Fair Work Ombudsman v Teds Roofing and Plumbing Qld Pty Ltd
[2023] FedCFamC2G 324
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Teds Roofing and Plumbing Qld Pty Ltd [2023] FedCFamC2G 324
File number(s): MLG 2664 of 2021 Judgment of: JUDGE SYMONS Date of judgment: 2 May 2023 Catchwords: INDUSTRIAL LAW – Fair Work – pecuniary penalty – failure of the respondent to comply with two compliance notices given under s 716(2) of the Fair Work Act 2009 (Cth) – whether two contraventions of compliance notices should be treated as separate and distinct for the purpose of assessing penalty – course of conduct principle considered – whether there is an interrelationship between the legal and factual elements of the two contraventions – where circumstances in which contraventions occurred and response to each contravention is uniform – where it is appropriate to group the two contraventions – where respondent in difficult financial position at time of contraventions - where penalties sought by the applicant involve substantial overreach – order for single penalty in the sum of $8,750 Legislation: Fair Work Act 2009 (Cth) ss. 117, 539, 545, 546, 547, 557, 716,
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r. 9.04,
The Clerks – Private Sector Award 2020 cl. 16
Cases cited: Australian Building and Construction Commission v Pattinson (2022) 399 ALR 599; [2022] HCA 13
Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor (No 2) [2019] FCCA 2144
Fair Work Ombudsman v Route 45 Pty Ltd [2023] FedCFamC2G 83
Fair Work Ombudsman v Tester [2021] FCCA 771
Fair Work Ombudsman v Theill Pipelines Pty Ltd & Anor [2021] FCCA 492
Jordan v Mornington Inn Pty Ltd (2007) 166 IR 33; [2007] FCA 1384
Trade Practices Commission v CSR Ltd [1990] FCA 521
Transport Workers’ Union of Australia v Registered Organisations’ Commissioner (No 2) (2018) 363 ALR 464; [2018] FCAFC 203
Division: Division 2 General Federal Law Number of paragraphs: 71 Date of last submission/s: 31 March 2023 Date of hearing: 31 March 2023 Place: Melbourne Solicitor for Applicant: HWL Ebsworth Lawyers Respondent: Mr Reeves, Director, appearing with leave ORDERS
MLG 2664 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
ApplicantAND: TEDS ROOFING AND PLUMBING QLD PTY LTD (ACN 631 848 756)
Respondent
order made by:
JUDGE SYMONS
DATE OF ORDER:
2 May 2023
THE COURT DECLARES BY CONSENT THAT
1.The respondent contravened s 716(5) of the Fair Work Act 2009 (Cth) (the FW Act) by failing to comply with the Compliance Notices issued on 1 April 2020 (the Michael Compliance Notice) and 20 April 2020 (the Wakeham Compliance Notice) (collectively the Compliance Notices).
THE COURT ORDERS THAT:
2.Leave is granted pursuant to rule 9.04 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) for Mr Reeves to carry on the proceedings and appear for the respondent.
THE COURT ORDERS BY CONSENT THAT:
3.Pursuant to s 545(1) of the FW Act, the respondent take the steps that were required by the Compliance Notices within 28 days from the date of this order, by:
(a)calculating and paying to Ms Michael any outstanding entitlements and superannuation in accordance with the Michael Compliance Notice;
(b)calculating and paying to Ms Wakeham any outstanding entitlements and superannuation in accordance with the Wakeham Compliance Notice;
(c)preparing and producing to the applicant a schedule outlining its calculations of the entitlements and superannuation required to be paid to Ms Michael, and the entitlements and superannuation required to be paid to Ms Wakeham and providing proof that all necessary payments have been made in accordance with the Michael Compliance Notice and the Wakeham Compliance Notice.
4.Pursuant to s 547(2) of the FW Act, the respondent pay to Ms Michael and Ms Wakeham interest on the amounts (if any) owed to them pursuant to paragraphs 3(a) and 3(b) above within 28 days of the date of this order.
THE COURT ORDERS THAT:
5.Pursuant to s 546 of the FW Act the respondent pay a pecuniary penalty in the sum of $8,750 to the Commonwealth within 28 days.
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 SYMONS:
INTRODUCTION
This is an application for the imposition of a penalty arising from the respondent’s failure to comply with two compliance notices given under s 716(2) of the Fair Work Act 2009 (Cth) (the FW Act).
The respondent was represented in this proceeding by its director, Mr Reeves, who (as a non-lawyer) was granted leave pursuant to rule 9.04 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) to carry on the proceedings and appear for the respondent.
The respondent has cooperated with the applicant and signed a statement of agreed facts dated 7 September 2022 (reproduced as Annexure A to these reasons). The respondent has admitted contravening s 716(5) of the FW Act by failing to comply with:
(a)a compliance notice given to the respondent by Fair Work Inspector Aaron Mullan (FWI Mullan) with respect to the unpaid entitlements of a former employee Ms Katie Michael, pursuant to s 716(2) of the FW Act on 1 April 2021 (Michael Compliance Notice); and
(b)a compliance notice given to the respondent by Fair Work Inspector Kez Ma (FWI Ma) with respect to the unpaid entitlements of a former employee Ms Sarah Wakeham, pursuant to s 716(2) of the FW Act on 20 April 2021 (Wakeham Compliance Notice)
(collectively, the Compliance Notices).
