Fair Work Ombudsman v SHREK Pty Ltd
[2010] FMCA 907
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v SHREK PTY LTD & ANOR | [2010] FMCA 907 |
| INDUSTRIAL LAW – Notional agreements preserving State awards (“NAPSAs”) – Australian Pay and Classification Scales (“APCSs”) – breaches of NAPSAs and APCSs – accessorial liability – civil penalties – consideration of matters relevant to penalty. |
| Workplace Relations Act 1996, ss.171, 182, 185, 208, 717, 719, 722, 728, cls.34 and 43 of sch.8 Workplace Relations Amendment (Work Choices) Act 2005 Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008 Fair Work Act 2009, s.701 Fair Work (Transitional Provisions & Consequential Amendments) Act 2009, item 11 of sch.2, item 13.1 of sch.18 Annual Holidays Act 1944 (NSW), s.4 Uniform Civil Procedure Rules 2005 (NSW) |
| Fair Work Ombudsman v Security Protection Services Pty Ltd (2010) 194 IR 96 Stuart v Construction, Forestry, Mining & Energy Union (CFMEU) (2010) 269 ALR 49 Kelly v Fitzpatrick (2007) 166 IR 14 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 A & L Silvestri Pty Ltd v Construction, Forestry, Mining & Energy Union [2008] FCA 466 Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 CPSU, The Community & Public Sector Union v Telstra Corporation Ltd (2001) 108 IR 228 Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 Gibbs v The Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | SHREK PTY LTD (ACN 096 956 526) |
| Second Respondent: | PETER COURT |
| File Number: | SYG 2543 of 2009 |
| Judgment of: | Cameron FM |
| Hearing date: | 21 June 2010 |
| Date of Last Submission: | 21 June 2010 |
| Delivered at: | Sydney |
| Delivered on: | 24 November 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr R. Reitano |
| Solicitors for the Applicant: | Sparke Helmore |
| Counsel for the Respondents: | Mr A.L Connolly |
| Solicitors for the Respondents: | Trisley Lawyers |
THE COURT DECLARES THAT:
The first respondent contravened s.182(1) of the Workplace Relations Act 1996 (“WRA”) being a term of the Australian Fair Pay and Conditions Standard (“Standard”) by failing to pay the following employees (collectively defined as “clerical employees”) the minimum hourly rate of pay that was at least equal to the basic periodic rate of pay under the Australian Pay and Classification Scale derived from the terms of the Clerical and Administrative Employees (State) Award (“Clerical APCS”):
(a)Agata Surdyka;
(b)Ashley Hammond;
(c)Aurora Veart;
(d)Jan Hansen;
(e)Katherine Laws;
(f)Kirsten O’Connell;
(g)Kristy Gascoyne;
(h)Leslie Laws;
(i)Lucy Tyrna;
(j)Noni Chadwick;
(k)Rochelle Hinds; and
(l)Tracey Monaghan.
The first respondent contravened s.185(2) of the WRA being a term of the Standard by failing to pay clerical employees a 20% casual loading in addition to and based on their rate of pay under the Clerical APCS.
The first respondent contravened cl.5.4 of the notional agreement preserving the terms of the Clerical and Administrative Employees (State) Award (“Clerical NAPSA”) by failing to pay eight of the clerical employees a minimum payment of four hours work for shifts that were less than four hours.
The first respondent contravened cl.10.3.3 of the Clerical NAPSA by failing to pay clerical employees the following shift loadings:
(a)a shift loading of 17% during shifts finishing between 7pm and 11pm; and
(b)a shift loading of 20% for time worked during shifts starting between 11pm and 5am or ending 11pm and 6am.
The first respondent contravened cl.10.3.6 of the Clerical NAPSA by failing to pay clerical employees penalty rates of one and a half times the Clerical APCS rate for hours worked on Saturdays, one and three quarter times the Clerical APCS rate for hours worked on Sundays and two and a half times the Clerical APCS rate for time worked on public holidays.
The first respondent contravened cl.10.4 of the Clerical NAPSA by failing to pay five of the clerical employees overtime rates for time worked in excess of thirty-eight hours per week or nine hours in any one day.
The first respondent contravened s.182(1) of the WRA being a term of the Standard by failing to pay the following employees (collectively defined as “driving employees”) the minimum hourly rate of pay that was at least equal to the basic periodic rate of pay under the Australian Pay and Classification Scale derived from the terms of the Transport Industry – Mixed Enterprise Interim (State) Award (“Transport APCS”):
(a)Trent Paora;
(b)Mark McNiven;
(c)Ray Hansen;
(d)Stuart Sneddon;
(e)Tom Warner; and
(f)Vasil Rusev.
The first respondent contravened s.185(2) of the WRA being a term of the Standard by failing to pay driving employees a 15% casual loading in addition to and based on their rate of pay under the Transport APCS.
The first respondent contravened cl.11.5.2 of the notional agreement preserving the terms of the Transport Industry – Mixed Enterprise Interim (State) Award (“Transport NAPSA”) by failing to pay five of the driving employees a minimum payment of eight hours pay for shifts that were less than eight hours.
The first respondent contravened cl.11.4 of the Transport NAPSA by failing to pay five of the driving employees overtime rates for time worked in excess of forty hours per week.
The first respondent contravened cl.11.5.3 of the Transport NAPSA by failing to pay driving employees the following shift loadings:
(a)a shift loading of 17.5% for shifts finishing between 6pm and midnight; and
(b)a 30% shift loading for shifts finishing between midnight and 8am.
The first respondent contravened cl.11.5.5 of the Transport NAPSA by failing to pay driving employees the following penalty rates for time worked on weekends and public holidays;
(a)a rate of time and one half of the Transport APCS rate for time worked on Saturdays;
(b)a rate of two times the Transport APCS rate for time worked on Sundays; and
(c)a rate of two and a half times the Transport APCS rate for time worked on public holidays.
The first respondent contravened those terms of the Clerical NAPSA and the Transport NAPSA derived from s.4(3)(b)(ii) of the Annual Holidays Act 1944 (NSW) in failing to pay both clerical and driving employees a loading of 1/12 of each worker’s ordinary pay for each shift worked.
The second respondent was involved in the first respondent’s contraventions outlined in declarations (1) to (13) above within the meaning of s.728 of the WRA and thereby is taken to have contravened the WRA and the NAPSAs in respect of the employment of the clerical and driving employees.
THE COURT ORDERS THAT:
The first respondent pay the following amounts to the following persons pursuant to ss.719(6) and 722 of the WRA:
(a)Agata Surdyka - $1,165.56;
(b)Ashley Hammond - $3,745.28;
(c)Jan Hansen - $68,551.74;
(d)Katherine Laws - $53,589.50;
(e)Kirsten O’Connell - $7,405.04;
(f)Kristy Gascoyne - $4,977.22;
(g)Leslie Laws - $41,846.77;
(h)Lucy Tyrna - $41,952.65;
(i)Noni Chadwick - $6,373.25;
(j)Rochelle Hinds - $7,131.14;
(k)Tracey Monaghan - $2,548.74;
(l)Trent Paora - $783.75;
(m)Mark McNiven - $35,217.45;
(n)Ray Hansen - $2,338.97;
(o)Stuart Sneddon - $4,602.62;
(p)Tom Warner - $8,814.05; and
(q)Vasil Rusev - $55,245.69.
The first respondent pay a penalty of $13,200 in relation to its breach of s.182(1) of the WRA.
The first respondent pay a penalty of $17,600 in relation to its breach of s.185(2) of the WRA.
The first respondent pay a penalty of $5,500 in relation to its breach of cl.5.4 of the Clerical NAPSA.
The first respondent pay a penalty of $16,500 in relation to its breach of cl.10.3.3 of the Clerical NAPSA.
The first respondent pay a penalty of $16,500 in relation to its breach cl.10.3.6 of the Clerical NAPSA.
The first respondent pay a penalty of $13,200 in relation to its breach of cl.10.4 of the Clerical NAPSA.
The first respondent pay a penalty of $5,500 in relation to its breach of that term of the Clerical NAPSA derived from s.4(3)(b)(ii) of the Annual Holidays Act 1944 (NSW).
The first respondent pay a penalty of $5,500 in relation to its breach of cl.11.5.2 of the Transport NAPSA.
