Fair Work Ombudsman v Tran
[2023] FedCFamC2G 1038
•15 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Tran [2023] FedCFamC2G 1038
File number: LNG 42 of 2021 Judgment of: JUDGE TAGLIERI Date of judgment: 15 November 2023 Catchwords: INDUSTRIAL LAW – penalty hearing – contraventions of Fair Work Act 2009 (Cth) – where parties agree as to penalty within a specified range – determination of quantum of penalties to be paid to Commonwealth – penalty orders made Legislation: Crimes Act 1914 (Cth) s 12
Fair Work Act 2009 (Cth) ss 44, 45, 90(1), 90(2), 116, 125(1), 535(1), 536(1), 536(2), 539(2), 546, 557, 557(1), 718A(1)
Restaurant Industry Award 2010 cls 20.1, 33.1(a), 33.2(a) 33.1(b), 34.1, 35.2(b),
Cases cited: Australian Building and Construction Commissioner v J Hutchinson Pty Ltd T/A Hutchinson Builders [2019] FCA 667
Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate and Ors (2015) 258 CLR 485
Fair Work Ombudsman v Grouped Property Services Pty Ltd (No.2) [2017] FCA 557
Fair Work Ombudsman v NSH North Proprietary Limited trading as New Shanghai Charlestown [2017] FCA 1301
Trade Practices Commission v CSR Ltd [1990] FCA 521
Markarian v R (2005) 228 CLR 357
Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Sayed v Construction, Forestry, Mining and Energy Union [2015] FCA 338
Division: Division 2 General Federal Law Number of paragraphs: 41 Date of hearing: 20 July and 30 October 2023 Place: Hobart Counsel for the Applicant: Ms Leoncio Solicitor for the Applicant: Norton Rose Fulbright Counsel for the Respondents: Mr Rinaldi Solicitor for the Respondents: Dobson Mitchell & Allport ORDERS
LNG 42 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: XUAN TRAN
First Respondent
QUANG MANH DONG
Second Respondent
ORDER MADE BY:
JUDGE TAGLIERI
DATE OF ORDER:
15 NOVEMBER 2023
THE COURT ORDERS THAT:
1.Pursuant to section 546(1) of the Fair Work Act 2009 (Cth) (FW Act):
(a)the First Respondent pay pecuniary penalties of $45,532.80 in respect of the contraventions set out in the Orders of 30 May 2023; and
(b)the Second Respondent pay pecuniary penalties of $23,990.40 in respect of the contraventions set out in the Orders of 30 May 2023.
2.Pursuant to section 546(3) of the FW Act, the penalty amounts referred to in Order 1 above be paid to the Consolidated Revenue Fund of the Commonwealth in accordance with the following payment schedule:
Payment No. Date of payment Amount of payment (fraction of penalty amount) 1 1 calendar month after the date of this Order (Order Date) 1/12th 2 2 calendar months after the Order Date 1/12th 3 3 calendar months after the Order Date 1/12th 4 4 calendar months after the Order Date 1/12th 5 5 calendar months after the Order Date 1/12th 6 6 calendar months after the Order Date 1/12th 7 7 calendar months after the Order Date 1/12th 8 8 calendar months after the Order Date 1/12th 9 9 calendar months after the Order Date 1/12th 10 10 calendar months after the Order Date 1/12th 11 11 calendar months after the Order Date 1/12th 12 12 calendar months after the Order Date 1/12th 3.In the event of default of compliance with Order 2, the outstanding balance of the penalty amounts referred to in Order 1 will become due and payable in accordance with the terms of the written payment plan, signed by parties on 25 October 2023.
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 Taglieri
These proceedings relate to various contraventions of the Fair Work Act 2009 (Cth) (“the Act”) and the Restaurant Industry Award 2010 (“the Award”). The Applicant commenced proceedings on 17 August 2021 seeking declarations and orders for payment of compensation and imposition of penalties.
