Fair Work Ombudsman v Top Value International Pty Ltd
[2013] FMCA 41
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v TOP VALUE INTERNATIONAL PTY LTD & ORS | [2013] FMCA 41 |
| INDUSTRIAL LAW – Fair work – pecuniary penalties – breaches of award – underpayment of employee – agreed statement of facts – breaches admitted – consideration of matters relevant to penalty. |
| Fair Work Act 2009 (Cth), ss.14, 45, 536(1), 535, 535(1)- 535(2), 536(1), 545(2)(b), 546(3)(a), 547(2), 550(1), 701 Storage Services – General – Award 1999 [AP796791], cls.16, 13.4.2, 24.2.1 |
| Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Kelly v Fitzpatrick (2007) 166 IR 14 Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | TOP VALUE INTERNATIONAL PTY LTD |
| Second Respondent: | GUO HUI LIU |
| Third Respondent: | JUN HONG MA |
| File Number: | MLG 1578 of 2011 |
| Judgment of: | Hartnett FM |
| Hearing date: | 6 September 2012 |
| Delivered at: | Melbourne |
| Delivered on: | 1 February 2013 |
REPRESENTATION
| Counsel for the Applicant: | Ms Nicholas |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| Counsel for the Respondents: | Mr Fetter |
| Solicitors for the Respondents: | Vincent J Ryan |
THE COURT DECLARES BY CONSENT THAT:
The First Respondent, and also the Second and Third Respondents by reason of their involvement in the contraventions on and from 27 March 2006 pursuant to s.728(1) of the Workplace Relations Act 1996 (Cth)(‘the WR Act’) and s.550(1) of the Fair Work Act 2009 (Cth)(‘the FW Act’), each contravened:
(a)clause 16 of the Storage Services – General – Award 1999 [AP796791] (‘Pre-Modern Award’) by failing to pay Mr Ralph White the applicable rate of pay for a Grade 2 Storeworker for all hours worked;
(b)
clause 13.4.2 of the Pre-Modern Award by failing to pay
Mr White the applicable casual loading for all hours worked;
(c)section 182(1) of the WR Act and item 5 of Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth)(‘the Transitional Act’) by failing to pay Mr White the basic periodic rate of pay contained in the Australian Pay and Classification Scale derived from the Pre-Modern Award;
(d)section 185(2) of the WR Act and item 5 of Schedule 16 of the Transitional Act by failing to pay Mr White the guaranteed casual loading on his basic periodic rate of pay contained in the Australian Pay and Classification Scale derived from the Pre-Modern Award;
(e)section 45 of the FW Act by virtue of a contravention of clause A.2.3 of Schedule A of the Storage Service and Wholesale Award 2010 [MA000084] (‘Modern Award’) by failing to pay Mr White no less than the minimum wage in the relevant transitional minimum wage instrument for all hours worked;
(f)
section 45 of the FW Act by virtue of a contravention of clause A.6.2 of Schedule A of the Modern Award by failing to pay
Mr White the casually loaded rate in the relevant transitional minimum wage instrument for all hours worked;
(g)
clause 24.2.1 of the Pre-Modern Award by failing to pay
Mr White overtime rates for overtime periods worked;
(h)section 536(1) of the FW Act by failing to give Mr White a payslip within one working day of paying him in relation to the performance of work;
(i)regulation 19.20(1) and (2) of the Workplace Relations Regulations 2006 (Cth)(‘the WR Regulations’) by failing to issue Mr White with a payslip within one day of payment to which the pay slip relates being made;
(j)regulations 19.4(1)-(2), 19.5(1), 19.6(1), 19.8(1), 19.9(1), 19.11(1)-(4) and 19.13(1) of the WR Regulations by failing to make and keep records relating to Mr White in accordance with the WR Regulations;
(k)section 535(1) and 535(2) of the FW Act by virtue of contraventions of regulations 3.31(1), 3.32(d), 3.32(e), 3.33(1), 3.33(2), 3.33(3), 3.34 and 3.37, by failing to make and keep records relating to Mr White in a form and including information in accordance with the Fair Work Regulations 2009 (Cth).
