Fair Work Ombudsman v Schneider
[2022] FedCFamC2G 478
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Schneider [2022] FedCFamC2G 478
File number(s):
MLG 2730 of 2021
Judgment of:
JUDGE MANSINI
Date of judgment:
20 June 2022
Catchwords:
INDUSTRIAL LAW – FAIR WORK – application for pecuniary penalty following default judgment – multiple contraventions of ss.716(5) and 536(1) of the Fair Work Act 2009 (Cth) – where s.536(1) contraventions constitute a single course of conduct – not appropriate to group contraventions – assessment of relevant considerations – penalty ordered pursuant to s.546(1) – where s.546(3) provides that the Court may order payment in part to the Commonwealth, a particular organisation or a particular person.
Legislation:
Crimes Act 1914 (Cth) s 4AA.
Fair Work Act 2009 (Cth) ss 12, 14, 30D, 536(1), 549, 546(1), 546(2), 557, 716(2), 716(5).
Cases cited:
Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25
Australian Opthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCA 8
Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner [2018] FCAFC 97
Fair Work Ombudsman v Maclean Bay Pty Ltd (No 2) [2012] FCA 557
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301
Fair Work Ombudsman v Tester [2021] FCCA 771
Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53
Trade Practices Commission v CSR Ltd [1990] FCA 762
Markarian v The Queen [2005] HCA 25
Wong v The Queen [2001] HCA 64
Division:
Division 2 General Federal Law
Number of paragraphs:
61
Date of last submission/s:
2 June 2022
Date of hearing:
2 June 2022
Place:
Melbourne
Solicitor for the Applicant:
Office of the Fair Work Ombudsman
The Respondent:
No appearance by or on behalf of the Respondent
ORDERS
MLG 2730 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: JESSICA LEE SCHNEIDER
Respondent
ORDER MADE BY:
JUDGE MANSINI
DATE OF ORDER:
20 JUNE 2022
THE COURT ORDERS THAT:
1.Pursuant to section 546(1) of the Fair Work Act 2009 (Cth) (the Act), Ms Jessica Lee Schneider (Respondent) pay a pecuniary penalty totalling $6,660 in respect of:
(a)the contravention of section 716(5) of the Act in relation to the Harvey Compliance Notice;
(b)the contravention of section 716(5) of the Act in relation to the Stevensen Compliance Notice; and
(c)the contraventions of section 536(1) of the Act in relation to the failures to give payslips to Ms Harvey and Ms Stevensen, which are taken to be a single course of conduct pursuant to section 557 of the Act.
2.The penalty in Order 1 be paid to the Fair Work Ombudsman (FWO) within 28 days of the date of this order.
3.The penalty received in accordance with Order 2 be distributed by the FWO within 90 days of payment being made by the Respondent as follows:
(a)$1,400 to Ms Harvey;
(b)$230 to Ms Stevensen; and
(c)the remainder to the Consolidated Revenue Fund of the Commonwealth.
4.In the event Ms Harvey and/or Ms Stevensen cannot be located within 180 days of this order, the requisite amount received in accordance with Order 2 be paid into the Consolidated Revenue Fund of the Commonwealth.
5.The FWO have liberty to apply within 7 days for amendment to the form of the orders as to distribution of the penalties.
6.The FWO have liberty to apply on 7 days’ notice in the event that any of the preceding orders are not complied with.
7.There be no order as to costs.
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 Mansini
INTRODUCTION
In this matter, the Fair Work Ombudsman (FWO) seeks the imposition of a pecuniary penalty against Ms Jessica Lee Schneider (trading as “Vengeance Performance Horses”) (Respondent) for failures to comply with compliance notices and to provide payslips.
On 8 February 2022, his honour Judge McNab (as he then was) entered default judgment in which the Court:
(a)made declarations that the Respondent had contravened ss.716(5) and 536(1) of the Fair Work Act 2009 (Cth) (Act);
(b)made orders pursuant to s.545(1) of the Act stipulating that the Respondent was to take certain steps that were required by the compliance notices, calculate and pay any superannuation contributions and prepare a schedule outlining calculation of the outstanding entitlements and pay and superannuation, provide proof that outstanding amounts were rectified, pay interest; and
(c)made orders for hearing of the FWO’s application for pecuniary penalty,
(Default Judgment).
