Fair Work Ombudsman v Singh

[2016] FCCA 1335

FEDERAL CIRCUIT COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v SINGH [2016] FCCA 1335

Catchwords:
INDUSTRIAL LAW – Penalty – contraventions of the Road Transport and Distribution Award 2010 relating to remuneration – failure to comply with record keeping obligations – appropriate penalty to be imposed – relevant considerations – applicable penalty of each contravention.

Legislation:

Crimes Act 1914 (Cth), s.4AA(1)

Fair Work Act 2009, ss.3(b), 45, 535, 536, 539, 545, 546, 549, 550, 557, 712,

sub-div.1 of ch.3, pts.3-6, div.3
Fair Work Regulations 2009 (Cth), regs.3.33, 3.44, 4.01A
Road Transport and Distribution Award 2010, cll. A.3.5 ,A.5.4, A.6.4, A.7.3, 12.5, 27.1, 28.1 of sch.A, sch.C

Serious Drugs, Identity Crime and Other Measures) Act 2012(Cth), item 9(1)

of sch.3
Transport Industry (State) Award

Cases cited:
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; [2008] FCAFC 8
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 90 ALJR 113, [2015] HCA 46
Fair Work Ombudsman v Amritsaria Four Pty Ltd [2016] FCCA 968
Fair Work Ombudsman v Maclean Bay Pty Ltd (No. 2) [2012] FCA 557
JR55 v Northern Ireland Commissioner for Complaints [2016] UKSC 22
Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080
Murrihy v Betezy.com.au Pty Ltd (No. 2) (2013) 221 FCR 118; [2013] FCA 1146
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543, [2007] FCAFC 65

Applicant: FAIR WORK OMBUDSMAN

Respondent: SUMERDEEP SINGH

File Number: SYG 2559 of 2015

Judgment of: Judge Smith

Hearing date: 12 April 2016

Date of Last Submission: 12 April 2016

Delivered at: Sydney

Delivered on: 10 June 2016

REPRESENTATION

Solicitors for the Applicant: Ms R. Piechocki, Office of the Fair Work Ombudsman

The Respondent appeared in person

DECLARATIONS MADE BY CONSENT

1. The respondent was involved, within the meaning of subsection 550(2) of the Fair Work Act 2009 (Cth) (“FW Act”), in the contravention by Sumer Bagri Pty Ltd (ACN 152 334 882) (in liquidation) (“Company”) of each of the following civil remedy provisions:

   (a)section 45 of the FW Act, by failing to pay each of Navjeet Singh, Arundeep Singh, Paramjit Singh, Darryl Fuller, Alfredo Barroso, John Jones, Amandeep Singh, Gurpreet Singh, Tarndeep Singh, Michael Jarvis, Tony Wilson and Stephen Short (“Employees”) the minimum rates of pay required by clauses 12.5(c) and A.3.5 of Schedule A of the Road Transport and Distribution Award 2010 (“Road Transport Award”);

   (b)section 45 of the FW Act, by failing to pay each of the Employees the casual loading for ordinary hours of work required by clauses 12.5(c) and A.5.4 of Schedule A of the Road Transport Award;

   (c)section 45 of the FW Act, by failing to pay each of the Employees the Saturday penalties required by clauses 28.1(a) and A.7.3 of Schedule A of the Road Transport Award;

   (d)section 45 of the FW Act, by failing to pay each of Gurpreet Singh, Tarndeep Singh, Michael Jarvis, Tony Wilson and Stephen Short the Sunday penalties required by clauses 28.1(b) and A.7.3 of Schedule A of the Road Transport Award;

   (e)section 45 of the FW Act, by failing to pay each of Michael Jarvis, Tony Wilson and Stephen Short the public holiday penalties required by clauses A.3.5, A.5.4 and A.7.3 of Schedule A of the Road Transport Award;

   (f)section 45 of the FW Act, by failing to pay each of the Employees the casual loading for overtime worked required by clauses 12.5(d) and A.6.4 of Schedule A of the Road Transport Award;

   (g)section 45 of the FW Act, by failing to pay each of the Employees the overtime rates required by clauses 12.5(d), 27.1 and A.3.5 of Schedule A of the Road Transport Award;

   (h)subsection 539(3) of the FW Act and subregulation 3.44(4) of the Fair Work Regulations 2009 (Cth) (“FW Regulations”), by altering records that it was required to keep in respect of each of the Employees;

   (i)subsection 539(3) of the FW Act and subregulation 3.44(1) of the FW Regulations, by failing to ensure that the records it kept in respect of each of the Employees were not false or misleading to its knowledge;

   (j)subsection 539(3) of the FW Act and subregulation 3.44(6) of the FW Regulations, by making use of entries in employee records for each of the Employees on or around 2 July 2014, knowing that those records were false or misleading; and

   (k)subsection 536(1) of the FW Act, by failing to give Stephen Short, Michael Jarvis and Tony Wilson pay slips within one working day of paying amounts to those Employees in relation to the performance of work.

