Fair Work Ombudsman v TAC Pham Pty Ltd
[2020] FCCA 3036
•12 November 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v TAC PHAM PTY LTD & ANOR | [2020] FCCA 3036 |
| Catchwords: INDUSTRIAL LAW – Penalty hearing – agreed contraventions – previous Court proceedings imposing penalties for same contraventions – contrition and cooperation demonstrated – penalties imposed. |
| Legislation: Crimes Act 1914 (Cth), s.4AA |
| Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | TAC PHAM PTY LTD (ACN 135 782 768) |
| Second Respondent: | CUC THI THU PHAM |
| File Number: | PEG 498 of 2019 |
| Judgment of: | Judge Kendall |
| Hearing date: | 2 November 2020 |
| Date of Last Submission: | 2 November 2020 |
| Delivered at: | Perth |
| Delivered on: | 12 November 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms H Millar |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Counsel for the Respondents: | Mr R Tan |
| Solicitors for the Respondents: | Tan & Tan Lawyers |
ORDERS AND DECLARATIONS
THE COURT DECLARES THAT:
The first respondent, Tac Pham Pty Ltd, contravened:
(a)section 44(1) of the Fair Work Act 2009 (Cth) (the “Act”), by contravening a provision of the National Employment Standards, namely by failing to pay Aira Allarse and Chloe Sinderberry for absence on a public holiday pursuant to s.116 of the Act;
(b)section 45 of the Act, by contravening the following terms of the Restaurant Industry Award 2010 (the “Award”), namely by failing to:
(i)pay Aira Allarse, Ajay Sapoka, Ash Yen Ju, Chloe Sinderberry, Nguyen Thi Hai Ha and Ralph Jiao adult minimum wages, pursuant to clause 20.1;
(ii)pay Nguyen Pham Nhu Quynh, Pham Thi Mai Anh (Mai Anh) and Truong Pham Truong Vu junior minimum wages, pursuant to clause 20.3;
(iii)pay Ash Yen Ju and Pham Thi Mai Anh (Mai Anh) casual loading, pursuant to clause 13.1;
(iv)pay Aira Allarse, Ajay Sapoka, Ash Yen Ju and Chloe Sinderberry Saturday penalty rates, pursuant to clause 34.1;
(v)pay Aira Allarse, Chloe Sinderberry and Pham Ngoc Phuong Thao (Tu Nhi) Sunday penalty rates, pursuant to clause 34.2;
(vi)pay Ash Yen Ju, Chloe Sinderberry, Nguyen Huu Tinh, Nguyen Pham Nhu Quynh, Nguyen Thi Hai Ha, Pham Ngoc Phuong Thao (Tu Nhi), Pham Thi Mai Anh (Mai Anh) and Ralph Jiao public holiday penalty rates, pursuant to clause 34.1;
(vii)pay Ajay Sapoka, Chloe Sinderberry, Nguyen Huu Tinh and Nguyen Thi Hai Ha late night penalty rates, pursuant to clause 34.2;
(viii)pay Aira Allarse, Ajay Sapoka, Chloe Sinderberry, Ralph Jiao and Truong Pham Truong Vu split shift allowance, pursuant to clause 24.2;
(ix)pay Chloe Sinderberry, who was not a casual employee, for a minimum of four hours for working on a public holiday, pursuant to clause 34.4(a);
(x)pay Pham Thi Mai Anh (Mai Anh), a casual employee, for a minimum of two hours for working on a public holiday, pursuant to clause 34.4(b);
(xi)pay Pham Ngoc Phuong Thao (Thu Nhi), a casual employee, for a minimum of two hours’ work, pursuant to clause 13.3;
(xii)provide part-time employees with a part time work agreement pursuant to clause 12.3;
(c)section 536(1) of the Act, by failing to give a pay slip within one working day of paying an amount in relation to the performance of work; and
(d)section 536(2) of the Act, by failing to include, on pay slips given to employees, information prescribed by the Fair Work Regulations 2009 (Cth),
(together, the “Contraventions”).
The contraventions committed by the first respondent at paragraphs 1(b)(i), 1(b)(ii) and 1(d) above were serious contraventions within the meaning of s.557A of the Act (the “Serious Contraventions”).
The second respondent, Cuc Thi Thu Pham, was:
(a)involved in each of the Contraventions pursuant to s.550 of the Act; and
(b)involved in each of the Serious Contraventions pursuant to s.557A(5A) of the Act.
THE COURT ORDERS THAT:
The first respondent pay penalties of $191,646 pursuant to s.546(1) of the Act for committing the Contraventions and Serious Contraventions.
The second respondent pay penalties of $38,394 pursuant to s.546(1) of the Act for her involvement in the Contraventions and Serious Contraventions.
Pursuant to s.546(3)(a) of the Act, all pecuniary penalties imposed be paid into the Consolidated Revenue Fund of the Commonwealth of Australia within 120 days of the Court’s orders.
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 PERTH |
PEG 498 of 2019
| FAIR WORK OMBUDSMAN |
Applicant
And
| TAC PHAM PTY LTD (ACN 135 782 768) |
First Respondent
| CUC THI THU PHAM |
Second Respondent
REASONS FOR JUDGMENT
Introduction
On 19 December 2019, the applicant (the Fair Work Ombudsman) filed an application in this Court claiming that the first respondent (Tac Pham Pty Ltd) had contravened ss.44, 45 and 536 of the Fair Work Act 2009 (Cth) (the “Act”). The applicant claimed that the second respondent (Ms Cuc Thi Thu Pham) was involved in the first respondent’s contraventions pursuant to s.550 of the Act. The applicant sought pecuniary penalties against the respondents.
On 29 May 2020, the parties filed a statement of agreed facts in accordance with s.191 of the Evidence Act 1995 (Cth). In that statement of agreed facts, the respondents admitted the following contraventions:
A. ADMITTED CONTRAVENTIONS
1. On the basis of the facts agreed below, the First Respondent, Tac Pham Pty Ltd (ACN 135 782 768) (Han’s Cafe), admits that it contravened the following civil remedy provisions of the Fair Work Act 2009 (Cth) (FW Act) between 25 September 2017 and 8 April 2018:
(a) section 44(1) of the FW Act, by contravening a provision of the National Employment Standards, namely by failing to pay for absence on a public holiday pursuant to section 116 of the FW Act;
(b) section 45 of the FW Act, by contravening the following terms of the Restaurant Industry Award 2010 (Award), namely by failing to:
(i) pay Aira Allarse, Ajay Sapoka, Ash Yen Ju, Chloe Sinderberry, Nguyen Thi Hai Ha and Ralph Jiao adult minimum wages, pursuant to clause 20.1;
(ii) pay Nguyen Pham Nhu Quynh, Pham Thi Mai Anh (Mai Anh) and Truong Pham Truong Vu junior minimum wages, pursuant to clause 20.3;
(iii) pay Ash Yen Ju and Pham Thi Mai Anh (Mai Anh) casual loading, pursuant to clause 13.1;
(iv) pay Aira Allarse, Ajay Sapoka, Ash Yen Ju and Chloe Sinderberry Saturday penalty rates, pursuant to clause 34.1;
(v) pay Aira Allarse, Chloe Sinderberry and Pham Ngoc Phuong Thao (Tu Nhi) Sunday penalty rates, pursuant to clause 34.2;
(vi) pay Ash Yen Ju, Chloe Sinderberry, Nguyen Huu Tinh, Nguyen Pham Nhu Quynh, Nguyen Thi Hai Ha, Pham Ngoc Phuong Thao (Tu Nhi), Pham Thi Mai Anh (Mai Anh) and Ralph Jiao public holiday penalty rates, pursuant to clause 34.1;
(vii) pay Ajay Sapoka, Chloe Sinderberry, Nguyen Huu Tinh and Nguyen Thi Hai Ha late night penalty rates, pursuant to clause 34.2;
(viii) pay Aira Allarse, Ajay Sapoka, Chloe Sinderberry, Ralph Jiao and Truong Pham Truong Vu split shift allowance, pursuant to clause 24.2;
(ix) pay Chloe Sinderberry , who was not a casual employee, for a minimum of four hours for working on a public holiday, pursuant to clause 34.4(a);
(x) pay Pham Thi Mai Anh (Mai Anh), a casual employee, for a minimum of two hours for working on a public holiday, pursuant to clause 34.4(b);
(xi) pay Pham Ngoc Phuong Thao (Thu Nhi), a casual employee, for a minimum of two hours’ work, pursuant to clause 13.3;
(xii) provide part-time employees with a part time work agreement pursuant to clause 12.3;
(c) section 536(1) of the FW Act, by failing to give a pay slip within one working day of paying an amount in relation to the performance of work;
(d) section 536(2) of the FW Act, by failing to include, on pay slips given to employees, information prescribed by the Fair Work Regulations 2009 (Cth) (FW Regulations),
(together, the Admitted Contraventions).
2. Han’s Cafe further admits that the Admitted Contraventions set out at paragraphs 1 (b)(i), 1 (b)(ii) and 1 (d) above were serious contraventions within the meaning of section 557A of the FW Act (Serious Contraventions).
3. The Second Respondent, Ms Cuc Thi Thu Pham (Ms Pham), admits that she was involved in each of the Admitted Contraventions pursuant to section 550 of the FW Act.
4. Ms Pham further admits that she was involved, within the meaning of section 557A(5A) of the FW Act, in the Serious Contraventions.
These reasons for judgment concern the penalty to be imposed for the above agreed contraventions.
Background
This is not the first time that the applicant has brought litigation against the respondents.
The first respondent began trading as Hans Café Rockingham in 2013. The second respondent was the General Manager of the first respondent and was at all times responsible for the direction, control, management and supervision of the first respondent’s business.
Following an audit conducted by a Fair Work Inspector on
24 January 2017, the respondents were advised that the first respondent had underpaid 25 employees during the period of 22 December 2014 until 20 December 2015. The first respondent rectified these underpayments.
On 6 June 2017, proceedings were commenced in the Federal Court in relation to the underpayments made in the 2014-2015 period (the “Federal Court proceedings”). The respondents filed a statement of agreed facts admitting liability and the matter proceeded straight to a penalty hearing.
