Fair Work Ombudsman v Sushi Bay Act Pty Ltd
[2019] FCCA 1669
•28 June 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v SUSHI BAY ACT PTY LTD & ANOR | [2019] FCCA 1669 |
| Catchwords: INDUSTRIAL LAW – Admitted Contraventions of Fair Work Act 2009 (Cth) – underpayments – incorrect classification – failure to keep records – penalty. |
| Legislation: Fair Work Act 2009 (Cth), ss.44, 45, 90, 96, 535, 539, 546, 550, 557 Restaurant Industry Award 2010, cl. 12.3, 13.1, 20, 20.3, 34.1 |
| Cases cited: Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | SUSHI BAY ACT PTY LTD ACN 160 778 772 |
| Second Respondent: | REBECCA YI JEONG SHIN |
| File Number: | SYG 3436 of 2017 |
| Judgment of: | Judge Obradovic |
| Hearing date: | 31 May 2018 |
| Date of Last Submission: | 31 May 2018 |
| Delivered at: | Parramatta |
| Delivered on: | 28 June 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms Homan |
| Solicitors for the Applicant: | Office of the Fairwork Ombudsman |
| Counsel for the First Respondent: | Mr McGee |
| Solicitors for the First Respondent: | Hayashi & Hong Lawyers |
Counsel for the Second Respondent: | Mr McGee |
| Solicitors for the Second Respondent: | Hayashi & Hong Lawyers |
ORDERS
The Court declares that the first respondent contravened the following civil remedy provisions of the Fair Work Act 2009 (Cth) (“the Act”):
(a)Section 44(1) by contravening the following provisions of the National Employment Standards contained in Part 2-2 of the Act;
(i)Failing to pay annual leave entitlements in accordance with section 90(2);
(ii)Failing to accrue paid personal/carers leave in accordance with section 96;
(b)Section 45 by contravening the following clauses of the Restaurant Industry Award 2010:
(i)Failing to pay adult minimum wages as required by clause 20;
(ii)Failing to pay junior minimum wages as required by clause 20.3;
(iii)Failing to pay casual loading as required by clause 13.1;
(iv)Failing to pay penalty rates as required by clause 34.1;
(v)Failing to make part-time agreements as required by clause 12.3; and
(c)Section 535(1) by failing to keep records of the kind prescribed by the Fair Work Regulations 2009 (Cth).
The Court declares that the second respondent was involved in the first respondent’s contraventions as set out above, within the meaning of section 550 of the Act.
Pursuant to section 546(1) of the Act and within 42 days, the first respondent is to pay a pecuniary penalty of $103,680 in respect of the contraventions as set out above.
Pursuant to section 546(1) of the Act and within 42 days the second respondent is to pay a pecuniary penalty of $20,736 in respect of her involvement (within the meaning of section 550 of the Act) in the first respondent’s contraventions as set out above.
Pursuant section 545(1) of the Act, the first respondent will, within three months of the date of this order, provide for workplace relations compliance training (“training”) on the following terms:
(a)The first respondent must engage, at its own expense, a person or organisation with expertise in workplace relations, and approved by the applicant, to conduct the training;
(b)The training must relate to compliance with the Act and the Restaurant Award, including the first respondent’s obligations in respect of minimum wages, casual loading, penalty rates, personal leave and annual leave entitlements, part-time agreements and record-keeping;
(c)The training must be undertaken by:
(i)All persons employed or engaged by the first respondent whose duties relate to the management of employees, the administration of payroll, and the administration and compliance with Australian workplace laws; and
(ii)The second respondent.
(d)Within 30 days of completing the training, the first respondent must provide the applicant, in writing, with a report specifying the date(s) on which the training was completed, the details of the delivery and content of the training and the names and positions of all persons who undertook the training;
Pursuant to section 545(1) of the Act, the first respondent will, at its own expense, engage a third party, or third parties, with appropriate qualifications in accounting and workplace relations to undertake an audit of the first respondent’s compliance with the Act and the Restaurant Award on the following terms:
(a)The audit period will be the first accounting quarter commencing after the making of the orders;
(b)The audit is to be completed within 30 days of the end of the audit period;
(c)The audit will apply to all employees employed by the first respondent at any time during the audit period;
(d)The audit will assess the first respondent’s compliance with the following obligations according to each employee’s classification of work, category of employment and hours worked during the audit period:
(i)Wages and work related entitlements under the Restaurant Award; and
(ii)Accrual and payment of entitlements under the National Employment Standards in Part 2-2 of the Act.
