Fair Work Ombudsman v T & Sons Pty Ltd

[2020] FCCA 3519

FEDERAL CIRCUIT COURT OF AUSTRALIA

Fair Work Ombudsman v T & Sons Pty Ltd [2020] FCCA 3519  

File number(s):

BRG 376 of 2020

Judgment of:

JUDGE JARRETT

Date of judgment:

22 December 2020

Catchwords:

INDUSTRIAL LAW – Commonwealth – Compliance and enforcement – Civil remedies – Pecuniary penalty orders – Amount of penalty – failure to comply with compliance notice  

Legislation:

Fair Work Act 2009 (Cth) ss 539(2), 546(1), 546(2)(a), 550(1), 550(2), 716(4A), 716(4B), 716(5)

Federal Circuit Court Rules 2011 (Cth) r 13.03B(2)(c)

Cases cited:

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157

Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482

Number of paragraphs:

34

Date of last submission/s:

18 December 2020

Date of hearing:

18 December 2020

Place:

Brisbane

Solicitors for the Applicant:

Norton Rose Fulbright Australia

ORDERS

BRG 376 of 2020

BETWEEN:

FAIR WORK OMBUDSMAN

Applicant

AND:

T & SONS PTY LTD

First Respondent

ROSA VO

Second Respondent

ORDER MADE BY:	JUDGE JARRETT
DATE OF ORDER:	22 DECEMBER 2020

THE COURT ORDERS THAT:

1.Pursuant to s.546(1) of the Fair Work Act:

(a)the first respondent T & Sons Pty Ltd pay a pecuniary penalty of $22,050 to the Commonwealth for the contravention of s.716(5) of the Fair Work Act 2009 (Cth), within 28 days of this order; and

(b)the second respondent Rosa Vo pay a pecuniary penalty of $4,410 to the Commonwealth for her involvement (within the meaning of s.550(2) of the Fair Work Act) in the first respondent T & Sons Pty Ltd’s contravention of s.716(5) of the Fair Work Act 2009 (Cth), within 28 days of this order.

REASONS FOR JUDGMENT

JUDGE JARRETT

1. By this application the Fair Work Ombudsman seeks the imposition of pecuniary penalties on the first respondent and the second respondent for contraventions of s.716(5) of the Fair Work Act 2009 (Cth). The first respondent failed to comply with a compliance notice given to it on or about 14 January, 2020.

2. On 16 October, 2020 this court made declarations that:

   (c)the first respondent contravened s.716(5) of the Fair Work Act, by failing to comply with the compliance notice; and

   (d)the second respondent was involved, within the meaning of s.550(2) of the Fair Work Act, in that contravention and is taken, by s.550(1) of the Fair Work Act, to have contravened s.716(5) of the Fair Work Act.

3. The Court ordered that default judgment be entered for the Fair Work Ombudsman, pursuant to rule 13.03B(2)(c) of the Federal Circuit Court Rules 2011 (Cth), and that the first respondent take the steps required by the compliance notice within 28 days of 16 October, 2020 by calculating and paying to the Fair Work Ombudsman the outstanding entitlements it was required to pay to a former employee, Ms Jasmine Wood, calculating and paying any additional superannuation contributions into Ms Wood’s nominated superannuation fund, preparing and producing a schedule to the Fair Work Ombudsman and providing corresponding proof of rectification to the Fair Work Ombudsman.

4. Pursuant to s.546(1) of the Fair Work Act, the Fair Work Ombudsman now seeks the imposition of pecuniary penalties on the respondents. The Fair Work Ombudsman submits that the penalties of $22,050 and $4,410 should be imposed on the first and second respondents respectively. For the reasons that follow, I accept that submission.

5. The facts of the matter are set out in the Statement of Claim filed by the applicant on 2 July, 2020 and an affidavit of Fair Work Inspector Justin Page filed on 27 November, 2020.  Because the respondents have not responded to the application, they are deemed to have admitted the allegations of fact in the statement of claim.  The statement of claim and the affidavit of Fair Work Inspector Page demonstrate the following matters.

6. The first respondent operates a retail bakery business trading as Mount Ommaney Bakehouse, in Mount Ommaney, a suburb of Brisbane, Queensland.

7. In or around July, 2019 the Fair Work Ombudsman commenced an investigation into the first respondent’s payments to its former employee Jasmine Wood between 20 February, 2019 and 25 March, 2019.  Ms Wood was 15 years of age during her employment with the first respondent.  She had complained to the Fair Work Ombudsman and her complaint initiated an investigation. 

8. During the investigation, the second respondent was the Manager of the first respondent and interacted with the Fair Work Ombudsman as the authorised representative of the first respondent.

