Fair Work Ombudsman v Scott Redmond t/as Cleaning Excellence
[2019] FCCA 3697
•19 December 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v SCOTT REDMOND TRADING AS CLEANING EXCELLENCE | [2019] FCCA 3697 |
| Catchwords: INDUSTRIAL LAW – Contraventions of Fair Work Act 2009 (Cth) –– failure to keep records – failure to comply with notice to produce – failure to comply with compliance notice – penalty. |
| Legislation: Fair Work Act 2009 (Cth), ss.536, 539, 546, 557, 712, 716 Fair Work Regulations 2009 (Cth), r.3.46 |
| Cases cited: Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54 |
| Applicant: | FAIR WORK OMBUDSMAN |
| Respondent: | SCOTT REDMOND TRADING AS CLEANING EXCELLENCE |
| File Number: | SYG 1809 of 2018 |
| Judgment of: | Judge Obradovic |
| Hearing date: | 8 March 2019 |
| Date of Last Submission: | 8 March 2019 |
| Delivered at: | Parramatta |
| Delivered on: | 19 December 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms Bulut |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| Appearing for the Respondent: | No appearance |
ORDERS
An order pursuant to s.546(1) of the Fair Work Act 2009 (Cth) that the Respondent pay a pecuniary penalty in respect of each of the contraventions found on 8 March 2009 in the total amount of $ 17,190.
An order pursuant to s.546(3)(a) of the Fair Work Act 2009 (Cth) that the pecuniary penalties ordered in accordance with order (1) above be paid to the Consolidated Revenue Fund of the Commonwealth within 28 days of the date of these Orders.
The Applicant has liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
SYG 1809 of 2018
| FAIR WORK OMBUDSMAN |
Applicant
And
| SCOTT REDMOND TRADING AS CLEANING EXCELLENCE |
Respondent
REASONS FOR JUDGMENT
On 8 March 2019 the Court heard and determined an application for default judgment made by the Applicant against the Respondent. Reasons were delivered ex tempore. Orders were made as follows:
(1)Default judgment is entered for the Applicant against the Respondent pursuant to sub-rule 13.03B(2)(d) of the Federal Circuit Court Rules 2001 (“FCC Rules”).
(2)Upon the admissions which the Respondent is taken to have made, consequent upon default by the Respondent pursuant to Rule 13.03A(2) of the FCC Rules, the Court declares that the respondent contravened the following civil remedy provisions:
(a)Section 716(5) of the Fair Work Act 2009 (Cth) (“FWA”) by failing to comply with the Compliance Notice issued by the Fair Work Ombudsman dated 24 April 2018, requiring the Respondent to pay $3,124.84 to Mr Wayne Craig and $70.92 to Mr Barry Neilsen;
(b)Section 712(3) of the FWA by failing to comply with the Notice to Produce Records or Documents dated 20 June 2017; and
(c)Section 536(2) of the FWA by failing to include on the payslips issued by Mr Craig and Ms Aleasha Sykes information prescribed by regulations 3.46(1)(d) and 3.46(5) of the Fair Work Regulations 2009.
(3)Pursuant to section 545(1) of the FWA the Respondent pay the amount of $3,195.76 (gross) to the Applicant within 28 days of the date of this order, to be distributed by the Applicant as follows:
(a)$3,124.84 to Mr Craig; and
(b)$70.92 to Mr Neilsen.
(4)Pursuant to section 547(2) of the FWA the Respondent pay interest on the amounts referred to in paragraph 3 above.
(5)Pursuant to section 545 (1) of the FWA the Respondent produce to the Applicant all documents sought by the Notice to Produce Records or Documents dated 20 June 2017 (other than the rosters and timesheets for Mr Craig and Ms Sykes produced to the applicant on 23 November and 7 December 2017) within 14 days of the date of the Court’s orders.