The parties agree that the following declaration and orders should be made:
(a)a declaration that the respondent contravened s 716(5) of the FW Act by failing to comply with the Compliance Notices;
(b)an order pursuant to s 545(1) of the FW Act, that the respondent take the steps that were required by the Compliance Notices within 28 days from the date of this order, by:
(i)calculating and paying to Ms Michael any outstanding entitlements and superannuation in accordance with the Michael Compliance Notice;
(ii)calculating and paying to Ms Wakeham any outstanding entitlements and superannuation in accordance with the Wakeham Compliance Notice;
(iii)preparing and producing to the Applicant a schedule outlining its calculations of the entitlements and superannuation required to be paid to Ms Michael, and the entitlements and superannuation required to be paid to Ms Wakeham, and providing proof that all necessary payments have been made in accordance with the Michael Compliance Notice and the Wakeham Compliance Notice;
(c)An order pursuant to s 547(2) of the FW Act, that the respondent pay to Ms Michael and Ms Wakeham interest on the amounts owed to them pursuant to paragraphs 4(b)(i) and 4(b)(ii) above within 28 days of the date of this order;
(d)An order pursuant to s 546 of the FW Act that the respondent pay a pecuniary penalty to the Commonwealth for the contravention set out in paragraph 4(a) above within 28 days.
The outstanding issue is the size of any penalty to be imposed.
BACKGROUND
The respondent was, at relevant times, the operator of a roofing and plumbing business located in Alice River in the State of Queensland. The business is no longer trading but the respondent remains registered.
In around February 2021, FWI Mullan commenced an investigation into the respondent and its compliance with workplace laws following a request for assistance by Ms Michael.
Following the investigation, FWI Mullan formed a reasonable belief that, at all relevant times between 1 October 2020 and 21 January 2021 (Michael Contravention Period):
(a)Ms Michael was employed to work for the respondent;
(b)The Clerks – Private Sector Award 2020 (the Award), a modern award under the FW Act, covered and applied to Ms Michael’s employment;
(c)Ms Michael was not paid the minimum wage prescribed by the Award.
FWI Mullan formed a reasonable belief that the respondent had contravened clause 16 of the Award (minimum wages) and on the basis of that belief, gave the respondent a Compliance Notice on 1 April 2021, which required the respondent to take certain steps to remedy the contraventions. Those steps included that the respondent identify the hours worked by Ms Michael during the Michael Contravention Period, identify the amount the respondent should have paid Ms Michael in respect of the minimum wage during this period, calculate the amounts that had been paid, make payment to Ms Michael of the difference, make a record of this information, calculate and pay any additional superannuation contributions and produce reasonable evidence to the applicant of having taken these steps by 13 May 2021.
In around February 2021, FWI Ma commenced an investigation into the respondent and its compliance with workplace laws following a request for assistance by Ms Wakeham.
Following this investigation, FWI Ma formed a reasonable belief that at all relevant times between 7 January 2021 and 2 February 2021 (Wakeham Contravention Period):
(a)Ms Wakeham was employed to work for the respondent;
(b)The Award covered and applied to Ms Wakeham’s employment;
(c)Ms Wakeham’s employment with the respondent was terminated on 26 January 2021;
(d)Ms Wakeham was not paid the minimum wage in the Award; and
(e)On termination of Ms Wakeham’s employment, the respondent failed to make a payment in lieu of notice of termination.
FWI Ma formed a reasonable belief that during the Wakeham Contravention Period, the respondent contravened clause 16 of the Award (minimum wages) and s 117(2)(b) of the FW Act (payment in lieu of notice of termination). On the basis of that belief, FWI Ma issued the respondent with a compliance notice on 20 April 2021, which required the respondent to take certain steps to remedy the contraventions. Those steps included that the respondent identify the hours worked by Ms Wakeham during the Wakeham Contravention Period, identify the amount the respondent should have paid Ms Wakeham in respect of the minimum wage and payment in lieu of notice of termination during this period, calculate the amounts that had been paid, make payment to Ms Michael of the difference, make a record of this information, calculate and pay any additional superannuation contributions, and produce reasonable evidence to the applicant of having taken these steps by 30 July 2021.
It is common ground that the respondent failed to comply with the Compliance Notices and that as a result it contravened s 716(5) of the FW Act.
The following amounts were paid by the respondent in response to the Compliance Notices:
(a)$2,424.00 to Ms Michael;
(b)$3,439.76 to Ms Wakeham.
PROCEEDINGS IN THIS COURT
These proceedings were commenced by the applicant filing an originating application and statement of claim on 19 October 2021.
On 26 May 2022, I made orders by consent referring the matter to mediation.
The mediation was listed for one day on 12 August 2022 and resumed for a second day on 7 September 2022. The parties resolved the matter with respect to liability.
Orders were made on 7 September 2022 to facilitate the matter proceeding to a hearing on penalty. This included an order for the filing of a statement of agreed facts and orders establishing a timetable for the parties to file and serve submissions and any evidence upon which they would seek to rely on the question of penalty.
A statement of agreed facts was filed on 8 September 2022.
On 24 February 2023 the applicant filed written submissions and the affidavits of FWI Ma and Fair Work Inspector Rawlings (FWI Rawlings), both sworn on 23 February 2023.
The respondent did not file any evidence or submissions responsive to these orders on the question of penalty.
The matter came before me for hearing on 31 March 2023. On this occasion, the applicant was represented by solicitor-advocate Mr Adams. The director of the respondent, Mr Reeves, made submissions on behalf of the respondent. Mr Reeves participated in the hearing via video–link.
PENALTY
Compliance notice
Section 716(5) of the FW Act provides that a person must not fail to comply with a compliance notice properly given. That section is a civil remedy provision. The power to issue a compliance notice was introduced as an alternative process to deal with an employer’s failure to meet minimum entitlement obligations without the need to commence litigation.