These reasons address the remaining question of the appropriate pecuniary penalty (if any) to be imposed on the Respondent for its contraventions.
PROCEDURAL CONTEXT
On 25 October 2021 these proceedings were commenced. On 13 December 2021, the Respondent consented to orders for programming including filing of a notice of address for service and defence but was thereafter absent from and did not participate in the proceedings.
On 8 February 2022, the Court declared that:
1.The Respondent contravened s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with the requirements of:
(a)a compliance notice in regards to employee Ms Tiana Harvey issued to the Respondent on 19 March 2021 pursuant to s 716(2) of the FW Act (Harvey Compliance Notice); and
(b)a compliance notice in regards to employee Ms Charli Stevenson issued to the Respondent on 19 March 2021 pursuant to s 716(2) of the FW Act (Stevenson Compliance Notice).
2.A declaration that the Respondent contravened s 536(1) of the FW Act by failing to provide a payslip within one working day of paying an amount:
(a) to employee Ms Harvey in relation to performance of work; and
(b) to employee Ms Stevenson in relation to performance of work.
(sic.)
Also on 8 February 2022, the Court ordered that:
3.Pursuant to s 545(1) of the FW Act, the Respondent take the steps that were required by the Harvey Compliance Notice, within 28 days of this order, by:
(a)calculating and paying to Ms Harvey the outstanding entitlements she was required to pay to Ms Harvey, as required by the Harvey Compliance Notice;
(b)calculating and paying any superannuation contributions into Ms Harvey’s nominated superannuation fund for any additional superannuation contributions required to be paid on the outstanding entitlements referred to in order 3(a) above; and
(c)preparing and producing to the Applicant a schedule outlining her calculation of the outstanding entitlements she was required to pay to Ms Harvey and any superannuation contributions required to be paid to Ms Harvey’s nominated superannuation fund referred to in orders 3(a) and 3.(b) above and providing proof to the Applicant that the outstanding amounts were rectified.
4.Pursuant to s 547(2) of the FW Act, the Respondent pay interest to Ms Harvey on the amounts owed pursuant to order 3 above.
5.Pursuant to s 545(1) of the FW Act, the Respondent take the steps that were required by the Stevenson Compliance Notice, within 28 days of this order, by:
(a)calculating and paying to Ms Stevenson the outstanding entitlements she was required to pay to Ms Stevenson, as required by the Stevenson Compliance Notice;
(b)calculating and paying any superannuation contributions into Ms Stevenson’s nominated superannuation fund for any additional superannuation contributions required to be paid on the outstanding entitlements referred to in order 5.(a) above; and
(c)preparing and producing to the Applicant a schedule outlining her calculation of the outstanding entitlements she was required to pay to Ms Stevenson and any superannuation contributions required to be paid to Ms Stevenson’s nominated superannuation fund referred to in orders 5.(a) and (b) above and providing proof to the Applicant that the outstanding amounts were rectified.
6.Pursuant to s 547(2) of the FW Act, the Respondent pay interest to Ms Stevenson on the amounts owed pursuant to order 5 above.
7.The Applicant file and serve an outline of submissions and any affidavit evidence in respect of penalty by no later than 4.00pm on 28 April 2022.
8.The Respondent file and serve an outline of submissions and any affidavit evidence in respect of penalty by no later than 4.00pm on 27 May 2022.
9.The Applicant file and serve any reply to the Respondent’s evidence and submissions by no later than 4.00pm on 3 June 2022.
10.The proceeding be listed for Penalty Hearing in the Federal Circuit and Family Court of Australia at Melbourne on 8 June 2022 at 10.00am.
11. The parties have liberty to apply on three days’ notice.
12.The Applicant serve a copy of these Orders on the respondent as soon as practicable.
(sic.)
After the Default Judgment was delivered, the FWO initially filed two affidavits of:
(a)Fair Work Inspector Tran, on 22 April 2022; and
(b)Fair Work Inspector Cox, on 28 April 2022.
