Fair Work Ombudsman v The Pagoda Tree (Vic) Pty Ltd

[2022] FedCFamC2G 182

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v The Pagoda Tree (Vic) Pty Ltd [2022] FedCFamC2G 182

File number(s):

MLG 4021 of 2020

Judgment of:

JUDGE MCNAB

Date of judgment:

18 March 2022 

Catchwords:

INDUSTRIAL LAW – FAIR WORK – failure to pay minimum award rates and casual loading – failure to provide documents – failure to pay parental leave payments – importance of maintaining the proper operation of a funded system of payments.  

Legislation:

Evidence Act 1995 (Cth) s 191(2).

Fair Work Act 2009 (Cth) ss 13, 44(1), 45, 90(2), 535(1), 546(1), 550(2)(c), 557.

Health Professionals and Support Services Award 2010 cls 10.3(d), 10.4(b), 26.1, 26.2, 28.1(d).

Paid Parental Leave Act 2010 (Cth) ss 3A, 72(1), 72(2), 80.

Regulatory Powers (Standard Provisions) Act 2014 (Cth) ss 82, 85(1), 92.

Cases cited:

Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560

Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482

Fair Work Ombudsman v Grouped Property Services Pty L TD (No 2) [2017] FCA 557

Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301

Fair Work Ombudsman v The Meatball and Wine Bar Pty Ltd [2018] FCCA 2288

Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14

Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7

Division:

Division 2 General Federal Law

Number of paragraphs:

65

Date of last submission/s:

16 November 2021

Date of hearing:

17 November 2021

Place:

Melbourne

Counsel for the Applicant:

Ms C Dowsett

Solicitor for the Applicant:

Office of the Fair Work Ombudsman

Counsel for the Respondents:

Mr J Tierney

Solicitor for the Respondents:

PCL Lawyers

Table of Corrections
March 30 2022	In the Media Neutral Citation (MNC) and Order 1, the word “(Vic)” has been inserted in between the words “Tree” and “Pty”.
March 30 2022	In Order 2(b) and Paragraph 1, the words “Regulatory Powers (Standardisation Reform) Act 2021 (Cth)” have been replaced with “Regulatory Powers (Standard Provisions) Act 2014 (Cth)”.

ORDERS

MLG 4021 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

FAIR WORK OMBUDSMAN

Applicant

AND:

THE PAGODA TREE (VIC) PTY LTD

First Respondent

NATALIE JADE KRINGOUDIS

Second Respondent

ORDER MADE BY:	JUDGE MCNAB
DATE OF ORDER:	18 MARCH 2022

Amended pursuant to rule 17.05(2)(h) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 on 30 March 2022.

THE COURT DECLARES THAT:

1.The Pagoda Tree (Vic) Pty Ltd (“First Respondent”) contravened the following civil remedy provisions:

(a)section 45 of the Fair Work Act 2009 (Cth) (“the FW Act”) in the Casual Employment Period from 12 January 2016 to 19 February 2017, by failing to pay:

(i)casual loading to Ms H pursuant to clause 10.4(b) of the Health Professionals and Support Services Award 2010 (“the Award”);

(ii)casual Saturday loading to Ms H pursuant to clause 26.2 of the Award;

(b)section 45 of the FW Act in the Part-Time Employment Period from 20 February 2017 to 17 August 2018, by failing to:

(i)pay part-time Saturday loading to Ms H pursuant to clause 26.1 of the Award;

(ii)enter into written part-time agreements with Ms H pursuant to clause 10.3(b) of the Award;

(c)section 44(1) of the FW Act by failing to pay annual leave and annual leave loading to Ms H on termination as required by section 90(2) of the FW Act;

(d)section 535(1) of the FW Act by failing to make and keep records in relation to Ms H’s employment of the kind prescribed by the FW Regulations in relation to the loadings and penalty rates that Ms H was entitled to be paid during the Casual Employment Period and the Part-Time Employment Period;

(e)section 72(2) of the Paid Parental Leave Act 2010 (Cth) (“the PPL Act”) by failing to pay Ms H $3,309.01 for Parental Leave Pay (“PLP”) on 12 December 2018;

(f)section 72(1) of the PPL Act by failing to pay Ms H PLP instalments in whole or in part and on time on twelve occasions; and

(g)section 80 of the PPL Act by failing to provide Ms H any or all of the information prescribed by the Rules on thirteen occasions.

2.Ms Kringoudis (“Second Respondent”) was involved in the contraventions of the following civil remedy provisions:

(a)within the meaning of section 550(2)(c) of the the FW Act, in the contraventions of the First Respondent set out in paragraphs 1(a) to (d) above; and

(b)within the meaning of section 92 of the Regulatory Powers (Standardisation Reform) Act 2021 (Cth) Regulatory Powers (Standard Provisions) Act 2014 (Cth) (“the Regulatory Powers Act”), in the contraventions of the First Respondent set out in paragraphs 1(e) to (g) above.

THE COURT ORDERS THAT:

3.In respect of the contraventions of the FW Act:

(a)the First Respondent pay penalties in the amount of $25,515 pursuant to section 546(1) of the FW Act for the contraventions as declared at paragraph 1(a) to (d) above;

(b)the Second Respondent pay penalties in the amount of $5,103 pursuant to section 546(1) of the FW Act for her involvement in the First Respondent’s contraventions as declared at paragraph 1(a) to (d) above; and

(c)pursuant to section 546(3) of the FW Act that all penalties imposed on each of the Respondents be paid to the Consolidated Revenue Fund of the Commonwealth within 28 days of the date of these orders.

