 the matters remitted to me. On 16 March 2018 I set aside the declarations I made 7 November 2014;[3] and on 8 May 2018 I heard the matters that had been remitted to me. Although I did not so state in my reasons for judgment of 16 March 2018, the effect of Bromwich J’s findings that the declarations I made on 7 November 2014 were binding on Mr Lohr by itself rendered unnecessary the FWO’s having to apply for leave to reopen her case to adduce evidence of SSG’s contraventions of s.45 of the FW Act. That remained so even though on 16 March 2018 I set aside the declarations I made on 7 November 2014.
[3] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor (No.2) [2018] FCCA 611
In these reasons for judgment, then:
a)I consider whether the FWO has proved Mr Lohr was involved in SSG’s contraventions of s.45 of the FW Act, as alleged in the statement of claim;
b)assuming the FWO proves Mr Lohr was involved in SSG’s contraventions of s.45 of the FW Act, I consider the pecuniary penalties I should order Mr Lohr to pay; and
c)I reassess the penalties for what in my earlier reasons I found was Mr Lohr’s involvement in old SSG’s contraventions of s.45 of the FW Act.
SSG’s alleged contraventions of FW Act
I set out in my earlier reasons the background to the FWO’s claims,[4] and also the particular amounts the FWO alleges SSG was required to pay to particular employees (SSG Employees) under the Security Services Industry Award 2010 (Award) but failed to pay, in contravention of s.45 of the FW Act.[5] What I there said should be read with these reasons for judgment. In this section of my reasons I consider whether the evidence satisfies me that SSG failed to pay to the SSG Employees the amounts the FWO alleges SSG was obliged under the Award to pay.
[4] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, at [11]-[17]
[5] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, at [40]-[57]
The FWO relies on three affidavits of Mr Christie who, at the relevant times, was an inspector employed by the Office of the FWO, and the documents exhibited to those affidavits. The first two affidavits were read at the hearing of 14 May 2015, and the third affidavit was read at the hearing of 8 May 2018. In my earlier reasons I set out in some detail the contents of the three affidavits,[6] and what I there said should be incorporated into these reasons for judgment.
[6] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, at [58]-[69]; [78]-[80]
In my earlier reasons I made some observations about the nature of the evidence Mr Christie gave in his first and second affidavits;[7] and I found that Mr Christie’s evidence should be given weight as a summary of the effect of the documents to which his evidence refers.[8] What I there said about Mr Christie’s evidence applies to Mr Christie’s third affidavit. The evidence Mr Christie gives in his third affidavit should be given weight as a summary of the effect of the documents to which he refers in his third affidavit. I find, therefore, that SSG made the underpayments to the SSG Employees as stated in the annexures to the statement of claim. In particular, I find that:
[7] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, at [105]-[106]
[8] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, at [108]
a)in contravention of cl.10.5(b) of the Award and item A.5.4 of the schedule to the Award, and, therefore, in contravention of s.45 of the FW Act, SSG failed to pay a casual loading to the SSG Employees identified in annexure B to the statement of claim;
b)in contravention of cl.15.6 and 15.1(a) of the Award, and, therefore, in contravention of s.45 of the FW Act, SSG failed to pay a broken shift allowance to each of the SSG Employees identified in annexure C to the statement of claim;
c)in contravention of cl.22.3 of the Award and item A.7.3 of the Schedule to the Award, and, therefore, in contravention of s.45 of the FW Act, SSG failed to pay a night shift penalty to each of the SSG Employees identified in annexure D to the statement of claim;
d)in contravention of cl.22.3 of the Award and item A.7.3 of the Schedule to the Award, and, therefore, in contravention of s.45 of the FW Act, SSG failed to pay a permanent night shift penalty to each of the SSG Employees identified in annexure E to the statement of claim;
e)in contravention of cl.22.3 of the Award and item A.7.3 of the Schedule of the Award, and, therefore, in contravention of s.45 of the FW Act, SSG failed to pay a Saturday work penalty rate to each of the SSG Employees identified in annexure F to the statement of claim;
f)in contravention of cl.22.3 of the Award and item A.7.3 of the Schedule to the Award, and, therefore, in contravention of s.45 of the FW Act, SSG failed to pay a Sunday work penalty rate to each of the SSG Employees identified in annexure G to the statement of claim;
g)in contravention of cl.22.3 of the Award and item A.7.3 of the Schedule to the Award, and, therefore, in contravention of s.45 of the FW Act, SSG failed to pay a public holiday penalty to each of the SSG Employees identified in annexure H to the statement of claim;
h)in contravention of cl.23.3 of the Award, and, therefore, in contravention of s.45 of the FW Act, SSG failed to pay overtime penalties for Monday to Friday overtime to each of the SSG Employees identified in annexure I to the statement of claim;
i)in contravention of cl.23.3 of the Award, and, therefore, in contravention of s.45 of the FW Act, SSG failed to pay overtime penalties for Saturday overtime to each of the SSG Employees identified in annexure J to the statement of claim;
j)in contravention of cl.23.3 of the Award, and, therefore, in contravention of s.45 of the FW Act, SSG failed to pay overtime penalties for Sunday overtime to each of the SSG Employees identified in annexure K to the statement of claim; and
k)in contravention of cl.23.3 of the Award, and, therefore, in contravention of s.45 of the FW Act, SSG failed to pay overtime penalties for public holiday overtime to each of the SSG Employees identified in annexure L to the statement of claim.
