Fair Work Ombudsman v Skypac Group Pty Ltd
[2020] FCCA 2332
•26 August 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v SKYPAC GROUP PTY LTD & ORS | [2020] FCCA 2332 |
| Catchwords: INDUSTRIAL LAW – Application for civil penalty – admitted contraventions of the Fair Work Act 2009 (Cth) by first, second and third respondents – agreement on penalty range and necessary declarations – appropriate penalty. |
| Legislation: Evidence Act 1995 (Cth), s.191 Fair Work Act 2009 (Cth), ss.45, 325, 535, 550(2), 557(1) Fair Work Regulations 2009 (Cth), rr.3.32(b), 3.44(1), 3.44(6) Fast Food Industry Award 2010 Crimes Act 1914 (Cth), s.4AA |
| Cases cited: Fair Work Ombudsman v HSCC Pty Ltd [2020] FCA 655 Fair Work Ombudsman v Lohr [2018] FCA 5 Fair Work Ombudsman v Wongtas Pty Ltd (No 2) [2012] FCA 30 Commonwealth v Director, Fair Work Building Industry Inspectorate & Anor |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | SKYPAC GROUP PTY LTD (ACN 605 026 284) |
| Second Respondent: | SKYPIC GROUP PTY LTD (ACN 144 847 334) |
| Third Respondent: | HUA GONG |
| File Number: | MLG 2651 of 2019 |
| Judgment of: | Judge O'Sullivan |
| Hearing date: | On the papers |
| Date of Last Submission: | 17 July 2020 |
| Delivered at: | Dandenong |
| Delivered on: | 26 August 2020 |
REPRESENTATION
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Solicitors for the First, Second and Third Respondents: | Tao Jiang Lawyers |
ORDERS
THE COURT DECLARES THAT:
The First Respondent contravened the following civil remedy provisions:
(a)section 45 of the FW Act by failing to pay Ms Mia Are, Ms Marites Dayao, Ms Marylyn Jarapa, Ms Madelyn Sumigad, Ms Yun Tang, Ms Phuong Truong, Ms Sim Yee Yu, ‘Hayley’ and ‘Lin’ the applicable minimum adult hourly rate for each ordinary hour they worked, in contravention of clause 17 of the Fast Food Industry Award 2010 (Award);
(b)section 45 of the Fair Work Act 2009 (FW Act) by failing to pay Ms Natalie Hansford, Ms Siheng Luo, Mr Morgan Mills and Ms Karen Reyes the applicable minimum junior hourly rate for each ordinary hour they worked, in contravention of clause 18 of the Award;
(c)section 45 of the FW Act by failing to pay the Skypac Employees, except for Ms Tang, the applicable casual loading for each applicable ordinary hour they worked during the period 23 January 2017 to 25 June 2017 (First Skypac Audit Period), in contravention of clause 13.2 of the Award;
(d)section 45 of the FW Act by failing to pay Ms Abby Gorman, Ms Luo and Ms Jeri Packham, the applicable casual loading for each applicable ordinary hour they worked during the period 30 October 2017 to 31 December 2017 (Second Skypac Audit Period), in contravention of clause 13.2 of the Award;
(e)section 45 of the FW Act by failing to pay Ms Are, Ms Hansford, Ms Luo, Mr Mills, Ms Reyes, Ms Sumigad, Ms Truong, Ms Yu and ‘Hayley’ the applicable Saturday penalty rate for each ordinary hour they worked on a Saturday, in contravention of clause 25.5(b)(ii) of the Award;
(f)section 45 of the FW Act by failing to pay Ms Dayao, Ms Hansford, Ms Luo, Mr Anthon Peralta, Ms Reyes, Ms Sumigad and Ms Tang the applicable Sunday penalty rate for each ordinary hour they worked on a Sunday during the First Skypac Audit Period, in contravention of clause 25.5(c) of the Award;
(g)section 45 of the FW Act by failing to pay Ms Luo and Ms Packham the applicable Sunday penalty rate for each ordinary hour they worked on a Sunday during the Second Skypac Audit Period, in contravention of clause 25.5(c) of the Award;
(h)section 536(1) of the FW Act by failing to provide the Skypac Employees pay slips within one working day of making payment for the performance of work;
(i)section 535(1) of the FW Act, by failing to make and keep records as required, in contravention of regulation 3.32(b) of the Fair Work Regulations 2009 (FW Regulations);
(j)regulation 3.44(1) of the FW Regulations by making or keeping false or misleading records of each of the following:
(i)hourly rates of remuneration paid to the Skypac Employees as specified in the First Skypac Pay Records (which were records required to be made and kept by Regulation 3.33(1)(a) of the FW Regulations);
(ii)gross and net amounts paid to the Skypac Employees specified in the First Skypac Pay Records (which were records required to be made and kept by Regulation 3.33(1)(b) of the FW Regulations);
(iii)penalty rates paid to the Skypac Employees as specified in the First Skypac Pay Records (which were records required to be made and kept by Regulation 3.33(3) of the FW Regulations);
(iv)hours worked by the Skypac Employees as specified in the First Skypac Pay Records (which were records required to be made and kept by Regulation 3.33(2) of the FW Regulations); and
(v)hours worked by the Skypac Employees as specified in the First Skypac Time Records (which were records required to be made and kept by Regulation 3.33(2) of the FW Regulations);
(k)regulation 3.44(6) of the FW Regulations by making use of the entries in the following records knowing they were false or misleading:
(i)hourly rates of remuneration paid to the Skypac Employees as specified in the First Skypac Pay Records;
(ii)gross and net amounts paid to the Skypac Employees specified in the First Skypac Pay Records;
(iii)penalty rates paid to the Skypac Employees as specified in the First Skypac Pay Records;
(iv)hours worked by the Skypac Employees as specified in the First Skypac Pay Records; and
(v)hours worked by the Skypac Employees as specified in the First Skypac Time Records;
(l)section 325(1) by requiring Ms Sumigad to pay the amount of $896 in relation to her tax return to the First Respondent;
(m)section 325(1) by requiring Ms Sumigad to pay the amount of $4,046.19 in relation to rectification payment to the First Respondent;
The Second Respondent contravened the following civil remedy provisions:
(a)section 45 of the FW Act by failing to pay Ms Liu Chang, Ms Tang, Ms Truong, Ms Jiaqian Wu, Ms Helen Yang, ‘Anh’, ‘Pha’ and ‘Vicky’ the minimum applicable adult hourly rate for each ordinary hour they worked, in contravention of clause 17 of the Award;
(b)section 45 of the FW Act by failing to pay the Skypic Employees the applicable casual loading for each ordinary hour they worked on a Monday to Saturday, in contravention of clause 13.2 of the Award;
(c)section 45 of the FW Act by failing to pay Ms Daina Allison, Ms Tahila Rose Di Pasquali, Ms Mikalea Mills, Ms Maddison Robbins-Hart and Ms Truong the applicable Saturday penalty rate for each ordinary hour they worked on a Saturday, in contravention of clause 25.5(b)(ii) of the Award;
(d)section 45 of the FW Act by failing to pay Ms Di Pasquali, Ms Mills, Ms Robbins-Hart and Ms Truong the applicable Sunday penalty rate for each hour they worked on a Sunday, in contravention of clause 25.5(c) of the Award;
(e)section 45 of the FW Act by failing to pay Ms Allison, Ms Di Pasquali, Ms Mills, Ms Truong, Ms Yang and Anh the applicable public holiday penalty rate for each hour they worked on a public holiday, in contravention of clause 30.3 of the Award;
(f)section 536(1) of the FW Act by failing to provide the Skypic Employees pay slips within one working day of making payment for the performance of work;
(g)section 535(1) of the FW Act, by failing to make and keep records as required, in contravention of regulation 3.32(b) of the FW Regulations;
(h)section 535(1) of the FW Act, by failing to make and keep records as required, in contravention of regulation 3.33(1)(b) of the FW Regulations; and
(i)section 712(3) of the FW Act by failing to comply with the Notice to Produce Records or Documents dated 5 July 2017.
The Third Respondent was involved in each of the contraventions of the First Respondent set out at paragraph 1 above pursuant to section 550(1) of the FW Act.
The Third Respondent was involved in each of the contraventions of the Second Respondent set out at paragraph 2 above pursuant to section 550(1) of the FW Act.