(6)Pursuant to section 545(1) of the FWA the Respondent:
(a)Within a period of 14 days of the date of the Court’s orders, register with the Applicant’s “My Account” portal at and complete a profile inclusive of the ‘Award’ option;
(b)Within 7 days after the period in subparagraph (a) above, provide to the Applicant their respective “My Account” registration number; and
(c)Within in a period of 60 days of the date of the Court’s orders, register with the Applicant’s Online Learning Centre at complete all education courses designed for employers, and provide the Applicant with evidence of completion of those courses within a further month of registration.
(7)The Applicant have liberty to apply on 7 days’ notice in the event that any of the preceding orders are not complied with.
Following the delivery of reasons for judgment and the making of orders, the Court heard submissions in respect of penalty. These are the Reasons for Judgment in respect of penalty for breaches of the FWA as found on 8 March 2019.
Contraventions
The Respondent trades as Cleaning Excellence, a cleaning business based in regional New South Wales. He is a sole trader. The Applicant commenced an investigation in June 2017, following online enquires received by the Applicant between 27 January 2017 and 9 June 2017 from Mr Wayne Craig, Mr Barry Nielsen and Ms Aleasha Sykes (Employees) in respect of their employment by the Respondent.
On 20 June 2017, the Respondent was served with the Notice To Produce which required production of records or documents in relation to the Employees, as well as in respect to other employees and contractors employed by the Respondent during a period of approximately six months in 2016 and 2017. The Notice required production of those documents to the Applicant by 5pm 17 July 2017. The Respondent did not produce any documents within the timeframe for compliance.
On 23 November 2017 and 7 December 2017, the Respondent produced a selection of rosters and timesheets in relation to Mr Craig and Ms Sykes. Such documents were in part an answer to the Notice to Produce but the documents were produced late. Other documents held by the Respondent were not provided at all, including: tax file number declarations belonging to Ms Sykes and Mr Craig, employee information forms belonging to Ms Sykes and Mr Craig, any documents relating to Mr Nielsen, and any documents at all relating to other employees or contractors engaged by the Respondent between 15 December 2016 to 14 June 2017.
During their employment with the Respondent, Mr Craig and Ms Sykes were issued with pay slips. These pay slips did not contain the date on which payment was made or the name or fund number of their superannuation fund, being information required by regulation 3.46(1)(d) or 3.46(5) of the Fair Work Regulations 2009 (Cth) respectively.
On 24 April 2018, the Respondent was issued with the Compliance Notice, which required the Respondent pay $3,124.84 to Mr Craig, and $70.92 to Mr Nielsen, by 18 May 2018.The Respondent has not paid the amount required by the Compliance Notice either by the due date of 18 May 2018 or at all.
As noted at the commencement of these Reasons, the Court had already declared on 8 March 2019 that the Respondent has contravened civil remedy provisions of the FWA as follows:
a)He has failed to comply with a Notice to Produce records or documents issued on 20 June 2017 in contravention of s712(3) FWA;
b)He has filed to comply with a Compliance Notice dated 24 April 2018 in contravention of s716(5) FWA; and
c)He issued payslips that did not contain the information required by the Fair Work Regulations 2009 (Cth) in contravention of s536(2) FWA.
It was submitted on behalf of the Applicant that:
a)The Court can impose civil penalties in respect of the Contraventions;
b)The Applicant has standing to seek penalties in respect of them.
c)The following factors are particularly relevant to the Court’s determination of penalty in the circumstances of this case:
i)the deliberateness of the Respondent’s conduct, specifically in failing to comply with both the Notice to Produce and Compliance Notice despite being made aware of the need to comply, as well as issuing pay slips without the required content despite previous interactions with the regulator regarding pay slip obligations – noting that he failed to pay an infringement notice which would have addressed the payslip issue without need for further enforcement steps;
ii)the disregard the Respondent has shown for the regulator’s investigative and compliance tools, and consequently, the need to uphold their effectiveness through the imposition of deterrent penalties – his actions have impeded the regulator’s investigation, and had he complied with any of the tools deployed, these proceedings would not have been necessary; the complete absence of cooperation by the Respondent, both during the Applicant’s investigation and after the commencement of proceedings; and
iii)the absence of corrective action or contrition on the part of the Respondent.