(e)Within 14 days of the audit being completed, the first respondent will rectify any contraventions identified in the audit;
(f)Within 30 days of the audit being completed, the first respondent will provide to the applicant:
(i)A copy of the audit report, which will include a statement of the methodology used in the audit;
(ii)A copy of the source materials used to audit the times worked by employees (including but not limited to rosters, time cards and time sheets) and the amounts paid to the employees (including but not limited to pay slips and pay reports);
(iii)Written details of any contraventions identified in the audit;
(iv)Evidence of rectification by the first respondent of any contraventions identified in the audit.
The applicant has 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 SYDNEY |
SYG 3436 of 2017
| FAIR WORK OMBUDSMAN |
Applicant
And
| SUSHI BAY ACT PTY LTD ACN 160 778 772 |
First Respondent
| REBECCA YI JEONG SHIN |
Second Respondent
REASONS FOR JUDGMENT
These proceedings involve the underpayment of $18,671.57 to 22 employees (“Employees”) who were engaged by the first respondent to work in a sushi restaurant in Belconnen, ACT at various times between 23 November 2015 and 27 March 2016 (“Contravention Period”). Four of the employees were under 20 years of age and twenty of the employees were visa holders from non-English speaking backgrounds.
The first respondent, Sushi Bay ACT Pty Ltd and the second respondent, Rebecca Yi Jeong Shin have admitted contraventions of the Fair Work Act 2009 (Cth) (“Act”), Fair Work Regulations 2009 (Cth) and the Restaurant Industry Award 2010 (“Award”) which were alleged in the Application and Statement of Claim filed on 9 November 2017.
Both respondents have admitted all of the contraventions as set out in the Statement of Agreed Facts filed 1 March 2018. The underpayments were rectified on 24 October 2017 prior to the commencement of these proceedings.
Admitted Contraventions
The first respondent admitted to contravening the following civil remedy provisions of the Act in the relevant period:
a)Section 44(1) by contravening the following provisions of the National Employment Standards (“NES”) contained in Part 2-2 of the Act:
i)Failing to pay annual leave entitlements in accordance with section 90(2);
ii)Failing to accrue paid personal/carer’s leave in accordance with section 96;
b)Section 45 by contravening the following clauses of the Award:
i)Failing to pay adult minimum wages at the correct classification and rates as required by clause 20;
ii)Failing to pay junior minimum wages at the correct classification and rates as required by clause 20.3;
iii)Failing to pay casual loading as required by clause 13.1;
iv)Failing to pay penalty rates at the correct classification and rates as required by clause 34.1;
v)Failing to make part-time agreements as required by clause 12.3; and
c)Section 535(1) by failing to keep records of the kind prescribed by the Fair Work Regulations 2009.
The second respondent admits that she was involved in the contraventions set out above pursuant to section 550(1) of the Act.
Principles Relevant to the Determination of Penalty
Section 546(1) of the Act enables the Court to impose a penalty in respect of a contravention of a civil remedy provision. The primary purpose of the imposition of civil penalties is:
“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.”[1]
[1] Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 at [55], citing Trade Practices Commission v CSR Ltd [1990] FCA 521
An appropriate method to determine the question of penalty may be summarised as follows:[2]
a)identify the separate contraventions, with each breach of each obligation being a separate contravention of a civil remedy provision for the purposes of section 539(2) of the Act;
b)consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that section 557 of the Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person;
c)consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what the respondent did;
d)consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation; and
e)consider the overall penalties arrived at, including by reference to those which may be proposed by the applicant19, what is proposed by the respondents and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole and not crushing or oppressive, making such adjustments as are necessary.
[2] Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 (“NSH North”) at [36]
Maximum Penalty
The maximum penalty amounts that the Court can impose for each contravention are:
Contravention type
First Respondent
Second Respondent
NES contraventions
Award contraventions
$54,000
(300 penalty units)
$10,800
(60 penalty units)
Record keeping contraventions
$27,000
(150 penalty units)
$5,400
(30 penalty units)
Factors Relevant to Penalty
The relevant factors going to penalty have been identified as follows[3]:
[3] Kelly v Fitzpatrick [2007] FCA 1080 at [14] adopting Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 at [26]-[59]
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 respondent.
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 cooperated 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.
