Fair Work Ombudsman v Viplus Pty Ltd
[2018] FCCA 741
•29 March 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v VIPLUS PTY LTD & ANOR | [2018] FCCA 741 |
| Catchwords: INDUSTRIAL LAW – Compensation and penalties – appropriate penalty to be imposed – multiple contraventions of Fair Work Act 2009 (Cth) – whether multiple contraventions should be grouped and treated as a single contravention – whether contraventions arose out of a single course of conduct – application of totality principle. |
| Legislation: Fair Work Act 2009, ss.45, 535, 536(2), 546, 557(1) Fair Work Regulations 2009, reg.3.33 |
| Cases cited: Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) [2016] FCA 698 Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482; 90 ALJR 113; 326 ALR 476; (2015) 67 AILR 102-494; 255 IR 87 Fair Work Ombudsman v Access Embroidery (Australia) Pty Ltd & Anor [2012] FMCA 835 Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 Fair Work Ombudsman vI LUV Pty Ltd & Ors [2016] FCCA 2569 Gibbs v the Mayor, Councillors and Citizens of City of Altona [1992] FCA 553; 37 FCR 216; (1992) 34 AILR 369; 42 IR 255 Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14; 1 R 14 McIver v Healey [2008] FCA 425; (2008) 60 AILR 100-850 Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70; 168 FCR 383; 247 ALR 714; (2008) 60 AILR 100-883; 171 IR 455 New Image Photographics Pty Ltd v Fair Work Ombudsman [2013] FCA 1385 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | VIPLUS PTY LTD (ACN 101 236 668) |
| Second Respondent: | JASON YUAN |
| File Number: | BRG 1114 of 2015 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | VIPPER PTY LTD (ACN 098 124 522) |
| Second Respondent: | JASON YUAN |
| File Number: | BRG 1115 of 2015 |
| Judgment of: | Judge Mercuri |
| Hearing date: | 29 September 2017 |
| Date of Last Submission: | 17 October 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 29 March 2018 |
REPRESENTATION
| File Number: | BRG 1114 of 2015 |
| Counsel for the Applicant: | Ms Gall |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Counsel for the First Respondent: | No appearance |
| Solicitors for the First Respondent: | None | |
| Advocate for the Second Respondent: | In person | |
| Solicitors for the Second Respondent: | None |
| File Number: | BRG 1115 of 2015 |
| Counsel for the Applicant: | Ms Gall |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Counsel for the First Respondent: | No appearance |
| Solicitors for the First Respondent: | None | |
| Advocate for the Second Respondent: | In person | |
| Solicitors for the Second Respondent: | None |
ORDERS
IN PROCEEDING BRG 1114 OF 2015
THE COURT ORDERS THAT:
Pursuant to subsection 546(1) of the Fair Work Act 2009 (Cth)
(“the FW Act”), the first respondent, Viplus Pty Ltd, pay pecuniary penalties for the contraventions of the civil remedy provisions set out in the declarations in respect of it at paragraph 2 of the orders made by his Honour Judge Jarrett on 4 October 2016, in the sum of $88,140.
Pursuant to subsection 546(1) of the FW Act, the second respondent pay pecuniary penalties for the contraventions of the civil remedy provisions set out in the declarations at paragraph 2 of the orders made by his Honour Judge Jarrett on 4 October 2016, above in the sum of $20,602.
Pursuant to subsection 546(3)(a) of the FW Act, the first respondent and the second respondent each pay their respective penalty amounts to the Consolidated Revenue Fund of the Commonwealth within 28 days.
The applicant have liberty to apply in the event that any of the preceding orders are not complied with.
IN PROCEEDING BRG 1115 OF 2015
THE COURT ORDERS THAT:
Pursuant to subsection 546(1) of the Fair Work Act 2009 (Cth)
(“the FW Act”), the first respondent, Vipper Pty Ltd, pay pecuniary penalties for the contraventions of the civil remedy provisions set out in the declarations in respect of it at paragraph 1 of the orders made by his Honour Judge Jarrett on 4 October 2016, in the sum of $68,262.
Pursuant to subsection 546(1) of the FW Act, the second respondent pay pecuniary penalties for the contraventions of the civil remedy provisions set out in the declarations at paragraph 1 of the orders made by his Honour Judge Jarrett on 4 October 2016, above in the sum of $15,957.
Pursuant to subsection 546(3)(a) of the FW Act, the first respondent and the second respondent each pay their respective penalty amounts to the Consolidated Revenue Fund of the Commonwealth within 28 days.
The applicant have liberty to apply in the event that any of the preceding orders are not complied with.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 1114 of 2015
| FAIR WORK OMBUDSMAN |
Applicant
And
| VIPLUS PTY LTD (ACN 101 236 668) |
First Respondent
And
| JASON YUAN |
Second Respondent
BRG 1115 of 2015
| FAIR WORK OMBUDSMAN |
Applicant
And
| VIPPER PTY LTD (ACN 098 124 522) |
First Respondent
And
| JASON YUAN |
Second Respondent
REASONS FOR JUDGMENT
Introduction
The Fair Work Ombudsman brought proceedings seeking the imposition of civil penalties under the Fair Work Act 2009 (Cth)
(“the FW Act”) against Viplus Pty Ltd (“Viplus”) and Mr Yuan inBRG 1114/2015 (“Viplus proceedings”) and against Vipper Pty Ltd (“Vipper”) and Mr Yuan in BRG 1115/2015 (“Vipper proceedings”) alleging breaches of the FW Act.
The question of liability was the subject of a hearing before his Honour Judge Jarrett on 4 October 2016 (“liability proceeding”). His Honour’s findings, reasons and orders in the liability proceeding are set out at [2017] FCCA 1669 (“liability decision”). In the liability decision, Judge Jarrett declared that:
a)Viplus and Vipper had each contravened various provisions of the FW Act; and
b)Mr Yuan was involved in each of the contraventions by Viplus and Vipper.
His Honour Judge Jarrett listed both proceedings for a further hearing on 29 September 2017 to determine the penalty, if any, that should be imposed on each of the respondents following the findings made in the liability decision. Both proceedings[1] were listed to be heard and dealt with concurrently.
[1] BRG 1114/2015 and BRG 1115/2015.