THE COURT ORDERS THAT:
The First Respondent pay an aggregate penalty pursuant to:
(a)section 178(1) of the WR Act (as in force prior to 27 March 2006);
(b)section 719(1) of the WR Act (as in force thereafter);
(c)regulation 14.4 of the WR Regulations; and
(d)section 546(1) of the FW Act
for the contraventions of the Pre-Modern Award; the WR Regulations; the Transitional Act; and the FW Act referred to in the above declarations in the amount of $42,240.
The Second Respondent pay an aggregate penalty pursuant to:
(a)section 719(1) of the WR Act (as in force from 27 March 2006);
(b)regulation 14.4 of the WR Regulations; and
(c)section 546(1) of the FW Act
for the contraventions of the Pre-Modern Award; the WR Regulations; the Transitional Act; and the FW Act referred to in the above declarations as they relate to conduct on and from 27 March 2006 in the amount of $8,448.
The Third Respondent pay an aggregate penalty pursuant to:
(a)section 719(1) of the WR Act (as in force from 27 March 2006);
(b)regulation 14.4 of the WR Regulations; and
(c)section 546(1) of the FW Act
for the contraventions of the Pre-Modern Award; the WR Regulations; the Transitional Act; and the FW Act referred to in the above declarations as they relate to conduct on and from 27 March 2006 in the amount of $2,112.
Pursuant to s.178(6) of the WR Act (as in force prior to 27 March 2006), s.719(6) of the WR Act (as in force thereafter) and s.545(2)(b) of the FW Act the First Respondent pay to Mr White the total underpayment amount of $63,939.34.
Pursuant to s.179A of the WR Act (as in force prior to 27 March 2006), s.722 of the WR Act (as in force thereafter) and s.547(2) of the FW Act the First Respondent pay interest pursuant to legislation on the underpayment amount referred to in the preceding order, in the amount of $6,340.
Pursuant to s.356(a) of the WR Act (as in force prior to 27 March 2006), s.841(1)(a) of the WR Act (as in force thereafter) and s.546(3)(a) of the FW Act each of the respondents pay the penalties referred to in orders 1, 2 and 3 above into the Consolidated Revenue Fund of the Commonwealth.
The payment of penalties referred to above be made within 30 days of the date of this order.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1578 of 2011
| FAIR WORK OMBUDSMAN |
Applicant
And
| TOP VALUE INTERNATIONAL PTY LTD |
First Respondent
| GUO HUI LIU |
Second Respondent
| JUN HONG MA |
Third Respondent
REASONS FOR JUDGMENT
On 3 November 2011, the Applicant filed an Application and Statement of Claim against the First Respondent for alleged underpayments in respect of its former employee Mr Ralph White.
The Application and Statement of Claim also alleged that the Second and Third Respondents were involved in the contraventions of the First Respondent.
The First Respondent is a company incorporated under the provisions of the Corporations Act 2001 (Cth) and was at all relevant times:
a)an employer within the meaning of s.6 of the Workplace Relations Act 1996 (Cth) (‘the WR Act’) and, from 1 July 2009, was a national system employer within the meaning of s.6 of the WR Act and, from 1 July 2009, a national system employer within the meaning of s.14 of the Fair Work Act 2009 (Cth) (‘the FW Act’);
b)the operator of a business which imports and wholesales gift wares and home wares throughout Australia;
c)the employer of Mr White; and
d)a small business in terms of personnel.
The Second Respondent was at all relevant times the sole director of the First Respondent and was responsible for the overall direction, management and supervision of the First Respondent’s business; for the day-to-day management of employment of the employees on behalf of the First Respondent; the setting and adjusting pay rates and wages of employees of the First Respondent; and by reason of the foregoing, responsible in a practical sense for ensuring that the First Respondent complied with its legal obligations to its employees. The Second Respondent was also involved in travelling to China and interstate and to rural Victoria to advance the interests of the business.
The Third Respondent was at all relevant times engaged by the First Respondent in a secretarial capacity. She is the wife of the Second Respondent and has limited spoken English and limited ability to read and write in English. She and her husband migrated to Australia from China as adults with no English skills. The Third Respondent was at all relevant times responsible, subject to the instructions of the Second Respondent, for the day-to-day management of the employment of employees on behalf of the First Respondent; for setting and adjusting pay rates and wages to employees of the First Respondent; and by reason of the foregoing, responsible in a practical sense for ensuring that the First Respondent complied with its legal obligations to its employees, subject to instructions from the Second Respondent.