Liability was determined in respect of the allegations against the Respondents by consent and orders were made on 30 May 2023, as follows:
1.It is declared that the Respondents contravened the following civil remedy provisions of the Fair Work Act 2009 (Cth) (FW Act):
(a)section 45 of the FW Act by contravening clause 31.2(e) of the Award by failing to arrange Mr Khanh Nguyen’s (Nguyen) ordinary hours to ensure he was “[g]iven a minimum of eight full days off per four week period”;
(b)section 45 of the FW Act by contravening clause 20.1 of the Restaurant Industry Award 2010 (Award) by failing to pay Nguyen the minimum hourly rate required to be paid to adult employees;
(c)section 45 of the FW Act by contravening clause 20.1 of the Award by failing to pay Ms Hai Tran (Tran) the minimum hourly rate required to be paid to adult employees;
(d)section 45 of the FW Act by contravening clause 34.1 of the Award by failing to pay Nguyen appropriate penalty rates for work performed on a public holiday;
(e)section 45 of the FW Act by contravening clause 34.1 of the Award by failing to pay Tran appropriate penalty rates for work performed on a public holiday;
(f)section 44(1) of the FW Act by contravening section 116 of the FW Act by failing to pay Tran for a day or part days she was absent from her employment on a day that was a public holiday;
(g)section 45 of the FW Act by contravening clauses 33.1(a), 33.1(b) and 33.2(a) of the Award by failing to pay Nguyen’s overtime rates for Monday to Friday, for the first two hours of overtime worked;
(h)section 45 of the FW Act by contravening clauses 33.1(a), 33.1(b) and 33.2(a) of the Award by failing to pay Nguyen’s overtime rates for Monday to Friday, where in excess of two hours overtime was worked;
(i)section 45 of the FW Act by contravening clauses 33.1(a), 33.1(b) and 33.2(b) of the Award by failing to pay Nguyen’s overtime rates on Saturdays, for the first two hours of overtime worked;
(j)section 45 of the FW Act by contravening clauses 33.1(a), 33.1(b) and 33.2(b) of the Award by failing to pay Nguyen’s overtime rates on Saturdays, where in excess of two hours overtime was worked;
(k) section 44 of the FW Act by contravening section 90(1) of the FW Act by failing to pay Nguyen the base rate of pay for his ordinary hours of work during a period of paid annual leave;
(l)section 45 of the FW Act by contravening clause 35.2(b) of the Award by failing to pay Nguyen and Tran (the Employees) annual leave loading of 17.5%;
(m) section 44(1) of the FW Act by contravening section 90(2) of the FW Act by failing to pay the Employees for annual leave on termination;
(n)section 44(1) of the FW Act by contravening section 125(1) of the FW Act by failing to provide Nguyen with the Fair Work Information Statement;
(o)section 535(1) of the FW Act by failing to comply with their obligations in relation to employee records for the Employees of the kind prescribed by Regulations:
(i) 3.33(1)(a), (b) and (c);
(ii) 3.34(a) and (b);
(iii) 3.36(1)(a) and (b); and (iv) 3.37(1);
(p)section 536(1) of the FW Act by failing to provide pay slips to the Employees within one working day of paying an amount to the Employees in relation to the performance of work;
(q)section 536(2) of the FW Act by failing to comply with their obligations to the Employees in relation to pay slips in conformity with the Regulations (regulations 3.45 and 3.46).
2.It is declared that the First Respondent contravened section 718A of the FW Act by providing false or misleading information or documents to a Fair Work Inspector.
3.Pursuant to s 545(2)(b) of the FW Act, the Respondents, jointly and severally, pay the following amounts to the Applicant on or before 16 June 2023 by way of compensation for amounts underpaid to the Employees, to be distributed as follows:
(a) $156,316.31 to Nguyen; and
(b) $18,683.69 to Hai Tran.