The applicant relies upon the following documents in these proceedings:
a)
Statement of Agreed Facts filed in the Viplus proceedings on
20 May 2016 (“Viplus SOAF”);
b)
Statement of Agreed Facts filed in the Vipper proceedings on
20 May 2016 (“Vipper SOAF”);
c)liability decision and court orders dated 20 July 2017;
d)affidavit of Fair Work Inspector Cordell Jackson affirmed and filed on 8 July 2016 (“Jackson affidavit”);[2]
[2] Specifically paragraphs 1 to 15, 19, 27 to 33 and annexures CMJ-3, CMJ-9 to CMJ-13, and CMJ-19 to CMJ-26.
e)affidavit of Evan Michailidis sworn and filed on 7 July 2016 (“Michailidis affidavit”);[3]
[3] Specifically paragraphs 1 to 17, 20, 22 to 42, 47 to 59, 60 to 66, 73 to 75 and documents exhibited under annexures EM-1, EM-5 to EM-13, EM-18, EM-24, EM-25, EM-26, EM-28, EM-29, EM-35, EM-36.
f)
affidavit of Fair Work Inspector Emma Travers affirmed on
26 August 2016 (“Travers affidavit”) including all annexures;
g)
affidavit of Fair Work Inspector Nathan Forwood
(“FWI Forwood”) affirmed and filed on 8 July 2016
(“first Forwood affidavit”);[4]
[4] Specifically paragraphs 1 to 14, 18 and 21 and documents exhibited under annexures NWF-9 and NWF-10 of exhibit NWF.
h)
further affidavit of FWI Forwood affirmed and filed on
25 August 2017 (“second Forwood affidavit”) including all annexures;
i)affidavit of Paolo dos Santos (“dos Santos”) affirmed 7 July 2016 (“first dos Santos affidavit”);[5]
j)
affidavit of Paolo dos Santos affirmed 25 August 2016
(“second dos Santos affidavit”);[6]
k)applicant’s submissions on penalty; and
l)applicant’s reply submissions on penalty.
[5] Specifically paragraphs 1 to 7 and 10 to 28 and annexures PDS-1 and PDS-2.
[6] Specifically paragraphs 1 to 6 and 9.
The respondents rely upon the following documents:
a)affidavit of the second respondent in each of these proceedings affirmed on 19 August 2016. At paragraph 5 of his affidavit affirmed 21 September 2017, Mr Yuan deposes to having previously filed an affidavit in this matter which was affirmed on 19 August 2017. Mr Yuan’s earlier affidavit in these proceedings was filed on 19 August 2016 and I take this to be the affidavit to which Mr Yuan refers as his first affidavit;
b)affidavit of the second respondent in each of these proceedings affirmed on 21 September 2017; and
c)respondents’ submissions on penalty.
Mr Yuan appeared on his own behalf at the penalty hearing on
29 September 2017. He sought leave to appear on behalf of Vipper and Viplus. Although leave was not granted for Mr Yuan to appear on behalf of Vipper or Viplus, the court did permit the late filing of the written submissions filed on behalf of each of the respondents and has had regard to those written submissions in considering this application.
In light of the late filing of the respondents’ outline of submissions, the applicant sought and was granted additional time to file a brief reply to those submissions. The applicant’s reply was received by the court on 17 October 2017.
Background
The background to these proceedings is set out in detail in the liability decision. Of particular relevance to the question of penalty are the following background details:
Viplus Pty Ltd and Vipper Pty Ltd each conduct a 7-Eleven Store franchise in the Brisbane central business district. The former conducts a store in Adelaide Street and the latter a store in George Street, Brisbane. The second respondent Jason Yuan is a director of each company. He manages both companies and their 7-Eleven stores. He is assisted in doing so by his wife Irene. Mr Yuan spends most of his time in the Adelaide Street store and his wife spends most of her time in the George Street store.[7]
Mr Yuan is about 61 years of age. He has lived in Australia permanently since 2000. His primary language is Mandarin although he has a working knowledge of English.… He has tertiary qualifications gained in the United States of America and a long history of working in finance and property related businesses.[8]
By its defence, save for one immaterial exception, Vipper admitted all of the allegations made against it. Mr Yuan made some qualified admissions, but otherwise denied the allegations of accessorial liability against him.[9]
By its defence, Viplus admitted all of the allegations of contravention against it however took issue with the classification ascribed by the applicant to two of Viplus’ employees referred to in the material as Chi Chi and Karthick. … Again, Mr Yuan made some qualified admissions but otherwise denied the allegations of accessorial liability made against him.[10]
… Broadly, Mr Yuan admits accessorial liability for the payslip and record keeping obligations not met by the companies. However, he disputes accessorial liability for those contraventions related to the underpayment of wages where the incorrect loading or penalty rate was applied as he denies knowing that the amounts paid by Vipper and Viplus were insufficient to meet each companies’ legal obligations.[11]
[7] Paragraph 1 of the liability decision.
[8] Paragraph 13 of the liability decision.
[9] Paragraph 4 of the liability decision.
[10] Paragraph 5 of the liability decision.
[11] Paragraph 6 of the liability decision.
At paragraph 43 of the liability decision, his Honour Judge Jarrett found that he was “…satisfied that both Chi Chi and Karthick should properly be classified as a Retail Employee Level 3.”
In relation to Mr Yuan’s accessorial liability, his Honour Judge Jarrett found that Mr Yuan was liable as an accessory for each of the contraventions committed by Vipper and Viplus.[12]
[12] See analysis and findings at paragraphs 44 to 63 of the liability decision.
At the time of the penalty hearing, the evidence before the court was that as at 25 August 2017, both Viplus and Vipper were still registered as companies and that Mr Yuan was, at that time, a director and majority shareholder of each entity. In addition, there is evidence to suggest that Mr Yuan is also a director and secretary of another company called Vippco Pty Ltd (ACN 134 116 742).[13]
[13] See paragraphs 5 to 8 and annexures NWF-30 to NWF-32 of the second Forwood affidavit.
It is also common ground that, Mr Yuan owns a property located at
4 Demigre Street, Eight Mile Plains, Queensland which is his family home.[14]
[14] See paragraphs 11 to 12 of the second Forwood affidavit.
Issues for determination
The issues for determination in these proceedings is the quantum of any penalties which ought to be applied having regard to the admissions made by the respondents in the Vipper SOAF[15] and the Viplus SOAF[16] as well as the findings of his Honour Judge Jarrett in the liability decision and summarised above.
