Fair Work Ombudsman v Taing
[2024] FedCFamC2G 270
•22 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Taing [2024] FedCFamC2G 270
File number(s): MLG 767 of 2023 Judgment of: JUDGE MANSINI Date of judgment: 22 March 2024 Catchwords: INDUSTRIAL LAW – FAIR WORK – cafes and restaurants industry – application for relief in relation to admitted contraventions of the Fair Work Act 2009 (Cth) – where joint trustees failed to keep employment records and did not comply with a statutory compliance notice – where respondents produced or were involved in production of false or misleading documents during the course of a FWO investigation - consideration of relevant factors for fixing a pecuniary penalty and whether to make a compensation order – HELD that declaratory relief and pecuniary penalties be ordered – no compensation ordered where the relevant loss does not arise because of the subject contravention. Legislation: Fair Work Act 2009 (Cth) ss. 3, 12, 535, 539, 545, 546, 550, 679, 712, 716, 718
Fair Work Regulations 2009 (Cth) rr. 3.40
Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
CFMMEU v ABCC [2018] FCAFC 97
Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Fair Work Ombudsman v Carers Portland Inc [2023] FedCFamC2G 620
Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53
Markarian v The Queen [2005] HCA 25
Trade Practices Commission v CSR Ltd [1990] FCA 762
Wong v The Queen [2001] HCA 64
Division: Division 2 General Federal Law Number of paragraphs: 87 Date of last submission/s: 26 October 2023 Date of hearing: 7 December 2023 Place: Melbourne Counsel for the Applicant: Ms Campbell Counsel for the First Respondent: Mr Boccabella The Second Respondent: Appearing in person The Third Respondent: Appearing in person ORDERS
MLG 767 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: VANNA TAING
First Respondent
BRANDON BUI
Second Respondent
GARY LAI
Third Respondent
ORDER MADE BY:
JUDGE MANSINI
DATE OF ORDER:
22 MARCH 2024
THE COURT DECLARES THAT:
1.The First Respondent contravened:
(a)Section 718A(1) of the Fair Work Act 2009 (Cth) (Act), by knowingly or recklessly producing false or misleading records to an inspector of the Applicant;
(b)Section 535(1) of the Act, by failing to make or keep records relating to the termination of employment of 16 employees; and
(c)Section 716(5) of the Act, by failing to comply with the statutory compliance notice issued on 31 October 2022.
2.The Second Respondent contravened:
(a)Section 718A(1) of the Act, by his involvement (within the meaning of section 550(2) of the Act) in the First Respondent’s knowing or reckless production of false or misleading records to an inspector of the Applicant per declaration 1(a);
(b)Section 535(1) of the Act, by failing to make or keep records relating to the termination of employment of 16 employees; and
(c)Section 716(5) of the Act, by failing to comply with the statutory compliance notice issued on 31 October 2022.
3.The Third Respondent contravened section 718A(1) of the Act by his involvement (within the meaning of section 550(2) of the Act) in the First Respondent’s knowing or reckless production of false or misleading records to an inspector of the Applicant per declaration 1(a).
THE COURT ORDERS THAT:
4.Pursuant to s.546(1) of the Act:
(a)The First Respondent pay a pecuniary penalty of $15,000 for his contraventions of the Act per declarations 1(a), (b) and (c);
(b)The Second Respondent pay a pecuniary penalty of $12,500 for his contraventions of the Act per declarations 2(a), (b) and (c); and
(c)The Third Respondent pay a pecuniary penalty of $4,000 for his contravention of the Act per declaration 3.
5.Pursuant to s.546(3)(a) of the Act, the pecuniary penalties ordered against the Respondents set out in order 4 are to be paid to the Consolidated Revenue Fund of the Commonwealth of Australia within 28 days of these orders.
6.The Applicant have liberty to apply on 7 days’ notice in the event that these orders are not complied with.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE MANSINI
IN SUMMARY
This is an application by the Fair Work Ombudsman in relation to a chicken and beer restaurant where various contraventions of the workplace laws are admitted.