4.Pursuant to section 545(1) of the FW Act requiring:
(a)the Respondents engage a suitably qualified compliance professional or legal practitioner with expertise in workplace relations law to conduct training for each of the Respondents, to occur within three months of the date of the Court's orders, in relation to compliance with:
wages and work-related entitlements under the Award; and
accrual and payment of entitlements under the National Employment Standards contained in Part 2-2 of the FW Act; and
(b)the Respondents notify the Applicant in writing, within seven days of completion of the training, of the name(s) of the person(s) who conducted the training, and the topics covered in the training.
5.Pursuant to section 545(1) of the FW Act that within a period of two months each of the Respondents is to:
(a)register Vina Yummy Kitchen with the Applicant's ‘My Account’ portal at and complete the profile including the Award options;
(b)provide to the Applicant their ‘My Account’ Customer Reference Number/s; and
(c)register Vina Yummy Kitchen with the Applicant's Online Learning Centre at and complete all education courses designed for employers.
6.The hearing on the question of liability be vacated.
7.The Applicant file and serve any affidavits and outline of submissions on the question of penalties on or before 23 June 2023.
8.The Respondents file and serve any affidavits and outline of submissions on the question of penalties on or before 7 July 2023.
9.The Applicant file and serve any material in reply, including any submissions, on the question of penalties on or before 14 July 2023.
10.The hearing on the question of penalties be listed on 21 July 2023 at 10:00am in person in Melbourne with an estimated hearing time of 1 day (“the hearing”).
[original emphasis]
The proceedings were adjourned to 20 July 2023 for a hearing in respect of the question of penalty. At that time the Applicant’s evidence in respect of penalty was heard while the Respondents’ evidence was part heard. The penalty hearing was adjourned to 30 October 2023 for the purpose of completing the penalty hearing.
At the adjourned penalty hearing, the parties informed the Court that they had reached agreement in respect of the appropriate penalty ranges. The parties through their Counsel made brief submissions as to proposed orders which they asked the Court to make by consent. They also invited the Court to conclude the penalty hearing by reference to:
(a)A Statement of Agreed Facts filed 25 October 2023; and
(b)Joint submissions filed on the 25th of October 2023.
Having briefly read the Statement of Agreed Facts and joint submissions, I was satisfied that relevant matters had been addressed to permit the Court to conclude the penalty hearing on the papers. I made the following orders by consent:
1.The balance of the adjourned hearing to determine penalties in these proceedings listed 30 October 2023 is vacated.
2.Finalisation of the hearing as to penalties in these proceedings is adjourned to Chambers for determination on the papers.
3.Judgment on penalty is reserved and to be delivered on a date to be notified to the parties by Chambers.
This judgment now contains the reasons for concluding that the Respondents should pay the following penalties:
(1)The First Respondent pay penalties in the total sum of $45,532.80; and
(2)The Second Respondent pay penalties in the total sum of $23,990.40.
RELEVANT FINDINGS
By reference to the Statement of Agreed Facts at [10] to [25] inclusive, the Court makes the following findings:
The Respondents
10. The First Respondent and the Second Respondent are husband and wife.
11. The First Respondent:
(a)runs the Vina Yummy Kitchen restaurant jointly with the Second Respondent; and
(b)undertakes the administration of and paperwork for Vina Yummy Kitchen
12. The Second Respondent:
(a)runs the Vina Yummy Kitchen restaurant jointly with the First Respondent;
(b)is the head chef of Vina Yummy Kitchen;
(c)did not have detailed knowledge of the records kept by the business;
(d)worked extensively with Nguyen in the kitchen of the Restaurant and was aware of the hours worked by Nguyen; and
(e)handed cash payments to one of the Employees during the Assessment Periods
13.Vina Yummy Kitchen is currently registered with the Australian Securities and Investments Commission on the Australian Business Names Register.
14.The Respondents continue to operate Vina Yummy Kitchen and trade to the public in partnership.
The Employees
15.Ms Hai Tran (Hai Tran) and Mr Khanh Nguyen (Nguyen) are husband and wife.
16.Hai Tran and Nguyen were born in Vietnam.
17.Hai Tran and Nguyen lived in Vietnam together until 2013 with their two sons.