The FWO also provided the Court with evidence that the Respondent was served with the Court’s orders of 8 February 2022, the FWO’s materials filed in support of the penalty application and was on notice of the penalty hearing.[1]
[1] Affidavit of Sherilyn Ding sworn 3 June 2022.
No material was filed by or on behalf of the Respondent.
On 2 May 2022, the parties were notified that the penalty hearing would proceed at 10.00am on 2 June 2022 before the Court as presently constituted.
At the penalty hearing on 2 June 2022, appearance was entered for the FWO. The Respondent did not appear.
In all of the circumstances, I determined it was appropriate to proceed with the penalty hearing absent the attendance of the Respondent.
FACTUAL CONTEXT
By the Default Judgment, the Court deemed the contraventions as pleaded in the FWO’s statement of claim to be admitted. The relevant background facts in evidence are unchallenged in these penalty proceedings, summarised as follows:
The Respondent is a sole trader operating a business involving the re-training of retired racehorses, predominantly for equestrian purposes under the registered business name “Vengeance Performance Horses”. The Respondent operates this business from 230 Emmersons Road, Lovely Banks in the state of Victoria.
In or around February 2021, Fair Work Inspector Cox commenced an investigation into the Respondent following a request from two former employees:
(a)Ms Harvey, who was employed by the Respondent between 25 July 2020 and 15 January 2021 as a part-time employee. Ms Harvey was classified as a Level 1 employee under the Miscellaneous Award 2020 (Award) from 25 July 2020 to 25 October 2020 and a Level 2 employee under the Award from 26 October 2020 to 15 January 2021; and
(b)Ms Stevensen, who was employed by the Respondent between 27 September 2020 and 3 January 2021 as a part-time employee. Ms Stevensen was under the age of 21 during her employment with the Respondent and was classified as a Level 1 junior employee under the Award.
In the course of its investigation, an officer of the FWO communicated with the Respondent by telephone (on 3 March 2021). In that telephone discussion the Respondent acknowledged entitlements were outstanding, and said that she would pay the employees as soon as she had the funds to do so, and explained that the business had suffered due to “COVID-19 lockdowns”.[2]
[2] Affidavit of Linda Tran sworn 21 April 2022 at [11] and LT-4.
Following the investigation, the Fair Work Inspector formed a reasonable belief, within the meaning of s.716(1)(b) of the Act, that the Respondent had contravened:
(a)clause 15.1 (adult minimum rates) and cl.20 (Saturday penalty rate) of the Award in relation to Ms Harvey; and
(b)clause 15.4 (junior minimum rates) of the Award in relation to Ms Stevensen.
The loss suffered by Ms Harvey and Ms Stevensen on account of these contraventions was estimated as $1,900 gross over approximately 6 months in relation to Ms Harvey and approximately $230 gross over approximately 3 months in the case of Ms Stevensen.
On 4 March 2021, the FWO sent an email to the Respondent advising of its intention to issue compliance notice(s). On 6 March 2021, the Respondent replied to the FWO’s email (a copy of which is in evidence) as follows:
Hi Linda,
So if I’m reading correctly, following letting you know my business was hit incredibly hard with income being cut during Covid, my own medical issues and breakup following, which led to being unable to pay staff over a short period of time, you now want to issue me with a fine? Where is the logic in that?
I told you on the phone that I will be in a position to begin processing some pays within a couple of weeks time when income has picked up some more to allow extra money which is not required to keep a roof over my head. I have also communicated to both staff that I absolutely will be paying them as soon as I am able to do so, I have never refused to pay them, as I am sure you are aware. My business was going brilliantly prior to orders of national and state parliament imposing restrictions, lockdowns, border closures etc. If I am issued a fine under these circumstances I will be disputing it and anything further issued to me.
I’m sure given the current situation with Victoria in a state of emergency due to the ongoing pandemic, majority of struggling business being forced to close, people losing their homes and some their lives from suicide due to the debilitating stress and financial strain – here you are wanting to add another financial burden upon someone who has been struggling through this – surely some compassion and understanding from yourself/FWO would not go astray. If this is not taken into consideration I’m sure the media would love hearing about the ridiculous proposed actions from the FWO.