The employer produced false and misleading records during the course of a FWO investigation and failed to keep records of 16 employee terminations. Then, after another FWO investigation arrived at a reasonable belief that 16 former employees had been underpaid in contravention of numerous provisions of the legislation and modern award, the employer failed to comply with a statutory compliance notice.
These reasons explain the relief ordered.
CONTEXT
The following is a summary of the evidence before the Court. Except where indicated this evidence was admitted or not contentious and constitutes findings I have made.
The parties and relevant actors
The matter involves the following:
(a)The Applicant is the Fair Work Ombudsman (FWO).
(b)Each of the following were appointed by the FWO under s.700 of the Fair Work Act 2009 (Cth) (Act) to undertake an investigation into the Respondents’ business: Fair Work Inspector Leigh Pace, Fair Work Inspector Patricia Stassi, Fair Work Inspector Jason Rhodes and Fair Work Inspector Lou Marks.
(c)The First Respondent is a Mr Vanna Taing, who is and was at all relevant times a joint and several trustee of the VB888 Unit Trust (ABN 4268 4853 199) (Trust) which operated a Gami Chicken and Beer Restaurant located at R208 Southland Shopping Centre, 1239 Nepean Highway, Cheltenham.
(d)The Second Respondent is a Mr Bao Bui, who is and was at all relevant times a joint and several trustee of the Trust which operated the Gami Chicken and Beer Restaurant (with the First Respondent).
(e)The Third Respondent is a Mr Gary Lai, who is and was at all material times a beneficiary of the Trust which operated the Gami Chicken and Beer Restaurant and performed a human resources role for the business including, but not limited to, payroll and participation in business management meetings with Mr Taing and Mr Bui.
About the business
It was not contentious that, at the relevant times, the subject chicken and beer restaurant employed at least 16 individuals.
For his part, Mr Taing gave evidence that he was responsible for “front of house” operations and serving customers. He submitted that Mr Bui was responsible for hiring workers and “back of house” operations and together they were business partners who quickly ran into partnership disputes, as the business got into financial difficulties. Mr Taing also said that Mr Lai was kept appraised of decisions and was also a person with whom he had disputes.
It was apparent that Mr Bui and Mr Lai did not agree with those submissions about their roles and responsibilities. However, Mr Bui formally accepted his responsibility as joint business partner of Mr Taing and Mr Lai formally accepted he played a part in performance of human resources and payroll functions for the business.
Production of false and misleading documents
In the course of an investigation into the business’ compliance with workplace laws, the FWO (via Fair Work Inspector Stassi) issued a notice to produce records or documents to Mr Taing. The notice to produce was dated 18 April 2019. Among other things, the notice required production of payslips and pay records for each employee who had performed work for the business during the period 1 January to 18 April 2019.
It was an admitted fact that, in April 2019 after the notice to produce was issued, there was a meeting between Mr Taing, Mr Bui and Mr Lai at which it was agreed that Mr Taing would modify existing payslips of the employees subject of the notice to produce. Mr Taing subsequently did so.
On or about 13 May 2019, Mr Taing produced a number of records to Fair Work Inspector Stassi in response. By that response, Mr Taing provided payslips for three employees, namely, Kha Tran (for the period 18 February to 3 March 2019); Hitomi Kozuka and Jeffery Dalman (for the period 24 December 2018 to 17 March 2019). It was admitted in these proceedings that those payslips were not the true payslips provided those employees and purported to represent that those employees had worked fewer hours and were paid at a higher rate than in truth they worked and were paid. It was also admitted that Mr Taing knew or was reckless as to the truth of the information in the payslips at the time of production to Fair Work Inspector Stassi and that Mr Bui and Mr Lai by their respective knowledge were also knowing or reckless.
