Fair Work Ombudsman v Turn-Key Fitout Pty Ltd (No 2)
[2023] FedCFamC2G 885
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Turn-Key Fitout Pty Ltd (No 2) [2023] FedCFamC2G 885
File number(s): MLG 858 of 2022 Judgment of: JUDGE SYMONS Date of judgment: 4 October 2023 Catchwords: INDUSTRIAL LAW – Fair Work –default judgment entered previously for failure to comply with compliance notice and a contravention of payslip obligations – whether penalty should be imposed and amount of penalty to be imposed – where respondent failed to engage in proceeding – where no evidence before the Court that the respondent has taken any steps to rectify the contraventions – need to deter respondent specifically in circumstances where respondent remains registered – consideration of the age of the affected employee – penalty imposed to send message to like employers and businesses about seriousness of workplace contraventions Legislation: Fair Work Act 2009 (Cth) ss 536, 546, 557, 716
Fair Work Regulations 2009 (Cth)
Federal Circuit and Family Court of Australia (General Federal Law) Rules 2021 (Cth) r 13.06.
Timber Industry Award 2010
Timber Industry Award 2020
Cases cited: Australian Building and Construction Commissioner v Pattinson & Anor (2022) 399 ALR 599; [2022] HCA 13
Fair Work Ombudsman v Al Hilfi [2016] FCA 193
Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd [2012] FMCA 258
Fair Work Ombudsman v Turn-Key Fitout Pty Ltd [2023]. FedCFamC2G 384
Trade Practices Commission v CSR Ltd [1990] FCA 521
Division: Division 2 General Federal Law Number of paragraphs: 41 Date of last submission/s: 2 August 2023 Date of hearing: 2 August 2023 Place: Melbourne Solicitor for the Applicant: Fair Work Ombudsman Respondent: No appearance ORDERS
MLG 858 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
ApplicantAND: TURN-KEY FITOUT PTY LTD
Respondent
ORDER MADE BY:
JUDGE SYMONS
DATE OF ORDER:
4 OCTOBER 2023
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) (FW Act), the respondent pay pecuniary penalties of:
(a)$13,250 in respect of the contravention of s 716(5) of the FW Act; and
(b)$11,025 in respect of the contravention of s 536(2) of the FW Act.
2.Pursuant to s 546(3)(a) of the FW Act, the pecuniary penalties ordered to be paid by the respondent be paid to the Commonwealth within 28 days of this order.
3.The applicant has liberty to apply on seven days’ notice in the event that 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 SYMONS:
INTRODUCTION
On 20 April 2022, the Fair Work Ombudsman (FWO) commenced proceedings against the respondent, Turn-Key Fitout Pty Ltd.
On 11 May 2023, the Court entered default judgment for the FWO against the respondent. This decision involved findings that the respondent had failed to comply with procedural rules and orders made by the Court including that it file and serve a response or any defence to the FWO’s application and that it give a notice of address for service (refer Fair Work Ombudsman v Turn-Key Fitout Pty Ltd [2023] FedCFamC2G 384).
On 11 May 2023 the Court made the following declarations of deemed admission by the respondent to a Compliance Notice Contravention and a Pay Slip Contravention:
1.Upon admissions that the respondent is taken to have made consequent upon its non-compliance with the Federal Circuit and Family Court of Australia (General Federal Law) Rules 2021 (Cth) (Rules) and orders of this Court:
(a)the respondent contravened s 716(5) of the Fair Work Act 2009 ((FW Act) by failing to comply with a compliance notice given to the respondent on 16 September 2021 (Compliance Notice); and
(b)the respondent contravened s 536(2) of the FW Act by giving pay slips not containing the information prescribed by regulation 3.46(5)(a) of the Fair Work Regulations 2009 (Cth).
On the same date, the Court made orders that required the respondent, within 28 days, to take steps of the kind that were required under the Compliance Notice. In particular, the respondent was ordered to calculate and pay to the affected employee the amounts outstanding for wage and annual leave entitlements and for superannuation (if any) under a combination of the Fair Work Act 2009 (Cth) (FW Act), the Timber Industry Award 2010 and the Timber Industry Award 2020 (the Awards).
The Court also made orders progressing the matter to a penalty hearing on 2 August 2023. They included (in respect of the respondent) that by 19 July 2023 it file and serve affidavit evidence and written submissions on the question of penalty. The respondent did not file any material responsive to these orders and when the matter was called on for hearing on 2 August 2023 there was nobody who appeared, or purported to appear, on its behalf.
