Fair Work Ombudsman v Sempha Solutions Pty Ltd
[2025] FedCFamC2G 1155
•22 July 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Sempha Solutions Pty Ltd [2025] FedCFamC2G 1155
File number(s): MLG 2274 of 2024 Judgment of: JUDGE MANSINI Date of judgment: 22 July 2025 Catchwords: INDUSTRIAL LAW – FAIR WORK – retail industry – failure to comply with compliance notice – where default judgment was entered in respect of liability and respondent has continued to elect not to participate in the proceedings for relief – final relief granted on default. Legislation: Fair Work Act 2009 (Cth) ss. 545, 550, 716
Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r.13.06
General Retail Industry Award 2020
Cases cited: Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450
CFMMEU v ABCC [2018] FCAFC 97
Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Trade Practices Commission v CSR Ltd (1991) ATPR 41-076
Division: Division 2 General Federal Law Number of paragraphs: 31 Date of hearing: 8 July 2025 Place: Melbourne Solicitor for the Applicant: Australian Government Solicitor The First Respondent: There being no appearance The Second Respondent: There being no appearance ORDERS
MLG 2274 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: SEMPHA SOLUTIONS PTY LTD (ACN 609 049 443)
First Respondent
SIMON PAUL HERMAN
Second Respondent
ORDER MADE BY:
JUDGE MANSINI
DATE OF ORDER:
22 JULY 2025
THE COURT ORDERS THAT:
1.By no later than 4.00pm on 19 August 2025 and pursuant to s.545(1) of the Fair Work Act 2009 (Cth) (Act), the First Respondent take the steps that were required by the statutory compliance notice dated 5 October 2023 (Notice) as specified at paragraphs 8 to 11 of the Notice.
2.By no later than 4.00pm on 19 August 2025 and pursuant to s.546(1) of the Act, the First Respondent pay a pecuniary penalty to the Commonwealth of Australia in the amount of $18,780 in respect of the contraventions of the Act subject of declarations, made on 26 November 2024.
3.By no later than 4.00pm on 19 August 2025 and pursuant to s.546(1) of the Act, the Second Respondent pay a pecuniary penalty to the Commonwealth of Australia in the amount of $3,756 in respect of the contraventions of the Act subject of declarations, made on 26 November 2024.
4.By 4.00pm on 23 July 2025, the Applicant is to serve a copy of these orders on the First Respondent and the Second Respondent along with a copy of the Court’s reasons of 22 July 2025.
5.The Applicant have liberty to apply on 7 days’ notice in the event of non-compliance with these orders.
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
IN SUMMARY
For the reasons delivered on 26 November 2024, the Court declared that the First Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (Act) by its failure to comply with a statutory compliance notice and the Second Respondent was involved within the meaning of s.550(2) of the Act.
The Respondents did not participate in a further directions hearing and did not file any further materials in relation to relief as ordered or at all. Being satisfied that the Respondents were on notice of the fact of the proceedings and afforded ample opportunity to participate, the question of relief proceeded to be heard in default of the Respondent pursuant to r.13.06(e) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
These reasons address the appropriate relief to be ordered for the Respondents declared contravention.
APPLICATION BEFORE THE COURT
The relevant context to the application is set out in the reasons of 26 November 2024 and is not repeated here. For those reasons, the Respondent was declared to have contravened s.716(5) by its failure to comply with a statutory compliance notice dated 5 October 2023.
The primary relief sought by the Fair Work Ombudsman (FWO) for the declared contraventions was:
(a)An order requiring the First Respondent to comply with the statutory compliance notice dated 5 October 2023;
(b)Imposition of a pecuniary penalty on the First Respondent in the range of $28,170 to $32,865 (60 to 70% of the maximum) to be paid in relation to the First Respondent’s contravention of s.716(5);
(c)Imposition of a pecuniary penalty on the Second Respondent in the range of $5,634 to $6,573 (60 to 70% of the maximum) to be paid in relation to the contravention declared by the Second Respondent’s involvement in the contravention of s.716(5) within the meaning of s.550(2); and
(d)Liberty to apply on 7 days’ notice in the event of non-compliance with relief ordered.
