Fair Work Ombudsman v Tester
[2021] FCCA 771
•16 April 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Fair Work Ombudsman v Tester [2021] FCCA 771
File number(s): BRG 533 of 2020 Judgment of: JUDGE JARRETT Date of judgment: 16 April 2021 Catchwords: INDUSTRIAL LAW – Commonwealth – compliance and enforcement – civil remedies – pecuniary penalty orders – amount of penalty – failure to comply with compliance notice. Legislation: Fair Work Act 2009 (Cth) ss 539(2) 546, 557(1), 557(2), 716(2), 716(3), 716(4A), 716(4B), 716(5), 717 Cases cited: Australian Building and Construction Commissioner v CFMMEU [2020] FCA 549
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
CFMMEU v ABCC (2018) 264 FCR 155
Commonwealth of Australia v Director of the FWBII (2015) 258 CLR 482
Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Number of paragraphs: 37 Date of last submission/s: 25 January 2021 Date of hearing: By written submission Place: Brisbane Solicitor for the Applicant: Office of the Fair Work Ombudsman The Respondent: Self-represented ORDERS
BRG 533 of 2020 BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: AMELIA ANN TESTER
Respondent
ORDER MADE BY:
JUDGE JARRETT
DATE OF ORDER:
16 APRIL 2021
THE COURT DECLARES THAT:
1.The respondent contravened s.716(5) of the Fair Work Act 2009 (Cth) by:
(a)failing to comply with a notice issued to her by the applicant pursuant to s.716(2) of the Fair Work Act 2009 (Cth); and
(b)failing to comply with a second notice issued to her by the applicant pursuant to s.716(2) of the Fair Work Act 2009 (Cth).
THE COURT ORDERS THAT:
2.Pursuant to s.546 of the Fair Work Act 2009 (Cth) the respondent pay a single pecuniary penalty in respect of both contraventions the subject of declarations 1(a) and 1(b) hereof in the sum of $5,250.
3.The penalty the subject of order 2 hereof be paid to the Commonwealth.
REASONS FOR JUDGMENT
JUDGE JARRETT:
By this application the Fair Work Ombudsman seeks the imposition of pecuniary penalties on the respondent for contraventions of s.716(5) of the Fair Work Act 2009 (Cth). The respondent failed to comply with two compliance notices given to her pursuant to s.716(2) of the Act on or about 24 April, 2020.
The respondent admits the contraventions and the parties have filed a statement of agreed facts on 25 January, 2021 setting out their agreement about those facts. The facts are also set out in the statement of claim filed by the applicant on 20 November, 2020 (to which there has been no response) and an affidavit of Phillip Walsh, Fair Work Inspector, filed on 27 November, 2020.
In or around December, 2019 the applicant commenced an investigation into the respondent’s payments to six of her employees over the period from 12 August, 2019 to 2 February, 2020.
A Ms Tilling, one of the respondent’s former employees, alleged that she was not paid the minimum wages due to her as a casual employee and that she was not paid weekend penalty rates. She complained to the applicant. Her complaint initiated the applicant’s investigation.
At the time the investigation commenced, the respondent was operating a café, bed and breakfast accommodation facility and a lavender product wholesale and retail business as a sole trader.
Based on information obtained during the course of the investigation, the Fair Work Inspector undertaking the investigation formed the belief that the respondent breached two awards, namely the Hospitality Industry (General) Award 2010 with regard to two employees: Mr King and Ms Tilling; and the Storage Services and Wholesale Award 2010 with regard to four employees: Ms McDonald, Ms Cooper, Ms Donnelly and Ms Ward.
On 24 April, 2020 the Fair Work Inspector gave two compliance notices to the respondent pursuant to s.716(2) of the Act. Such a notice may require the recipient of the notice to do either or both of the following within such reasonable time as is specified in the notice:
(a)take specified action to remedy the direct effects of the contravention specified in the notice; and/or
(b)produce reasonable evidence of the person’s compliance with the notice.
Both notices met the requirements of s.716(3) of the Act.