In circumstances where the FWO produced evidence that a sealed copy of the 11 May 2023 orders was sent to the respondent’s last-known email addresses on 11 May 2023,[1] as well as delivered via express post to the respondent’s registered address on 12 June 2023,[2] and there was evidence of service (or attempted service) via these same methods of the FWO’s submissions on penalty and affidavit material[3]and efforts made by the FWO’s legal representative to contact the respondent using its publicly listed telephone number,[4] I am satisfied that it is appropriate to determine the question of penalty without further recourse to the respondent. The Court’s power to make orders on default has again been engaged, including by reason of r 13.06(1)(e) of the Rules, which provides that if a party to a proceeding is absent from a hearing, the Court may, amongst other things, proceed with the hearing generally or in relation to any claim for relief in the proceeding.
[1] See annexure “SLV- 25” of the affidavit of service of Sophie Louise Vassallo affirmed 27 July 2023.
[2] See annexures “SLV- 24” and “SLV-26” of the affidavit of service of Sophie Louise Vassallo affirmed 27 July 2023.
[3] See annexures “SLV- 28” and “SLV-29” of the affidavit of service of Sophie Louise Vassallo affirmed 27 July 2023.
[4] See [15]-[18] and annexure “SLV-33” and “SLV-34” of the affidavit of service of Sophie Louise Vassallo affirmed 27 July 2023.
SUBMISSIONS AND EVIDENCE ON PENALTY
The FWO relies upon:
·its application and statement of claim filed on 20 April 2020;
·the affidavit of Sophie Louise Vassallo affirmed and filed on 30 September 2022;
·the affidavit of Sophie Louise Vassallo affirmed and filed on 28 April 2023;
·the affidavit of Linda Trang Tran (FWI Tran) affirmed on 23 June 2023 and filed on 5 July 2023;
·written submissions filed on 5 July 2023;
·the affidavit of service of Sophie Louise Vassallo affirmed 27 July 2023.
While the FWO initially submitted that penalties should be imposed by reference to a monetary range, by the time of the hearing, its position had crystallised so that instead it invited the Court to impose penalties in the amount of $26,640 for the Compliance Notice Contravention and $19,980 for the Pay Slip Contravention. In circumstances where the maximum penalty (at relevant times) for a breach of s 716(5) was $33,300 for a corporation and $66,600 for a breach of s 536(2) of the FW Act, these amounts (as a proportion of the statutory maximum) represented 80 and 30 per cent, respectively.
The approach to penalty adopted by the FWO also recognised that the Compliance Notice Contravention occurred on one occasion and therefore justified the imposition of a single penalty. As far as the contravention of s 536(2) of the FW Act was concerned, the FWO accepted that although it involved 24 separate contraventions of that provision, the respondent was entitled to the benefit of s 557(1) of the FW Act (course of conduct) which had the result that the multiple contraventions were taken to constitute a single contravention and justified a single penalty.
Factors relevant to penalty
The approach to determining penalty was revisited by the High Court in the decision of Australian Building and Construction Commissioner v Pattinson & Anor [2022] HCA 13 (Pattinson). In that case, the majority upheld the Commissioner’s appeal and confirmed that the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the FW Act by the deterrence of further contraventions of the FW Act by those responsible and by (like) others. The Court rejected the approach implicit in the decision of the Full Court (the subject of the appeal) that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention. The majority held instead that “[t]he power conferred by s 546 of the Act is not subject to constraints drawn from the criminal law and there is no place for a ‘notion of proportionality’…in a civil penalty regime”.[5] However, the Court did accept that s 546 requires the Court to ensure that any penalty “strikes a reasonable balance between deterrence and oppressive severity”.[6] It was only in this more qualified sense that the conception of “proportionality” had any role to play.
[5] Pattinson at [10].
[6] Pattinson at [41].
The High Court also referred to the several factors identified by French J in Trade Practices Commission v CSR Ltd [1990] FCA 521 which informed the assessment of a penalty of an appropriate deterrent value. The list revealed that both the circumstances of the contravenor and the circumstances of the contravention may be relevant to the assessment of whether the maximum level of deterrence is called for.[7] However, the Court repeated the caution that the list of possible relevant considerations should not be approached as a “rigid catalogue of matters for attention” and instead the task of the court remains to determine what is an “appropriate” penalty in the circumstances of the particular case.[8]
[7] Pattinson at [57].
[8] Pattinson at [18] and [19].
In its written submissions – which were adopted at the hearing – the FWO placed particular emphasis upon the following considerations.