I turn to consider the precise relief sought.
Orders requiring compliance with the notice
The FWO sought orders of the Court directed at requiring compliance with the statutory compliance notice, pursuant to s.545(1) of the Act, as follows:
(a)An order requiring the First Respondent to identify the hours worked by the subject employee (Employee) during the period between 21 September 2022 and 3 April 2023 in respect of which the entitlement was required to be paid by the General Retail Industry Award 2020;
(b)An order requiring the First Respondent to identify the amount the First Respondent paid to the Employee during the period in respect of the entitlement at (a);
(c)An order requiring the First Respondent to calculate the amount the First Respondent should have paid the Employee during the period in respect of the entitlement and identifying the applicable rate(s) of pay within the period and the period during which each rate applied;
(d)An order requiring the First Respondent make payment to the Employee of the difference between (b) and (c);
(e)An order requiring the First Respondent to make a record of the information and amounts referred to at (a) to (c) and the amount referred to at (d);
(f)An order requiring the First Respondent to calculate and pay to the Employee’s chosen superannuation fund any additional superannuation contributions in respect to the amounts required to be paid to the Employee and paying such additional superannuation contributions to the chosen superannuation fund of the Employee; and
(g)An order requiring the First Respondent to prepare and produce a schedule setting out the underpayment rectification information at (e) and superannuation contributions calculated for the Employee and paid to the Employee’s superannuation fund in accordance with (f).
Section 545(1) of the Act contains a broad discretionary power for the Court to make any order it considers appropriate if the Court is satisfied that a person has contravened a civil remedy provision. As explained in the reasons of 26 November 2024, that state of satisfaction exists. In passing the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) (operative since 27 February 2024), the legislature has clarified that the type of remedial order the Court may make under s.545(1) includes that which requires a person to comply, either wholly or partly, with a notice (other than an infringement notice) given to the person by an inspector or the Fair Work Ombudsman: s.545(2)(d) of the Act.
The FWO submitted that their proposed orders would have the utility of rectifying the First Respondent’s non-compliance with the statutory compliance notice in circumstances where no other action to date has secured compliance.
Absent the Respondent’s participation, there is no opposition to the first to fifth proposed orders or any suggestion of futility.
Resolution
In all of the circumstances of the present case, I consider it is appropriate that the First Respondent be required to comply with the statutory compliance notice dated 5 October 2023 by order pursuant to s.545(1) of the Act. The effect of such order is to require the Respondent to: assess whether there was an underpayment, as was the FWO inspector’s reasonable belief set out in the statutory compliance notice stated 5 October 2023; and rectify those outstanding entitlements (these being the steps that the statutory compliance notice itself required the First Respondent to take).
Having regard to the opportunities afforded to the Respondent to participate in these proceedings and to raise any practical or actual difficulty with compliance with the orders proposed by the FWO, I do not consider it appropriate that there be liberty to apply in respect of the order to be made pursuant to s.545 of the Act.
Imposition of a pecuniary penalty
Another form of relief sought by the FWO is the imposition of a pecuniary penalties for the First Respondent’s declared contravention of s.716(5) in the range of $28,170 to $32,865 (60 to 70% of the maximum) and for the Second Respondent’s declared involvement in the range of $5,634 to $6,573 (60 to 70% of the maximum).
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”. As above and for the reasons delivered on 26 November 2024, that state of satisfaction exists.
It falls to determine what level of penalty (if any) is appropriate as against the Respondents in light of the established contraventions.
In the present proceedings, the maximum penalty that the Court may impose is $46,950 for the First Respondent’s contravention and $9,390 for the Second Respondent’s contravention.
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: Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450 (Kiefel CJ, Gageler, Keane, Gordon, Edelman, Steward and Gleeson JJ) at [15]-[16] (Pattinson) citing the plurality in Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 (French CJ, Kiefel, Bell, Gageler, Keane, Nettle and Gordon JJ) and French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 (CSR Ltd). An “appropriate” penalty being one that “strikes a reasonable balance between oppressive severity and the need for deterrence in a particular case”: Pattinson at [41].