Consideration of the well-known penalty factors[4] is to be undertaken within the overarching consideration of what penalty will achieve the principal object of deterrence, both specific and general. These factors are well-settled, but not a “rigid catalogue of matters for attention.”[5] The identified factors while a convenient checklist, do not restrict the Court in the exercise of its discretion.
Assessment of Appropriate Penalties
[4] set out in Trades Practices Commission v CSR Ltd, [1990] FCA 521, which were adopted in this Court in Mason v Harrington Corp.. The so-called “checklist” of factors set out in Pangaea was approved and adopted by the Federal Court in Kelly
[5] Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (“Merringtons”) [2008] FCAFC 8 at [88] to [91]
Nature, Extent and Circumstances of the Conduct
In summary the contravening conduct extended to two National Employment Standard contraventions concerning annual and personal leave entitlements, seven separate Award contraventions (comprising six types of underpayment and a failure to make part-time agreements) and a record- keeping contravention.
The conduct occurred over a four month period and affected 22 Employees, including four Junior Employees. The Employees were variously employed on full-time, part-time or casual bases and classified as introductory level employees, kitchen attendants (grade 1) or food and beverage attendants (grade 2) under the Restaurant Award. The Employees worked various hours between 9am and 9pm, seven days per week, in the sushi restaurant.
The underpayment contraventions arose as a result of the following conduct:
a)The first respondent classified and paid all Employees as introductory level employees, save for one. Seventeen Employees were entitled to be classified and paid at a higher level. As a result, these 17 Employees were underpaid their minimum wages and Saturday, Sunday and public holiday penalty rates;
b)The first respondent treated all Employees as either full-time or part-time employees. Twelve Employees were entitled to be treated and paid as casual employees. As a result, these Employees were not paid any amount for casual loading and were underpaid the Saturday penalty rate, and the first respondent failed to keep proper time records with respect to their employment;
c)The first respondent paid 150% instead of 250% for the public holiday penalty rate; and
d)The first respondent failed to pay any amount to four Employees, and an insufficient amount to one, for accrued annual leave entitlements to full-time and part-time Employees on termination of employment.
The casual loading underpayment accounts for 44% of the total underpayment and the underpayment of annual leave entitlements accounts for 22%.
Over the four month Contravention Period, the first respondent underpaid individual Employees up to $2,000. Most of the individual underpayments occurred over shorter periods of time. Only three Employees were employed for the entire contravention period. The underpayments with respect to all other Employees arose during shorter periods than the contravention period, for example the largest individual underpayment of $1,992, arose over just three months and the next largest individual underpayment arose due to the first respondents failure to pay a full-time employee their annual leave entitlements on termination of approximately $1,800.
Nature and Extent of Loss or Damage
The respondents have accepted that the underpayments were significant amounts to the employees themselves, as they were performing low-skilled, low paid work and were reliant upon the minimum conditions established by the award.
The impact of the contraventions is not simply limited to a monetary impact. The failure to afford leave accruals, whilst it does not result in a monetary underpayment, is a failure by the employer to afford any recognition of that leave entitlement. It is also to be coupled with the fact of the vulnerability of the Employees. Twenty of the twenty-two Employees were foreign nationals, visa holders and from non-English speaking backgrounds. Thirteen of the Employees held 417 working holiday visas, five held temporary student visas, one held a 457 temporary skilled visa and one held a bridging visa. Four were Employees under the age of 20 years.
Similar Previous Conduct
In 2009, the Fair Work Ombudsman conducted an audit of a “Sushi Bay” business conducted by the second respondent in Robina. At this time, the employees of the business were employed by Sushi Bay Pty Ltd under the second respondent’s directorship. This audit resulted in a determination that Sushi Bay Pty Ltd had underpaid hourly rates for numerous classification levels and required rectification of underpayments. The total underpayments were $101.50.
In 2014, the Fair Work Ombudsman conducted a second audit of the Sushi Bay business operated in Robina. At this time, the employees of the business were employed by another company, Sushi Bay Qld Pty Ltd, of which the second respondent was also a director. This audit resulted in findings that the company of which the second respondent was a director contravened the Act and the Restaurant Industry Award 2010 with respect to:
a)Incorrect classification of employees;
b)Underpayment of hourly rate;
c)Underpayment of Saturday, Sunday and public holiday rates;
d)Non-payment of annual leave loading and annual leave entitlements on termination; and
e)Failure to make part-time hours agreements with part-time employees.