Deterrence - General
Turning first to the Compliance Notice Contravention, the FWO submitted that a key consideration was the promotion of the efficacy of the compliance notice as a tool of Fair Work Inspectors that when complied with, diverted workplace matters from the courts without the need to impose penalties. A robust approach to penalty would, it was said, demonstrate that there are serious consequences for failing to comply with a compliance notice and would deter other parties from choosing to adopt this course.
As far as the Pay Slip Contravention was concerned, the FWO emphasised the importance of the pay slip provisions in both the FW Act and the Fair Work Regulations 2009 (Cth) (FW Regulations) as creating a framework by which compliance may be monitored. It followed that this framework would be compromised by the issuing of pay slips that (as in this case) did not include the name or name and number of the fund to which an employee’s superannuation contributions were made.
The FWO read into evidence the affidavit of FWI Tran which annexed the FWO report “Industry profile and FWO Interactions: Other Wood Product Manufacturing” (Industry Report). The Industry Report contains data for the period July 2020 to December 2022. Amongst other things it records that: (i) young workers (15 to 25 years of age) made up 15.5% of employment in the other wood product manufacturing industry and accounted for 31.3% of completed disputes in that industry; and (ii) across all industries, 4.3% of disputes involved apprentice or trainee workers whereas in the other wood product manufacturing industry, 25% of disputes involved apprentice or trainee workers.
This information was said to be significant given that the respondent operated a business supplying and installing cabinets and because the affected employee was aged 19 and 20 years over the course of his employment and was classified as an unapprenticed junior worker.
Deterrence – Specific
The FWO submitted that there was a particular need to deter the respondent specifically from engaging in the same contravening conduct in the future for the following reasons.
First, in circumstances where the respondent remains registered, there was a risk that it may engage in the same (contravening) conduct in the future.
Second, the respondent has shown disregard for its obligations under the FW Act by failing to comply with the Compliance Notice within the specified timeframe, and by giving pay slips that failed to include the information required under the FW Act and the FW Regulations.
Nature, circumstances and deliberateness of contravening conduct
The FWO’s submissions under this heading again emphasised the significance of the compliance notice as a non-litigious enforcement mechanism.
The FWO noted that the respondent had been given the Compliance Notice on 16 September 2021 but had failed to comply with the Notice by the date stipulated for compliance, being 25 October 2021 or to take advantage of the further opportunities to rectify non-compliance provided by the FWO through its correspondence sent on 26 October 2021 and 10 November 2021.[9]
[9] See annexures “LTT-04” and “LTT-05” of the Affidavit of Linda Trang Tran affirmed 23 June 2023.
The FWO submitted that by failing to comply with the Compliance Notice or to engage in these proceedings, the respondent should be understood as having demonstrated a deliberate disregard for its obligations under the FW Act and the authority of the FWO as a regulator of Commonwealth workplace laws which should be reflected in the magnitude of any penalty.
As far as the failure to provide compliant pay slips was concerned, the FWO referred to observations made by Reithmuller FM (as he then was) in Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd [2012] FMCA 258 which emphasised the potential for pay slip contraventions to exacerbate the power differential between the employer and employee and to facilitate breaches of industrial laws.
The FWO submitted that in this case, the affected employee was denied the opportunity, or at the very least was frustrated in any attempts, to monitor and ensure that the correct superannuation contributions were made on his behalf by the respondent.
Corrective action, contrition and cooperation
The FWO submitted that the respondent had not exhibited any contrition nor taken any corrective action to remedy the contraventions, the subject of this proceeding. I readily accept the first proposition in circumstances where the respondent has been entirely absent from this proceeding and has not taken any steps that might indicate an attitude of regret or even circumspection about the matters that underscore the two workplace contraventions.
As far as corrective action is concerned, the evidence before the Court is that no steps have been taken by the respondent to identify or rectify any underpayment of wages or superannuation to the affected employee. Further, there is no evidence from the respondent as to whether it has taken steps directed at ensuring that it understands and has systems that allow it to give effect to, its pay slip obligations.
I accept that these matters coalesce such that it would not be appropriate to allow a discount for corrective action or cooperation.