Mr Lohr’s involvement in SSG’s contraventions
In my earlier reasons I considered and found that Mr Lohr was involved in old SSG’s contraventions of terms of that Award and, therefore, of s.45 of the FW Act.[9] I there noted the FWO relied on admissions Mr Lohr made in his points of defence to prove Mr Lohr had knowledge of the facts that constituted the contraventions the statement of claim alleged against old SSG, and I identified the admissions Mr Lohr made in his points of defence.[10] The admissions I identified in my earlier reasons are equally relevant to whether Mr Lohr had knowledge of the facts that constitute SSG’s contraventions of the Award. Mr Lohr also admitted he was the person who made decisions on behalf of SSG who was ultimately responsible for SSG’s decisions in relation to:[11]
a)the recruitment or engagement of the SSG Employees;
b)the terms and conditions on which the SSG Employees would be engaged;
c)payments made to the SSG Employees in relation to the performance of work; and
d)the work to be performed by the SSG Employees.
[9] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, at [111]-[126]
[10] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, at [117]
[11] Statement of claim [161]; Defence [66]
I also identified in my earlier reasons additional evidence on which the FWO relied to prove Mr Lohr’s knowledge,[12] and evidence Mr Lohr gave at the hearing on 14 May 2015.[13] At the hearing of 8 May 2018 Mr Lohr informed me he did not wish to give any further evidence.
[12] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, at [118]-[121]
[13] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, at [122]
The findings I made about Mr Lohr’s involvement in old SSG’s contraventions of s.45 of the FW Act also apply to SSG’s contraventions of s.45 of the FW Act. That is, I find Mr Lohr was the person who made the decision on behalf of SSG about the rate at which SSG would pay the SSG Employees, and that he approved and authorised the payments made to the SSG Employees for the work they performed on the basis of that rate. To that extent, therefore, Mr Lohr participated in SSG’s failing to pay the SSG Employees the amounts it was required to pay under the Award as specified in the annexures to the statement of claim. I also find that, although Mr Lohr may not have been aware of the specific rates that were payable under the Award, he was aware an award applied to SSG. I continue to accept Mr Lohr’s evidence that he found it difficult to determine what rates were payable for different classes of work performed by old SSG and SSG employees. I also continue to accept his evidence that he decided to pay the old SSG and the SSG Employees the flat rate believing that payment on the basis of the flat rate would be sufficient to cover the amounts payable under such award as applied to the old SSG and SSG Employees.
On the basis of these findings I find that Mr Lohr was also involved in SSG’s contraventions of s.45 of the FW Act and, for that reason, is to be taken to have contravened s.45 of the FW Act.
Penalties
Statutory framework
Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”. That expression is defined in s.539 of the FW Act to include the provisions identified in column 1 of the table to s.539(2) of the Act. Section 45 is included in that column.
Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”. The maximum penalty units for a contravention s.45 of the FW Act are 60 for an individual. The maximum penalty units for which Mr Lohr is liable for his involvement in each of old SSG’s and SSG’s contraventions of s.45 of the FW Act, therefore, is 60 penalty units.
I need also refer to s.12 of the FW Act, which provides that “penalty unit” has the meaning given by s.4AA of the Crimes Act 1914 (Cth) (Crimes Act). Up to 27 December 2012 s.4AA(1) of the Crimes Act defined penalty unit to mean $110. Item 7 of Schedule 3 to the Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Act 2012 (Cth) amended s.4AA to define penalty unit to mean $170. Item 9 of Schedule 3 provided that the amendment made by item 7 of that Schedule applies “in relation to an offence committed after the commencement of this item”. The amendment took effect on 28 December 2012.
I refer to these provisions because the contravening conduct of SSG occurred from September 2012 to February 2013, that is, before and after 28 December 2012, being the date on which the penalty unit was increased from $110 to $170. In Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) Katzmann J accepted a submission that where contraventions involve a course of conduct spanning the period both before and after an increase in the penalty unit, the higher amount should apply, or at least be taken into account.[14] Her Honour assessed the penalties in that case on the basis of the higher penalty unit, noting, however, that “in relation to the contraventions involving courses of conduct spanning the two periods, I will take into account in the determination of the penalty the fact that the lower amount applied for part of the period”.[15] I will apply the same approach; and, I propose to do so by adjusting the difference between the amended and old maximum penalty units in the same proportion as the period over which the contravening conduct occurred when the old maximum penalty applied bears to the total period over which the contravening conduct occurred.