18.Hai Tran is the First Respondent's sister.
19.Hai Tran and Nguyen do not speak English fluently.
Employment
20.The First Respondent assisted Hai Tran and her family to emigrate to Australia from Vietnam.
21.The Partnership sponsored Hai Tran's subclass 457 visa.
22.Hai Tran and Nguyen migrated to Australia from Vietnam with their two sons in or around March 2013.
23.In addition to a number of other employees, the Partnership employed Hai Tran and Nguyen (together, the Employees) to perform work at Vina Yummy Kitchen.
24.Hai Tran worked front-of-house and in the kitchen with the Second Respondent at Vina Yummy Kitchen.
25.Nguyen worked in the kitchen with the Second Respondent at Vina Yummy Kitchen.
[original emphasis]
I find that the contraventions occurred between 17 August 2015 and 26 June 2017 in the case of the employee Tran and between 17 August 2015 and 25 August 2019 in the case of Nguyen.[1]
[1] Statement of Agreed Facts filed 17 April 2023.
In addition, by reference to the Statement of Agreed Facts at [26] and [29], the Court finds that both Respondents have apologised for their breaches of the Act and have taken corrective actions with a view to educating themselves in respect of requirements of the Act and to mitigate against similar breaches in the future.
The Respondents have paid the compensation due to Tran and Nguyen pursuant to the orders made on 30 May 2023.[2]
[2] Statement of Agreed Facts 25 October 2023 at [4].
The parties also agree that, according to data collected by the Applicant between July 2018 and December 2022, the industry in which the Respondents operate is a high-risk industry in respect of contraventions of the Act. This is particularly so in respect of contraventions relating to underpayment of hourly rates, wages and conditions, annual leave, provision of payslips, and failure to pay penalty rates, which are among the top 10 contraventions in the industry. I find accordingly.
JOINT SUBMISSIONS OF THE PARTIES AS TO PENALTY
The parties jointly submitted that the range of penalty that ought to be imposed in total after discounts is $45,532.80 to $56,304.00 against Tran and $23,990.40 to $32,313.60 against Nguyen.[3]
[3] Joint submissions filed 25 October 2023 at [79].
They agreed that important public policy principles required promotion and predictability of civil penalties and that, consistent with the nature of civil proceedings, the Court may approve compromises reached between the parties relating to penalties.[4]
[4] Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate and Ors (2015) 258 CLR 485.
The parties’ joint submissions also include a summary of principles extracted from the authorities which apply to assessment of penalties for the relevant contraventions. I do not repeat those principles and agree that the summary of them in the joint submissions is accurate.[5]
[5] Statement of Agreed facts filed 25 October 2023 at [18].
The Court’s power to order penalties is provided for in s 546 of the Act.
The Court accepts that deterrence is the primary purpose of imposition of civil penalties for contraventions of the Act,[6] and furthermore that the Court’s task involves an exercise of broad discretion involving instinctive synthesis. Further, there is a well-established five-step approach to be taken by the Court, the nature of which is usefully summarised in Fair Work Ombudsman v NSH North Proprietary Limited trading as New Shanghai Charlestown [2017] FCA 1301 at [36].
[6] Trade Practices Commission v CSR Ltd [1990] FCA 521.
WHAT PENALTY SHOULD BE IMPOSED?
The Respondents each committed the contraventions that are referred to at [2] of these reasons.
Section 557 of the Act permits two or more contraventions of a specified civil remedy provision to be taken to constitute a single contravention, where committed by the same person and arising out of a single course of conduct.
The parties agreed in their joint submissions filed 25 October 2023 at [24] that, except in respect of the contraventions of s 90(2) of the Act, the Respondents are entitled to the benefit of s 557(1) of the Act to group multiple contraventions of the same term of the Award or same provision of the National Employment Standards.
In respect of the contravention of s 90(2) of the Act, it is agreed that because a decision not to pay annual leave on termination of employment of the two employees occurred on different dates,[7] the contraventions by the Respondents in respect of each employee cannot be taken to have arisen from the same course of conduct. I accept the submission as logically and factually causally correct.
