Fair Work Ombudsman v Shaik
[2016] FCCA 2345
•8 September 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v SHAIK | [2016] FCCA 2345 |
| Catchwords: PRACTICE AND PROCEDURE – Statement of agreed facts – significant reduction of time and effort in investigating claims and presenting case in this Court. PENALTIES – Civil penalties – increase in amount of penalty unit over the PENALTIES – Factors relevant to imposition – 5% discount for PRINCIPLES OF GENERAL AND SPECIFIC DETERRENCE – Review of authorities – importance of pay records being maintained – hospitality |
| Legislation: Crimes Act 1914 (Cth), s.4F(1) Fair Work Act 2009 (Cth), ss.3, 14, 44, 45, 90(2), 456, 323, 535, 536, 539, 546, 550, 557 Fair Work Regulations 2009 (Cth), regs.3.32, 3.44 |
| Cases cited: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate: Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 Cotis v MacPherson (2007) 169 IR 30 Director of the Fair Work Building Industry Inspectorate v Zion Tiling Pty Ltd (No. 2) [2013] FCCA 1288 Explanatory Memorandum, Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Bill 2012 National Hospitality Industry Campaign Restaurants, Cafes and Catering (Wave 2), June 2015 Restaurant Industry Award 2010 [MA00019], cls.4.1, 20.1, 34.1, Sch.A.2.5 and 8.2.5 |
| Applicant: | FAIR WORK OMBUDSMAN |
| Respondent: | FAROK SHAIK |
| File Number: | MLG 2586 of 2014 |
| Judgment of: | Judge Wilson |
| Hearing date: | 18 February 2016 |
| Date of Last Submission: | 18 February 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 8 September 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Tracey |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| Respondent appeared in person |
THE COURT DECLARES THAT –
The respondent was involved within the meaning of section 550 of the Fair Work Act 2009 (Cth) (“the Act”) in each of the following contraventions by Indian Tandoori Restaurant Wangaratta Pty Ltd (ACN 117 518 653) (“the company”) as follows –
(a)section 45 of the Act in that it failed to pay
Ms Ramandeep Kaur Mangat and Mr Sanjeev Kumar Sharma the minimum rate of pay for ordinary hours worked Monday to Friday in accordance with subclause A.5.2 of Schedule A of the Restaurant Industry Award 2010 [MA00019] (“the modern award”);
(b)section 45 of the Act in that it failed to pay Ms Mangat and
Mr Sharma the minimum rate of pay for ordinary hours worked on a Saturday in accordance with subclause A.7.3 of Schedule A of the modern award;
(c)section 45 of the Act in that it failed to pay Ms Mangat and
Mr Sharma the minimum rate of pay for ordinary hours worked on a Sunday in accordance with subclause A.7.3 of Schedule A of the modern award;
(d)section 45 of the Act in that it failed to pay Ms Mangat and
Mr Sharma the minimum rate of pay for ordinary hours worked on a public holiday in accordance with subclause A.7.3 of Schedule A of the modern award;
(e)section 44 of the Act by failing to pay Ms Mangat and Mr Sharma their accrued but untaken annual leave entitlements at the time of the termination of their employment in accordance with
section 90(2) of the Act;
(f)section 323 of the Act by failing to pay Ms Mangat and
Mr Sharma their wages in full; and
(g)subsection 535(1) of the FW Act by failing to keep records required by the Fair Work Regulations 2009 (Cth).
THE COURT ORDERS THAT –
The respondent pay a penalty of $50,872.50 (“the penalty sum”), pursuant to subsection 546(1) of the Act in respect of his involvement in the contraventions of the company as outlined in order 1 above.
The respondent pay the penalty sum specified at order 2 above as to half to Ms Mangat ($25,436.25) and as to the other half to Mr Sharma ($25,436.25) within 28 days of the date of this order.
The applicant have 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 MELBOURNE |
MLG 2586 of 2014
| FAIR WORK OMBUDSMAN |
Applicant
And
| FAROK SHAIK |
Respondent
REASONS FOR JUDGMENT
Introduction
By application filed 19 December 2014, the Fair Work Ombudsman (“FWO”) sought orders in the nature of penalties against the respondent for contraventions of the Fair Work Act 2009 (Cth)
(“the Act”). The hearing before me proceeded upon an extensive set of agreed facts and affidavits that were adduced in evidence either by consent or without opposition.
At all relevant times, the respondent Farok Shaik (“the respondent”) was the sole director of and shareholder in the company Indian Tandoori Restaurant Wangaratta Pty Ltd (“the company”). The company was placed in voluntary liquidation some time ago. FWO brought this proceeding against the respondent pursuant to the accessorial liability provisions of the Act in respect of contraventions committed by the company.
Synopsis
For the reasons that follow, in the circumstances of this case it is appropriate to impose fines on the respondent in respect of the agreed contraventions. Those fines reflect specific and general deterrence as well as the Court’s denunciation of the conduct in which the respondent engaged. In my judgment it is appropriate to impose fines at the higher range of penalties that were open to be imposed. In my view, no more than a 5% discount should be applied on account of the admissions made by the respondent and on account of his limited assistance to FWO in this case.
The claim in broad terms
The essence of FWO’s claim was found in the statement of claim filed 19 December 2014. FWO alleged that it was a Fair Work Inspector pursuant to the Act with standing to apply for orders in respect of contraventions of civil remedy provisions under the Act.
FWO alleged that at all relevant times the company was a national system employer within the meaning of the Act and that the company carried on business as the operator of restaurants serving Indian cuisine from several locations in Victoria. FWO believed that the company employed Ramandeep Kaur Mangat and Sanjeev Kumar Sharma (collectively “the employees”), each Indian nationals, on a full-time basis from 19 August 2012 to 4 October 2013. FWO alleged that the company employed Ms Mangat as a cook on a full-time basis pursuant to an employment contract dated 15 May 2012. FWO alleged that the company agreed to pay Ms Mangat an annual income of $42,500.00 and that her employment contract required Ms Mangat to undertake a collection of duties ordinarily associated with those of a cook, working a minimum of 38 ordinary hours per week.
So far as Mr Sharma was concerned, FWO alleged that the company employed him pursuant to an oral agreement made by the respondent and Mr Sharma on or about 15 May 2012 pursuant to which Mr Sharma would be employed as a tandoori cook, working on a
full-time basis at a weekly salary of $800.00 and on the basis of a minimum of 38 ordinary hours per week being worked.
FWO further alleged that the respondent was the sole director of and shareholder in the company, that he was involved in the overall operations of the company, that he determined the terms and conditions of employment of all employees of the company and was the person responsible for payment of wages of employees. FWO alleged that the respondent knew that the company was required to comply with all Commonwealth workplace relations legislation and industrial instruments and that he knew the company was required to pay minimum wages and entitlements.
FWO further alleged that the company was bound by the provisions of the Restaurant Industry Award 2010 [MA00019]
(“the modern award”) and that Ms Mangat and Mr Sharma were employees to which the provisions of the modern award applied.
FWO alleged that the company contravened the modern award on seven grounds –
(a)Under contravention 1, FWO asserted that the company did not pay minimum wages to the employees Ms Mangat and
Mr Sharma for ordinary hours worked on a Monday to Friday basis resulting in a total underpayment of minimum wages of $58,704.90;
(b)Under contravention 2, FWO asserted that the company did not pay the employees Ms Mangat and Mr Sharma at all for hours worked on a Saturday resulting in underpayment of wages for Saturday work of $14,004.92;
(c)Under contravention 3, FWO asserted that the company did not pay the employees Ms Mangat and Mr Sharma at all for hours worked on a Sunday resulting in underpayment of wages for Sunday work of $2,660.40;
(d)Under contravention 4, FWO asserted that the company did not pay the employees Ms Mangat and Mr Sharma at all for hours worked on a public holiday resulting in underpayments of wages for the public holidays worked of $4,458.24;
(e)Under contravention 5, FWO asserted that the company terminated the employment of Mr Sharma and Ms Mangat and that at the time of termination of employment of each, those employees were not paid any remuneration in respect of their accrued but untaken annual leave entitlements resulting in an underpayment of $3008.11 each with the total underpayment of accrued annual leave being $6,016.22. FWO asserted that the company underpaid the employees Ms Mangat and Mr Sharma the total amount of $85,844.68;
(f)Under contravention 6, FWO asserted that throughout the employees’ period of employment, the company did not pay the employees at all and the company thereby contravened s.323(1) of the Act; and
(g)Under contravention 7, FWO asserted that the company was required to but failed to ensure that the records relating to
Ms Mangat were not false and misleading and, that in contravention thereof, the company maintained records over certain periods that failed to contain prescribed information, in breach of s.535(1) of the Act.
FWO asserted that the respondent carried accessorial liability for the contraventions committed by the company and that he was therefore amenable to the imposition of penalties pursuant to specific sections of the Act.
Statement of agreed facts
Mr J Tracey of counsel who appeared for FWO, with the assistance of his instructing solicitors, very helpfully formulated a statement of agreed facts (“SOAF”)[1] upon which this litigation proceeded. The SOAF is a compendious document.
[1] SOAF filed 22 July 2016.
The evidence in support of this application
FWO relied on the evidence in five affidavits sworn or affirmed by three deponents.[2] No evidence was adduced in opposition to any of the material contained in those five affidavits. In his final address,
Mr Tracey submitted that some of the evidence in those affidavits was relevant to the question of penalty rather than its being relevant to contravention. In either case, it is necessary for me to recite some of the more important matters arising from the affidavit material.