Mr White was born on 17 June 1952. He is now aged 60 years. From approximately September 2004 to on or about 2 March 2005, and from on or about 8 June 2005 until on or about 30 May 2010, Mr White was employed by the First Respondent and performed work at the First Respondent’s warehouse premises in Huntingdale in the State of Victoria. Mr White’s duties included the licensed operation of materials handling equipment (being a forklift); unloading and loading goods, by hand and by forklift; and maintaining the general cleanliness of the warehouse. Mr White was licensed to operate materials handling equipment including forklifts. He was engaged by the First Respondent as a casual employee.
Coverage of applicable industrial instruments
The Applicant, a Fair Work Inspector pursuant to s.701 of the FW Act, alleged that the First Respondent committed the following contraventions (as set out in the Agreed Statement of Facts):
i) Failure to pay minimum wages:
a)In contravention of clause 16 of the Storage Services – General – Award 1999 [AP796791] (‘Pre-Modern Award’), the First Respondent did not pay Mr White the applicable rate of pay for a Grade 2 Storeworker for all hours worked by him during the below period of employment;
| Rates of pay for a Grade 2 Storeworker under the Pre-Modern Award | |
| 1 August 2005 to 26 March 2006 | $14.33 (Mr White was paid throughout $12.50 per hour) |
b)In contravention of s.182(1) of the WR Act, and subsequent to 1 July 2009, s.182(1) of the WR Act and item 5 of Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (‘the Transitional Act’), the First Respondent did not pay Mr White the basic periodic rate of pay contained in the Australian Pay and Classification Scale (‘APCS’) derived from the Pre-Modern Award for all hours worked by him during the below periods of his employment;
| Rates of pay for a Grade 2 Storeworker under the Pre-Modern Award | |
| 27 March 2006 to 30 November 2006 | $14.33 (Mr White was paid throughout $12.50 per hour) |
| 1 December 2006 to 30 September 2007 | $15.05 (Mr White was paid throughout $12.50 per hour) |
| 1 October 2007 to 30 September 2008 | $15.32 (Mr White was paid throughout $12.50 per hour) |
| 1 September 2008 to 31 December 2009 | $15.89 (Mr White was paid throughout $12.50 per hour) |
| 1 January 2010 to 30 June 2010 | $15.89 (Mr White was paid throughout $12.50 per hour) |
c)In contravention of s.45 of the FW Act and clause A.2.3 of the Modern Award, the First Respondent did not pay Mr White the minimum wage in the relevant transitional minimum wage instrument, namely the APCS derived from the Pre-Modern Award, for all hours worked by him during that period of his employment from 1 January 2010 to 30 May 2010.
Mr White was paid $12.50 per hour and was entitled to $15.89 per hour.
ii) The contraventions of:
a)clause 16 of the Pre-Modern Award;
b)section 182(1) of the WR Act and item 5 of Schedule 16 of the Transitional Act; and
c)section 45 of the FW Act and clause A.2.3 of the Modern Award;
resulted in Mr White being underpaid $19,721.75 in respect of unpaid minimum wages.
iii) Failure to pay casual loading
a)In contravention of clause 13.4.2 of the Pre-Modern Award, the First Respondent did not pay Mr White the applicable 33 1/3 per cent casual loading for all hours worked by him in the period of employment from 1 August 2005 to 26 March 2006 where he should have received $19.10 per hour;
b)In contravention of s.185(2) of the WR Act and item 5 of Schedule 16 of the Transitional Act, the First Respondent did not pay Mr White the guaranteed casual loading as specified in the APCS derived from the Pre-Modern Award which was as follows;
| Casual rates of pay for a Grade 2 Storeworker under the Pre-Modern Award | ||||
| Time period | Basic periodic rate of pay | Casual loading per cent | Casual loading amount | Casually loaded basic periodic rate of pay |
| 27 March 2006 to 30 November 2006 | $14.33 | 33 1/3 | $4.77 | $19.10 |
| 1 December 2006 to 30 September 2007 | $15.05 | 33 1/3 | $5.01 | $20.06 |
| 1 October 2007 to 30 September 2008 | $15.32 | 33 1/3 | $5.10 | $20.42 |
| 1 September 2008 to 31 December 2009 | $15.89 | 33 1/3 | $5.29 | $21.18 |
| 1 January 2010 to 30 June 2010 | $15.89 | 33 1/3 | $5.29 | $21.18 |
c)In contravention of s.45 of the FW Act and clause A.6.2 of the Storage Service and Wholesale Award 2010 [MA000084] (‘Modern Award’), the First Respondent did not pay Mr White the casually loaded rate in the relevant transitional minimum wage instrument, namely the APCS derived from the Pre-Modern Award, for all hours worked by him during that period of his employment from 1 January 2010 to 30 June 2010.