4.In respect of the contraventions of the PPL Act:

(a)the First Respondent pay penalties in the amount of $33,075 pursuant to section 82(3) of the Regulatory Powers Act for the contraventions as declared at paragraph 1(e) to (g) above;

(b)the Second Respondent pay penalties in the amount of $5,859 pursuant to section 82(3) of the Regulatory Powers Act for her involvement in the First Respondent’s contraventions as declared at paragraph 1(e) to (g) above; and

(c)pursuant to section 82(3) of the FW Act that all penalties imposed on each of the Respondents be paid to the Consolidated Revenue Fund of the Commonwealth within 28 days of the date of these orders.

5.The Applicant Fair Work Ombudsman have liberty to apply on seven (7) days’ notice if any of 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

Judge McNab

INTRODUCTION

1. This matter involves an admitted contravention by The Pagoda Tree (Vic) Pty Ltd (“the First Respondent”), pursuant to sections 44(1), 45, 90(2) and 535(1) of the Fair Work Act 2009 (Cth) (“the FW Act”), and sections 72(1), 72(2) and 80 of the Paid Parental Leave Act 2010 (Cth) (“the PPL Act”). Ms Kringoudis (“the Second Respondent”), the company’s sole director and shareholder, has admitted to her involvement in the contravention with the meaning of section 550(2)(c) of the FW Act, and section 92 of the Regulatory Powers (Standard Provisions) Act 2014 (Cth) (“the Regulatory Powers Act”).

2. The Applicant Fair Work Ombudsman (“FWO”) is seeking a declaration as to that contravention and the imposition of a pecuniary penalty against the Respondents pursuant to section 546(1) of the FW Act.

3. The First Respondent is a Chinese Medical Practice that specialises in treating Women’s health issues including importantly for this case fertility and Women’s health during pregnancy. The principal breaches that the penalties imposed are directed at is the failure to pay government funded maternity benefits to an employee.

4. The issue to be determined is the quantum of the penalty to be imposed on the Respondents.

   BACKGROUND

   Agreed Statement of Facts

5. In this matter the Court has the benefit of an agreed statement of facts filed on 30 March 2021. As set out above, the Respondents have admitted to contravening the FW Act and the PPL Act.

6. The contraventions relate to one former employee of the Pagoda Tree, Ms H.

7. The First Respondent employed Ms H from 12 January 2016 to 2 August 2019. The First Respondent employed Ms H on a casual basis from 12 January 2016 to 19 February 2017 (“the Casual Employment Period”). Ms H was then employed by the First Respondent on a part-time basis from 20 February 2017 to 17 August 2018 (“the Part-Time Employment Period”).

8. Ms H ceased work due to her pregnancy from 17 August 2018 but remained an employee of the First Respondent until 2 August 2019.

9. At all relevant times, Ms H was a national system employee within the meaning of section 13 of the FW Act of the First Respondent.

10. During both the Casual Employment Period and the Part-Time Employment Period Ms H:

    (a)was engaged by the First Respondent as a ‘Practitioner’;

    (b)practiced as a Chinese Medicine Practitioner performing duties including treating patients through acupuncture;

    (c)held a Master’s degree being a Masters of Acupuncture and Oriental Medicine; and

    (d)was registered by the Australian Health Practitioner Regulation Agency in the profession of Chinese Medicine Practitioner.

11. At all relevant times, the Health Professionals and Support Services Award 2010 (“the Award”) applied to the First Respondent in respect of the employment of Ms H. 

12. Ms H was underpaid $10,296 in entitlements pursuant to the Award in the period of 12 January 2016 to 17 August 2018. Ms H commenced a period of maternity leave in August 2018, where after the Respondents failed to pay her a substantial party of her taxpayer-funded paid parental leave.

13. Upon Ms H’s resignation on 2 August 2019, the Respondents did not pay Ms H’s annual leave entitlement pursuant to the FW Act.

    ADMITTED CONTRAVENTIONS

14. On the basis of the facts and matters agreed in the agreed statement of facts, the First Respondent admits that it contravened the following civil remedy provisions:

    (a)in the Casual Employment Period, section 45 of the FW Act by failing to pay:

    (i)casual loading to Ms H pursuant to clause 10.4(b) of the Award;

    (ii)casual Saturday loading to Ms H pursuant to clause 26.2 of the Award;

    (b)in the Part-Time Employment Period, section 45 of the FW Act by failing to:

    (i)pay part-time Saturday loading to Ms H pursuant to clause 26.1 of the Award;

    (ii)enter into written part-time agreements with Ms H pursuant to clause 10.3(b) of the Award;

    (c)section 44(1) of the FW Act by failing to pay annual leave and annual leave loading to Ms H on termination as required by section 90(2) of the FW Act;

    (d)section 535(1) of the FW Act by failing to make and keep records in relation to Ms H’s employment of the kind prescribed by the FW Regulations in relation to the loadings and penalty rates that Ms H was entitled to be paid during the Casual Employment Period and the Part-Time Employment Period;

    (e)section 72(2) of the PPL Act by failing to pay Ms H $3,309.01 for Parental Leave Pay (“PLP”) on 12 December 2018;

    (f)section 72(1) of the PPL Act by failing to pay Ms H PLP instalments in whole or in part and on time on twelve occasions; and

    (g)section 80 of the PPL Act by failing to provide Ms H any or all of the information prescribed by the Rules on thirteen occasions.

