Fair Work Ombudsman v Tate trading as Kreating Real Change Disability Services
[2023] FedCFamC2G 629
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Tate trading as Kreating Real Change Disability Services [2023] FedCFamC2G 629
File number(s): SYG 1548 of 2022 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 20 July 2023 Catchwords: INDUSTRIAL LAW – assessment of a pecuniary penalty for contravention of s 716(5) of the Fair Work Act 2009 (Cth). Legislation: Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 12, 90(2), 539(1), 539(2), 546, 557A, 700, 716(2), 716(5)
Social, Community, Home Care and Disability Services Industry Award 2010 cls 4, 23.2, 26.4(a), 26.4(b), 31.3
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082
Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492
Fair Work Ombudsman v VS Investment Group Pty Ltd [2013] FCCA 208
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Division: Fair Work Number of paragraphs: 27 Date of hearing: 9 May 2023 Place: Sydney Solicitor for the Applicant: Ms C Maibom of Maddocks, by telephone The Respondent: No appearance by, or on behalf of, the respondent ORDERS
SYG 1548 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: KRISTY LEANNE TATE T/AS KREATING REAL CHANGE DISABILITY SERVICES (ABN 65 135 536 817)
Respondent
order made by:
JUDGE MANOUSARIDIS
DATE OF ORDER:
20 july 2023
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) (FW Act) the respondent pay a pecuniary penalty in the sum of $4,290 for her contravention of s 716(5) of the FW Act as declared in the orders made on 7 March 2023.
2.The respondent pay the pecuniary penalty referred to in order 1 to the Commonwealth within 28 days after the day on which these orders are pronounced.
3.The applicant has liberty to apply on seven days’ notice in the event the preceding 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
INTRODUCTION
The applicant (FWO) applies under s 546(1) of the Fair Work Act 2009 (Cth) (FW Act) for an order that the respondent, Ms Tate trading as Kreating Real Change Disability Services, pay a pecuniary penalty because she contravened s 716(5) of the FW Act by failing to comply with a compliance notice dated 1 October 2021 given under s 716(2) of the FW Act (Compliance Notice).
PROCEDURAL HISTORY
The FWO commenced this proceeding on 27 October 2022 by filing an application and a statement of claim.
The matter came before me for a first court date on 22 November 2022. Ms Tate, however, did not appear. I nevertheless:
(a)ordered Ms Tate file and serve a notice of address for service and a defence;
(b)ordered the FWO file and serve any reply to Ms Tate’s defence;
(c)listed the matter for a directions hearing on 7 February 2023;
(d)granted the parties liberty to apply; and
(e)noted if Ms Tate fails to comply with (a) the FWO shall be at liberty to apply for default judgment at the directions hearing referred to in (c).
On 7 February 2023 Mr Harris, a lawyer, filed a notice of address for service for Ms Tate, and at the directions hearing on 7 February 2023 Mr Harris appeared. At that directions hearing I extended the time by which Ms Tate file and serve a defence; extended the time by which the FWO file and serve any reply to Ms Tate’s defence; listed the matter for a directions hearing on 7 March 2023; granted the parties liberty to apply; and noted that if Ms Tate fails to file and serve a defence the FWO would be at liberty at the directions hearing on 7 March 2023 to apply for default judgment. On 27 February 2023 Mr Harris filed a notice of intention to withdraw as lawyer.
Ms Tate did not file a defence, and she did not appear at the directions hearing on 7 March 2023. On 7 March 2023 I therefore heard the FWO’s application for default judgment and, at the conclusion of the hearing, I made a number of orders, including a declaration that Ms Tate contravened s 716(5) of the FW Act by failing to comply with the Compliance Notice. I then set the matter down for hearing on the question of penalty on 9 May 2023.
FACTS
I made the declaration on 7 March 2023 on the basis of the allegations made in the statement of claim which, given the declaration I made, are taken to have been admitted by Ms Tate. Those allegations are as follows:
(a)Ms Tate is and was at all relevant times an NDIS registered disability service provider trading as “Kreating Real Change Disability Services” (Business) in Crookwell, New South Wales.
(b)In or around August 2021 FWI Pace (FWI), a Fair Work Inspector appointed by the FWO under s 700 of the FW Act, commenced an investigation (Investigation) into Ms Tate in relation to the employment of Ms Haley and Ms Beard (Employees).