The notices required the respondent to take action to remedy the direct effects of each of the contraventions identified by the Fair Work Inspector and in relation to each employee the subject of one or other of the notices, to:
(a)identify the number of hours that employee worked during the relevant employment period in respect of which the entitlement under the relevant award was required to be paid;
(b)identify the amount the respondent paid to the employee during the relevant employment period;
(c)calculate the amount that the respondent should have paid to the employee during the relevant employment period;
(d)make a payment to the employee of the difference between the amount paid and the amount that ought to have been paid;
(e)calculate additional superannuation contributions required under the relevant award in respect of the amount required to be paid to the employee; and
(f)if the employee is owed additional superannuation contributions, pay such additional superannuation contributions to the chosen superannuation fund of the employee.
The notices also required the respondent to produce reasonable evidence of the steps taken to comply with the notice by providing in relation to each employee, and in respect of each contravention that concerns each employee, a schedule that set out any rectification payment information, including calculations and payments in respect of superannuation entitlements.
The respondent failed to comply with the requirements of each notice. On her own admission, she did not have a reasonable excuse for failing to comply with the compliance notices. She did not apply to have the notices reviewed by an eligible court as she might have done pursuant to s.717 of the Fair Work Act.
Ultimately, the respondent did take the action specified in the compliance notices but not before the filing of this proceeding. Following the filing of this proceeding the respondent took the steps required by the compliance notices and did so between 14 August, 2020 and 28 October, 2020. She calculated and paid to her former employees the outstanding entitlements that were due to them.
CONSIDERATION
The facts demonstrate that the respondent has committed two contraventions of s.716(5) of the Fair Work Act. Contraventions of s.716(5) do not attract the operation of the course of conduct provisions provided for in s.557(1) of the Act because s.716(5) is not a civil remedy provision specified in s.557(2) of the Act.
Notwithstanding that, the Court has a discretion to group separate contraventions together where the contraventions may be said to overlap with each other or involve the potential double punishment of a respondent for the same or substantially similar conduct. The onus to demonstrate such overlap or commonality of factual substratum is on the respondent and there is no evidence before the Court that the respondent’s failure to comply with the two notices arose from the one transaction or decision such that they should be grouped together.
Moreover, each of the notices related to different employees engaged under different awards and identified different contraventions. Each notice required the respondent to take action specific to the employees and contraventions identified in that notice. I accept that for that reason, the obligations imposed by each notice were wholly separate and distinct. I am satisfied that the respondent’s decisions not to comply with each notice did not constitute a single transaction.
As the submissions for the applicant point out, the power of a Fair Work Inspector to issue a compliance notice was introduced into the Fair Work Act to provide a mechanism for dealing with non-compliance with minimum entitlements in the Fair Work Act, as an alternative to commencing litigation for each underlying contravention. Failure to comply with a compliance notice is a contravention of a civil remedy provision of the fair Work Act: ss.716(5) and 539(2) of the Fair Work Act. The Court may impose penalties if it is satisfied that a person has contravened a civil remedy provision: s.546 of the Fair Work Act. The compliance notice procedure provides a mechanism for the efficient and cost-effective rectification of identified contraventions of the Fair Work Act, including underpayments to employees.
If the respondent had complied with the compliance notices in this case:
(a)the applicant would have been prevented from bringing these proceedings against it in respect of the underlying contraventions by reason of s.716(4A) of the Fair Work Act; and
(b)she would not be taken to have admitted or contravened the civil remedy provisions in respect of the underlying contraventions by reason of s.716(4B) of the Fair Work Act.
Deterrence, both specific and general, is the “principal and indeed only” objective of pecuniary penalties under the Fair Work Act: Commonwealth of Australia v Director of the FWBII (2015) 258 CLR 482 at 506 [55]; CFMMEU v ABCC (2018) 264 FCR 155 at 167 [19]; Australian Building and Construction Commissioner v CFMMEU [2020] FCA 549 at [26]. Retribution, denunciation and rehabilitation have no part to play.
The penalty in this case must be set at a level such that it would be likely to act as a deterrent in preventing similar contraventions by like-minded persons. It must have the necessary “sting or burden” to secure “the specific and general deterrent effects that are the raison d’être of its imposition”: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at [116].
The maximum penalty that the Court may impose on an individual for a contravention of s.716(5) of the Fair Work Act is $6,300.
The compliance notices were given to the respondent at her principal place of business. She was aware of the compliance notices and the obligation to comply with them, including that failure to comply may lead to the applicant commencing proceedings seeking civil penalties and orders for compliance.