15. The Second Respondent also admits that she was involved:

    (a)within the meaning of section 550(2)(c) of the FW Act, in the contraventions of the First Respondent set out in paragraph 14(a) to 14(d) above; and

    (i)within the meaning of section 92 of the Regulatory Powers Act, in the contraventions of the First Respondent set out in paragraph 14(e) to 14(g) above.

16. The FWO relied upon affidavits of Ms H affirmed 22 April 2021, an affidavit of Darren John Lang who is a Fair Work Inspector sworn 23 April 2021. The Respondents relied on an affidavit of the Second Respondent, Ms Kringoudis sworn 14 May 2021.

    Paid Parental Leave Act (“PPL Act”) Contraventions

17. Whilst the failure to pay the proper Award rate is a serious contravention, the Court regards the Respondents’ failure to pay PLP entitlements as particularly serious. The agreed statement of facts notes that Ms H was entitled to PLP for the period from 31 October 2018 to 5 March 2019. The first payment in relation to PLP was not made in until 6 December 2018 because of the Second Respondent’s delay in completing the online acceptance of the employer determination, notice of which was given to the First Respondent by the Department of Human Services (“DHS”) on 31 October 2018.

18. On 6 December 2018 an amount of $7,193.50 was transferred by the DHS to the bank account of the First Respondent. Pursuant to section 72(1) of the PPL Act, the First Respondent was required to pay a lump sum of $3,309.01 to Ms H on 12 December 2018 to back pay the PLP instalments that had fallen due since the beginning of the period to which she was entitled to PLP, which commenced on 31 October 2018. The First Respondent did not pay Ms H anything in respect of PLP on 12 December 2018.

19. The First Respondent was also required on 12 December 2018, to begin paying weekly PLP instalments pursuant to section 72(2) the PPL Act. Ms H was entitled to 13 weekly payments of $719.35 from 12 December 2008 enter 6 March 2019 and a final instalment of $287.74 on 13 March 2019. It must be acknowledged that from 6 December 2018 to 31 January 2019, the First Respondent received payments totalling $12,948.30 from the DHS to fund Ms H’s PLP. The agreed statement of facts notes that the First Respondent only made two of the weekly instalment payments in full and on time, those being payments due on 23 and 30 January 2019. Seven of the required instalment payments were made late and/or not made in full. Five instalment payments were not paid at all.

20. As at 31 March 2019, the end of Ms H’s PLP period, the First Respondent had failed to pay Ms H $7,318.19 of her PLP entitlement which equates to approximately 57% of the total PLP funding. The First Respondent did not pay Ms H $5,244.80 of her PLP until 25 May 2020, more than 15 months after the final PLP instalment was due to be paid.

21. The FWO refers to the evidence given by Ms H regarding the financial strain that she was placed under as a result of not receiving the PLP instalments which had been paid to the First Respondent by the DHS.

22. In written submissions and in oral submissions made by Counsel on behalf of the FWO, reference was made to bank statements that had been produced by the First Respondent and the account into which DHS paid the PLP funds. Those bank statements show that the money that was received from DHS was spent on amongst other things, items such as travel throughout the period October 2018 to March 2019 including $2,000 each on 7 December and 10 December 2018, immediately after funds were received from DHS to fund the PLP payments to Ms H. The Court was also taken to statements which showed regular transfers of funds from the account that received the PLP funds to personal accounts of the Second Respondent. From those accounts it appears that funds were used to pay for daily living expenses and restaurant meals and alcohol.

23. The FWO also makes the entirely valid submissions that a failure to provide information regarding the PLP payments to an employee undermines the employee’s capacity to track the payments and to ensure that they are receiving funds that are due to them.

24. The FWO submits that the underpayments and failure to pay PLP were deliberate and that she has admitted knowing that Ms H was only paid flat rates of pay and that she was not paid annual leave entitlements on termination. It is put that the Second Respondent’s evidence at [22] of her affidavit, that she believed that Ms H was paid above the minimum rates set by the Award. The Second Respondent stated she did not deliberately intend to underpay her award entitlements, and it should not be admitted without leave of the Court by reason of section 191(2) of the Evidence Act 1995 (Cth). That submission is correct and I will not have regard to that evidence of the Respondents which contradicts the admissions contained in the statement of agreed facts.

25. The Respondent’s submissions depose that the penalty range proposed by the FWO both at its higher and lower end would result in penalties that are manifestly excessive. Whilst accepting that the contraventions are inherently serious it is submitted by the Respondents that they are at the low end of the range having regard to the following matters:

    (a)the low amount of loss and damage;

    (b)the Respondents are first-time contraveners;

    (c)the Respondents have displayed genuine contrition;

    (d)the Respondents have apologised to the Court;

    (e)the Respondents have cooperated with the FWO;

    (f)the Respondents have made full rectification to the affected employee;

    (g)the Respondents have undertaken significant corrective action, including training and substantial improvements to their systems and processes to ensure future compliance;

    (h)the Respondent’s conduct in relation to the FW Act contraventions was not deliberate, and is better characterised as careless disregard;

    (i)there is limited need for specific deterrence in this case; and

    (j)the Court is under an obligation to ensure that the aggregate of the penalties imposed is proportionate to the overall conduct of the Respondents.