Failure to make and keep employment records
Some 16 employees were terminated by Mr Bui by way of SMS (text message), on 12 April 2021. Mr Taing and Mr Bui admitted that no records were kept in respect of any of these terminations as required by s.535(1) of the Act and regulation 3.40 of the Fair Work Regulations 2009 (Cth).
Failure to comply with a statutory compliance notice
In the course of another investigation into the business’ compliance with workplace laws, commenced in or about May 2021, Fair Work Inspector Pace formed a belief that Mr Taing and Mr Bui had engaged in a series of contraventions of the legislation and the modern award.
On 31 October 2022, Fair Work Inspector Pace gave Mr Taing and Mr Bui a statutory compliance notice in respect of this belief and pursuant to s.716(2) of the Act. The belief that Fair Work Inspector Pace held was detailed in the notice, which is extracted in full at Annexure A to these reasons. In summary, the notice outlined the following alleged contraventions of the Act and relevant modern award in relation to 16 named former employees: minimum rates of pay, penalty rates for late and weekend shifts, penalty rates for public holiday shifts, casual employee entitlements, entitlements to payment of accrued but unused annual leave and payment in lieu of notice on termination of employment. The notice required Mr Taing and Mr Bui to take a range of specified actions to calculate and remedy the direct effects of the identified contraventions and keep a record of same. The notice specified:
(a)The time for taking the specified actions was by 2 December 2022; and
(b)The time for production to the FWO of reasonable evidence of compliance with the specified actions including proof of payment was 9 December 2022.
There was no evidence of compliance with the specified actions in the notice by 9 December 2022.
On 22 December 2022, Mr Taing paid an amount of $800 gross to each of the 16 former employees (totalling $12,800) and the following day sent proof of payment by email to Fair Work Inspector Pace.
On 9 March 2023, the FWO sent a letter to Mr Taing and Mr Bui which advised that the matter had been referred to the FWO’s legal compliance and enforcement branch and afforded them a final opportunity to take the actions required by the statutory compliance notice or provide any reasonable excuse for their failure to do so by 17 March 2023. Also in March 2023, the FWO sent a letter to Mr Lai which advised him that the FWO intended to commence proceedings against him as an accessory.
As at the time of hearing, it was agreed that a total amount of $44,887.25 gross remained owing to 13 of the 16 former employees in respect of employment-related entitlements accrued for work performed at the Respondents’ chicken and beer restaurant (a detailed breakdown of which was annexed to the agreed statement of facts). There was no evidence of any further attempts to rectify the matters subject of the statutory compliance notice.
After these proceedings were commenced in this Court, Mr Taing and Mr Lai contacted the FWO within 5 and 4 weeks (respectively) regarding their intended admissions. Mr Bui confirmed his intended admissions at the first return of this matter before the Court.
Other matters
The following matters were referred to in Mr Taing’s written submissions and oral evidence, which were not agreed by any other party and the relevance of which is considered below.
As earlier referenced, Mr Taing admitted to having falsified records produced by him to the FWO. At the hearing, Mr Taing also admitted his awareness that this was something he should not be doing but sought to explain his actions as having been voted on by the 3 Respondents, with Mr Bui and Mr Lai not agreeing with his suggestions. Further, that he (Mr Taing) went ahead and produced the false records anyway.
Mr Taing also submitted that there was no intention to disregard the statutory obligations to the staff and that the period of the failure to meet employment obligations was:
..a lean poor and horrendous time for the business. It was a desperate attempt/measure to salvage the business from its financial difficulties. It was important for the Respondents to maintain cash flow in order to prevent the business from collapsing and laying off permanent staffs.
In his written submissions, Mr Taing contended that he was financially destitute at the time and lost all of his life savings, and had proposed a joint loan with Mr Bui and Mr Lai to pay their employee obligations but they refused. Mr Taing reiterated in evidence that there was some discussion about taking out a joint loan because it would not be enough if he took an individual loan.
APPLICATION BEFORE THE COURT
On 4 May 2023, the FWO commenced these proceedings by way of statement of claim and supporting affidavit.