Regards
Jessica[3]
[3] Affidavit of Linda Tran sworn 21 April 2022 at [12], [13] and LT-6.
On or around 19 March 2021, the Fair Work Inspector gave the Respondent two compliance notices (together, Compliance Notices), one in respect of Ms Harvey (Harvey Compliance Notice) and one in respect of Ms Stevensen (Stevensen Compliance Notice). The Compliance Notices required the Respondent to calculate and rectify any underpayments and superannuation contributions owed to Ms Harvey and Ms Stevensen by 23 April 2021 and provide evidence of the Respondent’s compliance to the FWO by 30 April 2021. The Compliance Notices met the requirements of s.716(3) of the Act.
Various attempts were made by the FWO to communicate with the Respondent about the need to comply with the Compliance Notices and consequences of non-compliance, over the period 19 March 2021 to 13 October 2021.[4] The Respondent failed to comply with both Compliance Notices.
[4] Affidavit of Linda Tran sworn 21 April 2022 at [14]-[22] and the affidavit of Christine Cox sworn 28 April 2022 at [11]-[21].
A further issue was identified by the FWO in that Ms Harvey and Ms Stevensen did not receive a payslip within one working day of some payments in relation to the performance of work during their employment with the Respondent, in contravention of s.536(1) of the Act.
In relation to the penalty hearing, the affidavit of Fair Work Inspector Tran included evidence (among other things):
(a)that as of 20 April 2022 and since December 2020, Ms Stevensen had not received any payment from the Respondent;[5]
(b)that on 18 April 2022, Ms Harvey had received payment in part (in the amount of $500) from the Respondent in relation to the Harvey Compliance Notice and, as of 20 April 2022, had not received further payment or a payslip;[6] and
(c)of results of a search of the “Equifax database” which verified the business name and ownership of the Respondent as at 20 April 2022 and that, as recently as 22 February 2022, the business had been active on social media in relation to its business activities.[7]
[5] Affidavit of Linda Tran sworn 21 April 2022, at [23]-[24].
[6] Affidavit of Linda Tran sworn 21 April 2022, at [25].
[7] Affidavit of Linda Tran sworn 21 April 2022, at [26], [27], LT-16 and LT-17.
APPROACH TO DETERMINATION OF PENALTIES
The Court’s power to impose pecuniary penalties in respect of the established contravention resides in s.546(1) of the Act.
Section 546(1) permits the Court to impose a pecuniary penalty “that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision”. By the Default Judgment, that state of satisfaction exists. It falls to determine what level of penalty (if any) is appropriate as against the Respondent in light of the established contraventions.
As recently affirmed by the High Court of Australia, the purpose of a civil penalty under the regime provided by the Act is primarily, if not wholly, protective in the promotion of the public interest in compliance with the provisions of the Act and in (general and specific) deterrence of further contraventions.[8] An “appropriate” penalty being one that “strikes a reasonable balance between oppressive severity and the need for deterrence in a particular case”.[9]
[8] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, [15]-[16] (Pattinson )citing the plurality in (the Agreed Penalties Case) and French J in Trade Practices Commission v CSR Ltd [1990] FCA 762.
[9] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, [41].
The principles that inform the exercise of the discretion in determination of appropriate penalties in a particular case are well established. In Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown, Bromwich J endorsed the following five step approach:
(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 McAlry-Smith [2008] FCAFC 8; 165 FCR 560 at [23], [71] and [102].[10]
[10] [2017] FCA 1301; 275 IR 148 at [36].