The first respondent pay a penalty of $13,200 in relation to its breach of cl.11.4 of the Transport NAPSA.
The first respondent pay a penalty of $13,200 in relation to its breach of cl.11.5.3 of the Transport NAPSA.
The first respondent pay a penalty of $16,500 for breach of cl.11.5.5 of the Transport NAPSA.
The first respondent pay a penalty of $5,500 for breach of that term of the Transport NAPSA derived from s.4(3)(b)(ii) of the Annual Holidays Act 1944 (NSW).
The second respondent pay a penalty of $3,850 in relation to his involvement in the first respondent’s breach of s.182(1) of the WRA.
The second respondent pay a penalty of $4,950 in relation to his involvement in the first respondent’s breach of s.185(2) of the WRA.
The second respondent pay a penalty of $2,200 in relation to his involvement in the first respondent’s breach of cl.5.4 of the Clerical NAPSA.
The second respondent pay a penalty of $4,400 in relation to his involvement in the first respondent’s breach of cl.10.3.3 of the Clerical NAPSA.
The second respondent pay a penalty of $4,400 in relation to his involvement in the first respondent’s breach of cl.10.3.6 of the Clerical NAPSA.
The second respondent pay a penalty of $3,850 in relation to his involvement in the first respondent’s breach of cl.10.4 of the Clerical NAPSA.
The second respondent pay a penalty of $2,200 in relation to his involvement in the first respondent’s breach of that term of the Clerical NAPSA derived from s.4(3)(b)(ii) of the Annual Holidays Act 1944 (NSW).
The second respondent pay a penalty of $2,200 in relation to his involvement in the first respondent’s breach of cl.11.5.2 of the Transport NAPSA.
The second respondent pay a penalty of $3,850 in relation to his involvement in the first respondent’s breach of cl.11.4 of the Transport NAPSA.
The second respondent pay a penalty of $3,850 in relation to his involvement in the first respondent’s breach of cl.11.5.3 of the Transport NAPSA.
The second respondent pay a penalty of $4,400 in relation to his involvement in the first respondent’s breach of cl.11.5.5 of the Transport NAPSA.
The second respondent pay a penalty of $2,200 in relation to his involvement in the first respondent’s breach of that term of the Transport NAPSA derived from s.4(3)(b)(ii) of the Annual Holidays Act 1944 (NSW).
The amounts specified in Order 1 be paid within 28 days.
The penalties be paid to the Commonwealth within 28 days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 2543 of 2009
| FAIR WORK OMBUDSMAN |
Applicant
And
| SHREK PTY LTD (ACN 096 956 526) |
First Respondent
| PETER COURT |
Second Respondent
REASONS FOR JUDGMENT
Introduction
In these proceedings the Fair Work Ombudsman seeks pecuniary penalties against the respondents pursuant to s.719 of the Workplace Relations Act 1996 (“WRA”) by reason of the first respondent’s underpayments of the wages and entitlements of a number of its employees. It is alleged that the second respondent was knowingly involved in the alleged contraventions and is therefore similarly liable pursuant to s.728 of the WRA. Orders are also sought pursuant to s.719(6) of the WRA that the amounts owed to the employees be paid and that there be interest on such underpayments pursuant to s.722 of the WRA.
For the reasons which follow, the first respondent will be ordered to pay a total amount of $346,289.42 including interest in respect of unpaid wages and entitlements. Full particulars of this amount appear later in these reasons. Additionally, the first and second respondents will be ordered to pay pecuniary penalties totalling $141,900 and $42,350 respectively.
Statutory provisions
The events the subject of these proceedings commenced in the period following the amendments to the WRA effected by the Workplace Relations Amendment (Work Choices) Act 2005. It has not been submitted that the subsequent Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008 made amendments to the WRA which are material to these proceedings. Significant changes to the industrial relations landscape commenced on 1 July 2009 with the introduction of the Fair Work Act 2009. Those changes are not relevant to these proceedings other than to observe that although the provisions of the WRA relevant to these proceedings have been repealed by sch.1 to the Fair Work (Transitional Provisions & Consequential Amendments) Act 2009 (“Fair Work (TP & CA) Act”), item 11 of sch.2 to that Act provides that the WRA continues to apply on and after its repeal in relation to conduct that occurred before the repeal. Consequently, the WRA continues to apply to these proceedings and to the issues which the proceedings raise.
The applicant is a Fair Work Inspector pursuant to s.701 of the Fair Work Act. Pursuant to item 13.1 of sch.18 to the Fair Work (TP & CA) Act, a Fair Work Inspector may bring proceedings relating to conduct which occurred before the WRA was repealed.
As noted earlier, the applicant seeks the payment of certain outstanding wages and entitlements and the imposition of pecuniary penalties pursuant to s.719 of the WRA. Relevantly, that section provided:
719 Imposition and recovery of penalties
(1) An eligible court may impose a penalty in accordance with this Division on a person if:
(a) the person is bound by an applicable provision; and
(b) the person breaches the provision.
(2) Subject to subsection (3), where:
(a) 2 or more breaches of an applicable provision are committed by the same person; and
(b) the breaches arose out of a course of conduct by the person;
the breaches shall, for the purposes of this section, be taken to constitute a single breach of the term.
…
(4) The maximum penalty that may be imposed under subsection (1) for a breach of an applicable provision is:
(a) 60 penalty units for an individual; or
(b) 300 penalty units for a body corporate.
…
(6) Where, in a proceeding against an employer under this section, it appears to the eligible court that an employee of the employer has not been paid an amount that the employer was required to pay under an applicable provision (except a term of an ITEA), the court may order the employer to pay to the employee the amount of the underpayment. …
The applicant alleges that the first respondent breached ss.182(1) and 185(2) of the WRA and various provisions of the notional agreements preserving State awards which applied to certain of its employees. Section 182(1) of the WRA provided:
182 The guarantee
Guarantee of APCS basic periodic rates of pay
(1) If:
(a) the employment of an employee is covered by an APCS; and
(b) the employee is not an APCS piece rate employee;
the employee must be paid a basic periodic rate of pay for each of the employee’s guaranteed hours (pro-rated for part hours) that is at least equal to the basic periodic rate of pay (the guaranteed basic periodic rate of pay) that is payable to the employee under the APCS.
Section 185(1) and (2) of the WRA provided:
185 The guarantee
(1) This section applies to a casual employee for whom, under section 182, there is a guaranteed basic periodic rate of pay, other than a casual employee in relation to whom the following paragraphs are satisfied:
(a) subsection 182(1) applies to the employee;
(b) the APCS that covers the employment of the employee does not contain casual loading provisions under which a casual loading is payable to the employee;
(c) the employee’s employment is not covered by a workplace agreement.
(2) The casual employee must be paid, in addition to his or her actual basic periodic rate of pay, a casual loading that is at least equal to the guaranteed casual loading percentage of that actual basic periodic rate of pay.
For the purposes of s.719, s.717 of the WRA provided that “applicable provision” included a term of the Australian Fair Pay and Conditions Standard and a term of a collective agreement. Sections 182 and 185 of the WRA were provisions of the Australian Fair Pay and Conditions Standard: s.171(3); and a notional agreement preserving State awards may be enforced as if it were a collective agreement: cl.43(1) of sch.8 to the WRA.
Section 722 of the WRA provided:
722 Interest up to judgment
(1)In exercising its powers under subsection 719(5) or (6) or in a proceeding under section 720 or 721, the eligible court must, upon application, unless good cause is shown to the contrary, either:
(a)order that there be included in the sum for which an order is made or judgment given, interest at such rate as the eligible court thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date on which the order is made or judgment entered; or
(b)without proceeding to calculate interest in accordance with paragraph (a), order that there be included in the sum for which an order is made or judgment given, a lump sum instead of any such interest.
(2) Subsection (1) does not:
(a)authorise the giving of interest upon interest or of a sum instead of such interest; or
(b)apply in relation to any debt upon which interest is payable as of right whether by virtue of an agreement or otherwise; or
(c)authorise the giving of interest, or a sum instead of interest, otherwise than by consent, upon any sum for which judgment is given by consent.
Section 728 provided:
728 Involvement in contravention treated in same way as actual contravention
(1)A person who is involved in a contravention of a civil remedy provision is treated as having contravened that provision.
(2)For this purpose, a person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d)has conspired with others to effect the contravention.
