Fair Work Ombudsman v Salmon

Case [2024] FedCFamC2G 789

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Salmon [2024] FedCFamC2G 789

File number: MLG 1555 of 2023
Judgment of: JUDGE SYMONS
Date of judgment: 28 August 2024
Catchwords: INDUSTRIAL LAW – application for imposition of pecuniary penalty – admitted contraventions of ss 716(5) and 536(1) of the Fair Work Act 2009 (Cth) – where respondent has rectified underpayments and cooperated with the regulator by signing an agreed statement of facts – where respondent is no longer in business – where no need for specific deterrence – where respondent took responsibility for his actions despite challenging personal circumstances – modest penalty imposed
Legislation:  Fair Work Act 2009 (Cth), ss 536, 539, 546, 716
Cases cited:

 Australian Building and Construction Commission v Pattinson (2022) 274 CLR 450; [2022] HCA 13

Trade Practices Commission v CSR Ltd [1990] FCA 521

Division: Division 2 General Federal Law
Number of paragraphs: 74
Date of last submissions: 6 August 2024
Date of hearing: 6 August 2024  
Place: Melbourne
Solicitor for the Applicant: The Fair Work Ombudsman
The Respondent: In person

ORDERS

MLG 1555 of 2023

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

FAIR WORK OMBUDSMAN
Applicant
AND:

DANIEL ALAN SALMON
Respondent

ORDER MADE BY:

JUDGE SYMONS

DATE OF ORDER:

28 AUGUST 2024

THE COURT DECLARES THAT:

1.The respondent contravened:

(a)section 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing without reasonable excuse to comply with a compliance notice given to him on 15 December 2022; and

(b)section 536(1) of the FW Act between 22 February 2021 and 10 June 2021 by failing to give Mr Matthew Allen pay slips within one working day of paying an amount in relation to the performance of work.

THE COURT ORDERS THAT:

2.Pursuant to s 546(1) of the FW Act, the respondent pay a pecuniary penalty of $1,000 to the Commonwealth for the contraventions declared in paragraph 1 of these orders.

3.The applicant pay the penalty identified in paragraph 2 of these orders to the consolidated revenue of the Commonwealth within 28 days of these orders.

4.The applicant has liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.

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

JUDGE SYMONS:

INTRODUCTION

  1. This is an application for the imposition of a pecuniary penalty in respect of two admitted contraventions of the Fair Work Act 2009 (Cth) (FW Act).

  2. The application proceeds, in part, by reference to a statement of agreed facts (

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Fair Work Ombudsman v Salmon [2024] FedCFamC2G 789
Case
[2024] FedCFamC2G 789
Decision Date

CaseChat Overview and Summary

Fair Work Ombudsman v Salmon is an industrial law matter before the Federal Circuit and Family Court of Australia, concerning a penalty imposed against Mr. Salmon for contraventions of sections 716(5) and 536(1) of the Fair Work Act 2009 (Cth). The Fair Work Ombudsman (the applicant) sought a penalty against Mr. Salmon for underpaying an employee and failing to provide pay slips. The primary legal issues the court had to decide were the appropriate level of penalty and whether the applicant's proposed penalty was justified considering Mr. Salmon's cooperation, corrective action, and personal circumstances.

The court began by reviewing the nature and seriousness of the contraventions. The contraventions involved the failure to pay minimum hourly rates and accrued leave entitlements, as well as the failure to provide pay slips. These contraventions were serious as they undermined the statutory notice regime and the administrative obligations of the workplace regulator. However, the court noted that Mr. Salmon had rectified the underpayments and cooperated with the regulator by signing an agreed statement of facts and providing regular updates. While Mr. Salmon's engagement with the applicant was not exemplary, the court considered his actions to be a genuine effort to make things right, reflecting his difficult personal circumstances rather than indifference to the regulator or the employee's entitlements.