26. It is submitted that the penalty unit value increased from $180-$210 on 1 July 2017, during the Part-Time Employment Period of Ms H. It is appropriate for a lower penalty to apply for part of the period during which the contravention occurred citing Fair Work Ombudsman v Grouped Property Services Pty L TD (No 2) [2017] FCA 557, [401].

27. In relation to the circumstances in which the conduct took place was put in submissions that the First Respondent is a Women’s Health Clinic specialising in traditional Chinese medicine and natural fertility treatments and has been operating since 2014. It is put that a business consultant was engaged to assist in setting up the business and that consultant prepared employment contracts and systems manuals. An accountant was engaged to set up the business payroll and accounts systems and that accountant was subsequently convicted of fraud offences. However, it is not clear how this relates to the business of the First Respondent. It is put that at the time of the contraventions, the First Respondent’s systems and practices were inadequate ensuring compliance with the FW Act and the Award.

28. In relation to corrective action, the Respondents submit that in addition to having repaid all the money owing to Ms H, the Second Respondent has given evidence that the business has moved to an online automated payroll system with automated itemised timekeeping that calculates and records each employee’s rate of pay. The Second Respondent has familiarised herself with the relevant award, that being the Award, and legislation and guides to the parental leave scheme. The Second Respondent also says that she has created online profiles with the FWO and receives notifications regarding updates of the Award. She states that she has also completed online training modules on the FWO website in relation to the obligations she has as an employer.

    CONSIDERATION

    Approach to the determination of penalties

1. The parties agree on the proper approach to determining appropriate penalties and referred to the approach and edified by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 at [36], his Honour endorsed this approach:

   (1)identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention;

   (2)consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that section 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person;

   (3)consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each Respondent did;

   (4)consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation; and

   (5)consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (“CFMEU Civil Penalties Case”) at [64]) and what is proposed by the Respondents, and apply the totality principle, to ensure that the penalties for each Respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23], [71] and [102].

2. I also have regard to section 85(1) the Regulatory Powers Act which provides:

   A relevant Court may make a single civil penalty order against a person for multiple contraventions of civil penalty provision if proceedings for the contraventions are founded on the same facts, or of the contraventions form, or are part of, a series of contraventions of the same or similar character.

3. The Respondent accepts the proposed grouping of the contraventions as set out in paragraphs [23]-[25] of the FWO submissions which sets out six separate contraventions of the FW Act. In relation to the admitted contraventions of sections 72(1) and 72(2) of the PPL Act, the Respondents submit that these arise out of the same or similar course of conduct as they are founded on the same facts and form part of a series of contraventions of the same or similar character. I accept that the contraventions of sections 72(1) and 72(2) of the PPL Act have that character and I will treat these two admitted contraventions of the PPL Act as a single contravention.

   The nature and extent of the circumstances of the contravening conduct

4. In relation to the Award underpayments of casual loading and casual Saturday loading over a 13 month period, the FWO holds such conduct to be significant as those entitlements are designed to compensate for insecurity of employment and lack of paid leave for working and for working on a weekend.

5. It is also put that the failure to pay annual leave on termination in the sum of $1,760 arose in circumstances where Ms H was already experiencing financial hardship at least in part due to the Respondent failing to pay her full PLP entitlement. It also arose at a time when she was endeavouring to start her own business and was relying on savings and credit cards.

6. It is put that the failure to record a part-time agreement in writing which set out Ms H’s agreed weekly and daily hours was not merely a technical contravention. Pursuant to clause 28.1(d) of the Award, part-time employees are entitled to overtime when they work outside the hours agreed in their part-time agreement. It is put that the failure to record the part-time agreement with Ms H effectively removes the ability for her to identify any entitlement she may have otherwise had to overtime under clause 28.1(d) of the Award.

7. The Respondents made submissions in relation to the importance of record-keeping in maintaining an effective safety net for employees. This is also important as it provides employees with the opportunity to ascertain whether they are being appropriately paid. The FWO acknowledges that there is a degree of overlap in this case between the failure to record the employee Ms H’s entitlement to loadings and failure to pay those loadings and therefore seeks a penalty recognising that overlap.

   Applicant FWO and Respondent’s proposed penalty ranges

8. A summary of the FWO and Respondent’s submissions on penalty is set out in the written submissions filed on 18 June 2021 and 9 July 2021 respectively. The summary tables are set out as Annexures to this judgment, marked “Annexure A”, “Annexure B” and “Annexure C”:

9. By the agreed statement of facts it is agreed that during the Casual Employment Period, Ms H was paid a flat rate of pay and was not paid the casual loading or casual Saturday loading to which she was entitled.

10. During that period she was employed part-time from 20 February 2017 to 17 August 2018. Ms H was paid a flat rate of pay save on one occasion and she was not paid the required Saturday loading.