[2] Affidavit of Dane Stefan Robert Stella affirmed 14 August 2015; Affidavit of Dane Stefan Robert Stella affirmed 5 October 2015; Affidavit of Ramandeep Kaur Mangat sworn 5 August 2015; Affidavit of Ramandeep Kaur Mangat sworn 14 September 2015; and Affidavit of Sanjeev Kumar Sharma affirmed 11 August 2015.
The evidence of Mr Sharma
In his affidavit affirmed 11 August 2015, Mr Sharma deposed to having worked for the company between 19 August 2012 and 4 August 2013. He said his wife, Ms Mangat, worked with him. He said the company operated Indian restaurants under the name Indian Tandoori Restaurant in Yarrawonga, Wangaratta, Bendigo, Rutherglen and Beechworth. He said the respondent was the manager of the restaurant at each of the locations at which he worked.
Mr Sharma affirmed that he met the respondent in May 2012 in response to an advertisement. He said the respondent offered to pay him $800.00 per week and to provide accommodation and food.
Mr Sharma said that during their first meeting, the respondent agreed to sponsor Ms Mangat’s subclass 187 visa application. Mr Sharma said that the respondent did not give him a written contract of employment, although he said the respondent gave Ms Mangat a written contract of employment. He said the respondent offered to sponsor Ms Mangat but not Mr Sharma. Mr Sharma said that he agreed with the respondent that he (Mr Sharma) would work full-time hours, opening and closing the restaurant. Mr Sharma said that Ms Mangat mostly served customers and cleaned or helped with the tandoori oven even though she was engaged as a chef.
Mr Sharma said that when working at the Yarrawonga restaurant he worked from 3.00 or 4.00 p.m. to 10.00 or 11.00 p.m. without lunch, and sometimes longer depending on the cleaning required. At Beechworth, he said he worked from early in the morning until midnight. At Bendigo he said he ordinarily commenced work at about 11.00 a.m. and worked until 2.30 p.m. thereabouts, that the restaurant reopened at 4.00 p.m and that he worked thereafter until about
11.00 p.m. with a 30-minute meal break.
Mr Sharma said that he did not receive any money for working for the company. He said Ms Mangat did not receive any money either. He said he confronted the respondent about not being paid and that the respondent said that the respondent did not intend to give Mr Sharma anything. He said that he was forced to work at a motel in Yarrawonga in the latter part of 2012 and that he had not been paid for the work he performed for the respondent.
Mr Sharma affirmed that he lived in rooms at the top of the restaurants in Yarrawonga and at Beechworth and that in Bendigo, he lived with other workers. Mr Sharma said that the respondent paid for accommodation costs and that food was free.
Mr Sharma affirmed that he was forced to borrow money from friends and family simply to survive. He affirmed that he had not repaid anyone from whom he borrowed money.
Mr Sharma gave evidence about the matter upon which Mr Tracey focused as founding a submission that the penalty to be ordered against the respondent in this case should be of such amount as to reflect the aggravating circumstances of the respondent’s behaviour. Mr Sharma gave evidence that in the period between 2012 and 2013 the respondent said to him words to the effect that if Mr Sharma asked the respondent about wages, the respondent would deport him.
As is developed below, FWO placed considerable store in the fact that Mr Sharma and Ms Mangat were vulnerable in the sense that they were, in August 2015 and later, residing in Australia on a
Criminal Justice Stay visa, that they were in a desperate financial condition and that the respondent exploited their vulnerability by requiring them to work for over 14 months in circumstances where they were unpaid.
The respondent did not challenge any of the matters to which
Mr Sharma deposed in his affidavit.
The evidence of Ms Mangat
In her affidavit sworn 5 August 2015, Ms Mangat said she worked for the company between 19 August 2012 and 4 October 2013 during a time when, so she said, the respondent was the director of the company. For the purpose of recounting her evidence, it is unnecessary to record locations at which the company operated restaurants. Suffice it to say that between 19 August 2012 and 4 October 2013, Ms Mangat worked at several restaurants operated by the company until the respondent requested Ms Mangat to work at the company’s restaurant in Bendigo in October 2013, which she declined to do.
Ms Mangat swore that in April or May 2012, while living at an address in Melbourne, she responded to an advertisement to work at the restaurant. She said she travelled to Wangaratta to meet the respondent in May 2012, at a time when she held a Bridging Visa A class.
Ms Mangat deposed to her qualifications in hospitality, she having obtained her arts degree from Punjabi University and her qualifications as a secondary school economics and mathematics teacher.
Ms Mangat said that during her initial discussions with the respondent, the respondent said that he would sponsor Ms Mangat and Mr Sharma if each came together to the respondent’s restaurant which Ms Mangat and Mr Sharma agreed to do. She said she signed an employment agreement on 15 May 2012 after which, so she deposed, the respondent commenced the process for her application for a visa.
Ms Mangat swore that she attended to a variety of tasks including customer service duties, front of house duties, assisting in the kitchen, making dough, making curries, washing, shopping, and other tasks. She said that performing cooking duties was a visa condition although the majority of her time was spent undertaking customer service duties. She said cleaning was not a duty under the visa conditions. She said she challenged the respondent about meeting her visa requirements to which she said that the respondent told her that he was the sponsor and that it was his responsibility to give her the work to do.
Ms Mangat swore that the respondent said he would pay Mr Sharma $800.00 per week by way of wages. When asked why she was the only person who entered into a formal written contract with the company, the respondent said that only Ms Mangat required the contract of employment because she was the primary applicant for the visa and that she was being sponsored.
Ms Mangat said that her application for permanent residency was refused in November 2013.
She swore that she was not paid any amount for the work she did for the company. She said she did not receive any cash payments and did not take any money from the cash register.
Ms Mangat said she was not provided with weekly payslips.
Ms Mangat said she wanted to enter into a lease of a house in
October 2013 and needed evidence of income so she requested the respondent to provide her with payslips. She swore that the respondent provided her with certain payslips. She said those payslips were false because she had not been paid any money and no superannuation. She said she confronted the respondent about the fact that he provided payslips when he had not actually paid her any amount. She said the respondent told her that it was not her job to look at the payslips, that he was the businessman of the company and that he provided the payslips to enable her to rent the property she sought. She said she ultimately did not use the payslips, that is to say the false payslips, from the company when applying to rent a home.
Ms Mangat gave evidence that the respondent asked for her tax file number. She said that she told the respondent that he had not paid her wages. She asked why he requested her tax file number in those circumstances. Ms Mangat swore that the respondent said that the Immigration Department would approve her permanent residency application quickly if she provided the tax file number. She said that in October 2013 the respondent provided a tax document to her stating that she had been paid $36,498.00 of which $4,586.00 had been withheld by way of tax. She said that the respondent told her that she was required to file that tax return or she would be penalised.
Ms Mangat gave evidence of the hours she worked at the company’s restaurants in Yarrawonga, Beechworth and Bendigo and of the modest amount of time during which she was not physically working.
Ms Mangat said that she was required to work in a motel in
October 2012 by reason of the fact that the respondent or the company had not paid her for the work she performed.
Ms Mangat swore that she and Mr Sharma were required to borrow money from friends to be able to survive while they worked for the company. She said that on occasions, she borrowed amounts of up to $2,000.00.
Ms Mangat said that while she worked for the company she suffered a great deal of mental distress mainly on account of the fact that she was receiving no money for the work she performed and the bills that required payment were increasing. She said that the respondent threatened to terminate his sponsorship of Ms Mangat on occasions. On other occasions she said that when she requested payment, the respondent threatened to withdraw her file from the
Immigration Department (meaning, that the respondent would cease his support of her in her application for a visa).
Ms Mangat gave evidence that she continued to work for the company because she needed to demonstrate that she had worked for a certain period of time so as to obtain the visa that she sought. She said she did not want to give up the period that she had already worked.
Ms Mangat also gave evidence of the respondent threatening violence towards her. In paragraph 135 of her affidavit sworn 5 August 2015, Ms Mangat said that she questioned the respondent about the visa application and the progress that the respondent was making with it. She said that the respondent said words to her to the effect that if she asked about the visa he would kill her.
As with the evidence of Mr Sharma on point, Mr Tracey relied on that threat of violence as demonstrating aggravating circumstances thereby warranting the court ordering a substantial penalty being imposed upon the respondent.
Ms Mangat swore an additional affidavit on 14 September 2015 in which she deposed to obtaining a Criminal Justice Stay visa subclass ZB 951 granted on 6 August 2015.
The evidence of Dane Stefan Robert Stella
Mr Stella affirmed two affidavits. In the first, dated 14 August 2015, Mr Stella deposed to being an inspector of FWO and that he had carriage of the FWO investigation into the employment of Ms Mangat and Mr Sharma by the company since April 2014.
Mr Stella gave evidence that the respondent was at all material times the sole director of the company and that the company was in liquidation, a liquidator having been appointed to it on
10 November 2014.
Mr Stella gave evidence that another company operated in Victoria called Indian Tandoori Wangaratta Pty Ltd, the sole director of which was the respondent’s wife.
Mr Stella said that Ms Mangat and Mr Sharma made complaints to FWO in late March 2014 complaining that they had not received any payment for the work they had done while employed by the company.
Mr Stella gave evidence of the respondent’s conduct after FWO commenced its investigations into the complaints made to it by
Ms Mangat and Mr Sharma. In essence, Mr Stella gave evidence of information provided to him by the respondent which was
non-responsive to the inquiries he made or false or inaccurate.
Mr Tracey submitted that I should use the information supplied by
Mr Stella as evidence of the respondent’s want of cooperation during the investigations undertaken by FWO in this proceeding. In the passages that follow I address the FWO’s contentions about the respondent’s failure to cooperate during FWO’s investigations.