On 20 July 2023, the 3 Respondents made admissions by way of an agreed statement of facts.
The FWO sought:
(a)Declaratory relief; and
(b)Pecuniary penalties against each respondent pursuant to s.546 of the Act by reason of their admitted contraventions, in the ranges of:
(i)For Mr Taing and Mr Bui:
Contravention Maximum penalty Proposed penalty range s.718A $12,600 $10,080 - $11,340
(being 80-90% of the maximum)s.535(1) $13,320 $3,996 - $5,328
(being 30-40% of the maximum)s.716(5) $6,660 $4,662 - $5,328
(being 70-80% of the maximum)Total: $18,738 - $21,996 15% discount applied: $15,927 - $18,697
(ii)For Mr Lai:
Contravention Maximum penalty Proposed penalty range s.718A $12,600 $10,080 - $11,340
(being 80-90% of the maximum)Total: $10,080 - $11,340 25% discount applied: $7,560 - $8,505
The FWO further sought that compensation be paid to the 13 former employees of the chicken and beer restaurant.
Mr Bui and Mr Lai accepted the proposed range of pecuniary penalty sought as against each of them. Mr Taing accepted that a pecuniary penalty be ordered as against him but sought a lesser range, in the vicinity of a 35 to 50% discount. They admitted that a total amount of $44,887.25 owed to 13 former employees was outstanding.
The matter was heard as to relief on 7 December 2023.
Materials relied upon
The FWO relied on the:
·Originating Application filed on 4 May 2023;
·Statement of Claim filed on 4 May 2023;
·Statement of Agreed Facts filed on 20 July 2023;
·Affidavit of Leigh Pace affirmed on 14 September 2023;
·Submissions on Penalty filed on 14 September 2023; and
·Reply Submissions on Penalty filed on 26 October 2023.
Mr Taing relied on the:
·Submissions on Penalty filed on 13 October 2023;
·Affidavit of Vanna Taing filed on 5 December 2023; and
·Mr Taing’s oral evidence given at hearing on 7 December 2023.
Mr Bui and Mr Lai filed notices of address for service and no other document.
As will be apparent from the summary above, Mr Taing filed written submissions on his own behalf. To the extent that those submissions made references to the position of “the Respondents” it was understood not to represent the views of Mr Bui and Mr Lai, who represented themselves jointly at the hearing and sought to distinguish their position.
THE CONTRAVENTIONS
The overarching object of the Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians, including by ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards and modern awards: s.3 of the Act.
The Act provides a framework for compliance and enforcement of the minimum conditions, rights and responsibilities it creates: Chapter 4 of the Act. It establishes the role and office of the Fair Work Ombudsman whose functions include promotion and monitoring of compliance with the Act and empowers appointed inspectors (s.700) to do certain things for purposes of determining whether the Act is being complied with: Part 5-2 and s.679 of the Act. For example, to require production of records or documents (s.712), to give a compliance notice based on an inspector’s reasonable belief of certain contraventions which requires certain actions to be taken within a specified reasonable time and a person must not fail to so comply (s.716).
Relevant to the present case, an employer is obliged to keep certain employee records: s.535(1). Where the FWO or an inspector requests production of information or documents (including employee records), there is a prohibition on giving information or producing a document to the FWO or an inspector exercising powers or performing functions under or in connection with a law of the Commonwealth if the person knows or is reckless as to whether the information or the document is false or misleading: s.718A.
Where an inspector forms a reasonable belief that a person has contravened the National Employment Standards, a term of a modern award or other legislated minimum conditions of employment, they may give what is known as a statutory compliance notice which is required to specify certain information: s.716.
Each of ss.535(1), 716(5) and 718A of the Act are civil remedy provisions.
By operation of s.550, a person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
The FWO in their capacity as a “fair work inspector” may apply to this Court for orders in relation to contraventions of ss.718A, 535(1) and 716(5): ss.12 and 539(2). The Court may make any order it considers appropriate where satisfied that a person has contravened a civil remedy provision: s.545(1). The Court may also make a pecuniary penalty order for such contravention: s.546.
