Fair Work Ombudsman v Tac Pham Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Tac Pham Pty Ltd [2018] FCA 120

File number(s): WAD 250 of 2017
Judge(s): SIOPIS J
Date of judgment: 20 February 2018
Catchwords: INDUSTRIAL LAW – the first respondent operated a restaurant - the first respondent contravened the Restaurant Industry Award 2010 by underpaying its part-time employees – the respondents agreed a statement of facts and made admissions of contraventions of the Fair Work Act 2009 (Cth) – appropriate pecuniary penalty.
Legislation:

Fair Work Act 2009 (Cth) ss 45, 536(2), 550, 712

Evidence Act 1995 (Cth) s 191

Crimes Act 1914 (Cth) s 4AA

Fair Work Regulations 2009 (Cth) regs 3.46(1), 3.46(5)

Cases cited:

Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216

Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153

Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557

Fair Work Ombudsman v Han Investments Pty Ltd [2017] FCA 623

Date of hearing: 5 December 2017
Registry: Western Australia
Division: Fair Work Division
National Practice Area: Employment & Industrial Relations
Category: Catchwords
Number of paragraphs: 121
Counsel for the Applicant: Ms H Millar
Solicitor for the Applicant: Clayton Utz
Counsel for the First and Second Respondents: Mr R Tan
Solicitor for the First and Second Respondents: Tan and Tan Lawyers

ORDERS

WAD 250 of 2017
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

TAC PHAM PTY LTD (ACN 135 782 768)

First Respondent

CUC THI THU PHAM

Second Respondent

JUDGE:

SIOPIS J

DATE OF ORDER:

20 FEBRUARY 2018

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…

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Details
Case
[2018] FCA 120
Decision Date

CaseChat Overview and Summary

The case of Fair Work Ombudsman v Tac Pham Pty Ltd involves the Fair Work Ombudsman as the plaintiff and Tac Pham Pty Ltd, along with its director, the respondents. The dispute centres on the underpayment of part-time employees at the respondents' restaurant, which contravened the Restaurant Industry Award 2010. Both respondents admitted to the contraventions of the Fair Work Act 2009 (Cth) and agreed to a statement of facts, which led to the court determining the appropriate pecuniary penalty.

The central legal issues before the court were to determine the appropriate penalty for the contraventions, taking into account various factors such as the extent of cooperation with the Fair Work Ombudsman, the contrition shown by the respondents, and the need for deterrence. The court considered the respondents' cooperation and admissions of liability as mitigating factors but noted the delayed compliance and problematic initial cooperation with the Fair Work Ombudsman. Additionally, the court acknowledged the contrition demonstrated by the respondents and the necessity of imposing a penalty that would deter future non-compliance.

The court concluded that the respondents deserved credit for their cooperation and admissions of liability but also recognised the importance of deterrence. The penalty was set at a level that would remind the respondents of their obligations under the Restaurant Award and the importance of paying lawful entitlements to employees. The first respondent was ordered to pay a penalty of $37,500, and the second respondent was ordered to pay $7,500. Furthermore, the first respondent was mandated to engage a compliance professional to conduct training for its managerial staff regarding workplace relations law.

The court's final orders included the pecuniary penalties to be paid by the respondents, mandated training for managerial staff at the first respondent's expense, and provisions for the Fair Work Ombudsman to apply for enforcement if the orders were not complied with. The penalties were to be paid into the Consolidated Revenue Fund of the Commonwealth within 28 days of the order, and the first respondent was required to notify the Fair Work Ombudsman of the training conducted within seven days of its completion.

Orders

Orders of the court

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.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