ORDERS

1. The respondent pay penalties, pursuant to section 546(1) of the FW Act, in the total amount of $41,208 in respect of the respondent's involvement in the contraventions in declaration 1 above, which is made up of:

   (a)a penalty of $5,712 in respect of his involvement in the contravention outlined in declaration 1(a) above;

   (b)a penalty of $5,712 in respect of his involvement in the contraventions outlined in declaration 1(b) and 1(f) above;

   (c)a penalty of $5,712 in respect of his involvement in the contravention outlined in declaration 1(c) above;

   (d)a penalty of $5,712 in respect of his involvement in the contravention outlined in declaration 1(d) above;

   (e)a penalty of $5,712 in respect of his involvement in the contravention outlined in declaration 1(e) above;

   (f)a penalty of $5,712 in respect of his involvement in the contravention outlined in declaration 1(g) above;

   (g)a penalty of $2,448 in respect of his involvement in the contraventions outlined in declaration 1(h) and 1(i) above;

   (h)a penalty of $2,448 in respect of his involvement in the contravention outlined in declaration 1(j) above;

   (i)a penalty of $2,040 in respect of his involvement in the contravention outlined in declaration 1(k) above.

2. Pursuant to subsection 546(3)(a) of the FW Act, the respondent pay the penalties referred to in order 2 above to the applicant within 28 days. Pursuant to subsection 546(3)(c) of the FW Act the applicant is within 14 days of receipt of payment of the pecuniary penalties imposed on the respondent, to pay the penalties to the Employees in amounts proportionate to their outstanding underpayments.

3. Pursuant to subsection 546(3)(a) of the FW Act, the applicant will remit any penalty amount payable in respect of an Employee who cannot be located within the 28 day period set out in order 3 above, to the Consolidated Revenue Fund of the Commonwealth within 14 days of that 28 day period expiring.

4. The applicant has liberty to apply on seven days' notice in the event that any of the preceding orders is not complied with.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2559 of 2015

FAIR WORK OMBUDSMAN

Applicant

And

SUMERDEEP SINGH

Respondent

REASONS FOR JUDGMENT

1. The respondent (“Mr Singh”) was at all relevant times the sole director and shareholder of Sumer Bagri Pty Ltd (ACN 152 334 882) (in liquidation) (“Company”).

2. The Company provided grocery delivery services in the Coffs Harbour area over the period from 2011 to 2014 and, in that time employed at least 12 delivery drivers.

3. The parties agree that the Company contravened the Fair Work Act 2009 (Cth) (“FW Act”) and Fair Work Regulations 2009 (Cth) (“FW Regulations”) by:

   a)contravening the Road Transport and Distribution Award 2010 (“Road Transport Award”), in respect of minimum rates of pay, casual loading for ordinary hours, Saturday penalties, Sunday penalties, public holiday rates, casual loading for overtime and overtime rates, resulting in a total underpayment to 12 employees of $143,600.78;

   b)altering employee records, keeping and making use of false and misleading records; and

   c)failing to provide payslips to employees.

4. The parties also agree that Mr Singh was involved in those contraventions.

5. The Company went into liquidation in June 2015. For that reason, the applicant (“Ombudsman”) has only brought proceedings against Mr Singh in respect of his involvement in the Company’s contraventions.

6. Mr Singh has admitted his involvement. The only issue is the appropriate penalty that ought to be imposed on him for that involvement. The parties have agreed to a statement of facts for the purpose of determination of that issue. The following facts are derived from that statement as well as from affidavit and other evidence relied on by the parties.

BACKGROUND

Contracts / Supply chain

1. Mr Singh came to Australia in February 2008 to study Community Welfare at TAFE NSW at Coffs Harbour. He completed his studies in November 2009 but was initially unable to find work in his field of study. In June 2011 he started work as a casual delivery driver delivering groceries. At that time Mr Singh's employer had an arrangement with Linfox Australia Pty Limited, to deliver groceries for Woolworths Limited.

2. In around July 2011 Mr Singh had discussions with Linfox about setting up his own delivery business to provide services to Linfox. The Company was incorporated on 27 July 2011 for the purposes of that business.

3. The Company then delivered groceries which had been ordered online to Woolworths’ customers as part of a supply chain which operated as follows:

Woolworths to Linfox

1. Woolworths engaged Linfox under a delivery contract dated 4 February 2011 and varied from time to time, to carry out deliveries to Woolworths’ customers.