On 20 February 2018, Justice Siopis delivered judgment on the issue of penalty: Fair Work Ombudsman v Tac Pham Pty Ltd [2018] FCA 120 (“Tac Pham No.1”). His Honour’s orders and declarations were as follows:
THE COURT DECLARES THAT:
1. The first respondent contravened the following civil penalty provisions:
(a) section 45 of the Fair Work Act 2009 (Cth) (the FW Act), by contravening clause 20.1 of the Restaurant Industry Award 2010 (the Restaurant Award) by failing to provide the employees listed in paragraph 19 of the statement of agreed facts and admissions filed on 17 July 2017 (the SOAF) with the required minimum rate of pay under the Restaurant Award;
(b)section 45 of the FW Act, by contravening clause 20.3 of the Restaurant Award by failing to provide the junior employee listed in paragraph 25 of the SOAF with the required minimum rate of pay under the Restaurant Award;
(c)section 45 of the FW Act, by contravening clause 34.1 of the Restaurant Award by failing to provide the employees listed in paragraph 31 of the SOAF with the required Saturday penalty rates under the Restaurant Award;
(d) section 45 of the FW Act, by contravening clause 34.1 of the Restaurant Award by failing to provide the employees listed in paragraph 36 of the SOAF with the required Sunday penalty rates under the Restaurant Award;
(e) section 45 of the FW Act, by contravening clause 34.1 of the Restaurant Award by failing to provide the employees listed in paragraph 41 of the SOAF with the required public holiday penalty rates under the Restaurant Award;
(f)section 45 of the FW Act, by contravening clause 34.2 of the Restaurant Award by failing to provide the employees listed in paragraph 46 of the SOAF above with the required late night penalty rates under the Restaurant Award;
(g) section 45 of the FW Act, by contravening clause 24.2 of the Restaurant Award by failing to provide the employees listed in paragraph 52 of the SOAF with the required split shift allowance under the Restaurant Award;
(h) section 536(2) of the FW Act, by failing to give a pay slip to each of the employees which included the information required by regulation 3.46(1) of the Fair Work Regulations 2009 (Cth); and
(i) section 536(2) of the FW Act, by failing to give a pay slip to each of the employees which included the information required by regulation 3.46(5) of the Fair Work Regulations 2009 (Cth).
2. Pursuant to s 550 of the FW Act, the second respondent was involved in each of the contraventions set out in paragraph 1 above.
AND THE COURT ORDERS THAT:
3. Pursuant to s 546(1) of the FW Act, each respondent is to pay the following pecuniary penalty in respect of their contraventions of the FW Act:
(a) the first respondent - the sum of $37,500; and
(b) the second respondent - the sum of $7,500.
4. Pursuant to s 546(3)(a) of the FW Act, all pecuniary penalties imposed be paid into the Consolidated Revenue Fund of the Commonwealth of Australia within 28 days of the date of this order.
5. Pursuant to s 545(1) of the FW Act, all persons engaged by the first respondent who have managerial responsibility for decisions regarding wages and conditions are, at the expense of the first respondent, to engage a suitably qualified compliance professional or legal practitioner with expertise in workplace relations law to conduct training, either jointly or individually, to occur within three months of the date of this order, in relation to compliance with:
(a) wages and work-related entitlements under the Restaurant Award;
(b) accrual and payment of entitlements under the National Employment Standards contained in Part 2-2 of the FW Act; and
the first respondent is to notify the applicant in writing, within 7 days of the training, of the attendees and the name(s) of the person(s) who conducted the training.
6. The applicant has liberty to apply on 7 days’ notice in the event that any of the preceding orders are not complied with.
On 20 May 2018, the second respondent and her husband (who is the director of the first respondent) attended the training required by Order 5 of His Honour Justice Siopis’ orders. The second respondent’s son assisted the second respondent at the training by providing interpretation assistance.
On 30 May 2018, a Fair Work Inspector attended the first respondent’s business as a part of the National Compliance Monitoring Campaign. The respondents were issued, and subsequently complied with, a Notice to Produce documents. The second respondent instructed an accounting firm to assist with complying with the Notice to Produce and to conduct a payroll audit.
The payroll audit by the accounting firm identified that the first respondent had underpaid 16 employees. The first respondent corrected the underpayments and the accounting firm conducted all future payroll for the first respondent until it closed in 2019.
On 7 June 2019, the respondents were advised by the applicant that it had been found that the first respondent had underpaid 21 employees in the period of 1 October 2017 until 31 March 2018. On
18 September 2019, the applicant issued an Amended Findings of Contravention. The respondent paid the relevant employees on
25 September 2019.
On 19 December 2019, the applicant commenced proceedings in this Court seeking pecuniary penalties for the underpayment of 11 employees during the period 25 September 2017 to 8 April 2018.
Proceedings in this Court
The Court has referenced the following materials in writing this judgment:
a)the Statement of Agreed Facts signed 29 May 2020;
b)the affidavit of Viet Hai Dinh sworn 26 June 2020;
c)two affidavits of the second respondent. One sworn 25 June 2020 and another sworn 12 August 2020;
d)
the affidavit of Karen Mary Elizabeth Blackshaw affirmed
27 July 2020;
e)
outlines of written submissions filed by the applicant on
27 August 2020 and 22 October 2020; and
f)
an outline of submissions filed by the respondent on
17 September 2020.
This matter was heard on 2 November 2020. Ms Millar appeared as Counsel for the applicant. Mr Tan appeared on behalf of the respondents.
Ms Blackshaw’s Affidavit
Ms Blackshaw was the Fair Work Inspector responsible for the investigation of, and findings made in relation to, underpayments by the first respondent to its employees during the period 25 September 2017 to 8 April 2018 – the underpayments the subject of these proceedings.
Ms Blackshaw’s affidavit largely comprises of annexures documenting the applicant’s involvement with the respondents. In particular, the affidavit annexes:
a)file notes;
b)documents provided to the applicant pursuant to the Notice to Produce;
c)a copy of the findings and amended findings of the investigation and the breakdown of how the figures were arrived at;
d)a transcript of an interview with the second respondent;
e)the affidavits filed by the second respondent and her husband (the director of the first respondent) in the Federal Court proceeding, the transcript of the Federal Court proceeding and a copy of Tac Pham No.1; and
f)an industry profile report undertaken by the applicant in relation to the Café and Restaurant industry.
Most of Ms Blackshaw’s evidence provides contextual information and historical background.
Mr Dinh’s Affidavit
Mr Dinh is a certified practicing accountant. He was first retained by the second respondent in June 2018 to assist with preparing the documents required by the Notice to Produce. Mr Dinh also conducted a full payroll audit and identified underpayments by the first respondent in relation to a number of employees.
After he identified these underpayments, Mr Dinh became responsible for the first respondent’s payroll. He states that the second respondent was “very shocked and upset” when he advised her of the underpayments. Mr Dinh also says that, while he explained to the second respondent how the underpayments occurred, she did not seem to understand. He further explains that the second respondent was using a manual payroll system and that it is difficult for anyone to do so in the hospitality industry.
Mr Dinh deposes:
27. In my professional opinion, Ms Pham’s conduct that leads to the contraventions of the FW Act was not deliberate. I have seen that Ms Pham has tried her best working with us to ensure her payroll system is correct and up to date by changing from manual records to software and computerised system.
28. Payroll is a complex area of employment law and it involves a good understanding of not only software system, but also employment contracts, and complex pay rates of the hospitality industry. Her effort to understand and implement her payroll system quickly is highly commended by us.
29. Throughout this matter, Ms Pham always instructed KDA to fully cooperate and assist the FWO with their investigation and enquiries.
Mr Dinh appeared for brief cross-examination. He confirmed that he began doing the first respondent’s payroll in June 2018. He explained that he had a face-to-face meeting with the second respondent and explained to her how the underpayments had occurred. When asked by Counsel for the applicant whether, when conducting a payroll audit, he took into account “cash payments”, Mr Dinh confirmed that he “did so”.
Mr Dinh’s evidence in cross-examination was forthright and he struck the Court as entirely credible.
The Second Respondent’s Affidavits
The second respondent filed two affidavits in this matter: one dated 25 June 2020; another dated 12 August 2020. Paragraph [57] of the first affidavit dated 25 June 2020 was struck out by consent.
The second respondent states that the first respondent is currently in the process of voluntary liquidation. Further, it is said that the first respondent has no assets and no financial capacity to pay a penalty. The second respondent attached various financial statements demonstrating that the first respondent had not made a profit in since the 2015/2016 financial year. She states that the first respondent is currently $798,254 in debt.
The second respondent also makes reference to her lack of English language proficiency. She says that she was unaware of the correct rates of pay or any obligations surrounding payslips when the business opened and received only two weeks of training by the franchisor. She noted that, following the orders made by Justice Siopis, she attended “intense, technical and extremely difficult” training which she tried “very hard to understand” (but “could not”).
The second respondent says that she was “very surprised” to hear about the investigation into the underpayments the subject of proceedings in this Court as, at that time, she had “recently paid the pecuniary penalties” and “had undertaken the training”. However, she explains that, upon learning of the underpayments she caused them to be rectified and, despite being unable to afford the cost, retained an accounting firm to tend to all bookkeeping.
Through these proceedings, the second respondent became aware that her “manual approach” to record keeping (copying and pasting previous payslips) had resulted in a number of mistakes and inadvertent errors. This, she says, included overpayments which, she notes, the applicant had acknowledged. The second respondent confirmed that she had not taken any action in relation to those overpayments. She also stated that a number of underpayments were to family members and that she always paid those family members above what they were owed in cash.
Finally, the second respondent states:
63. I accept responsibility for my wrongdoing. However, I did not deliberately underpay my employees. As soon as I became aware of any underpayment occurred, I endeavoured to take the corrective actions to identify the underpayments and to retified those underpayments to the underpaid employees with my own money.
64. I have no motivation or purpose of securing a personal gain from those underpayments. Upon the request of the FWO, I fully disclosed to the FWO a range of genuine records, including payroll summaries and activities, payment of superannuation records and pay slips.
65. I am hopeful hope that the Court takes into account the significant language handicap I have in dealing with the regulatory compliance concerning the remuneration of employees and related recordkeeping.