Background facts
An agreed statement of facts was filed by the parties and later became an exhibit. Relevant agreed facts are summarised below.
The first respondent provided labour services to the operator of “Newcastle After Hours Medical Service” and “After Hours (Newcastle) Medical Service” and the second respondent was its sole director, shareholder as well as being company secretary. The first respondent employed a number of individuals as clerical staff and others as driving staff at either the Newcastle After Hours Medical Service or the After Hours (Newcastle) Medical Service. The second respondent was in charge of the day-to-day management of the first respondent and responsible, in a practical sense, for ensuring that the latter complied with its obligations in respect of its employees.
From 27 March 2006, in respect of the clerical staff, the first respondent was bound by the notional agreement preserving the terms of the Clerical and Administrative Employees (State) Award (“Clerical NAPSA”). From the same date, in respect of the driving staff, the first respondent was bound by the notional agreement preserving the terms of the Transport Industry – Mixed Enterprises Interim (State) Award (“Transport NAPSA”). Also included as a term of the Clerical NAPSA and of the Transport NAPSA were holiday loading entitlements pursuant to the Annual Holidays Act 1944 (NSW): cl.34 of sch.8 to the WRA.
From 27 March 2006 the first respondent was also bound by the Australian Fair Pay and Conditions Standard under pt.7 of the WRA. In that connection, s.208 of the WRA provided that from 27 March 2006 the pay and classification provisions of the Clerical and Administrative Employees (State) Award became a preserved Australian Pay and Classification Scale (“Clerical APCS”). Similarly, s.208 had the effect that the pay and classification provisions of the Transport Industry – Mixed Enterprises Interim (State) Award also became a preserved Australian Pay and Classification Scale (“Transport APCS”).
Between 27 March 2006 and 26 August 2007 the hourly wage rate paid by the first respondent to its clerical employees was as follows:
a)the greater of $140 per fourteen hour shift ($10 per hour) or 9% of Medicare takings for the shift;
b)$12 per hour weekend days;
c)$14 per hour weekend nights; and
d)$16 per hour on public holidays.
From the week ending 26 August 2007 to 1 July 2008 the hourly rates paid to the clerical employees were as follows:
a)$140 per fourteen hour shift ($10 per hour);
b)$120 per shift weekend days ($12 per hour);
c)$196 per shift weekend nights ($16 per hour); and
d)$16 per hour on public holidays.
The clerical employees were also paid a bonus payment based on the number of calls received in any one shift.
Between 27 March 2006 and 30 June 2008 the basic periodic rate of pay for an Adult grade one clerical employee under the Clerical APCS was:
a)from 27 March 2006 to 30 November 2006 - $13.77;
b)from 1 December 2006 to 30 September 2007 - $14.50; and
c)from 1 October 2007 to 30 June 2008 - $14.77.
Between 27 March 2006 and 30 June 2008 the basic periodic rate of pay for a 19 year old junior grade one clerical employee under the Clerical APCS was:
a)from 27 March 2006 to 30 November 2006 - $9.45;
b)from 1 December 2006 to 30 September 2007 - $9.95; and
c)from 1 October 2007 to 30 June 2008 - $10.13.
Between 27 March 2006 and 30 June 2008 the basic periodic rate of pay for a 20 year old junior grade one clerical employee under the Clerical APCS was:
a)from 27 March 2006 to 30 November 2006 - $11.12;
b)from 1 December 2006 to 30 September 2007 - $11.70; and
c)from 1 October 2007 to 30 June 2008 - $11.92.
Between 27 March 2006 and 1 July 2008 the hourly wage rate paid by the first respondent to its driving employees was as follows:
a)the greater of $10 per hour or 7% of Medicare takings;
b)the greater of $8 per hour while on call after leaving the base or 7% of Medicare takings;
c)$12 per hour on weekend days;
d)$16 per hour on weekends while working; and
e)$10 per hour on public holidays while on call after leaving the base.
The driving employees were also paid a bonus payment based on the number of calls done in any one shift.
Between 27 March 2006 and 30 June 2008 the basic periodic rate of pay for “Chauffers/drivers of vehicles used for the purpose of carrying persons” under the Transport APCS was:
a)from 27 March 2006 to 30 November 2006 - $14.09;
b)from 1 December 2006 to 30 September 2007 - $14.81; and
c)from 1 October 2007 to 30 June 2008 - $15.08.
In relation to the clerical employees, the first respondent:
a)breached s.182 of the WRA by failing to pay each of them their correct hourly rate of pay;
b)breached s.185(2) of the WRA by failing to pay each of them an amount representing casual loading;
c)breached cl.5.4 of the Clerical NAPSA by failing to pay eight of them a minimum of four hours worked for each shift;
d)breached cl.10.3.3 of the Clerical NAPSA by failing to pay each of them required shift loadings for afternoon and night shifts;
e)breached cl.10.3.6 of the Clerical NAPSA by failing to pay each of them required minimum rates of pay for time worked on Saturdays, Sundays and public holidays;
f)failed to pay five of them overtime rates for time worked in excess of nine hours per day in any one day or thirty-eight hours per week in any one week although cl.10.4 of the Clerical NAPSA required it to pay clerical employees overtime rates for time worked in excess of nine hours per day in any one day or thirty-eight hours in any one week; and
g)breached a term of the Clerical NAPSA derived from s.4(3)(b)(ii) of the Annual Holidays Act 1944 (NSW) by failing to pay each of them holiday loading of 1/12 of their ordinary pay for each shift worked.
In respect of the driving employees, the first respondent:
a)breached s.182 of the WRA by failing to pay each of them their correct minimum hourly rate of pay;
b)breached s.185(2) of the WRA by failing to pay each of them an amount representing casual loading;
c)breached cl.11.5.2 of the Transport NAPSA by failing to pay five of them a minimum of eight hours worked for each shift;
d)breached cl.11.5.3 of the Transport NAPSA by failing to pay each of them required shift loadings for afternoon or night shifts;
e)breached cl.11.5.5 of the Transport NAPSA by failing to pay each of them required minimum rates of pay for time worked on Saturdays, Sundays and public holidays;
f)breached cl.11.4 of the Transport NAPSA by failing to pay five of them overtime rates for time worked in excess of forty hours per week in any one week; and
g)breached a term of the Transport NAPSA derived from s.4(3)(b)(ii) of the Annual Holidays Act 1944 (NSW) by failing to pay each of them a holiday loading of 1/12 of their ordinary pay for each shift worked.
Twelve clerical employees and six driving employees were underpaid amounts during their periods of employment and in 2008 and 2009 each respondent paid each of them an amount or amounts in part satisfaction of the underpayments. Originally the employees’ underpayments were:
a)Agata Surdyka - $1,462.66;
b)Aurora Veart - $699.60;
c)Ashley Hammond - $5,779.82;
d)Jan Hansen - $54,518.08;
e)Katherine Laws - $49,223.64;
f)Kirsten O’Connell - $20,398.98;
g)Kristy Gascoyne - $4,220.35;
h)Leslie Laws - $33,081.22;
i)Lucy Tyrna - $35,349.88;
j)Noni Chadwick - $5,283.94;
k)Rochelle Hinds - $5,685.15;
l)Tracey Monaghan - $2,416.79;
m)Trent Paora - $939.80;
n)Mark McNiven - $49,346.32;
o)Ray Hansen - $2,226.93;
p)Stuart Sneddon - $4,774.85;
q)Tom Warner - $7,816.24; and
r)Vasil (Vic) Rusev - $73,150.82.
After payments of some amounts in 2008 and 2009 the following amounts remain outstanding to the following employees:
a)Agata Surdyka - $962.66;
b)Ashley Hammond - $2,979.82;
c)Jan Hansen - $52,127.08;
d)Katherine Laws - $40,723.64;
e)Kirsten O’Connell - $5,398.98;
f)Kristy Gascoyne - $3,720.35;
g)Leslie Laws - $31,611.22;
h)Lucy Tyrna - $31,550.66;
i)Noni Chadwick - $4,783.94;
j)Rochelle Hinds - $5,185.15;
k)Tracey Monaghan - $1,916.79;
l)Trent Paora - $649.05;
m)Mark McNiven - $26,346.32;
n)Ray Hansen - $1,726.93;
o)Stuart Sneddon - $3,774.85;
p)Tom Warner - $7,146.24; and
q)Vasil (Vic) Rusev - $41,732.82.