In the present case
I am satisfied that the statement of claim filed in this matter and upon which the FWO relies complies with the rules of pleading and properly pleads a cause of action that supports the grant of relief. In particular, I am satisfied that the facts alleged in the statement of claim and the admissions of the Respondents in the statement of agreed facts establish that:
(a)Mr Taing:
(i)knowingly or recklessly produced false or misleading payslips to the Fair Work Inspector in contravention of s.718A of the Act;
(ii)failed to make or keep records relating to the termination of employment of 16 employees, in contravention of s.535(1) of the Act; and
(iii)failed to comply with the statutory compliance notice in contravention of s.716(5) of the Act.
(b)Mr Bui:
(i)was involved in Mr Taing’s contravention of s.718A of the Act (at (a)(iii) above), by operation of s.550(2) of the Act;
(ii)failed to make or keep records relating to the termination of employment of 16 employees, in contravention of s.535(1) of the Act; and
(iii)failed to comply with the statutory compliance notice in contravention of s.716(5) of the Act.
(c)Mr Lai was involved in Mr Taing’s contravention of s.718A of the Act (at (a)(iii) above), by operation of s.550(2) of the Act.
The Court has a wide discretion to make declarations. Having regard to the admissions of the Respondents and in the particular circumstances of this case, I am satisfied that this is an appropriate case for declaratory relief, if for no other reason than to ensure that the respondents clearly understand their obligations under the workplace laws and to record the Court’s disapproval of the contravening conduct.
WHETHER TO IMPOSE PENALTIES
The Court’s power to impose pecuniary penalties in respect of the established contraventions resides in s.546(1) of the Act.
Section 546(1) permits the Court to impose a pecuniary penalty “that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision”.
As reasoned above, that state of satisfaction exists. It falls to determine what level of penalty (if any) is appropriate as against the Respondents in light of the established contraventions.
Factors relevant to the Court’s discretion
The purpose of a civil penalty under the regime provided by the Act is primarily, if not wholly, protective in the promotion of the public interest in compliance with the provisions of the Act and in (general and specific) deterrence of further contraventions: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, [15]-[16] (Pattinson) citing the plurality in Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 and French J in Trade Practices Commission v CSR Ltd [1990] FCA 762 (CSR Ltd). An “appropriate” penalty being one that “strikes a reasonable balance between oppressive severity and the need for deterrence in a particular case”: Pattinson at [41].
The task of assessing what amount to impose involves the selection of a figure taking into account all factors relevant to the particular case: Wong v The Queen [2001] HCA 64; (2001) 207 CLR 582 at [75] (Gaudron, Gummow and Hayne JJ); Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 at [37] (Gleeson CJ, Gummow, Hayne and Callinan JJ); Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; (2018) 260 FCR 68, at [55] (Allsop CJ, Davies and Wigney JJ); Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25 at[44] (Jagot, Yates and Bromwicgh JJ) as cited by Snaden J at [26] in Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654. The oft cited decision of French J in CSR Ltd at [42] listed those factors relevant to an overall assessment of penalty, restated by the Full Court in CFMMEU v ABCC [2018] FCAFC 97 at [20]:
..the nature, character and seriousness of the conduct; the loss and damage caused; the circumstances in which the conduct took place; the size of the contravener and its degree of power; the deliberateness of the conduct and the time over which it occurred; the degree of involvement of senior officials or management; the culture of the organisation as to compliance or contravention; and, any co-operation with the regulator and contrition.
This is not an exhaustive list. Further, each case warrants an “idiosyncratic” approach and a careful analysis of all relevant circumstances - as was stated in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [12] (Graham J):
Penalties are not a matter of precedent. The choice of penalty must be dictated by the individual circumstances of a case, not by a line by line comparison with another case.[1]
I consider the present matter in light of those well-established principles.