[14] [2017] FCA 557, at [396]-[400]
[15] [2017] FCA 557, at [401]
The only contraventions with which I am concerned are those committed by old SSG and SSG by their failing to pay amounts they were required to pay under the Award. Accordingly, $6,600 is the maximum amount of the penalty to which Mr Lohr is liable for each contravention by old SSG of a term of the Award (because that conduct occurred during the period when the old maximum penalty applied), and therefore, of s.45 of the FW Act, and $10,200 is the maximum amount of the penalty Mr Lohr can be ordered to pay for each contravention by SSG of a term of the Award, it being understood, however, that it is necessary to take into account that a lower penalty applied for most of the period (five sixths) over which SSG engaged in the contravening conduct.
Principles
The approach to assessing penalties for contraventions of provisions of the FW Act was outlined by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown as follows:[16]
(1)Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2)Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3)Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
(4)Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5)Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23] [71] and [102].
[16] [2017] FCA 1301, at [36]
In Fair Work Ombudsman v A To Z Catering Solution Pty Limited (No.3),[17] I noted that step 3 (which I understood to express the “one transaction principle”) could be taken to suggest that it is appropriate to further group contraventions after the application of s.557(1) of the FW Act. For the reasons I gave in A To Z Catering Solution,[18] the proper approach appears to be to assess penalties to contraventions after the application of s.557(1) of the FW Act, and then to consider:[19]
whether the conduct giving rise to separate contraventions was such that the separate imposition of penalties would be effectively imposing multiple penalties for either the same conduct or for overlapping parts of the same conduct which separately went to make out the separate contraventions; and
ensure that a person who has engaged in contravening conduct is not punished twice for the same conduct and to ensure that the total penalty imposed in respect to the contraventions is “just and appropriate” and not disproportionate.
[17] [2018] FCCA 3574, at [27]
[18] [2018] FCCA 3574, at [28]
[19] Australian Building and Construction Commissioner v Construction, Forestry,Mining and Energy Union (the BKH Contractors Case) (No 2) [2018] FCA 1563, [59] (Flick J)
The approach of most judges when assessing penalties for single contraventions of a provision of the FW Act is to take into account the non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick,[20] which his Honour adopted from the judgment of Mowbray FM in Mason v Harrington Corporation Pty Ltd.[21] Those considerations are:
[20] [2007] FCA 1080, [14]
[21] [2007] FMCA 7
a)the nature and extent of the conduct which led to the breaches;
b)the circumstances in which that conduct took place;
c)the nature and extent of any loss or damage sustained as a result of the breaches;
d)whether there had been similar previous conduct by the respondent;
e)whether the breaches were properly distinct or arose out of the one course of conduct;
f)the size of the business enterprise involved;
g)whether or not the breaches were deliberate;
h)whether senior management was involved in the breaches;
i)whether the party committing the breach had exhibited contrition;
j)whether the party committing the breach had taken corrective action;
k)whether the party committing the breach had cooperated with the enforcement authorities;
l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
m)the need for specific and general deterrence.
Although any one or more of these factors may be relevant to the assessment of a pecuniary penalty in any given case, “courts have warned against the use of checklists because they give rise to the risk of transforming the process of instinctive synthesis into the application of a rigid catalogue of matters for attention”.[22] I propose to consider, as I did in my earlier reasons, the factors identified in Mason that are relevant to the circumstances of this case.
[22] Australian Building & Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977; (2010) 199 IR 373 at [10] (Barker J)
Also relevant is the maximum penalty for the contravention provided for by the FW Act; and here I need only refer to the following passage from the judgment of Flick J in The BKH Contractors Case (No 2):[23]
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed . . . .
[23] [2018] FCA 1563, [19]
The contraventions
In my earlier reasons I found that Mr Lohr was involved in the following contraventions of the Award, and therefore of s.45 of the FW Act, by old SSG.[24]
[24] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, [132]
No
Term of award
Description
1.
Cl.10.5(b), item A.5.4 of Schedule A
Failure to pay casual loading
2.
Cl.15.1(a), cl.15.6
Failure to pay broken shift allowance
3.
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for night work
4.
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for permanent night work
5.
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for Saturday work
6.
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for Sunday work
7.
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for public holiday work
8.
Cl.23.3
Failure to pay overtime payments for Monday to Friday overtime
9.
Cl.23.3
Failure to pay overtime payments for Saturday overtime
10.