The second respondent was cross-examined by Counsel for the applicant. She confirmed that she did not engage any consultant or accountant to assist with the payroll until June 2018. She explained, however, that she had tried to find a consultant and also tried to learn how to do the payroll herself after August 2017. She said that she wanted a consultant or accountant who spoke Vietnamese and, in June 2018, asked her lawyer to find a consultant or accountant for her.
The second respondent’s evidence was vague. She sought to justify the fact that she did not engage a consultant in August 2017 (or until June 2018) because her English language skills “were not high”, the Federal Court proceedings were not finalised and she was trying to find a Vietnamese speaking consultant.
The second respondent also stated that she would check the Restaurant Industry Award 2010 (the “Award”) rates “once or twice a year” if she was confused but found the details provided to be inadequate and did not really understand it.
When re-examined, the second respondent indicated that (in addition to the Court ordered education course she undertook in May 2018), she undertook a “bookkeeping” course. This evidence had not been raised previously. It is not mentioned in the two affidavits filed by the second respondent. There is no corroborative evidence (like a certificate of completion) included in any of the materials before the Court. The Court gives little weight to this evidence.
The “Serious Contraventions”
In the statement of agreed facts, the following is admitted:
2. Han’s Cafe further admits that the Admitted Contraventions set out at paragraphs 1 (b)(i), 1 (b)(ii) and 1 (d) above were serious contraventions within the meaning of section 557A of the FW Act (Serious Contraventions).
…
4. Ms Pham further admits that she was involved, within the meaning of section 557A(5A) of the FW Act, in the Serious Contraventions.
The statement of agreed facts continues:
I. SERIOUS CONTRAVENTIONS
The serious contraventions of section 45 of the FW Act regarding failure to pay minimum hourly rates of pay
103. Han’s Cafe knew that at all times during the Employees’ respective Assessed Employment Periods:
(a) the Award applied to Han’s Cafe and the Employees;
(b) the Award contained mandatory rates of pay in respect of the Employees; and
(c) it was unlawful not to comply with the terms of an applicable award.
104. The Employer knew that Han’s Cafe paid the Employees rates of pay for work in the Business which were insufficient to meet the minimum rates of pay in the Award.
105. At all material times:
(a) Han’s Cafe failed or neglected to exercise due diligence to prevent the noncompliance with the minimum rates of pay in the Award, or authorised or permitted the non-compliance;
(b)a corporate culture thereby existed within Han’s Cafe that directed, encouraged, tolerated or led to non-compliance with the minimum rates of pay in the Award; and
(c)in the alternative to sub-paragraph (b) above, Han’s Cafe failed or neglected to create and maintain a corporate culture that required compliance with the minimum rates of pay in the Restaurant Award.
106. By reason of the matters agreed in paragraphs 103 to 105 above, Han’s Café expressly authorised the contraventions of section 45 of the FW Act (in respect of breaches of clauses 20.1 and 20.3 of the Award), as agreed in paragraphs 43 to 46 above and 49 to 50 above within the meaning of section 5578(1) of the FW Act and so knowingly contravened each provision within the meaning of section 557A(1)(a) of the FW Act.
107. Further and in the alternative to the matters agreed in paragraph 106 above, by reason of the matters agreed in paragraphs 103to 105above, Han’s Cafe implicitly or tacitly authorised the contraventions of section 45 of the FW Act (in respect of breaches of clauses 20.1 and 20.3 of the Award), as agreed in paragraphs 43to 46 above and 49to 50 above within the meaning of section 557B(1) of the FW Act and so knowingly contravened each provision within the meaning of section 557A(1)(a) of the FW Act. The conduct constituting each of the contraventions agreed in paragraphs 43 to 46 above and 48 to 50 above, namely failing to pay the Employees minimum rates of pay for their ordinary hours in accordance with the applicable classification in the Award, was part of a systematic pattern of conduct in that:
(a) Han’s Cafe:
(i) committed the contraventions multiple times on a regular basis during the Assessed Employment Periods;
(ii) committed the contraventions of section 45 of the FW Act (arising out of clause 20.1 of the Award) in respect of six of the Employees;
(iii) committed the contraventions of section 45 of the FW Act (arising out of clause 20.3 of the Award) in respect of three of the Employees;
(iv) committed 13 other types of contraventions, 10 of which were committed multiple times during the Assessed Employment Periods, as agreed in paragraphs 52, 58, 61, 66, 70, 7 4, 78, 82, 86, 89, 94, 98and 102above, (together, the Minimum Wage Relevant Contraventions);
(b) the period over which the Minimum Wage Relevant Contraventions occurred spans from 5 October 2017 to 8 April 2018;
(c) Han’s Cafe committed the Minimum Wage Relevant Contraventions in relation to 11 Employees;
(d) Han’s Cafe failed to give pay slips in accordance with section 536(1) of the FW Act, as agreed in paragraphs 95 to 98 above; and
(e) Han’s Cafe failed to include required information on pay slips in accordance with section 536(2) of the FW Act, as agreed in paragraphs 99 to 102 above.
108. By reason of the matters agreed in paragraphs 103 to 107 above, Han’s Cafe’s contraventions of section 45 of the FW Act for failing to pay minimum rates of pay the Employees under clauses 20.1 and 20.3 of the Award, were serious contraventions within the meaning of section 557A(1) of the FW Act.
The serious contraventions of section 536(2) of the FW Act regarding failure to include information in pay slips
109. At all times during the Employees’ respective Assessed Employment Periods, Han’s Cafe knew that:
(a) Han’s Cafe issued Employees with pay slips; and
(b) the pay slips did not include Han’s Cafe’s name; the date on which the payment, to which the pay slip related, was made; the Australian Business Number of Han’s Cafe; or the name and number of any fund to which a superannuation contribution was made.
110. Han’s Cafe knew that it was legally required to include information on pay slips and that failure to do so was unlawful.
111. At all material times:
(a) Han’s Cafe failed or neglected to exercise due diligence to prevent the noncompliance with the legal obligation to provide pay slips, or authorised or permitted such conduct taking place;
(b) a corporate culture thereby existed within Han’s Cafe that directed, encouraged, tolerated or led to non-compliance with the legal obligation to provide pay slips; and
(c) in the alternative to sub-paragraph (b) above, Han’s Cafe failed or neglected to create and maintain a corporate culture that required compliance with the legal obligation to provide payslips.
112. By reason of the matters agreed in paragraphs 109 to 111 above, Han’s Café expressly authorised the contraventions of section 536(2) of the FW Act, as agreed in paragraphs 99 to 102 above, within the meaning of section 557B(1) of the FW Act and so knowingly contravened that provision within the meaning of section 557A(1)(a) of the FW Act.
113. Further and in the alternative to the matters agreed in paragraph 112 above, by reason of the matters agreed in paragraphs 108 to 111 above, the Employer implicitly or tacitly authorised the contraventions of section 536(2) of the FW Act, as agreed in paragraphs 99to 102, within the meaning of section 557B(1) of the FW Act and so knowingly contravened that provision within the meaning of section 557A(1)(a) of the FW Act.
114.The conduct constituting the contraventions agreed in paragraphs 99 to 102, namely failing to include required information on pay slips, was part of a systematic pattern of conduct in that:
(a) the Employer:
(i) committed this contravention multiple times on a regular basis during the Assessed Employment Periods, in respect of each of the Employees;
(ii) committed 14 other types of contraventions, 11 of which were committed multiple times during the Assessed Employment Periods, as agreed in paragraphs 46, 50, 54, 58, 62, 66, 70, 74, 78, 82, 86, 89, 94 and 98 above, (together, the Pay Slip Relevant Contraventions);
(b) the period over which the Pay Slip Relevant Contraventions occurred spans from 5 October 2017 to 8 April 2018; and
(c) Han’s Cafe committed the Pay Slip Relevant Contraventions in relation to 11 Employees.
115. By reason of the matters agreed in paragraphs 109 to 114 above, Han’s Cafe’s contraventions of section 536(2) of the FW Act for failing to include required information in pay slips were serious contraventions within the meaning of section 557A(1) of the FW Act.
…
Ms Pham’s involvement in the serious contraventions
122. Ms Pham has committed serious contraventions of section 45 of the FW Act, for failing to pay minimum hourly rates of pay in accordance with clauses 20.1 and 20.3 of the Award, within the meaning of section 557 A(5A) of the FW Act, because:
(a)she was involved in Han’s Cafe’s contraventions of section 45 of the FW Act (by failing to comply with clauses 20.1 and 20.3 of the Award), by reason of the matters agreed in paragraph 121 above;
(b) Han’s Cafe’s contraventions of section 45 of the FW Act, for failing to pay minimum hourly rates of pay to the Employees in accordance with clauses 20.1 and 20.3 of the Award, were serious contraventions for the reasons agreed in paragraph 108 above;
(c) Ms Pham knew that Han’s Cafe’s contraventions of section 45 of the FW Act, for failing to pay minimum hourly rates of pay to the Employees in accordance with clauses 20.1 and 20.3 of the Award, were serious contraventions because she knew that:
(i) Han’s Cafe knowingly contravened section 45 of the FW Act, in that it expressly, tacitly or impliedly authorised the contraventions; and
(ii) Han’s Cafe’s conduct constituting the contraventions was part of a systematic pattern of conduct.
123. Ms Pham has committed serious contraventions of section 536(2) of the FW Act, within the meaning of section 557 A(5A) of the FW Act, because:
(a) she was involved in Han’s Cafe’s contraventions of section 536(2) of the FW Act, by reason of the matters agreed in paragraph 111 above;
(b) Han’s Cafe’s contraventions of section 536(2) of the FW Act, for failing to include the required information in pay slips, were serious contraventions for the reasons agreed in paragraph 115 above;
(c) Ms Pham knew that Han’s Cafe’s contraventions of section 536(2) of the FW Act, for failing to include the required information in pay slips, were serious contraventions because she knew that:
(i) Han’s Cafe knowingly contravened section 536(2) of the FW Act, in that it expressly, tacitly or impliedly authorised the contraventions; and
(ii) Han’s Cafe’s conduct constituting the contraventions was part of a systematic pattern of conduct.
Section 557A of the Act came into effect on 15 September 2017. The contraventions all occurred after this date. Accordingly, s.557A was in effect and applies to this case.