In his second affidavit filed in this proceeding,[3] Mr Stella exhibited an FWO report published in June 2015 concerning the operation of certain aspects of the national hospitality industry. Mr Stella affirmed that only 29% of the 279 businesses assessed were compliant with all requirements of the Act.
[3] Affidavit of Dane Stefan Robert Stella affirmed 5 October 2016.
Factual findings
It is necessary for me to pronounce various factual findings upon which the penalties imposed in this case are based. Those findings are taken from the uncontroversial evidence adduced in the five affidavits sworn in support of FWO’s application in this case as well as from the comprehensive SOAF.
The parties agreed that FWO was at all relevant times a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument under the Act, that FWO was a
Fair Work Inspector pursuant to s.701 of the Act and that FWO was a person with standing and authority to bring this proceeding pursuant to s.539(2) of the Act in respect of conduct after 1 July 2009 for orders and penalties in relation to contraventions of ss.44, 45, 323(1) and 535(1) of the Act.
It was also agreed between the parties that the company was at all relevant times a national system employer within the meaning of s.14(1)(a) of the Act and that the company operated Indian restaurants located in Yarrawonga, Beechworth and Bendigo. The parties also agreed the company was placed in voluntary liquidation on
10 November 2014.
The employment details of Ms Mangat and Mr Sharma are addressed below in the context of the specific contraventions alleged by FWO.
The contraventions in greater detail
On behalf of FWO, Mr Tracey of counsel submitted that this case had special features that attracted the operation of particular legal principles in the context of the imposition of penalties. He submitted that the respondent’s want of remorse and contrition, the respondent’s exploitation of vulnerable employees, certain aggravating features and the deliberateness of aspects of the respondent’s conduct set this case apart by placing it in the higher end of the range of penalties to be imposed.
Before turning to factors relevant to penalty, it is necessary for me to say a little about each contravention.
Contravention 1 – failure to pay the minimum wage for work between Mondays and Fridays
The company employed Ms Mangat and Mr Sharma on a full-time basis from 19 August 2012 to 4 October 2013. Ms Mangat’s duties with the company involved serving customers, cutting up vegetables, kneading flour and making naans, washing dishes and tablecloths, mopping floors, setting up the store room, setting up tables and then the setting of those tables, shopping for provisions, helping the chef make curries, operating the tandoori oven, taking orders from customers and taking payments from customers.
Mr Sharma’s duties in his employment with the company involved preparing and assembling ingredients for cooking, cooking curries and baking naan bread, operating the tandoori oven and cleaning it.
During the period of the company’s employment of Ms Mangat and
Mr Sharma, the provisions of the modern award applied to the company. That was by reason of the fact that the company was an employer in the restaurant industry as defined in the modern award and also by reason of the fact that the company employed persons having the classifications listed in Schedule B to the modern award.
The company was required to pay Ms Mangat and Mr Sharma the minimum wage for adult employees for ordinary hours worked by them from Monday to Friday. That requirement arose from cl.A.2.5 of Schedule A of the modern award, by reference to clauses 20.1 and 34.1 of the modern award.
In the period between 1 July 2012 and 30 June 2013, the minimum wage for ordinary hours worked from Monday to Friday was
$17.05 per hour.
From 1 July 2013, the minimum wage for ordinary hours work from Monday to Friday was $17.49 per hour.
In the period from the commencement date of 19 August 2012 to
30 June 2013, the combined hours worked by Ms Mangat and
Mr Sharma for the company was 1,292.23 ordinary hours between Monday and Friday. Then, for the period between 1 July 2013 and
4 October 2013, Ms Mangat and Mr Sharma worked for
417.78 ordinary hours between Monday and Friday on a full-time basis.
FWO proved and the respondent admitted that the company was required to pay Ms Mangat and Mr Sharma, each, the sum of $29,352.45 and that in total, the company failed to paid Ms Mangat and Mr Sharma the sum of $58,704.90 of the total number of ordinary hours they worked between Mondays and Fridays.
The company’s failure to pay Ms Mangat and Mr Sharma the sum of $58,704.90 was a contravention of s.45 of the Act and that failure was also a failure to comply with Schedule A of the modern award.
The maximum penalty for a contravention of s.45 of the Act was $10,200.00.
In the passages below I have separately addressed whether the maximum penalty should be imposed upon the respondent or whether a discount should be applied and why.
Contravention 2 – failure to pay the minimum wage for work on Saturdays
In establishing contravention 2, FWO demonstrated and the respondent admitted that the company employed Ms Mangat and
Mr Sharma in their respective roles described above, that each was required to perform the functions described above, that the modern award’s terms and provisions applied to each and that the company was required to pay each for the work each did every Saturday. FWO proved and the respondent admitted that between 1 July 2012 and
30 June 2013, under the modern award the company was required to pay Ms Mangat and Mr Sharma at the rate of $19.61 per hour for work that they undertook each Saturday.
Under the modern award, for the period from 1 July 2013 until
4 October 2013, the company was required to pay them at the rate of $20.99 per hour for Saturday work they performed. FWO proved and the respondent admitted that in those periods, Ms Mangat and
Mr Sharma worked each Saturday on a full-time basis for the duration of their employment with the company for 262.23 ordinary hours from 19 August 2012 to 30 June 2013 and for 88.62 ordinary hours after 1 July 2013. By reason of their having worked for that number of ordinary hours each Saturday at the rates referred to above, the company was required to pay them $7,002.46 for all hours worked on a Saturday. FWO proved and the respondent admitted that the company did not pay Ms Mangat and Mr Sharma for all hours they worked on a Saturday resulting in the company’s failure to pay them wages aggregating $14,004.92. The company’s failure to pay them that sum was a contravention of s.45 of the Act. The maximum penalty for a contravention of s.45 of the Act was $10,200.00.
Contravention 3 – failure to pay the minimum wage for work on Sundays
FWO proved and the respondent admitted that the company employed Ms Mangat and Mr Sharma in their respective roles described above, that each was required to perform the functions described above, that the modern award’s terms and provisions applied to each and that the company was required to pay each for the work they did every Sunday. FWO proved and the respondent admitted that under the award, between 1 July 2012 and 30 June 2013, the company was required to pay Ms Mangat and Mr Sharma at the rate of $22.17 per hour and at the rate of $24.49 per hour in the period after
1 July 2013 for all work they undertook for the company on a Sunday on a full-time basis. FWO proved and the respondent admitted that
Ms Mangat and Mr Sharma worked on Sundays on a full-time basis for a total of 60 hours from 19 August 2012 to 30 June 2013 with the consequence that the company was required to pay them but failed to pay them a total of $2,660.40 (being $1,330.20 each) over that period. The company’s failure to pay them that sum was a contravention of s.45 of the Act for which the company became liable to a maximum penalty of $10,200.00.
Contravention 4 – failure to pay the minimum wage for work on public holidays
FWO proved and the respondent admitted that under the modern award, during their employment with the company when Ms Mangat and Mr Sharma worked for the company on public holidays, the company was required to pay them at the rate prescribed by the modern award which, over the period 1 July 2012 to 30 June 2013, was $32.40 per hour and from 1 July 2013 was $38.49 per hour. FWO proved and the respondent admitted that Ms Mangat and Mr Sharma worked on the following public holidays –
(a) 6 November 2012 (Melbourne Cup);
(b) 25 December 2012 (Christmas Day);
(c) 26 December 2012 (Boxing Day);
(d) 28 January 2013 (Australia Day substitute);
(e) 11 March 2013 (Labour Day);
(f) 29 March 2013 (Good Friday);
(g) 30 March 2013 (Easter Monday)
(h) 25 April 2013 (Anzac Day); and
(i) 10 June 2013 (Queen’s Birthday).
FWO proved and the respondent admitted that Ms Mangat and
Mr Sharma worked for 68.80 ordinary hours on public holidays, that the company thereby became liable to pay them the sum of $4,458.24 (being $2,229.12 each), that the company failed to pay them that sum and as a result, that the company contravened s.45 of the Act rendering the company liable to a maximum penalty of $10,200.00.
Contravention 5 – failure to pay annual leave entitlements
FWO proved and the respondent admitted that under the modern award, at the termination of their employment Ms Mangat and
Mr Sharma should have been paid for their accrued but untaken annual leave to which they were entitled at the time of the termination. FWO proved and the respondent admitted that Ms Mangat and
Mr Sharma did not take any periods of paid annual leave while they were employed by the company and that each was entitled to
171.99 hours of untaken annual leave when their employment with the company was terminated. FWO proved and the respondent admitted that the company owed Ms Mangat and Mr Sharma the total sum of $6,016.22 by way of unpaid and untaken annual leave and that by reason of the company’s failure to pay them that sum, the company contravened s.44 of the Act rendering the company liable to a maximum penalty of $10,200.00.
Total sums unpaid
FWO proved and the respondent admitted that the company had failed to pay Ms Mangat and Mr Sharma a total sum of $85,844.68.
Contravention 6 – failure to pay wages in full
FWO proved and the respondent admitted that the company did not pay Ms Mangat and Mr Sharma at all throughout the employees’ period of employment with the company and that such failure contravened s.323(1) of the Act for which the company was liable to a maximum penalty of $5,100.00 (as recorded in attachment A of FWO’s penalty submissions filed 27 January 2016).