[15] Attached to these reasons and marked Annexure A.
[16] Attached to these reasons and marked Annexure B.
Approach to penalty proceedings
The court’s power to impose penalties arises under section 546 of the FW Act which relevantly provides:
The Federal Court, the Federal Circuit Court or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.
Note: Pecuniary penalty orders cannot be made in relation to conduct that contravenes a term of a modern award, a national minimum wage order or an enterprise agreement only because of the retrospective effect of a determination (see subsections 167(3) and 298(2)).
The applicant referred the court to the High Court’s decision in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate[17] in which the court stated:
…whereas criminal penalties import notions of retribution and rehabilitation, the purpose of the civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
“Punishment for breaches of the criminal law traditionally involved three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act].… The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.”
[17] [2015] HCA 46 at paragraph [55].
In the respondents’ submissions on penalty, the respondents acknowledge that “the purpose of implementing a penalty is to protect the public interest by promoting compliance with the industrial law”.[18]
[18] Paragraph 4 of the respondents’ outline of submissions filed 29 September 2017.
However, they go on to state that:
The Court must also be careful to ensure that the person is not made a scapegoat for the conduct of others… The overarching responsibility of the Court being to consider all circumstances relevant to the case and make a decision about what quantum of penalty is fair, reasonable and in the public interest [sic].[19]
[19] Paragraphs 6 to 7 of the respondents’ outline of submissions filed 29 September 2017.
It is well settled that in determining what, if any, penalties ought to be applied in respect of the contravening conduct by the respondents, the court is required to:
a)
identify the separate contraventions involved. Each contravention of each separate obligation found in the FW Act and
Fair Work Regulations (“FW Regulations”) is a separate contravention of a civil remedy provision for the purposes of section 539(2) of the FW Act;[20]
b)consider whether the contraventions arising in the first step constitute a course of conduct having regard to the requirements under section 557(1) of the FW Act;
c)consider the fact that employers should not be penalised more than once for the same conduct; that is, the penalties imposed by the court should be an appropriate response to the conduct of the respondents.[21] This is a distinct exercise from, and is in addition to, the final application by the court of the “totality principle”;[22]
d)determine an appropriate penalty for each contravention and, if relevant, each group of contraventions, taking into account all the relevant circumstances; and
e)apply an “instinctive synthesis” in assessing whether the penalty is an appropriate response to the conduct which led to the contraventions by applying the “totality principle”.[23]
[20] Gibbs v the Mayor, Councillors and Citizens of City of Altona [1992] FCA 553; 37 FCR 216; (1992) 34 AILR 369; 42 IR 255 at [24]; McIver v Healey [2008] FCA 425; (2008) 60 AILR 100-850 at [16].
[21]Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560; 246 ALR 35; (2008) 60 AILR 100-809.
[22]Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70; 168 FCR 383; 247 ALR 714; (2008) 60 AILR 100-883; 171 IR 455.
[23] Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14; 1 R 14 at [30] (Tracey J).
While the respondents did not take issue with this general approach, they did say:
While it may be convenient to do so, the Respondents submit that the Court should not treat the determination of the penalty like a math equation, whereby it starts with the maximum penalty, and then applies arbitrary ‘discounts’ based what mitigating factors can be identified and accepted [sic].
The Respondent submits that by taking this approach the parties and the Court may lose sight of the overarching responsibility to impose a penalty which both meets public expectation as to deterrence, but is not crushing or oppressive; in favour of method which allows for more precise calculation [sic].[24]
[24] See paragraphs 8 to 9 of the respondents’ outline of submissions as to penalty.
Identify separate contraventions
The contraventions in this instance are set out in the liability decision.[25]
[25] See orders 2 to 4 of the liability decision regarding Viplus and orders 1 to 3 of the liability decision regarding Vipper.
Course of conduct
Section 557(1) of the FW Act provides that two or more contraventions of a civil remedy provision are taken to be a single contravention where the contraventions are committed by the same person and the contraventions arise out of a course of conduct by that person.
The applicant submitted:
The Applicant accepts that multiple contraventions of the same term of the Award and section 535 of the FW Act may be treated as one contravention under section 557 of the FW Act, provided there is one course of conduct. The Applicant accepts that such groups are appropriate in each of these proceedings [sic].[26]
[26] Paragraph 14 of the applicant’s submissions on penalty filed 25 August 2017.
The applicant further submitted that the appropriate application of section 557 of the FW Act results in the following total number of contraventions:
a)in respect of the Viplus proceedings, twelve contraventions for each of Viplus and Mr Yuan namely:
i)ten separate contraventions of section 45 of the FW Act and the General Retail Industry Award 2010 (“the Award”);
ii)one contravention of section 536(2) of the FW Act; and
iii)one contravention of section 535(1) of the FW Act;
b)in respect of the Vipper proceedings, eight contraventions for each of Vipper and Mr Yuan, namely:
i)five separate contraventions of section 45 of the FW Act and the Award;
ii)one contravention of section 536(1) of the FW Act;
iii)one contravention of section 536(2) of the FW Act; and
iv)one contravention of section 535(1) of the FW Act.
The respondents accepted the applicant’s submissions regarding the operation and application of section 557 of the FW Act.
Grouping
The applicant further submitted that in addition to statutory grouping under section 557, it is also open to the court to group various contraventions which overlap or have common elements, in circumstances where it is appropriate to do so to avoid penalising a respondent more than once for the same conduct or substantially similar conduct.[27]
[27] Paragraph 17 of the applicant’s submissions on penalty filed 25 August 2017.
Similarly, the respondents submitted that the court should:
…separate to the operation of section 557 of the FW Act, consider and have regard to which of those contraventions (as grouped by the Applicant) arose from a ‘single course of conduct’… [sic]
The “course of conduct” principle… recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which a person has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality.[28]
[28] Paragraphs 11 to 13 of the respondents’ submissions on penalty filed 29 September 2017.
Although both parties essentially agree to the statement of principal with regard to how the court must approach the issue of grouping, the respondents disputed the appropriateness of the grouping put forward by the applicant. The respondents argued that the contraventions which relate to the underpayment for work undertaken at night, on Saturdays and on public holidays and the consequentially incorrect payslips arise out of one single decision, namely the decision:
to implement a wage payment system (across two stores) whereby employees were:
(a)paid once through the 7-Eleven payroll system, at their relevant ordinary rate of pay (other than employees Karthick and Chi Chi whose classification level was incorrect); and
(b)paid an additional $20 per hour cash for working Sundays and Public Holidays…
In the circumstances, the Respondents submit that these contraventions should be considered as having occurred from the one course of conduct or one criminality [sic].
