Fair Work Ombudsman v Tester

Case [2021] FCCA 771

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:

  1. 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.

  2. 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. 

  3. 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. 

  4. 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…

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Fair Work Ombudsman v Tester [2021] FCCA 771
Case
[2021] FCCA 771
Decision Date

CaseChat Overview and Summary

The Fair Work Ombudsman (the applicant) commenced proceedings against Ms Tester (the respondent) in the Federal Court of Australia. The dispute concerned Ms Tester's failure to comply with two compliance notices issued by a Fair Work Inspector, which required her to calculate and pay outstanding entitlements to former employees. Although Ms Tester eventually complied with the notices after the proceedings were filed, the applicant sought pecuniary penalties for the contraventions.

The court was required to determine whether Ms Tester had contravened section 716(5) of the *Fair Work Act 2009* (Cth) by failing to comply with the two compliance notices. A further issue was whether the two contraventions should be grouped together under section 557(1) of the Act, thereby potentially limiting the penalties that could be imposed. The court also had to consider the appropriate penalty for the contraventions, having regard to the objectives of pecuniary penalties under the Act.

Jarrett J found that Ms Tester had committed two contraventions of section 716(5) of the Act. The court reasoned that contraventions of section 716(5) are not subject to the course of conduct provisions in section 557(1) because section 716(5) is not a civil remedy provision specified in section 557(2). While the court has a discretion to group contraventions if they overlap or involve potential double punishment, the onus was on the respondent to demonstrate this. The court found no evidence that the failure to comply with the two notices arose from a single transaction or decision, noting that each notice related to different employees, different awards, and identified different contraventions, making the obligations distinct. The court emphasised that failure to comply with a compliance notice is a contravention of a civil remedy provision, and the primary objective of pecuniary penalties under the Act is deterrence.

The court ordered Ms Tester to pay a total penalty of $5,250. This penalty was considered appropriate given the serious and deliberate nature of her conduct in failing to comply with the statutory notices, which necessitated court proceedings that could have been avoided. The penalty also reflected the fact that the employees had now been paid and that Ms Tester consented to the making of the orders. The court noted the absence of evidence regarding Ms Tester's financial capacity or any prior contraventions of the Act.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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.

Ratio Decidendi

Legal Principle Established

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.