Contravention 7 – failure to make and keep records
FWO proved and the respondent admitted that under s.535(1) of the Act and the Fair Work Regulations 2009 (Cth), (“the Regulations”) at all relevant times the company was required to make and keep for a period of seven years employee records containing prescribed information but that in respect of Ms Mangat, that the company failed to keep and maintain information to the degree required by regs.3.32(c), 3.32(d) and 3.32(e) and to the degree of accuracy required by reg.3.44 of the Regulations. Specifically, FWO proved and the respondent admitted that the company made a payslip that misrepresented that Ms Mangat had been paid on two occasions in
July 2012, prior to the commencement of her employment, and that the company made that payslip knowing it was false or misleading. FWO proved and the respondent admitted that such a contravention of s.535(1) of the Act rendered the company liable to a penalty of $5,100.00.00 (as recorded in attachment A of FWO’s penalty submissions filed 27 January 2016).
Accessorial liability of the respondent
FWO proved and the respondent admitted that at all relevant times the respondent had actual knowledge that Ms Mangat and Mr Sharma were not paid by the company, that Ms Mangat and Mr Sharma were not paid an amount for accrued annual leave upon their termination and that the company did not keep records relating to Ms Mangat that complied with the Regulations.
FWO proved and the respondent admitted that the respondent had actual knowledge of the factual matters that constituted each of the contraventions alleged against the company and that the respondent was an intentional participant in the factual matters that constituted each of the contraventions alleged against the company with the result that, under the Act, the respondent was knowingly concerned in and thus involved in the company’s contraventions of ss.44, 45, 323 and 535 of the Act with the consequence that the respondent was taken to have committed those contraventions himself by reason of the operation of s.550(1) of the Act.
As has been mentioned many times in the passages above, at no stage did the respondent take issue with the contraventions alleged, his involvement in and his guilt of each of the contraventions on which FWO relied on in this proceeding.
Conduct of the respondent
Mr Tracey submitted that the respondent’s conduct was egregious in a number of ways. He submitted that this Court should impose upon the respondent a penalty that adequately reflected the seriousness of the contraventions alleged and admitted.
Mr Tracey submitted that Ms Mangat and Mr Sharma were Indian nationals who responded to an advertisement in about April or
May 2012 so as to gain employment with the company. He submitted that Ms Mangat and Mr Sharma travelled from Melbourne to Wangaratta to meet the respondent. During that meeting the respondent offered Ms Mangat and Mr Sharma full-time employment and that the company, through the respondent, was to be the visa sponsor.
Mr Tracey submitted that Mr Sharma was Ms Mangat’s dependent for the purposes of the visa. Mr Tracey submitted that despite her engagement as a cook, in reality Ms Mangat performed the work of a lower level food and beverage attendant employee.
Mr Tracey submitted that the severity of the company’s underpayment of Ms Mangat and Mr Sharma was aggravated by the respondent’s own record-keeping practices. He submitted that the respondent failed to make and keep any records as were required by s.535 of the Act and the Regulations made under it. Mr Tracey submitted that the respondent also failed to provide Ms Mangat and Mr Sharma with payslips in accordance with s.536 of the Act. He submitted that rather than complying with the respondent’s obligations under the Act by providing timely and accurate payment records, the respondent created false payslips for Ms Mangat and then produced false payslips to FWO during the course of its investigations.
Mr Tracey invited the Court to pay particular regard to the fact that
Ms Mangat and Mr Sharma were each particularly vulnerable. He submitted that Ms Mangat was employed under a sponsored migration scheme and, as such, both Ms Mangat and Mr Sharma were highly reliant on the respondent so as to obtain permanent residency in Australia, a matter of enormous importance to Ms Mangat and
Mr Sharma as Ms Mangat swore in paragraph 130 of her affidavit dated 5 August 2015. Mr Tracey submitted that Ms Mangat raised her concerns about the visa with the respondent on a number of occasions and that the respondent dismissed those concerns. Mr Tracey submitted that in reality, Ms Mangat worked for the company under the false expectation that she would receive permanent residency, that the respondent knew how important the visa was to Ms Mangat and
Mr Sharma and that the respondent’s assertion that he provided
Ms Mangat and Mr Sharma with an opportunity to obtain permanent residency was false.
On behalf of FWO it was submitted that the respondent failed to provide Ms Mangat with timely information about the progress, and ultimate refusal, of her visa and that Ms Mangat was denied the opportunity to respond to the visa refusal as she did not receive correspondence within sufficient time that would have permitted her to respond. Mr Tracey submitted that a strong if not undeniable inference was thereby enlivened that such conduct was part of a concerted effort to keep Ms Mangat and Mr Sharma working for free for as long as they harboured an expectation, no matter how remote, of obtaining permanent residency. Mr Tracey referred to their heightened vulnerability by reason of English not being Mr Sharma’s first language, his need for an interpreter, the fact that he suffered from Bell’s palsy and the fact that both Ms Mangat and Mr Sharma were not well-placed to inform themselves about minimum legal requirements.
In a written document filed in this proceeding[4] and in submissions made by the respondent when he appeared in person before me, the respondent mentioned on a number of occasions that he apologised for his conduct in the circumstances of this case.
[4] Document filed by Farok Shaik on 11 May 2015.
There can be no doubt that the respondent offered any number of apologies for his conduct. Mr Tracey submitted that the Court should scrutinise those apologies for genuineness, enquiring whether the apologies were truthful apologies for engaging in the conduct amounting to the contraventions proved in this case or whether the respondent was apologetic for being held to account. Even making allowances for the fact that English may not be the respondent’s first language, I find it difficult to believe that his apologies made in writing and before me related to a genuine state of regret for engaging in the conduct that amounted to the contraventions that were proved in this case. The contraventions were committed over a sustained period. They were no mere acts of inadvertence or carelessness. They reflected a conscientious disregard for employment laws in this country. They were redolent of exploitation. They were antithetical to compliance with the obligations that are imposed upon an employer. To my mind Mr Tracey’s submissions have merit. I am not satisfied that the respondent was at all remorseful or contrite about his conduct in the circumstances of this case. To my mind, his apology to the court was more a statement of his regret at being caught out for what amounted to a wholesale abrogation of his responsibilities under the Act.
To my mind, Mr Tracey’s submissions are meritorious when he urged the Court to denounce the conduct that has been proved in this case.
FWO pointed to the fact that the respondent required Ms Mangat and Mr Sharma to live in accommodation provided by him. Mr Tracey submitted that those arrangements were to ensure that Ms Mangat and Mr Sharma were always available to the company, a matter to which Ms Mangat deposed at paragraph 88 of her affidavit sworn
5 August 2015. The provision of accommodation by the respondent in favour of Ms Mangat and Mr Sharma, while superficially laudable, was a convenient method by which the respondent ensured that Ms Mangat did not work elsewhere during the period of her employment.
Exploitation of Ms Mangat and Mr Sharma was not the only factor upon which FWO relied as grounding its submissions relating to the egregious conduct engaged in by the respondent. Mr Tracey submitted that the respondent made threats and inducements to Ms Mangat and Mr Sharma in relation to wages and the visa and that the respondent threatened to kill Ms Mangat and Mr Sharma if she continued to ask about the visa. Other evidence demonstrated that the respondent threatened to stop sponsoring Ms Mangat or withdraw the visa file whenever Ms Mangat asked about being paid. The uncontroverted evidence revealed that the respondent told Mr Sharma the respondent would withdraw the visa file and deport Mr Sharma if Mr Sharma stopped working for the company.
The respondent maintained that he did not threaten to kill Ms Mangat or Mr Sharma. He did not give evidence in this proceeding, although he swore to the veracity of the information contained in his response. That denial is to be contrasted with the belief held by Ms Mangat and Mr Sharma in the truth of the respondent’s threats and that
Ms Mangat and Mr Sharma were constantly reminded of the respondent’s power over them.
Mr Tracey submitted that another telling factor in the egregious nature of the contraventions in this case lay in the magnitude of the unpaid entitlements due to Ms Mangat and Mr Sharma. They amounted to $85,844.68. On any view, that is a very substantial amount and represented 100% of their total entitlements. For over one year, the company failed to pay Ms Mangat and Mr Sharma a solitary cent of their statutory entitlements. Knowing that the company did not pay
Ms Mangat in particular, the respondent refused to tolerate Ms Mangat working elsewhere.[5] Unsurprisingly, Ms Mangat and Mr Sharma had to work other jobs and received benefactions from family and friends to make ends meet. The respondent had been notified of their parlous financial condition yet he took no step to alleviate their circumstances.
[5] Affidavit of Ramandeep Kaur Mangat sworn 5 August 2015 at paras.103-104.
In an application such as this, any similar previous conduct by the respondent is relevant. FWO did not advance its case on the basis that historically, the respondent had engaged in previous similar conduct. Instead, FWO contended that each contravention between August 2012 and 4 August 2013 was the breach of a separate obligation imposed by the modern award the breach of which was to be regarded as a separate contravention. In support of that contention, Mr Tracey relied on decisions of various federal courts.[6] FWO submitted that where two or more contraventions were concerned, under s.557 of the Act, those contraventions may, in certain circumstances, be taken to constitute a single contravention. However, FWO submitted that the relevant question was whether the breaches arose out of separate acts (or decisions of the company) or out of a single act (or decision) because the latter may constitute a course of conduct but the former will not, as was held in Seymour v StawellTimber Industries Pty Ltd.[7]
[6] Gibbs v the Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216 at [223], McIver v Healey [2008] FCA 425 at [16], Blandy v Coverdale NT Pty Ltd [2008] FCA 1533 at [56], Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62 at [12]-[19].
[7] Seymour v StawellTimber Industries Pty Ltd (1985) 9 FCR 241 at 245, 266-267.
In this case I have proceeded on the basis that the contraventions alleged by FWO are separate. In my judgment it is not appropriate to group the eight separate contraventions.