Accordingly, the Respondents submit the Court must consider what is an appropriate penalty for this “course of conduct”, rather than what is an appropriate penalty for each single contravention flowing from the course of conduct (of which there are multiple).[29]
[29] Paragraphs 14 to 17 of the respondents’ outline of submissions.
The respondents referred, in support of this submission, to the following decisions:
a)Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) (“Hillside”);[30] and
b)Construction, Forestry, Mining and Energy Union v Cahill (“Cahill”).[31]
[30] [2016] FCA 698 at [23].
[31] [2010] FCAFC 39 at [39].
Justice Beach summarised the proposition in Hillside at paragraph 23 as follows:
…the ‘course of conduct’ principle gives consideration to whether the contraventions arise out of the same course of conduct to determine whether it is appropriate that a single overall penalty should be imposed that is appropriate for the course of conduct.
Similarly, in Cahill Justices Middleton and Gordon noted at paragraph 39:
As the passages in Williams 262 ALR 417 explain, a “course of conduct” or the “one transaction principle” is not a concept peculiar to the industrial context. It is a concept which arises in the criminal context generally and one which may be relevant to the proper exercise of the sentencing discretion. The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is “the same criminality” and that is necessarily a factual specific enquiry. Bare identity of motive for commission of separate offences will seldom suffice to establish the same criminality in separate and distinct offending acts or omissions. (emphasis added)
The respondents argued that applying these principles to this case, the court should conclude that as a result of one single decision by
Mr Yuan, namely to implement a wage payment system across both stores, whereby employees were paid once through the 7-Eleven payroll system at their ordinary rate of pay,[32] and then paid an additional $20 per hour cash for working Sundays and public holidays, the relevant employees were underpaid as compared to the Award when they worked at night, on Saturdays and on public holidays.
[32] Other than Karthick and Chi Chi.
The respondents also argued that as a result of this decision, the payslips provided to the employees were also incorrect as they did not record all monies paid. The respondents submitted that these contraventions should be considered to have occurred as a result of the same course of conduct or one criminality.
In its reply submissions, the applicant contested this submission and said that the respondents’ contention that a single overall penalty should be imposed for all of the underpayments in each matter is not consistent with the authorities.
The applicant conceded that in addition to section 557:
…it is also open to the Court to group separate contraventions where the contraventions contain common elements or can be said to overlap with each other. It is appropriate for the Court to group contraventions where, if they were treated separately, this would potentially penalise the Respondents twice for the same or substantially similar conduct [sic].[33]
[33] Paragraph 14 of the applicant’s reply submissions on penalty dated 17 October 2017 and case law referred to therein.
The applicant also conceded that ‘at a very high level of abstraction, the contraventions of each term of the Award arose from a decision not to pay employees their correct entitlements under the Award.’ [34]
[34] Paragraph 17 of the applicants’ reply submissions on penalty dated 17 October 2017.
Notwithstanding this concession and the acknowledgement of the court’s general power to group contraventions to ensure that a respondent is not penalised twice for the same conduct, the applicant maintained:
…it is not appropriate to group contraventions of different and distinct terms of an award. Each of the eight groups of contraventions of the Award provisions identified in the Viplus matter and the five groups of contraventions of the Award in the Vipper matter impose separate and distinct obligations and to group them would place insufficient weight upon the separate legal character of these obligations.[35]
[35] Paragraph 16 of the applicant’s reply submissions on penalty dated 17 October 2017 and case law referred to therein.
The applicant’s position in this regard is consistent with the view taken by Gray J in Gibbs v The Mayor, Counsellors and Citizens of the City of Altona [1992] FCA 374 at [24] and Collier J in New Image Photographics Pty Ltd v Fair Work Ombudsman [2013] FCA 1385 at [53]-[57].
The applicant submitted that it is appropriate to group the contraventions in relation to the failure to pay Saturday loadings to full time and casual employees together. Similarly, the applicant submitted that the two public holiday loadings for casual and full-time employees should be grouped together.
The applicant submitted that no further grouping ought to be permitted as each of the remaining contraventions relates to separate and distinct entitlements or obligations.
Whilst at a very high level of abstraction, the respondents’ decision to implement a payment system which included both payments through the 7-Eleven payroll and ‘cash’ payments culminated in the underpayment of various entitlements. I am not satisfied that the ‘course of conduct’ principle, properly applied, requires the grouping contended for by the respondents. In coming to this view, I note that I am still required to give regard to the totality principle to ensure that the penalties imposed are appropriate which I address below.
I therefore agree with the grouping put forward by the applicant save for the failure to pay shift penalties in the Viplus proceedings. I am satisfied that it is appropriate to group the contraventions arising from a failure to comply with clause 30.3(a) and clause 30.3(b) together, as they both relate to the failure to pay shift penalties, albeit at different rates because a higher rate applies to shift work undertaken on a Saturday.
Conclusion with respect to grouping of contraventions
Having considered the submissions put on behalf of the applicant and the respondents and the relevant authorities, I conclude that the contraventions should be grouped as set out in the following tables:
a)in relation to the Viplus proceedings:
Contravention
Maximum Penalty
– Viplus proceedingMaximum Penalty
– Mr Yuan1.
Failure to pay minimum rates in breach of clause 17 of the Award
$51,000
$10,200
2.
Failure to pay casual loading in breach of clause 13.2 of the Award
$51,000
$10,200
3.
Failure to pay overtime in breach of clause 29.2 of the Award
$51,000
$10,200
4.
Failure to pay evening penalty in breach of clause 29.4 of the Award
$51,000
$10,200
5.
Failure to pay Saturday loading in breach of clause 29.4(b) and A.7.3 of the Award
$51,000
$10,200
6.
Failure to pay public holiday rates in breach of clause 29.4(d) and A.7.3 of the Award
$51,000
$10,200
7.
Failure to pay shift penalties in breach of clause 30.3 and A.7.3 of the Award
$51,000
$10,200
8.
Failure to provide payslips with information required by the FW Regulations
$25,500
$5,100
9.