The task of assessing what amount to impose involves the selection of a figure taking into account all factors relevant to the particular case.[11] The oft cited decision of French J in Trade Practices Commission v CSR Ltd[12] listed those factors relevant to an overall assessment of penalty, restated by the Full Court in CFMMEU v ABCC:
..the nature, character and seriousness of the conduct; the loss and damage caused; the circumstances in which the conduct took place; the size of the contravener and its degree of power; the deliberateness of the conduct and the time over which it occurred; the degree of involvement of senior officials or management; the culture of the organisation as to compliance or contravention; and, any co-operation with the regulator and contrition.[13]
[11] Wong v The Queen [2001] HCA 64; (2001) 207 CLR 582, 611, [75] (Gaudron, Gummow and Hayne JJ); Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357, 373-375, [37] (Gleeson CJ, Gummow, Hayne and Callinan JJ); Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; (2018) 260 FCR 68, 84, [55] (Allsop CJ, Davies and Wigney JJ); Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25, 36 [44] (Jagot, Yates and Bromwicgh JJ) as cited by Snaden J at [26] in Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654.
[12] [1990] FCA 762; [1991] ATPR 41-076 at [42].
[13] [2018] FCAFC 97 at [20].
This is not an exhaustive list. Further, each case warrants an “idiosyncratic” approach and a careful analysis of all relevant circumstances - as was stated in Australian Ophthalmic Supplies:
Penalties are not a matter of precedent. The choice of penalty must be dictated by the individual circumstances of a case, not by a line by line comparison with another case.[14]
[14] Australian Opthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCA 8 at [12] (Graham J).
I consider the present matter in light of those well-established principles.
CONSIDERATION
Identify each separate contravention
The present case involves four contraventions of the Act by the Respondent being a sole trader and the employer.[15] Specifically: two contraventions of s.716(5) (in relation to the failures to comply with the Harvey Compliance Notice and the Stevensen Compliance Notice) and two contraventions of s.536(1) (in relation to the failures to provide a payslip to Ms Harvey and to Ms Stevensen within one working day of payment in relation to work performed).
[15] A “national system employer”, see s.14 and s.30D of the Act.
Course of conduct
I accept the FWO’s contentions that: the contraventions of s.536(1) are to be treated as arising out of “a single course of conduct” pursuant to s.557 of the Act; and that s.716(5) is not a civil remedy provision covered by s.557(2) of the Act. Accordingly, the two contraventions of s.536(1) are taken to be a single contravention for the purposes of assessment of penalty and the two contraventions of s.716(5) each attract a separate penalty.
Common elements
In Fair Work Ombudsman v Tester the Court considered the discretion to group separate contraventions together in the context of an employer’s failure to comply with two compliance notices and ultimately held it was not appropriate in that case:
…the Court has a discretion to group separate contraventions together where the contraventions may be said to overlap with each other or involve the potential double punishment of a respondent for the same or substantially similar conduct. The onus to demonstrate such overlap or commonality of factual substratum is on the respondent and there is no evidence before the Court that the respondent’s failure to comply with the two notices arose from the one transaction or decision such that they should be grouped together. [16]
[16] Fair Work Ombudsman v Tester [2021] FCCA 771 at [14]-[15].
In the present case, the Compliance Notices were issued on the same date. But each notice related to different employees engaged under different classifications of the Award and required the Respondent to take action specific to each employee and the contraventions identified therein. The obligations imposed by each notice were separate and distinct. The Respondent has not appeared or made any attempt to discharge its onus in this regard. On the materials before the Court, there is no basis on which to be satisfied that the Respondent’s decisions not to comply with the Harvey Compliance Notice and not to comply with the Stevensen Compliance Notice constituted a single transaction or decision. In this case, it is appropriate that each of the three contraventions attract a separate penalty.
Fix an appropriate penalty for each single or group contravention, taking into account all relevant circumstances
At the relevant times, a penalty unit was $222.[17] Accordingly, the maximum penalty applicable to the Respondent is one of $6,660 or 30 penalty units for each contravention of s.716(5) and $13,320 or 60 penalty units for contraventions of s.536(1) of the Act which are taken to be a single contravention for present purposes (ss.539 and 546(2)).
[17] See s.12 of the Act and s.4AA of the Crimes Act 1914 (Cth).
The FWO seeks the imposition of a “mid range” pecuniary penalty on the Respondent pursuant to s.546(1) of the Act, in the total amount of $10,656, being 40% of the maximum (the maximum being calculated as: $6,660 + $6,660 + $13,320 = $26,640).