The company was formally cautioned. The Fair Work Ombudsman also determined that four companies all of which were under the second respondent’s directorship, had contravened section 535(1) of the Act by failing to make and keep for seven years employee records.
The second respondent sought to engage with the Ombudsman to ensure that those contraventions were rectified, and addressed the issues at the time.
Clearly, the second respondent, and the first respondent through her, was therefore on notice of the legal obligations as an employer. As such, the admitted contraventions are conduct which is “a manifestation of a continuing attitude of disobedience of the law” rather than an “uncharacteristic aberration”.[6]
[6] Veen v R (No.2) [1988] HCA 14 at 477 cited in Director of the Fair Work Building Industry Inspectorate v CFMEU [2016] FCA 413 at [24]
Deliberateness
The Court finds that the contravening conduct was deliberate in light of the second respondent’s admitted knowledge, prior audits, history of employee complaints and the education provided by the Fair Work Ombudsman.
Size and Financial Circumstances of the Company
The first respondent is an Australian proprietary company limited by shares registered since 15 October 2012. It carries on the business of operating one sushi train style restaurant located in Belconnen, ACT. However, the first respondent’s business is part of a network of 25 sushi restaurants branded “Sushi Bay” which operate in the ACT, New South Wales, Queensland and the Northern Territory through Sushi Bay (the first respondent) and five related companies, all under Ms Shin’s directorship, and at least 15 registered business names. The Sushi Bay network appears to be operated from 570 Blaxland Road, Eastwood New South Wales.
The Court accepts the applicant’s submissions that the second respondent’s group of companies and the first respondent’s businesses is undoubtedly sophisticated with access to resources.
The applicant has corresponded with executive level staff in relation to this investigation and a prior audit, including an “in-house accountant”, “Chief Operating Officer” and “Executive Manager”. The first respondent’s registered office address is in fact an external accountancy firm which indicates that they have accountants on retainer.
Given the extent of the second respondent’s commercial enterprises, the Court accepts that it should impose penalties of a magnitude which will ensure “that the penalty is not such as to be regarded by that offender or others as an acceptable cost of doing business”.[7]
[7] Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20, [62] cited with approval in approval in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54 [66] (French CJ, Crennan, Bell and Keane JJ)
Senior Management’s Involvement
The second respondent has properly admitted that she is, and was at all material times, responsible for ensuring that the first respondent complied with its legal obligations under the Act. The second respondent is the sole Director and person responsible for the overall operation, management and control of the first respondent. .
The second respondent:
a)knew that the Act, Regulations and Restaurant Award applied and that the Restaurant Award prescribed minimum pay rates and conditions, including classification definitions and conditions concerning casual Employees;
b)knew the purported classifications of and rates paid to the first respondent’s employees generally, and determined or authorised the classification structure used by the first respondent including the purported classification of most of its employees as introductory level employees;
c)was responsible for authorising payments made to the Employees; and
d)had access to first respondent’s employment and pay records, including records detailing each employee’s classification, duties, hours of work, amounts paid and accrued leave entitlements.
The second respondent’s involvement in this contravening conduct is typical of her involvement more generally in the pattern of conduct engaged by her businesses.
The second respondent authorised payments to employees and liaised with the applicant and provided the applicant with information on employees’ conditions and employee records.
The Court finds that second respondent had knowledge of, and authorised, systemic practices which inevitably resulted in the underpayment of the employees. Further, the second respondent had knowledge of her other businesses’ non-compliance with respect to misclassification and pay rates. Yet, knowing what she did, she failed to take steps to ensure the first respondent’s compliance with workplace laws.
The second respondent has been a company director for 15 years. The second respondent has been a director of the companies that operate Sushi Bay restaurants for 11 years and director of the first respondent for more than 5 years, since 15 October 2012. She is the current director of 13 companies and was previously director of another three companies. The second respondent is an experienced company director, business operator and employer in the restaurant industry. She has had the benefit of extensive intervention and education on employer obligations. The Court does not accept the submission that she has continued to be a relatively unsophisticated operator of the business.
Contrition, Corrective Action and Co-Operation
The respondents made full admissions on 1 March 2018, four months after the commencement of the proceedings. The underpayments were rectified on 24 October 2017, the day after the respondents were notified of the applicant’s intention to commence proceedings, and more than three months after they were notified of the underpayments.