Failure to keep records with the information required by regulation 3.33 of the FW Regulations
$25,500
$5,100
TOTAL MAXIMUM
$408,000
$81,600
b)in relation to the Vipper proceedings:
Contravention
Maximum Penalty
– Vipper proceedingMaximum Penalty
– Mr Yuan1.
Failure to pay casual loading in breach of clause 13.2 of the Award
$51,000
$10,200
2.
Failure to pay Saturday loading in breach of clause 29.4(b) and A.7.3 of the Award
$51,000
$10,200
3.
Failure to pay public holiday penalty rates in breach of clause 29.4(d) and A.6.4 and A.7.3 of the Award
$51,000
$10,200
4.
Failure to pay Saturday shift in breach of clause 30.3 and A.7.3 of the Award
$51,000
$10,200
5.
Failure to record cash payments
$25,500
$5,100
6.
Failure to keep records with the information required by regulation 3.33 of the FW Regulations
$25,500
$5,100
TOTAL
$255,000
$51,000
The proposed penalty range sought by the applicant varies from no penalty recommended in relation to the contravention regarding the failure to pay casual loading by Viplus to 60% – 70% in relation to the failure to pay shift penalties.[36]
[36] Annexure C of the applicant’s submissions as to penalty filed 25 August 2017.
It is submitted by the respondents that a total penalty of $30,000 to $35,000 for each of the corporate entities and between $5,000 and $10,000 for Mr Yuan is appropriate.
Factors relevant to the imposition of penalties
In Kelly v Fitzpatrick [2007] FCA 1080; the Honourable Justice Tracey set out, in a convenient summary, the principles which apply in a case such as this. His Honour referred to the decision of
Mason v Harrington Corporation Pty Ltd[2007] FMCA 7 in which Mowbray Federal Magistrate (as he then was) identified:
a non-exhaustive range of considerations to which regard may be had in determining whether particular conduct calls for the imposition of the penalty, and if it does the amount of the penalty.[37]
[37] Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at [24].
The Honourable Justice Tracey adopted those considerations, namely:
a)the nature and extent of the conduct which led to the breaches;
b)the circumstances in which that conduct place;
c)the nature and extent of 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.
As noted by Graeme J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8:
Checklists of this kind can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day the task of the court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations.[38]
[38] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560; 246 ALR 35; (2008) 60 AILR 100-809 at [91].
Noting that this is not an exhaustive list, I address each of these considerations in turn to the extent that they are relevant to my determination.
The nature and extent of the conduct which led to the breaches and circumstances in which it took place
The respondents’ businesses required the affected employees to regularly work unsociable hours. As a result of the practice adopted by the respondents to pay a flat hourly rate, the applicant stated that, with the exception of public holidays when employees received an additional cash payment, the employees were not compensated for these unsociable hours, for any shift work undertaken or for any overtime worked.
In addition, Viplus did not pay two of its employees (Chi Chi and Karthick) at the correct classification level.[39] Moreover, these employees did not receive payment for overtime or evening work when they worked more than their full-time hours.
[39] See liability decision dated 20 July 2017.
Vipper’s decision to pay two of its casual employees (Joey and Muhammad) flat cash rates below the Award casual rate, occurred notwithstanding Mr Yuan’s statement in his affidavit on
19 August 2016 that his intention was always to pay his employees the correct rate.[40]
[40] Paragraph 107(a) and 112 of the second respondent’s affidavit filed 19 August 2016.
Mr Yuan had been running these businesses for over twelve years and in addition, has a background in finance, banking and project management.
The evidence demonstrates that the respondents had access to significant training and support from the 7-Eleven head office, including in relation to the obligations imposed by Australian workplace laws.
Moreover, Vipper and Mr Yuan had been involved in a complaint of underpayment by a former employee in late 2012 to early 2013. The evidence clearly shows that Mr Yuan was provided with wage rate information and information about weekend penalty rates and public holiday rates and, most relevantly, was issued with a letter of caution stating the requirements to pay weekend and public holiday penalty rates and to keep employee records.
The letter of caution issued by the applicant on 5 February 2013 clearly states that:
a)the FWO had commenced an investigation as a result of a complaint made by a former employee regarding various employment entitlements including non-payment of weekend and public holiday penalty rates;
b)the FWO formed the view that there had been a contravention in that no penalty rates were paid for employees working on weekends or public holidays;
c)an employer is required to make and keep for seven years, prescribed employee records; and
d)the letter of caution could be relied upon in future proceedings should there be any further breaches.[41]
[41] Annexure ET-16 of the Travers affidavit.
In the Travers affidavit, FWO inspector, Ms Emma Travers
(“Ms Travers”) annexed a number of file notes detailing her discussions with Mr Yuan during the course of the investigation in 2012 and 2013.
Mr Yuan acknowledged that he was issued with a fine and letter of caution from Ms Travers on 5 February 2013. He deposed however, that he understood that the problem arose from the fact that he did not keep adequate records. He stated at paragraph 171 of his affidavit affirmed on 19 August 2018:
Emma also provided me with a letter however I didn’t really understand what it said as it was in very technical language, however based on what Emma had told me I understood that it meant I needed to keep records.
Mr Yuan gave further evidence that following the issuing of the letter of caution, he had various discussions with 7-Eleven head office and legal advisers. He stated that he was on notice from 7-Eleven head office that ‘payroll was (his) responsibility and that if (he) had not paid Ivan correctly that 7-Eleven could terminate the franchises. This made (him) very stressed.’
I find that Mr Yuan understood (or should reasonably have understood) his responsibilities as an employer to ensure compliance with employment laws. I find that he was on notice that his practices in 2012 and 2013 were not compliant with the Award and the FW Act particularly to the extent that it related to the failure to pay penalty rates on weekends and public holidays.
Nature and extent of the loss or damage
The contraventions by Viplus and Mr Yuan resulted in an underpayment of $19,125.58 affecting 10 employees.[42]
[42] Paragraphs 2, 11 and 81 of Viplus SOAF.
Similarly, the contraventions by Vipper resulted in an underpayment of $12,381.69 effecting 11 employees.[43]
[43] Paragraph 50 of Vipper SOAF.
Given that many of the employees of both Viplus and Vipper were in Australia on various visas, with many being young workers, the impact of the underpayments was significant for each of the affected employees.[44]
[44] Fair Work Ombudsman vI LUV Pty Ltd& Ors [2016] FCCA 2569 at [46].
