Fair Work Ombudsman v Sapphire Freighters Pty Ltd (No 2)

The Fair Work Ombudsman (FWO) brought proceedings against Sapphire Freighters Pty Ltd in the Federal Court of Australia. The dispute concerned Sapphire Freighters' failure to comply with a compliance notice issued by a Fair Work Inspector, which required the company to rectify underpayments to an employee, Mr Anthony Lawlor, and provide evidence of this rectification. Sapphire Freighters failed to appear at the hearing.

The court was required to determine whether to impose penalties on Sapphire Freighters for contravening section 716(5) of the *Fair Work Act 2009* (Cth) by failing to comply with the compliance notice. The FWO sought penalties in the range of $18,900 to $22,500, submitting that such penalties were appropriate due to the respondent's continued non-compliance, the outstanding underpayment of approximately $6,000, and the need for specific and general deterrence within the road freight transport industry.

Mercuri J reasoned that Sapphire Freighters' conduct, including its lack of engagement during the investigation and its continued failure to comply with the compliance notice even after default orders were made, indicated an intention not to comply. The court noted the absence of any evidence of contrition, corrective action, or cooperation from the respondent. The significant underpayment to the employee, the impact on his health and finances, and the expenditure of public funds by the regulator were also considered. Applying the principle that civil penalties are primarily protective and aimed at deterring contravention, and noting the lack of evidence regarding the respondent's financial circumstances that might suggest a penalty would be crushing, the court found that a penalty was warranted.

The court ordered Sapphire Freighters to pay a penalty of $21,500. This penalty was imposed having regard to the respondent's persistent failure to engage with the FWO, its non-compliance with the statutory notice, its failure to challenge the notice or provide a reasonable excuse for non-compliance, and the significance of the $6,000 underpayment to the employee. The court emphasised the need for both specific and general deterrence in this context.