On 5 December 2017, there was a hearing before the Court at which the parties adduced evidence and made submissions as to the appropriate penalty which should be imposed on each of the respondents.THE EVIDENCE The respondents relied upon three affidavits. There was no cross-examination on the affidavits.Mr Pham’s affidavit of 25 August 2017 The first was an affidavit dated 25 August 2017 by Mr Pham, the husband of the second respondent and the director of the first respondent. The other two affidavits were made by the second respondent. The affidavits are dated 25 August 2017 and 3 October 2017 respectively. The applicant objected to paras 33, 49, 50, 51 and annexure TP3 of Mr Pham’s affidavit dated 25 August 2017. The respondents conceded the objections and, consequently, those paragraphs were not read. Further, the respondents did not read para 38 of Mr Pham’s affidavit. The FWO objected to para 35, 51, 52, 53 and annexure CP3 of the second respondent’s affidavit dated 25 August 2017. The respondents conceded the objections and, consequently, those paragraphs were not read. Mr Pham deposed that he migrated to Australia from Vietnam in June 2006. At that time he was 30 years old and did not know a “single word of English”. Mr Pham said that in 2008 he learnt of the opportunity to acquire a franchise of Han’s Café in Rockingham, Western Australia, which he took up. He said that the cost of opening the restaurant was $600,000 and he borrowed the full amount from the franchisor. Mr Pham said that he must have spent about one or two weeks training at the franchisor’s Carousel restaurant in Cannington, Western Australia, as his orientation to taking up the Rockingham franchise. Other than that orientation, said Mr Pham, there was no system in place for any training from the franchisor. Mr Pham said that Ms Tram, who was the wife of Mr Ian Han, the owner of the franchise chain, was his primary point of contact in relation to the business operation of the Han’s Café Rockingham restaurant. Mr Pham said that when he asked Ms Tram how much he should pay the staff and what the minimum wage was, she told Mr Pham that the minimum wage was approximately $15 an hour. Mr Pham said that the franchisor had provided an Excel spreadsheet for him to work out how much he should pay the employees. He said he would input the hours each of the employees worked into the Excel spreadsheet, and it would automatically multiply the rate using built in formulas. Mr Pham said that he would check the minimum wage applicable in Perth every now and again. He said he did this by conducting a Google search using the words “minimum wage”. Mr Pham said that he did not seek advice from professionals on this issue and he relied on the search results from the internet. Mr Pham went on to say that on 30 November 2016, he received an email from the FWO advising that the FWO was investigating alleged contraventions of the FW Act and the Restaurant Award which included, but was not limited to, an investigation of the payment of minimum wages and penalty rates.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

As mentioned, the first respondent is a small family company. The second respondent is and was, at all material times, involved in the day to day operations of the company. She was the person who decided on the rates of pay for employees and implemented the systems which led to the employees being paid and the pay slips being issued.Contrition, corrective action and cooperation These are factors which can be taken into account in the respondents’ favour in considering the amount of the penalty. There has been a good deal of cooperation by the respondents with the FWO after the issue of the FWO’s audit letter on 25 January 2017. After receipt of the letter notifying the respondents of the underpayments, the respondents made payments to the affected employees promptly. The credit to be given to this factor is tempered, however, by the fact that this action was really a belated compliance by the first respondent with its statutory obligations. Further, the respondents, after being served with the originating application and statement of claim in this proceeding, made early admissions and have cooperated in the conduct of these proceedings. The extent of the cooperation with the applicant, however, in relation to the investigation of this matter is more problematic. As was deposed to by Ms Suppiah, the respondents initially ignored approaches which had been made by the applicant and belatedly responded by providing some documents to the applicant even though they were not the documents that the applicant had requested. I place no weight on the second respondent’s explanation for not responding earlier to the FWO’s requests for the production of documents. However, on balance, the respondents deserve significant credit, in determining the appropriate penalty, for their cooperation in making an early admission of liability. Another factor in favour of the respondents is that Mr Pham and the second respondent have apologised to the employees involved and thus demonstrated an element of contrition.Deterrence This is a case where, in my view, specific deterrence is an element to be taken into account in determining the appropriate penalty. As mentioned, until at least early March 2016, the approach of the second respondent was to ignore the intervention of the FWO in the conduct of the first respondent’s business. The tenor of the second respondent’s affidavit is somewhat dismissive of the FWO’s dealing with her in 2013 in relation to the complaint made by Ms Guest. Further, in 2016, there was a failure to respond to the initial approaches of the FWO in relation to this matter when asked to provide documents. Although the respondents say that they will comply with the law in the future, in my view, the penalty should be set at a level which will operate as a reminder to the respondents of the importance of operating, and continuing to operate, a business which complies with the Restaurant Award conditions and of the importance of paying the young and vulnerable employees who comprise a substantial part of the first respondent’s workforce their lawful entitlements.