2. Woolworths paid Linfox by the hour for each hour of work by a driver engaged by Linfox to perform the deliveries. During the period September 2011 to August 2014, the hourly rates paid by Woolworths to Linfox were:

   a)from September 2011 to late January 2013, between $51.29 and $53.16 on Monday to Sunday;

   b)from late January 2013 to August 2014, between $52.90 and $54.73 on Monday to Saturday, and between $53.03 and $55.99 on Sundays; and

   c)from October 2013 to August 2014, in addition to the rates referred to in (b), a higher rate on public holidays of between $83.59 and $85.81.

Linfox to the Company

1. Linfox sub-contracted these deliveries to the Company under a contract commencing 8 August 2011 (“Contract”).

2. Linfox paid the Company by the hour for each hour of work by a driver engaged by the Company performing the deliveries. During the period September 2011 to August 2014, the rates paid by Linfox to the Company were:

   a)from September 2011 to late January 2013, between $44.40 and $46.53 on Monday to Sunday;

   b)from late January 2013 to August 2014, between $45.50 and $47.09 on Monday to Saturday, and between $50.50 to $53.22 on Sundays; and

   c)from October 2013 to August 2014, in addition to the rates referred to in (b) above, a new higher rate on public holidays between $71.50 and $73.40.

The Company to its employees

1. The Company paid its drivers amounts which were substantially lower than the rates the Company received from Linfox.

Employees

1. From 19 September 2011 to 31 August 2014 (“Contravention Period”), the Company employed 12 delivery drivers during the periods set out in table 1 below (“Employment Periods”) to perform deliveries under the Contract.

   Table 1

Employee	Employment Periods
Mr Navjeet Singh	19 September 2011 – 13 November 2011
Mr Arundeep Singh	7 November 2011 – 5 January 2014
Mr Paramjit Singh	12 December 2011 – 28 July 2013
Mr Darryl Fuller	4 June 2012 – 4 November 2012
Mr Alfredo Barroso	30 July 2012 – 7 October 2012
Mr John Jones	15 October 2012 – 23 December 2012
Mr Amandeep Singh	5 November 2012 – 23 June 2013
Mr Gurpreet Singh	3 December 2012 – 6 January 2013
Mr Tarndeep Singh	31 December 2012 – 30 June 2013
Mr Michael Jarvis	24 June 2013 – 31 August 2014
Mr Tony Wilson	8 July 2013 – 31 August 2014
Mr Stephen Short	16 September 2013 – 31 August 2014

1. When the Employees were employed they were told that they would be paid the following hourly rates (“Stated Rates”):

   a)from the beginning of the Contravention Period until around April 2014, the following flat hourly rates for all hours worked:

Table 2

Employee	Employment Period	Hourly Rate (gross)
Navjeet Singh	19 September 2011 – 13 November 2011	$18
Arundeep Singh	7 November 2011 – 5 January 2014	$21
Paramjit Singh	12 December 2011 – 28 July 2013	$18
Darryl Fuller	4 June 2012 – 4 November 2012	$17
Alfredo Barroso	30 July 2012 – 7 October 2012	$17 (until 16 September 2012)
		$20 (thereafter)
John Jones	15 October 2012 – 23 December 2012	$17
Amandeep Singh	5 November 2012 – 23 June 2013	$23
Gurpreet Singh	3 December 2012 – 6 January 2013	$23
Tarndeep Singh	31 December 2012 – 30 June 2013	$23
Michael Jarvis	8 July 2013 – 31 August 2014	$18
Tony Wilson	11 June 2013 – 31 August 2014	$18
Stephen Short	16 September 2013 – 31 August 2014	$18

b)from around April 2014 to the conclusion of the Contravention Period:

i)the flat hourly rates set out in table 2 for all hours worked other than on public holidays; and

ii)a flat hourly rate of $28 (gross) on public holidays.

1. The Employees were not paid the Stated Rates for all hours worked.

2. During the relevant Employment Periods each of the Employees:

   a)performed duties consisting of driving a two-axle rigid truck with a gross vehicle mass (GVM) of 6500[1] tonnes to deliver pre-packaged groceries to customers of Woolworths, and the loading and unloading of groceries from the truck; and

   b)was engaged on a casual basis, paid by the hour, paid weekly, and worked varying hours as required by the Company.

   [1] This was the GVM as set out in the statement of claim and the agreed statement of facts. However, it must in fact have meant to be a GVM of 6500 kilograms not tonnes. This is because it was common ground that sch.C (3) of the Road Transport and Distribution Award 2010 applied and that classification applies to drivers of a two-axle rigid vehicle exceeding 4.5 tonnes but not exceeding 13.9 tonnes GVM.