The aggregate penalties sought by the Applicant against the Respondent are between $15,300 and $17,730.
Principles Relevant to the Determination of Penalty
Section 546(1) of the FWA enables the Court to impose a penalty in respect of a contravention of a civil remedy provision. The primary purpose of the imposition of civil penalties is:
“to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.”[1]
[1] Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 at [55], citing Trade Practices Commission v CSR Ltd [1990] FCA 521
An appropriate method to determine the question of penalty may be summarised as follows:[2]
a)identify the separate contraventions, with each breach of each obligation being a separate contravention of a civil remedy provision for the purposes of section 539(2) of the FWA;
b)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 section 557 of the FWA 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;
c)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 the respondent did;
d)consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation; and
e)consider the overall penalties arrived at, including by reference to those which may be proposed by the Applicant, what is proposed by the Respondent and apply the totality principle, to ensure that the penalties for each Respondent are appropriate and proportionate to the conduct viewed as a whole and not crushing or oppressive, making such adjustments as are necessary.
[2] Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 (“NSH North”) at [36]
Factors Relevant to Penalty
The relevant factors going to penalty have been identified as follows[3]:
[3] Kelly v Fitzpatrick [2007] FCA 1080 at [14] adopting Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 at [26]-[59]
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.
Consideration of the well-known penalty factors[4] is to be undertaken within the overarching consideration of what penalty will achieve the principal object of deterrence, both specific and general. These factors are well-settled, but not a “rigid catalogue of matters for attention.”[5] The identified factors while a convenient checklist, do not restrict the Court in the exercise of its discretion.
Assessment of Appropriate Penalties
[4] set out in Trades Practices Commission v CSR Ltd, [1990] FCA 521, which were adopted in this Court in Mason v Harrington Corp.. The so-called “checklist” of factors set out in Pangaea was approved and adopted by the Federal Court in Kelly
[5] Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (“Merringtons”) [2008] FCAFC 8 at [88] to [91]
Nature, Extent and Circumstances of the Conduct
The common thread in the contravening conduct in this matter is the failure by the Respondent to comply with multiple investigative and compliance tools deployed by the regulator in order to determine entitlements in his business, and to enforce compliance using appropriate non-litigious means.
As a consequence of the Respondent’s decision not to comply with the Notice to Produce, additional steps were required to be taken to encourage compliance, and ultimately, not all documents were provided. This meant that the investigation was delayed and there was an impediment to assessing all employees’ entitlements.
The Compliance Notice was issued following enquiries by the Respondent’s employees. The conduct which was the basis of the Compliance Notice was the Respondent’s failure to pay hourly rates required by the Cleaning Services Award 2010 in respect of Mr Craig, as well as failing to make any payment in respect of some hours worked by Mr Craig and Mr Nielsen. The Respondent’s communications with the Applicant demonstrate that he had no intention of complying with the notice. He also did not take any steps to have the notice set aside.
In relation to the issuing of payslips:
a)The Respondent failed to include the date of payment and details of the relevant superannuation fund on the payslips issued to Mr Craig and Ms Sykes;
b)The Respondent had previously been alerted to his obligation to include this information in payslips issued to employees by the Applicant in 2013, but continued to issue payslips that did not contain requisite information; and
c)The Respondent was issued an infringement notice pursuant to the FW Regulations to address the deficiencies, which if paid, would have resolved the issue.
Consequently, had the Respondent complied with the Notice to Produce, the Compliance Notice, or Infringement Notice (or heeded the warnings of the regulator to comply with the underlying obligations), the proceedings would not likely have been brought. It is of real concern that his disregard for his lawful obligations and the regulator’s tools has necessitated the bringing of proceedings to ensure compliance.