(c)Following the Investigation the FWI formed a belief that:
(i)The Social, Community, Home Care and Disability Services Industry Award 2010 (Award) covered and applied to Ms Tate in relation to her employment of the Employees pursuant to cl 4 of the Award.
(ii)Ms Haley was employed by Ms Tate at the Business as a full-time disability services worker from 14 October 2019 to 13 May 2021 at a rate of $35.00 per hour; Ms Haley was classified as a “Home Care Employee (Initially Level 1, and subsequently Level 3)”; Ms Haley had accrued approximately 120.84 hours of untaken annual leave; and Ms Tate failed to pay Ms Haley her accrued annual leave entitlements, including annual leave loading, upon termination.
(iii)Ms Beard was employed by Ms Tate at the Business on a casual basis as a disability support worker from 20 March 2021 to 19 June 2021 (Period) at a rate of $26.96 per hour; Ms Beard was classified as a “Home Care Employee Level 1” under the Award; Ms Beard was entitled to be paid at the rate of 175% of the ordinary rate of pay (inclusive of 25% casual loading) for time worked on a Saturday during the Period, pursuant to cl 26.4(a) of the Award; Ms Beard was entitled to be paid at the rate of 225% of the ordinary rate of pay (inclusive of 25% casual loading) for time worked on a Sunday during the Period, pursuant to cl 26.4(b) of the Award; and during the Period Ms Beard was not paid at the rate of 175% of the ordinary rate of pay (inclusive of 25% casual loading) for time worked on a Saturday, and 225% of the ordinary rate of pay (inclusive of 25% casual loading) for time worked on a Sunday.
(d)As a result of the matters in subparagraph (c), the FWI formed a reasonable belief that Ms Tate, in relation to Ms Haley, contravened s 90(2) of the FW Act, and cl 31.3 of the Award; and in relation to Ms Beard, Ms Tate contravened cl 26.4(a) and cl 26.4(b) of the Award (Contraventions).
(e)On 1 October 2021, the FWI gave Ms Tate the Compliance Notice.
(f)The Compliance Notice required Ms Tate to take the following action by 3 December 2021 to remedy the direct effects of the Contraventions (Specified Action):
(i)in relation to Ms Haley:
(A)identify the number of hours of annual leave that were accrued to Ms Haley when her employment ended;
(B)calculate the amount Ms Haley should have been paid by Ms Tate for the hours of accrued annual leave when her employment ended, having regard to the hours identified at 6(f)(i)(A);
(C)calculate the amount that Ms Haley should have been paid by Ms Tate for annual leave loading under the Award when her employment ended, having regard to the hours identified in 6(f)(i)(A);
(D)make a payment to Ms Haley of the amounts owed to her as calculated in 6(f)(i)(B) and 6(f)(i)(C) above; and
(E)make a record of the information and amounts calculated in 6(f)(i)(A) to 6(f)(i)(C) above and the amount of payment referred to in 6(f)(i)(D) immediately above;
(ii)in relation to Ms Beard:
(A)identify the number of hours Ms Beard worked during the Period in relation to which entitlements for time worked on a Saturday and a Sunday were required to be paid by the Award;
(B)identify the amount Ms Tate paid to Ms Beard during the period in relation to her entitlements, having regard to the hours identified at 6(f)(ii)(A);
(C)calculate the amount that Ms Beard should have been paid by Ms Tate during the Period in relation to her entitlements, having regard to the hours identified at 6(f)(ii)(A);
(D)make a payment to Ms Beard of the difference between the amount paid at 6(f)(ii)(B) above and the amount referred to in 6(f)(ii)(C) above; and
(E)make a record of the information and amounts calculated at 6(f)(ii)(A) to 6(f)(ii)(C) above and the amount of the payment referred to in 6(f)(ii)(D) immediately above.
(iii)in relation to the Employees:
(A)calculate additional superannuation contributions required by cl 23.2 of the Award in relation to the amounts required to be paid to the Employees by Ms Tate as a result of the actions set out at 6(f)(i) and 6(f)(ii) above; and
(B)in relation to each of the Employees owed such additional superannuation contributions, pay such additional superannuation contributions to the chosen superannuation fund of the Employees.
(g)The Compliance Notice also required Ms Tate to produce evidence to the FWO of her compliance with the Compliance Notice by 10 December 2021, by producing:
(i)a schedule in relation to the Employees that sets out the calculations and payments made to remedy the direct effects of the Contraventions and any additional superannuation contributions; and
(ii)proof that full payment had been made to the Employees.