9. On 14 January, 2020 Fair Work Inspector Page gave the compliance notice to the first respondent after forming a reasonable belief that the first respondent had contravened provisions of the General Retail Industry Award 2010 relating to minimum wages, casual loading, and evening and weekend penalty rates.

10. The compliance notice required the first respondent to:

    (a)take specified action by 19 February, 2020 to remedy the direct effects of the contraventions by:

    (i)calculating the amounts that should have been paid for the hours worked by Ms Wood during the employment period;

    (ii)making a payment to Ms Wood of the difference between what Ms Wood was entitled to be paid and what Ms Wood was actually paid during the employment period; and

    (b)produce reasonable evidence of the first respondent’ compliance with the compliance notice to the Fair Work Ombudsman, by producing a copy of the schedule of calculations and payments, and evidence that the amounts owing had been paid to Ms Wood, by 19 February, 2020.

11. Despite the notice, the first respondent did nothing.  It did not take the action specified in the compliance notice by 19 February, 2020 or at all.  It did not provide evidence to the Fair Work Ombudsman of calculations or payments.

12. On 2 July, 2020 these proceedings were commenced by the Fair Work Ombudsman seeking orders that the first respondent remedy the contravention of s.716(5) of the Fair Work Act and that the first respondent and the second respondent pay pecuniary penalties for their respective contraventions of s.716(5) of the Fair Work Act. Again, the first respondent has done nothing. The second respondent has not done anything either.

13. On or about 13 October, 2020 after the Fair Work Ombudsman filed an application in a case seeking default judgment, the first respondent made a payment of $860 to Ms Wood.  While the second respondent, on behalf of the first respondent, provided evidence indicating that the payment of $860 had been made to Ms Wood, no further evidence has been provided to the Fair Work Ombudsman as to the manner of calculating the amount paid to her.

14. As the submissions for the Fair Work Ombudsman point out, the power of a Fair Work Inspector to issue a compliance notice was introduced into the Fair Work Act to provide a mechanism for dealing with non-compliance with minimum entitlements in the Fair Work Act, as an alternative to commencing litigation for each underlying contravention. Failure to comply with a compliance notice is a contravention of a civil remedy provision: ss.716(5) and 539(2) of the Fair Work Act. The Court may impose penalties if it is satisfied that a person has contravened a civil remedy provision: s.546 of the Fair Work Act. The legislature has set penalties for non-compliance with a compliance notice because a failure to comply will cause the Fair Work Ombudsman (and the Court) to spend time and public funds dealing with civil remedy proceedings which would otherwise not have been required had compliance occurred. Thus, compliance notices provide a mechanism for the efficient and cost-effective rectification of identified contraventions of the Fair Work Act, including underpayments to employees.

15. If the first respondent had complied with the compliance notice in this case:

    (a)the Fair Work Ombudsman would have been prevented from bringing civil remedy proceedings against it in respect of the underlying contraventions pursuant to s.716(4A) of the Fair Work Act; and

    (b)it would not be taken to have admitted or contravened the civil remedy provisions in respect of the underlying contraventions pursuant to s.716(4B) of the Fair Work Act.

16. However, where a person fails to comply with a compliance notice, s.539(2) of the Fair Work Act allows a Fair Work Inspector to bring civil remedy proceedings against that person, to seek appropriate orders to remedy the contravention and obtain pecuniary penalties under s.546 of the Fair Work Act.

17. By a combination of ss. 539(2) and 546(2)(a) of the Fair Work Act, the maximum penalty that the Court may impose for a contravention of s.716(5) of the Fair Work Act is $31,500 for a corporation and $6,300 for an individual.

18. Specific and general deterrence, is either the sole or at least the primary objective of civil penalties: Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at 506, [55] (French CJ, Kiefel, Bell, Nettle and Gordon JJ) see also at 513, [79] Keane J agreeing with the plurality. The “principal object” of deterrence is achieved where a penalty has the necessary “sting or burden” to secure the specific and general deterrent effects that are the raison d’etre of its imposition: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at [116].

    CONSIDERATION OF PENALTY

19. On 14 January, 2020 a copy of the compliance notice was given to the first respondent at the first respondent’s principal place of business.  The first respondent, through the second respondent, was aware of the compliance notice and the obligation to comply with it, including that failure to comply may lead to the Fair Work Ombudsman commencing proceedings seeking civil penalties and orders for compliance.

20. Despite the notice, neither respondent engaged with the Fair Work Ombudsman.  An opportunity to engage in a payment plan to rectify the amount due under the compliance notice was offered to the first respondent, but that elicited no response either.  Despite being given ample time and multiple opportunities by the Fair Work Ombudsman to comply with the notice and avoid litigation, the first respondent failed to comply by the required date in the compliance notice or at all.  These proceedings are the result of the respondents’ failure to engage with the Fair Work Ombudsman.