This Court has previously recognised that compliance notices provide an efficient mechanism to rectify identified contraventions of the FW Act without the need for costly and often time-consuming litigation.[1]
[1] See, e.g., FWO v Nobrace Centre Pty Ltd & Anor (No 2) [2019] FCCA 2144 and the cases referred to in that decision.
Relevantly, s 716(4B) of the FW Act provides:
A person who complies with a notice in relation to a contravention of a civil remedy provision is not taken:
a) to have admitted to contravening the provision; or
b) to have been found to have contravened the provision.
Penalty sought by the applicant
Pursuant to ss 539 and 546(2)(b) of the FW Act, the maximum penalty that the Court may impose on the respondent for a single contravention of s 716(5) of the FW Act is $33,300. The applicant seeks that a penalty be imposed in the amount of $26,640, comprising penalties of $13,320 (50% of the maximum, with a further 20% discount for cooperation) in respect of the respondent’s failure to comply with each of the Michael Compliance Notice and the Wakeham Compliance Notice. The applicant invites the Court to approach the question of penalty on the basis that it should give separate recognition to each Compliance Notice and decline to exercise its discretion to group the two contraventions together. This is an issue to which I will return.
Factors relevant to penalty
The primary purpose of deterrence was re-emphasised by the High Court in the decision of Australian Building and Construction Commission v Pattinson [2022] HCA 13 (Pattinson). In that decision, the majority upheld the Commissioner’s appeal and confirmed that the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with provisions of the FW Act by those responsible and by (like) others. The Court rejected the approach implicit in the decision of the Full Court (the subject of the appeal) that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention. The majority held instead that “[t]he power conferred by s 546 of the Act is not subject to constraints drawn from the criminal law and there is no place for a ‘notion of proportionality’ in a civil penalty regime”.[2] However, the High Court did accept that s 546 requires the Court to ensure that any penalty “strikes a reasonable balance between deterrence and oppressive severity”.[3] It was only in this more qualified sense that the concept of “proportionality” had any role to play.
[2] See Australian Building and Construction Commissioner v Pattinson & Anor [2022] HCA 13 at [10].
[3] Ibid at [41].
The High Court in Pattinson also referred to the several factors identified by French J in Trade Practices Commission v CSR Ltd [1990] FCA 521 which informed the assessment of a penalty of an appropriate deterrent value. The list revealed that both the circumstances of the contravener and the circumstances of the contravention may be relevant to the assessment of whether the maximum level of deterrence is called for.[4] However, the Court repeated the caution that the list of possible relevant considerations should not be approached as a “rigid catalogue of matters for attention” and instead the task of the court remains to determine what is an “appropriate” penalty in the circumstances of the particular case.[5]
[4] Ibid at [57].
[5] Ibid at [18] and [19].
Nature and circumstances of the conduct and extent of any loss
As noted above, the compliance notice regime was introduced as a means to quickly and inexpensively resolve contraventions of the FW Act. Had the respondent complied with each of the Compliance Notices within the time frames specified, this litigation could have been avoided. I do not accept however that the respondent’s failure to comply with the Compliance Notices foreclosed the question of litigation. It remained at all times a matter for the applicant as to whether it chose to direct its resources at the prosecution of the respondent.
The applicant accepts – and this is reflected in the statement of agreed facts – that the respondent has made payments to Ms Michael and Ms Wakeham of the total amount of $2,424 and $3.439.76, respectively. At the penalty hearing, the applicant tendered two emails sent by Mr Reeves to the applicant on 13 October 2021 which recorded the payments made by the respondent to each of Ms Michael and Ms Wakeham across the period 17 June 2021 up to and including 14 October 2021.[6] In the case of Ms Michael, the respondent made weekly payments in the amount of $25 across this period (save for a period of three weeks during which no payment was made) and in the case of Ms Wakeham, the respondent made weekly payments in the amount of $30 (again, save for a period of three weeks during which no payment was made). The significance of this payment period being that it pre-dated the commencement of this litigation, although it commenced after the expiry of the date by which action was required under the Michael Compliance Notice (being 7 May 2021). The balance of the payments made to Ms Michael and Ms Wakeham were made after 19 October 2021.
[6] See Exhibit “A1”.
The applicant submits against this background and where it further submits that the respondent has never produced evidence of the calculations said to justify the payments made to each of Ms Michael and Ms Wakeham that there is no means of verifying whether all outstanding payments have been rectified (warranting a finding of “partial rectification”). It further submits that the fact that the employees were deprived of the benefit of the outstanding funds during the period across which the payments were made is a relevant loss that the Court can take into account when assessing penalty.
When invited to address this consideration, Mr Reeves told the Court that the respondent did provide “evidence of payment”. However, that is not what is in dispute. Instead, there is no evidence before the Court that the respondent did at any time provide the applicant with calculations as to how the payment figures were obtained. While this constitutes a breach of each Compliance Notice, I do note that the applicant acknowledges that it is likely that Ms Michael and Ms Wakeham ultimately received from the respondent an amount that extinguished (if not exceeded) the amount owing to them by reference to the Compliance Notices.
The applicant also submits that the Court can take into account that the respondent has not produced any evidence that the requirement to calculate and pay superannuation contributions to each of Ms Michael and Ms Wakeham has been complied with.
Mr Reeves told the Court that the superannuation debt was being paid in an amount of $2,000 per month. While he gave this evidence from the bar table, it was broadly consistent with the evidence of FWI Ma that on 17 August 2021 he had been informed that the respondent was paying superannuation pursuant to a payment plan negotiated with the Australian Taxation Office.[7]
[7] See paragraph [25(c)] of the affidavit of FWI Ma filed on 23 February 2023.