In determining the penalty, the court considered the principles of deterrence and proportionality. The High Court in Australian Building and Construction Commission v Pattinson emphasised that the primary purpose of a civil penalty is to promote compliance with the Fair Work Act. However, the court must also ensure that the penalty strikes a reasonable balance between deterrence and oppressive severity. The court acknowledged the need for general deterrence but also recognised the mitigating factors in this case, including Mr. Salmon's corrective action, cooperation, and challenging personal circumstances.

The court concluded that a penalty of $1,000 was appropriate. While the contraventions were serious, the court found that there was no need for specific deterrence as Mr. Salmon had shown genuine contrition and had taken steps to rectify the underpayments. The court also noted that Mr. Salmon was no longer in business, further reducing the need for a high penalty. The court accepted the applicant's submissions that the proposed penalty, which included a 20% discount for cooperation and corrective action, was modest and reflected the circumstances of the case. The court emphasised the importance of acknowledging the opportunity to send a message to other employers in the industry while also considering the unique circumstances of Mr. Salmon's case.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

The applicant seeks a penalty against the respondent in the total amount of $3,120. This includes an overall discount of 20 per cent for cooperation and corrective action and is calculated as follows: (a)$990 (15% of the maximum) for the admitted failure to comply with the Compliance Notice; and (b)$2,130 (20% of the maximum) for the admitted failure to give pay slips.BACKGROUND The SOAF establishes the following. Mr Salmon at relevant times was a sole trader operating a carpentry business in Victoria trading as “D. Salmon Carpentry”.[1][1] SOAF [4](a). Mr Salmon employed the Employee from 22 July 2019 to 18 June 2021 (Employment Period). In February 2021, Fair Work Inspector (FWI) Coleman commenced an investigation into Mr Salmon’s compliance with the FW Act (Investigation).[2][2] SOAF [5]. Based on the information obtained during the Investigation, FWI Coleman formed a belief that:[3] [3] SOAF [6]. (a)during the Employment Period, the Building and Construction General On-site Award 2010 (2010 Award) and the Building and Construction General On-site Award 2020 (2020 Award) covered and applied to Mr Salmon in respect of the Employee’s employment;(b)The Employee was employed:(i)between 22 July 2020 and 1 March 2021 as a second year full-time Apprentice Carpenter pursuant to clause 15 of the 2010 Award; and(ii)between 2 March 2021 and 18 June 2021 as a second year full-time Apprentice Carpenter pursuant to clause 14 of the 2020 Award;(c)Mr Salmon did not pay the Employee the minimum hourly rate in accordance with clause 19.7(b)(i)(A) of the 2010 Award and 2020 Award for work performed between 27 September 2020 and 6 June 2021;(d)Mr Salmon did not pay the Employee at all for work performed between 7 June 2021 and 18 June 2021; and(e)Mr Salmon did not pay the Employee any amount for accrued but untaken annual leave and annual leave loading at the end of the Employment Period. By reason of the above, FWI Coleman formed a reasonable belief, within the meaning of section 716(1) of the FW Act, that in respect of the Employee’s employment, the Respondent had contravened:[4] (a)clause 19.7(b)(i)(A) of the 2010 Award by failing to pay the Employee the minimum hourly rate;(b)clause 19.7(b)(i)(A) of the 2020 Award by failing to pay the Employee the minimum hourly rate; and(c)section 90(2) of the FW Act by failing to pay accrued, untaken annual leave on termination of employment.(collectively, the Contraventions).[4] SOAF [7].The Compliance Notice On 15 December 2022, FWI Coleman gave Mr Salmon the Compliance Notice by sending it toMr Salmon by post to 1 Willow Court Korumburra, Victoria and 56 Valley View Pde Korumburra, Victoria. A copy of the Compliance Notice was also sent to Mr Salmon by email to d.salmoncarpentry@gmail.com.[5][5] SOAF [8]. Pursuant to section 716(2) of the FW Act, the Compliance Notice required Mr Salmon to:[6] (a)by 18 January 2023, take specified action to remedy the direct effects of the Contraventions (Specified Action) including:(i)calculating and paying the outstanding amounts owed to the Employee in respect of the Contraventions;(ii)calculating and paying to the Employee’s chosen superannuation fund any additional superannuation required to be paid in respect of the amounts referred to in paragraph 13(a)(i) (Superannuation Contributions); and(b)by 25 January 2023, produce reasonable evidence to the Applicant of Mr Salmon’s compliance with the Compliance Notice by preparing and producing calculations and evidence that the amounts owed had been paid to the Employee.[6] SOAF [9].