(h)Ms Tate failed to take the Specified Action set out in the Compliance Notice by 3 December 2021, and she failed to produce to the FWO reasonable evidence of compliance with the Compliance Notice by 10 December 2021.
(i)For the reasons in (h) above Ms Tate failed to comply with the Compliance Notice.
(j)For the reasons in (e) to (i) above Ms Tate has contravened s 716(5) of the FW Act.
The FWO read a number of affidavits at the hearing on penalty.
Partial repayment
On 6 January 2022, Ms Beard emailed Mr Keyhoe, a Fair Work Officer, with a payslip she received from Ms Tate for $187.50 that was unexplained.[1]
[1] Affidavit of Linda Tran 28.03.23, [15.b.]; annexure “LT-5”
On 11 February 2022 Mr Keyhoe emailed Ms Haley asking if she had received a payment from Ms Tate, and on that same day Ms Haley replied and confirmed that a payment of $910.00 had been received.[2]
PENALTY
[2] Affidavit of Linda Tran 28.03.23, [15.d.]; annexure “LT-7”
Power and principles
Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”.[3] That expression is defined in s 539(1) of the FW Act to include the provisions identified in column 1 of the table to s 539(2) of the FW Act. Subsection 716(5) is in column 1 of the table to s 539(2) of the FW Act.
[3] I repeat in this and the following 4 paragraphs much of what I said in Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082, at [33]-[38]
Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)” and, if the person is a body corporate, must not be more than five times “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”. The maximum penalty units for a contravention of s 716(5) of the FW Act as at 3 December 2021, being the day by which Ms Tate was required to carry out the Specified Action, are 30 penalty units for an individual, and 150 penalty units for a body corporate. (This excludes “serious contraventions”, as defined in s 557A of the FW Act.) Section 12 of the FW Act provides that “penalty unit” has the meaning given by s 4AA of the Crimes Act 1914 (Cth). The penalty unit provided for by s 4AA of that Act as at 3 December 2021 was $222. Thus, $6,660 is the maximum penalty Ms Tate may be ordered to pay for her contravention of s 716(5) of the FW Act.
The approach of most judges when assessing penalties for a single contravention of a provision of the FW Act is to take into account the non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick,[4] which his Honour adopted from the judgment of Mowbray FM in Mason v Harrington Corporation Pty Ltd. [5] Those considerations are:
[4] Kelly v Fitzpatrick [2007] FCA 1080, at [14]
[5] Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
(a)the nature and extent of the conduct which led to the breaches;
(b)the circumstances in which that conduct took place;
(c)the nature and extent of any loss or damage sustained as a result of the breaches;
(d)whether there had been similar previous conduct by the respondent;
(e)whether the breaches were properly distinct or arose out of the one course of conduct;
(f)the size of the business enterprise involved;
(g)whether or not the breaches were deliberate;
(h)whether senior management was involved in the breaches;
(i)whether the party committing the breach had exhibited contrition;
(j)whether the party committing the breach had taken corrective action;
(k)whether the party committing the breach had cooperated with the enforcement authorities;
(l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(m)the need for specific and general deterrence.
Although these factors have been identified and applied as relevant to the assessment of penalties, they do not constitute a “rigid catalogue of matters for attention”.[6]
[6] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8, at [91] (Buchanan J)
Also relevant is the maximum penalty for the contravention provided for by the FW Act; and here I refer to the following passage from the judgment of Flick J in The BKH Contractors Case (No 2):[7]
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed . . . .
[7] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563, at [19]
Nature, extent, circumstances, and deliberateness of the contravening conduct
Although it is the case Ms Tate made two payments, one to Ms Haley in the amount of $910, and one to Ms Beard in the amount of $187.50, Ms Tate has failed to comply with the essential elements of the Compliance Notice. Ms Tate has not provided to the FWO the number of hours each of Ms Haley and Ms Beard had worked, and therefore has not calculated the amounts Ms Tate should have paid each of Ms Haley and Ms Beard under the Award. Further, Ms Tate was required to comply with the Compliance Notice by 3 December 2021, but the FWO did not commence this proceeding until 27 October 2022. Ms Tate, therefore, had almost 11 months to rectify her failure to comply with the Compliance Notice. Ms Tate’s failure to comply with the Compliance Notice, therefore, is serious; and it manifests a conscious disregard by her of the obligations she has to comply with the Compliance Notice.