Cl.23.3
Failure to pay overtime payments for Sunday overtime
11.
Cl.23.3
Failure to pay overtime payments for public holiday overtime
12.
Cl.23.5, item A.7.3 of Schedule A
Failure to pay minimum break penalty
In these reasons I have found that Mr Lohr was involved in the following contraventions of the Award and, therefore, of s.45 of the FW Act, by SSG:
No
Term of award
Description
13.
Cl.10.5(b), item A.5.4 of Schedule A
Failure to pay casual loading
14.
Cl.15.1(a), cl.15.6
Failure to pay broken shift allowance
15.
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for night work
16.
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for permanent night work
17.
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for Saturday work
18.
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for Sunday work
19.
Cl.22.3, item A.7.3 of Schedule A
Failure to pay penalties for public holiday work
20.
Cl.23.3
Failure to pay overtime payments for Monday to Friday overtime
21.
Cl.23.3
Failure to pay overtime payments for Saturday overtime
22.
Cl.23.3
Failure to pay overtime payments for Sunday overtime
23.
Cl.23.3
Failure to pay overtime payments for public holiday overtime
Although I have found a total of 23 contraventions of s.45 of the FW Act, 12 committed by old SSG, and 11 by SSG (all of these being the contraventions alleged in the statement of claim), the FWO’s submissions on penalty proceed on the basis that the set of contraventions I have numbered 9, 10, 11 (FWO Group no.1), and the set of contraventions I have numbered 20, 21, 22, and 23 (FWO Group no.2) are each to be treated as a single contravention. It is not apparent from the FWO’s written submissions why each of the two sets of contraventions are treated as one. The FWO only states that the FWO “has identified the contraventions as set out in the tables” in the annexures to the FWO’s written submissions.[25] The FWO does not expressly state that each of the two sets of contraventions are treated as one because of the operation of s.557(1) of the FW Act. I will assume, however, that that is the basis on which the FWO has treated each of these two sets of contraventions as a single contravention.
[25] Applicant’s Outline of Submissions on Liability and Penalty, [56]
Further grouping under s.557(1) of the FW Act?
A contravention of s.45 of the FW Act occurs on each occasion a term of the Award is not complied with.[26] Each line of the two tables above summarising old SSG’s and SSG’s contraventions, therefore, should not be taken to represent a single contravention of the term of the Award identified in that line. Each line represents multiple contraventions of each term of the Award that is identified in each line of each of the tables (relevant Award terms). The first question that arises is whether the multiple contraventions of each of the relevant Award terms by old SSG and by SSG should be treated as single contraventions. That depends on the operation of s.557(1) of the FW Act, which provides:
For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:
(a) the contraventions are committed by the same person; and
(b)the contraventions arose out of a course of conduct by the person.
[26] See, for example, Blandy v Coverdale NT Pty Ltd ACN 102 611 423 [2008] FCA 1533 at [56]
As I have concluded elsewhere,[27] s.557(1) of the FW Act does not apply to multiple contraventions of different terms of modern awards, even if such contraventions arise out of a course of conduct, and even if the contraventions affect only one person. Subsection 557(1) of the FW Act, however, applies to the multiple contraventions of the one term of a modern award, even where the contravention may affect two or more persons. In those circumstances, old SSG’s and SSG’s multiple contraventions of the relevant Award terms should be grouped according to each of the relevant Award terms each of old SSG and SSG contravened.
[27] Fair Work Ombudsman v Australian Wild Tuna Pty Ltd & Anor [2016] FCCA 2626
The FWO submits that although the contraventions by each of old SSG and SSG of each of the same relevant Award terms are similar in nature, s.557(1) of the FW Act cannot operate to group the contraventions of each of these terms into one contravention.[28] That submission is correct to the extent it applies to old SSG’s and to SSG’s contraventions; and that is because s.557(1) requires that the contraventions be committed by “the same person”, and that the contraventions arise out of a course of conduct “by the person”. But the question before me is not what penalty I should order old SSG or SSG to pay for their contraventions of the relevant Award terms. Subsection 546(1) empowers this Court to order “a person” to pay a pecuniary penalty if the Court is satisfied that “the person has contravened a civil remedy provision”. The question is what penalty I should order Mr Lohr to pay for his contraventions of a civil remedy provision. That s.557(1) of the FW Act does not, therefore, apply to group each of old SSG’s and SSG’s contraventions of the same relevant Award terms into one contravention does not necessarily mean it does not apply to group contraventions which, because of his involvement in those contraventions, Mr Lohr is taken to have committed. Whether s.557(1) of the FW Act applies to Mr Lohr for his involvement in old SSG’s and SSG’s contraventions of the relevant Award terms in the same way as it applies to old SSG’s and SSG’s contraventions turns on the proper construction of s.550(1) and s.557(1) of the FW Act.