Evidence

Evidence Before The Court

Although the affidavit was filed late, I consider that it was compiled and put before the Court in an effort to provide a more complete picture of Mr Salmon’s circumstances and for that reason any criticism of the applicant’s conduct is not justified.SUBMISSIONS AND EVIDENCE ON PENALTY The applicant relies on the following material:·The affidavit of Kate Meredee Dambacher Raffety affirmed and filed on 18 April 2024 (First Raffety affidavit);·The affidavit of Ms Raffety affirmed and filed on 5 August 2024 (Second Raffety affidavit);·The affidavit of Christine Cox affirmed and filed on 18 April 2024 (Cox affidavit); ·Written submissions filed on 9 May 2024. Mr Salmon did not file any material responsive to the October or May orders, but he did participate in the hearing on penalty by telephone and was invited to make submissions on penalty which he did.Penalty range sought by the applicant Pursuant to s 539(2) of the FW Act, the maximum penalty that the Court may impose for a contravention of s 536(1) is $13,320 for an individual. Pursuant to s 546(2)(a), the maximum penalty that the Court may impose for a contravention of s 716(5) is $8,250 for an individual. As indicated above, the applicant seeks a total penalty be imposed in the amount of $3,120 for both contraventions. When invited to respond to the penalty sought by the applicant, Mr Salmon did not offer a specific figure but asked that it be as modest as possible, to respond to his personal circumstances. Factors relevant to penalty The primary purpose of deterrence was re-emphasised by the High Court in the decision of Australian Building and Construction Commission v Pattinson[2022] 274 CLR 450. In that decision, the majority upheld the Commissioner’s appeal and confirmed that the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with provisions of the FW Act by those responsible and by (like) others. The Court rejected the approach implicit in the decision of the Full Court (the subject of the appeal) that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention. The majority held instead that “[t]he power conferred by s 546 of the Act is not subject to constraints drawn from the criminal law and there is no place for a ‘notion of proportionality’ in a civil penalty regime”.[9] However, the High Court did accept that s 546 requires the Court to ensure that any penalty “strikes a reasonable balance between deterrence and oppressive severity”[10]. It was only in this more qualified sense that the concept of “proportionality” had any role to play.[9] Pattinson at [10]. [10] Ibid at [41]. The High Court in Pattinson also referred to the several factors identified by French J in Trade Practices Commission v CSR Ltd [1990] FCA 521 which informed the assessment of a penalty of an appropriate deterrent value. The list revealed that both the circumstances of the contravener and the circumstances of the contravention may be relevant to the assessment of whether the maximum level of deterrence is called for.[11] However, the Court repeated the caution that the list of possible relevant considerations should not be approached as a “rigid catalogue of matters for attention” and instead the task of the court remains to determine what is an “appropriate” penalty in the circumstances of the particular case.[12][11] Ibid at [57]. [12] Ibid at [18] and [19].