iv) The contraventions of:
a)clause 13.4.2 of the Pre-Modern Award;
b)section 185(2) of the WR Act and item 5 of Schedule 16 of the Transitional Act; and
c)section 45 of the FW Act and clause A.6.2 of the Modern Award;
resulted in Mr White being underpaid $39,990.06 in respect of unpaid casual loading.
v) Underpayment of overtime
a)In contravention of clause 24.2.1 of the Pre-Modern Award and the APCS in the latter period, during the periods from 3 November 2005 to 26 March 2006 and from 27 March 2006 to 12 August 2008, the First Respondent did not pay Mr White overtime rates for overtime periods worked.
b)The contraventions of clause 24.2.1 of the Pre-Modern Award and the APCS resulted in Mr White being underpaid $4,227.54 in respect of unpaid overtime, comprised of $4,210.82 at time and a half and $16.72 at double time.
Total underpayment
Mr White was entitled to be paid a total of $164,345.28 by the First Respondent during his period of employment. During his employment, the First Respondent paid Mr White a total of $100,405.94. Consequently, the total underpayment to Mr White was $63,939.35. The First Respondent has not rectified the underpayment.
In contravention of regulations 19.20(1) and (2) of the Workplace Relations Regulations 2006 (Cth) (‘the WR Regulations’) and s.536(1) of the FW Act, the First Respondent failed to provide pay slips to Mr White.
In contravention of the WR Regulations;
i)19.4(1)-(2);
ii)19.5(1);
iii)19.6(1);
iv)19.8(1)(d)-(e);
v)19.9(1);
vi)19.11(1)-(4); and
vii)19.13(1);
the First Respondent did not make or keep, or cause to be made or kept, a record in the required form or which contained the content required pursuant to Chapter 2, Part 19, Division 2 and 3 of the WR Regulations.
In contravention of ss.535(1) and 535(2) of the FW Act, the First Respondent failed to make or keep records in accordance with regulations:
i)3.32(d);
ii)3.32(e);
iii)3.33(1);
iv)3.33(2);
v)3.33(3);
vi)3.34; and
vii)3.37;
of the FW Regulations in the required form or which contained the content required pursuant to s.535 of the FW Act and Part 3-6, Division 3, Subdivision 1 of the Fair Work Regulations 2009 (Cth).
The Second Respondent, it is agreed:
a)was involved in all of the contraventions alleged against the First Respondent referred to in the previous paragraphs for the purposes of s.728(1) of the WR Act and s.550(1) of the FW Act; and
b)is pursuant to s.728(1) of the WR Act and s.550(1) of the FW Act to be treated as having himself contravened the relevant civil remedy provisions (and each of them), in that he:
i)aided, abetted, counselled or procured;
ii)induced; or
iii)by way of his acts or omissions, was directly or indirectly knowingly concerned in or a party to,
each of the contraventions alleged against the First Respondent in respect of the period on and from 27 March 2006.
The Second Respondent is and was at all relevant times:
a)since 7 August 2006 the sole director and secretary of the First Respondent;
b)a shareholder of the First Respondent via shares held in a personal capacity (108,000 of a total of 240,000 shares);
c)a shareholder of Chemfair Man Group Pty Ltd (as the Second Respondent is a director, secretary and shareholder of Chamfair Man Group Pty Ltd; holding 50 of a total of 100 shares), which is a shareholder of the First Respondent;
d)responsible, along with the Third Respondent, for the overall direction, management and supervision of the First Respondent’s operations and employees;
e)responsible for the day to day management of the employment of employees on behalf of the First Respondent, including Mr White;
f)
responsible for setting and adjusting pay rates and wages and conditions of employees of the First Respondent, including determining that the First Respondent would not provide
Mr White with any pay increases during his period of employment;
g)aware of and responsible for the hours of work and type of work performed by employees, including Mr White;
h)jointly responsible, along with the Third Respondent, for making payments of wages to the employees of the First Respondent;
i)responsible for the making and keeping of, or causing to be made or kept on behalf of the First Respondent, records in relation to employees employed by the First Respondent;
j)aware of how, and of the extent to which, records were kept by the First Respondent in respect of employees;
k)aware that payslips were not issued to Mr White;
l)responsible for matters relating to taxation, superannuation and remuneration of employees;
m)along with the Third Respondent, was the point of contact for employees who sought to be paid their entitlements;
n)along with the Third Respondent, was the point of contact for the office of the Applicant in relation to the complaint made by Mr White to the office of the Applicant hence was aware of the nature and substance of the complaint; and was
o)responsible in a practical sense for ensuring that the First Respondent complied with its legal obligations to its employees.