[28] Applicant’s Outline of Submissions on Liability and Penalty, [63]
I begin with s.550(1) of the FW Act. It provides that a “person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision”. Having found that Mr Lohr was involved in each of old SSG’s and SSG’s contraventions of each of the relevant Award terms, s.550(1) of the FW Act requires that Mr Lohr be taken to have contravened each of those terms. That means that although old SSG and SSG – that is, two separate legal persons - have each contravened each of the relevant Award terms over separate periods, Mr Lohr – a single legal person – has contravened each of the relevant Award terms over an undivided period of time, being the sum of the periods over which old SSG and SSG contravened those terms. The question then becomes whether s.557(1) of the FW Act applies to group into single contraventions each of Mr Lohr’s contraventions of each of the relevant Award terms. In my opinion it does.
Subsection 557(1) of the FW Act applies to “two or more contraventions of a civil remedy provision” that includes s.45; and it applies to contraventions “committed by the same person” arising “out of a course of conduct by the person”. I have found that Mr Lohr was involved in each of old SSG’s and SSG’s contraventions of each of the relevant Award terms. That means that, under s.550(1) of the FW Act, Mr Lohr is taken to have contravened each of the relevant Award terms; and Mr Lohr’s contraventions arose out of a course of conduct that extended over the periods in which old SSG and SSG contravened each of the relevant Award terms. It follows that, when assessing the penalty Mr Lohr should pay because of his contraventions of each of the relevant Award terms, s.557(1) of the FW Act applies to group into a single contravention each of his contraventions of each of the relevant Award terms he is taken to have committed because of s.550(1) of the FW Act.
The contraventions of the Award, and therefore, of s.45 of the FW Act, Mr Lohr is to be taken as having committed for which I must assess a penalty, therefore, and the maximum amount of the penalty for each contravention, are as follows:
Grouped No.
Award
Description
Penalty (Max.)
1.
Cl.A.5.4 of Schedule A
Failure to pay casual loading
$10,200
2.
Cl.15.6
Failure to pay broken shift allowance
$10,200
3.
Cl.A.7.3 of Schedule A
Failure to pay penalties for night work
$10,200
4.
Cl.A.7.3 of Schedule A
Failure to pay penalties for permanent night work
$10,200
5.
Cl.A.7.3 of Schedule A
Failure to pay penalties for Saturday work
$10,200
6.
Cl.A.7.3 of Schedule A
Failure to pay penalties for Sunday work
$10,200
7.
Cl.A.7.3 of Schedule A
Failure to pay penalties for public holiday work
$10,200
FWO Group no.1 & 2
Cl.23.3
Failure to pay overtime payments for Monday to Friday overtime
$10,200
FWO Group no.1 & 2
Cl.23.3
Failure to pay overtime payments for Saturday overtime
$10,200
FWO Group no.1 & 2
Cl.23.3
Failure to pay overtime payments for Sunday overtime
$10,200
FWO Group no.1 & 2
Cl.23.3
Failure to pay overtime payments for public holiday overtime
$10,200
9
Cl.A.7.3 of Schedule A
Failure to pay minimum break penalty (old SSG only)
$6,600
Assessment - general
In principle a penalty should be assessed separately for each of the contraventions I have found Mr Lohr committed. In his written submissions, however, counsel for the FWO has identified and made submissions on the matters relevant to the assessment of penalties by reference to the contraventions viewed as a whole. That is the approach I followed when I assessed penalties in my earlier judgment, although my approach was predicated on the correctness of my finding (which Bromwich J held was incorrect) that by application of the “one transaction principle” I should assess the penalty on the basis that all twelve contraventions constituted one contravention. The approach of counsel for the FWO is, however, convenient, and I propose to follow that approach, it being clear, however, that I am assessing the penalties on the basis that Mr Lohr has committed twelve contraventions. Further, I adopt what I said in my earlier reasons about the assessment of penalties to the extent they apply to Mr Lohr’s involvement in old SSG’s contravening conduct because what I there said remains relevant to assessing the penalties Mr Lohr should be ordered to pay.