Here, I have concluded that the conduct constituting each contravention was separate. Let me explain why.
In contravention 1, the company’s failure to pay the minimum wage to Ms Mangat and Mr Sharma between Monday and Friday was the subject of the contravention. Particular provisions of the modern award applied in respect of that contravention.
In contravention 2, the company’s failure to pay the minimum wage to Ms Mangat and Mr Sharma on Saturday was the subject of the contravention. Different provisions of the modern award applied in respect of contravention 2 than did the provisions of the modern award relevant to contravention 1.
In contravention 3, the company’s failure to pay the minimum wage to Ms Mangat and Mr Sharma on Sunday was the subject of the contravention. Again, different provisions of the modern award applied in respect of contravention 3 than did the provisions of the modern award relevant to contraventions 1 and 2.
In contravention 4, the company’s failure to pay the minimum wage to Ms Mangat and Mr Sharma on public holidays was the subject of the contravention. Once again, different provisions of the modern award applied in respect of contravention 4 than did the provisions of the award relevant to the other contraventions that were proved and admitted.
In contravention 5, the company’s failure to pay Ms Mangat and
Mr Sharma their unpaid annual leave entitlements upon termination of employment was the subject of the contravention. Yet other, different provisions of the modern award applied to that contravention than did the provisions of the modern award relevant to other contraventions.
In contravention 6, the company’s conduct grounding the contravention was its failure to pay the required amounts – a separate and distinct contravention to the fact of not complying with the other provisions of the Act.
In contravention 7, the company’s failure to make and keep proper records was the subject matter of the contravention proved and admitted.
The respondent’s accessorial liability was the subject of a separate plea. Self-evidently, that conduct was addressed to a separate legal entity, the respondent, as opposed to the entity, the company, that should have but failed to comply with its obligations to make proper payments to employees under the Act.
Wholly separate and distinct contraventions were alleged by FWO. While it is true that the conduct in which the company engaged took place over the same period in question and it related to the same adversely affected employees, in my view it was not appropriate for me to treat each of the separate contraventions as warranting their grouping.
In his written submissions, Mr Tracey pointed out that the obligations to pay minimum wages on Monday to Friday, the failure to pay penalty rates on Saturday and the failure to pay penalty rates on Sunday were separate and distinct obligations and arose from distinct terms of the award making the grouping of those contraventions “completely artificial”.[8]
[8] Applicant’s Outline of Submissions on Penalty filed 16 October 2015 at para.37.
I agree.
I have considered whether if it is appropriate for the Court to group the contraventions by reason of the fact that treating them separately would potentially punish the respondent twice for the same or substantially similar conduct. Some support, albeit not binding upon me, exists for that proposition.[9] However, I have dismissed that suggestion as I do not consider that there is sufficient identification of facts, circumstances and conduct as to warrant the grouping of the contraventions which the respondent admitted, being those that FWO has proved.
Penalties
[9] Fair Work Ombudsman v Total Project Marketing Pty Ltd (in liquidation) [2014] FCCA 451 at [84].
Maximum penalties
The maximum penalty for five of the contraventions admitted and proved is, in each case, $10,200.00. The maximum penalty for two of the other contraventions admitted and proved it is, in each case, $5,100.00. The total maximum penalty that could be imposed for the contraventions proved and admitted is $61,200.00.
Having regard to my holding that the contraventions should not be grouped, it is next necessary for me to consider the amount to be imposed in respect of each contravention.
The period of employment in which the contraventions occurred took place between 19 August 2012 and 4 October 2013, in all, 412 days. Over that period, the amount of a “penalty unit” changed in that, effective from 28 December 2012, the value of the penalty unit increase from $110.00 to $170.00.
It is necessary for me to have regard to the maximum penalties that apply for each contravention. That is because of the observations of the High Court of Australia in Markarian v R[10] where the High Court held that maximum penalties are to be taken into account and balanced with all other relevant factors so as to provide a yardstick.
[10] (2005) 228 CLR 357 at [31].
In this case the value of the penalty unit altered over the period during which the contraventions occurred, that is to say, over the period of the employment of Ms Mangat and Mr Sharma. The law is not yet settled as to whether the proper value of the penalty unit to be applied is the lower or the higher of the two. The learning points in both directions.
In this case I am required to decide which of the two streams of learning should apply in the circumstances in this case
FWO urged to me to proceed on the basis that I should apply the maximum penalty in its increased form to all contraventions, even where the value of the penalty unit increased after the date of the contravention. Superficially, such an argument is not attractive because of the application of s.4F(1) of the Crimes Act1914 (Cth) which provides that the increased penalty unit applies “only to offences committed after the commencement” of the increase.
It is important to keep two events in mind. First, the company employed Ms Mangat and Mr Sharma between 19 August 2012 and
4 October 2013. Second, the increase in the value of the penalty unit from $110.00 to $170.00 commenced on 28 December 2012. In other words, some of the contravening conduct was committed when the prevailing value of the penalty unit was $110.00 (19 August 2012 to
28 December 2012) whereas the majority of the contravening conduct was committed when the prevailing penalty rate was $170.00 per penalty unit.
Mr Tracey submitted that the period during which the company employed Ms Mangat and Mr Sharma was 412 days in total of which there were 131 days or 32% of the whole of the employment period where the value of the penalty unit was $110.00 and there were
281 days or 68% of the whole employment period where the value of the penalty unit was at the increased rate of $170.00.
Section 546(1) of the Act empowers the court to “order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision”. Each of the sections of the Act the respondent admitted to having contravened was a “civil remedy provision” for the purposes of the Act.
In Murrihy v Betezy.com.au Pty Ltd (No 2),[11] (“Murrihy”) Jessup J of the Federal Court of Australia considered a factual situation where all the relevant contraventions took place prior to 28 December 2012 when the amending legislation that increased the value of the penalty unit came into operation. In scholarly reasons, his Honour carefully examined whether to apply the lower rate of $110.00 per penalty unit or the increased rate of $170.00 per penalty unit. Ultimately, his Honour decided to apply the value of a penalty unit that was operative prior to the commencement of the amending legislation, namely $110.00 per penalty unit. In reaching that conclusion, his Honour addressed the general common law rule concerning the application of amending legislation to events that had already occurred. Jessup J quoted from the well-known observations of Dixon CJ in Maxwell v Murphy[12] where Dixon CJ held as follows –
The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise and affect rights or liabilities which the law has defined by reference to the past events.
[11] [2013] FCA 1146.
[12] (1957) 96 CLR 261, 267.
To like effect, in Fisher v Hebburn Ltd,[13] Fullagar J held –
There can be no doubt that the general rule is that an amending enactment – or, for that matter, any enactment – is prima facie to be construed as having a prospective operation only. That is to say, it is prima facie to be construed as not attaching new legal consequences to facts or events which occurred before its commencement.[14]
[13] (1960) 105 CLR 188.
[14] (1960) 105 CLR 188, 194.
In Murrihy, Jessup J said the following –
The point of the common law’s strong inclination against giving legislation a retrospective operation was not that the past conduct in question amounted to an offence for which a conviction could be recorded, but that the conduct was the point of reference for the imposition of a punishment.[15]
Ultimately, his Honour applied the value of a penalty unit before the commencement of the amending legislation.
[15] [2013] FCA 1146 at [27].
Of course, in this case part of the impugned conduct took place at a time when the value of the penalty unit was $110.00 and when the lion’s share of the conduct occurred when the value of the penalty unit was $170.00.
In Kelly v Fitzpatrick,[16] (“Kelly”) Tracey J of the Federal Court of Australia was concerned with a factual situation having a close parallel to the one with which I am concerned in this case. His Honour said the following –
In fixing appropriate penalties for breach of each of the relevant Award terms it is necessary to bear in mind that, with the exception of the breach of Clause 12.5 (casual loadings), there were repeated breaches of each of the terms over a period in excess of five years. For a little more than half of this period the maximum penalty (calculated, having regard to s 178(2) and 719(2), as single breaches of each relevant term) was $2,200. It was $6,600 for the rest of the period. The breaches of Clause 12.5 occurred wholly within the period during which the maximum penalty was $2,200.[17]
True, Tracey J did not develop the analysis that Jessup J did of the retrospective operation of legislation. However it is plain enough that Tracey J applied penalties in circumstances where the contraventions occurred between February 2001 and March 2006 and amendments to the maximum penalty were increased in August 2004.
[16] [2007] FCA 1080
[17] [2007] FCA 1080 at [29].
On behalf of FWO, Mr Tracey argued that, according to page 63 of the Explanatory Memorandum Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Bill 2012, the express purpose of the increase in the value of the penalty unit was to accommodate increases in the Consumer Price Index so that maximum monetary penalties for the contravention of Commonwealth laws kept pace with inflation and that they held their value over time. Mr Tracey said that in determining the monetary value of the maximum penalty for the contraventions admitted in this case, it would not be manifestly excessive for the court to adopt the higher penalty unit value over the whole period from 19 August 2012 to 4 October 2013 even though the amending legislation by which the value of the penalty unit increased on 28 December 2012 raising it from $110.00 to $170.00.
The decision of Gyles J in Sharpe v Dogma Enterprises Pty Ltd[18] (“Sharpe”) illustrates the practical difficulty that a trial judge encounters when confronted with a situation where the contraventions took place over a period of time and alterations were made to the applicable penalty over the same period of time. There, his Honour said the following –
There has been argument as to what the maximum penalty is for each of the offences which have been found. It is not an easy issue because, for the purposes of the declaration, the offences were divided into the period of the week for which the offence took place during each week over that period – not that there were breaches of every term and condition in every such week. Because it was accepted that, within each category, it was the one course of conduct, one offence was seen to be appropriate. That is all very well, but the maximum penalty was raised during that period.[19]
[18] [2007] FCA 1550.