The Third Respondent, it is agreed:
a)was involved in all of the contraventions alleged against the First Respondent referred to in the previous paragraphs for the purposes of s.728(1) of the WR Act and s.550(1) of the FW Act; and
b)is pursuant to s.728(1) of the WR Act and s.550(1) of the FW Act to be treated as having herself contravened the relevant civil remedy provisions (and each of them), in that she:
aided, in accordance with s.728(2)(a) of the WR Act and s.550(2)(a) of the FW Act, each of the contraventions alleged against the First Respondent in the paragraphs above in respect of the period on and from 27 March 2006.
The Third Respondent is and was at all relevant times:
a)the wife of the Second Respondent;
b)engaged by the First Respondent in a secretarial capacity;
c)a shareholder of Chemfair Man Group Pty Ltd (as the Second Respondent is a director, secretary and shareholder of Chamfair Man Group Pty Ltd; holding 50 of a total of 100 shares), which is a shareholder of the First Respondent;
d)responsible, subject to the instruction of the Second Respondent, for the day-to-day management of the employment of employees on behalf of the First Respondent, including Mr White;
e)responsible, subject to the instruction of the Second Respondent, for setting and adjusting pay rates and wages and conditions of employees of the First Respondent;
f)responsible, subject to the instruction of the Second Respondent, for making payments of wages to the employees of the First Respondent, including Mr White;
g)responsible, subject to the instruction of the Second Respondent, for the making and keeping of, or causing to be made or kept on behalf of the First Respondent, records in relation to employees employed by the First Respondent;
h)aware of how, and of the extent to which, records were kept by the First Respondent in respect of employees;
i)aware that payslips were not issued to Mr White;
j)along with the Second Respondent, was the point of contact for employees who sought to be paid their entitlements; and
k)along with the Second Respondent, was the point of contact for the office of the Applicant in relation to the complaint made by Mr White to the office of the Applicant hence was aware of the nature and substance of the complaint.
Consideration
The respondents have admitted liability. The parties agree to the making of declarations in the form that will be made. These reasons deal with the issue of penalty. The following account is based on the Agreed Statement of Facts filed by the parties on 29 June 2012 and their submissions as to penalty, all of which are in evidence.
On 10 June 2010, the office of the Applicant received a complaint form from Mr White in relation to his complaint. On 16 June 2010, the office of the Applicant wrote to the First Respondent, advising that a complaint had been made. The letter set out that the matter may be resolved using the Applicant’s Assisted Voluntary Resolution process in order to reach a resolution quickly and without the need to commence a formal investigation. Following contact with the Third Respondent by telephone, on 9 July 2010, a Fair Work Inspector telephoned the Third Respondent and advised that the complaint would be progressing to a formal investigation. On 12 July 2010, a letter was sent to the First Respondent at 2-18 Hargreaves Street Huntingdale in the State of Victoria confirming this course. On 31 August 2010, a determination of contravention letter was sent to the First Respondent in relation to the complaint. The registered post receipt indicates that the letter was delivered on 2 September 2010. On 17 September 2010, a final contravention letter was sent to the First Respondent. The registered post receipt indicates that the letter was delivered on 20 September 2010. In October and November 2010, the Fair Work Inspector had correspondence with the Second and Third Respondent by email and telephone regarding the complaint in which they provided information about their view of Mr White’s employment. Subsequently, Fair Work Inspector communicated with the solicitors for the First and Second Respondents to resolve the matter before the Application and Statement of Claim were filed on 3 November 2011. Further delays occurred in progressing the matter with an order for substituted service being required to be made in respect of the Third Respondent on 22 February 2012. Throughout the entire proceedings the respondents were slow in participating at all in the proceedings and in making admissions, although they did ultimately admit liability and agreed to a statement of facts, a mitigating factor. However, they failed to facilitate the efficient conduct of the proceedings and no rectification of the underpayment was attempted or financial information as to their circumstances provided in a timely fashion.