Legislation and Industrial instrument

1. During the Contravention Period:

   a)the Company was bound by the FW Act and the FW Regulations in respect of each employee;

   b)the Company was covered by the Road Transport Award, which applied to the employment of each of the Employees;

   c)the Employees were employed in the classification of Transport Workers Grade 3 under sch.C of the Road Transport Award during their respective Employment Periods;

   d)from the commencement of the Contravention Period until the beginning of the first full pay period on or after 1 July 2014, the Company was required to use the minimum wages and conditions of the Australian Pay and Classification Scale derived from the Transport Industry (State) Award for the purposes of calculating rates under sch.A of the Road Transport Award.

Investigation

1. On 1 May 2014 the Ombudsman received a complaint from a former employee of the Company regarding alleged non-payment of wages and commenced an audit of the Company's compliance with Commonwealth workplace laws.

2. On 16 June 2014, Fair Work Inspector Karen Thio issued a Notice to Produce Records and Documents to the Company under s.712 of the FW Act seeking documents, including time and wage records for the period from 27 July 2011 (“NTP”). The NTP was personally served on Mr Singh.

3. On 2 July 2014 Mr Singh on behalf of the Company produced time and wage records to the Ombudsman in response to the NTP. The documents included records of the start and finish times as well as the hours of work for each employee.

4. On 2 April 2015, Inspector Thio conducted an interview with Mr Singh. During the interview, Mr Singh admitted, and I find, that:

   a)he prepared the time records produced to Inspector Thio;

   b)the time records:

   i)were different from the records previously provided to the Company by Linfox which recorded the Employees' start and finish times;

   ii)were not accurate;

   iii)incorrectly recorded hours worked by the Employees which were not in fact the hours worked by the Employees; and

   iv)incorrectly recorded hours worked by Mr Singh during the period from 23 December 2013 to 26 February 2014 when those hours were in fact worked by various Employees, not Mr Singh and, in fact, Mr Singh was overseas during that period.

   c)Mr Singh had been advised of the applicable overtime and penalty entitlements by Inspector Thio before receiving the NTP and Mr Singh had that in mind when preparing the time records;

   d)in relation to the preparation of the NTP Documents, Mr Singh was trying to save himself and that he had done something that he should not have done.

5. On 18 June 2015 and 19 August 2015, Inspector Thio sent an 'Audit Findings letter' and 'Revised Audit Findings Letter' to the Company and Mr Singh respectively, outlining contraventions by the Company of the FW Act and FW Regulations (set out below).

6. The Company was placed into liquidation on 29 June 2015.

7. On 20 August 2015, Mr Singh told Inspector Thio that he did not intend to contest the contraventions as outlined in the Revised Audit Findings letter dated 19 August 2015.

8. These proceedings were commenced on 16 September 2015.

Underpayment contraventions

Failure to pay minimum rates of pay

1. The Company underpaid the Employees a total amount of $26,696.93 during the Contravention Period in relation to minimum hourly rates of pay for ordinary hours of work (“Ordinary Hours”) under the Road Transport Award.

2. By failing to pay each of the Employees the required minimum rates of pay, the Company:

   a)contravened cl.A.3.5 of sch.A of the Road Transport Award, in the period up to and including 6 July 2014;

   b)contravened cl.12.5(c) in the period from 7 July 2014 onwards; and

   c)in doing so, contravened s.45 of the FW Act.

Failure to pay casual loading for Ordinary Hours

1. The Company underpaid the Employees a total of $35,574.73 during the Contravention Period in relation to casual loading for Ordinary Hours under the Road Transport Award.

2. By failing to pay each of the Employees the required casual loading for Ordinary Hours, the Company:

   a)contravened cl.A.5.4 of sch.A of the Road Transport Award, in the period up to and including 6 July 2014, and cl.12.5(c) in the period from 7 July 2014 onwards; and

   b)in doing so, contravened s.45 of the FW Act.

Failure to pay Saturday penalties

1. The Company underpaid the Employees a total of $8,211.59 during the Contravention Period in relation to penalties for Ordinary Hours performed on a Saturday under the Road Transport Award.

2. By failing to pay each of the Employees the required Saturday penalties, the Company:

   a)contravened cl.A7.3 of sch.A of the Road Transport Award, in the period up to and including 6 July 2014, and sub-cl.28.1(a) in the period from 7 July 2014 onwards; and

   b)in doing so, contravened s.45 of the FW Act.

Failure to pay Sunday penalties

1. The Company underpaid Gurpreet Singh, Tarndeep Singh, Michael Jarvis, Tony Wilson and Stephen Short a total of $3,983.17 during the Contravention Period in relation to penalties for Ordinary Hours performed on a Sunday under the Road Transport Award.