Nature of the contravening conduct
The relevant conduct in the present case arose during the course of FWO investigations into compliance of Mr Taing and Mr Bui’s chicken and beer restaurant with workplace laws. Specifically, Mr Taing and Mr Bui’s failures to make and keep employment termination records (in contravention of s.535(1)) and failure to comply with the statutory compliance notice (in contravention of s.716(5)). There is also the matter of Mr Taing’s production of false and misleading information or documents to the FWO inspector (in contravention of s.718A), in which Mr Bui and Mr Lai were respectively involved (pursuant to s.550).
The contraventions of s.718A arose during the course of the first FWO investigation in 2019 and is especially serious in that it was a deliberate attempt to prevent the FWO from discovering any non-compliance with workplace laws and minimum conditions of employment. The evidence established that Mr Taing was responsible for administering the primary contravention and was aware, at the relevant time, that he should not be falsifying such records. Even if he were encouraged or directed to do so by others (which is not established, on my assessment of the evidence), that would not reasonably excuse his actions. It is established that Mr Taing’s act was within the knowledge of Mr Bui and Mr Lai who for their part were knowing or reckless in this respect.
Without more, it is concluded that the joint trustees’ contravention of s.535(1) was also deliberate in that no effort was made to keep the necessary employment records. This contravention arose during the course of the FWO’s second investigation which commenced in or about May 2021. The absence of records did not apparently preclude the FWO inspector’s capacity to form a reasonable belief of outstanding employment entitlements owed (on which the statutory compliance notice was based) but this does not reasonably excuse the conduct in the present case.
The joint trustees were aware of the statutory compliance notice issued pursuant to s.716 of the Act on 31 October 2022. Compliance with the notice required: by 2 December 2022, identification of amounts that had been paid to 16 specified former employees, calculation of the amounts that should have been paid to them and payment of any shortfall; and, by 9 December 2022, for reasonable evidence of same to be produced to the FWO. At least Mr Taing (if not also Mr Bui, who does not deny it) understood the consequences of failure to comply. Their decision not to comply with the statutory compliance notice by the required dates in contravention of s.716(5) was deliberate. That their non-compliance was driven by difficult financial circumstances or attempts to save the business does not ameliorate the seriousness or nature of the contraventions.
The circumstances underlying the issue of the statutory compliance notice were, relevantly, that a FWO inspector formed a reasonable belief that 16 former employees were entitled to be paid at certain classifications and status under the Restaurant Industry Award 2010 (modern award) and were not paid certain categories of entitlements owed to them as specified in the statutory compliance notice. To comply with the notice, Mr Taing and Mr Bui were required to prepare calculations and pay any shortfall and produce reasonable evidence to the FWO but did not do so. It was not until some time later, during the course of these proceedings, that a precise total amount of $44,887.25 was agreed to be outstanding to 13 of the former employees (as set out in an annexure to the agreed statement of facts filed on 20 July 2023). The circumstances which gave rise to the issue of the notice and the delay in arriving at agreement as to the entitlements owed to the 16 employees subject of the notice should also be taken into account in considering the nature and seriousness of the contravention as to arrive at the penalty in this case.
It is also relevant that this is not a case where there is a history of prior contraventions of the Act by any of the Respondents.
Loss and damage
The falsification of records in contravention of s.718A may naturally have impeded the earlier FWO investigation but there is no direct evidence of any loss or damage in this respect.
The failure to keep employment termination records in contravention of s.535(1) does not appear to have occasioned any direct loss in light of the Respondents’ admissions but again there is no evidence of this.
The failures of Mr Taing and Mr Bui to calculate the various specified employment-related entitlements paid and owed and to pay any shortfall (by 2 December 2022) and produce reasonable evidence to the FWO (by 9 December 2022), as required by the statutory compliance notice, meant that the matter was not resolved at an early stage via the compliance notice mechanism. In this respect, it may be accepted that there has been a delay in calculating entitlements owed and paid to the former employees and in extracting an admission from Mr Taing and Mr Bui that the calculated outstanding amounts are owed. There was a partial rectification in late December 2022. By the admissions of Mr Taing and Mr Bui, some 13 employees remain out of pocket (totalling $44,887.25 gross). Whilst there is no evidence of the impact of loss or any particular damage to the individuals concerned it may readily be anticipated that those individuals have sustained a loss because it is admitted they were not paid all of their entitlements for work performed some years ago (in some cases, in 2017 and through to 2021), and this is a relevant factor to be given appropriate weight.