Decision

Reasons for decision

Mr Salmon’s statement also described how from towards the end of 2021 and “pushing in to 2022” things were not financially stable, and it was a “constant battle trying to keep up with depts (sic) and payments which unfortunately resulted in 2 cars in 2 years being re possessed one which I am current trying to get back so this doesn’t effect my credit rating as much”. Mr Salmon also provided detail of some difficult family circumstances related to a relationship breakdown and which he explained had now finally resolved but which had from late 2022 to recently, meant that this period of time, emotionally and financially was “full on”.CONCLUSION I consider that a penalty in the global amount of $1,000 should be applied in this case. In fixing this amount I accept, as a general proposition, that a failure by an employer to comply with a compliance notice given under ss 716(2) and (3) of the FW Act, undermines the efficacy of the statutory notice regime and increases the administrative and cost burden of the workplace regulator and where proceedings are then issued, diverts judicial resources. This is a mischief to which general deterrence can and should appropriately be directed. I also accept the payslip contravention to be serious given the central place of this administrative obligation to the ability of employees to check that their entitlements are being properly met. The penalty amount that I have fixed on is concerned principally with acknowledging that all cases represent the opportunity to send a message to like employers within the industry that there will be consequences when workplace responsibilities are avoided. However, beyond this objective, the characteristics of this case have led me to conclude that there is no need to go further than the application of a modest penalty. While Mr Salmon’s engagement with the applicant was not exemplary, to the extent that it fell short of this standard it seems to me that this likely reflected the fact that Mr Salmon was juggling a series of difficult and distracting life challenges rather than indicative of an indifference to the role of regulator, the Employee’s entitlements or this proceeding. Mr Salmon showed up and communicated in the plainest of terms what I understood to be a genuine desire to make things right and an acknowledgement of wrongdoing. There was a civility in the proceeding before me that I consider reflects well on Mr Salmon and on those who represented the applicant in her various interactions with Mr Salmon. While it is of course open to question why this proceeding was ever brought and/or maintained against Mr Salmon given the quantum of penalty sought against him and the personal circumstances that he was experiencing, it is not up to the Court to second-guess such matters.

Ratio Decidendi

Legal Principle Established

I accept both of these submissions.Contrition, corrective action and cooperation The applicant’s proposed penalty makes an allowance for a 20 per cent discount on account primarily of Mr Salmon’s corrective action in rectifying the underpayments and for his cooperation in signing the SOAF, which amongst other things, contains admissions that he contravened ss 536(1) and 716(5) of the FW Act. The making of admissions at a relatively early stage of the proceeding meant that the matter could proceed directly to a penalty hearing rather than there being a hearing on liability and then penalty. There is an obvious cost and time saving in the former approach. The applicant accepts that Mr Salmon has shown contrition during and after the time for compliance with the Compliance Notice in the following communications:(a)“I do apologise for this” (see [45] above);(b)“im very sorry” (see [48] above);(c)“I understand this need to be sorted” (see [50] above). The applicant submits that these communications reveal that at various stages Mr Salmon showed a willingness to engage with the applicant, albeit that he was at times experiencing hardship and found its requests to be overwhelming. I accept this to be so. It is also clear, especially from the various records annexed to the second Raffety affidavit, that Mr Salmon maintained regular communication with the applicant while the proceeding was on foot and did his best to participate in the Court process despite his lack of representation and trying personal circumstances. Although the applicant’s officers and lawyers dealt with Mr Salmon in a universally courteous, helpful, fair and transparent fashion, it must at times have felt to Mr Salmon that he was being required to jump through hoops to secure an outcome. I consider that Mr Salmon is unlikely to forget this chapter of his life anytime soon. It is also the case that Mr Salmon expressed contrition when he communicated with the Employer by text message on 11 September 2023 in connection with finalising arrangements for rectifying the underpayment[28] and that he provided regular updates and evidence to the applicant concerning the rectification payments. [28] Annexure KR-13 to the second Raffety affidavit. Mr Salmon’s personal circumstances The second Raffety affidavit contains information that further illuminates Mr Salmon’s personal circumstances. It appears that on 13 May 2024, and in response to a request made by the applicant for Mr Salmon to provide evidence of his financial circumstances in advance of the first-listed penalty hearing, that Mr Salmon sent the applicant an email in which he identified the following financial commitments:[29]·I have a car loan repayment that the car has been repossessed and being held until $8K is paid then the outstanding loan I’m unsure off.·I have a trade account of $10K to pay off.·I have a deposit to an old client of $20K to pay back.·$7K owing to accountant.[29] Annexure KR-21 to the second Raffety affidavit.