Nature, character and loss
The relevant conduct in the present case is the Respondent’s failures to comply with the Harvey Compliance Notice and the Stevensen Compliance Notice and to provide payslips within one day of payment for work performed to each of Ms Harvey and Ms Stevensen.
The Compliance Notices were issued following investigation and on the basis of the Fair Work Inspector’s reasonable belief that the Respondent had contravened provisions of the Award in respect of entitlements to minimum rates of pay and penalty rates owed to Ms Harvey and Ms Stevensen. The materials before the Court include communications exchanged during the FWO’s investigation by which the Respondent acknowledged (on more than one occasion, including in written correspondence) that Ms Harvey and Ms Stevensen had not been paid their entitlements and claimed this was because it was experiencing financial stress. It may be noted that those communications also convey an intention to rectify the outstanding entitlements owed and to dispute any proceedings brought.
The Respondent has done neither. Although it initially participated and consented to orders of the Court as to filing of a defence, the Respondent has not filed any defence, has otherwise declined the opportunities to appear before the Court and has not provided reasonable evidence of compliance. By the Default Judgment, the Respondent is taken to have admitted the contraventions.
As a result of the non-compliance with the Compliance Notices, the precise value of entitlements owed to Ms Harvey and Ms Stevensen is not able to be calculated but is estimated at $1,900 gross and $230 gross respectively. After commencement of these proceedings, Ms Harvey received an amount of $500 from the Respondent. The outstanding entitlements owed to Ms Harvey and Ms Stevensen remain unresolved as a consequence of the non-compliance with the Compliance Notices.
The Respondent has now had some 14 months to comply with the Compliance Notices and give the payslips but has not done so. That is not an insignificant period and ought be considered too long in the present context.
Ultimately, the failure of the Respondent to comply with its obligations under the Act (including to provide payslips) has denied Ms Harvey and Ms Stevensen the benefit of understanding how they were paid and assessing their precise entitlements for work performed. Indeed Ms Stevensen may be considered more vulnerable to such contraventions than an experienced worker, being only 16 years of age at the time of the Respondent’s contraventions in relation to her employment. In addition, all concerned were denied the benefit of a quick and informal resolution without recourse to litigation. The circumstances which gave rise to the issue of the notices and the Respondent’s effective admissions in this regard should also be taken into account in determining the penalty in this case.
Deliberateness, cooperation and contrition
In all of the circumstances, I am satisfied that the Respondent was aware of the Compliance Notices and the consequences of failure to comply. The decision of the Respondent not to comply was deliberate.
Since then, the Respondent has taken some corrective action by making a payment of $500 to Ms Harvey on 18 April 2022 however the FWO sought to characterise this as “minimal”. There has been no payment made to Ms Stevensen, nor has either employee been provided with outstanding payslips. There has no compliance with the Stevensen Compliance Notice and partial but not substantial compliance with the Harvey Compliance Notice.
The Respondent was aware of the proceedings but has declined to file any material. Its part partial rectification of the amount owed to Ms Harvey is unexplained. The Respondent’s indication in earlier correspondence to the FWO of an intent to rectify the matters is acknowledged, however there is no evidence of active cooperation with the regulator, demonstration of contrition or legitimate attempt to correct the wrongdoings subject of these proceedings.
In my view, the Respondent’s conduct demonstrates a failure to recognise the seriousness of her non-compliance with a statutory notice and a failure to properly acknowledge the loss suffered by the employees. It follows that no discount is warranted on the basis of cooperation.
Compliance with minimum standards
A further and important consideration in this case is the need for compliance with the statutory framework. The statutory framework concerning compliance notices is an important mechanism for a Fair Work Inspector to deal with non-compliance with minimum entitlements in the Act as an alternative to commencing litigation. It also provides a means of early resolution and rectification without penalty. The substantial penalties set by the legislature for contraventions of the Act demonstrate the importance Parliament places on employers complying with their minimum obligations.
