Fair Work Ombudsman v Skyjohn Pty Ltd

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Skyjohn Pty Ltd [2022] FedCFamC2G 563

File number(s): ADG 337 of 2021
Judgment of: JUDGE BROWN
Date of judgment: 12 July 2022
Catchwords: INDUSTRIAL LAW – fair work – claim for unpaid leave entitlements following termination of employment – penalty hearing – failure to comply with Compliance Notice – where respondents have not participated in proceedings – first time offenders – primacy of issues – relating to general and specific deterrence –  calculation of penalty   
Legislation:

Crimes Act 1914 (Cth) s 4AA

Fair Work Act 2009 (Cth) ch 2, ss 3, 90, 539, 546, 550, 681, 682, 701, 706, 712, 716, 717

Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), rr 13.04, 13.05
Cases cited:

Australian Building and Construction Commissioner v Pattinson [2022] HCA 13

Australian Opthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCFCA 8

Blandy v Coverdale NT Pty Ltd [2008] FCA 1533

Fair Work  Ombudsman v Yogurberry World Square [2016] FCA 1290

Fair Work Ombudsman v Corporation Sun Pty Ltd [2020] FCCA 2849

Fair Work Ombudsman v Darna Pty Ltd [2015] FCCA 709

Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365

Fair Work Ombudsman v Maclean Bay Pty Ltd (No 2) [2012] FCA 557

Fair Work Ombudsman v Matcraft Pty Ltd & Ors [2021] FCCA 272

Fair Work Ombudsman v Trek North Tours & Anor (No 2) [2015] FCCA 1801

Kelly v Fitzpatrick [2007] FCA 1080

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7

Minister for Immigration & Citizenship v Li (2013) 249 CLR 332

Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65

Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412

Veen v R (No 2) (1988) 164 CLR 465
Division: Division 2 General Federal Law
Number of paragraphs: 99
Date of hearing: 10 June 2022
Place: Adelaide
Counsel for the Applicant: Mr Bergander-Florek
Solicitor for the Applicant: HWL Ebsworth Lawyer
Solicitor for the Respondents: No appearance
Table of Corrections
18 August 2022 In paragraph 93 and Order 4a the sum of $13,320.00 has been replaced by $16,650.00
18 August 2022 In paragraph 93 and Order 4b the sum of $2,664.00 has been replaced by $3,330.00

ORDERS

ADG 337 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

SKYJOHN PTY. LTD. (ACN 008 142 756)

First Respondent

PETER ALBERT ROBINSON

Second Respondent

ORDER MADE BY:

JUDGE BROWN

DATE OF ORDER:

12 JULY 2022
*AMENDED 18 AUGUST 2022

THE COURT DECLARES THAT:

1.The First Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth), (hereinafter referred to as the Act) by failing to comply with the Compliance Notice.

2.The Second Respondent was involved, within the meaning of section 550(2) of the Act, in the contravention of section 716(5) of the Act by the First Respondent, and has therefore contravened section 716(5) of the Act pursuant to section…

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Details
Case
[2022] FedCFamC2G 563
Decision Date

CaseChat Overview and Summary

In the Fair Work Ombudsman v Skyjohn Pty Ltd case, the Fair Work Ombudsman initiated proceedings against Skyjohn Pty Ltd for unpaid leave entitlements following the termination of employment. The matter proceeded as a penalty hearing after the respondents failed to comply with a Compliance Notice. The respondents did not participate in the proceedings. The central issue for the court was to determine an appropriate penalty for the non-compliance with the Compliance Notice. The court had to balance the principles of general and specific deterrence against the mitigating factors such as the respondents being first-time offenders.

The court emphasised the importance of Compliance Notices and the need for prompt rectification of errors to benefit both the employer and employee. The judge considered the gravity of the offending, the necessity for general deterrence, and the lack of cooperation from the respondents. The penalty was calculated to be 50% of the maximum allowable penalty, amounting to $16,650.00 for the first respondent and $3,330.00 for the second. The court highlighted that while the respondents were first-time offenders and one of them attempted to rectify the situation post-termination, the failure to cooperate with authorities and the protracted nature of the case warranted a significant penalty to serve as a deterrent.

The judge concluded that the penalties imposed were substantial enough to achieve general deterrence and ensure compliance with industrial laws. The court ordered that the penalties be paid to the Commonwealth, considering the funding of the prosecution by the Fair Work Ombudsman. The decision underscored the principle that the size or financial difficulty of an employer should not significantly influence the penalty calculation.