THE COURT ORDERS THAT:
Pursuant to sections 546(2) and (3) of the FW Act that the First Respondent pay to the Commonwealth pecuniary penalties of $161,988.75 in respect of the contraventions set out at paragraph 1 above.
Pursuant to sections 546(2) and (3) of the FW Act that the Second Respondent pay to the Commonwealth pecuniary penalties of $80,325.00 in respect of the contraventions set out at paragraph 2 above.
Pursuant to section 546(2) of the FW Act that the Third Respondent pay pecuniary penalties of $34,616.00 in respect of the contraventions set out at paragraph 3 and 4 above.
Pursuant to section 546(3)(a) of the FW Act that the pecuniary penalties ordered to be paid by the Third Respondent be paid to the Commonwealth on the following terms:
(a)$5,000 to be paid within 28 days of the Court’s orders;
(b)the residual amounts payable within 12 months of the Court’s orders.
(c)An order that the Applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT Melbourne |
MLG 2651 of 2019
| Fair Work Ombudsman |
Applicant
And
| Skypac Group Pty Ltd |
First Respondent
| Skypic Group Pty Ltd |
Second Respondent
| HUA GONG |
Third Respondent
REASONS FOR JUDGMENT
Introduction
“This is a case about greed and the exploitation of the vulnerable...once again in the fast food industry.[1]”
[1].Fair Work Ombudsman v HSCC Pty Ltd [2020] FCA 655 at [1]
This too is a case arising from the underpayment of employees in the fast food industry. It is also an illustration of, an all too common, a phenomena where employers from culturally and linguistically diverse backgrounds who exploit workers (including, or especially, from within their own ethnic communities) and then come before the Court and seek to rely on their own alleged ignorance of workplace laws or foreign cultural norms to mitigate any penalties that need to be applied when they are finally caught out.[2]
[2] See Fair Work Ombudsman v Wongtas Pty Ltd (No. 2) [2012] FCA 30; Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 at [175] to [176]
On 14 August 2019, the Fair Work Ombudsman (“the applicant”) commenced proceedings against Skypac Group Pty Ltd (“the first respondent”), Skypic Group Pty Ltd (“the second respondent”) and Hua Gong (“the third respondent”) (“the respondents”).
The applicant alleged that the first and second respondents contravened various provisions of the Fair Work Act 2009 (Cth) (“the Act’), the Fair Work Regulations 2009 (Cth) (“the Regulations”) and the Fast Food Industry Award 2010 (“the Award”) and that the third respondent was involved in those and accessorily liable as a result.
The applicant alleged that following an investigation in 2017, it identified that the first and second respondents underpaid almost thirty employees at Hello Juice stores located in Werribee and Geelong and the third respondent (who was the general manager of both of those businesses) was involved in these contraventions.
Most unfortunately, it was also alleged the respondents made and used false and misleading records and unlawfully required some of the affected employees to make payments back to the respondents of the monies that had been recovered as underpayments due to the affected employees.
For the reasons set out below, the question before the Court is the quantum of penalties that should be imposed on each of the respondents for agreed contraventions which included the failure to pay minimum hourly rates, casual loading, Saturday, Sunday and public holidays rates, breaches of the requirements regarding pay slips and employee records, making and using false records and failure to comply with a notice to produce.
Prior to the first return date, the parties advised the Court that the respondents would make full admissions and requested that the matter be programmed for a penalty hearing. It was subsequently necessary, at the request of the parties, to make a number of adjustments to the timetable for that purpose.
Ultimately after the parties had filed a statement of agreed facts, affidavits and further submissions the proceedings were fixed for a penalty hearing on 11 November 2020. However, on 7 August 2020 the parties requested the Court consider the appropriate penalty for the admitted contraventions on the papers and vacate the penalty hearing. Accordingly, orders were made to facilitate the disposition of the matter on the papers in accordance with the agreement of the parties.