On 13 May 2008 a breach notice was sent to the first respondent in relation to the clerical employees. Among other things, the breach notice particularised breaches of the WRA and the Clerical NAPSA. On 28 May 2008 a final notice in relation to the clerical employees was issued to the first respondent.
On 15 January 2009 a breach notice was sent to the first respondent in relation to the driving employees. Among other things, that notice particularised breaches of the WRA and the Transport NAPSA and foreshadowed the possibility of legal action. On 30 January 2009 a final notice in relation to the driving employees was issued to the first respondent. On 21 October 2009 these proceedings were commenced.
Not only is the second respondent sole director and sole shareholder of the first respondent but he is also the sole director of Hansiy Pty Ltd, the operator of Newcastle After Hours Medical Service and After Hours (Newcastle) Medical Service. Similarly, he was a director of Talmiz Pty Ltd (“Talmiz”) which provided labour services to Hansiy Pty Ltd between 1988 and March 2001. In 2000 Talmiz was the subject of action by the NSW Office of Industrial Relations in respect of underpayment of wages and entitlements pursuant to the Clerical and Administrative (State) Award in relation to an employee performing clerical work at the After Hours Newcastle Medical Service. On 6 March 2001 Talmiz was subject to a court order in respect of outstanding wages, entitlements and penalties. The second respondent participated in those proceedings and was aware of the orders made. Immediately following those proceedings, Talmiz ceased trading and its employees became employees of the first respondent. On 1 May 2005 Talmiz was deregistered by the Australian Securities and Investments Commission (“ASIC”) and the orders made against it on 6 March 2001 have never been satisfied.
The second respondent was involved in each of the contraventions by the first respondent within the meaning of s.728 of the WRA.
Since commencing these proceedings, the first and second respondents have adopted a co-operative approach to resolving the proceedings.
The evidence
The applicant tendered copies of relevant industrial instruments, an ASIC printout concerning the first respondent and business name printouts concerning Hansiy Pty Ltd. The applicant also tendered a notice to admit facts and a notice disputing facts. The respondents tendered no evidence.
Factual findings
The parties filed a document entitled “Consent Draft Findings”. After certain corrections were made, the parties agreed to findings being made reflecting the contents of that document, as corrected. Having considered the matters contained in the agreed statement of facts I am of the view that such findings should be made. I therefore find as follows:
a)the first respondent contravened s.182(1) of the WRA being a term of the Australian Fair Pay and Conditions Standard (“Standard”) by failing to pay the following employees (“clerical employees”) the minimum hourly rate of pay that was at least equal to the basic periodic rate of pay under the Clerical APCS:
i)Agata Surdyka;
ii)Ashley Hammond;
iii)Aurora Veart;
iv)Jan Hansen;
v)Katherine Laws;
vi)Kirsten O’Connell;
vii)Kristy Gascoyne;
viii)Leslie Laws;
ix)Lucy Tyrna;
x)Noni Chadwick;
xi)Rochelle Hinds; and
xii)Tracey Monaghan;
b)the first respondent contravened s.185(2) of the WRA being a term of the Standard by failing to pay clerical employees a 20% casual loading in addition to and based on their rate of pay under the Clerical APCS;
c)the first respondent contravened cl.5.4 of the Clerical NAPSA by failing to pay eight of the clerical employees a minimum payment of four hours work for shifts that were less than four hours;
d)the first respondent contravened cl.10.3.3 of the Clerical NAPSA by failing to pay clerical employees the following shift loadings:
i)a shift loading of 17% during shifts finishing between 7pm and 11pm; and
ii)a shift loading of 20% for time worked during shifts starting between 11pm and 5am or ending 11pm and 6am;
e)the first respondent contravened cl.10.3.6 of the Clerical NAPSA by failing to pay clerical employees penalty rates of one and a half times the Clerical APCS rate for hours worked on Saturdays, one and three quarter times the Clerical APCS rate for hours worked on Sundays and two and a half times the Clerical APCS rate for time worked on public holidays;
f)the first respondent contravened cl.10.4 of the Clerical NAPSA by failing to pay five of the clerical employees overtime rates for time worked in excess of thirty-eight hours per week or nine hours in any one day;
g)the first respondent contravened s.182(1) of the WRA being a term of the Standard by failing to pay the following employees (“driving employees”) the minimum hourly rate of pay that was at least equal to the basic periodic rate of pay under the Transport APCS:
i)Trent Paora;
ii)Mark McNiven;
iii)Ray Hansen;
iv)Stuart Sneddon;
v)Tom Warner; and
vi)Vasil (Vic) Rusev;
h)the first respondent contravened s.185(2) of the WRA being a term of the Standard by failing to pay driving employees a 15% casual loading in addition to and based on their rate of pay under the Transport APCS;
i)the first respondent contravened cl.11.5.2 of the Transport NAPSA by failing to pay five of the driving employees a minimum payment of eight hours pay for shifts that were less than eight hours;
j)the first respondent contravened cl.11.4 of the Transport NAPSA by failing to pay five of the driving employees overtime rates for time worked in excess of forty hours per week;
k)the first respondent contravened cl.11.5.3 of the Transport NAPSA by failing to pay driving employees the following shift loadings:
i)a shift loading of 17.5% for shifts finishing between 6pm and midnight; and
ii)a 30% shift loading for shifts finishing between midnight and 8am;
l)the first respondent contravened cl.11.5.5 of the Transport NAPSA by failing to pay driving employees the following penalty rates for time worked on weekends and public holidays:
i)a rate of time and one half of the Transport APCS rate for time worked on Saturdays;
ii)a rate of two times the Transport APCS rate for time worked on Sundays; and
iii)a rate of two and a half times the Transport APCS rate for time worked on public holidays;
m)the first respondent contravened s.4(3)(b)(ii) of the Annual Holidays Act 1944 (NSW) being a term of both the Clerical and Transport NAPSAs in failing to pay both clerical and driving employees a loading of 1/12 of each worker’s ordinary pay for each shift worked; and
n)the second respondent was involved in the first respondent’s contraventions outlined in paragraphs [a] to [m] above, within the meaning of s.728 of the WRA and thereby is taken to have contravened the WRA and the NAPSAs in respect of the employment of clerical and driving employees.
I also make findings in accordance with the agreed facts set out above at [12] to [32] and I further find that the second respondent is or has been a director of sixteen companies whose details are reproduced in the ASIC printout which is annexure H to the agreed statement of facts.
Based on the lack of dispute by the respondents to aspects of the notice to admit facts I also find that:
a)Agata Surdyka commenced employment with the first respondent no later than 25 May 2008, ceased employment with the first respondent no earlier than 30 June 2008 and performed clerical duties consistent with at least the classification of “Grade one” clerical employee under the Clerical NAPSA;
b)Ashley Hammond commenced employment with the first respondent no later than 15 July 2007, ceased employment with the first respondent no earlier than 30 June 2008 and performed duties consistent with at least the classification of “Grade one” clerical employee under the Clerical NAPSA;
c)Aurora Veart commenced employment with the first respondent no later than 6 May 2007, ceased employment with the first respondent no earlier than 8 July 2007 and performed clerical duties consistent with at least the classification of “Grade one” clerical employee under the Clerical NAPSA;
d)Jan Hansen commenced employment with the first respondent no later than 28 May 2006, ceased employment with the first respondent no earlier than 30 June 2008 and performed clerical duties consistent with at least the classification of “Grade one” clerical employee under the Clerical NAPSA;
e)Katherine Laws commenced employment with the first respondent no later than 21 May 2006, ceased employment with the first respondent no earlier than 30 June 2008 and performed clerical duties consistent with at least the classification of “Grade one” clerical employee under the Clerical NAPSA;
f)Kirsten O’Connell commenced employment with the first respondent no later than 27 March 2006, ceased employment with the first respondent no earlier than 22 July 2007 and performed clerical duties consistent with at least the classification of “Grade one” clerical employee under the Clerical NAPSA;
g)Kristy Gascoyne commenced employment with the first respondent no later than 10 September 2006, ceased employment with the first respondent no earlier than 7 October 2007 and performed clerical duties consistent with at least the classification of “Grade one” clerical employee under the Clerical NAPSA;
h)Leslie Laws commenced employment with the first respondent no later than 27 March 2006, ceased employment with the first respondent no earlier than 30 June 2008 and performed clerical duties consistent with at least the classification of “Grade one” clerical employee under the Clerical NAPSA;
i)Lucy Tyrna commenced employment with the first respondent no later than 27 March 2006, ceased employment with the first respondent no earlier than 18 May 2008 and performed clerical duties consistent with at least the classification of “Grade one” clerical employee under the Clerical NAPSA;
j)Noni Chadwick commenced employment with the first respondent no later than 27 January 2008, ceased employment with the first respondent no earlier than 30 June 2008 and performed clerical duties consistent with at least the classification of “Grade one” clerical employee under the Clerical NAPSA;
k)Rochelle Hinds commenced employment with the first respondent no later than 27 March 2006, ceased employment with the first respondent no earlier than 24 June 2007 and performed clerical duties consistent with at least the classification of “Grade one” clerical employee under the Clerical NAPSA; and
l)Tracey Monaghan commenced employment with the first respondent no later than 27 March 2006, ceased employment with the first respondent no earlier than 18 May 2008 and performed clerical duties consistent with at least the classification of “Grade one” clerical employee under the Clerical NAPSA.