Nature and Extent of Loss or Damage
As a result of a failure to comply with the Compliance Notice, Mr Nielsen and Mr Craig have suffered financial loss in the amounts of $70.92 and $3,124.84 respectively. These amounts, particularly in respect of Mr Nielsen, are relatively small. This does not mean that the amounts were insignificant to the persons to whom they were due. In addition, the fact that the quantum was relatively small and that the Respondent failed to take any steps to make the payments required, is considered an aggravating factor.
One of the principal objects of the FWA is to provide a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions for all employees. A compliance notice is intended to act as a means of ensuring compliance with the FWA without the need to go to Court.[6] Where a person does not comply with a compliance notice, they undermine that purpose[7] and can be seen as “undermin[ing] the FW Act’s enforcement framework, and the safety net of entitlements it is designed to protect.”[8]
[6] Fair Work Ombudsman v Rum Runner Trading Pty Ltd [2018] FCCA 1129 at [86] citing Fair Work Ombudsman v The Syndicate Group Pty Ltd [2015]] FCCA 2847 at [27]; Fair Work Ombudsman v Absynthe Restaurant Pty Ltd [2015] FCCA 58 at [36]
[7] Rum Runner at [110]
[8] Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492 at [78]. See also Fair Work Ombudsman v Daladontics (Vic) Pty Ltd [2014] FCCA 2571 at [23].
The Respondent’s conduct in not complying with the Notice to Produce (notwithstanding his acknowledgment of the existence of documents) involved a failure to adhere to the minimum standards required by the FWA and undermined the statutory objectives and the principal objects of the FWA.
Not to comply with the requirements to issue proper payslips is to leave the employees significantly disempowered, creating a structure within which breaches of industrial laws can easily be perpetrated.[9]
[9] Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd [2012] FMCA 258 at [67]
Deliberateness and Similar Previous Conduct
The Court finds that the contravening conduct was deliberate in light of:
a)The Respondent’s prior interactions with the Applicant which put him on notice as to his obligations under the FW Regulations regarding payslip content;
b)The Respondent was informed on at least six occasions by the Applicant that the Notice to Produce had not been complied with or that not all documents required by the Notice had been provided;
c)The Respondent demonstrated an understanding of his obligations by stating in correspondence that he did not have time to locate the documents sought by the Applicant;
d)The Respondent was made aware of his obligation to comply with the Compliance Notice when it was served upon him as well as in subsequent communications with the Applicant;
e)In correspondence with the Applicant, the Respondent has acknowledged that there is an amount outstanding under the Compliance Notice and yet has failed to pay it within the timeframe for compliance or at any stage (including actively stating that he does not intend to pay the amount); and
f)The Respondent has otherwise made statements appearing to dispute certain aspects of the Compliance Notice, and yet has failed to provide evidence in support of this position and/or to seek a review of the Compliance Notice.
Size and Financial Circumstances of the Company
There is no evidence available regarding the financial position or size of the Cleaning Excellence business operated by the Respondent.
Senior Management’s Involvement
The Cleaning Excellence business is operated by the Respondent as a sole trader. As such, the Respondent was entirely responsible for the contraventions.
Contrition, Corrective Action and Co-Operation
The fact that the Respondent has not made any payments in respect of the Compliance Notice is a strong inference that he is not contrite. This is particularly so given the modest quantum of amounts outstanding and the time which has passed since the Compliance Notice was issued to date of hearing.
Rather than accepting any responsibility for the conduct which forms the basis for these proceedings, in his interactions with the Applicant[10], the Respondent has made allegations about Mr Craig which have not been the subject of any evidence, he has criticised the Applicant’s investigation, he has criticised the industrial relations system, and he has failed to meaningfully engage in these proceedings. Co-operation has been limited and the Respondent’s interactions with the Applicant could fairly be described as rather obstructive[11].