The Court accepts that the respondents’ engagement with the applicant in respect of rectification of the underpayments was done in a timely manner once the applicant became involved. However, the underpayments relate to a period of time which was more than 18 months prior to the rectification of the underpayments. In that respect, the late payment of the amounts due to the employees which was not forthcoming until there was an indication proceedings would be commenced, does not fully mitigate the losses suffered by the employees. The damage had already had its primary effect.[8]
[8] Fair Work Ombudsman v Ultra Tune Australia Pty Ltd [2012] FMCA 560 at [12]
The respondents cooperated by complying with the notice to produce and other requests for information and documents within the times stipulated by the applicant.
The Court accepts that the respondents have taken the following corrective action:
a)They have taken steps to ensure that all employees employed by the first respondent have been engaged in the correct employment category, have been placed in the correct classification under the Restaurant Award and that part-time hours agreements have been entered into where employees are engaged on a part-time basis;
b)The first respondent has also put in processes to ensure that there is proper recording of annual leave and personal/carer’s leave accruals and entitlements;
c)They have also put in place leave request forms to enable employees to utilise their accruals of leave;
d)A copy of the Restaurant Award and the ‘Pay Guide’ issued by the applicant have been made available for review by employees at all Sushi Bay restaurants;
e)The second respondent is registered with the Fair Work Ombudsman’s Learning Centre. She has reviewed and shared learning materials made available by the applicant with members of the Sushi Bay management team; and
f)The second respondent is in the process of undertaking further corrective actions to ensure ongoing compliance with workplace laws, and put in place a system to prevent further contraventions.
Need to ensure compliance with minimum standards
The respondents accept that their failures to pay adequate minimum wages and to afford employees entitlements to personal and annual leave (or the appropriate loading) are serious breaches of the safety net.
Compliance with record-keeping obligations is fundamental to an employee’s ability to independently verify their entitlements and for the applicant’s ability to enforce compliance. The Court accepts that non-compliance with these obligations undermines and frustrates the attainment of the Act’s objective of ensuring compliance with the safety net of minimum standards, creating a structure within which breaches of industrial laws can easily be perpetrated.[9]
[9] Fair Work Ombudsman v Taj Palance & Anor [2012] FMCA 258 at [67]
The record-keeping contravention in this case arose as a result of the failure to correctly categorise employees as casual employees. It was a flow on effect of a different contravention.
Deterrence
The first respondent continues to operate and employ staff, as do other businesses within the network of which the second respondent is a director. The Court finds that there is a real risk that the pattern of conduct engaged in by the second respondent and her business of under-classifying employees, failing to treat and pay casual employees accordingly and failing to provide leave entitlements will continue unless there is a specific deterrence of sufficient parity.
The Court also accepts that general deterrence is an important factor for its consideration. The Court accepts that there is widespread non-compliance in the industry.
Course of Conduct and Grouping
As noted earlier, s557(1) of the Act provides that for specified contraventions of the Act, two or more contraventions of the same civil remedy provisions will be treated as a single contravention where that contravention was committed by the same person and arose out of the same course of conduct.
The admitted contraventions take into account section 557 by treating, as a single contravention, multiple contraventions of the same obligation committed by the same person with respect to multiple employees over multiple pay periods.
In addition to the statutory course of conduct provisions, it is open to the Court to group separate contraventions where the contraventions contain common elements or can be said to overlap each other.[10] The Court may appropriately group contraventions where if they were treated separately, this would potentially penalise the respondent twice for the same or substantially similar conduct.[11]
[10] Pearce v R [1998] HCA 57 at [40]; Johnson v R [2004] HCA 15 at [27] to [34]; Merringtons at [46], [72] (Graham J) and [93] (Buchanan J); Fair Work Ombudsman v Tiger Telco Pty Ltd (in liq) [2012] FCA 479 (“Tiger”) at [24] to [25] (Bromberg J).
[11] Johnson v R [2004] HCA 15; (2004) 205 ALR 346; Tiger at [24]−[25] per Bromberg J.
The Court may impose a single penalty for a group or category of contraventions where the contraventions of multiple provisions of the Act or the Award contain substantial common elements or wholly or substantially overall with each other.[12]
[12] Kelly v Fitzpatrick at [30], Merringtons at [46], [72]
It was submitted on behalf of the respondents that a significant proportion of the admitted contraventions relate to contraventions of the Award. Of these contraventions, a significant proportion was said to arise from the first respondent incorrectly classifying employees in relation to the classification structure. It was further submitted that the contraventions occurred in that there was a failure to have proper regard to the experience, competency level and duties and responsibilities performed by those employees during the initial employment period, to determine whether they should be properly reclassified. The Court accepts these submissions[13] and finds that it is as a result of these circumstances that 17 employees were underpaid their minimum wage.