In the respondents’ written submissions filed on 17 September 2020, the respondents seem to resile from the statements they have agreed to above. The respondents submit that they are not appropriate parties upon whom to impose serious contravention penalties, that the contraventions were not deliberate and the contraventions do not fall within what is considered a “serious contravention”.
The applicant submits that the respondents’ specious attempt to “re-characterise” the contraventions should not be allowed.
The statement of agreed facts was filed in accordance with s.191 of the Evidence Act 1995 (Cth). The respondents have not sought leave to adduce any evidence to contradict the agreed fact as is required by s.191(2)(b) of the Evidence Act 1995 (Cth). On that basis, the respondents’ purported attempt in their written submissions to have the “serious contraventions” deemed “contraventions” (such that the maximum penalty is reduced) is rejected.
It is noted that s.557A(7) of the Act provides:
(7)If, in proceedings for an order in relation to a serious contravention of a civil remedy provision, the court:
(a) is not satisfied that the person has committed a serious contravention against that provision; and
(b) is satisfied that the person has contravened that provision;
the court may make a pecuniary penalty order against the person not for the serious contravention but for the contravention of that provision.
The Explanatory Memorandum to the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth) explains the purpose of s.557A(7) as follows:
30. New subsection 557A(7) applies if alleged ‘serious contraventions’ have not been proved (e.g. the applicant has failed to prove the contraventions were deliberate). It allows the courts to determine whether the corresponding strict liability provisions were contravened and make appropriate orders accordingly.
Here, the serious contraventions are admitted. Hence, they are not alleged. Further, the statement of agreed facts “proves” that the elements of s.557A(1) of the Act are met.
In Fair Work Ombudsman v IE Enterprises Pty Ltd [2020] FCA 848, Justice Anderson held that in circumstances where the facts giving rise to the alleged serious contravention are admitted, the Court was be satisfied that the contraventions meet s.557A(1).
Here, on the basis of the admitted facts, this Court likewise finds that s.557A applies to the admitted contraventions of failing to pay minimum wages and failing to include information on employee timesheets.
Principles
The Court’s power to impose pecuniary penalties for breaches of civil remedy provisions is found in s.546 of the Act. As the applicant rightly submits, the Court has a wide discretion when assessing what is an appropriate penalty.
While the discretion is wide, the Court is governed by what the Parliament has, by ss.539(2) and 546(2) of the Act, determined to be the “maximum” price of deterrence for contraventions of the Act. The Court should use the maximum penalty as a “yardstick” to determine the appropriate penalty: Mornington Inn v Jordan [2008] FCAFC 70 at [41]-[46] (“Mornington Inn”).
The Court must bear in mind that the imposition of a penalty for a contravention of the Act is protective in nature: Trade Practices Commission v CSR Ltd [1990] FCA 521. It is not intended to be retributive or rehabilitative in nature. Rather, it serves to educate against and deter conduct that breaches the Act: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 (“ABCC”).
The steps the Court undertakes when determining what is an appropriate penalty were summarised in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 at [36] (“NSH North”) as follows:
(1) Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2) 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 s 557 of the FW 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.
(3) 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 each respondent did.
(4) Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5) Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and 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, making such adjustments as are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23], [71] and [102].
Consideration
Step 1: Identification and Maximum Penalty Units
Here, there were, at least, 172 individual contraventions of the Award between 25 September 2017 and 8 April 2018. Those contraventions are as follows:
Item Contravention Total Number of Contraventions 1. s.45 - failure to pay minimum adult rate of pay pursuant to cl.20.1 of the Award 37 contraventions affecting
6 employees2. s.45 - failure to pay junior minimum rate pursuant to cl.20.3 of the Award 4 contraventions, affecting
3 employees3. s.45 - failure to pay casual loading pursuant to cl.13.1 of the Award 4 contraventions affecting
2 employees4. s.45 - failure to pay Saturday penalty rates pursuant to cl.34.1 of the Award 32 contraventions, affecting 4 employees 5. s.45 - failure to pay Sunday penalty rates pursuant to cl.34.1 of the Award 11 contraventions, affecting 3 employees 6. s. 45 - failure to pay public holiday penalties pursuant to cl.34.2 11 contraventions, affecting employees
7. s.45 - failure to pay late night penalties pursuant to cl.34.2 of the Award 12 contraventions, affecting 4 employees 8. s.45 - failure to pay split shift allowance pursuant to cl. 24.2 of the Award 46 contraventions, affecting 5 employees 9. s.45 - failure to pay minimum 4 hours for working on a public holiday pursuant to cl.34.4(a) of the Award 1 contravention affecting
1 employee10. s.45 - failure to pay minimum 2 hours for working on a public holiday pursuant to cl. 34.4(b) of the Award 1 contravention affecting
1 employee11. s.45 - failure to pay minimum 2 hours to casual employees pursuant to cl.13.3 of the Award 1 contravention affecting
1 employee12. s.44(1) - failure to pay employees entitled to be absent on a public holiday pursuant to cl.13.3 of the Award 5 contraventions affecting
2 employees13. s.45 - failure to make part time work agreements pursuant to cl.12.3 of the Award 7 contraventions affecting
7 employees14. s.536(1) - failure to give pay slips Numerous contraventions between 25 September 2017 and 8 April 2018 15. s.536(2) - failure to include information required by regulations 3.46(1) and 3.46(5) on pay slips Numerous contraventions between 25 September 2017 and 8 April 2018
Reading ss.539(2) and 546(2) together, the maximum penalty units which can be imposed upon the first respondent for each contravention identified in items 3-14 is 300 penalty units. The maximum penalty units which can be imposed upon the second respondent for each contravention of items 3-14 is 60.
Items 1, 2 and 15 are all admitted “serious contraventions”. Accordingly, each contravention of those individual items has maximum penalty units of 3,000 for the first respondent and 600 for the second respondent.
At the relevant time, s.4AA of the Crimes Act 1914 (Cth) provided that a penalty unit was $210. Accordingly, the maximum penalty unit for:
a)a serious contravention by the first respondent is $630,000;
b)a serious contravention by the second respondent is $126,000;
c)a contravention by the first respondent is $63,000; and
d)a contravention by the second respondent is $12,600.
Steps 2-3: Grouping
Statutory Course of Conduct
Section 557 of the Act provides:
(1) For the purposes of this Part, 2 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.
(2) The civil remedy provisions are the following:
(a) subsection 44(1) (which deals with contraventions of the National Employment Standards);
(b) section 45 (which deals with contraventions of modern awards);
…
(o) subsections 536(1), (2) and (3) (which deal with employer obligations in relation to pay slips);
…
(3) Subsection (1) does not apply to a contravention of a civil remedy provision that is committed by a person after a court has imposed a pecuniary penalty on the person for an earlier contravention of the provision.
Here, there was a single contravention of each of items 9, 10 and 11. As these contraventions were single contraventions of a discrete obligation, they are not entitled to any grouping as per s.557(1) of the Act. They stand alone.
The parties’ submissions otherwise demonstrate that there is agreement as to the relevant groupings of the contraventions pursuant to s.557.
While there were multiple contraventions of items 12, 13 and 14, as these arose out of the same course of conduct, the respondent is entitled to the benefit of s.557(1) and they will be treated as a single contravention of each clause or section (i.e., while the respondent failed to pay employees entitled to be absent on a public holiday on five separate occasions, this will be treated as a single breach of cl.13.3 of the Award).
The remaining items (i.e., items 1-8 and 15) are all “repeat” contraventions. That is, the respondent was found to have breached those same provisions in the Federal Court proceedings.
The applicant submits that, to the extent that these “repeat” contraventions occurred prior to Tac Pham No.1 being delivered on 20 February 2018, the respondents are entitled to the benefit of s.557(1) of the Act. That is, multiple contraventions of the same clause before this date should be treated as a single contravention.
For example, the Federal Court in Tac Pham No.1 found that the respondents had breached cl.20.1 of the Award. Prior to Tac Pham No.1 being delivered on 20 February 2018, the respondent had breached cl.20.1 on 28 occasions. By virtue of s.557(1) of the Act, despite 28 individual contraventions, these should be treated as one contravention.
The Court agrees with this assessment. All individual contraventions of the same provision of the Award in relation to a number of employees which occurred before 20 February 2018 are entitled to the benefit of s.557(1) and, accordingly, will be treated as one contravention.
However, the applicant submits that contraventions which occurred after the delivery of Tac Pham No.1 on 20 February 2018 should be treated as individual, distinct contraventions. This is so because of s.557(3) of the Act which provides:
(3) Subsection (1) does not apply to a contravention of a civil remedy provision that is committed by a person after a court has imposed a pecuniary penalty on the person for an earlier contravention of the provision.
The applicant’s submissions are consistent with the decision in Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union (the Hutchison Ports Appeal) [2019] FCAFC 69 (“Hutchison Ports”) wherein Justice Ross stated:
46. In my view a plain reading of the text compels the conclusion that in order to enliven the operation of s 557(3) the prior contravention must be of the same civil remedy provision and the Court’s order imposing a penalty for that contravention must have occurred before the contraventions found in the present matter. Further, s 557(3) is not confined to cases in which the prior penalty has been imposed for a contravention forming part of the same course of conduct that is before the Court.
Justice Rangiah then continued:
187. Section 557(1) of the FW Act requires a court to treat a person who is, for the first time, to be penalised for multiple contraventions of a civil remedy provision set out in s 557(2) with a degree of leniency (or at least, without undue severity) where the contraventions arise out of a single course of conduct. However, if the same person has previously contravened the same provision, the effect of ss 557(3) and 546(1) is that it is left for the court to assess the appropriate number of penalties, as well as their scale.
188. Where a court has imposed a pecuniary penalty for an earlier contravention of a civil remedy provision set out in s 557(2), s 557(3) of the FW Act is engaged where the same person again contravenes the same civil remedy provision, even if the contraventions are unrelated.
There is no need to consider the unanswered question raised by Hutchison Ports (at [78] and [168]) as, here, the earlier penalties can be regarded as being for contraventions of the same civil penalty provision (as they involve the exact same clauses of the exact same Award).