Size and financial circumstances of the respondent
The applicant acknowledged that during its investigations and after the Compliance Notices were given to the respondent, representatives of the respondent made various statements to FWI Mullan and FWI Ma that the respondent was experiencing financial difficulties. These statements included:
On 13 May 2021, Ms Judith Reeves (Ms Reeves), the accountant for the respondent, sent an email on behalf of the respondent to FWI Ma that, in part, read:[8]
Hello Kez,
Just no money currently.
I dealing with a bankruptcy notice issued by Metroll for Mathew at the moment and if we cannot get around this then sadly I think it will be shut up shop. I’m really hoping I can get this $54K debt onto a payment plan but we will see how it goes.
I wish I had better news. It has been a very stressful 6 months…
[8] See annexure “KM-3” of the affidavit of FWI Ma filed on 23 February 2023.
On 17 June 2021, Ms Reeves sent an email to FWI Mullan and FWI Ma that, in part, read:[9]
Hello Aaron & Kez,
Thank you for your email and apologies for my delayed response.
I wish I had better news. The cash flow for the company is still critical and at the risk of sounding like a broken record, the people still left on the ground are working extremely hard to improve the cash-flow…
All said, I can commence a small payment plan for Katie [Michael] and Sarah [Wakeham] ($25 & $30 respectively per week, starting today) – I know this is small but it’s a start. If I’m in a position to pay more I will do so in latter weeks. I truly wish the cash-flow was in position to make full payment, as much as I love talking to you both, I find this whole situation so very draining and exhausting.
…
[9] See annexure “KM-4” of the affidavit of FWI Ma filed on 23 February 2023.
On 25 August 2021, Ms Reeves sent an email to FWI Mullan that, in part, read:[10]
Hello Aaron,
Thanks for your email.
Ideally it would have been paid in full already, however, this just has not been possible. There was not sufficient funds this week to even pay the $25, hopefully this can be made up next week.
I will not promise you anything that I do not think can be delivered and so I can only offer the $25 per week until the cash position improves.
If this is not acceptable, then by all means take it to litigation. I expect that this will almost then push the Company into liquidation. I sincerely hope we can avoid this.
Happy to discuss further.
…
[10] See annexure “JR-9” to the affidavit of FWI Rawlings filed on 23 February 2023.
The email of 17 June 2021 was sent in response to an email sent by FWI Mullan on 10 June 2021 (copied to FWI Ma) in which FWI Mullan had sought from Ms Reeves an update on the respondent’s “intentions/capacity to pay the Compliance Notice served 1 April 2021”. The email from FWI Mullan contained an acknowledgement of the financial difficulties the company was experiencing and recorded the author’s appreciation of Ms Reeves’ “engagement and forthrightness”.[11]
[11] See annexure “KM-4” to the affidavit of FWI Ma filed on 23 February 2023.
The applicant expressed a similar sentiment in the following email sent by FWI Mullan to Ms Reeves on 25 August 2021, which read:[12]
Good morning Judy, I hope you’re well.
Thank you for the proactive payments you have made to Katie [Michael] to this point.
I acknowledge the financial distress the company is experiencing and can imagine the stress it entails, however the weekly instalments of $25 is insufficient to resolve the matter in a timely manner.
Could you please propose a payment plan detailing frequency and timeframe by Friday 27 August 2021.
Please note that I will be required to refer the Company for possible litigation if an acceptable payment plan cannot be put in place by this date.
...
[12] See annexure “JR-9” to the affidavit of FWI Rawlings filed on 23 February 2023.
The applicant – through FWI Ma – communicated a further acknowledgement that the company was “under financial hardship” in an email sent to Ms Reeves on 2 August 2021 in which it sought a response to a failure to comply with compliance notice issued on the same date.[13]
[13] See annexure “KM-11” to the affidavit of FWI Ma filed on 23 February 2023.
The applicant submitted that notwithstanding the evident financial distress that the respondent was experiencing, these financial circumstances did not exculpate the respondent’s contraventions of workplace laws and that its capacity to pay a penalty should be regarded as of less significance than the objective of general deterrence (referring to Jordan v Mornington Inn Pty Ltd [2007] FCA 1384, [99]).
The applicant also sought to emphasise the failure of the respondent to comply with the obligation to complete calculations and to provide them to the applicant which was an important step and one that did not require the payment of any money.
Corrective action, cooperation with the applicant and contrition
Under this heading, the applicant submitted that through the filing of the statement of agreed facts on 7 September 2022, the respondent had reduced the cost and complexity of this proceeding. The applicant also acknowledged that the amounts referred to at [30] above were paid to Ms Michael and Ms Wakeham in difficult financial circumstances.
The applicant submitted that these actions of the respondent justified a discount on penalty of no more than 20%.
General deterrence
Under this heading the applicant made the submission that the efficacy of statutory notices, such as compliance notices, would be hindered if recipients were to perceive that a failure to comply carried no meaningful consequences. It followed, according to the applicant, that penalties for non-compliance should be set at a level which demonstrated that there were serious consequences for failing to comply with such notices.
Specific deterrence
The applicant submitted that there was a particular need to deter the respondent from engaging in the same contravening conduct given that it remained registered. The applicant did however acknowledge that the need for deterrence was diminished by the fact that payments had been made by the respondent to Ms Michael and Ms Wakeham and there had been “broad agreement” between the applicant and the respondent regarding the amounts owed to each of these former employees.