Material relied on
The applicant relied on:
a)Statement of Agreed Facts filed on 11 December 2019 (“S.O.A.F.”);
b)affidavit of Tahlia Rose Di Pasquale filed on 19 December 2019;
c)affidavits of Claudia Andrea Zeballos filed on 19 December 2019 and 18 March 2020; and
d)Outline of Submissions on Penalty filed 20 March 2020, Further Submissions on Penalty filed 19 June 2020 and Reply Submissions on Penalty filed 17 July 2020.
The respondents relied on:
a)the S.O.A.F.;
b)the affidavits of the third respondent filed 2 March and 11 May 2020; and
c)Outline of Submissions on Penalty filed 6 July 2020.
Statement of agreed facts
The parties had filed a S.O.A.F. on 11 December 2019 which outlined details of the admitted contraventions, summarised earlier, along with the agreed declarations and orders.
In summary, in the S.O.A.F., it is admitted that:
a)the first respondent underpaid 17 employees employed for various periods in 2017, a total of $23,902.47. those underpayments arose from contraventions of section 45 of the FW Act for failing to pay the minimum applicable adult and junior hourly rates for ordinary hours, casual loading, Saturday, Sunday and/or public holiday penalty rates under the Award.
b)the second respondent underpaid 12 employees employed for various periods in 2017 a total of $14,555.64. Those underpayments arose from contraventions of section 45 of the FW Act for failing to pay the minimum applicable adult hourly rate for ordinary hours, casual loading, Saturday, Sunday and/or public holiday penalty rates under the Award.
c)the first and second respondents committed various record keeping contraventions by:
i)failing to make and keep records as required in contravention of section 535(1) of the FW Act and regulations 3.32(b) of the FW Regulations.
failing to provide employees with payslips within one working day of making payment for performance of work in contravention of section 536(1) of the FW Act.
d)the first respondent:
i)made and kept false or misleading records of various kinds in contravention of regulations 3.44(1) of the FW Regulations;
ii)made use of the entries in certain categories of records knowing they were false or misleading in contravention of regulation 3.44(6) of the FW Regulations.
e)the first respondent contravened section 325(1) of the FW Act by requiring one of the employees to pay the amount of $896.00 in relation to her tax return to the first respondent.
f)the first respondent contravened section 325(1) of the FW Act by requiring the same employee to pay the amount of $4,046.19 in relation to underpayment monies recovered for her back to the first respondent ;
g)the second respondent contravened section 712(3) of the FW Act by failing to comply with a Notice to Produce Records or Documents (NTP) dated 5 July 2017.
h)the third respondent who was at all relevant times the general manager for both businesses, and responsible for their day-to-day management including employment, rostering and pay, was involved in each of the admitted contraventions of the first and second respondents pursuant to section 550(2) of the FW Act.
Agreed penalty
Given the S.O.A.F. and the parties submissions this is a matter where the contraventions have been admitted and there is agreement not only on the necessary declarations that should be made to record those contraventions[3] but also the appropriate range of penalties that should be imposed for that conduct.
[3] See Construction Forestry Maritime Mining and Energy Union v Milin Builders Pty Ltd [2019] FCA 1070 (Milin Builders) at [73] to [98] on power to grant declaratory relief that does nothing more than record respondents’ conduct was engaged in contravention of a statute.
The Court’s role when dealing with a civil penalty case, where the parties have agreed on the pecuniary penalty, is not to simply “rubber stamp” that agreed penalty.[4] That said, subject to the Court being satisfied that the proposed penalty is appropriate[5], it is accepted that it is “highly desirable in practice” for the Court to impose the proposed penalty[6]. The declaratory relief sought, which is agreed, is appropriate if it is to mark disapproval of the conduct or realise some broader educative or deterrent effect[7]
[4] BlueScope Steel Limited v The Australian Worker’s Union [2019] FCA 182 at [3]
[5] See Commonwealth of Australia v Director Fair Work Building Industry Inspectorate (2015) 258 CLR 482 of [47] to [48].
[6] See Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at [58]
[7] See Milin Builders at [98] and applicant’s submissions dated 20 March 2020 at paragraph [74] to [75].
The proposed penalty will be consistent with these principles if it falls within the range of penalties that the Court could, in the exercise of its discretion, impose having regard to the facts and circumstances of the contraventions and the legal principles that apply to the fixing of penalties for civil penalty provisions.[8] When considering the appropriateness of the range of penalties agreed between the parties it is important to note the maximum penalty remains a “yardstick” against which the process of assessment is to proceed and the primary purpose of any imposition of penalty is deterrence.