It is also relevant that a public loss has been occasioned by the regulator bringing these enforcement proceedings in the absence of an early resolution of the matter.
Corrective action, cooperation with the FWO and contrition
The Respondents engaged with the FWO and made admissions at an early stage of these proceedings.
At the hearing, there was an apology for the contraventions expressed by Mr Lai, which was understood to be put jointly on behalf of Mr Bui who was also understood to agree.
For his part, Mr Taing’s evidence that he would have liked to rectify matters and considered taking out a loan may be taken as an expression of some remorse but went no further and fell short of any genuine contrition.
Size of the business, management involvement and financial circumstances
At the time of the hearing, the joint trustees’ chicken and beer restaurant was no longer operational.
Mr Taing told the Court of financial hardship of himself and the business, especially since the impacts of the COVID-19 pandemic and related regulations on the cafés and restaurants industry in the State of Victoria.
Compliance with minimum standards
A further and important consideration in this case is the need for compliance with the statutory framework. Employee records are a vital source of proof and required to be kept for a period of 7 years being aligned with the 6 year timeframe in which an employee may bring an underpayment claim. Notices to produce and compliance notices are important mechanisms which enable the FWO to investigate and deal with non-compliance with minimum entitlements in the Act as an alternative to litigation. It also provides employers with a means of early resolution and rectification without penalty.
The contraventions in the present case are serious and such conduct ultimately undermines the Act’s enforcement framework and the safety net of entitlements it is designed to protect.
Deterrence
The principles and importance of general and specific deterrence are well-established.
The FWO’s unchallenged data in evidence before the Court demonstrated a relatively high instance of underpayment disputes in the café and restaurants industry in the period 2020 to 2021, including at the time of the contraventions in this case.
There is a need for general deterrence in this matter to emphasise the importance of an effective compliance framework, the maintenance of effective minimum terms and conditions of employment and adherence to the record-keeping obligations in the cafe and restaurants industry. It is also essential to promote the effectiveness of the FWO in performance of its functions to investigate and require production of accurate documents and information. Further, with regard to each of the contraventions in the present case, to send a message to other employers about the need for compliance.
This is also a case where there is a need for specific deterrence, having regard to the deliberateness of each contravention as determined above.
In fixing the penalties in this matter, I have had regard to the apology of Mr Lai also made on behalf of Mr Bui which I assessed as heartfelt and genuine. However, in relation to Mr Taing, there was nothing persuasive before the Court as to find that he was apologetic, contrite or even cognisant of the seriousness of his conduct. And, in circumstances where it was Mr Taing who administered the contraventions and effected the primary contravention of s.716A in the production of falsified records and then sought to explain the contraventions by reference to saving his business and placing blame on others, there is a particular and greater need for specific deterrence in his case.
Appropriate regard is had to the fact that the subject chicken and beer restaurant is longer operational but that does not preclude any or all of the Respondents from becoming engaged in management of businesses in the cafes and restaurants industry in the future.
In my view, for all Respondents, specific deterrence is necessary to promote compliance with the workplace laws on the part of each Respondent in the future.
THE APPROPRIATE PENALTY
In weighing all of the relevant factors, I am satisfied that it is appropriate to impose pecuniary penalties as follows:
(a)On Mr Taing for his contraventions of ss.718A, 535(1) and 716(5) in the total amount of $15,000;
(b)On Mr Bui for his involvement in Mr Taing’s contravention of s.718A and his contraventions of ss.535(1) and 716(5) in the total amount of $12,500;
(c)On Mr Lai for his involvement in Mr Lai’s contravention of s.718A in the total amount of $4,000.