However, also in this context, the applicant identified the failure of the respondent to produce actual calculations to it, despite such calculations having been explicitly requested on several occasions after the relevant Compliance Notice was issued, as being a matter that pointed to a need for deterrence. The applicant submitted that to the extent that financial difficulties afflicted the respondent, they did not excuse its failure to take this “non-financial” step (referring to Fair Work Ombudsman v Theill Pipelines Pty Ltd & Anor [2021] FCCA 492, [22], [59]).
When Mr Reeves was asked to address the question of deterrence I understood him, implicitly, to submit that it was not necessary in the case of the respondent as although registered, there was no intention that it continue trading. Mr Reeves told the Court that the respondent had tried to do the right thing (with respect to its workplace law obligations) but that it was not a good time for the respondent financially when the Compliance Notices were issued.
Grouping and course of conduct
This proceeding concerns two contraventions by the respondent of s 716(5) of the FW Act. The applicant emphasises the distinct character of each contravention – they required the respondent to take action specific to each employee – and submits that they should be treated as discrete contraventions for the purpose of assessing penalty.
In support of this submission the applicant notes that contraventions of s 716(5) do not engage the statutory grouping provision (s 557(1) of the FW Act) and therefore any grouping can only occur on an application of common law course of conduct principles. However, in circumstances where those principles are directed at preventing a respondent from being penalised twice for essentially the same conduct, they have no (or little) work to do where each Contravention Notice related to a different employee and imposed obligations that were “separate and distinct” (referring to Fair Work Ombudsman v Tester [2021] FCCA 771 (Tester) at [14]-[15]).
The applicant also identified the following features of the Compliance Notices as supporting its submission that this was an appropriate case for their separate recognition:
First, each employee requested assistance separately and dealt with a different Fair Work Inspector.
Second, the Compliance Notices related to overlapping (but not identical) periods of employment.
Third, the employees were both engaged under the Award (but under different classifications).
Fourth, there was overlap between the contraventions cited in each of the Compliance Notices (although there were also differences).
When invited to make submissions on the question of grouping, Mr Reeves told the Court that he considered this matter to be one where it was appropriate to treat the two contraventions as part of the same course of conduct. Mr Reeves noted that the two former employees were sisters and that he and Ms Reeves in their dealings with the applicant’s officers and representatives had made repeated requests that the two Compliance Notices be dealt with together, at least administratively. While this last representation was given from the bar table, it struck me as consistent with the evidence to which I will refer below, concerning the manner in which the respondent interacted with the applicant concerning the Compliance Notices.
Where s 557(1) of the FW Act does not apply, the Court is left with the instruction of s 546(1) to impose a pecuniary penalty that “the court considers is appropriate”. Where there are multiple contraventions, this assessment must take into account whether the factual or legal circumstances overlap to an extent that there is a risk of multiple punishments for what is essentially the same contravention. In other words, the “course of conduct” (or “one transaction”) principle must be considered.
The “course of conduct” principle has been discussed in numerous decisions of courts in the Federal jurisdiction and in the context of proceedings brought under the FW Act and its predecessor legislation. In Transport Workers’ Union of Australia v Registered Organisations’ Commissioner (No 2) (2018) 363 ALR 464 at [84]-[91], the Full Court, referring to other judgments of the Full Court, considered the application of the course of conduct principle in the assessment of pecuniary penalties and made the following observations:
(a)The purpose of the common law course of conduct principle is to ensure that, having regard to the circumstances (factual and legal), a party is not penalised more than once for the same conduct.
(b)That phrase should not simplistically be adopted to transfer multiple contraventions into one contravention, or, necessarily, to impose one penalty by reference to one maximum amount.
(c)The principle cannot, of itself, operate as a de facto limit on the penalty to be imposed.
(d)The application of the principle must be informed by the particular legislative provisions relevant to the proceedings. In particular, weight must be given to the fact that the legislature has deliberately and explicitly created separate contraventions for each relevant action.
(e)The application and utility of the principle must be tailored to the circumstances.
(f)A judge is not obliged to apply the principle if the resulting penalty fails to reflect the seriousness of contraventions.
(g)The task is to evaluate the conduct and its course and assess what penalty is, or penalties are, appropriate for the contraventions.
(h)It is necessary to examine all the conduct and enquire how its course and its explanation factually and legally informs the imposition of penalties, in order to avoid double punishment.
An application of these considerations to the circumstances of this case yields two relevant inquiries. The first is to identify the legislative framework within which the principle operates. The second is to identify the conduct and its course taken by the respondent over the relevant period, being that period coextensive with the date of issue of the Compliance Notice and the date by which compliance was required under the Compliance Notice. In practical terms this involves an identification of “what decision or actions were taken or not taken” by the respondent during this period so as to inform whether there was a course of conduct.[14]
[14] This was the approach taken by Judge Blake in the decision of Fair Work Ombudsman v Route 45 Pty Ltd [2023] FedCFamC2G 83 at [32], a decision which the applicant brought to the attention of the Court consistent with its obligations as a model litigant.
As far as the legislative framework is concerned, it is noteworthy that s 716(2) authorises the giving of a compliance notice to a person where an inspector reasonably believes that the person has contravened one or more of ten separate category of workplace law recognised or given effect by, the FW Act. The legislature has deliberately and explicitly created separate contraventions for each failure to comply with a compliance notice (s 716(5)) but has also given considerable latitude to the inspector (and by extension, the applicant) as to the coverage of any compliance notice issued to an employer. Practically speaking, the provision would authorise both the giving of a compliance notice that concerned the workplace entitlements of ten employees and across a range of workplace laws or instruments and a compliance notice (like the ones given in this case) that concerned a single employee.[15]
[15] By way of example, in the decision of Tester referred to in the applicant’s submissions, the applicant had issued two compliance notices. The first concerned the entitlements of two employees and the second concerned the entitlements of four employees.