[19] [2007] FCA 1550 at para.3.
His Honour appears to have not determined the point, proceeding instead by applying the 11-point non-exclusive list of factors relevant to the imposition of a penalty as first formulated in Mason v Harrington Corporation Pty Ltd,[20] as adopted by Tracey J in Kelly.[21]
[20] [2007] FMCA 7 at paras.26–59.
[21] [2007] FCA 1080.
The jurisprudence on point appears to me to be divided. In one camp are the cases that have proceeded by strict application of common law principles of statutory construction that, for the most part, forbid retrospective application of legislation in the absence of express enabling legislation. Jessup J considered those in Murrihy.[22] In the other camp are cases such as Kelly[23] and Sharpe[24] that have recognised the fact that legislation imposing penalties has altered during the course of the impugned conduct where the court was required to apply (or at least consider) the maximum penalty applicable in the circumstances of the case.
[22] [2013] FCA 1146.
[23] [2007] FCA 1080.
[24] [2007] FCA 1550.
It seems to me that the answer lies in the wording of s.456(1) of the Act. To my mind, that is the express enabling provision by which the court may impose such pecuniary penalty that the court considers appropriate so long as the court is first satisfied that the person, relevantly here the respondent, has contravened a civil remedy provision. I am so satisfied that the respondent so contravened the Act. Accordingly, in circumstances where the impugned conduct spanned a 14-month period during the lion’s share of which the amending legislation (that commenced on 28 December 2012) was operative, I am permitted to examine the maximum penalty that applies for the admitted contraventions, namely a penalty unit valued at $170.00.
Factors relevant to penalty
As mentioned above, in Kelly, Tracey J embraced an 11-point
non-exhaustive list of factors relevant to the imposition of a penalty. I have touched upon many of them above. However, let me address them in a more structured manner now.
Nature, extent and circumstances of the contravening conduct
In the passages above I have addressed the way in which Ms Mangat and Mr Sharma responded to the advertisement placed in or about April or May 2012 by the company leading to the employment of each. For the purposes of this item that falls for consideration, I refer to the matters canvassed in paragraphs 75 to 101 above.
Nature and extent of the loss or damage sustained
As is pointed out in paragraphs 9(a)–(e) above, the total underpayment of $85,844.68 was significant and represented 100% of the total entitlements of Ms Mangat and Mr Sharma.
Any similar previous conduct
That has been addressed in paragraph 87 above.
Whether the breaches were distinct or arose out of one course of conduct
That has been addressed in paragraphs 88 to 101 above.
The size of the business enterprise
The evidence revealed that the company operated several restaurants in regional Victoria and that the respondent personally was associated with more than three. During the course of the investigations leading to this proceeding, the respondent admitted to Mr Stella that he maintained a connection with businesses operated by his wife. FWO submitted, and I agree, that there is no basis for reducing any penalty that might be imposed on the respondent by reason merely of the fact of the company being in liquidation. Accessorial liability necessarily focuses on the accessory, not the primary party.
In Cotis v MacPherson[25]and Kelly[26] it was held that an employer’s financial position at the time of the contraventions is not relevant to the question of penalty and employers, whether small, medium or large have an obligation to meet minimum standards in relation to their employees. The courts also held that employers cannot overcome their own financial difficulties by underpaying their employees.
[25] (2007) 169 IR 30 at [16].
[26] (2007) 166 IR 4 at [28] / FCA 1080 at [28].
In view of those observations, I have paid no regard to the financial condition of the company or of the respondent at the times of the admitted contraventions.
Whether the breaches were deliberate
On behalf of FWO Mr Tracey submitted that I should find that the contraventions admitted in this case were deliberate. He submitted that deliberateness was an important factor in favour of imposing penalties in the high range. FWO urged a number of factors in support of its contentions about the respondent’s deliberateness.
First, Mr Tracey submitted that the company attempted to conceal its wrongdoing by creating false and misleading payslips for
Ms Mangat. Next, Mr Tracey submitted that the respondent required Ms Mangat to provide her tax file number in or about October 2013 despite the fact that the company had not paid Ms Mangat. Next,
Mr Tracey relied on the instruction given by the respondent to
Ms Mangat directing her to lodge a tax return. Next, Mr Tracey submitted that I should place store in the respondent’s admission that he knew he was committing wrongdoing and engaged in the conduct anyway.
Mr Tracey submitted that the conduct of the respondent was a deliberate and calculated campaign to obtain the benefit of the labour of Ms Mangat and Mr Sharma without paying them for their services. Mr Tracey submitted that Ms Mangat and Mr Sharma found themselves in an invidious situation given their dependence on the visa, upon securing permanent residency and their need to be paid wages just to survive.
Whether senior management was involved
In this case the controlling mind of the company was the respondent. He had been a company director for 10 years prior to the contraventions. The conclusion is inescapable that the respondent, as senior management of the company, was intimately involved in the contraventions, as he admitted.
Contrition
When the respondent appeared before me, he was apologetic for his conduct in the facts and circumstance of this case. He said that many times. In court documentation filed in this proceeding he indicated that he accepted his mistakes and confessed that he had in fact made mistakes.[27] FWO contended that the respondent sought to blame his actions on a migration agent or upon Ms Mangat and Mr Sharma themselves. Mr Tracey submitted that the respondent’s attempts to shift the blame onto others was not consistent with the respondent exhibiting genuine contrition and acceptance of his wrongdoing. Mr Tracey highlighted the absence of evidence that the respondent had actually apologised to Ms Mangat or to Mr Sharma nor had he expressed any regret or genuine remorse towards them. Mr Tracey submitted that the respondent was contrite only in so far as he had been caught contravening the Act.
[27] Applicant’s Outline of Submissions on Penalty filed 16 October 2015 at paras.108-109.
To my mind there is force in Mr Tracey’s submissions that the respondent’s apologies were hollow and that his contrition was not genuine. The respondent made no attempts to engage in any form of restitution towards Ms Mangat and Mr Sharma. Not a cent was paid nor offered by the respondent so as to redress the contraventions in this case. The respondent did not express his apology towards them, even in his native language, let alone in the English language. I am not convinced that the respondent exhibited any contrition in respect of the contraventions admitted in this case. The apology that the respondent offered to me in court was hollow. I am not persuaded that the respondent’s professed apology was backed by genuine remorse or regret.
Corrective action
It is relevant for me to consider whether the respondent has taken any corrective action to rectify the very substantial unpaid sums owed to Ms Mangat and Mr Sharma. The entity primarily liable, the company, is now in liquidation. There is no suggestion that any dividend will be payable out of the liquidation. From the company, Ms Mangat and
Mr Sharma will remain unsatisfied.
The respondent personally has taken no steps to date to pay the amounts owed to Ms Mangat and Mr Sharma out of his own funds. Unless orders are made compelling him to pay the amounts due to
Ms Mangat and Mr Sharma, there is a high likelihood, possibly an inevitability, that the respondent will not pay the sums due to
Ms Mangat and Mr Sharma.
Mr Tracey submitted that even by the imposition of the maximum amounts that can be imposed by way of penalties with accompanying orders for the payment of that penalty amount directly to Ms Mangat and Mr Sharma, nevertheless there will be a shortfall between the amount the company should have paid to Ms Mangat and Mr Sharma and which was not in fact paid. To that point I observe that the imposition of penalties is not intended to take effect in a manner that provides full indemnity for the loss occasioned to the unpaid employee.
Cooperation with the enforcement authorities
FWO submitted that the respondent gave a modest amount of cooperation during the course of FWO’s investigations in this case but that the value of any such cooperation was significantly diminished by reason of the fact that some of the information provided by the respondent was false and misleading. FWO relied upon the false payslips provided by the respondent and upon the fact that the respondent did not participate in a formal record of interview nor did he properly respond to a notice to produce.
FWO also relied on the fact that the respondent misrepresented to
Mr Stella that Ms Mangat had been paid in cash[28] when she had not in fact been paid any amount. FWO also relied on the fact that several answers given by the respondent during questioning by Mr Stella were false, especially the information given by the respondent that
Ms Mangat and Mr Sharma had taken money from the cash register as wages and that the respondent paid tax and made superannuation contributions to Ms Mangat.
[28] SOAF filed 22 July 2015 at para.90.
The respondent also falsely informed Mr Stella that he, the respondent, had records of monies paid to Ms Mangat[29] when no such records existed.
[29] SOAF filed 22 July 2015 at para.90(e).
Mr Tracey invited me to balance the limited cooperation referred to above against the fact that the respondent had facilitated the efficient conduct of the proceeding by admitting liability and entering into the SOAF. I have taken that into account. However, Mr Tracey sounded a word of caution by pointing out that while the respondent’s cooperation was relevant, he said any such cooperation should not be overstated and that the weight to be given to cooperation by way of mitigation of penalty should be considered in light of inconsistent and false answers to questions put to the respondent by Mr Stella.
I accept that by his making the SOAF, by his participation in interviews conducted by Mr Stella and by the provision of some (albeit limited) information to FWO, the respondent had in fact assisted the enforcement authorities in this case and thereby reduced the expense to the public purse in the conduct of what might otherwise have been an expensive and time-consuming investigation and enforcement proceeding. As it happened, the hearing of this proceeding was relatively short and the case was presented in a very ordered manner that lent itself to ease of handling, notwithstanding the large volume of affidavit material and the very many folders of authorities to which
Mr Tracey and his instructing solicitors took me. Without the respondent’s cooperation the case could not have proceeded in that manner. I have taken that into account as well.