The respondents rectified the underpayments in full. This rectification however, does not take away from the detriment suffered by the individuals who did not have the benefit of the amounts to which they were lawfully entitled for a significant period of time.
The respondents pointed to the fact that they maintained full records of payments made to employees and did not try and falsify such records or mislead the regulator in the course of their investigation. The respondents also pointed to the fact that they submitted all of their pay records to 7-Eleven head office and reasonably expected that if there was a problem with their methods that this would have been raised with them.
This later point is inconsistent with the evidence given by Mr Yuan himself that it was made clear to him in 2012/2013 that payroll was his responsibility and that if he did not discharge that responsibility, it could result in the franchise agreements being terminated.
The respondents further stated that the method of payment adopted by them resulted in some employees who worked Sundays being overpaid as against the award by up to $14,000 collectively.[45] In response, the applicant stated that there was no evidence before the Court to support this submission and therefore it was relevant to the Court’s consideration of the contraventions.
[45] Paragraph 19(d) of the respondents’ submissions as to penalty.
There is also no evidence, even if there was an overpayment as alleged by the respondents, as to the level of any such overpayment and whether any such overpayment was received by the same individuals who were underpaid.
I agree with the applicant that this is not a factor relevant to the court’s consideration.
Overall, I am satisfied that the underpayments in this instance were substantial particularly when regard is had to the low skill nature of most of the workers and their vulnerability given their age in some cases and their visa status.[46]
[46] Fair Work Ombudsman v I Luv Pty Ltd [2016] FCCA 923 at [46].
Any similar previous conduct
Whilst none of the respondents has previously been subject to prosecution by the applicant, I refer to paragraphs 54 to 58 above which detail prior involvement with the applicant on the part of
Mr Yuan and Vipper Pty Ltd.
The continued failure to ensure compliance with the Award following the issuing of a letter of caution to Vipper Pty Ltd is a relevant factor going to penalty with respect to both Mr Yuan and Vipper.
Whether the breaches were distinct or arose out of one course of conduct
The analysis on this factor is set out above.
Size and financial circumstances of the business
At the time of the contraventions, Vipper and Viplus were operating as small to medium businesses. There is no evidence regarding the size or financial circumstances of either Vipper or Viplus, which would warrant a reduction in any penalty to be imposed in this case on that ground alone.
Whether the breaches were deliberate
It is trite to state that ignorance of the law is no excuse.[47]
[47] Australian Competition and Consumer Commission v Eternal Beauty Products Pty Ltd [2012] FCA 1124 (Murphy J) at [54]; Fair Work Ombudsman v Access Embroidery (Australia) Pty Ltd & Anor [2012] FMCA 835 at [40]−[41]; Fair Work Ombudsman v Bosen Pty Ltd & Ors [2011] VMC 91.
In this case, the court accepts that the respondents did not seek to cover up their underpayments and other non-compliance, nor did they falsify any records.
To that extent it is arguable that the contraventions could not be said to be deliberate in the sense that they are ‘intentional’ or ‘on purpose’.[48]
[48] Oxford Dictionary meaning of ‘deliberate’.
However, I am satisfied that at least in the case of Vipper and Mr Yuan, they knew, or ought reasonably to have known, that the practices whereby staff were being paid prior to 2012 were non-compliant with the Award.
This is particularly so given the evidence that 7-Eleven head office provided extensive material to its franchisees, including the respondents regarding payment obligations and compliance with workplace laws.
In these circumstances, the failure to ensure that payment methods complied with the Award after the applicant’s 2012 investigation and the provision of the letter of caution amounts, at best, to carelessness or indifference, particularly in relation to Vipper and Mr Yuan.
The involvement of senior management
Mr Yuan was the directing mind and will of each of Vipper and Viplus.
Mr Yuan has admitted his involvement within the meaning of
section 550 of the FW Act for the purposes of some of the contraventions engaged in by Vipper and Viplus.
His Honour Judge Jarrett found Mr Yuan was involved in each of the contraventions committed by Viplus and Vipper.
Whether the party committing the breach had exhibited contrition, taken corrective action and cooperated with the enforcement authorities
As stated above, each of the underpayments was rectified in full.
There have been varying degrees of cooperation with the applicant in the course of this proceeding by each of the respondents.
Vipper has fully cooperated with the applicant by making full admissions in relation to the contraventions it engaged in.
In relation to Vipper, Mr Yuan admitted to his involvement in the payslip and record keeping contraventions but contested liability in respect of the 5 underpayment contraventions.
Viplus admitted all contraventions other than the underpayment contravention arising from the incorrect classification of two employees (Karthick and Chi Chi) which necessitated a hearing in relation to this classification issue.
In relation to Viplus, Mr Yuan admitted his involvement in the payslip and record keeping contraventions but contested liability in respect of the ten underpayment contraventions.
Having regard to these differing levels of cooperation, the applicant submitted that an appropriate discount for cooperation be applied as follows:
a)Mr Yuan – 5% for each of the Viplus and Vipper proceedings;
b)Viplus – 15%; and
c)Vipper – 20%.
The respondents submitted that they have rectified the damage to their employees and ensured that those same mistakes did not occur again.
The respondents further submitted that the overpayment to those employees who worked on Sundays as a result of the method of payment adopted is a significant factor which ought to be taken into account as ‘these employees have now been paid approximately $25,000 above award’. As stated above, there is no evidence as to which employee worked on Sunday and which employees, if any, were paid above the award.
In any event, no authority was provided to the court for the proposition that overpayment to some employees is a factor which ought to be taken into account in considering the imposition of a penalty for non-compliance and underpayment contraventions in respect of other employees.
Similarly, the respondent pointed to the fact that 7-Eleven did not renew the franchise agreement in relation to the Adelaide Street and George Street stores resulting in the respondents’ loss of the George Street store, forced sale at short notice of the Adelaide Street store and loss of employment for Mr Yuan and his wife.
Whilst these circumstances are clearly unfortunate, they are ultimately of the respondents’ making. As stated above, Mr Yuan (and Vipper specifically) were on notice from 2012, both of his obligations under the Award and that from 7-Eleven’s perspective, it was his responsibility to ensure those obligations were met and a failure to do so would put his franchise at risk.
Mr Yuan has expressed remorse in his affidavit to this court. It is clear from the fact that he did not seek to hide the way in which staff were being paid, that there was no deceit involved in this case.