The applicant has identified the fact that each employee requested its assistance separately and each then dealt with a different Fair Work Inspector as being a matter that supports a conclusion that the two contraventions of the Compliance Notices should maintain their separate character for the purpose of assessing penalties. However, I consider there is need for circumspection in accepting this submission. To the extent that the course of conduct principle seeks to prevent arbitrary and/or disproportionate punishment, the fact that the workplace regulator received separate requests for assistance and made a procedural decision to then assign different Fair Work Inspectors to their investigation is not a matter that bears rationally on this assessment. These anterior steps that were taken before the giving of the Compliance Notice have no capacity to inform an evaluation of the relevant conduct of the respondent and the ultimate question of what penalty is appropriate for the contraventions.
A picture of the respondent’s conduct emerges from the applicant’s affidavit material and the limited submissions made by Mr Reeves at the penalty hearing. It is clear that despite efforts made by the applicant to maintain the independence of its two investigations, the respondent was at pains to deal with the two employees together and its response and explanation as to why it had not been able to make the required payments uniformly reflected the difficult financial and trading circumstances the respondent was experiencing across much of 2021 which inhibited its capacity to pay both staff and customers.
Indicative of this approach, the respondent (primarily through Ms Reeves) referred to both former employees in communications with representatives of the applicant – for example in her email to FWI Mullan sent on 22 May 2021, Ms Reeves noted that she had “copied Kez [FWI Ma] into this email because we are also dealing with him on Katie’s sister Sarah”. In this same email, Ms Reeves foreshadowed the respondent being in a position to commence a payment plan for Katie [Michael]. As events transpired, a payment plan was negotiated between the respondent and the applicant that comprehended payments on a weekly basis to both former employees. The payments were made at the same intervals and across the same period, albeit for slightly different amounts ($25 and $30).
Having regard to these circumstances – especially the uniformity of the financial situation that pertained at or around the time of the contraventions and the action and responses taken by the respondent - and the fact that the two Contravention Notices were issued within a relatively short time of one another, operated in respect of individuals (siblings) whose employment was covered by the Award and which spanned a relatively brief and overlapping period of time I consider that in substance the two contraventions should be conceptualised as emanations of the “one transaction”.
Put a different way, I consider that there was a significant interrelationship between the legal and factual elements of the two contraventions which justifies them being grouped together for the purpose of assessing penalty. In saying this I acknowledge that the precise steps (and concomitant failures) required under each Compliance Notice were different (reflecting the precise circumstances of the two former employees). However, the substance of the contraventions (as reflected in the declarations sought by agreement of the parties) were identical; a breach of s 716(5) of the FW Act constituted by a failure to comply with a compliance notice.
CONSIDERATION
Any pecuniary penalty levied against the respondent must be directed at achieving the object of deterrence. There is always work for general deterrence in cases such as this which involve a failure to comply with a compliance notice. Observations about the importance of the compliance notice as a means of diverting resources away from the Court system are trite but true. Any penalty should be pitched at such a level that gives pause to other employers who might be pre-disposed to ignore a notice given under s 716(2) of the FW Act.
There is a lesser imperative in this case for specific deterrence. The conduct of the respondent – reflected in its interactions with the applicant prior to and during litigation – was generally cooperative and responsive. The failure of the respondent to comply with the financial aspect of the Compliance Notices is explained by its difficult financial circumstances. The respondent pro-actively negotiated a payment plan for the payment of outstanding entitlements and paid the balance (or an amount closely approximating the balance) by the time that the statement of agreed facts was settled in September 2022. While the respondent did not file material on the question of penalty, it did, through its director Mr Reeves, participate in the Court hearing and made submissions that communicated an acknowledgement of wrongdoing.
The applicant did not challenge Mr Reeve’s assertion that the respondent was no longer trading but identified as a matter of some significance (on the question of deterrence) the fact that the respondent remained registered. However, I am not persuaded that this is a compelling consideration in circumstances where the human actor behind the respondent (Mr Reeves) has demonstrated that he takes the question of compliance seriously and has no doubt learnt a salutary lesson from his protracted dealings with the workplace regulator.
In fixing an appropriate penalty, I acknowledge and take account of the financial loss to Ms Michael and Ms Wakeham and to the emotional toll (reflected in Ms Wakeham’s communications to the applicant reproduced in the affidavit material) of having to pursue their lawful entitlements.[16]
[16] See Annexures “KM-5” and “KM-14” of the affidavit of FWI Ma filed on 23 February 2023.
I consider that in this case and notwithstanding the lack of evidence from the respondent as to its current financial situation, the penalties sought by the applicant involve substantial overreach. I consider that a single penalty in the amount of $8,750 is an appropriate and proportionate response in all of the circumstances.
I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Symons. Associate:
Dated: 2 May 2023
ANNEXURE A
STATEMENT OF AGREED FACTS
This Statement of Agreed Facts is made by the Parties in these proceedings for the purposes of s 191 of the Evidence Act 1995 (Cth).
A ADMITTED CONTRAVENTIONS
1.On the basis of the agreed facts set out below, the Respondent admits to contravening s 716(5) of the Fair Work Act 2009 (Cth) (FW Act), by failing to comply with:
(a)a compliance notice given to the Respondent by Fair Work Inspector Aaron Mullan (FWI Mullan) pursuant to s 716(2) of the FW Act on 1 April 2021; and
(b)a compliance notice given to the Respondent by Fair Work Inspector Kez Ma (FWI Ma) pursuant to s 716(2) of the FW Act on 20 April 2021
(collectively, the Contraventions).