Based on the lack of dispute by the respondents to aspects of the notice to admit facts, coupled with their agreement to facts set out in the agreed statement of facts, I also find that:
a)Trent Paora commenced employment with the first respondent no later than 15 June 2008, ceased employment with the first respondent no earlier than 30 June 2008 and performed duties consistent with the classification of “Chauffeurs/drivers of vehicles used for the purpose of carrying persons” under the Transport NAPSA;
b)Mark McNiven commenced employment with the first respondent no later than 27 March 2006, ceased employment with the first respondent no earlier than 30 March 2008 and performed duties consistent with the classification of “Chauffeurs/drivers of vehicles used for the purpose of carrying persons” under the Transport NAPSA;
c)Ray Hansen commenced employment with the first respondent no later than 27 March 2006, ceased employment with the first respondent no earlier than 25 November 2007 and performed duties consistent with the classification of “Chauffeurs/drivers of vehicles used for the purpose of carrying persons” under the Transport NAPSA;
d)Stuart Sneddon commenced employment with the first respondent no later than 27 March 2008, ceased employment with the first respondent no earlier than 30 June 2008 and performed duties consistent with the classification of “Chauffeurs/drivers of vehicles used for the purpose of carrying persons” under the Transport NAPSA;
e)Tom Warner commenced employment with the first respondent no later than 23 December 2007, ceased employment with the first respondent no earlier than 30 June 2008 and performed duties consistent with the classification of “Chauffeurs/drivers of vehicles used for the purpose of carrying persons” under the Transport NAPSA; and
f)Vasil Rusev commenced employment with the first respondent no later than 27 March 2006, ceased employment with the first respondent no earlier than 30 June 2008 and performed duties consistent with the classification of “Chauffeurs/drivers of vehicles used for the purpose of carrying persons” under the Transport NAPSA.
The parties’ submissions
Applicant
The applicant submitted that multiple contraventions of individual provisions of the WRA, the Clerical NAPSA, the Transport NAPSA and requirements derived from the Annual Holidays Act 1944 (NSW) should be grouped together as single courses of conduct pursuant to s.719(2) of the WRA. The contraventions which, it was submitted, should be grouped together were:
a)the contraventions of s.182(1) of the WRA in respect of the clerical employees;
b)the contraventions of s.185(2) of the WRA in respect of the clerical employees;
c)the contraventions of cl.10.3.3 of the Clerical NAPSA;
d)the contraventions of cl.10.3.6 of the Clerical NAPSA;
e)the contraventions of cl.10.4 of the Clerical NAPSA;
f)the contraventions of s.182(1) of the WRA in respect of the driving employees;
g)the contraventions of s.185(2) of the WRA in respect of the driving employees;
h)the contraventions of cl.11.5.2 of the Transport NAPSA;
i)the contraventions of cl.11.5.3 of the Transport NAPSA;
j)the contraventions of cl.11.5.5 of the Transport NAPSA;
k)the contraventions of cl.11.4 of the Transport NAPSA; and
l)the contraventions of the term in each of the Clerical NAPSA and the Transport NAPSA derived from s.4(3)(b)(ii) of the Annual Holidays Act 1944 (NSW).
The applicant did not mention the contraventions of cl.5.4 of the Clerical NAPSA in this context but this appears to have been an oversight.
The maximum civil penalty for a corporation for a contravention being $33,000 and for an individual $6,600, the applicant submitted that the maximum penalties for which the first and second respondents were potentially liable were $429,000 and $85,800 respectively.
The applicant referred to the breach notice served on the first respondent on or about 14 May 2008 which, it was said, was the earliest time at which the respondents, or either of them, could have known that the Workplace Ombudsman was concerned with the question of underpayments. It was put that the next most relevant date in connection with the underpayments was the date of the commencement of these proceedings, 21 October 2009. It was argued that if there had been any attempt to make good or to demonstrate contrition about the underpayments, these were two dates when the respondents could have done so. It was submitted that the breaches could only be viewed as deliberate or intentional given that approximately a quarter of a million dollars remained outstanding and the events on those two dates clearly indicated to the respondents that they were in breach of the relevant obligations. It was submitted that the third date of relevance was the date when the agreed statement of facts was filed, 31 March 2010, at which point the respondents admitted their contraventions. It was argued that, notwithstanding these events, the respondents took no steps to make good the outstanding underpayments.
On the question of specific deterrence, and in particular in relation to the second respondent, the applicant submitted that he was the director of nine registered companies and was a former director of one other company and of six deregistered companies. It was pointed out that he was still the sole director of Hansiy Pty Ltd, the operator of Newcastle After Hours Medical Service and After Hours (Newcastle) Medical Service.
It was also argued that the second respondent had been a director of Talmiz which, for three years prior to 2001, had provided labour services to Hansiy Pty Ltd at the Newcastle After Hours Medical Service and the After Hours (Newcastle) Medical Service. The applicant referred to the events concerning Talmiz and the similarity of the industrial instrument which Talmiz breached and the instruments with which these proceedings are concerned. It was submitted that the second respondent can be taken to have known of the existence of the original instrument.
The applicant submitted that these proceedings were concerned with eighteen employees over a twenty-seven month period of time and a quarter of a million dollars worth of underpayments. It was submitted that, stripped of all the niceties, this was a serious matter which involved a large number of employees, a long period of time and a lot of money which remained outstanding. It was further submitted that the respondents had had plenty of time to rectify the breaches and although those breaches had been admitted, rectification was wanting. It was also submitted that the respondents had advanced no explanation as to why the breaches occurred and why they had not been rectified.
The applicant observed that there was no evidence in these proceedings as to whether penalties could be paid and no evidence as to whether the outstanding entitlements might ever be paid. It was observed that all the Court could know was that the amounts had not been paid at the date of the hearing notwithstanding that the respondents’ attention had been drawn to the underpayments and that they had admitted the relevant breaches.
It was also submitted that, particularly as far as the second respondent was concerned, the issue of specific deterrence loomed large, especially having regard to his status as the director of other companies. The applicant referred to the comments of Turner FM in Fair Work Ombudsman v Security Protection Services Pty Ltd (2010) 194 IR 96 where his Honour said:
The second and third respondents plead contrition, saying that they have never denied the breaches and have cooperated in the resolution of the matter since the underpayments were discovered. However the second respondent at least is preparing to “walk away” (post) from the matter leaving $134,031.00 owing to the employees. (at 106 [51])
The applicant submitted that the sole shareholder of the first respondent, and therefore the sole beneficiary of the proceeds of its business or its profits, was the second respondent.
The Ombudsman submitted that although a substantial amount had been paid, a more substantial amount had not been paid and part payment was not a mitigating factor. It was submitted that the failure to make full payment to the employees was not a matter of recklessness and it was observed that no statement of contrition had been proffered by either of the respondents. It was submitted that co-operation with the prosecuting authority did not amount to contrition and may have been no more than recognition of the obvious. Moreover, it was submitted, co-operation with the prosecuting authority did not necessarily or automatically justify a reduction in the penalty which would be otherwise be appropriate and the respondents’ co-operation with the investigation was what the law required in any event.