[8] See Fair Work Ombudsman v HSCC Pty Ltd [2020] FCCA 655 at [26] and [28]
Principles relevant to the determination of penalty
The approach of the Court in determining penalties involves the following steps:
a)the Court is to identify the separate contraventions involved. Each contravention of an obligation constituting a separate contravention of a civil remedy provision of the FW Act;
b)the Court should consider whether any of the breaches taken together constitute a single course of conduct pursuant to s.557(1) such that multiple contraventions should be treated as a single contravention;
c)to the extent that two or more contraventions have common elements, this should be taken into account in considering what an appropriate penalty is in all the circumstances for each contravention. The respondents should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to the respondents’ actions. Importantly, this third task is distinct from, and in addition to, the final application of the “totality principle”;
d)the Court will consider an appropriate penalty to impose in respect of each contravention, whether a single contravention, a course of conduct, or group of contraventions, having regard to all of the circumstances of the case; and
e)having fixed an appropriate penalty for each contravention, the Court should then review the aggregate penalty so as to determine whether it is an appropriate response to the contravening conduct. In doing so, the Court should apply an “instinctive synthesis” in making this assessment. This final step is commonly known as the “totality principle”.[9]
[9] See Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 at [36].
This process is guided by a consideration of a number of non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick [2007] FCA 1080, which were as follows:
a)the nature and extent of the conduct which led to the breaches;
b)the circumstances in which that conduct took place;
c)the nature and extent of any loss or damage sustained as a result of the breaches.;
d)whether there had been similar previous conduct by the respondents;
e)whether the breaches were properly distinct or arose out of the one course of conduct;
f)the size of the business enterprise involved;
g)whether or not the breaches were deliberate;
h)whether senior management was involved in the breaches;
i)whether the party committing the breach had exhibited contrition;
j)whether the party committing the breach had taken corrective action;
k)whether the party committing the breach had co-operated with the enforcement authorities;
l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
m)the need for specific and general deterrence.[10]
[10] See also Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC at [89]. See applicant’s submissions filed 20 March 2020 at [13] to [14] and [25] and respondents submissions filed 6 July 2020 at [7] to [8].
Course of conduct
Section 557(1) of the FW Act provides as follows:
“For the purposes of this Part, two or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if: (a) the contraventions are committed by the same person; and (b) the contraventions arose out of a course of conduct by the person.”
The approach to the application of these provisions has been set out in Fair Work Ombudsman v Lohr [2018] FCA 5 at [29] and [34].
The applicant’s submissions filed 20 March 2020 addressed this issue and the issue of the common law course of conduct at paragraphs [15] and [21]. The respondents agreed with those submissions.[11]
[11] See paragraph [7] of submission filed 6 July 2020.
The parties agreed each contravention of section 45 of the FW Act by each of the first and second respondents should be treated as a separate contravention. It was also agreed each of the contraventions by the second respondent of s.535 of the FW Act were a separate contravention (given that they came from separate allegations for each of the affected employees).
The parties accepted there was no warrant to treat as one contravention the same contravention by the first and second respondents. It was also agreed that each of the contraventions of s.325 of the FW Act by the first respondent should be treated separately. Finally it was agreed it was inappropriate to treat the contraventions of Regulations 3.44(1) and 3.44(6) as arising from the same course of conduct given that they were created at different points.