Accordingly, s.557(3) applies to items 1-8 and 15. The respondent is not entitled to the benefit of s.557(1). Any contravention after
20 February 2018 is to be treated as an individual contravention.
Accepting that those contraventions which occurred after
20 February 2018 are not entitled to the benefit of s.557(1), the Court adopts the following groupings:
Item Contravention Total number of contraventions after applying s.557 of the Act 1. s.45 - failure to pay minimum adult rate of pay pursuant to cl.20.1 of the Award 10 contraventions 2. s.45 - failure to pay junior minimum rate pursuant to cl.20.3 of the Award 1 contravention 3. s.45 - failure to pay casual loading pursuant to cl.13.1 of the Award 1 contravention 4. s.45 - failure to pay Saturday penalty rates pursuant to cl.34.1 of the Award 8 contraventions 5. s.45 - failure to pay Sunday penalty rates pursuant to cl.34.1 of the Award 5 contraventions 6. s.45 - failure to pay public holiday penalties pursuant to cl.34.2 4 contraventions 7. s.45 - failure to pay late night penalties pursuant to cl.34.2 of the Award 2 contraventions 8. s.45 - failure to pay split shift allowance pursuant to cl. 24.2 of the Award 10 contraventions 9. s.45 - failure to pay minimum 4 hours for working on a public holiday pursuant to cl.34.4(a) of the Award 1 contravention 10. s.45 - failure to pay minimum 2 hours for working on a public holiday pursuant to cl. 34.4(b) of the Award 1 contravention 11. s.45 - failure to pay minimum 2 hours to casual employees pursuant to cl.13.3 of the Award 1 contravention 12. s.44(1) - failure to pay employees entitled to be absent on a public holiday pursuant to cl.13.3 of the Award 1 contravention 13. s.45 - failure to make part time work agreements pursuant to cl.12.3 of the Award 1 contravention 14. s.536(1) - failure to give pay slips 1 contravention 15. s.536(2) - failure to include information required by regulations 3.46(1) and 3.46(5) on pay slips 28 contraventions
Common Law Course of Conduct
In Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1 the common law course of conduct principle was described as follows:
39. The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is “the same criminality” and that is necessarily a factually specific enquiry.
The applicant accepts that:
a)items 1 and 2 carry a common element and ought to be grouped;
b)items 9, 10 and 11 should also be grouped under the common law principle; and
c)item 15 should be subject to the common law course of conduct principle (i.e., the failure to include required information on payslips on numerous occasions should be treated as one contravention).
The Court finds these concessions to be appropriate.
The question remains as to whether any further groupings ought to occur so as to ensure there is no “double punishment”.
In Hutchison Ports, it was held that, where s.557(3) applies, the common law course of conduct principle still applies to the determination of penalty: Hutchison Ports at [95] and [183]. Accordingly, while contraventions which occurred after 20 February 2018 were excluded from being grouped under s.557(1), they fall for consideration under the common law course of conduct provision.
Unfortunately, the respondents do not advance any submissions of assistance in this regard. The respondents simply submit that the Court “may choose to group some or all of the contraventions based on the ‘common elements’ principle.” The respondents have made no attempt to identify any “common elements”. Nor have they proposed any groupings of the contraventions. Rather, the respondents simply agree with the applicant’s groupings.
The Court notes that the groupings do not differ from those which Justice Siopis found to be appropriate in the previous Federal Court proceedings.
On the basis of the applicant’s proper concessions (as to groupings of certain items) and in the absence of any further submissions from the respondents as to further groupings, the Court proceeds as per the tables annexed to the parties’ written submissions.
Conclusion – Grouping
On the basis of the above groupings (as per s.557 and the common law course of conduct principle), the maximum penalties that may be imposed on the respondents are:
Contraventions First Respondent Second Respondent Items 1 and 2 - s.45 failure to pay minimum adult rate of pay pursuant to cl.20.1 of the Award and failure to pay junior minimum rate pursuant to cl.20.3 of the Award $6,300,000 $1,260,000 Item 3 - s.45 - failure to pay casual loading pursuant to cl.13.1 of the Award $63,000 $12,600 Item 4 - s.45 - failure to pay Saturday penalty rates pursuant to cl.34.1 of the Award $504,000 $100,800 Item 5 - s.45 - failure to pay Sunday penalty rates pursuant to cl.34.1 of the Award $315,000 $63,000 Item 6 - s. 45 - failure to pay public holiday penalties pursuant to cl.34.2 $252,000 $50,400 Item 7 - s.45 - failure to pay late night penalties pursuant to cl.34.2 of the Award $126,000 $25,200 Item 8 - s.45 - failure to pay split shift allowance pursuant to cl. 24.2 of the Award $630,000 $126,000 Items 9, 10 and 11 - s.45 - failure to pay:
- minimum 4 hours for working on a public holiday pursuant to cl.34.4(a) of the Award
- minimum 2 hours for working on a public holiday pursuant to cl. 34.4(b) of the Award
- minimum 2 hours to casual employees pursuant to cl.13.3 of the Award
$63,000 $12,600 Item 12 - s.44(1) - failure to pay employees entitled to be absent on a public holiday pursuant to cl.13.3 of the Award $63,000 $12,600 Item 13 - s.45 - failure to make part time work agreements pursuant to cl.12.3 of the Award $63,000 $12,600 Item 14 - s.536(1) - failure to give pay slips $63,000 $12,600 Item 15 - s.536(2) - failure to include information required by regulations 3.46(1) and 3.46(5) on pay slips $17,640,000 $3,528,000
On the basis of the above, the maximum penalty that may be imposed:
a)on the first respondent is $26,082,000; and
b)on the second respondent is $5,216,400.
Step 4: Assessment of Penalty
The Act does not specify mandatory factors that the Court must consider when determining the appropriate penalty. The factors that are often cited as relevant are those identified in Kelly v Fitzpatrick [2007] FCA 1080. Those factors are not exhaustive and the question of which factors are relevant is to be answered on a case by case basis.
Having regard to the parties’ submissions, the Court considers the following factors to be appropriate here:
a)the nature, extent and circumstances surrounding the contravening conduct including the involvement of senior management;
b)the deliberateness of the conduct and any similar previous conduct;
c)the nature and extent of the loss;
d)the size and financial resources;
e)contrition, cooperation and corrective action;
f)compliance with minimum standards; and
g)deterrence.
The Court will address each of these factors in turn.
The Nature, Extent and Circumstances of the Contravening Conduct
The nature and extent of the contraventions (being the type of contraventions, the number of contraventions and the number of employees affected by the contraventions) in this matter are set out above at [49].
There is no dispute that the second respondent (the manager and person with ultimate control) was responsible for the payroll and responsible for complying with the relevant payroll requirements. Hence, senior management was involved.
In Tac Pham No.1 it was stated:
86. The contraventions referred to above are serious because they represent a comprehensive failure on the part of the respondents to implement the conditions of the Restaurant Award. This is not a case where there were one or two occasions when the Restaurant Award was not implemented during the course of an otherwise compliant regime by the respondents. Rather in this case, there was a general failure to implement the Restaurant Award in respect of the first respondent’s part-time employees. The affected employees included junior employees and adult employees who were vulnerable employees. The respondents did not direct their attention to ensuring that their business operated a system for the payment of wages which would give effect to the provisions of the Restaurant Award.
87. Further, in my view, the failure of the respondents to provide the employees with appropriate pay slips is symptomatic of the disregard by the first respondent of the need to keep comprehensive records in conducting the business. In Fair Work Ombudsman v Han Investments Pty Ltd [2017] FCA 623, Barker J at [114] observed as follows:
The record keeping obligations are directed at ensuring the creation and retention of records as a critical tool in the assessment of compliance with workplace laws. Unless an employer complies with the law, and makes and keeps employment records, an effective safety net for employees is difficult to maintain. The result is that employees are more vulnerable to exploitation. The job of the FW Ombudsman, as regulator, in detecting and protecting employees’ workplace entitlements is reduced in effectiveness.
The nature and extent of the contraventions in this matter are more serious than those in Tac Pham No.1. Relevantly:
a)a number of the contraventions were “repeat contraventions”. This reflects a comprehensive (and ongoing) failure on the part of the respondents to implement the conditions and requirements of the Award;
b)there were additional contraventions of other provisions of the Award which had not previously been contravened. In other words, the extent of the non-compliance with the Award increased;
c)there was a general failure to implement the Award in respect of not only the first respondent’s part-time employees, but also the first respondent’s casual employees. Some of these employers were junior employees. This makes them more vulnerable to exploitation;
d)in the Federal Court proceedings, the respondents (both the second respondent and her husband as director of the first respondent) deposed that “I will engage qualified consultants to ensure my company’s compliance with all relevant laws and regulations”. Those statements were made to the Court on 25 August 2017. Relevantly, this was one month prior to when the contraventions relevant to this matter began to occur. Contrary to their statements, the respondents did not engage qualified consultants and the extent of non-compliance with the relevant laws and regulations did not improve. It continued and it increased.
The respondents refer to circumstances surrounding the contraventions that they say explain why they did what they did. Relevantly, they emphasise that the second respondent relied on a payroll system that she believed she had correctly updated, she had significant English language difficulties and struggled to understand the payroll system (notwithstanding that she undertook the Court ordered training course) and she is a mother to six children – five of whom are under 18.
The Court places little weight on these matters. The second respondent was responsible for the business. It was incumbent on her to ensure that she had the capacity (be it intellectual, linguistic or time-based) to ensure that she complied with the Award and the Act. If she was unable to do so then she should have engaged consultants who could help her (noting that she had suggested in her affidavit in the Federal Court proceedings that she would do so).
On the basis of the above, the Court considers that the nature, extent and surrounding circumstances are such that penalties in the mid-high range are warranted.
The Deliberateness of the Conduct and Similar Previous Conduct
There is no dispute that the respondents have been found to have engaged in similar conduct previously in relation to items 1-2, 4-8 and 15 of the contraventions identified above.
In Tac Pham No.1, Justice Siopis stated (in relation to what are the repeated contraventions in this matter):
…the respondents’ conduct is to be characterised as conduct in reckless disregard of the workplace laws.
Here, the applicant submits that the fact that the respondents have a prior record for breaching the Act and the Award demonstrates that they are aware of their obligations. Accordingly, their conduct can be deemed to be “deliberate”.