The respondent in this case engaged with the applicant during her investigation. However, despite being given ample time and multiple opportunities by the applicant to comply with the notices and avoid litigation, the respondent failed to comply by the required date in each notice. These proceedings are the result of the respondents’ failure to engage with the notices and what they required.
I can come to no other conclusion than that the respondents’ failure to comply with the compliance notice was deliberate. I accept the applicant’s submission that the respondent’s conduct in failing to comply with the compliance notices demonstrates a deliberate disregard for her obligations under the Fair Work Act and the authority of the applicant as a regulator of Commonwealth workplace laws. It demonstrates a certain level of contempt for the laws put in place to safeguard the entitlements of employees.
The respondent failed to pay the amounts to her employees for at least six months (for one employee), and up to eleven months (for another employee). Five of these months were as a result of the failure to comply with the compliance notice. The loss sustained by the employees was rectified after the commencement and active pursuit of these proceedings by the applicant.
The respondent has engaged in these proceedings, though she failed to comply with the orders made 3 November, 2020. Nonetheless, she has accepted responsibility for her actions by the agreement represented by the agreed statement of facts. She has admitted her offending conduct. She has participated in these proceedings and facilitated their expeditious disposal.
It is appropriate to take that into account and give the respondent credit for the payments made to her employees. The applicant submits however, that I should infer from the conduct of the respondent that the respondent would not have made the payments to the employees to partially rectify the non-compliance with the compliance notice without the commencement of these proceedings. I think it proper to draw that inference and I draw it.
I accept the submission by the applicant that the respondent’s failure to comply with the compliance notices represents an undermining of the Fair Work Act’s enforcement framework and the safety net of entitlements it is designed to protect. It reflects a preference of the respondent’s own interests over the minimum entitlements due to her employees under the identified awards.
As has been said many times now, the failure to comply with a compliance notice properly issued by the applicant pursuant to s.716(2) of the Act is serious. The efficacy of such notices will be eroded or negated if recipients perceive that a failure to comply carries no meaningful consequences.
Given the importance of a Fair Work Inspector’s power to issue compliance notices and that compliance with such notices avoids the need for litigation or the imposition of any penalties, I accept, as I have done in the past, that penalties for non-compliance should be set at a level which demonstrates that there are serious consequences for failing to comply with a compliance notice. Deterrence of others from refusing or failing to comply with compliance notices is singularly important. A penalty must be set such that it is not seen by others as just the cost of doing business. It must be likely to act as a deterrent in preventing similar contraventions by like-minded persons or organisations.
The failure of the respondent to comply with the notices for approximately five (5) months left the employees without the benefit of legal action for that period. They were left without the benefit of those funds for at least that period. The respondent demonstrated a disregard for the obligations of an employer under Commonwealth workplace laws.
That said, the respondent cooperated in the course of these proceedings through her full admissions. This saved the Court and the parties a great deal of time and resources that may be expended due to a contested hearing.
The respondent has placed no evidence before the court as to her financial capacity. Nor is there any evidence that suggests that the applicant has been found to have contravened the Fair Work Act in the past. I have approached the application on the basis that this is the first time the respondent has been found to have contravened the Fair Work Act.
CONCLUSION
The failure to comply with a statutory notice is serious and in this case it required the applicant to commence proceedings in circumstances where litigation could have easily been avoided. I can only conclude that the failure to comply was a deliberate choice.
The positive things that might be said for the respondent are that the employees have now been paid and that the respondent consents to the making of the pecuniary penalty orders among other orders.
A penalty needs to reflect the seriousness of the respondent’s conduct and it needs to send a message to the respondent in this case to other like-minded organisations and individuals that ignoring the obligations cast upon employers and those that control them by the Fair Work Act will not be tolerated.
A total penalty of $5,250 for the respondent is appropriate in this case. There is no evidence that such a penalty would be crushing or oppressive for the respondent. It reflects the objective seriousness of the deliberate conduct engaged by the respondent. It also reflects the efforts that the respondent made and that she consents to the making of the orders sought by the applicant.
There will be orders as set out at the commencement of these reasons.
I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jarrett delivered on 16 April, 2021. Associate:
Dated: 16 April 2021
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