The following passage from the judgment of Judge Emmett in Fair Work Ombudsman v Viper Industries Pty Ltd applies to the nature of Ms Tate’s contravention of s 716(5) of the FW Act.[8]
The Respondents’ intentional failure to comply with a mandatory notice issued by the workplace regulator is “conduct ... [which] undermines the utility and effectiveness of a fundamental object” [of] the FW Act. The failure to comply undermines and frustrates the powers conferred on Fair Work Inspectors, which are conferred for the purposes of providing an effective means of enforcing compliance with lawful minimum entitlements. There is a significant cost to the public by reason of the need to bring this matter before the court to enforce compliance.
[8] Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492, at [7]
These matters point to assessing penalty at the higher end of the scale.
Nature and extent of loss occasioned by contravention
The FWO has estimated that Ms Tate still owes Ms Haley the sum of $3,319 (gross) in relation to the matters stated in the Compliance Notice, and Ms Tate still owes Ms Beard the amount of at least $136.43.[9] These amounts represent losses that flow from Ms Tate’s failure to comply with the Compliance Notice. The amount in relation to Ms Haley is significant; and the amount in relation to Ms Beard is not insubstantial. These matters, too, point to assessing penalty at the higher end.
[9] Affidavit of L Tran 28.03.2023, [15.e.]; annexure “LT-8”, page 30
Deterrence
The FWO submits the penalty should reflect an element of specific deterrence because Ms Tate’s ABN remains registered; and Ms Tate disregarded her obligations under the FW Act by failing to comply with the Compliance Notice, she has failed to engage with the FWO during the Investigation, and she has failed to participate in the proceedings or comply with Court orders.[10] I am satisfied the penalty should include an element for specific deterrence.
[10] Applicant’s Submissions on Penalty, [39]
As for general deterrence, I refer to what Judge Jarrett said in Fair Work Ombudsman v VS Investment Group Pty Ltd:[11]
The failure to comply with a notice properly issued by the applicant in the course of its investigations and the discharge of its statutory functions is serious. Recipients of such notices should be left under no misapprehension about their obligations to comply with those notices.
[11] Fair Work Ombudsman v VS Investment Group Pty Ltd [2013] FCCA 208, at [51]
The FWO relies on data contained in an industry profile for the “Other Social Assistance Services” industry (Industry) for the period July 2019 to June 2022.[12] The data records that between July 2019 and June 2022 the Industry accounted for 2.4% of completed disputes by the FWO across all industries, and 21% of those disputes in the Industry involved contraventions in relation to wages and conditions, and 14% involved contraventions in relation to termination of employment.[13] Further, the FWO submits that there is a need for a meaningful and deterrent penalty given the impact non-compliance with statutory notices have in undermining the system of workplace compliance.
[12] Affidavit of Linda Tran 28.03.23, [17.a.]; annexure “LT-9”
[13] Applicant’s Submissions on Penalty, [38]
The penalty should be set at a level which demonstrates to employers in general, and to employers in the Industry in particular, that they would be faced with a meaningful penalty if they fail to comply with a compliance notice given under s 716(2) of the FW Act.
Deliberateness and lack of contrition and corrective action
The FWO submits that deliberateness is a relevant factor to assessing penalty, and it is open to the Court to infer that Ms Tate has deliberately chosen not to pay the amounts owed to the Employees.[14]
[14] Applicant’s Submissions on Penalty, [28]
In its written submissions, the FWO further submits that Ms Tate’s failure to meaningfully engage with the FWO during the Investigation or in these proceedings demonstrates a lack of contrition. The FWO, also in its written submissions, acknowledges that unparticularised payments to the Employees demonstrates that some corrective action has been taken. On this basis, the FWO submits that it would be appropriate for a small discount “of not more than 5%” be applied.[15]
[15] Applicant’s Submissions on Penalty, [30]; [31]
Assessment
In my opinion, 65% of the maximum penalty represents the appropriate penalty Ms Tate should be ordered to pay. That amount takes into account the payments Ms Tate has made. I therefore find that $4,290 is an appropriate penalty Ms Tate should be ordered to pay for her contravention of s 716(5) of the FW Act.
DISPOSITION
I will order that Ms Tate pay a pecuniary penalty of $4,290; and that Ms Tate pay this amount to the Commonwealth within 28 days after the day on which I pronounce my orders.
I will reserve to the FWO liberty to apply on seven days’ notice if Ms Tate does not pay the pecuniary penalty I propose to order she pay.
I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 20 July 2023
6
0