[10]The Respondent’s interactions with the Applicant have included statements such as:
o“I reject your offer to admit to fault and accept punitive penalties given the investigation by Fairwork is obviously bias, incomplete and inadequate”;
othe Applicant is engaging in “classic government overreach” and “pure socialism”;
o“I know Fairwork struggle to get it right so I’ll correct you.”; and
o“I run a business and I’m not in the habit of wasting time because ex-staff try to rip me off. I’ll take the time I need and I will only comply with something that is valid, not something you deem valid based on ‘evidence’ supplied by disgruntled ex-staff”.
[11] During the investigation, the Respondent prolonged the process by:
(a) not responding to various communication attempts by the Applicant;
(b) failing to respond to the NTP until November 2017 despite communication with FWI Rossow over some four months, after which point only a partial response was provided;
(c) making representations suggesting he possessed other documents required to be produced under the NTP but refusing to provide them to the Applicant;
(d) failing to correspond meaningfully with Mr Rossow, including sending emails stating “my time is valued at $250 an hour and is limited I will not be spending time on this matter…” and “I totally reject this email”;
(e) responding to the Compliance Notice by making numerous assertions regarding Mr Craig despite previously acknowledging that he had no evidence to support these assertions; and
(f) stating that “we are a small business with limited resources and it is not possible to paid that amount of money…(sic)” but then failing to respond to the Applicant’s request for any evidence supporting this.
(g)
The Respondent’s conduct demonstrates a lack of insight into the seriousness of the contraventions. There is also no evidence that the Respondent has changed or intends to change his behaviour, or that he has taken any corrective action to prevent future breaches of workplace laws.
The Respondent has through his limited engagement with these proceedings, demonstrated a poor attitude towards the entire process and his obligations to comply with Court orders.
Need to ensure compliance with minimum standards
Compliance with record-keeping obligations is fundamental to an employee’s ability to independently verify their entitlements and for the applicant’s ability to enforce compliance. The Court accepts that non-compliance with these obligations undermines and frustrates the attainment of the Act’s objective of ensuring compliance with the safety net of minimum standards, creating a structure within which breaches of industrial laws can easily be perpetrated.[12]
[12] Fair Work Ombudsman v Taj Palance & Anor [2012] FMCA 258 at [67]
Deterrence
The Respondent continues to operate his business and employ staff. Specific deterrence is therefore relevant.
The Court also accepts that general deterrence is an important factor for its consideration. It is vital for the purposes of the FWA that the public is left in no doubt that there is a positive obligation to comply with statutory notices issued by the Applicant, such as Notices to Produce Records or Documents and Compliance Notices.
Penalty
Whilst the penalty imposed must not be crushing or oppressive, it must be proportionate to the conduct engaged in by the respondents and not have the effect of exonerating the conduct.[13]
[13] See Kelly, supra, at [30]; Merringtons, supra, at [23] per Gray J, [66]-[73] per Graham J, [98]-[102] per Buchanan J; Fair Work Ombudsman v Promoting U Pty Ltd & Anor [2012] FMCA 58, [55]-[57].
The Court finds that the conduct of the Respondent is highly aggravating, and that the penalties imposed should be in the higher range for each of the contraventions.
The maximum penalty amounts that the Court can impose for each contravention are:
Contravention
Maximum Penalty
Subsection 716(5) of the FWA
$6,300
Subsection 712(3) of the FWA
$12,600
Subsection 536(2) of the FWA $5,400 TOTAL: $24,300
In respect of the contravention of section 716(5) it is appropriate that a penalty of $5,670 be imposed.
In respect of the contravention of section 712(3) it is appropriate that a penalty of $8,820 be imposed.
In respect of the contravention of section 536(2) it is appropriate that a penalty of $2,700 be imposed.
As such, the overall penalty to be imposed is $17,190. In all of the circumstances, given the conduct which has led to the breaches, the penalty while significant so as to bear relativity to the seriousness of the conduct, is not oppressive or crushing.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Judge Obradovic
Associate:
Date: 19 December 2019
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