Compliance with the minimum standards
FWO submitted that compliance with minimum standards was an important consideration in this case. Mr Tracey referred me to s.3 of the Act, pointing out that a principal objective of the Act was the preservation of an effective safety net in respect of employee entitlements and effective enforcement mechanisms.
FWO cited the respondent’s blatant disregard for the company’s obligations as an employer, contending that such blatant disregard was illustrated by the prolonged contraventions and by the fundamental nature of them in this proceeding. By way of example, Mr Tracey focused on the record-keeping contraventions, contending that these were particularly serious because record-keeping obligations played a central role in the capacity of FWO to monitor and enforce compliance with minimum employment standards. While not binding upon me, a number of authorities were cited in support of that proposition.[30] I accept that the company was derelict in complying with its record-keeping obligations. The controlling mind of the company was the respondent and so it follows that he too was derelict in procuring the company’s compliance with its record-keeping obligations.
[30] Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd [2012] FMCA 258 at [67]; Fair Work Ombudsman v Bundaberg Security Pty Ltd [2014] FCCA 592 at[26]; Director of the Fair Work Building Industry Inspectorate v Zion Tiling Pty Ltd (No. 2)[2013] FCCA 1288 at[38]; and Fair Work Ombudsman v Bento Kings Meadows Pty Ltd [2013] FCCA 977 at 34.
But FWO went further in submitting that the respondent engaged in a “calculated and deceitful strategy… [that] materially aggravated the seriousness”[31] of the respondent’s conduct. In support of that contention FWO referred to the decision of this court in Fair Work Ombudsman v S H Millicent Pty Ltd.[32] FWO invited me to conclude that the respondent’s conduct was extremely serious and it invited me to denounce the respondent’s conduct thereby ensuring that the system of enforcement was not undermined and that a person in the shoes of the respondent was not rewarded for making, using and providing false records.[33]
[31] Applicant’s Outline of Submissions on Penalty filed 16 October 2015 at para.125.
[32] [2012] FMCA 178 at [35].
[33] Fair Work Ombudsman v Orwill Pty Ltd [2011] FMCA 730 at [19] to [21].
I have carefully considered whether it is correct to characterise the respondent’s conduct as “calculated and deceitful” and as a “calculated and deceitful strategy”. On balance, in my opinion it is. Expressed most simply, for a sustained period of time the company controlled by the respondent did not pay Ms Mangat and Mr Sharma the statutory entitlements the company should have paid. I accept that the company’s failure was no mere inadvertence, as I have canvassed above. I also accept that a high degree of consciousness was exhibited in the respondent procuring the company to not pay Ms Mangat and
Mr Sharma the sums to which each was entitled. Forgetfulness, complete lapse of memory, carelessness, even negligence, is not the correct characterisation of the respondent’s conduct on the facts of this case. I find it impossible to accept that for almost 14 months the respondent, knowing that Ms Mangat and Mr Sharma worked for his company undertaking long hours at his request and at significant personal inconvenience (to say nothing of financial distress), inexplicably omitted to pay them. The fact that the company (and thereby the respondent) month after month omitted to pay Ms Mangat and Mr Sharma illustrated a pattern of conduct of which the company and the respondent were well aware. In a sense the deceit lay in the respondent continuing to represent to Ms Mangat and Mr Sharma that he was advancing their visa application and their path to permanent residency when in truth he was not and instead was exploiting them. His conduct was calculated in the sense that it was deliberate and well thought out. His strategy was deceitful in the sense that he deceived
Ms Mangat and Mr Sharma to continue working when he had not paid them and, self-evidently, had no intention of paying them. For those reasons I agree with the characterisation attributed to the conduct of the respondent that it is extremely serious. I also agree that the extremely serious nature of the respondent’s conduct warrants the imposition of significant penalties denouncing the seriousness of the conduct involved and denouncing the aggravating circumstances of this case.
Specific and general deterrence
Specific deterrence
The need for specific and general deterrence is a factor relevant to the imposition of a civil penalty, as the Full Court of the Federal Court of Australia observed in Ponzio v B & P Caelli Constructions Pty Ltd.[34] By giving effect to specific and general deterrence, the respondent in this case will be deterred from any further similar conduct to the conduct that he admitted contravening and the public will be deterred from engaging in similar conduct to the conduct in which the respondent admitted engaging in this case.
[34] (2007) 158 FCR 543 at [559] – [560].
At first blush, specific deterrence would appear to have little relevance in this case as the company is now in liquidation. However, before me the respondent stated, in terms similar to which Mr Stella affirmed[35] that the respondent’s wife presently operates a company that runs a restaurant and as such, at least according to FWO, it was likely that the respondent would remain involved in the restaurant industry responsible for employing workers whose roles equated to those of
Ms Mangat and Mr Sharma.
[35] Affidavit of Dane Stefan Robert Vella affirmed 14 August 2015 at paras.9-14.
FWO focused on the fact that the respondent was likely to remain involved in the restaurant industry by reason of the fact that his wife remained involved in the restaurant industry. Mr Tracey urged me to take into account the likelihood of the respondent engaging on an ongoing basis in the conduct has given rise to this litigation and to the contraventions committed by the company and the respondent, as proved by FWO and admitted by the respondent. Citing the observations of Gray J in Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union,[36] FWO submitted that a court imposing penalties is entitled to take into account steps to be taken so as to ensure that no future breach occurs as being relevant factors for the purposes of specific deterrence. To my mind, that accords with common sense. Put differently, it would make no sense for me to ignore the reality that the respondent is likely to return to the hospitality industry, possibly under the guise of a different corporate emanation, with the attendant risk that he continues to engage in the conduct which has led to the contraventions in this case. I agree with Mr Tracey when he submitted that specific deterrence was a real issue in this case.
[36] (2008) 171 FCR 357 at [369].
FWO went further by submitting that only the imposition of high penalties is likely to make the contravening conduct unprofitable and the prospect of any future contraventions commercially and personally undesirable. Having no evidence of the respondent’s personal financial circumstances I am unable to say whether the imposition of a high penalty will be unprofitable to him. That said, common sense indicates that the imposition of a high penalty is likely to render any future similar contraventions commercially and personally undesirable. To that extent, I accept FWO’s submissions.
General deterrence
FWO placed greater weight in its submissions concerning general deterrence and the need for the court to denounce the conduct of the respondent in this case. FWO submitted that this court should impose a penalty that serves as a warning to others. FWO invited me to set a penalty that illustrates that the law marks its disapproval of the respondent’s conduct and thereby sets its face against the perpetration of that conduct.
In support of its contentions concerning general deterrence, FWO repeated its submissions about Ms Mangat and Mr Sharma being vulnerable workers whose vulnerability the respondent exploited, especially in reference to his false assurances that he was advancing their visa applications when in truth he was not. FWO submitted that it was appropriate for the court to impose a penalty that sent a message to employers and to the community generally that underpayment of wages to and the exploitation of such vulnerable workers would not be tolerated. FWO referred to the decision of this court in Fair Work Ombudsman v Bento Kings Meadows[37] in which a judge of this Court referred to the fact of there being cases over a number of years that dealt with employers making underpayments to workers as well as other breaches of workplace legislation referable specifically to vulnerable employees. I accept without reservation that this case is a further, lamentable, illustration of a prevalent phenomenon in the hospitality industry where employers exploit vulnerable workers by underpayment of salary entitlements and in other ways. The fact that the exploitation continues indicates that the imposition of penalties, even heavy penalties, is not, of itself, working sufficiently well in generally deterring certain employers from engaging in conduct that contravenes the Act. I recognise that in this case the imposition of still further penalties will add to the number of reported cases in which heavy penalties have been imposed by this court upon errant employers for contraventions of the Act.
[37] [2013] FCCA 977.
FWO focused its submissions in relation to general deterrence upon the contraventions in this case in failing to properly maintain prescribed record keeping for employee wages. FWO relied upon its report entitled “National Hospitality Industry Campaign Restaurants, Cafes and Catering (Wave 2)”, published in June 2015 in which various statistics were reported in relation to 279 businesses assessed in Victoria. FWO said that report revealed that 35% of those businesses had errors relating to pay rates, 20% of those businesses had errors relating to record keeping in payslips and 16% of those businesses had errors relating to payslips, record keeping and pay rates. Those statistics supported FWO’s submission to the effect that a real need for general deterrence existed in the restaurant industry and that penalties at the high end were justified in order to deter others operating in the restaurant industry from breaching the Act.
Without knowing more about the businesses to which FWO’s report related, the parallels to be drawn from the statistics in the report and the circumstances urged by FWO in this case are not readily apparent. A fair construction of that report reveals that deficiencies are prevalent in record-keeping practices among businesses in the hospitality industry, especially in relation to information concerning wages and pay rates. I accept that conclusion as being almost irresistible. However, it is an altogether different proposition for FWO to submit that statistics drawn from 279 businesses surveyed in the hospitality industry in a particular calendar year provides particularly helpful empiric evidence by which I can reach conclusions in relation to the utility of principles of general deterrence as they apply to the facts of this case.
Specific penalties urged by FWO in this case
In supplementary submissions dated 22 January 2016, FWO advanced a number of propositions as to penalty consequent upon the decision of the High Court of Australia that was handed down on
9 December 2015 in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate: Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate.[38] FWO submitted that, in essence, it was now permissible for parties to a civil penalty proceeding to make submissions which identified a range of penalties, nominated specific penalties in respect of particular contraventions as well as urging the court to adopt an agreed position on penalties. FWO said the decision of the High Court rendered otiose the decision of the Full Court of the Federal Court of Australia in Director,Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union[39] pursuant to which the practice had emerged of parties to a civil penalty proceeding making no submissions in relation to the amount or range of penalties to be imposed for contraventions admitted in civil penalty proceedings.