The applicant submitted that a penalty in the mid to high level range should be imposed.
Respondents
The respondents submitted that the maximum penalty can be treated as the penalty most appropriate for the worst possible case, referring to what Moore J had said in Stuart v Construction, Forestry, Mining & Energy Union (CFMEU) (2010) 269 ALR 49 at 61 [30]:
Means of assessing what is the appropriate penalty is the seriousness of the offence viewed objectively: Veen v R (No 2) (1988) 164 CLR 465; 77 ALR 385 per Mascon [sic] CJ, Brennan, Dawson and Toohey JJ and R v Dodd (1991) 57 A Crim R 349 which can involve a comparison between the case under consideration and the worst possible case. Relevant to this task is the maximum penalty which can be treated as the penalty appropriate for the worst possible case: Markarian at [31].
The respondents submitted that the present case was far from the worst possible case noting that the applicant had recommended that a penalty in the range of mid-to-high level be imposed.
It was submitted that the effect which each category of breach had on the employees was not the same and that different levels of penalty were justified for breaches of different seriousness. It was submitted that if the most serious breach were to attract the highest penalty then the penalties for the other breaches could be set proportionately to it.
It was also submitted that if breaches involved contravening conduct which was common to more than one breach, an allowance should be made for the overlapping conduct and a respondent should not be punished twice for the same wrong. It was submitted that in this case allowance should be made for the overlap of the breaches in that the breaches in respect of the clerical employees and the driving employees were essentially the same and all arose out of a single overall course of conduct. An example given was the failure to pay the correct basic periodic rate of pay; it was submitted that this was the same kind of breach for each class of employee. It was submitted that this should not result in two penalties, or penalizing the same fault twice.
It was also submitted that the respondents had co-operated with the applicant since the commencement of the proceedings and had demonstrated a willingness to facilitate the administration of justice by making extensive admissions in their defence, prompt and fulsome submissions in response to the matters the applicant raised in the notice to admit facts, willing participation in mediation, agreement on facts and consent to draft findings.
Emphasis was also placed on the amount which the respondents had already paid in reduction of the outstanding employee entitlements.
The respondents submitted that it would not be appropriate to penalise every breach with the same penalty given that there was considerable variation in the size of the underpayments and that therefore they had different consequences. It was conceded that the employees were paid according to a scheme of hourly payments and bonuses which was the first respondent’s creation and which did comply with either of the two NAPSAs.
The respondents also urged the Court to apply a discount for co-operation given that they had co-operated with the applicant since the beginning of the proceedings, amongst other things, having made available all the material that was sought from them by the applicant in order that he could calculate the underpayments.
The respondents’ counsel told the Court that he had been instructed that the first respondent had ceased to operate.
Annexed to their written submissions the respondents provided the Court with a table setting out various underpayments as proportions of the total amount underpaid and grading them according to relative egregiousness. In that table breaches of the clerical weekend and holiday rates provided by the Clerical NAPSA were classified as the worst breaches, amounting to 26.13% of the total underpayment, whereas the clerical minimum shift breaches of cl.5.4 of the Clerical NAPSA were classified as the least serious breaches, amounting to 0.33% of the amount underpaid. It was submitted that penalties should be applied on a sliding scale according to the relative seriousness of each underpayment.
The respondents submitted that the first respondent was applying a systematic policy, admittedly a wrong one and not in compliance with the NAPSA, but the employees were not being paid arbitrarily.
Although it was an agreed fact that the second respondent had been involved in the Talmiz proceeding, it was submitted that it was not clear how responsible he was for this and, in any event, the proceedings related to a single employee. Further, in relation to the other companies with which the second respondent was associated, it was submitted that there was no evidence of any wrongdoing or complaint in relation to them. It was suggested that there should be no suggestion that there would be wrongdoing in the future concerning those companies or any reason to think that the first respondent’s conduct would flow over to other businesses.
It was submitted that the highest penalty applies to the worse possible case and that there had been no aggravating conduct in this case such as bullying or discrimination. Consequently, the maximum penalty was not appropriate.
Considerations as to penalty
Introduction
As Tracey J said in Kelly v Fitzpatrick (2007) 166 IR 14 at 18-19 [14], in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Mowbray FM identified “a non-exhaustive range of considerations to which regard may be had in determining whether particular conduct calls for the imposition of a penalty, and if it does the amount of the penalty”. Tracey J adopted those considerations and described them as follows:
· The nature and extent of the conduct which led to the breaches.
· The circumstances in which that conduct took place.
· The nature and extent of any loss or damage sustained as a result of the breaches.
· Whether there had been similar previous conduct by the respondent.
· Whether the breaches were properly distinct or arose out of the one course of conduct.
· The size of the business enterprise involved.
· Whether or not the breaches were deliberate.
· Whether senior management was involved in the breaches.
· Whether the party committing the breach had exhibited contrition.
· Whether the party committing the breach had taken corrective action.
· Whether the party committing the breach had cooperated with the enforcement authorities.
· The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
· The need for specific and general deterrence.
However, as Gyles J said in A & L Silvestri Pty Ltd v Construction, Forestry, Mining & Energy Union [2008] FCA 466 at [6], there are no mandatory statutory criteria.
Considerations relevant to this case are:
a)the nature and extent of the conduct which led to the breach;
b)the nature and extent of any loss or damage sustained as a result of the breach;
c)whether there has been similar previous conduct by the respondents;
d)whether the breaches are properly distinct or arose out of the one course of conduct;
e)the size of the business enterprise involved;
f)the deliberateness of the breaches;
g)involvement of senior management;
h)whether in the running of the first respondent’s business the respondents had a culture of compliance;
i)contrition, corrective action and co-operation with the enforcement authorities; and
j)the need for specific and general deterrence.
The nature and extent of the conduct which led to the breach
The first respondent engaged in a course of conduct which led to eighteen of its employees being paid in accordance with a set of wage rates, details of which were set out in a document attached to the notice to admit facts and authenticity of documents, which did not reflect its statutory obligations to those employees. The conduct commenced no later than 27 March 2006. That is the earliest date relevant for these proceedings under the WRA following the Work Choices amendments. On 27 June 2008 the first respondent wrote to the Workplace Ombudsman acknowledging receipt of a breach notice dated 13 May 2008. In that letter, the first respondent stated that, in the future, all employees covered by the grade one classification of the Clerical NAPSA would be paid in accordance with the award, the Clerical NAPSA and the WRA. According to the first respondent’s letter to the applicant dated 20 February 2009 it terminated all its staff on 30 June 2008. The breach notice in relation to the driving employees was not sent until January 2009, by which time their employment with the first respondent had already been terminated.
Consequently, for a period of more than two years, during which it is apparent that various staff came and left, the first respondent implemented a wages regime at variance with its statutory obligations.
The second respondent was responsible for the first respondent’s conduct and the day to day management and control of its business. It was admitted that he was the ultimate decision maker in relation to the first respondent’s human resourcing decisions and responsible in a practical sense for ensuring that the first respondent complied with its legal obligations in respect of its employees. He admitted that he was involved in the first respondent’s contraventions.
The nature and extent of any loss or damage sustained as a result of the breach
The loss of earnings originally suffered by the relevant employees is detailed above at [26]. Those underpayments totalled $356,375.07 and, after payments totalling $94,038.57, the amount which remains outstanding to those employees is $262,336.50. The respondents submitted that the payment of approximately one quarter of the outstanding entitlements was something which should be taken into account, as indeed it should. However, that fact should not obscure the reality that approximately 75% of the relevant employees’ entitlements remain outstanding. Moreover, some of the outstanding amounts are considerable. For instance, Jan Hansen is owed $52,127.08, Katherine Laws is owed $40,723.64, Leslie Laws is owed $31,611.22, Lucy Tyrna is owed $31,550.66, Mark McNiven is owed $26,346.32 and Vasil Rusev is owed $41,732.82. The employees in question all worked for the first respondent, during the relevant period, for over two years and it can be inferred that the size of the underpayments reflects the fact that they were underpaid for a long period. Similarly, many, although not all, of the smaller amounts owing to individual employees appear to reflect the fact that they worked for the first respondent for much shorter periods of time.