    The underpayments for the casual and part-time employment periods total $10,296.04 comprising of:

    (a)$1,480.67 for casual loading;

    (b)$6,954.78 per casual Saturday loading;

    (c)$100.49 for part-time Saturday loading (for which no penalty is sought); and

    (d)$1,760.10 for annual leave and annual leave loading due on termination of Ms H’s employment in August 2018.

11. Penalties are sought because the Respondents failed to keep the required records of the loadings and penalty rates to which Ms H was entitled and did not make a written part-time agreement that complied with the requirements of clause 10.3(b) of the Award.

12. The contraventions relating to PLP are set out in this agreed statement of facts. On around 17 August 2018 Ms H commenced a period of parental leave and her daughter was born on 25 September 2018. PLP was payable to Ms H for the period 31 October 2018 to 5 March 2019. The First Respondent was required to pay Ms H a lump sum of $3,309.01 on 12 December 2018 and weekly PLP instalments of $719.35 (gross) per week commencing on 12 December 2018 until 13 March 2019.

13. The Respondents failed to pay a total of $11,509.40 of Ms H’s total PLP entitlement of $12,948.30. They admit having paid only two of the total 14 PLP instalments on time and in the correct amounts to Ms H. The PLP underpayments were not rectified until 17 months after the first PLP payment fell due. The FWO commenced an investigation into the First Respondent’s employment of Ms H after receiving a referral from the DHS on 26 August 2019. Payments rectifying the FW Act and PPL Act underpayments were not made until 25 and 27 May and 18 September 2020.

    Factors relevant to the Court’s discretion

14. I have regard to a non-exhaustive list of factors relevant to the imposition of a penalty which was usefully summarised by Mowbray FM (as he then was) in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 at [26]-[59] and deal with the relevant considerations below.

15. The contraventions in this matter, in particularly the failure to maintain proper records and the failure to remit to the employee PLP instalments are serious.

16. Whilst the submission that the Respondents paid to Ms H the outstanding amounts, the process of receiving the payment was drawn out and left Ms H financially exposed. The emails from Ms H to the Second Respondent and to the First Respondent’s employees who were responsible for managing the payments indicate that Ms H was making enquiries regarding payment of annual leave and maternity leave entitlements from 17 January 2019. Payment of the annual leave was promised on 20 January 2019 in an email from Ms Brooks who was the assistant manager at the First Respondent to Ms H. That was not paid as promised and there ensues a series of communications where Ms H is politely making enquiries about payment.

17. On 23 April 2019 Ms H wrote to the Second Respondent by email stating:

    I am leaving for the US on 8 May and need the remainder of my maternity leave pay and annual leave pay prior to when I go. I am still owed 10 weeks with maternity leave ($7,195 before tax) and 54 hours of annual leave ($1,728 before tax). I was meant to do some sole proprietor work in May that I cannot do until I receive the rest of maternity leave pay, and our savings are nearly gone. We are in a very bad situation now because of this delay.

    Please redress the situation ASAP and let me know that you have received this email as I have not received responses to my last few attempts to reach you. I have been very patient but patience does not pay the bills!

18. The Second Respondent responded on 24 April 2019 apologising that she had let these issues slip through the cracks and that she would follow up with her accountant and that she would make adjustments and make sure the funds get sorted as soon as possible.

19. The Second Respondent then wrote further to Ms H on 14 May 2019. That email states, omitting relevant parts:

    Thank you for your patience, it really has been a trying time and I appreciate you so much. I can’t apologise enough. I should be able to swear this all up by the end of May but I will make sure that you receive your payment starting this week.

    To be transparent, as you are most likely aware, I have been in a legal battle with name omitted who are refusing to pay me a large of money. I am still in the process – sadly this shouldn’t affect anyone else but it has and so I want to make sure I can move forward as quickly as possible. This couple with me being absent from the clinic has really created a big hole financially however I have sought solutions and very confident I can get this sorted for you by the end of May.

    I anticipate to pay your annual leave in the last week of May (2019) and to do my best to fill your balance of your weekly payments in the meanwhile.

    Again, sincere and deep apologies, it most certainly hasn’t been ideal and I am ever so sorry this has affected you.

    I hope you had a beautiful Mother’s Day and cannot wait to see you soon.

20. Notwithstanding these assurances and the others that followed from the Second Respondent, Ms H did not receive her outstanding Award entitlements until the end of May 2020 after the FWO had become involved in August 2019 and corresponded with the Second Respondent on 15 October 2019 regarding the underpayments. The underpayments were identified by the FWO in a notice of contravention dated 18 June 2020 in the sum of $8,628 were not paid until 18 September 2020.

21. In correspondence from the Second Respondent to the FWO dated 29 June 2020, in response to a contravention letter from the FWO, the Second Respondent made an offer of $3,000 to settle the matter. The Second Respondent cited the financial impact of Covid-19 on her business and also alleged that she had been embezzled twice over the last five years but had continued to “honour every cent owed to the ATO and creditors”.

22. This letter concluded:

    This matter is the final straw and a process where I have been the victim on two occasions, and at no time ever intentionally set out to do the wrong thing, however it seems that no other circumstances matter, let alone even be taken into consideration.