[38] [2015] HCA 46.
[39] [2015] FCAFC 59.
FWO submitted that the respondent should not receive any leniency in terms of penalty by reason merely of the fact that he had not previously been before the court to be dealt with for contravening conduct. FWO submitted that the contraventions in this case occurred over a significant period of time, each constituting separate contraventions but which, for convenience, were brought in this single proceeding rather than having been brought in separate proceedings for each separate contravention.
FWO submitted that at its highest, this court should discount the penalty to be imposed by no more than 5%. FWO submitted that a discount of 5% was appropriate as it recognised the utilitarian value of the respondent having made admissions in the SOAF.
Let me now turn to each specific contravention and to the specific penalty that FWO urged me to impose.
Contravention 1
For this contravention the maximum penalty was $10,200.00. Applying a 5% discount for admissions, the penalty became $9,690.00. FWO submitted that it was appropriate to impose a penalty in the range of 80% to 90% of the maximum amount applicable, as discounted by 5%. The imposition of a penalty in the range of 80% to 90% took into account the circumstances in which the underpayments occurred but recognised that this was the first time the respondent had come before the court for breaches of workplace laws. I recognise that this is, essentially, a first offence for the respondent. I also take into account the very serious fact of his company having paid no wages to
Ms Mangat and Mr Sharma for almost 14 months and that when they purported to challenge him about his company’s failure to pay, the respondent threatened to refer Ms Mangat and Mr Sharma to the immigration authorities or to otherwise refuse to further advance their visa application. There is a great deal of force in FWO’s submission that the respondent exploited the vulnerability of Ms Mangat and
Mr Sharma in a way that was morally moribund and legally improper. I impose a 90% penalty for contravention 1 being the amount of $8,721.00.
Contravention 2
For this contravention the maximum penalty was $10,200.00. Applying a 5% discount from admissions, the penalty became $9,690.00. FWO submitted that it was appropriate to impose a penalty in the range of 80% to 90% of the maximum amount applicable as discounted by 5%. The imposition of a penalty in the range of 80% to 90% takes into account the circumstances in which the underpayments occurred but recognises that this was the first time the respondent had come before the court for breaches of workplace laws. For the reasons advanced in respect of contravention 1, I impose a 90% penalty, as discounted by 5% of the maximum penalty that could have been imposed for contravention 2 being the amount of $8,721.00.
Contravention 3
For reasons identical to those advanced in respect of contravention 1 and contravention 2, in my judgment it is proper to impose a 90% penalty of the maximum penalty that could have been imposed ($10,200.00) as discounted by 5% ($9,690.00) thereby deriving the figure of $8,721.00 in respect of contravention 3.
Contravention 4
For reasons identical to those advanced in respect of contravention 1, contravention 2 and contravention 3, in my judgment it is proper to impose a penalty that represents 90% of the amount corresponding to the maximum penalty payable for this contravention and that I should apply a 5% discount to the maximum penalty to be imposed. Expressed arithmetically, the maximum penalty that could have been imposed was $10,200.00. The maximum penalty with a 5% discount from admissions was $9690.00 and 90% of the discounted amount was $8,721.00.
Contravention 5
For this contravention FWO submitted that a penalty in the range of 60% to 70% was appropriate for the respondent’s failure to pay accrued but untaken annual leave in accordance with the provisions of s.90(2) of the Act. The amount payable in respect of accrued but untaken annual leave was modest, $3,008.11. FWO submitted that the unpaid accrued but untaken annual leave amount represented the entire safety net entitlement to annual leave possessed by Ms Mangat and
Mr Sharma and that they had no opportunity to take annual leave while working for the company. I agree. The maximum amount payable for this contravention was $10,200.00. Applying a 5% discount from admissions, the figure became $9,690.00 and that 70% of the discounted amount was $6,783.00. In my judgment it is appropriate to impose a penalty of $6,783.00 for this contravention. For the whole of the period during which Ms Mangat and Mr Sharma were employed by the company, the respondent denied Ms Mangat and Mr Sharma any opportunity to take annual leave and he did not pay them the amount that corresponded to accrued but untaken annual leave. The respondent’s behaviour in that regard was appalling. There is a great deal of force in FWO’s submission that this court should denounce his conduct by imposing a penalty at the higher end of the range of available penalties. Given that the maximum penalty payable for this contravention was $10,200.00 an amount corresponding to 70% of the maximum penalty was appropriate and I impose a penalty of $6,783.00 for contravention 5.
Contravention 6
For this contravention the maximum penalty to be imposed was $5,100.00. Applying a 5% discount for admissions, the maximum penalty, as discounted, was $4,845.00. FWO submitted that this court should impose a penalty in the range between 75% and 95% of the amount that could be imposed by way of maximum penalty in respect of record-keeping contraventions because the record-keeping contraventions were serious having regard to the importance of record-keeping and payslips accuracy to the integrity and functioning of the Australian workplace relations regime.
I agree.
The evidence revealed that the company was derelict in its obligations towards Ms Mangat and Mr Sharma generally but specifically in respect of their employment details as recorded in the books and records of the company. The maintenance of proper records in respect of payslips and wages is critical in the proper and efficient running of any company irrespective of the size, magnitude or complexity of the enterprise under consideration. In this case, the respondent maintained no records whatsoever of the payment entitlements that were due to
Ms Mangat and Mr Sharma. Had an audit been undertaken at any point during the employment of Ms Mangat and Mr Sharma, it was not possible to ascertain whether and if so how much the company had paid or not paid by an examination of the wage records of the company. The respondent failed to comply with his most fundamental obligations in maintaining proper records of the employment of
Ms Mangat and Mr Sharma. I agree with the submissions of FWO that the maintenance of proper records, especially pay records for employees is of the highest importance among the obligations an employer must discharge in favour of his or her employees. In this case the respondent failed wholeheartedly to comply with that obligation. In my judgment it is appropriate to impose a penalty of 95% of the discounted amount. Expressed arithmetically, the maximum amount payable for a contravention of s.535(1) of the Act was $5,100.00. Applying a 5% discount to that maximum penalty the figure derived was $4,845.00 and 95% of that discounted amount was $4,602.75. I impose a penalty for contravention 6 of $4,602.75.
Contravention 7
For this contravention of the maximum amount payable was $5,100.00. Applying a 5% discount for admissions, the maximum penalty became $4,845.00. As with contravention 6, FWO submitted that this was a record-keeping contravention calling for the imposition of a penalty at the higher end of possible penalties. FWO further submitted that even with the imposition of the maximum amount of penalties, the total amount unpaid to Ms Mangat and Mr Sharma of $85,844.68 will not reinstate them to the position they would have been in had they been paid the amount that the Act required the company to pay them. Relying on the decision of the High Court in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate,[40] FWO submitted that the purpose of a civil penalty is primarily if not wholly protective in promoting the public interest in compliance. I agree. For that reason, it seems to me that a penalty of 95% of the maximum discounted amount is appropriate in the circumstances of this case.
[40] [2015] HCA 46 at [55].
In the context of this contravention, FWO relied upon the respondent’s production of documents in May 2014 which included payslips the respondent knew were false and misleading. FWO also relied on the misrepresentation made by the respondent to Mr Stella that Ms Mangat had been paid in cash. FWO further referred to a number of answers that it said were false and misleading especially in the context of Ms Mangat and Mr Sharma having taken money from the cash register as wages, that the respondent remitted tax and made superannuation contributions from Ms Mangat and that the respondent had records of money paid to Ms Mangat, all of which were false. FWO submitted that the company’s failure to ensure that it complied with s.535(1) of the Act by ensuring that its records were not false and misleading attracted the imposition of a penalty at the range of 95% of the discounted maximum penalty, that is to say, by the imposition of a penalty of $4,602.75.
For contravention 7, I order the imposition of a penalty of $4,602.75.
In summary, had I imposed the maximum penalty for each contravention, the sum would have been $61,200.00. Applying a 5% discount from admissions, that maximum penalty fell to $58,140.00. In the case of contraventions 1, 2, 3 and 4, I have applied a 90% penalty to the discounted maximum penalty in each case. In the case contravention 5 I have applied a 75% penalty to the maximum penalty with a 5% discount. In the case of contraventions 6 and 7 I have applied a 95% penalty to the maximum discounted sum being in respect of each contravention the sum of $4,602.35.
In total, I impose a total penalty of $50,872.50.
Finally, the amount of penalties that I have ordered falls short of the amount that the company should have paid but failed to paid
Ms Mangat and Mr Sharma. The respondent was responsible for that failure. In view of the liquidation of the company, Ms Mangat and
Mr Sharma will not be paid the amount that I have ordered from the liquidation of the company. Even if the respondent pays them the amount that I have ordered by way of penalty, there will nevertheless be a shortfall between the amount that should have been paid and the amount that I have ordered be paid. That is a most unsatisfactory state of affairs. By the imposition of penalties at the higher range available, the respondent should construe these reasons as representing the denunciation of his conduct and of the fact that this court sets its face against the conduct in which he has engaged.
The respondent is personally liable to make the payment that I have ordered. I make orders in accordance with the minutes proposed by
Mr Tracey and which are reproduced above.
I certify that the preceding one hundred and seventy-four (174) paragraphs are a true copy of the reasons for judgment of Judge Wilson
Date: 8 September 2016
2
19
4