The employees in question did not occupy highly paid positions and the underpayments of their wages represented a not insignificant reduction in the amounts they were entitled to receive. For instance, Agata Surdyka worked for the first respondent for little more than a month and yet is still owed $962.66; Noni Chadwick who worked for the first respondent for approximately five months is still owed $4,783.94; Trent Paora who worked for the first respondent for approximately a fortnight is owed $649.05 and Tom Warner who worked for the first respondent for slightly more than six months is still owed $7,146.24.
Given that from 1 October 2007 the basic hourly wage rate for an adult “Grade one” employee under the Clerical APCS was $14.77 and that from 1 October 2007 the basic hourly wage rate for “Chauffeurs/drivers of vehicles used for the purpose of carrying persons” under the Transport APCS was $15.08, the underpayments are significant.
Whether there has been similar previous conduct by the respondents
There was no evidence to suggest that the first respondent was involved in similar conduct in the past. However, the second respondent admitted that he had been a director of Talmiz which, on 6 March 2001, was subject to a court order concerning outstanding wages, entitlements and penalties owed to an employee performing clerical work at the After Hours Newcastle Medical Service. It will be recalled that the first respondent in these proceedings also provided labour services to the operator of Newcastle After Hours Medical Service and After Hours (Newcastle) Medical Service. It was admitted that the second respondent participated in the proceedings against Talmiz and was aware of the orders made. The evidence does not support a conclusion that the second respondent was involved as an accessory in the Talmiz contravention but it does support a conclusion that he was aware that conduct of the sort engaged in first by Talmiz and latterly by the first respondent amounted to breach of an employer’s workplace obligations.
Whether the breaches are properly distinct or arose out of the one course of conduct
It is apparent that all the breaches arose out of the first respondent’s application of its own wage rates to its clerical and driving staff. To that extent, every breach of the relevant provisions was part of the one course of conduct.
The size of the business enterprise involved
No evidence has been adduced by the respondents to indicate the size of the first respondent’s business. However, it is apparent that between March 2006 and 1 July 2007 it employed at least eighteen employees. It is also apparent from the deemed admission of certain contentions in the notice to admit facts that at the end of January 2008 the first respondent had at least ten employees. To these numbers might also be added the second respondent. Although a small business, the first respondent’s business was not a one person affair and should, without particular difficulty, have been able to obtain workplace relations advice which might have avoided these contraventions.
The deliberateness of the breaches
It must be concluded that the first respondent intended not to pay its employees in accordance with its statutory obligations. It was not submitted that the wage rates which it paid were intended to be based on or derived from the employees’ statutory entitlements; nor was it apparent that they were. It must be concluded that the first respondent’s conduct in not paying wages in accordance with statutory entitlements was deliberate and that the second respondent was an intentional participant in this conduct.
Moreover, by reason of his involvement in the Talmiz prosecution, the second respondent was aware that, at least in the case of the clerical employees, there might be an industrial instrument governing the terms of their employment.
Involvement of senior management
The second respondent was the sole director and shareholder of the first respondent and in charge of its day to day management. Quite apart from his admission, it can be inferred that he was an intentional participant in the contraventions. In can be concluded that the contraventions were actuated by decisions taken at the highest level of the first respondent.
Whether in the running of the first respondent’s business the respondents had a culture of compliance
No evidence was adduced by the respondents to suggest that, in the conduct of the first respondent’s business, they sought to comply with the WRA and related instruments and obligations. No evidence was adduced to suggest that the contraventions the subject of these proceedings were the product of a misunderstanding of the first respondent’s obligations or anything similar. It has not been demonstrated that a culture of compliance existed in the operation of the first respondent’s business.
Contrition, corrective action and co-operation with the enforcement authorities
Other than the payment of approximately a quarter of the employees’ outstanding entitlements, the respondents have not pointed to any corrective action on their part. Indeed, although the second respondent wrote to the Workplace Ombudsman on 27 June 2008 saying that, thereafter, it would comply with its obligations to the clerical employees, three days later it terminated their employment.
It can be accepted that, once the Office of the Workplace Ombudsman took an interest in the first respondent’s activities, it co-operated with his inquiries. The respondents also co-operated with the applicant by admitting large portions of the notice to admit facts and authenticity of documents, by entering into an agreed statement of facts and by agreeing to draft consent orders. This co-operation should be acknowledged but it did not extend so far as full compliance with the applicant’s breach notices requiring payment of the clerical and driving employees’ outstanding entitlements.
Importantly, no evidence of contrition has been put before the Court on behalf of either of the respondents. This is a matter of some significance as there was also no evidence put before the Court demonstrating that the first respondent was no longer trading, although there was a submission to this effect. It was not submitted that the first respondent would not trade at some point in the future even were it not trading at present.
The absence of an expression of contrition is particularly significant in the case of the second respondent who remains the sole director of Hansiy Pty Ltd which, from the agreed statement of facts, can be inferred still to be operating the Newcastle After Hours Medical Service and the After Hours (Newcastle) Medical Service. As such, there is a possibility that he will, in the future, have responsibility for dealing with employees and their entitlements.
It should not go unremarked that the respondents did not give evidence that they would not offend again.
The absence of expressions of contrition by either of the respondents indicating a recognition of the significance of their contravening conduct suggests that they do not care that they have failed to meet their statutory obligations. Given the second respondent’s previous exposure to proceedings such as these, the absence of an expression of contrition on his part is a matter of importance which will be most relevant when considering the question of specific deterrence.
The need for specific and general deterrence
Dealing first with the question of general deterrence, it should be observed that the protection of workers provided by the law should be enforced by the courts. This involves sending a message to others that the contravening conduct which the court has identified will not escape punishment. A penalty should be imposed to serve as a warning to others not to offend: Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543, per Lander J at 559 [93]; CPSU, The Community & Public Sector Union v Telstra Corporation Ltd (2001) 108 IR 228 at 231 [9]. A price should be placed on a contravention which is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act: Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 per French J at 52,152.
However, in this case specific deterrence assumes a particular significance. As has already been identified in these reasons, neither of the respondents has expressed contrition for their conduct. In such circumstances, the Court can have no confidence that they will not seek to repeat the behaviour which has been identified in these proceedings. Of particular significance is the fact that this is not the first occasion on which the second respondent has been exposed to proceedings such as these. Although he was the director of a company which was found to have failed to pay an employee in accordance with her award entitlements, he, some years later, has been found to have been involved in essentially the same conduct, although on a much larger scale. Plainly, he drew no lessons from the proceedings against Talmiz. Consequently, the penalty which will be imposed on the second respondent will contain a significant element for specific deterrence.
Further matters
As to the respondents’ submission that the similar breaches of the Clerical NAPSA and the Transport NAPSA should be considered to overlap, thus attracting some allowance in respect of penalty, regard should be had to what Gray J said in Gibbs v The Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216 at 223 when discussing the predecessor of s.719(2):
The object of s 178(2) appears to be that a party bound by an award and pursuing a course of conduct involving repeated acts or omissions, which would ordinarily be regarded as giving rise to a series of separate breaches, should not be punished separately for each of those breaches. If such a party has pursued a course of conduct which gives rise to breaches of several different obligations, there is no reason why it should be treated as immune in respect of its breach of one obligation, merely because it has acted in breach of another. This reasoning leads to the conclusion that each separate obligation found in an award is to be regarded as a “term”, for the purposes of s 178 of the Act. The ascertainment of what is a term should depend not on matters of form, such as how the award maker has chosen to designate by numbers or letters the various provisions of an award, but on matters of substance, namely the different obligations which can be spelt out.
The breaches of the individual provisions of the Clerical NAPSA and of the Transport NAPSA should be treated as separate and distinct from each other. This conclusion also applies to those terms of the NAPSAs derived from the Annual Holidays Act 1944 (NSW). Each NAPSA contained such a term implied by cl.34 of sch.8 to the WRA. Although all the breaches were the result of a single course of conduct, and thus no more than one breach of any particular provision of the NAPSAs should be found, breaches of the two NAPSAs which are of a similar nature should not be collected or aggregated as if they were breaches of the same obligation. This is not a case of the respondents being penalised twice for the same conduct; the breaches of the two NAPSAs were distinct breaches.
Consequently, it is appropriate that separate penalties be imposed in respect of the breaches of the Clerical NAPSA and of the Transport NAPSA. However, the applicant’s submission that the breaches of ss.182(1) and 185(2) should be separated into clerical employee breaches and transport employee breaches should not be accepted. Had the basic periodic pay rates and the entitlements to a casual loading been contained in the NAPSAs then it would have been appropriate to consider separate penalties. However, the breaches in question meet the criteria of s.719(2) and, thus, are to be taken to constitute single breaches of ss.182(1) and 185(2).