21. I can come to no other conclusion than that the respondents’ failure to comply with the compliance notice was deliberate. I accept the Fair Work Ombudsman’s submission that the first respondent’s conduct in failing to comply with the compliance notice coupled with its failure to engage in these proceedings, demonstrates a deliberate disregard for its obligations under the Fair Work Act and the authority of the Fair Work Ombudsman as a regulator of Commonwealth workplace laws. It demonstrates a contempt for the laws put in place to safeguard the entitlements of employees.

22. As a result of the failure to comply with the compliance notice, Ms Wood did not receive the amount owing to her until on or around 15 October, 2020 approximately 18 months after she ceased employment with the first respondent and approximately 9 months after compliance with the compliance notice was required.

23. This case serves to demonstrate the utility of the compliance notice regime set out in the Act.   The loss sustained by Ms Wood was only rectified through the commencement and active pursuit of these proceedings by the Fair Work Ombudsman.

24. Neither the first respondent nor the second respondent have meaningfully engaged with the Fair Work Ombudsman or the Court throughout the process of this litigation. The respondents have failed to:

    (a)attend the first court date on 9 September, 2020;

    (b)file and serve a notice of address for service as required by rule 6.01 of the Rules;

    (c)file and serve a response or defence within 28 days of service as required by rules 4.03 and 4.05(3) of the Rules;

    (d)file and serve a response and defence by 4:00pm on 7 October, 2020 in accordance with order 1 of the orders of the Court dated 9 September, 2020;

    (e)attend the directions hearing and hearing of the default application on 16 October, 2020; and

    (f)take all of the steps set out in order 4 of the orders of the Court dated 16 October, 2020.

25. The first respondent only made payment to Ms Wood in the days prior to the hearing of the application for default orders on 16 October, 2020.  It is appropriate to take into account and give the respondents credit for the payment made to Ms Wood.  The Fair Work Ombudsman submits however, that I should infer from the conduct of the respondents that the first respondent would not have made the payment to Ms Wood to partially rectify the non-compliance with the compliance notice without the commencement of these proceedings.  I think it proper to draw that inference and I draw it.

26. Otherwise, there has been no cooperation by the respondents.  They have not admitted their offending conduct.  They have not participated in these proceedings, they have not accepted their wrongdoing nor have they expressed regret in relation to the failure to comply with the compliance notice.

27. I accept the submission by the Fair Work Ombudsman that the first respondent’ failure to comply with the compliance notice undermines the Fair Work Act’s enforcement framework and the safety net of entitlements it is designed to protect. It reflects a prioritisation of the first respondent’s own interests at the expense of Ms Wood’s minimum entitlements under the Retail Award.

28. The failure to comply with a statutory notice properly issued by the Fair Work Ombudsman is serious.  The efficacy of statutory notices such as compliance notices will be hindered or made redundant if recipients perceive that a failure to comply carries no meaningful consequences.

29. Given the importance of a Fair Work Inspector ’s power to issue compliance notices, and that compliance with such notices avoids the need for litigation or the imposition of any penalties, penalties for non-compliance should be set at a level which demonstrates that there are serious consequences for failing to comply with a compliance notice. In that way, the primary purpose of imposing a pecuniary penalty will be satisfied.   Deterrence of others from refusing to comply with compliance notices is singularly important.  A penalty must be set such that it is not seen by others as just the cost of doing business.  It must be likely to act as a deterrent in preventing similar contraventions by like-minded persons or organisations.

30. I also accept that there is a particular need to specifically deter both the first respondent and the second respondent from engaging in the same contravening conduct in the future, given that the first respondent is still registered and no evidence has been provided that the second respondent no longer remains the Manager of the first respondent. The first respondent and the second respondent have demonstrated a disregard for the obligations of an employer under Commonwealth workplace laws.

    CONCLUSION

31. The failure to comply with a statutory notice is serious and in this case it required the Fair Work Ombudsman to commence proceedings in circumstances where litigation could have easily been avoided.  I can only conclude that the failure to comply by both respondents was a deliberate choice.  The only positive thing that might be said for the respondents is that Ms Wood has now been paid.

32. A penalty needs to reflect the seriousness of the respondent’s conduct and it needs to send a message to both the respondents in this case and other like-minded organisations and individuals that ignoring the obligations cast upon employers and those that control them by the Fair Work Act will not be tolerated.

33. A penalty of $22,050 for the first respondent and a penalty of $4,410 for the second respondent is appropriate in this case.  There is no evidence that such a penalty would be crushing or oppressive for either respondent.  It reflects the objective seriousness of the deliberate conduct engaged by the first respondent and the second respondent.

34. There will be orders as set out at the commencement of these reasons. 

I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jarrett.

Associate:

Dated:       22 December 2020