The respondents submitted that the contraventions occurred because of “human error”. The respondents also stress, and the second respondent’s affidavit provides evidence, that the second respondent took steps to obtain the knowledge required to comply with her Award obligations and that the contraventions occurred due to honest mistakes arising from a failure to keep accurate records. The second respondent makes various references to the difficulties that she had understanding the different classifications and rates of pay. Mr Dinh confirms that the second respondent was having difficulties understanding the complexities of the Award system.
Here, the second respondent was aware that employees were covered by the Award and that the Award set the minimum amount of wages. So much is apparent from the fact that the respondents admitted on
17 July 2017 to contravening the Award and the minimum wage rates for its employees (these being the contraventions the subject of Tac Pham No.1).
What is significant here is the fact that the second respondent and her husband (who is the director of the first respondent) both stated that they would engage qualified consultants to ensure compliance. They did not do so until the applicant advised them that it was commencing another investigation. The second respondent admitted that she did not understand the training program she attended on 31 May 2018. Despite that, she did not engage external consultants to take over her payroll until 22 June 2018 – after an accountant had advised her of a further $7,000 of underpayments. This demonstrates a completely unacceptable, nonchalant approach, to what was clearly a recognised inability (at least after 31 May 2018) on the part of the respondents to understand the Award.
While the respondents may have undertaken certain steps that they allege were taken to ensure that contraventions did not occur, it is arguable that they only did so so that they would be “seen” to have done so. The respondents had no intention of changing their conduct and would have continued as they had been if the applicant had not intervened when it did. The fact that the respondents did not take steps to engage an external consultant for over one year after they had said they would do so and only in response to the applicant’s investigation is, again, entirely unsatisfactory.
It is also concerning that the second respondent states in her affidavit in this Court that she was “very surprised” that there was an investigation as she had recently paid the penalties imposed in Tac Pham No.1 and had undertaken the training. In the Court’s view, this suggests that the second respondent treated the penalty imposed by the Federal Court as the “cost of doing business” and that she thought that she would, in effect, be immune from any further investigations.
On the basis of the evidence before it, the Court considers that the conduct here was brought about by deliberate indifference to the obligations that are owed under the Act and the Award.
The Nature and Extent of the Loss
The extent of underpayments in this matter amounts to $5,111.10. As a whole, this is not a significant amount. Individually, the underpayments to employees ranged from approximately $90 to $1,300.
The respondents submit that the underpayments “mostly represented” an average of 10 per cent of the employees’ total remuneration for the period.
This is inaccurate. There were, in fact, only three (of eleven) employees whose total underpayment amounted to less than 10 per cent of the total remuneration to which they were entitled. Further, there were two employees who were paid less than 50 percent of what they were owed. One employee was underpaid by some $833 (which amounted to an underpayment of 80 per cent of what he was entitled to).
The Court accepts that the underpayments are not ongoing as the employees have been paid their entitlements. However, the respondents only took action to properly compensate their employees when the applicant advised the respondents that it was conducting an investigation. Without interventions, the extent of the underpayments may well have been ongoing.
To the extent that the respondents suggest that four of the employees who were found to be underpaid were family members and that the second respondent paid them “cash” above what they were owed, the Court does not place any weight on this. It is uncorroborated and a mere assertion in an affidavit. It does not exempt them from the fact that they were required to pay (legally and with correlating records) the minimum rate.
In closing submissions, Counsel for the respondents made reference to various other matters that address the issue of underpayments. The Court was referred to cases involving “Neil Perry”, “Heston Blumenthal”, “George Calombaris” and “Woolworths” (as mentioned in a “news article” that Counsel cited from the bar table). It appears these cases were cited to support the respondents’ submission that the underpayments in this matter were “only minor”.
Penalty cases are fact specific: Registered Organisations Commissioner v Communications, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2020] FCA 96. It is of limited utility to compare cases.
Overall, the nature and the extent of the loss here is such that a significant reduction in penalty is not warranted. In context, and on the respondents’ calculations (as provided in Annexure A of their written submissions), the “average” underpayment was 23 per cent, not 10 per cent.
Further, the loss for the individual employees was between 4.5 per cent and 80 per cent of the amount they were owed. While some might see that as “trifling”, it is income that was earned and which the employees were entitled to. For junior employees, who are particularly vulnerable and whose wage is already minimised, an underpayment of even 4.5 per cent is nonetheless significant.
Size and Financial Resources
The applicant accepts that the first respondent was a “small business”. In closing submissions, Counsel for the respondents referred to the fact that the first respondent is a “family business” and purported to compare its size to larger enterprises (such as “Commonwealth Bank” and “Sunglass Hut”).
The size of a business does not excuse it from compliance with its statutory obligations.
The respondents have provided evidence that the first respondent ran at a loss from 2015/2016 until it closed in 2019. It is also said that the first respondent is in the “process of liquidation”, it does not have any assets and it is currently paying off liabilities to the Australian Tax Office. The respondents submit that the Court should consider these circumstances when determining the appropriate penalty.
In Tac Pham No.1, Justice Siopis stated:
93… As mentioned, the shareholders of the first respondent are the second respondent and Mr Pham. The evidence showed that the second respondent has operated profitable nail businesses … and has jointly with Mr Pham been able to purchase five properties in the course of the last 11 years. The balance sheet also reflects that the shareholders are prepared to advance monies to the first respondent for the conduct of its business. It is apparent, therefore, that the first respondent has been able to rely upon its shareholders’ funding and that the shareholders have sufficient assets to support that funding.
It is noted that the second respondent did not provide any “real detail” of the first respondent’s financial circumstances or her own financial circumstances – save for indicating that there was a debt owed to the Australian Tax Office by the first respondent and that the first respondent is in the process of liquidation.
While financial statements were provided, they did not provide any substantive assistance to the Court. The financial statements simply indicate that the first respondent has run at a “loss” since the 2015/2016 financial year. The financial statements do not demonstrate incapacity overall.
Further, the Court notes that the respondents’ submissions indicate that the first respondent currently owes the Australian Tax Office $62,962 but has entered into a payment plan to fulfil this obligation. On the evidence it thus appears that there is capacity to pay any penalty.
Evidence filed by the applicant shows that the second respondent is the director of three nail salons and that she and her husband currently hold the title to four properties.
To the extent that any financial difficulties do exist here, the fact that there may be difficulty paying any pecuniary penalty should not deter the Court from imposing the appropriate penalty.
Furthermore, even assuming that the first respondent will be liquidated (as the second respondent suggests), this does not lead the Court to consider that a lower penalty is warranted on the facts of this case.
In Australian Competition & Consumer Commission v ACN 135 183 372 (in liquidation) (formerly known as Energy Watch Pty Ltd) [2012] FCA 749, the corporation against whom penalties were sought had entered into liquidation. The Court stated:
19 …the Court should not be deterred from imposing the appropriate penalty by the fact of Energy Watch’s liquidation. Otherwise, insufficient attention will be paid to the very important consideration of general deterrence.
20. As the Full Court said in Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2007) 161 FCR 513 at [21]:
…there will be cases where other factors make it clearly desirable to impose a penalty on a company even though it is in liquidation.
This is such a case. It does not matter that the $1.95 million penalty which the Court will impose on Energy Watch will never be paid. The penalty will serve as a warning to all business people who engage in energy brokering services, not to replicate the conduct recorded in the declarations.
The fact that the first respondent has no assets and will soon (on the second respondent’s evidence) be liquidated does not deter the Court from imposing a penalty. Nor does it mitigate the penalty in any way.
Accordingly, the first respondent’s capacity (or incapacity) to pay is of little mitigatory effect: Jordan v Mornington Inn Pty Ltd [2007] FCA 1384 at [99].
As for the second respondent, no evidence has been advanced in relation to her personal financial circumstances. As noted above, the second respondent is the director of three nail salon business and shares the title to four properties with her husband. There is nothing to suggest a lack of financial capacity or that financial hardship will arise if a penalty is imposed.
Contrition, Cooperation and Corrective Action
In Mornington Inn, the Court stated:
74. It is important to note that it is not a sufficient basis for a discount that the plea has saved the cost of a contested hearing – that would discriminate against a person who exercised a right to contest the allegations. A discount may be justified, however, if the plea is properly to be seen as willingness to facilitate the course of justice. Remorse and an acceptance of responsibility also merit consideration where they are shown.
75. A conventional consideration in assessing a discount in a criminal case for a plea of guilty is the stage in the proceedings at which the plea is entered. Normally, the maximum discount for this factor, sometimes thought to be 25%, is reserved for a plea made at the first reasonable opportunity although, as was indicated in Cameron (at [23] – [24]) there is no obligation to make an early plea to a charge which wrongly particularises the substance to which the charge relates.
76. As Branson J has pointed out (see Alfred v Walter Construction Group Limited [2005] FCA 497) the rationale for providing a discount for an early plea of guilty in a criminal case does not apply neatly to a case, such as the present, where a civil penalty is sought and the case proceeds on pleadings. Nevertheless, in our view, it should be accepted, for the same reasons as given in Cameron, that a discount should not be available simply because a respondent has spared the community the cost of a contested trial. Rather, the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice.
In her affidavit dated 25 June 2020, the second respondent takes responsibility for her wrongdoing.
Further, the respondents complied with the Notice to Produce and Mr Dinh confirms that the second respondent instructed him to comply with any requests from the applicant and to “fully cooperate”.
The respondents also engaged an accounting firm to manage their payroll and changed from a manual system to a computerised system.
All of these matters weigh in favour of the respondents. They demonstrate a level of cooperation, contrition and corrective action.
Despite the above, the Court does note that the second respondent also demonstrated contrition in the Federal Court proceedings and gave evidence about corrective action that she said she would take to ensure that breaches of this sort did not happen again. However, she did not take steps to implement any corrective action until one year later and only did so when a further investigation was commenced.
As explained above, the second respondent’s explanation in cross-examination for why she did not do so was unsatisfactory. As Counsel for the applicant submitted, whether or not the second respondent was genuine when she gave evidence before the Federal Court that she would implement corrective action is “neither here nor there”. The evidence clearly demonstrates that she did not do so until a further investigation was commenced.
On the basis of the above, the Court has very real concerns about the second respondent’s credibility in so far as she claims to accept responsibility for what occurred.
The second respondent maintains in her affidavit that her “significant language handicap” contributed to her inability to understand the Award obligations.