[7] 26 June 2017 and 25 August 2019.
The parties jointly submitted that the Respondents’ contraventions of ss 536(1) and 536(2) of the Act arose essentially from the same conduct, being the failure to provide payslips. I agree with the joint submission that to ensure that there is no overlap or risk of penalising twice for the same conduct, the contraventions should be grouped.
Ultimately, the parties submitted that grouping pursuant to s 557 of the Act and common law grouping relating to ss 536(1) and (2) of the Act, the Court should impose penalties as if there were 13 contraventions as set out as follows:
(a)Five contraventions of s 45 of the Act in respect of the following breaches of the Award:
(i)clause 20.1 (failure to pay Employees minimum rate);
(ii)clause 34.1 (failure to pay Employees for public holiday work);
(iii)clauses 33.1(a), 33.1(b) and 33.2(a) (failure to pay Nguyen weekday overtime);
(iv)clauses 33.1(a), 33.1(b) and 33.2(b) (failure to pay Nguyen Saturday overtime); and
(v)clause 35.2(b) (failure to pay Employees annual leave loading);
(b)Five contraventions of s 44 of the Act for the following breaches of the National Employment Standards;
(i)section 116 of the Act (failure to pay Hai Tran for public holiday absence);
(ii)section 90(1) of the Act (failure to pay Nguyen annual leave);
(iii)section 90(2) of the Act (failure to pay Hai Tran annual leave on termination);
(iv)section 90(2) of the Act (failure to pay Nguyen annual leave on termination); and
(v)section 125(1) of the Act (failure to provide Nguyen the Fair Work Information Statement);
(c)One contravention of s 535(1) of the Act (failure to comply with employee record obligations);
(d)One contravention of ss 536(1) and 536(2) of the Act (failure to comply with payslip obligations), with these contraventions grouped pursuant to common law course of conduct principles; and
(e)One contravention of s 718A(1) of the Act (provision of false or misleading information, in respect of the Xuan Tran only).
I am satisfied that the groupings proposed by the parties are appropriate in view of the facts established by the Statement of Agreed Facts filed 25 October 2023 and the principles referred to at [18] to [21] of these reasons.
It is uncontroversial that there should be a reasonable relationship between the theoretical maximum penalty available and the final penalty imposed by court order.[8]
[8] Australian Building and Construction Commissioner v J Hutchinson Pty Ltd T/A Hutchinson Builders [2019] FCA 667 at [35]; Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [108] per Buchanan J, citing Markarian v R (2005) 228 CLR 357 at [31]; Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450 at [10] and [53] to [55], citing Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25 at [156].
The maximum penalties are those which are set out in the tables in s 539(2) of the Act. These are expressed to be a multiple of the value of a penalty unit as defined by the Crimes Act 1914 (Cth).[9] The parties were in agreement and I am satisfied, that the penalty unit values during the relevant periods are as follows:
(a)$180 for the contraventions between 31 July 2015 and 30 June 2017; and
(b)$210 for the contraventions between 1 July 2017 and 30 June 2020.
[9] Section 4AA of the Crimes Act 1914 (Cth) and s 12 of the Act.
Some contraventions that are the subject of the liability determination occurred solely during the period where the penalty unit applicable was $180 dollars.[10] The contraventions in respect of s 44 of the Act, by failing to pay annual leave on termination to the employee Nguyen, and further, the contravention of s 718A(1) of the Act, relating to production the false and misleading records to the Applicant occurred when the penalty was $210. All other remaining contraventions concern conduct which spans periods where the penalty unit value was either $180 or $210. I accept that for these remaining contraventions, the higher penalty rate should apply following the reasoning in of Katzmann J in Fair Work Ombudsman v Grouped Property Services Pty Ltd (No.2) [2017] FCA 557 at [396] to [398].
[10] Joint written submissions filed 25 October 2023 at [34], in respect of all declarations relating to Tran, declarations 1(n) for relating to Tran and Nguyen.