There have been twelve breaches by each respondent in respect of which penalties must be considered.
The breaches were not trivial or technical ones. They were persistent breaches over a reasonably lengthy period and disadvantaged relatively lowly paid workers, some to a considerable extent. Moreover, based on the calculation annexed to the respondents’ written submissions, the first respondent’s pay scheme seemed to particularly disadvantage casual employees and employees working shifts and/or overtime. The figures set out in the respondents’ calculations indicated that the effect of the breaches was most pronounced in those categories and the penalties which will be imposed will reflect this.
While this is not the worst possible case, it is nevertheless a serious one. Further, while recognizing that penalties should not be crushing, it should not be overlooked that as the sole director of the first respondent, the second respondent was the principal and possibly sole beneficiary of the first respondent’s failure to pay the outstanding $262,336.50.
Finally, although it is appropriate to impose separate penalties for each contravention or breach, this is a matter where the totality principle is relevant in determining the ultimate penalty which will be imposed on the respondents. That principle provides for a final check, once an appropriate penalty has been set for each contravention, to ensure that the appropriate penalty is not excessive in the circumstances: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560.
Compensation and penalties
Given the admissions concerning the amounts outstanding to the first respondent’s former employees, it should be ordered to pay the following amounts to the following former employees pursuant to s.719(6) of the WRA in respect of those outstanding wages and entitlements:
a)Agata Surdyka - $962.66;
b)Ashley Hammond - $2,979.82;
c)Jan Hansen - $52,127.08;
d)Katherine Laws - $40,723.64;
e)Kirsten O’Connell - $5,398.98;
f)Kristy Gascoyne - $3,720.35;
g)Leslie Laws - $31,611.22;
h)Lucy Tyrna - $31,550.66;
i)Noni Chadwick - $4,783.94;
j)Rochelle Hinds - $5,185.15;
k)Tracey Monaghan - $1,916.79;
l)Trent Paora - $649.05;
m)Mark McNiven - $26,346.32;
n)Ray Hansen - $1,726.93;
o)Stuart Sneddon - $3,774.85;
p)Tom Warner - $7,146.24; and
q)Vasil Rusev - $41,732.82.
To these figures should be added amounts for interest pursuant to s.722 of the WRA, good cause not being shown why interest should not be awarded. The evidence does not permit a confident conclusion as to when each employee was owed a particular sum of money. Consequently, a lump sum will be added to each of the amounts set out in the proceeding paragraph based on the rates of interest prescribed by the Uniform Civil Procedure Rules 2005 (NSW) calculated from the approximate mid-point of each employee’s employment with the first respondent, referred to above at [36] and [37], until the date of judgment. In the case of each employee, the additional amount is:
a)Agata Surdyka - $202.90;
b)Ashley Hammond - $765.46;
c)Jan Hansen - $16,424.66;
d)Katherine Laws - $12,865.86;
e)Kirsten O’Connell - $2,006.06;
f)Kristy Gascoyne - $1,256.87;
g)Leslie Laws - $10,235.55;
h)Lucy Tyrna - $10,401.99;
i)Noni Chadwick - $1,589.31;
j)Rochelle Hinds - $1,945.99;
k)Tracey Monaghan - $631.95;
l)Trent Paora - $134.70;
m)Mark McNiven - $8,871.13;
n)Ray Hansen - $612.04;
o)Stuart Sneddon - $827.77;
p)Tom Warner - $1,667.81; and
q)Vasil Rusev - $13,512.87.
The amounts owing to the employees are to be paid within twenty-eight days.
When determining the appropriate penalties in these proceedings, I have taken into consideration the matters considered earlier in these reasons. I consider the appropriate penalties in this matter to be:
a)in respect of the first respondent:
i)$13,200 for breach of s.182(1) of the WRA in failing to pay clerical employees a minimum hourly rate of pay that was at least equal to the basic period rate of pay under the Clerical APCS and in failing to pay driving employees a minimum hourly rate of pay that was at least equal to the basic period rate of pay under the Transport APCS;
ii)$17,600 for breach of s.185(2) of the WRA in failing to pay clerical employees a 20% casual loading in addition to and based on their rate of pay under the Clerical APCS and by failing to pay driving employees a 15% casual loading in addition to and based on their rate of pay under the Transport APCS;
iii)$5,500 for breach of cl.5.4 of the Clerical NAPSA in failing to pay time eight of the clerical employees a minimum of four hours work for shifts that were less than four hours;
iv)$16,500 for breach of cl.10.3.3 of the Clerical NAPSA in failing to pay clerical employees required shift loadings for shifts finishing between 7pm and 11pm and shifts starting between 11pm and 5am or finishing between 11pm and 6am;
v)$16,500 for breach of cl.10.3.6 of the Clerical NAPSA in failing to pay required penalty rates for hours worked on Saturdays, Sundays and public holidays;
vi)$13,200 for breach of cl.10.4 of the Clerical NAPSA in failing to pay five of the clerical employees required overtime rates for time worked in excess of thirty-eight hours per week or nine hours in any one day;
vii)$5,500 for breach of that term of the Clerical NAPSA derived from s.4(3)(b)(ii) of the Annual holidays Act 1944 (NSW) by failing to pay clerical employees a loading of 1/12 of each workers ordinary pay for each shift worked;
viii)$5,500 for breach of cl.11.5.2 of the notional agreement preserving the terms of the Transport NAPSA by failing to pay five of the driving employees a minimum payment of eight hours pay for shifts that were less than eight hours;
ix)$13,200 for breach of cl.11.4 of the Transport NAPSA by failing to pay five of the driving employees overtime rates for time worked in excess of forty hours per week;
x)$13,200 for breach of cl.11.5.3 of the Transport NAPSA by failing to pay driving employees shift loadings for shifts finishing between 6pm and midnight or finishing between midnight and 8am;
xi)$16,500 for breach of cl.11.5.5 of the Transport NAPSA by failing to pay driving employees penalty rates for time worked on Saturdays, Sundays and public holidays; and
xii)$5,500 for breach of that term of the Transport NAPSA derived from s.4(3)(b)(ii) of the Annual Holidays Act 1944 (NSW) by failing to pay driving employees a loading of 1/12 of each worker’s ordinary pay for each shift worked;
b)in respect of the second respondent:
i)$3,850 for his involvement in the first respondent’s breach of s.182(1) of the WRA;
ii)$4,950 for his involvement in the first respondent’s breach of s.185(2) of the WRA;
iii)$2,200 for his involvement in the first respondent’s breach of cl.5.4 of the Clerical NAPSA;
iv)$4,400 for his involvement in the first respondent’s breach of cl.10.3.3 of the Clerical NAPSA;
v)$4,400 for his involvement in the first respondent’s breach of cl.10.3.6 of the Clerical NAPSA;
vi)$3,850 for his involvement in the first respondent’s breach of cl.10.4 of the Clerical NAPSA;
vii)$2,200 for his involvement in the first respondent’s breach of that term of the Clerical NAPSA derived from s.4(3)(b)(ii) of the Annual Holidays Act 1944 (NSW);
viii)$2,200 for his involvement in the first respondent’s breach of cl.11.5.2 of the Transport NAPSA;
ix)$3,850 for his involvement in the first respondent’s breach of cl.11.4 of the Transport NAPSA;
x)$3,850 for his involvement in the first respondent’s breach of cl.11.5.3 of the Transport NAPSA;
xi)$4,400 for his involvement in the first respondent’s breach of cl.11.5.5 of the Transport NAPSA; and
xii)$2,200 for his involvement in the first respondent’s breach of that term of the Transport NAPSA derived from s.4(3)(b)(ii) of the Annual Holidays Act 1944 (NSW).
The total penalty in respect of the first respondent is therefore $141,900 and the total penalty in respect of the second respondent is $42,350. I am satisfied that each of these figures is just and appropriate as an aggregate amount.
The penalties are to be paid to the Commonwealth within twenty-eight days.
I certify that the preceding ninety-seven (97) paragraphs are a true copy of the reasons for judgment of Cameron FM
Date: 24 November 2010
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