I am prepared to proceed on that basis and note that where there is different but overlapping conduct this can be taken into account by application of the totality principle.[12]
[12] see Parker v Australian Building and Construction Commissioner [2019] FCAFC 56 at [275]
Grouping
The parties jointly submitted that their agreed position was reached on the basis of the following grouping and possible maximum penalties set out below:
(a)for the first respondent it was appropriate to group the agreed contraventions separately for the two separate audit periods (but group and therefore reduce the total agreed contraventions by two) as follows:
First audit period
Contravention Maximum Penalty Failure to pay minimum hourly rates $54,000 Failure to pay casual loadings $54,000 Failure to pay Saturday penalty rates $54,000 Failure to pay Sunday penalty rates $54,000 Failure to pay public holiday penalty rates $54,000 Failure to keep records $0 False and misleading pay records $18,000 False and misleading time records $18,000 Making false pay records $18,000 Making false time records $18,000
Second audit period
Failure to pay casual loadings $63,000 Failure to pay Sunday penalty rates $63,000 Failure to issue pay slips $63,000 Unreasonable request – tax $63,000 Unreasonable request – cash $63,000 Total $657,000 (b)for the second respondent as 9 grouped contraventions as follows:
Contravention Maximum Penalty Failure to pay minimum rates $54,000 Failure to pay casual loadings $54,000 Failure to pay Saturday penalty rates $54,000 Failure to pay Sunday penalty rates $54,000 Failure to pay public holiday rates $54,000 Failure to keep records - names $0 Failure to keep records – gross/net $54,000 Failure to issue payslips $54,000 Failure to comply NTP $54,000 Total $432,000 (c)the parties agreed that given the third respondent was involved in each of the admitted contraventions in (a) and (b) above, the above groupings should be adopted for determining any penalty for her involvement which resulted in an agreed maximum of $217,800.
Consideration
It was acknowledged that even with the proposed penalty ranges submitted by the parties the Court must still be satisfied the penalties are appropriate. In doing so it is now convenient to turn to an analysis of the relevant considerations set out above.
The nature, extent and circumstances of the conduct which led to the breaches
The applicant’s written submissions filed on 20 March 2020 address this consideration at paragraphs [26] to [34] and the respondents’ written submissions filed 6 July 2020 address this consideration directly at paragraphs [9] to [10].
The majority of the contraventions in question were contraventions of s.45 of the Act which provides that “[a] person must not contravene a term of a Modern Award.” Most of the other contraventions included either contraventions of record keeping and payslips. However, the gravest contravention was the production of false or misleading records which it was acknowledged merited a penalty at the higher end in these circumstances.
The conduct in this matter is serious. The first and second respondents paid the employees less than their entitlements. The first and second respondents also failed to make and keep certain employee records, and used record keeping practices which had the effect of concealing the contraventions. The third respondent failed to provide payslips to one of the employees in accordance with the Regulations. Additionally, the records produced were misleading employment records.
The nature and extent of any loss or damage sustained as a result of the breaches
The applicant’s written submissions filed on 20 March 2020 addressed this consideration at paragraphs [52] to [55]. The respondents addressed this consideration at paragraphs [22] to [24].
The contravening conduct continued over an extended period and resulted in underpayments of over $30,000 as well as attempts to claw back underpayments.
For the employees concerned, the impact of the contraventions is greater because they are award reliant workers and this is a factor that should be taken into account.
Finally it was necessary for the applicant in submissions in reply to note (by reference to the S.O.A.F.) that the respondents’ submissions regarding the loss sustained by the affected employees should be rejected, which I accept.
Whether there has been similar previous conduct by the respondents
The applicant’s written submissions filed on 20 March 2020 address this consideration at paragraph [56]. Whilst the respondents’ submissions noted there was an absence of previous similar conduct.
It should be observed that the lack of any prior matter having been brought against the respondents in the current proceedings counts for little in circumstances where (the first and second respondent) were plainly on notice as to what was required to comply with the Act.[13]
[13] see Fair Work Ombudsman v NHS North Pty Ltd trading as New Shanghai Charleston [2017] FCA 1301
The absence of previous similar conduct is not a mitigating factor, but means that there is no evidence of that nature which might otherwise have contributed to an increase in the penalty imposed.[14]
[14] Sayed v Construction, Forestry Mining and Energy Union (No.2) [2015] FCA 338 at [51]
The size of the business enterprise involved
The applicant’s written submissions filed 20 March 2020 addressed this consideration at paragraphs [48] to [49]. The respondents’ submissions addressed this contravention at paragraphs [19] to [20].
Where the respondents have consented to the ordering of the penalties within the agreed range, the Court can be satisfied that the proposed penalties can be met and are not crushing or oppressive, taking into account their respective circumstances.