The task of assessing what amount to impose involves the selection of a figure taking into account all factors relevant to the particular case: CSR Ltd, as applied in this context see for example CFMMEU v ABCC [2018] FCAFC 97 (Allsop CJ, White and O’Callaghan JJ). I turn to consider the appropriate penalty in light of those well established principles and non-exhaustive list of factors from the case authorities.
The relevant conduct in the present case is the First Respondent’s failure to comply with the statutory compliance notice dated 5 October 2023. Compliance with the notice required the First Respondent to take a range of actions to calculate and remedy the direct effects of the identified contraventions by 3 November 2023 and to provide reasonable proof of this to the FWO by 13 November 2023. The Second Respondent, as sole director of the First Respondent at the relevant times, was responsible for the overall operation and control of the First Respondent company and for ensuring it complied with its legal obligations including the statutory compliance notice. On the evidence before the Court, the Respondents were afforded ample opportunity but did not take the action required by the notice and did not provide reasonable proof of this to the FWO by those dates or at all.
The effect of the contraventions is that the Employee was denied an assessment of and, subject to the result of that assessment, potentially also payment of her proper entitlements for her employment with the First Respondent.
The Respondent’s cooperation with the FWO and in these proceedings has been limited. There is some evidence of early cooperation and engagement with the FWO’s investigation. That evidence establishes that the FWO made reasonable efforts to contact the Respondents prior to the time for compliance with the statutory compliance notice and since. The Second Respondent was aware of the statutory compliance notice but chose not to comply with the notice. In this respect, the contraventions were deliberate. Since the Court proceedings commenced, the Second Respondent’s engagement has been sporadic at best, having attended one procedural mention before the Court. The Second Respondent is aware of the proceedings but has declined to properly engage with the requirements ordered of them notwithstanding oral and written explanations provided by the Court including as to the consequences of such non-compliance.
There has been no statement of regret or remorse by or on behalf of the Respondents as may otherwise have been relevant to an assessment of the appropriate penalty. If, as the inspector reasonably believed, there is an outstanding underpayment owed to the Employee then there is no evidence that it has been rectified (whether in part or in full).
There is no evidence presently before the Court relating to the size of the First Respondent. The most recent evidence before the Court indicated that the First Respondent company remained registered with ASIC. The Respondents were given ample opportunity to adduce evidence about financial circumstances but failed to do so.
There is also no evidence of prior contraventions in respect of either Respondent.
The FWO submitted and it is accepted that there is a need for general deterrence in this matter, to emphasise the importance of an effective compliance framework and at a sufficient level to impress upon other employers, particularly in the retail industry, the importance of complying with the legal obligations owed to their employees.
There is also a need for specific deterrence in the present case as to demonstrate that non-compliance with a statutory compliance notice is not acceptable and to deter the Respondents from future conduct of this kind.
A further and important consideration is the need for compliance with the statutory framework. The statutory framework concerning compliance notices is an important mechanism for an 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. Failure to comply with a statutory compliance notice issued by the FWO is serious. Such conduct ultimately serves to undermine the Act’s enforcement framework and the safety net of entitlements it is designed to protect.
Resolution
When all of the above factors are considered, I am satisfied that it is appropriate to impose a pecuniary penalty on the Respondent for its contravention of s.716(5).
Weighing the various competing factors and in the particular circumstances, a penalty in the range of 60 to 70% of the maximum that may be imposed is excessive and, in my view, it is appropriate to fix the penalty in the amount of $18,780 for the First Respondent and $3,756 for the Second Respondent. This is a proportionate response to the declared contraventions and strikes a reasonable balance between oppressive severity and the need for both general and specific deterrence in this particular case.
I will also order that the penalty be payable to the Commonwealth of Australia within 28 days of these orders as sought and the FWO have liberty to apply on 7 days’ notice in the event of non-compliance with the Court’s orders.
CONCLUSION
For the above reasons, I will make orders accordingly.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansini. Associate:
Dated: 22 July 2025
0
5
4