Nature and extent of loss
The FWO identified the relevant loss flowing from the Compliance Notice Contravention as the denial to the affected employee of his entitlements under the FW Act and the Awards. While strictly speaking, compliance with the Compliance Notice might not have uncovered an underpayment or denial of entitlements (the Compliance Notice required the respondent to first calculate the amounts that should have been paid in respect of the identified entitlements and to rectify such payments only if they exceeded amounts already paid to the employee), I accept that the FWO’s investigation and inquiries had caused FWI Tran to form a reasonable belief that the affected employee had been underpaid certain of his entitlements under the Awards and the FW Act and that the respondent has not at any time sought to challenge the basis or soundness of this belief. There is some scope therefore to take this “loss” into account.
The FWO also in this context referred to the affected employee’s youth, and judicial recognition (including in the decision of Fair Work Ombudsman v Al Hilfi [2016] FCA 193 at [25]) that young employees may be classed as a group that is more vulnerable to contraventions of workplace laws. The FWO submitted that the failure of the respondent to include prescribed information in pay slips operated more profoundly on the affected employee as a member of a cohort of vulnerable workers and for this reason the Pay Slip Contravention was more egregious.
Size and financial circumstances of the respondent
The FWO noted, as is the case, that there is no evidence before the Court relating to the size or financial circumstances of the respondent and relied on authority that downplays the significance of such matters (especially capacity to pay a penalty) in a regime that recognises the primary objective of deterrence and which places responsibilities on employers, regardless of their size or profitability.
CONSIDERATION
Compliance Notice Contravention
In fixing a penalty for the Compliance Notice Contravention I have taken account of the following considerations.
First, I accept that there is a need to give effect to the primary objective of deterrence. As far as general deterrence is concerned, I accept that there is a need to send a message to other employers and prospective employers, including those that operate within the wood product manufacturing industry, that a failure to comply with a Compliance Notice without reasonable excuse, is a serious matter that warrants censure.
The fact that the employee whose entitlements were the subject of the Compliance Notice is a member of a youth cohort who, it might be accepted, are generally, through lack of life and work experience, more vulnerable, is a matter that contextually assumes some significance. However, the essence of the Compliance Notice Contravention is a failure to take the steps specified in the Notice, rather than a failure to make payments to a person with particular attributes. Accordingly, I give this consideration less weight.
As far as specific deterrence is concerned, the wholesale failure of the respondent to engage with this proceeding coupled with evidence of its continued registration, leads me to conclude that there is a need to separately recognise the potential for the respondent to engage in similar conduct in the future. However, this prospect should not be overstated. The FWO has not produced any evidence to suggest that the respondent is currently trading or employing staff.
Second, I accept that the indifferent attitude demonstrated by the respondent to the Compliance Notice and to this proceeding and the continued failure of the respondent to take steps to identify and rectify any outstanding entitlements involves both a lack of cooperation and a lack of contrition and to the extent that it is correct to refer to both matters as exculpatory, there should be no discount applied to the penalty. Rather, the attitude of the respondent reinforces the need in this case for specific deterrence.
Third, and relatedly, there is no evidence as to the size and/or financial circumstances of the respondent that might otherwise suggest that a more lenient approach to penalty be applied.
As noted earlier, the FWO seeks a penalty in the amount of $26,640. However, I consider that a penalty in the amount of $13,250 is a proportionate response to the matters identified above and will make an order for payment accordingly.
Pay Slip Contravention
Broadly speaking, the same considerations inform my assessment of penalty for the Pay Slip Contravention. However, I consider that there is a greater role for general deterrence to play in circumstances where the deficiencies in the pay slips generated for the affected employee reflect systemic shortcomings in the respondent’s industry; namely, an over-representation of young workers in the disputes coming before the workplace regulator.
My assessment of penalty also recognises the significance of the pay slip as the means by which an employee can hold an employer accountable to its responsibilities under workplace laws and industrial instruments. The obligation to account for and make payments in respect of superannuation is an important obligation that because it does not ordinarily reflect in a person’s take-home pay, is less susceptible to detection when the obligation is avoided. The pay slip assumes a particular significance in this regard although I note that it was not part of the FWO’s case that the respondent had failed to make payments on account of superannuation (except to the extent that they flowed from any underpayments).
As noted above, in circumstances where the respondent has not explained if and how it intends to avoid repetitions of the Pay Slip Contravention and where it remains registered, there is a need to specifically deter the respondent through the imposition of a penalty. This same detachment from the primary contravention and this proceeding also indicates a lack of contrition which I have taken into account in my assessment.
The FWO seeks the imposition of a penalty in the amount of $19,980. However, I consider that a penalty in the amount of $11,025 is a proportionate response to the matters identified above and will make an order for payment accordingly.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Symons . Associate:
Dated: 4 October 2023
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