It is noted that the second respondent offered the same explanation about her poor language skills in the Federal Court proceedings. Justice Siopis rejected the explanation provided – as does this Court.
The explanation provided does not justify the second respondent’s failure to do what needed to be done. It was her responsibility, and her responsibility alone, to ensure that she understood her obligations and complied with those obligations. If the second respondent’s English language difficulties were such that she was unable to understand her obligations, she should have sought help much sooner than she did. She did not do so and there is simply no evidence that language barriers were responsible for her failure to do so.
The corrective action that the respondents did take (to pay the employees, conduct an audit and engage an accounting firm) is, in the Court’s view, action that represents a “too little too late” approach to a quite serious failure on their part to ensure that vulnerable employees are given the legal protections they are entitled to. Had this corrective action been taken far earlier, this entire situation could have been avoided.
The applicant accepts that the respondents should be given a discount of no more than 25 percent for the contrition and cooperation that has been shown – noting that the respondents rectified the underpayment immediately, the second respondent participated in a voluntary interview and the respondents entered into an agreed statement of facts.
Taking into account the applicant’s submissions as to discount and the Court’s discussion above, the Court considers a discount of 20 per cent for each contravention to be appropriate.
Compliance with Minimum Standards
The respondents have failed to comply with the minimum standards in relation to the Award (being underpayments) and the Act (the provision of payslips).
Here, the underpayments demonstrate a failure on the part of the respondents to comply with the minimum standards. Their conduct demonstrates a disregard for the “absolute minimum obligations” that are provided by the Act.
As stated in Secretary, Department of Health & Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545, any failure to comply with minimum standards undermines the utility and effectiveness of the Act.
Section 3(b) of the Act states that an objective of the Act is:
ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders
Here, the respondents failed to meet the minimum wage entitlements. Those contraventions plainly ignore this core objective and must be discouraged.
In relation to the contraventions arising from a failure to provide payslips which comply with the Fair Work Regulations 2009 (Cth) , as stated in Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd & Anor [2012] FMCA 258:
67.…Proper pay slips allow employees to understand how their pay is calculated and therefore easily obtain advice. Pay slips provide the most practical check on false record keeping and underpayments, and allow for genuine mistakes or misunderstandings to quickly be identified. Without proper pay slips employees are significantly disempowered, creating a structure within which breaches of the industrial laws can easily be perpetrated.
The second respondent says that when her employees advised her that she had “made a mistake in their wages”, she paid them “immediately”. This may well be the case. However, the second respondent also made it quite clear that she did not provide payslips within one day of making payment as per s.536(1) of the Act. This is of concern to the Court. The fact that payslips must be issued within this short timeframe demonstrates the importance of immediately identifying errors and the need to rectify any errors.
The respondents submit that the fact that they engaged an accounting firm, switched from a manual payroll system to a computer software system and quickly rectified underpayments demonstrates an “effective means for investigation and enforcement of employee entitlements”. Again, the Court considers the engagement of the accounting firm to be “too little, too late” on the facts of this case. Importantly, the respondents failed to comply with the most basic obligations owed to employees. They repeatedly failed to comply with minimum standards. Their conduct reflects a cavalier and entirely unacceptable approach to core legal obligations.
Deterrence
As noted above, the purpose of imposing civil penalties is protective in nature. In ABCC the Full Court explained:
98. Whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty is primarily, if not wholly, protective in promoting the public interest in compliance: Trade Practices Commission v CSR Ltd [1990] FCA 521; (1991) ATPR 41-076 at 52,152 [42]; Commonwealth v Director, FWBII at [55] (per French CJ, Kiefel, Bell, Nettle and Gordon JJ). The principal object of a pecuniary penalty is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene; both specific and general deterrence are important: Chemeq at [90]; Ponzio at [93]. A pecuniary penalty for a contravention of the law must be fixed with a view to ensuring that the penalty is not to be regarded by the offender or others as an acceptable cost of doing business: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at 659 [66]; Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 at 265 [62]-[63]…
Accordingly, specific and general deterrence are critical factors for consideration in civil penalty proceedings.
Specific Deterrence
The Court accepts that the first respondent is in the process of liquidation. Hence, the need for specific deterrence is not high.
In Plancor Pty Ltd v Liquor, Hospitality & Miscellaneous Union [2008] FCAFC 170, the Court stated that the Court’s focus when considering specific deterrence is on whether the party the subject of the penalty (here, the second respondent) might engage in a similar breach in the future. In this regard, the Court will take into account whether the parties are remorseful and assess any steps taken to ensure that no future breach will occur.
The second respondent is the current director and shareholder of three companies (all of which appear to operate in the beauty industry).
Even though these businesses do not operate under the relevant Award, the need for specific deterrence still arises. The second respondent is involved with businesses that employ individuals. At the very least, compliant payslips are required.
Here, the second respondent has demonstrated remorse for the relevant contraventions. She also engaged an accounting firm to assist her.
Despite this, however, the second respondent did not act until she was, in effect, faced with another fair work investigation. Her commitment to corrective action is questionable on the facts of this case.
Again, the Court also notes that some of the workers were particularly “vulnerable”. Junior employees, and even those employees who were family members of the second respondent, were in a position where raising concerns about wages or other matters would have been confronting. Any risk of exploitation in this context is particularly serious.
The need for specific deterrence must be at a level that is meaningful to deter future conduct of the sort seen here.
General Deterrence
In Ponzio v B & P Caelli Constructions Pty Ltd and Ors [2007] FCAFC 65 at [93], the role and importance of general deterrence was summarised as follows:
In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like-minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217.
Contraventions of the Act and relevant awards in the restaurant and hospitality industry are, regrettably, rife. More recently, this Court described the hospitality industry as “notorious for underpayment of employees, and non-compliance with other industrial obligations”: Fair Work Ombudsman v Malevi Pty Ltd & Ors [2020] FCCA 2875. Further, in NSH North, it was stressed that it was a matter of judicial notice or “common sense reasoning” that the hospitality industry is notorious for non-compliance with standards imposed by industrial laws and is an industry in which enforcement of those standards has proved very difficult.
The applicant provided the Court with an industry profile report. That report indicates that the industry dispute rate is “high”. The data in that report demonstrates that many of the contraventions that occurred in this matter were of a sort that regularly occur in the industry.
Insofar as the respondents seek penalties for repeated contraventions in a range lower than those imposed in Tac Pham No.1 the Court rejects that request. While the Court accepts that the respondents may not have obtained any significant windfall or commercial gain from the underpayments, this does not mitigate the need for general deterrence.
The need for general deterrence in this matter is high. Here, we are faced with repeat contraventions of the same provisions of the Award that the respondents were previously found to have breached. Some employees were more vulnerable than others and in an industry which has a high number of junior employees, the need to ensure that the rights and entitlements of those more vulnerable are met is particularly high. Employers must be deterred from engaging in similar conduct.
Appropriate Penalty
Applying the 20 per cent discount to the penalty for the level of contrition, compliance and cooperation shown, the maximum penalties that may be imposed are as follows:
Contraventions First Respondent Second Respondent Items 1 and 2 - s.45 failure to pay minimum adult rate of pay pursuant to cl.20.1 of the Award and failure to pay junior minimum rate pursuant to cl.20.3 of the Award $5,040,000 $1,008,000 Item 3 - s.45 - failure to pay casual loading pursuant to cl.13.1 of the Award $50,400 $10,080 Item 4 - s.45 - failure to pay Saturday penalty rates pursuant to cl.34.1 of the Award $403,200 $80,640 Item 5 - s.45 - failure to pay Sunday penalty rates pursuant to cl.34.1 of the Award $252,000 $50,400 Item 6 - s. 45 - failure to pay public holiday penalties pursuant to cl.34.2 $201,600 $40,320 Item 7 - s.45 - failure to pay late night penalties pursuant to cl.34.2 of the Award $100,800 $20,160 Item 8 - s.45 - failure to pay split shift allowance pursuant to cl. 24.2 of the Award $504,000 $100,800 Items 9, 10 and 11 - s.45 - failure to pay:
- minimum 4 hours for working on a public holiday pursuant to cl.34.4(a) of the Award
- minimum 2 hours for working on a public holiday pursuant to cl. 34.4(b) of the Award
- minimum 2 hours to casual employees pursuant to cl.13.3 of the Award
$50,400 $10,080 Item 12 - s.44(1) - failure to pay employees entitled to be absent on a public holiday pursuant to cl.13.3 of the Award $50,400 $10,080 Item 13 - s.45 - failure to make part time work agreements pursuant to cl.12.3 of the Award $50,400 $10,080 Item 14 - s.536(1) - failure to give pay slips $50,400 $10,080 Item 15 - s.536(2) - failure to include information required by regulations 3.46(1) and 3.46(5) on pay slips $14,112,000 $2,822,400
Step 5: Determining the Penalty
The Parties Proposed Penalty Ranges
In Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46, it was accepted that submissions as to the terms and quantum of a civil penalty should be treated by the Court as a relevant consideration.
It is noted that both parties made submissions as to quantum on the basis that 25 per cent would be discounted (on the basis of the respondents’ contrition, cooperation and remorse). For the reasons given above, the Court does not consider that there should be a 25 per cent discount (and the Court notes that the applicant’s submissions were that a maximum of 25 per cent be discounted).
Accordingly, while the Court will take into account the proposed penalty ranges, the figures that the parties provided for each contravention (which applied a 25 per cent reduction) need not be set out here.
Here, the applicant’s submissions as to the total penalty (without a consideration as to totality) for all contraventions are as follows:
a)for the first respondent, between $126,630 and $248,062; and
b)for the second respondent, between $25,326 and $49,612.25.
The respondent’s submissions as to the total penalty (without consideration of totality) for all contravention are as follows:
a)for the first respondent, between $41,343.75 and $77,962.50; and
b)for the second respondent, between $8,316 and $15,592.50.