Both specific and general deterrence is required in these proceedings. However, in the case of specific deterrence, the familial relations which underpinned the employment of Tran and Nguyen are in my view not typical or common. They likely contributed to less attention, a casual attitude and inadequate concern for arrangements concerning their employment by the Respondents. While this does not excuse the contraventions, it is in my view relevant to the range of penalty required for specific deterrence. Similarly relevant to specific deterrence is the very significant financial impost on the Respondents because of their contraventions and the nature of the family business they run.
Both factors referred to at [27] of these reasons mean it is unlikely that similar conduct will recur by the Respondents. Accordingly, I consider general deterrence to be a consideration of greater importance on the facts of this case, especially given the high-risk nature of contraventions of the Awards and Act relating to minimum standards in the cafes, restaurants and takeaway foods industry. By this view, I do not ignore specific deterrence but evaluate it has less purpose to serve.
The nature and extent of the conduct which led to the contraventions by the Respondents largely reflected their naïveté, casual attitude and inexperience of the laws governing employment relationships in Australia.[11] Again, this does not excuse the Respondents’ contraventions, but it does distinguish the conduct from deliberate and flagrant breaches by a knowledgeable or sophisticated employer.
[11] Statement of Agreed Facts filed 25 October 2023 at [28] and [29].
In the case of Nguyen in particular, the nature and extent of loss sustained was large. However, the loss has now been compensated, and I take this into account.
I also consider, as was submitted orally on 30 October 2023, that there is no evidence of similar contraventions by the Respondents and that I have found that the risk of recurrence of the same behaviour is low.
The Respondents’ business is a small family business, and I infer based on the admitted small size of the business[12] that it has been considerably financially impacted because of these proceedings, the compensation paid to the employees, and in due course, the need to pay penalties.
[12] Joint Submissions filed 25 October 2023 at [76] and [77].
I accept that the First Respondent was the manager of the business employer and was thereby intimately involved in the contraventions, although initially perhaps unknowingly. Her responsibility, authority, and involvement in managing administration paperwork and payments of employees warrants her conduct being regarded as more serious.
CONCLUSION
The proposed range of penalty for the 13 grouped contraventions are helpfully summarised in Annexure A to the parties’ joint submissions filed 25 October 2023. The Annexure reflects the maximum penalties available and range of percentage of the worst case or maximum agreed for Tran and Nguyen.
I agree that the percentage ranges proposed are open in view of the reasoning expressed above, however, I consider that the lower end of the range ought to be imposed given all the findings I have made and because of the relative balancing of specific and general deterrence discussed in my reasons at [27] and [28] with other relevant considerations.
The parties also jointly submitted that a 20 per cent discount for the cooperation of the Respondents was agreed. Further that a discount of 15 per cent should apply when accounting for the totality principle.
I agree that these percentage discounts are warranted in view of the findings I have made and my reasons.
Accordingly, there will be orders that:
(1)The First Respondent pay penalties in the total sum of $45,532.80; and
(2)The Second Respondent pay penalties in the total sum of $23,990.40.
I accept the joint submissions that the penalties ought to be paid to the Commonwealth. This is not a case where the facts and circumstances warrant making an order that the penalties be paid to an employee.[13]
[13] Sayed v Construction, Forestry, Mining and Energy Union [2015] FCA 338.
During the hearing on 30 October 2023, counsel for the parties were somewhat apart in relation to the precise form of order the Court should make, due to an agreement in principle concerning the timeframe for payment of the penalties. After hearing submissions about this, I made some observations which then assisted the parties to reach agreement in full about the terms of the orders. Counsel for the Applicant agreed to provide a revised draft minute of order sought, which I have now asked to be marked as Exhibit 1.
The terms of the revised draft minute are acceptable to the Court, subject to clarifying the meaning of paragraph 3 of the minute, as it does not appear to serve a purpose.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Taglieri. Associate:
Dated: 15 November 2023
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