2. In doing so, the Company:

   a)contravened cl.A.7.3 of sch.A of the Road Transport Award, in the period up to and including 6 July 2014, and sub-cl.28.1(b) in the period from 7 July 2014 onwards; and

   b)in doing so, contravened s.45 of the FW Act

Failure to pay public holiday rates

1. The Company underpaid Michael Jarvis, Tony Wilson and Stephen Short a total of $1,725.20 during the period from 1 July 2013 to 6 July 2014 in relation to hourly rates for hours of work on a public holiday (other than Good Friday or Christmas Day) under the Road Transport Award.

1. By failing to pay each of Michael Jarvis, Tony Wilson and Stephen Short the required public holiday penalties, the Company:

   a)contravened cll.A.3.5, A.5.4 and A.7.3 of sch.A of the Road Transport Award; and

   b)in doing so, contravened s.45 of the FW Act

Failure to pay casual loading for overtime hours

1. The Company underpaid the Employees a total of $6,412.76 during the Contravention Period in relation to casual loading for each hour worked outside Ordinary Hours (“Overtime Hours”) under the Road Transport Award.

2. By failing to pay the applicable casual loading to the Employees for the Overtime Hours worked by the Employees, the Company:

   a)contravened cl.A.6.4 of sch.A of the Road Transport Award, in the period up to and including 6 July 2014, and sub-cl.12.5(d) in the period from 7 July 2014 onwards; and

   b)in doing so, contravened s.45 of the FW Act.

Failure to pay overtime rates

1. The Company underpaid the Employees a total of $60,996.40 during the Contravention Period in relation to overtime rates for Overtime Hours under the Road Transport Award.

2. By failing to pay each of the Employees the required overtime rates the Company:

   a)contravened cll.A.3.5 and 27.1 of the Road Transport Award in the period up to and including 6 July 2014 and sub-cll.12.5(d) and 27.1 in the period from 7 July 2015 onwards; and

   b)in doing so, contravened s.45 of the FW Act.

Total underpayment

1. The total amount of all of the underpayments was $143,600.78 (gross).

2. None of the underpayments have been rectified.

Record-keeping contraventions

Altering records

1. During the Contravention Period the Company was:

   a)required under s.535 of the FW Act and reg.3.33(2) of the FW Regulations to make and keep records that set out the hours worked by each Employee;

   b)prohibited under reg.3.44(4) of the FW Regulations from altering records it was required to keep under the FW Act or the FW Regulations.

2. The time records produced in response to the NTP were records which set out the hours worked by each Employee. As set out in [23] above, Mr Singh deliberately altered those records. He did so by changing the start and finish times of the Employees and the total number of hours worked by them in order to make it appear that the Employees received higher rates of pay than they actually received, and did not work hours where penalty rates were applicable.

3. This amounted to a contravention by the Company of reg.3.44(4) of the FW Regulations.

Keeping false or misleading records

1. During the Contravention Period the Company was required under reg.3.44(1) of the FW Regulations to ensure that records kept under the FW Act and the FW Regulations were not, to the Company's knowledge, false or misleading.

2. The time records produced in response to the NTP were records which set out the hours worked by each Employee and therefore records the Company was required to keep under s.535(1) of the FW Act and reg.3.33(2) of the FW Regulations. As noted above, they were false or misleading as they incorrectly recorded the Employees' hours of work.

3. The Company failed to ensure that the records the Company was required to keep under the FW Act and FW Regulations in respect of each of the Employees were not false or misleading, knew that the records were false or misleading, and, as a result contravened reg.3.44(1) of the FW Regulations.

Making use of false or misleading records

1. During the Contravention Period the Company was prohibited under reg.3.44(6) of the FW Regulations from making use of an entry in an employee record made and kept by it for sub-div.1 of ch.3, pts.3-6, div.3 of the FW Regulations, if it did so knowing that the entry was false or misleading.

2. The Time Records were records which set out the hours worked by each Employee, and therefore records the Company was required to keep under s.535(1) of the FW Act and reg.3.33(2) of the FW Regulations.

3. The Company:

   a)knew that the entries in the time records used were false and misleading;

   b)made use of the entries in those records by producing them to the Ombudsman in response to the NTP; and so

   c)contravened reg.3.44(6) of the FW Regulations.

Pay slip contraventions

Failure to provide pay slips

1. During the Contravention Period the Company was required under s.536(1) of the FW Act to give a pay slip to each of the Employees within one working day of paying an amount to the Employee in relation to the performance of work.

2. In contravention of that provision, the Company failed to provide pay slips to:

   a)Stephen Short in respect of various amounts paid to him in relation to the performance of work within one day of paying him such amounts, or at all, during the period from 27 May 2014 to 4 September 2014; and

   b)Michael Jarvis and Tony Wilson in respect of various amounts paid to those Employees in relation to the performance of work during their employment, within one day, or at all.