In my view, this is a proportionate response to the respective contraventions and strikes a reasonable balance between oppressive severity and the need for deterrence in this particular case.
WHETHER TO ORDER COMPENSATION
The FWO sought an order requiring Mr Taing and Mr Bui to pay the outstanding amount of $44,887.25 by way of compensation to the 13 former employees (plus superannuation and interest on that amount). It said the Court is empowered to do so pursuant to s.545 of the Act and should do so with regard to the Respondents’ admissions. The agreed statement of facts provided that the parties jointly recommended such order to the Court.
Section 545 confers a broad discretion on the Court to make any order that it considers appropriate if the Court is satisfied that a person has contravened a civil remedy provision. Without limiting that power, the statute expressly contemplates such order to include an award of compensation for loss that a person has suffered because of the contravention: s.545(2)(b).
The FWO was understood to contend that in this case it was the contravention of s.716(5) (the failure to comply with the statutory compliance notice) that caused the loss comprising the outstanding $44,887.25 owed to 13 former employees.
It may be accepted that the Court has jurisdiction to make an order of the kind sought where satisfied that the loss was suffered because of the contravention.
In the particular circumstances of this case, there is an admission that an outstanding amount of money (totalling $44,887.25 gross) is owed to 13 of 16 former employees. However, in my view, that does not arise from or because of the contraventions of s.716(5). Compliance with the statutory compliance notice may have expedited the resolution of the matter. Indeed the notice appears to have prompted some action in that there was a partial resolution shortly after compliance with the notice was due, in December 2022. But the fact of the outstanding entitlements of 13 former employees is not a loss occasioned by the failure to comply with the statutory compliance notice itself. Rather, any underpayment is a loss occasioned by the failure to pay an entitlement for work performed in accordance with the relevant modern award and/or the NES. Those entitlements variously arose some time before the statutory compliance notice was issued (spanning 2017 to 2021 according to the FWO Inspector’s reasonable belief).
In any event, I would not be minded to exercise the discretion to order compensation in the present case.
The application in this matter sought relief for contraventions of ss.718A, 535(1) and 716(5) of the Act. The pleadings do not articulate, nor have the Respondents admitted, contravention(s) of obligations to pay minimum terms and conditions – such as of s.44 (contravening the NES) and/or s.45 (contravening a modern award) of the Act - or involvement in such contravention. The findings of contraventions that I have made above are limited to contraventions of ss.718A, 535(1) and 716(5).
As observed in Fair Work Ombudsman v Carers Portland Inc [2023] FedCFamC2G 620 per Blake J, the Act expressly sets out a pathway for pursuing contraventions of an award, an enterprise agreement or the NES. It would potentially undermine the integrity of that framework were an application for contravention of civil remedy provision(s) to result in a compensation order directed at rectifying a separate and distinct contravention of a civil remedy provision(s) which was not part of the originating claim or pleadings.
In the present case, the statutory compliance notice was not withdrawn and was not complied with. The FWO is not apparently precluded (by operation of s.716(4)) from making application for orders in relation to contraventions of s.44 (contravening the NES) and s.45 (contravening a modern award).
It is not, in my view, appropriate to exercise the discretion where a proceeding for contravention of ss.718A, 535(1) and 716(5) is essentially a vehicle to pursue a remedy to rectify a different contravention. The Respondents’ admissions, whilst relevant to the present case, do not justify a different result in the form they were made.
The penalties in this case will be ordered to be paid to the Commonwealth of Australia. It will be a matter for the FWO whether it elects to direct any of the proceeds of the penalties obtained in these proceedings toward compensating the former employees.
DISPOSITION
For the above reasons, I will make declarations and orders for payment of pecuniary penalties to give effect to these reasons.
I certify that the preceding eighty-seven (87) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansini. Associate:
Dated: 22 March 2024
8
10
2