[13] The applicant submits that it is appropriate to group the adult and junior minimum wage contraventions together, but not the balance. It is submitted on behalf of the applicant that the elements of the remaining contraventions are factually and legally distinct, including because the entitlements are triggered by different circumstances and serve different purposes
The failure to correctly classify or re-classify these employees flowed into failures to pay the correct rates and for other entitlements under the Award, in particular the payment of correct penalty rates for work done on a Saturday, Sunday and public holiday. The admitted contraventions did not involve a failure to pay the employees any penalty rates for working on a Saturday, Sunday or public holiday, rather they were not paid at the correct rate due to their incorrect classification under the Award. It is therefore appropriate to group together these contraventions.
However, the failure to correctly categorise the nature of the employment is different. It is factually and legally distinct and therefore to be treated as a separate contravention for the purposes of penalty.
Penalty
Whilst the penalty imposed must not be crushing or oppressive, it must be proportionate to the conduct engaged in by the respondents and not have the effect of exonerating the conduct.[14]
[14] See Kelly, supra, at [30]; Merringtons, supra, at [23] per Gray J, [66]-[73] per Graham J, [98]-[102] per Buchanan J; Fair Work Ombudsman v Promoting U Pty Ltd & Anor [2012] FMCA 58, [55]-[57].
The Court has found that the respondents’ contravening behaviour was not accidental, but rather resulted from a careless and nonchalant attitude to legal obligations which had been brought to the second respondent’s attention previously. It affected a significant number of employees and entitlements.
The failure to pay annual leave entitlements on termination is a most basic and fundamental entitlement under the NES and was the subject of a formal caution by the applicant to the second respondent in May 2015. It is a failure that places the contraventions in the more serious range. The appropriate penalty after a 20% discount for admissions, rectifications and corrective action is $25,920 for the first respondent and $5,184 for the second respondent.
In respect of the failure to accrue paid personal/carer’s leave, and having regard to the fact that it impacted 10 employees (all of the full-time and part-time employees), notwithstanding that it is a fundamental entitlement under the NES and taking into consideration the impact of non-accrual, that is that the employees unable to take personal/carer’s leave and their loss of opportunity to access NES entitlement, it is overall in the less serious range. The appropriate penalty after a 20% discount for admissions, rectifications and corrective action is $12,960 for the first respondent and $2,592 for the second respondent.
The failure to pay minimum wages is likewise a most basic and fundamental entitlement under the Award. It was likewise the subject of a formal caution by the applicant to the second respondent in May 2015. It is in the mid-range. The appropriate penalty after a 20% discount for admissions, rectifications and corrective action is $21,600 for the first respondent and $4,320 for the second respondent.
In respect of the failure to pay casual loading, the Employees were not paid anything in this regard, and this amounted to a significant portion of the underpayments. This failure is grouped together with the failures to make part-time agreements. The appropriate penalty after a 20% discount for admissions, rectifications and corrective action is $21,600 for the first respondent and $4,320 for the second respondent.
In respect of the failure to pay Saturday, Sunday and public holiday penalty rates, given that these failures affected a significant number of the employees and were the subject of prior formal caution and education, they are contraventions which the Court views as serious. However, given the totality principle the appropriate penalty after a 20% discount for admissions, rectifications and corrective action is $17,280 for the first respondent and $3,456 for the second respondent.
In respect of the failure to keep records, and having regard to the fact that it affected all of the casual employees, namely 12 of the Employees, and that there were prior infringement notices and education on record-keeping obligations generally, but also noting some common elements with the casual loading underpayment, the appropriate penalty after a 20% discount for admissions, rectifications and corrective action is $4,320 for the first respondent and $864 for the second respondent.
Whilst it may appear that the total penalties imposed are disproportionate to the under payments, the totality of the circumstances as explained above warrant the imposition of the penalties as stated.
I certify that the preceding fifty-eight (58) paragraphs are a true copy of the reasons for judgment of Judge Obradovic
Associate:
Date: 28 June 2019
Key Legal Topics
Areas of Law
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Employment Law
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Statutory Interpretation
Legal Concepts
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Penalty
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Breach
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Statutory Construction
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