I am satisfied that the following discounts should apply in this case, having regard to the co-operation and contrition shown by the parties:
a)Mr Yuan – 10% for each of the Viplus and Vipper proceedings;
b)Viplus – 20%; and
c)Vipper – 22%.
The need for specific and general deterrence
The evidence before this court is that both Vipper and Viplus are still registered although neither are operating a business or employing any employees.
There is also evidence that the respondents had implemented some measures prior to ceasing to trade to ensure compliance with the Award.
In those circumstances, the respondents indicate that there is no real need for specific deterrence in this case.
I am satisfied that given that the corporate respondents still exist and have the potential for future activity, together with the fact that these contraventions occurred against the backdrop of a letter of caution directed to Vipper and Mr Yuan, specific deterrence is a relevant consideration, albeit, not a significant one.
In relation to general deterrence, the applicant submitted that
In order to be useful for general deterrence, a penalty should be imposed at a level that is likely to as [sic] a deterrent in preventing similar contraventions by like-minded individuals or organisations.[49]
[49] Paragraph 90 of the applicant’s submissions as to penalty and the case law referred to therein.
The applicant also pointed to the retail sector generally in which the respondents operated at the relevant time and 7-Eleven franchises specifically, both of which include numerous vulnerable employees. In that context, the applicant argued that there is a need for a penalty to be imposed at a sufficient level to act as a general deterrent.[50]
[50] Paragraphs 91 to 96 of the applicant’s submissions as to penalty and the case law referred to therein.
The respondents submitted that without seeking to derogate from the seriousness of their actions,
the Court should have regard to the heavy losses already suffered by the Respondents when considering whether further general deterrence is required…[sic][51];and
…that these circumstances alone should act as both a cautionary tale and significant deterrent to other employers who may be considering engaging in similar conduct and in particular to employers within the 7-Eleven network.[52]
[51] Paragraph 44 of the respondents’ outline of submissions as to penalty.
[52] Paragraph 47 of the respondents’ outline of submissions as to penalty.
I am satisfied that general deterrence is a relevant factor in this case.
Recommended penalty and totality principle
In summary, the applicant seeks penalties within the following range:
First Respondent
Mr Yuan
Viplus proceeding
$132,218 – $166,898
$29,555 – $37,307
Vipper proceeding
$104,040 – $128,520
$24,710 – $30,524
The applicant submitted that the totality principle has two elements:
a)first, determining whether the proposed penalty is an appropriate response to the conduct; and
b)second, considering whether the proposed penalty is oppressive or crushing.
The applicant submitted that in applying these principles and having regard to all of the circumstances, it might be appropriate to reduce the overall penalty for Mr Yuan in each proceeding by 25%, resulting in a penalty for him in the Viplus proceeding of $22,166 to $27,980 and in the Vipper proceeding of $18,532 to $22,893. The applicant submitted that no other reduction would be appropriate.
The respondents submit that in considering the totality principle, the court should have regard to:
a)the effect the total penalties will have on the Respondents, and in particular Mr Yuan who faces potential liability for all penalties imposed;
b)whether the Respondents, and in particular Mr Yuan, is being penalised multiple times for his engaging in what is essentially one course of conduct across two entities;
c)the damage and loss already suffered by the Respondents, and in particular Mr Yuan and his family, as a result of the matters arising out of this proceeding; and
d)the nature of the Respondents’ overall conduct [sic].[53]
[53] Paragraph 48 of the respondents’ submissions on penalty.
In addition, the respondents stated that the penalties sought by the applicant are oppressive ‘in circumstances where the only method of paying those penalties is for Mr Yuan to sell the family home’.[54]
[54] Paragraph 51 of the respondents’ submissions on penalty.
In all the circumstances, the respondents submitted that in the circumstances, total penalties for all three respondents in the range of $65,000 to $80,000 would be appropriate.[55]
[55] Paragraph 53 of the respondents’ submissions on penalty.
The applicant stated that the respondents’ submissions in this regard ought to be rejected. The applicant referred to the decision of
his Honour Justice Buchanan in Fair Work Ombudsman v
Ramsey Food Processing Pty Ltd (No 2) [2012] FCA 408 and cases following in which the courts have held that the culpability of each respondent is to be assessed individually.[56][56] See paragraphs 29 to 32 of the applicant’s reply submissions on penalty.
The FW Act contemplates that both a corporate entity and an individual can, in certain circumstances, concurrently breach provisions of the FW Act and concurrently attract penalties for such breach.
Section 550 of the FW Act specifically deals with this situation.
To the extent that the respondents’ submission is that any penalty imposed on the relevant corporate entity and Mr Yuan in each proceeding ought to be reduced or suspended, having regard to the fact that both Vipper and Viplus are small companies in which Mr Yuan is the main, if not only active participant, I reject this submission.
I note his Honour Judge Riethmuller’s comments in
Fair Work Ombudsman v Openica Logistics Pty Ltd & Anor[2016] FCCA 159 at [38]:
…as a matter of principle there should be two penalties. Ordinarily neither should be suspended as they are an incident (albeit negative) of the separate legal identity of the company. Avoidance of this negative incidence of corporate identity is simple: one can operate as a sole trader with the disadvantages that may bring. The second respondent has chosen to establish a company, a second legal entity, and this entity’s conduct is the subject of sanction, just as the real person involved in the conduct.
The same comments apply to the present case. Mr Yuan has chosen to establish separate legal entities to conduct each of the 7-Eleven franchises. Those entities have engaged in conduct which has either been conceded to be or found to be in contravention of the FW Act.
Mr Yuan has agreed or been found to have been involved in those contraventions. Other than as required by the application of the totality principle or the other considerations outlined above, there is no general basis on which the penalties imposed on either the corporate entity or Mr Yuan personally ought to be reduced as a result of this corporate structure.
Consideration of appropriate penalty
On the basis of the submissions referred to above and the material before the Court, the factors which are particularly relevant to determining a penalty that ought to be imposed in this case are:
a)the nature of the conduct;
b)the significant amount of the underpayment particularly having regard to the proportion of pay actually received by the employees;
c)the letter of caution issued by the applicant to Mr Yuan and Vipper in 2013;
d)the level of the parties’ cooperation and rectification of the underpayments;
e)the genuine remorse demonstrated by the second respondent; and
f)the need for specific and general deterrence.