The respondents rely upon; the Affidavits of the Second Respondent sworn 27 August 2012 and 6 September 2012; and the Affidavit of the Third Respondent sworn 27 August 2012.
Reasons given by the respondents for their contraventions included the following:
a)Their lack of familiarity with the requirements of the legislation;
i)The Second Respondent deposed in his Affidavit sworn 27 August 2012 that when he bought into Top Value International Pty Ltd (‘Top Value’) in 2002, that the existing entrepreneur, Mr David Bidstrop, had systems in place for the hiring of staff and their payment, and that he relied on those systems. His role was more out of the office, a fact supported by the Affidavit of Mr White sworn on 12 July 2012 and filed on behalf of the Applicant. He swore that the hiring of Mr White and determining his pay was the responsibility of Top Value’s office manager, Ms Elizabeth Tan. Following her departure, her role was taken over by Mr Leo Capuano as general manager and then by Ms Rita Saad. The Second Respondent claimed that not only was he consistently absent from the business but that he came to Australia in 1996 as an adult with no English skills in reading or writing. The Second Respondent relied upon manager employees to fix wages and to maintain payment regimes. It was not until after being contacted by the Applicant (after Mr White left the employ of Top Value) that he became aware of the complexities of the wage fixing regimes.
ii)The Third Respondent deposed in her Affidavit sworn 27 August 2012 that she has limited skills in English, that she was taught the accounting system by Mr Bidstrop, and that she was able to carry out accounting functions easily. In her Affidavit sworn 27 August 2012, the Third Respondent deposed that she could not understand the written communications that were addressed to her, including the various communications deposed to, and exhibited to, the Affidavit of Ms Caroline Weston sworn 12 July 2012. She referred all written communication to the Second Respondent or to her daughter, Catherine, who was living in Hong Kong. She continued to apply the wages that were in place in the MYOB program. She lacked the means to obtain knowledge of the requirements of legislation and awards.
b)The limited work ability of Mr White:
i)The affidavits filed on behalf of the respondents alleged a limited work ability and limited work practices of Mr White. He was described as a poor worker who carried out his work in a slow manner and with frequent mistakes. The respondents alleged that he spent a lot of time in the lunch room when he should have been working and that there were instances of theft, resulting in a formal warning letter.
ii)In contrast, the Affidavit of Mr White sworn 12 July 2012 alleged that he was a key person in the business because of his forklift licence. He swore that he was the only forklift driver employed by Top Value, ignoring the time that he was absent from his employment in 2005.
c)The benevolent nature of the respondents:
i)
The Second and Third Respondents both refer to their sense of responsibility towards Mr White and their desire to provide him with work, despite his deficiencies. The Second Respondent deposed that he believed that but for
Mr White’s employment at Top Value, he would have been unemployed. The First Respondent evidences its benevolent nature by exhibiting awards for donations to causes for children and the disadvantaged, specifically, the Scout, Safety House, the Salvation Army and Disabled Youth Sports Day.
d)Mr White’s choice:
i)
Both the Second and Third Respondent deposed that
Mr White commenced work at Top Value in 2004, Mr White says in January 2004, the same month that he qualified for his fork lift driver’s licence. It is agreed that he left Top Value in March 2005, having worked there for over a year. He returned, of his own volition, and asked for his old job back after three months. He deposed that in those three months, he worked for Preston Motors at a higher rate of pay. At the time that he left, he was being paid $12.50 per hour. He returned to be paid the same amount and remained in that employment until he left in June 2010, again of his own accord, a week before he complained to the Applicant on 10 June 2012 (according to the Affidavit of Ms Weston sworn 12 July 2012). There is no evidence of Mr White having requested a pay rise or having raised his underpayment until after he left the occupation of Top Value. The respondents asserted Mr White should have discussed the quantum of his pay with them over this lengthy period, and that had he done so they would have terminated his employment. The Second Respondent deposed that Mr White was kept on by them because “we know he would get government pay otherwise”
Penalty
In respect of penalty, the Applicant relies upon:
a)the Agreed Facts;
b)the Affidavit of Fair Work Inspector Ms Caroline Weston sworn and filed on 12 July 2012;
c)the Affidavit of Mr White affirmed on 9 July 2012 and filed on 12 July 2012;
d)five affidavits of Ms Kathleen Ben Yair, three sworn on 9 December 2011 and filed on 13 December 2011, one sworn on 31 January 2012 and filed on 13 February 2012, one sworn on 14 March 2012 and filed on 16 March 2012; and
e)Affidavit of Ms Anica Grace Winterburn affirmed and filed on 12 July 2012.