23. The Respondents have not sought to substantiate the allegations contained in that correspondence about the hardship caused to the business by any previous embezzlement or that the money paid by the DHS to be remitted to Ms H was needed to pay other business debts (which the Court does not accept as a valid excuse for not passing on the payments from the DHS).

24. The Court has set out these matters out in detail because it does not accept that the Respondents have paid the monies owing to Ms H at the earliest opportunity and their actions in drawing out the process has cause considerable hardship to Ms H. I have little doubt that had the FWO not become involved and pursued the matter on behalf of the employee that she would not have been paid without going to the expense of issuing legal proceedings herself.

    The size of the business enterprise involved;

25. I take into account that the business is a small one and that the impact of a substantial penalty may have a devastating effect on it. However no detailed material has been placed before the Court which would place the Court in a position of determining the effect of the penalty upon the Respondents. The Respondents have not put any recent bank statements before the Court in relation to either of the Respondent’s current financial positions. The Second Respondent made a deliberate forensic decision not to place evidence before the Court to seek to establish that the imposition of penalties would cause her crushing financial hardship. I do accept that penalties of the kind sought by the FWO are likely to be crushing having regard to their disclosed turnover of business in the relevant period. 

    Whether or not the breaches were deliberate;

26. The conduct in not immediately paying the sums when the Respondents became aware that they were outstanding does demonstrate a deliberateness in the contravention. I also find that the conduct of the Second Respondent in fobbing off Ms H over an extended period of time and not paying the amounts undermines the submission that she was contrite in relation to her conduct.

    Whether the party committing the breach had exhibited contrition, taken corrective action and co-operated with the enforcement authorities;

27. I take into account the fact that once proceedings have issued and the amounts of been paid there has been cooperation in the process of this proceeding. I also accept that the Respondents have taken remedial action in relation to the management of the business and wages.

    The need to ensure compliance with minimum standard by provision of an effective means for investigation and enforcement of employee entitlements; and

28. It is important that the penalty imposed on both the Respondents makes plain the importance of compliance with minimum standards both under the PPL Act and the FW Act. I accept the submissions of the FWO which are set out above in relation to this. The fact that the Respondents have received funds which have been provided to them for the purposes of remitting to an employee to assist through maternity leave and then used those funds for their own purpose must be deplored.

29. I note the object of PLP as set out in section 3A of the PPL Act is to provide financial support to primary carers (mainly birth mothers) of children, in order to:

    (a)allow those carers to take time off work to care for the child and after the child’s birth;

    (b)enhance the health and development of birth mothers and children;

    (c)encourage women to continue to participate in the workforce; and

    (d)provide those carers with greater flexibility to balance work and family life.

    The need for specific and general deterrence

30. In my view specific deterrence is important in this case to ensure that the Respondents do not tend to prefer their own interests over the interests of employees’ lawful entitlements at times when the business may not be providing the returns that the Second Respondent expects of it.

31. In terms of general deterrence, the penalty must be fixed at a level which makes it dissuade an employer from misusing taxpayer funded entitlements such as PLP. As was submitted by the FWO, the PLP scheme is one where the Commonwealth transfers a payment to the employer, and the employer makes the payment to the employee as part of its payroll process and by that process reposes a significant level of trust in the employer. Any failure by an employer to transfer PLP to an employee essentially amounts to an employer improperly appropriating Commonwealth funds. I take that into account when fixing penalty.

    Media attention

32. This is not a case where the penalty should be reduced as a result of a media release that been produced that is unfair or inaccurate and therefore the considerations that arose in Fair Work Ombudsman v The Meatball and Wine Bar Pty Ltd [2018] FCCA 2288 at [28]–[31] do not arise.

    CONCLUSION

33. I reduce the maximum penalty by 30% taking into account the Respondents’ cooperation in these proceedings.

34. I fix the penalties at a level which takes into account that the First Respondent is a small enterprise and the underpayments affected one employee.

35. The penalties fixed by the FW Act cover a very wide range of employers and contemplate circumstances where one breach may affect hundreds or more employees. To work from percentages of the maximum penalty for each breach where the number of breaches may be high but the amount involved in the breach is low, which may lead to distorted results in terms of penalties. Of course this can be addressed by the Court when considering the totality of the penalties, however it may save both the parties and the Court’s time if greater consideration was given to this when submissions are made on penalties, particularly where small enterprises are subject of proceedings where the value of the breach is relatively modest.