Whether or not the breaches were deliberate
The applicant’s written submissions filed 20 March 2020 addressed this consideration at paragraphs [35] to [39]. The respondents’ submissions were to the effect they did not agree they engaged in a deliberate attempt to avoid their obligations. However, that submission is rejected for the reasons set out in the application’s further submissions.[15]
[15] See paragraph [9(b)].
Whether senior management was involved in the breaches
The applicant’s written submissions filed 20 March 2020 addressed this consideration at paragraphs [50] to [51]. The respondents acknowledged the third respondent was at all relevant times the general managers of both the first and second respondents.
Contrition, corrective action and co-operation
The applicant’s written submissions filed 20 March 2020 addressed this consideration at paragraphs [40] to [47]. The respondents’ submissions relevant to this consideration were at paragraphs [12] to [18].
The need to ensure compliance with minimum standards
The applicant’s further submissions contended this consideration was a relevant factor. Compliance with minimum standards is a principle object of the FW Act and the failure to meet those standards deprives employees of that safety net. Further, as is the case here, either failing to keep records (or worse creating and using false and misleading records) results in difficulties in monitoring and enforcing compliance.
The need for specific and general deterrence
The applicant’s written submissions filed 20 March 2020 addressed this consideration at paragraphs [57] to [69]. The respondents’ submissions addressed this consideration at paragraphs [26] to [27].
The primary purpose of the imposition of a civil penalty is deterrence. The overarching importance of deterrence as a means of ensuring compliance with the statutorily ordained norms of behaviour, such as compliance with the Act, was confirmed by the High Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3 at [116] where the following statement was made by Keane, Nettle and Gordon JJ:
“As has been observed, the principle object of an order that a person pay a pecuniary penalty under s.546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners. According to orthodox sentencing conceptions as they apply to the imposition of civil pecuniary penalties, specific deterrence inheres in the sting or burden which the penalty imposes on the contraveners. Other things being equal, it is assumed that the greater the sing or burden the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and this the more likely it will be that the contravener is deterred from further contraventions; likewise, the more potent will be the example that the penalty sets for other would—be contraveners and therefore the greater the penalty’s general deterrent effect. Conversely, the less the sting or burden that a contravener is deterred from further contraventions and the less the general deterrent effect of the penalty. Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any, specific or general deterrent effect, and so it will be unlikely, or at least less likely, to achieve the specific and general deterrent effect that are the raise d’etre of its imposition.”
[footnote references omitted and emphasis added]
There were submissions made by the respondents at paragraphs [13] to [14] to the effect that the third respondent’s conduct was impacted by a “Chinese Culture difference” and “average English”. I refer to the earlier comments on whether such claims can have a mitigating effect on penalty and reject them for the reasons set out in the applicant’s reply submissions.[16] Given the authorities referred to in the applicant’s reply submissions that such a claim would be made on behalf of the respondents underscores the need for deterrence in this case.
[16] See paragraph [6] thereof.
The applicant’s assessment is that penalties within the range agreed will sufficiently promote the primary objective of deterrence is important. The penalty arrived at for each of the respondents should act as a deterrent to others who may be minded to flout the law and so they should also contain an element of general deterrence and the penalties should be at a level such that the payment of a penalty is not regarded as simply the cost of doing business.
Appropriate penalties
Plainly, there is commonality or overlap between some of the contraventions in relation to both the first and second respondents. This will be taken into account in the substance of the matter by imposing no penalty, or a nominal penalty, in respect of breaches of some terms, but a substantial penalty in respect of others. I note that this approach is consistent with the agreed position of the parties.