Having regard to the parties’ submissions and applying the principals outlined above, I would impose the following penalties in respect of each of the contraventions as grouped in paragraph 42 above:
Viplus Proceeding
a)in relation to Viplus, it is appropriate to impose a penalty of $100,160 for its contraventions which is made up as follows:
Grouped Contravention
Maximum penalty after discount for cooperation
Range sought by FWO
Penalty imposed by reason of this decision
Failure to pay minimum rates in breach of clause 17 of the Award
$40,800
30 – 40%
$12,500
Failure to pay casual loading in breach of clause 13.2 of the Award
$40,800
NIL
NIL
Failure to pay overtime in breach of clause 29.2 of the Award
$40,800
20 – 30%
$8,600
Failure to pay evening penalty in breach of clause 29.4 of the Award
$40,800
30 – 40%
$12,500
Failure to pay Saturday loading in breach of clause 29.4(b) and A.7.3 of the Award
$40,800
30 – 40%
$12,500
Failure to pay public holiday rates in breach of clause 29.4(d) and A.7.3 of the Award
$40,800
40 – 50%
$16,320
Failure to pay shift penalties in breach of clause 30.3 and A.7.3 of the Award
$40,800
60 – 70%
$22,440
Failure to provide payslips with information required by the FW Regulations
$20,400
50 – 60%
$10,200
Failure to keep records with the information required by regulation 3.33 of the FW Regulations
$20,400
20 – 30%
$5,100
TOTAL VIPLUS
$100,160
b)in relation to the second respondent in the Viplus proceedings, it is appropriate to impose a penalty of $23,412 for his part in the Viplus contraventions which is made up as follows:
Grouped Contravention
Maximum penalty after % discount
Range sought by FWO
Penalty imposed by reason of this decision
Failure to pay minimum rates in breach of clause 17 of the Award
$9,180
30 – 40%
$2,754
Failure to pay casual loading in breach of clause 13.2 of the Award
$9,180
NIL
NIL
Failure to pay overtime in breach of clause 29.2 of the Award
$9,180
20 – 30%
$1,836
Failure to pay evening penalty in breach of clause 29.4 of the Award
$9,180
30 – 40%
$2,754
Failure to pay Saturday loading in breach of clause 29.4(b) and A.7.3 of the Award
$9,180
30 – 40%
$2,754
Failure to pay public holiday rates in breach of clause 29.4(d) and A.7.3 of the Award
$9,180
40 – 50%
$3,672
Failure to pay Shift Penalties in breach of clause 30.3 and A.7.3 of the Award
$9,180
60 – 70%
$5,967
Failure to provide payslips with information required by the FW Regulations
$4,590
50 – 60%
$2,525
Failure to keep records with the information required by regulation 3.33 of the FW Regulations
$4,590
20 – 30%
$1,150
TOTAL YUAN
$23,412
Vipper Proceeding
a)in relation to Vipper, it is appropriate to impose a total penalty for the contraventions of $77,571 made up as follows:
Grouped Contravention
Maximum penalty after discount for cooperation
Range sought by FWO
Penalty imposed by reason of this decision
Failure to pay casual loading in breach of clause 13.2 of the Award
$39,780
30 – 40%
$11,934
Failure to pay Saturday loading in breach of clause 29.4(b) and A.7.3 of the Award
$39,780
30 – 40%
$11,934
Failure to pay public holiday penalty rates in breach of clause 29.4(d) and A.6.4 and A.7.3 of the Award
$39,780
50 – 60%
$15,912
Failure to pay Saturday shift in breach of clause 30.3 and A.7.3 of the Award
$39,780
60 – 70%
$23,868
Failure to record cash payments
$19,890
50 – 60%
$9,945
Failure to keep records with the information required by regulation 3.33 of the FW Regulations
$19,890
20 – 30%
$3,978
TOTAL VIPPER
$77,571
b)in relation to the second respondent in the Vipper proceedings, it is appropriate to impose a penalty for the contraventions of $18,133 made up as follows:
Grouped Contravention
Maximum penalty after % discount
Range sought by FWO
Penalty imposed
Failure to pay casual loading in breach of clause 13.2 of the Award
$9,180
30 – 40%
$2,754
Failure to pay Saturday loading in breach of clause 29.4(b) and A.7.3 of the Award
$9,180
30 – 40%
$2,754
Failure to pay public holiday penalty rates in breach of clause 29.4(d) and A.6.4 and A.7.3 of the Award
$9,180
40 – 50%
$3,672
Failure to pay Saturday shift in breach of clause 30.3 and A.7.3 of the Award
$9,180
60 – 70%
$5,508
Failure to record cash payments
$4,590
50 – 60%
$2,295
Failure to keep records with the information required by regulation 3.33 of the FW Regulations
$4,590
20 – 30%
$1,150
TOTAL YUAN
$18,133
Application of the Totality Principle
Consistent with the authorities referred to above, it is appropriate to take a final look at the aggregate penalty in each of the Viplus and Vipper proceedings to determine whether it is an appropriate response to the conduct which led to the contraventions and that it is not oppressive or crushing.
There is no evidence before this court that the penalties would be crushing or oppressive. Mr Yuan made some oral submissions about the difficulties that he would have in meeting any substantial penalties as he is not working and the fact that the corporate entities are no longer operating a 7-Eleven franchise. He did not however produce evidence as to either his current financial position or that of either Viplus Pty Ltd or Vipper Pty Ltd.
Having said that, the applicant submitted that in these proceedings, in applying the totality principle, it might be appropriate to reduce the penalties imposed on the second respondent of 25% in respect of each proceeding. This submission was made on the basis of the higher penalties being sought by the applicant. I note that the application of the totality principle does not require that a total penalty must be reduced but rather that any penalty imposed must be appropriate to the circumstances and just.
Having regard to the particular circumstances of these proceedings, a reduction through the application of the totality principle in the order of 12% in respect of each of the respondents in each proceeding would be appropriate.
After applying the totality principle, this results in the imposition of the following penalties:
Viplus Proceeding
Viplus
$88,140
Mr Yuan
$20,602
Vipper Proceeding
Vipper
$68,262
Mr Yuan
$15,957
Conclusion
For each of the reasons set out above, I therefore make the orders set out at the beginning of these reasons.
I certify that the preceding one hundred and twenty three (123) paragraphs are a true copy of the reasons for judgment of Judge Mercuri
Date: 29 March 2018
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