Contraventions by Mr Singh

1. At all material times during the Contravention Period, Mr Singh:

   a)was principally responsible for the overall direction, management and supervision of the Company's operations in relation to industrial instruments and arrangements, setting and adjusting pay rates, and determining wages and conditions of employment;

   b)was the person who took or authorised decisions regarding the Company's operations including decisions regarding the employment of staff and employee entitlements;

   c)was responsible in a practical sense for ensuring that the Company complied with its legal obligations to its employees under the FW Act;

   d)knew the duties performed by each of the Employees;

   e)knew that the work performed by the Employees was governed by an industrial award;

   f)knew the hours of work of each of the Employees;

   g)knew that an industrial award sets out minimum rates of  pay and other terms and conditions;

   h)knew the amounts paid by the Company to each of the Employees;

   i)knew that the amounts paid by the Company to each of the Employees did not include higher rates of pay for casual work, for overtime, or for weekend work;

   j)prior to April 2014, knew that the amounts paid by the Company to each of the Employees did not include higher rates of pay for public holiday work;

   k)was the person who created, or authorised the creation of, employee records for the Company;

   l)was aware of the content of the Company's employee records;

   m)was the person who deliberately altered the records produced in answer to the NTP Documents;

   n)knew that those documents were false or misleading;

   o)was the person who created and provided pay slips to the Employees;

   p)knew that the Company was required to provide pay slips to the Employees; and

   q)knew that during their employment, the Company did not give Stephen Short, Michael Jarvis and Tony Wilson pay slips within one day of paying each Employee an amount in relation to the performance of work or at all.

2. By way of his acts or omissions, Mr Singh was directly or indirectly knowingly concerned, in or a party to, each of the 11 contraventions by the Company set out above. For that reason, he is to be treated under s.550(1) of the FW Act as having himself contravened each of the provisions which the Company has contravened.

3. Before turning to consider the appropriate penalty it is necessary to explain one matter. Strictly speaking, the Company (and thus Mr Singh) contravened the FW Act each time there was an underpayment to an employee or a failure to comply with the record keeping obligations under the Regulations. However, the parties approached the issue of penalty on the basis that there was only one contravention in respect of each of the relevant obligations of the Company. Further, they agreed that the contraventions involving the casual rates of pay (that is, involving the overall casual loading and the casual overtime rates) ought to be considered to be one contravention and that the contraventions relating to the alteration of records and keeping records ought also to be treated as one contravention. I agree that that is the correct approach.

4. Section 557(1) of the Act provides that two or more contraventions of a civil remedy provision referred to in sub-s.(2) are, subject to sub-s.(3)[2], taken to constitute a single contravention if they are committed by the same person and arose out of a course of conduct by that person. I am satisfied that each different type of contravention outlined above was committed by the same person and arose out of a course of conduct by that person. In addition, the two types of contraventions concerning casual rates and alteration of records both ought to be considered as one contravention.

   [2] Sections 45 and 535 referred to in sub-ss.557(2) and (3) does not apply.

Consideration

1. Each of the contraventions by Mr Singh was a civil remedy provision: s.539. For that reason, the Court can impose a penalty in respect of those contraventions: s.546. Contraventions are not offences: s.549. That means that the penalties are to be imposed by the application of the principles relating to civil rather than criminal penalties.

2. Like any discretionary power, the power to order a pecuniary penalty must be exercised having regard to the purpose for which the power is given. In Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 90 ALJR 113, [2015] HCA 46, the High Court explained the purpose of the imposition of penalties for civil contraventions at [55]:

   [55]… whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance[3]:

   “Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation.  Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act] ... The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.”

   [3](1991) ATPR 41-076 at 52,152

3. Over the course of time the courts have developed a number of guidelines for the exercise of their power to impose pecuniary penalties. In Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 (“Kelly”) at 18-19 [14], Tracey J referred to the following:

   ·    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.

4. Those guidelines are meant to assist in the determination of what penalty is appropriate and do not constitute mandatory considerations.

5. A penalty in respect of an individual must not be more than the maximum number of penalty units referred to in the relevant item in column 4 of the table in s.539(2) and, in respect of a body corporate it must not be more than 5 times the maximum number of penalty units in that column: s.546(2).

6. The maximum penalty for the contravention of the regulations is included in the table in s.539(2) by the operation of reg.4.01A.