Compliance with minimum standards is an important consideration in the present case to ensure the preservation of an effective safety net for employee entitlements and effective enforcement mechanisms, particularly for junior employees. I accept the FWO’s contention that the Respondent’s failure to comply with the Harvey Compliance Notice and the Stevensen Compliance Notice undermines the Act’s enforcement framework and the safety net of entitlements it is designed to protect. Further, that the Respondent’s contraventions are at least indicative of the Respondent’s prioritisation of her own interests over her responsibilities as an employer.
Size of the business and financial circumstances
There is some evidence that the Respondent made assertions to the FWO of financial hardship due to the pandemic and related border closures. However, the Respondent’s failure to defend or engage with these proceedings means the exact financial circumstances and resources of the Respondent are not before the court and there is no other explanation in the Respondent’s defence as may have been relevant to the assessment of penalty. In any event, size and financial circumstances do not excuse or explain breaches of workplace laws.
Deterrence
The FWO contended that the Court should order a penalty:
(a)In specific deterrence, fixed at a level that deters the Respondent from contravening again particularly given that she continues to operate the business within which Ms Harvey and Ms Stevensen were employed; and
(b)Of sufficient severity to send a message to employers that a failure to comply with compliance notices will not be tolerated by the Fair Work Ombudsman, the community and the Courts and to impress, upon other employers, the importance of complying with the legal obligations owed to their employees (citing Fair Work Ombudsman v Maclean Bay Pty Ltd (No 2)).[18]
[18] [2012] FCA 557 at [29].
This is a case where there is a need for specific deterrence, particularly in circumstances where the Respondent continues to operate the business and has failed to participate in these proceedings. It is also necessary given the lack of contrition and failure to rectify the outstanding underpayments in full or to provide records to enable the proper entitlements to be determined.
There is also a need for general deterrence, to emphasise the importance of maintenance of effective minimum terms and conditions of employment and adherence to the provisions of industrial instruments. It is vital that penalty be imposed at a level which is sufficient as not to simply constitute a cost of doing business in the event that a disgruntled employee or regulator may investigate.
Fix the penalty
The FWO’s recommended penalty in respect of the multiple contraventions by the Respondent totals $10,656.
Weighing the various competing factors, I consider it appropriate to fix the penalty at 25% of the maximum for each contravention, amounting to a total of $6,660 for the Respondent’s contraventions. That is:
(a)a penalty of $1,665 for contravention of s.716(5) in relation to the Harvey Compliance Notice;
(b)a penalty of $1,665 for contravention of s.716(5) in relation to the Stevensen Compliance Notice; and
(c)a penalty of $3,330 for the contraventions of s.536(1) which are taken to be a single course of conduct pursuant to s.557.
Totality Principle
The “totality principle” requires that I ask myself, before imposing anything, whether the total of the penalties that I would impose might amount to a disproportionate response to the wrongdoing.
Having considered them in their totality, I am satisfied that penalties totalling $6,660 are a proportionate response to the Respondent’s wrongdoing and an appropriate level to achieve the deterrent objective to which civil penalties are directed.
CONCLUSION
The Respondent contravened s.716(5) by its failure to comply with the Harvey Compliance Notice and the Stevensen Compliance Notice, and engaged in a single course of conduct in contravention of s.536(1) by its failure to issue payslips to Ms Harvey and Ms Stevensen.
When all of the factors above are considered, I am satisfied that it is appropriate to impose a pecuniary penalty on the Respondent.
In my view, penalties totalling $6,660 is a proportionate response to the contraventions and strikes a reasonable balance between oppressive severity and the need for both general and specific deterrence in this particular case.
The FWO pursued this proceeding as regulator and opposed an order that the pecuniary penalties be paid to the employees concerned. However this is a case where Ms Harvey and Ms Stevensen have been left financially disadvantaged for a considerable period of time and had sought the assistance of the FWO in rectifying this position which has not been achieved. Accordingly, I am satisfied it is appropriate that the penalties be payable in part to Ms Harvey and Ms Stevensen (to the value of their estimated outstanding entitlements) and the remainder payable to the Consolidated Revenue Fund of the Commonwealth. The FWO will be at liberty to apply within 7 days as to the form of orders in light of this conclusion.
No order as to interest was sought and I make no order in this respect.
I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansini.
Associate:
Dated: 20 June 2022