Nature, circumstances, and extent of the conduct which led to the breaches
In my earlier reasons I identified the nature, circumstances, and extent of the conduct that led to Mr Lohr’s involvement in old SSG’s contraventions.[29] That conduct is the same as the conduct that led to Mr Lohr’s involvement in SSG’s contraventions of s.45 of the FW Act. It was Mr Lohr’s decision not to attempt to calculate each SSG Employee’s entitlement under whatever award applied to the SSG Employees, but instead to set a fixed rate in the belief that payment of the flat rate would satisfy SSG’s obligations to the SSG Employees, and to pay the SSG Employees at that rate, rather than at the rates provided for by the Award. Although it cannot be said Mr Lohr made the decision to pay a flat rate of $25 an hour because he was aware this would result in the old SSG Employees and the SSG Employees being paid less than they were entitled to be paid under the award that applied to them, his decision was nevertheless reckless. In my earlier reasons I also found Mr Lohr was aware that an award applied to old SSG and its employees, but he was unable to understand its terms; and that he agreed with the old SSG Employees to pay them a flat rate Mr Lohr believed would cover their legal entitlements.[30] On the basis of those findings, I also find that Mr Lohr was aware that an award applied to the SSG Employees, and that Mr Lohr decided to pay the SSG Employees at a rate which he did not know would satisfy old SSG’s obligations under such award. These are matters that weigh in favour of assessing penalties at the higher end of the scale.
[29] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, [142], [143]
[30] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, [142]
In my earlier reasons I found that the conduct that constituted Mr Lohr’s involvement in old SSG’s contraventions was extensive.[31] I found that it affected 25 employees of old SSG. I also found that the conduct took place over a long period. That may not be an accurate characterisation. With the possibly anomalous exception of one of the old SSG Employees, who is said to have commenced his employment in November 2010, the contravening conduct occurred only during August 2012.[32] SSG’s contravening conduct, however, extended over a longer period. It commenced no earlier than 1 September 2012 and ended on around 3 February 2013. Further, Mr Lohr’s involvement in SSG’s conduct affected 42 employees.
[31] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, [143]
[32] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, [143]
Considered together, therefore, Mr Lohr’s contravening conduct extended from around early August 2012 to early February 2013, and it affected a large number of employees. These, too, are matters that weigh in favour of assessing penalties at the higher end of the scale.
There are, however, variations in the number of employees affected by Mr Lohr’s involvement in old SSG’s and SSG’s contraventions of particular terms of the Award; and the amounts of the underpayments varied according to the terms contravened. This can be seen from the following table
Grouped No.
Award
Description
No. of employees
/underpayment
1.
Cl.A.5.4 of Schedule A
Failure to pay casual loading
8 (amount not identified)[33]
2.
Cl.15.6
Failure to pay broken shift allowance
6/$1,364.30[34]
3.
Cl.A.7.3 of Schedule A
Failure to pay penalties for night work
24/$3,622.96[35]
4.
Cl.A.7.3 of Schedule A
Failure to pay penalties for permanent night work
33/$9,663.78[36]
5.
Cl.A.7.3 of Schedule A
Failure to pay penalties for Saturday work
42/$14,454.07[37]
6.
Cl.A.7.3 of Schedule A
Failure to pay penalties for Sunday work
38/$21,449.55[38]
7.
Cl.A.7.3 of Schedule A
Failure to pay penalties for public holiday work
15/$2,599.51[39]
FWO Group no.1 & 2
Cl.23.3
Failure to pay overtime payments for Monday to Friday overtime
10/$675.16[40]
FWO Group no.1 & 2
Cl.23.3
Failure to pay overtime payments for Saturday overtime
5/$1,314.39[41]
FWO Group no.1 & 2
Cl.23.3
Failure to pay overtime payments for Sunday overtime
7/$4,477.29[42]
FWO Group no.1 & 2
Cl.23.3
Failure to pay overtime payments for public holiday overtime
3/$252.93[43]
9
Cl.A.7.3 of Schedule A
Failure to pay minimum break penalty (old SSG only)
1/$466.45[44]
[33] Statement of claim, [20]-[22], [90]-[92]; affidavit of M D Christie 10.07.2015, [20], [21]. As I noted in my earlier reasons, the amount of the underpayment does not appear to have been calculated.
[34] Statement of claim, annexure C; affidavit of M D Christie 10.07.2015 [19.iii]
[35] Statement of claim, annexure D; affidavit of M D Christie 10.07.2015 [19.iv]
[36] Statement of claim, annexure E; affidavit of M D Christie 10.07.2015 [19.v]
[37] Statement of claim, annexure F; affidavit of M D Christie 10.07.2015 [19.vi]
[38] Statement of claim, annexure G; affidavit of M D Christie 10.07.2015 [19.vii]
[39] Statement of claim, annexure H; affidavit of M D Christie 10.07.2015 [19.viii]
[40] Statement of claim, annexure I; affidavit of M D Christie 10.07.2015 [19.ix]
[41] Statement of claim, annexure J; affidavit of M D Christie 10.07.2015 [19.x]
[42] Statement of claim, annexure K; affidavit of M D Christie 10.07.2015 [19.xi]
[43] Statement of claim, annexure L; affidavit of M D Christie 10.07.20 [19.xii]
[44] Statement of claim, annexure M; affidavit of M D Christie 10.07.20 [19.xiii]
Nature and extent of any loss or damage sustained as a result of breaches
In my earlier reasons I noted that the old SSG Employees numbered 25.[45] Five were underpaid by amounts that were less than $20; six were underpaid by amounts of between $20 and $100, five were underpaid by amounts of between $100 and $200, five were underpaid by amounts of between $200 and $300, two were underpaid by amounts of between $300 and $500, and one was underpaid $616.38. One employee, Mr Goddard, was underpaid by $9,756.27. As for the SSG Employees, there are 42 in number, and the amounts by which individual employees were underpaid varied from $411.83 to $1,569.08. The total amount of the underpayments was $35,540.84.[46]
[45] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, [144]
[46] Statement of Claim, annexure “N”; affidavit of M D Christie 10.07.2015, [18]-[19]
Although some of the underpayments are relatively insignificant, most are not insignificant and some, and particularly the underpayment in the case of Mr Goddard, are significant. These are matters that weigh in favour of assessing penalties at the higher end of the scale.