B PARTIES
The Applicant
2.The Applicant, the Fair Work Ombudsman, is and was at all relevant times:
(a)a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to s 687(1) of the FW Act;
(b)a Fair Work Inspector (FWI) pursuant to s 701 of the FW Act; and
(c)a person with standing to bring these proceedings and to apply for orders for contraventions of civil remedy provisions pursuant to s 539(2) of the FW Act.
3.FWI Mullan and FWI Ma are and were at all relevant times FWIs appointed by the Applicant under s 700 of the FW Act.
The Respondent
4.The Respondent, Ted's Roofing & Plumbing QLD Pty Ltd (ACN 631 848 756) (Ted's Roofing), is and was at all relevant times:
(a)a company incorporated under the Corporations Act 2001 (Cth) and registered since 22 February 2019;
(b)a “constitutional corporation” within the meaning of s 12 of the FW Act;
(c)a “national system employer” within the meaning of s 14 of the FW Act; and
(d)by reason of the matters agreed in paragraphs 4(b) and 4(c) above, covered by the FW Act in respect of its employees.
5.Teds Roofing was, at all relevant times, the operator of a roofing and plumbing business with a principal place of business of 7 Cindy Court, Alice River, in the State of Queensland (Business).
C ADMITTED FAILURE TO COMPLY WITH COMPLIANCE NOTICES IN CONTRAVENTION OF SECTION 716(5) OF THE FW ACT
The First Investigation
6.In or around February 2021, FWI Mullan commenced an investigation into Ted's Roofing in respect of Ms Katie Michael, a former employee of Ted's Roofing (First Investigation).
7.As a result of the First Investigation, FWI Mullan formed a reasonable belief that, at all relevant times between 1 October 2020 and 21 January 2021 (Michael Contravention Period):
(a)Ms Michael was employed to work at the Business;
(b)the Clerks – Private Sector Award 2020 (Award), a modern award under the FW Act, covered and applied to Ms Michael; and
(c)Ms Michael was not paid the minimum wage in the Award.
8.By reason of the matters admitted in paragraph 7 above, FWI Mullan formed a reasonable belief within the meaning of s 716(1)(b) of the FW Act that, during the Michael Contravention Period, Ted's Roofing contravened clause 16 of the Award – minimum wages (Michael Contraventions).
The Michael Compliance Notice
9.On 1 April 2021, FWI Mullan gave Ted's Roofing a compliance notice in respect of the Michael Contraventions pursuant to s 716(2) of the FW Act (Michael Compliance Notice) by:
(a)posting a copy to Ted's Roofing's registered office at Shop 9, 13 Nexus Way, Gisborne, in the State of Victoria; and
(b)emailing a copy to Ms Judith Reeves, accountant for Ted's Roofing, at [email protected].
10.Pursuant to s 716(2) of the FW Act, the Compliance Notice required Ted's Roofing to:
(a)take the following actions to remedy the direct effects of the Michael Contraventions by 7 May 2021 (Michael Specified Action):
(i)identify the hours worked by Ms Michael during the Michael Contravention Period;
(ii)identify the amount that Ted's Roofing should have paid to Ms Michael in respect of the minimum wage during the Michael Contravention Period (Michael Entitlements);
(iii)calculate the amounts that had been paid to Ms Michael in respect of the Michael Entitlements during the Michael Contravention Period;
(iv)make payment to Ms Michael of the difference between the amounts referred to in paragraph 10(a)(ii) and the amount of the payment referred to in paragraph 10(a)(iii);
(v)make a record of the information and amounts referred to in paragraphs 10(a)(i) to (iii) above (Michael Rectification Information);
(vi)calculate and pay any additional superannuation contributions required by clause 20.2 of the Award in respect of the amounts owed to Ms Michael during the Michael Contravention Period;
(b)produce reasonable evidence to the Applicant of compliance with the Michael Compliance Notice by 13 May 2021, by producing:
(i)the Michael Rectification Information; and
(ii)evidence that full payment was made to Ms Michael as described in paragraphs 10(a)(iv) and 10(a)(vi) above.
11.The Michael Compliance Notice met the requirements of s 716(3) of the FW Act.
Failure to comply with the Michael Compliance Notice
12.Ted's Roofing failed to take the Michael Specified Action set out in the Michael Compliance Notice by 7 May 2021, and failed to produce evidence of compliance with the Michael Compliance Notice by 13 May 2021.
13.By reason of the matters agreed in paragraph 12 above, Ted's Roofing failed to comply with the Michael Compliance Notice.
14.The Respondent did not apply for a review of the Michael Compliance Notice pursuant to section 717 of the FW Act.
15.By reason of the matters agreed in paragraphs 12 to 13, Ted's Roofing contravened s 716(5) of the FW Act.
The Second Investigation
16.In or around February 2021, FWI Ma commenced an investigation into Ted's Roofing in respect of Ms Sarah Wakeham, a former employee of Ted's Roofing (Second Investigation).
17.As a result of the Second Investigation, FWI Ma formed a reasonable belief that, at all relevant times between 7 January 2021 and 2 February 2021 (Wakeham Contravention Period):
(a)Ms Wakeham was employed to work at the Business;
(b)the Award covered and applied to Ms Wakeham;
(c)Ms Wakeham's employment with Ted's Roofing was terminated on 26 January 2021;
(d)Ms Wakeham was not paid the minimum wage in the Award; and
(e)on termination of Ms Wakeham's employment, Ted's Roofing failed to make payment in lieu of notice of termination.