7. A “penalty unit” in the Act has the same meaning as in the Crimes Act 1914 (Cth). Section 4AA(1) of that Act currently provides that one penalty unit is $180. At the time of the enactment of the FW Act, and until 28 December 2012 a penalty unit was $110. From 28 December 2012[4] until 26 June 2015[5] it was $170. In the Amending Act, it was provided, by item 9(1) of sch.3, that the amendment “applies in relation to an offence committed after the commencement” of that item, namely, 28 December 2012. Item 9(1), however, has no application to a contravention of a civil remedy provision under the FW Act , since such a contravention is not an offence (s.549): see Murrihy v Betezy.com.au Pty Ltd (No. 2) (2013) 221 FCR 118; [2013] FCA 1146 at [7] (Jessup J) (“Murrihy”).

   [4] When it was amended by the Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Act 2012(Cth) (“Amending Act”).

   [5] When it was amended by the Crimes Legislation Amendment (Penalty Unit) Act 2015 (Cth).

8. Although there was only one contravention in respect of each type of obligation, some of the conduct that constituted the underpayment contraventions took place prior to the increase in the amount of the penalty unit. I considered a similar situation in Fair Work Ombudsman v Amritsaria Four Pty Ltd [2016] FCCA 968. I concluded there, that the higher penalty unit amount applied but that some account had to be taken of the fact that there was a lower penalty unit at the time of some of the conduct. I will take the same approach in this case.

9. Applying those provisions, the maximum penalties for the contraventions are as follows:

Table 3

Contravention	Mr Singh
Minimum rates of pay	$10,200
Casual loading and overtime	$10,200
Saturday penalties	$10,200
Sunday penalties	$10,200
Public holidays penalties	$10,200
Overtime rates	$10,200
Provide pay slips	$5,100
Altering records and keeping false and misleading records	$3,400
Use of false or misleading records	$3,400
TOTAL	$73,100

1. With those maximum amounts in mind, it is necessary to consider the matters relied on by each of the parties in support of the appropriate penalty.

Nature, extent and circumstances of the contravening conduct, loss and damage

1. Given that the Employees were casual drivers in a small delivery business, the amount of the underpayment ($143,600.78) was significant. The underpayments occurred over a three year period.

2. It is also notable that the underpayment occurred in circumstances where the Company was paid well above the award rates for the services it provided to Linfox. I accept, as Mr Singh submitted, that the Company was required to pay overheads in addition to wages, there was no cogent evidence about how much was paid and I am not satisfied that it was anywhere near the amount of the total underpayment.

3. Mr Singh submitted that he was not experienced in business and was also busy working as a blueberry packer and a welfare co-ordinator. While I accept that Mr Singh did not have any direct business

   experience, I find that he was aware of at least the fact that there were award rates that had to be paid and that he knew how to find out what they were. In June 2013 he was told by Mr Jarvis that the amount he proposed to pay was below award rates. He replied by text message (without alteration):

   Michael Wats [i.e. “what is”] the current award wages for LR delivery driver

   I checked it nearly 18 months back

4. The record keeping contraventions were also serious. First among them was the concerted effort to which Mr Singh went in order to doctor the employment records to avoid being found out by the Ombudsman. The role of record keeping in the statutory scheme is an important one. While it may be understandable that a small business might be disorganised in its efforts to maintain records, there is no excuse for deliberately falsifying records in order to deceive Inspectors of the Ombudsman and so divert them from their duty. Generally speaking, the role of an Ombudsman, first created in Sweden in 1809[6], is as a public advocate or representative of people who may not ordinarily have the means to individually pursue their claims through the courts. The Fair Work Ombudsman has the same role in relation to work place issues. It is a very important, protective role and it is a serious matter to undermine the efficacy of the powers given to the Ombudsman to fulfil it.

   [6] JR55 v Northern Ireland Commissioner for Complaints [2016] UKSC 22 at [1] (Lord Sumption: (with whom Lord Neuberger, Lord Clarke, Lord Carnwath and Lord Toulson agreed))

5. The falsification also indicates an awareness that the Company was in breach of its obligations to pay the Employees their entitlements.

Size of the business and financial circumstances

1. It is clear that the Company’s business was small. There was, apart from the fact that it is now in liquidation, no real evidence of the Company’s financial circumstances. Mr Singh adduced evidence of his income and the purchase of his home. He is now employed as a client co-ordinator at a welfare organisation with a net fortnightly income of $1,484.70 after tax, salary sacrifice and superannuation. He paid $420,000 for his home and owes $274,000 to the Bananacoast Community Credit Union in respect of that purchase. He does not have much cash and will have to draw down on his mortgage in order to pay any penalty. However, Mr Singh acknowledged that he had drawn $45,000 from the Company’s accounts in order to pay the deposit on the home. That is significant in circumstances where none of the Employees have been paid the amounts to which they were entitled.