Similar previous conduct
In my earlier reasons I noted that a complaint had been made by one employee of old SSG of which Mr Lohr was aware, and that appears to have been resolved. I found there was nothing in the evidence before me about the circumstances in which the complaint arose, and I do not, therefore, place any weight on the previous complaint.
Whether breaches deliberate
In my earlier reasons I accepted Mr Lohr’s evidence that he found it difficult to determine what rates were payable for different classes of work, and that he decided to pay the old SSG Employees the flat rate of $25 per hour because he believed that the flat rate would be sufficient to cover the amounts payable under such award as applied to the old SSG Employees. On the basis of that finding I also find that this explains Mr Lohr’s decision to pay the SSG Employees amounts calculated by applying a flat rate. Although this cannot be considered to be a deliberate flouting of the Award by Mr Lohr, his conduct was deliberate in the sense he was aware an award applied to the old SSG Employees and to the SSG Employees, yet he decided to pay the employees at a rate which he did not know would be sufficient to discharge old SSG’s and SSG’s obligations under such award. These matters weigh in favour of assessing penalties at the higher end of the scale.
Specific and general deterrence
In my earlier reasons I noted there is nothing in the evidence that suggests the penalty should be assessed to deter Mr Lohr from further contravening the FW Act. That remains the case. General deterrence, however, is another matter. As I observed in my earlier reasons, the penalty should be set to signal to employers generally the importance of complying with the FW Act and with complying with awards that cover them and their employees. In the particular circumstances of this case, it is important to signal to employers of limited financial means that they will not be excused from doing that which is necessary for acquainting themselves with the awards and the terms of the awards that cover them and their employees. The need for general deterrence, therefore, weighs in favour of assessing penalties at the higher end of the scale.
Size of business entity involved
It is accepted old SSG is no longer trading; and I infer from the evidence that is available to me, and in particular the evidence Mr Lohr gave at the hearing, that old SSG was a small business with limited financial resources. SSG also is not trading. These matters, however, are not relevant because the question that is before me is the assessment of the pecuniary penalty Mr Lohr should pay. There is no evidence of Mr Lohr’s financial circumstances. Even if, however, there was evidence that showed Mr Lohr had limited financial means with which to pay a penalty, I would have given that factor very little weight having regard to the other matters, and in particular, the need for general deterrence.
Other matters
There is no evidence Mr Lohr has attempted to take corrective action; and there is no evidence that Mr Lohr has exhibited contrition, or that he has cooperated to any significant degree with the FWO. These matters, therefore, are not available to Mr Lohr to mitigate the effect of the other factors I have identified.
Maximum penalties before adjustments
I am now in a position to assess the penalties that should be imposed. For ease of assessment, I propose first to adjust the maximum penalty downward for grouped contraventions 1-7, and FWO Group contraventions 1 and 2, to take into account, consistently with the approach suggested by Katzmann J in Grouped Property Services Pty Ltd (No 2), that, during the period of Mr Lohr’s contraventions up to 27 December 2012, the maximum penalty was $6,600, and that on that day the maximum penalty was increased to $10,200. Given that Mr Lohr’s contravening conduct occurred over around six months (from August 2012 to early February 2013), and the penalty of $6,600 applied for around the first five of those six months, it would be fair to reduce the maximum penalty of $10,200 by an amount equal to around five sixths of the difference between the new maximum penalty of $10,200 and the old maximum penalty of $6,600, namely $3,000, which would result in a notional maximum penalty of $7,200.[47] I propose, therefore, to take into account the fact that a maximum penalty of $6,600 applied for five of the six months over which the contraventions occurred (other than grouped contravention 9) by assessing penalties for those contraventions that occurred throughout the entire period on the basis that $7,200 represents the maximum penalty. On that basis, I assess the penalties as follows:
[47] 10,200 – (5/6 x (10,200 – 6,600)) = 10,200 – (5/6 x 3,600) = 10,200 – 3000 = 7,200
Grouped No.