36. For these reasons, the Court imposes the following penalties set out below:

Contravention	Maximum Penalty Units/Maximum Penalty	30% discount to Maximum penalty	Percentage of Discounted Penalty	Penalty Imposed
				Pagoda Tree	Ms Kringoudis
1	Section 45 of the FW Act by failing to pay causal loading – cl 10.4(b) of the Award	Pagoda (“1R”) – 300/$54,000 Ms Kringoudis (“2R”) – 60/$10,800	1R: $54,000 – 30% discount = $54,000 – $16,200 = $37,800 2R: $10,800 – 30% discount - $10,800 - $3,240 = $7,560	10%	$3,780	$756
2	Section 45 of the FW Act by failing to pay Saturday loading – cl 26.2 of the Award	1R – 300/$54,000 2R – 60/$10,800	1R: $54,000 – 30% discount = $54,000 – $16,200 = $37,800 2R: $10,800 – 30% discount - $10,800 - $3,240 = $7,560	10%	$3,780	$756
3	Section 45 of the FW Act by failing to pay part-time Saturday loading – cl 26.1 of the Award	1R – 300/$63,000 2R – 60/$12,600	1R: $63,000 – 30% discount = $63,000 - $18,900 = $44,100 2R: $12,600 – 30% discount = $12,600 - $3780 = $8,820	10%	$4,410	$882
4	Section 45 of the Act by failing to enter into written part-time agreements – cl 10.3(b) of the Award	1R – 300/$54,000 2R – 60/$10,800	1R: $54,000 – 30% discount = $54,000 – $16,200 = $37,800 2R: $10,800 – 30% discount - $10,800 - $3,240 = $7,560	12.5%	$4,725	$945
5	Section 44(1) failure to pay accrued annual leave on termination as required by section 90(2) of the FW Act	1R – 300/$63,000 2R – 60/$12,600	1R: $63,000 – 30% discount = $63,000 - $18,900 = $44,100 2R: $12,600 – 30% discount = $12,600 - $3780 = $8,820	10%	$4,410	$882
6	Section 535(1) of the FW Act by failing to make and keep employee records	1R – 300/$63,000 2R – 60/$12,600	1R: $63,000 – 30% discount = $63,000 - $18,900 = $44,100 2R: $12,600 – 30% discount = $12,600 - $3780 = $8,820	10%	$4,410	$882
7	Section 72(2) of the PPL Act by failing to pay Ms H $3,309.01 for PLP on 12 December 2018	1R – 300/$63,000 2R – 60/$12,600	1R: $63,000 – 30% discount = $63,000 - $18,900 = $44,100 2R: $12,600 – 30% discount = $12,600 - $3780 = $8,820	60%	$26,460	$5,292
	Section 72(1) of the PPL Act by failing to pay PLP instalments on twelve occasions.
8	Section 80 of the PPL Act by failing to provide information prescribed by the Rules.	1R – 150/$31,500 2R – 30/$6,300	1R: $31,500 – 30% discount = $31,500 - $9,450 = $22,050 2R: $6,300 – 30% discount = $6,300 - $4,410 = $1,890	30%	$6,615	$567
Total Penalties					$58,590	$10,962

1. I have considered the totality of the penalties. The penalties imposed on each contravention take into account the circumstances and conduct and I will not reduce them further.

I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment of Judge McNab.

Associate:

Dated:       18 March 2022

“Annexure A” – FWO’s proposed penalty range for the First Respondent

First Respondent
Description of contravention	Date of contravention	Penalty unit amount	Maximum penalty units/maximum penalty amount	Maximum after discount for cooperation	Proposed penalty range
					Percentage		Amount
				20%	lower	upper	lower	upper
Fair Work Act 2009 (Cth)
1	Section 45 – casual loading	12 Jan 2016 – 19 Feb 2017	$180	300/$54,000	$43,200	20%	30%	$8,640	$12,960
2	Section 45 – casual Saturday loading	12 Jan 2016 – 19 Feb 2017	$180	300/$54,000	$50,400	40%	50%	$17,280	$21,600
3	Section 45 – Part-time Saturday loading	20 Feb 2017 – 17 Aug 2018	$210	300/$63,000	$50,400	0%	0%	$0	$0
4	Section 45 – Written part-time agreement	Before 20 Feb 2017	$180	300/$54,000	$43,200	40%	50%	$17,280	$21,600
5	Section 44 by reason of section 90(2)	2 Aug 2019	$210	300/$63,000	$50,400	30%	40%	$15,120	$20,160
6	Section 535(1)	12 Jan 2016 – 19 Feb 2017	$210	300/$63,000	$50,400	20%	30%	$10,080	$15,120
Paid Parental Leave Act 2010 (Cth)
7	Section 72(2) – failing to pay PLP on Dec 12 2018	12 Dec 2018	$210	300/$63,000	$50,400	80%	90%	$40,320	$45,360
8	Section 72(1) – failing to pay PLP in whole or in part on 12 occasions (grouping into 12 contraventions)	12 Dec 2018 – 13 Mar 2019	$210	300/$63,000	$50,400	80%	90%	$40,320	$45,360
9	As above – group 2 (partial failures)	As above	As above	300/$63,000	$50,400	50%	60%	$25,200	$30,240
10	Section 80 – failing to provide information prescribed by the Paid Parental Leave Rules 2010 on 13 occasions (propose grouping into 2 contraventions)	31 Dec 2018 – 25 May 2020	$210	150/$31,500	$25,200	60%	70%	$15,120	$17,640
11	As above – group 2 (partial failures)	As above	As above	As above	$25,200	30%	40%	$7,560	$10,080
TOTAL	$196,920	$240,120
10% reduction for totality			$177,228	$216,108