A non-exhaustive list of factors potentially relevant to the imposition of a penalty under the WR Act was summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at paragraphs 26-59 as follows:
a)the nature and extent of the conduct which led to the breaches;
b)the circumstances in which that conduct took place;
c)the nature and extent of any loss or damage sustained as a result of the breaches;
d)whether there had been similar previous conduct by the Respondent;
e)whether the breaches were properly distinct or arose out of the one course of conduct;
f)the size of the business enterprise involved;
g)whether or not the breaches were deliberate;
h)whether senior management was involved in the breaches;
i)whether the party committing the breach had exhibited contrition;
j)whether the party committing the breach had taken corrective action;
k)whether the party committing the breach had cooperated with the enforcement authorities;
l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
m)the need for specific and general deterrence.
This summary was adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14 at paragraph 14. Whilst the summary is a convenient checklist, it does not prescribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion (Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 at paragraph 11). I have taken the relevant and significant matters as applicable to these facts from those set out in the summary into account as detailed hereafter.
The Court determines that the 33 contraventions alleged should be treated as if they were grouped as to:
a)three contraventions relating to payment contraventions; and
b)two relating to record keeping.
The Court accepts that, for the purposes of penalty only, there were three contraventions relating to base payments, casual loading and overtime loading and two contraventions relating to record keeping, and that the maximum penalties are as follows:
a)the First Respondent:
i)failure to pay base rates of pay $33,000;
ii)failure to pay casual loading $33,000;
iii)failure to pay overtime loading $33,000;
iv)failure to provide payslips $16,500; and
v)failure to maintain records $16,500;
b)the Second and Third Respondents:
i)failure to pay base rates of pay $6,600;
ii)failure to pay casual loading $6,600;
iii)failure to pay overtime loading $6,600;
iv)failure to provide payslips $3,300; and
v)failure to maintain records $3,300.
Thus, the maximum penalty for the First Respondent is $132,000 and for each of the Second and Third Respondents is $26,400.
I accept the submissions of the Applicant that the contraventions represent a failure to provide basic and important conditions and entitlements under the workplace relations legislation. The purpose of the legislation is to provide a safety net which ensures adequate minimum entitlements to employees, particularly those whom are vulnerable or in low income roles. The legislation is also designed to provide an even playing field for all employers with regard to employment costs. Contraventions of the fundamental entitlements undermines the workplace relations regime as a whole and displays a disregard for the respondents’ statutory obligations.
The rate of $12.50 per hour paid to Mr White throughout his entire period of employment was extremely low. It was less than the Federal Minimum Wage, demonstrating just how low the payment was.
The underpayment to Mr White was comparatively significant in the context of his period of employment and his rate of pay. The contravening conduct in relation to Mr White’s underpayment spanned a total period of approximately four and a half years from November 2005 to May 2010.
The respondents’ conduct displayed a general disregard for compliance with workplace laws or if not that, because I accept the respondents as a matter of practice relied upon others in a managerial capacity with a better command of the English language, to deal with the complexities of the requirements relating to payments, then displayed an indifference to the breaches. No contrition was evident and the apology proferred by the Second Respondent on the day of the hearing, I find not to be genuine. It was far too late in the day and was not accompanied by any efforts to date to repay Mr White monies owed to him.
The manner in which the Respondents sought to justify their conduct, by seeking to suggest that Mr White variously did not have the capacity to perform his duties, had poor eyesight, and was suffering from a mental disability, did the respondents no credit and on the hearing of the matter there was no reliance put by the respondents on this alleged conduct on the part of the employee. The evidence is that Mr White worked for them for approximately six years and for a large portion of that period was the only person who could operate the forklifts integral to the loading and unloading of their stock. Over his period of employment, he worked significant hours, including overtime and weekends at the respondents’ request.