The case reinforces the importance of adhering to Compliance Notices and the potential consequences of non-compliance, including the imposition of penalties that serve as a deterrent to both the individual employer and the broader community.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In my view, it is important that employers recognise that Compliance Notices are significant and are thus encouraged to manage their business so that errors, including innocent ones, can be rectified quickly and cheaply for the benefit of both business and employee. These considerations are applicable to both large and small employers. CONCLUSIONS It has been said that the task of sentencing is one of the hardest judicial tasks, as it requires the synthesis of competing considerations to arrive at a penalty which is just and appropriate. Necessarily it is a process of intuitive synthesis. It is useful to think of it in terms of percentages, but sentencing is not a purely arithmetical process. The penalty to be imposed must be proportionate to the gravity of the offending. This provides a high water mark in respect of the range of the penalty to be imposed before turning to any subjective factors which tend to mitigate the objective assessment of the offending. In my assessment, an appropriate penalty for the first respondent is one of $16,650.00 and $3,330.00 for the second respondent. These are, in my view, significant sums, which represents 50% of the maximum penalty. I accept that these sums are less than those sought by the FWO. The mitigating factors which have led to this reduction are the fact that each respondent is a first offender. In addition, I note that after Mr Miller left the employ of Skyjohn, Mr Robinson tried to do the right thing and paid Mr Miller the larger proportion of his leave entitlements, leaving a sum just in excess of $1,000.00 outstanding. However there has been no cooperation with authorities and the case has been protracted as a consequence, leading to these proceedings, which represent a significant impost on the public purse. At the same time, the breach represents a failure of the Compliance Notice system to achieve its objectives. As such, a message must be sent to the proprietors of small cottage-type industries, in which employees are isolated from their colleagues and so vulnerable to exploitation through a lack of knowledge, of the importance of prompt and complete rectification of any breaches of the industrial safety net. The penalty imposed, in my view, must be of sufficient moment to achieve the desired degree of general deterrence required. In all the circumstances, I do not consider that the penalties to be imposed can be considered as being either token or trivial. Although I acknowledge that I have scant information about the respondents’ financial circumstances. Importantly, as indicated above, I consider the penalty to be of sufficient magnitude to provide general deterrence. Pursuant to section 546(3) of the Act, the court may order the payment of any penalty imposed to be paid to the Commonwealth; a particular organisation; or a particular person. In this case, the FWO seeks that the penalties be paid to the Commonwealth. Given the prosecution has been funded by the FWO, it is obviously appropriate that this course should be adopted.

Ratio Decidendi

Legal Principle Established

However, in general terms, the fact that an errant employer conducts business on a small scale or may have fallen into financial difficulty, must be regarded as one factor, amongst many, in regards to how penalties are to be calculated. In this regard, I adopt the comments of Driver FM (as his Honour then was) in Rajagopalan v BM Sydney Building Materials Pty Ltd[28] as follows:Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to the Court’s consideration of penalty.[29][28] Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412.[29] See Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at [27] (Driver FM).Corrective action, cooperation and contrition Again for reason about which I can only conjecture, the respondents have not elected to pay the sum due to Mr Miller. The most concrete and useful example of contrition, which could have been provided by the respondent would have been the full payment of what was acknowledged to be due to Mr Miller. This has not occurred. There is no evidence of any corrective action. Despite the overtures of Ms Okulicz, the Compliance Notice was disregarded by the respondents, which I accept undermines the fundamental objectives of the system involved.General and specific deterrence As I have already observed deterrence has two aspects – general deterrence directed towards the community as a whole, and specific deterrence directed towards the individual concerned whose conduct is to be sanctioned. As the High Court has recently indicated, issues of deterrence must be accorded primacy in the imposition of any civil penalty. In Fair Work Ombudsman v Darna Pty Ltd,[30] Judge Hartnett said as follows in respect of the importance of the Compliance Notice process in the industrial regulatory system in this county:The Explanatory Memorandum to the Fair Work Bill 2008 (Cth) provides that compliance notices were designed to be another option to deal with non-compliance instead of pursuing court proceedings. It was to be a less costly and less time consuming procedure. Section 716 of the FW Act allows a person to whom a compliance notice is issued an opportunity to rectify an under payment without being subject to civil remedy provisions. The First Respondent’s failure to comply with the Compliance Notice issued has, in these proceedings, caused the Applicant and the Court to spend time and public funds in dealing with civil remedy proceedings which would not have been necessary had compliance occurred.[31][30] Fair Work Ombudsman v Darna Pty Ltd [2015] FCCA 709.[31] See Fair Work Ombudsman v Darna Pty Ltd [2015] FCCA 709 at [11] As I have already observed, so far as the current matter is concerned, the Compliance Notice procedure has been an abject failure in bringing about a prompt restitution to the employees concerned and the saving imposition on the public purse. One of the central purposes of the modern award system and the related enforcement procedures is to ensure all employees have the benefit of the industrial safety net provided by relevant awards.