Therefore;
a)in relation to the contraventions by the first respondent (in which the third respondent was involved) it is appropriate to impose penalties for the contraventions as follows:
First Audit Period Grouping Penalty – 1st Respondent Penalty – 3rd Respondent Failure to pay minimum hourly rates $25,245.00 $5,049.00 Failure to pay casual loadings $25,245.00 $5,049.00 Failure to pay Saturday penalty rates $6,885.00 $1,377.00 Failure to pay Sunday penalty rates $16,065.00 $3,213.00 Failure to pay p/h penalty rates $20,655.00 $4,131.00 Failure to keep records $0 $0 False and misleading pay records $6,885.00 $1,377.00 False and misleading time records $6,885.00 $1,377.00 Making false pay records $6,885.00 $1,377.00 Making false time records $6,885.00 $1,377.00 Second Audit Period Grouping Penalty – 1st Respondent Penalty – 3rd Respondent Failure to pay casual loadings $13,387.50 $2,677.50 Failure to pay Sunday penalty rates $2,677.50 $535.50 Failure to issue pay slips $29,452.50 $5,890.50 Unreasonable request – tax $29,452.50 $5,890.50 Unreasonable request – cash $34,807.50 $6,961.50 TOTAL $231,412.50 $46,282.50 b)in relation to the contraventions by the second respondent (in which the third respondent was also involved) it is appropriate to impose penalties for the contraventions as follows:
Grouping Penalty – 2nd Respondent Penalty – 3rd Respondent Failure to pay minimum rates $25,245.00 $5,049.00 Failure to pay casual loadings $25,245.00 $5,049.00 Failure to pay Saturday penalty rates $4,590.00 $918.00 Failure to pay Sunday penalty rates $4,590.00 $918.00 Failure to p/h rates $11,475.00 $2,295.00 Failure to keep records - names $0 $0 Failure to keep records – gross/net $6,885.00 $1,377.00 Failure to issue payslips $20,655.00 $4,131.00 Failure to comply NTP $16,065.00 $3,213.00 TOTAL $114,750.00 $22,950.00
Totality principle
Having fixed an appropriate penalty for each contravention, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate response to the contravening conduct.
The applicant’s written submissions filed 20 March 2020 addressed this issue at paragraphs [70] to [73]. These were supplemented by further submissions filed 19 June 2020 specifically on this issue at paragraphs [11] to [15]. Those submissions were necessary to address the impact of and appropriate application of the totality principle in the light of evidence put on by the third respondent that neither of the stores would be operating after June 2020 and the impact of the COVID-19 pandemic on the third respondent’s financial position.[17]
[17] See paragraph [10] – [15] of further submissions filed 19 June 2020.
The nub of those submissions and the ultimate agreement of the parties was a further reduction on the basis of totality to the agreed penalty ranges for the third respondent was necessary.
It is important in a case such as this to take into account the totality of the circumstances. This is a case that involves some degree of synthesis of the above matters, some of which tell in favour of and some of which tell against each of the respondents.
A reduction on the basis of totality is appropriate in this case. The cumulative effect of the significant number of contraventions in this matter, when considering penalties in relation to each in accordance with the usual steps, results in an aggregate figure which warrants a reduction on account of totality to reflect the totality of the conduct as a whole for the reasons (which I accept) in the applicant’s further submissions.
After a reduction for totality (of 30% for the first two respondents) the total penalty to be imposed on the first respondent for the grouped contraventions equates to $161,988.75. For the second respondent, this equates to $80,325.00. The third respondent (for whom a bigger percentage reduction for totality of 50% is appropriate) and this results in a penalty of $34,616.00.
Conclusion
The applicant and the respondents submit that the proposed range of total penalties are appropriate and that they are within the permissible range for contraventions of the FW Act. It is concluded for the following reasons that the penalties to be imposed should be at the very maximum of that agreed. The factors which support a penalty for each of the respondents at the top of the agreed range are:
a)the nature of the conduct;
b)the deliberate nature of the conduct involved;
c)the co-operation of the respondents was not as fulsome as it should have been and at stages smacked of obstruction and/or obfuscation in the actions of the third respondent; and
d)the deterrence (both general and specific) to mark disapproval of similar such conduct (and attempts to conceal contraventions).
In the end the penalties for the first and second respondent’s represent 25% and almost 20% of the possible maximum whilst for the third respondent only 16% of the maximum.
Therefore, as the Court:
a)is directed by the relevant authorities to consider what is appropriate in all the circumstances of this case; and
b)in its discretion in relation to penalty is not fettered by a checklist of mandatory criteria; and
c)notes the parties have filed the S.O.A.F., and agreed on a range of penalties; and
d)is satisfied the penalties set out above are just and appropriate;
there will be orders as set out in the beginning of these reasons for decision.
I certify that the preceding fifty six (56) paragraphs are a true copy of the reasons for judgment of Judge O'Sullivan
Associate:
Date: 26 August 2020
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