18.By reason of the matters admitted in paragraph 17 above, FWI Ma formed a reasonable belief within the meaning of s 716(1)(b) of the FW Act that, during the Wakeham Contravention Period, Ted's Roofing contravened the following provisions of the Award and the National Employment Standards (Wakeham Contraventions):
(a)clause 16 of the Award – minimum wages;
(b)section 117(2)(b) of the FW Act – payment in lieu of notice of termination.
The Wakeham Compliance Notice
19.On 20 April 2021, FWI Ma gave Ted's Roofing a compliance notice in respect of the Wakeham Contraventions pursuant to s 716(2) of the FW Act (Wakeham Compliance Notice) by:
(a)posting a copy to Ted's Roofing's registered office at Shop 9, 13 Nexus Way, Gisborne, in the State of Victoria; and
(b)emailing a copy to Ms Judith Reeves, accountant for Ted's Roofing, at [email protected].
20.Pursuant to s 716(2) of the FW Act, the Compliance Notice required Ted's Roofing to:
(a)take the following actions to remedy the direct effects of the Wakeham Contraventions by 23 July 2021 (Wakeham Specified Action):
(i)identify the hours worked by Ms Wakeham during the Wakeham Contravention Period;
(ii)identify the amount that Ted's Roofing should have paid to Ms Wakeham in respect of the minimum wage and payment in lieu of notice of termination during the Wakeham Contravention Period (Wakeham Entitlements);
(iii)calculate the amounts that had been paid to Ms Wakeham in respect of the Wakeham Entitlements during the Wakeham Contravention Period;
(iv)make payment to Ms Wakeham of the difference between the amounts referred to in paragraph 20(a)(ii) and the amount of the payment referred to in paragraph 20(a)(iii);
(v)make a record of the information and amounts referred to in paragraphs 20(a)(i) to 20(a)(iii) above (Wakeham Rectification Information);
(vi)calculate and pay any additional superannuation contributions required by clause 20.2 of the Award in respect of the amounts owed to Ms Wakeham during the Wakeham Contravention Period;
(b)produce reasonable evidence to the Applicant of compliance with the Wakeham Compliance Notice by 30 July 2021, by producing:
(i)the Wakeham Rectification Information; and
(ii)evidence that full payment was made to Ms Wakeham as described in paragraphs 20(a)(iv) and 20(a)(vi) above.
21.The Wakeham Compliance Notice met the requirements of s 716(3) of the FW Act.
Failure to comply with the Wakeham Compliance Notice
22.Ted's Roofing failed, without reasonable excuse, to:
(a)take the Wakeham Specified Action set out in the Wakeham Compliance Notice by 23 July 2021; and
(b)produce evidence of it taking the Wakeham Specified Action by 30 July 2021.
23.By reason of the matters admitted in paragraph 22 above, Ted's Roofing failed to comply with the Wakeham Compliance Notice.
24.The Respondent did not apply for a review of the Wakeham Compliance Notice pursuant to section 717 of the FW Act.
25.By reason of the matters admitted in paragraphs 22 to 23 above, Ted's Roofing contravened s 716(5) of the FW Act.
D PARTIAL RECTIFICATION
26.Ted's Roofing caused amounts to be paid to Ms Michael and Ms Wakeham in response to the Compliance Notice as follows:
(a)$2,424.00 to Ms Michael;
(b)$3,439.76 to Ms Wakeham.
27.The Respondent paid a small proportion of the amounts referred to in paragraph 26 (above) to Ms Michael and Ms Wakeham before the commencement of this proceeding as filed on 19 October 2021. The Respondent's payments to Ms Wakeham referred to in paragraph 26(b) (above) included seven payments of $30 that were made before 30 July 2021, which was the deadline for providing the Wakeham Rectification Information under the Wakeham Compliance Notice.
E RELIEF SOUGHT
Declarations
1.By consent, the Parties seek a declaration that Ted's Roofing contravened s 716(5) of the FW Act, by failing to comply with the Michael Compliance Notice and the Wakeham Compliance Notice.
Orders
2.By consent, the Parties seek orders that:
(a)pursuant to s 545(1) of the FW Act, Ted's Roofing take the steps that were required by the Michael Compliance Notice and Wakeham Compliance Notice within 28 days from the date of this order, by:
(i)calculating and paying to Ms Michael any outstanding Michael Entitlements and superannuation in accordance with the Michael Compliance Notice;
(ii)calculating and paying to Ms Wakeham any outstanding Wakeham Entitlements and superannuation in accordance with the Wakeham Compliance Notice;
(iii)preparing and producing to the Applicant a schedule outlining its calculations of the Michael Entitlements and superannuation required to be paid to Ms Michael, and the Wakeham Entitlements and superannuation required to be paid to Ms Wakeham, and providing proof that all necessary payments have been made in accordance with the Michael Compliance Notice and the Wakeham Compliance Notice;
(b)pursuant to s 547(2) of the FW Act, Ted's Roofing pay to Ms Michael and Ms Wakeham interest on the amounts owed to them pursuant to paragraphs 29(a)(i) and 29(a)(ii) above within 28 days of the date of this order;
(c)pursuant to s 546(1) of the FW Act, Ted's Roofing pay a pecuniary penalty to the Commonwealth for the contraventions declared at paragraph 28 above, within 28 days of the date of this order;
(d)the Applicant have liberty to apply on 7 days’ notice in the event that any of the preceding orders are not complied with; and
(e)such further orders as the Court considers appropriate.
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