Mr White has been deprived of the benefit of the unpaid amounts for a significant period of time. It is now more than six years since the commencement of the conduct, and more than two years since he ceased employment with the First Respondent. He is 60 years of age and currently in casual employment. The underpayment amount will be of great significance to him.
There is a need to impose a sufficiently meaningful and deterrent penalty. The Second and Third Respondents’ actions were the actions of the First Respondent.
The Applicant sought a penalty be imposed in the range of 40 to 60 per cent of the maximum in each of the groupings, with a submission at hearing the penalty be 60 per cent with a 20 per cent reduction first taken from the maximum penalty for admissions in relation to the Agreed Statement of Facts. So the Applicant sought for the First Respondent, a penalty of $132,000 less 20 per cent ($26,400) equalling $105,600 and then 60 per cent of this sum resulting in a figure of $63,360. For each of the Second and Third Respondents, the Applicant sought a penalty of $26,400 less 20 per cent ($5,280) equalling $21,120 and then 60 per cent of this sum resulting in a figure of $12,672. Counsel for the respondents agreed with the range proposed but stated the penalty should be at the lower end being 40 per cent for three of the grouped contraventions being failure to pay the base rate of pay, failure to pay the casual loading and failure to make and/or keep employment records, and 5 per cent for the remaining two groups of over time and pay slips, with the Third Respondent to pay only 10 per cent of the individual penalties imposed upon the Second Respondent in recognition of her being a functionary of her husband in operating the wages system, and the reduction for admissions be 25 per cent. So the respondents sought a penalty of $26,606.25 for the First Respondent; $5,321.25 for the Second Respondent; and $532.13 for the Third Respondent.
The evidence before the Court as to the financial position of the respondents and each of their capacity to pay was more limited then it should have been, and presented difficulties in determining whether the quantum of any penalty would be crushing to each of them. The Applicant is seeking substantial penalties. The evidence as to:
a)the First Respondent’s ability to pay any penalty and the amount owed to Mr White is that it is no longer operating any small business, but has around $220,000 in uncollected receivables. Legal action has been taken to recover this debt. It is the intention of the Second Respondent to pay to Mr White the money which he is owed out of these recovered funds. There will then be further funds available to meet a penalty payment, but that quantum will depend on the payment of legal costs and the sum able to be recovered. The company may have no prospect of meeting the penalty. The penalty should not be so oppressive such that the First Respondent conducts no business in the future. A penalty of 40 per cent of the maximum with a 20 per cent reduction is in my view appropriate. That is a sum of $42,240; and
b)the Second and Third Respondents ability to pay any penalty as sought by the Applicant, on the evidence, is limited and such a payment by each of them may be oppressive. The family home in which they reside has a mortgage in the sum of $920,000 approximately, and a value estimated to be $950,000. Neither of the First or Second Respondent is now currently employed and their receipt of income in the financial year ended 30 June 2011 was in total approximately $40,000. They obtain rental payments from a tenancy on their property of $300 a week and have lived off the proceeds of sale of their business which was sold in July 2011 for $650,000, with debts then being repaid and the sum remaining being exhausted. They have incurred the legal costs of these proceedings. It is not clear on the evidence how their mortgage is being met and nor is it clear how the respondents attend to an interest payment of $20,000 a year to a person in China from whom they (many years ago) borrowed $150,000. A clear picture of their assets and income was not able to be gleaned.
I accept that the Third Respondent’s actions were less reprehensible given her role in the business and poor command of the English language, than that of the other respondents. I accept the discount that is appropriate is that put forward by the Applicant being 20 per cent. In the circumstances of this case, I propose a penalty for the Second Respondent of 40 per cent of the maximum and for the Third Respondent of 10 per cent of the maximum. The resultant penalties are $8,448 and $2,112 respectively. I have not distinguished between the groupings as suggested by Counsel for the respondents preferring, given the findings I have made, the approach of Counsel for the Applicant and being satisfied, looking to the aggregate penalty in the application of “the totality principle”, that these penalties are an appropriate response to the conduct which led to the breaches.
I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Hartnett FM
Associate:
Date: 1 February 2013
3
0