The parties are in agreement as to the proposed range for each contravention. The proposed ranges are as follows:
Contraventions First Respondent Second Respondent Items 1 and 2 - s.45 failure to pay minimum adult rate of pay pursuant to cl.20.1 of the Award and failure to pay junior minimum rate pursuant to cl.20.3 of the Award 10-20 per cent of one contravention 10-20 per cent of one contravention Item 3 - s.45 - failure to pay casual loading pursuant to cl.13.1 of the Award 5-10 per cent 5-10 per cent Item 4 - s.45 - failure to pay Saturday penalty rates pursuant to cl.34.1 of the Award 5-10 per cent of one contravention 5-10 per cent of one contravention Item 5 - s.45 - failure to pay Sunday penalty rates pursuant to cl.34.1 of the Award 5-10 per cent of one contravention 5-10 per cent of one contravention Item 6 - s. 45 - failure to pay public holiday penalties pursuant to cl.34.2 5-10 per cent of one contravention 5-10 per cent of one contravention Item 7 - s.45 - failure to pay late night penalties pursuant to cl.34.2 of the Award 5-10 per cent of one contravention 5-10 per cent of one contravention Item 8 - s.45 - failure to pay split shift allowance pursuant to cl. 24.2 of the Award 15-20 per cent of one contravention 15-20 per cent of one contravention Items 9, 10 and 11 - s.45 - failure to pay:
- minimum 4 hours for working on a public holiday pursuant to cl.34.4(a) of the Award
- minimum 2 hours for working on a public holiday pursuant to cl. 34.4(b) of the Award
- minimum 2 hours to casual employees pursuant to cl.13.3 of the Award
2.5-5 per cent 2.5-5 per cent Item 12 - s.44(1) - failure to pay employees entitled to be absent on a public holiday pursuant to cl.13.3 of the Award 5-10 per cent 5-10 per cent Item 13 - s.45 - failure to make part time work agreements pursuant to cl.12.3 of the Award 10-20 per cent 10-20 per cent Item 14 - s.536(1) - failure to give pay slips 10-20 per cent 10-20 per cent Item 15 - s.536(2) - failure to include information required by regulations 3.46(1) and 3.46(5) on pay slips 10-20 per cent of one contravention 10-20 per cent of one contravention
The parties do, however, differ in their approach to items 1-2 and 15. The respondents propose that items 1-2 and 15 not be treated as “serious contraventions”. They say that the maximum penalty units for these contraventions should be 300 units and 60 units (as opposed to 3000 penalty units and 600 penalty units). The applicant calculates the penalty on the basis that, for example, the maximum penalty for items 1 and 2 is $6,300,000 ($5,040,000 after the 20 per cent discount). The respondents calculate the penalty on the basis that the maximum is $63,000 ($50,400 after the 20 per cent discount).
The Court accepts the applicant’s approach in this regard. For the reasons stated above, the respondents have admitted serious contraventions. Hence, increased penalties apply.
The applicant seeks a penalty for only a single contravention of each item (except those grouped under the course of conduct provision) notwithstanding that s.557 does not apply. The Court agrees with this approach. In circumstances where the total underpayments would not amount to 1 per cent of the maximum penalty for the respective contravention, the position advanced is correct. To do otherwise would be disproportionate.
The Court notes that the parties do not differentiate between the penalty ranges for the first and second respondent. The Court also considers this to be entirely appropriate. The second respondent took responsibility for the actions of the first respondent and the Court considers her to be equally liable.
Assessment of Penalty
Taking into account the proposed penalty ranges and the Court’s discussion above, the Court considers the following penalties to be appropriate:
a)for the failure to pay minimum adult rate of pay and the junior minimum rate, a penalty of 17 per cent is to be imposed. The Court notes that this is a case where there is a repeated contravention (such that the need for deterrence is higher), there is evidence of deliberate indifference to rates of pay and the contravention involves junior employees (who are more vulnerable and more easily exploited than others). These factors warrant a penalty at the higher end of the proposed penalty range;
b)for the failure to pay casual loading, the Court considers a penalty of 5 per cent to be appropriate. This contravention affected only two employees and was not a significant proportion of the underpayments;
c)for the failure to pay Saturday penalty rates, Sunday penalty rates, public holiday penalties and late night penalties, the Court considers a penalty of 7 per cent for each appropriate. Again, this is a repeat contravention and the extent of loss to individual employees for these contraventions was not insignificant;
d)for the failure to pay split shift allowance, again, noting that there were numerous contraventions, this was a repeated contravention, it included a junior employee, and the loss suffered by employees (including one employee being underpaid approximately $450) is significant, the Court considers 17 per cent to be appropriate;
e)for the failure to pay minimum hours (noting that it is not a repeat contravention), a penalty of 2.5 per cent is appropriate;
f)for the failure to pay employees entitled to be absent on a public holiday, a penalty of 5 per cent is appropriate. Again, the contravention was confined to two employees;
g)for the failure to make part-time work agreements, the Court considers 10 per cent to be appropriate. This contravention does not appear to have had any impact on the relevant employees and the Court takes into account that the employees concerned had likely been working for the respondents for some time;
h)for the failure to give payslips, noting what is said above in relation to the compliance with minimum standards and the importance of providing payslips in a timely manner, a penalty of 15 percent should be imposed. The Court bears in mind that the second respondent did state that many employees did not collect their payslips when she did make them available; and
i)for the failure to include the required information on the payslips, a penalty of 17 per cent is appropriate. This was a repeated contravention and one which has the effect of hampering the ability of an employee or a regulator to identify and determine whether the correct and appropriate payments have been made.
On the basis of the above, the penalties imposed on the respondents are as follows:
Contraventions First Respondent Second Respondent Items 1 and 2 - s.45 failure to pay minimum adult rate of pay pursuant to cl.20.1 of the Award and failure to pay junior minimum rate pursuant to cl.20.3 of the Award $85,680 $17,136 Item 3 - s.45 - failure to pay casual loading pursuant to cl.13.1 of the Award $2,520 $504 Item 4 - s.45 - failure to pay Saturday penalty rates pursuant to cl.34.1 of the Award $3,528 $705.60 Item 5 - s.45 - failure to pay Sunday penalty rates pursuant to cl.34.1 of the Award $3,528 $705.60 Item 6 - s. 45 - failure to pay public holiday penalties pursuant to cl.34.2 $3,528 $705.60 Item 7 - s.45 - failure to pay late night penalties pursuant to cl.34.2 of the Award $3,528 $705.60 Item 8 - s.45 - failure to pay split shift allowance pursuant to cl. 24.2 of the Award $8,568 $1,713.60 Items 9, 10 and 11 - s.45 - failure to pay:
- minimum 4 hours for working on a public holiday pursuant to cl.34.4(a) of the Award
- minimum 2 hours for working on a public holiday pursuant to cl. 34.4(b) of the Award
- minimum 2 hours to casual employees pursuant to cl.13.3 of the Award
$1,260 $252 Item 12 - s.44(1) - failure to pay employees entitled to be absent on a public holiday pursuant to cl.13.3 of the Award $2,520 $504 Item 13 - s.45 - failure to make part time work agreements pursuant to cl.12.3 of the Award $5,040 $1,080 Item 14 - s.536(1) - failure to give pay slips $7,560 $1,512 Item 15 - s.536(2) - failure to include information required by regulations 3.46(1) and 3.46(5) on pay slips $85,680 $17,136
In total, the penalties amount to:
a)for the first respondent, $212,940; and
b)for the second respondent, $42,660.
Totality
In Mornington Inn, the Federal Court stated:
42… the application of the totality principle which is a final check to be applied to ensure that a final, total or aggregate, penalty is not unjust or out of proportion to the circumstances of the case.
43. The totality principle was described by the High Court in Mill v R (1988) 166 CLR 59 (‘Mill’) at 62 – 63 as follows:
‘The totality principle is a recognized principle of sentencing formulated to assist a court when sentencing an offender for a number of offences. It is described succinctly in Thomas, Principles of Sentencing, 2nd ed (1979), pp 56-57, as follows (omitting references):
“The effect of the totality principle is to require a sentencer who has passed a series of sentences, each properly calculated in relation to the offence for which it is imposed and each properly made consecutive in accordance with the principles governing consecutive sentences, to review the aggregate sentence and consider whether the aggregate is ‘just and appropriate’. The principle has been stated many times in various forms: ‘when a number of offences are being dealt with and specific punishments in respect of them are being totted up to make a total, it is always necessary for the court to take a last look at the total just to see whether it looks wrong[‘]; ‘when ... cases of multiplicity of offences come before the court, the court must not content itself by doing the arithmetic and passing the sentence which the arithmetic produces. It must look at the totality of the criminal behaviour and ask itself what is the appropriate sentence for all the offences’.”
See also Ruby, Sentencing, 3rd ed (1987), pp 38-41. Where the principle falls to be applied in relation to sentences of imprisonment imposed by a single sentencing court, an appropriate result may be achieved either by making sentences wholly or partially concurrent or by lowering the individual sentences below what would otherwise be appropriate in order to reflect the fact that a number of sentences are being imposed. Where practicable, the former is to be preferred.’
The applicant accepts that this is a matter where the totality principle applies. The applicant proposes that a 10 per cent reduction be made on the basis of totality. The respondents’ submissions appear to accept that this is appropriate.
The Court agrees. Accordingly, a 10 per cent reduction will be allowed.
The Court has considered whether any further reduction is necessary. It does not consider any further reduction to be necessary. While the actual “amount” of the underpayments was not significant, when one has regard to the contraventions in context (including the relevant litigation history, that junior employees were victims and the nature and extent of the breaches in the current proceeding) this requires a sum that stands as an effective deterrent.
The penalties imposed will, in the Court’s view, have the necessary deterrent effect and the sum is not unjust or disproportionate to the circumstances of this case.
Accordingly, the penalties to be imposed are:
a)for the first respondent, $191,646; and
b)for the second respondent, $38,394.
Conclusion
For the reasons given above, the Court orders the following penalties to be imposed pursuant to s.546 of the Act:
a)for the first respondent, $191,646; and
b)for the second respondent, $38,394.
The applicant seeks orders that the respondents pay this amount in 28 days. Given the current climate, the Court is not inclined to require compliance within a short timeframe. The previous year has caused instability and uncertainty for many and it is appropriate that the respondents be given a longer period within which to pay the penalty amounts.
Accordingly, the Court will order that the penalties be paid within 120 days of the date of the Court’s orders.
I certify that the preceding one hundred and seventy-eight (178) paragraphs are a true copy of the reasons for judgment of Judge Kendall
Associate:
Date: 12 November 2020
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