Award
Description
Penalty (% of maximum)
1.
Cl.A.5.4 of Schedule A
Failure to pay casual loading
$2,880
(40%)
2.
Cl.15.6
Failure to pay broken shift allowance
$3,600
(50%)
3.
Cl.A.7.3 of Schedule A
Failure to pay penalties for night work
$5,040
(70%)
4.
Cl.A.7.3 of Schedule A
Failure to pay penalties for permanent night work
$5,040
(70%)
5.
Cl.A.7.3 of Schedule A
Failure to pay penalties for Saturday work
$5,760
80%
6.
Cl.A.7.3 of Schedule A
Failure to pay penalties for Sunday work
$5,760
(80%)
7.
Cl.A.7.3 of Schedule A
Failure to pay penalties for public holiday work
$3,600
(50%)
FWO Group no.1 & 2
Cl.23.3
Failure to pay overtime payments for Monday to Friday overtime
$5,760
(80%)
FWO Group no.1 & 2
Cl.23.3
Failure to pay overtime payments for Saturday overtime
FWO Group no.1 & 2
Cl.23.3
Failure to pay overtime payments for Sunday overtime
FWO Group no.1 & 2
Cl.23.3
Failure to pay overtime payments for public holiday overtime
9.
Cl.A.7.3 of Schedule A
Failure to pay minimum break penalty (old SSG only)
$1,650
(25%) (of $6,600)
TOTAL
$39,090
Other adjustments
In my earlier reasons I applied the “one transaction principle” to conclude that each of the contraventions of old SSG had such a degree of commonality that they ought to be treated as a single contravention.[48] Bromwich J held that this approach was incorrect, at least to the extent that I had proceeded on the view that contraventions of provisions of the FW Act can be further grouped after the application of s.557(1) of the FW Act has been exhausted. The question nevertheless arises whether there is a sufficient degree of common elements between each of the contraventions for which I have assessed a penalty. In particular I must consider whether the matters I identified in my earlier reasons should lead me to adjust the penalties because of what in my earlier reasons I identified as common elements.
[48] Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor [2017] FCCA 348, at [139]
In addition to the reasons for which Bromwich J found error in the approach I adopted in my earlier reasons, that approach was incorrect because it ignored that an essential element of each of the contraventions was an omission; and the omission that formed an element of each of the contraventions differed according to the obligation under the Award with which old SSG and SSG failed to comply when it paid the old SSG and SGG Employees amounts for work they performed. Thus, old SGG’s and SSG’s payments, and their having been made as a result of a single decision of Mr Lohr, did not reveal the essential attributes of the contraventions; and these lay in what Mr Lohr, when involved in old SSG’s and SSG’s contraventions of the Award, failed to do; and that is discharge the different obligations the different terms of the Award required old SSG and SSG to perform. In those circumstances, whatever common elements exist between old SSG’s and SSG’s contraventions of s.45 of the FW Act in which Mr Lohr was involved are insufficient to warrant any downward adjustment to the penalties I have assessed.
The final matter to consider is whether the penalties I have assessed, viewed as a whole, are appropriate and proportionate to the contravening conduct viewed as a whole. In my opinion, the penalties I have assessed are appropriate and proportionate to Mr Lohr’s contravening conduct viewed as a whole.
Disposition
I propose to make declaration to the effect that SSG contravened the terms of the Award, and therefore s.45 of the FW Act, that I have found it contravened, and that, in addition to his involvement in old SSG’s contraventions of s.45 of the FW Act, Mr Lohr was involved in SSG’s contraventions of s45 of the FW Act. I will also order that Mr Lohr pay pecuniary penalties in the sum of $39,090.
The FWO does not apply for an order that Mr Lohr pay the penalties to the old SSG Employees or the SSG Employees. The FWO seeks an order under s.546(3)(a) of the FW Act that Mr Lohr pay the pecuniary penalties to the FWO on terms that within 14 days of payment the FWO will pay the pecuniary penalties to the old SSG Employees and the SSG Employees in amounts proportionate to their outstanding underpayments, and to remit any part of the penalties payable to any of those employees whom the FWO cannot locate within 28 days after the date I pronounce my orders to the Consolidated Revenue Fund of the Commonwealth. In my opinion it is appropriate that I make orders to this effect, and I therefore also propose to order that Mr Lohr pay the penalties to the FWO within 28 after the date I pronounce my orders on the terms suggested by the FWO.
Finally, the FWO seeks an order that there be liberty to apply in the event any of the orders I propose to make are not complied with. In my opinion, it would be appropriate to grant the parties liberty to apply in relation to the implementation of the orders I propose to make, and also in relation to the extension of the times I will provide in the orders.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Date: 28 June 2019
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