“Annexure B” – FWO’s proposed penalty range for the Second Respondent

First Respondent
Description of contravention	Date of contravention	Penalty unit amount	Maximum penalty units/maximum penalty amount	Maximum after discount for cooperation	Proposed penalty range
					Percentage		Amount
				20%	lower	upper	lower	upper
Fair Work Act 2009 (Cth)
1	Section 45 – casual loading	12 Jan 2016 – 19 Feb 2017	$180	60/$10,800	$8,640	20%	30%	$1,728	$2,592
2	Section 45 – casual Saturday loading	12 Jan 2016 – 19 Feb 2017	$180	60/$10,800	$8,640	40%	50%	$3,456	$4,320
3	Section 45 – Part-time Saturday loading	20 Feb 2017 – 17 Aug 2018	$210	60/$12,600	$10,080	0%	0%	$0	$0
4	Section 45 – Written part-time agreement	Before 20 Feb 2017	$180	60/$10,080	$8,640	40%	50%	$3,456	$4,320
5	Section 44 by reason of section 90(2)	2 Aug 2019	$210	60/$12,600	$10,080	30%	40%	$3,024	$4,032
6	Section 535(1)	12 Jan 2016 – 17 Aug 2018	$210	60/$12,600	$10,080	20%	30%	$2,016	$3,024
Paid Parental Leave Act 2010 (Cth)
7	Section 72(2) – failing to pay PLP on Dec 12 2018	12 Dec 2018	$210	60/$12,600	$10,080	80%	90%	$8,064	$9,072
8	Section 72(1) – failing to pay PLP in whole or in part on 12 occasions (grouping into 12 contraventions)	12 Dec 2018 – 13 Mar 2019	$210	60/$12,600	$10,080	80%	90%	$8,064	$9,072
9	As above – group 2 (partial failures)	As above	As above	60/$12,600	$10,080	50%	60%	$5,040	$6,048
10	Section 80 – failing to provide information prescribed by the Paid Parental Leave Rules 2010 on 13 occasions (propose grouping into 2 contraventions)	31 Dec 2018 – 25 May 2020	$210	30/$6,300	$5,040	60%	70%	$3,024	$3,528
11	As above – group 2 (partial failures)	As above	As above	30/$6,300	$5,040	30%	40%	$1,512	$2,016
TOTAL	$39,384	$48,024
10% reduction for totality			$35,446	$43,222

“Annexure C” – Respondent’s proposed penalty range

Contravention	Maximum Penalty	Proposed Discount	Maximum penalty after discount	Penalty range	Total penalty range
					Pagoda Tree	Ms Kringoudis
66          1	67 Section 45 of the FW Act by failing to pay causal loading – cl 10.4(b) of the Award	68          Pagoda (“1R”) - $54,000 69          Ms Kringoudis (“2R”) – $10,800	70          30%	71          1R – $37,800 72          2R – $7,560	73          5% - 15% 74	75          $1,890 – $5,670	76          $378 – $1,134
77          2	Section 45 of the FW Act by failing to pay Saturday loading – cl 26.2 of the Award	78          1R – $54,000 79          2R – $10,800	80          30%	81          1R – $37,800 82          2R – $7,560	83          5% - 15% 84	85          $1,890 – $5,670	86          $378 – $1,134
87          3	88 Section 45 of the FW Act by failing to pay part-time Saturday loading – cl 26.1 of the Award	89          1R - $63,000 90          2R – $12,600	91          30%	92          1R – $44,100 93          2R – $8,820	94          5% - 15% 95	96          $2,205 – $6,615	97          $441 – $1,323
98          4	99 Section 45 of the Act by failing to enter into written part-time agreements – cl 10.3(b) of the Award	100       1R – $54,000 101       2R – $10,800	102       30%	103       1R – $37,800 104       2R – $7,560	105       5% - 15% 106	107       $1,890 – $5,670	108       $378 – $1,134
109       5	110 Section 44 by reason of section 90(2) – annual leave and annual leave loading on termination	1R – $63,000 2R – $12,600	111       30%	112       1R – $44,100 113       2R – $8,820	114       5% - 15% 115	116       $2,205 – $6,615	117       $441 – $1,323
118       6	119 Section 535(1) of the FW Act by failing to make and keep employee records	1R – $63,000 120       2R – $12,600	121       30%	122       1R – $44,100 123       2R – $8,820	124       5% - 15% 125	126       $2,205 – $6,615	127       $441 – $1,323
128       7	129 Section 72(2) of the PPL Act by failing to pay Ms H $3,309.01 for PLP on 12 December 2018	1R – $63,000 130       2R – $12,600	131       30%	132       1R – $44,100 133       2R – $8,820	134       20% - 30% 135	136       $8,820 – $13,230	137       $1,764 – $2,646
138       8	139 Section 72(1) of the PPL Act by failing to pay PLP instalments on twelve occasions.	1R – $63,000 140       2R – $12,600	141       30%	142       1R – $44,100 143       2R – $8,820	144       20% - 30% 145	146       $8,820 – $13,230	147       $1,764 – $2,646
148       9	149 Section 80 of the PPL Act by failing to provide information prescribed by the Rules.	1R – $31,500 150       2R – $6,300	151       30%	152       1R – $22,050 153       2R – $4,410	154       5% - 15% 155	156       $1,102 – $3,307	157       $882 – $1,323
158       Total Penalties		1R – $535,500 159       2R – $107,100	160       30%	161       -	162       -	163       $31,027 – $66,622	164       $6,205 – $13,324
165       Total Penalties after discount for totality			166	167       25% Discount for totality		$23,270 – $49,967	168       $4,653 – $9,993