Whether the breaches were deliberate

1. In my view, the breaches were deliberate. As I have said, Mr Singh was aware that the Company was paying under award wages and has conceded that he deliberately falsified records to avoid being caught for doing so.

Corrective action

1. There has been no corrective action.

Compliance with minimum standards

1. One of the principal objects of the FW Act is to provide a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions for all employees: s.3(b). Failure to comply with the Road Transport Award has undermined that objective. The failure to comply with record keeping obligations achieved the same effect. It is central to the Ombudsman’s functions that there be a reliable way of determining whether the minimum conditions of employment are being maintained. That way is to keep accurate records.

Deterrence

1. There are two aspects of deterrence: one aspect aimed at preventing recurrence of a contravention by the employer in question (specific deterrence) and one aspect aimed at ensuring that other employers do not contravene the FW Act and Regulations (general deterrence). In my view, specific deterrence has little role to play in this case. Mr Singh came to Australia to take a particular course and engage in a particular career. He has now done that. In those circumstances there is very little prospect that he will engage in business again and so will probably never employ anybody again.

2. On the other hand, general deterrence does have some role to play. As noted by Marshall J in Fair Work Ombudsman v Maclean Bay Pty Ltd (No. 2) [2012] FCA 557 at [29], “rights are a mere shell unless they are respected”.

Co-operation and admissions

1. Once the Ombudsman discovered that the records produced by Mr Singh were false, Mr Singh co-operated with the Ombudsman. He voluntarily took part in a formal record of interview with Inspector Thio, admitted the contraventions shortly after the proceedings were commenced and agreed to a statement of facts with the Ombudsman.

1. The Ombudsman submitted that the early concession meant that there should be a discount of 15%. In my view, given that there was no delay in making admissions, there should be a 20% discount for this element.

Conclusions on each contravention

1. In my view the contraventions were serious to varying degrees. They were deliberate and engaged in over a period of three years, that is, for most, if not all, of the period in which the Company ran the business. However, taking into account the fact that Mr Singh was not a business person as such and has moved into his real career, I consider that the underpayment contraventions are not in the highest category of cases and assess them at 70% of the maximum.

2. The payslip contravention was less serious and affected fewer employees. For that reason, I consider that to be at the medium level, namely 50% of the maximum. The remaining record keeping contraventions were, on the other hand, particularly egregious and I assess them to be 90% of the maximum.

3. Once that assessment has been done, I would give a discount of 20% in respect of each contravention for the early admission and co-operation with the Ombudsman. The results are set out in table 4 below:

Table 4

Contravention	Maximum penalty	Percentage	Amount	After 20% discount
Minimum wages	$10,200	70%	$7,140	$5,712
Casual loading	$10,200	70%	$7,140	$5,712
Saturday	$10,200	70%	$7,140	$5,712
Sunday	$10,200	70%	$7,140	$5,712
Public Holidays	$10,200	70%	$7,140	$5,712
Overtime	$10,200	70%	$7,140	$5,712
Pay slips	$5,100	50%	$2,550	$2,040
Altering records	$3,400	90%	$3,060	$2,448
Use false records	$3,400	90%	$3,060	$2,448
TOTAL	$73,100	$51,510	$41,208

1. Having arrived at the appropriate penalty for each contravention it is necessary to have a final look at the total penalty to ensure that that is just and appropriate or not crushing or oppressive: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; [2008] FCAFC 8; Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; [2007] FCAFC 65.

2. Mr Singh submitted that the appropriate penalty in his circumstances is $20,000. He says that, that is the amount which would be paid from further borrowing on the security of his home. I am not satisfied that there is a sufficient evidentiary basis to support that submission. While Mr Singh’s net income is modest ($1,484 per fortnight) this takes into account a salary sacrifice that is not explained. Further, assuming that his house has the same value as when he bought it, there is considerable equity in it, given that his outstanding loan is only $274,000. The amount of the loan repayments was not obvious from the bank records that were in evidence and I am left to speculate whether they were made by the salary sacrifice or from some other source.

3. I note that the applicant sought to have an order made requiring the respondent, under s.545(1) of the FW Act to register on the applicant’s learning centre and complete the online training course “hiring employees” as well as provide the applicant with a copy of the certificate of completion of the training course within 7 days of completion. I addressed this concern at [78] above and found that Mr Singh is unlikely to engage in business or employ people again. I therefore see no need to make the order sought by the applicant.

Conclusion

1. Overall, I consider that the total penalty of $41,208 is a just and appropriate response to the conduct involved in the contraventions and that no adjustment needs to be made to it.

2. For those reasons I make the orders set out above.

I certify that the preceding eighty-nine (89) paragraphs are a true copy of the reasons for judgment of Judge Smith

Associate: 

Date:  10 June 2016