Fair Work Ombudsman v W.X.Z Enterprises Pty Ltd
[2018] FCCA 616
•16 March 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v W.X.Z ENTERPRISES PTY LTD & ORS | [2018] FCCA 616 |
| Catchwords: INDUSTRIAL LAW – Accessorial liability – accessory’s alleged liability for involvement in principal’s contraventions of award – alleged accessory must know relevant award applies to employee. INDUSTRIAL LAW – Accessorial liability – accessory’s alleged liability for involvement in principal’s contraventions of statute – ignorance no defence to allegation of liability as accessory to breaches of statute. |
| Legislation: Fair Work Act 2009, ss.13, 14, 22, 30M, 30N, 42, 44, 45, 60, 90, 99, 116, 308, 311, 312, 313, 529, 535, 536, 539, 545, 547, 550 Fair Work Regulations 2009, regs.3.32, 3.33, 3.34, 3.36, 3.37 Fair Work Amendment (State Referrals and Other Measures) Act 2009 |
| United Firefighters’ Union of Australia v Metropolitan Fire and Emergency Services Board (2006) 152 FCR 18 Fair Work Ombudsman v Raying Holding (No 2) [2017] FCCA 2148 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | W.X.Z ENTERPRISES PTY LTD (ACN 122 695 854) |
| Second Respondent: | XIN TAI XU |
| Third Respondent: | XIN CHUN XU |
| File Number: | SYG 2823 of 2013 |
| Judgment of: | Judge Cameron |
| Hearing date: | 4 May 2015 |
| Date of Last Submission: | 18 June 2015 |
| Delivered at: | Sydney |
| Delivered on: | 16 March 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Y. Shariff |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| No appearance by or for the Respondents |
THE COURT DECLARES THAT:
The first respondent contravened the following civil remedy provisions of the Fair Work Act 2009 (“FW Act”):
(a)s.45 of the FW Act, by virtue of contravening cl.17 of the Fast Food Industry Award 2010 (“Modern Award”), by failing to pay the following employees (“Employees”) their minimum hourly rate of pay for all ordinary hours worked:
(i)Ms Songtao Lin (“Ms ST Lin”);
(ii)Ms Songbo Lin (“Ms SB Lin”);
(iii)Mr Zhisheng Chen (“Mr Chen”);
(iv)Ms Zhiqun Weng (“Ms Weng”);
(v)Mr Zhen Xu (“Mr Xu”);
(vi)Mr Guoyang Lin (“Mr Lin”);
(b)s.45 of the FW Act, by virtue of contravening cl.26.1(a)(i) of the Modern Award, by failing to pay the Employees their minimum hourly rate of pay for all overtime hours worked;
(c)s.45 of the FW Act, by virtue of contravening cl.25.5(a)(i) of the Modern Award, by failing to pay the Employees their minimum hourly rate of pay for all hours of work performed between 9:00pm and midnight Monday to Friday;
(d)s.45 of the FW Act, by virtue of contravening cl.25.5(b) of the Modern Award, by failing to pay the following employees their minimum hourly rate of pay for all ordinary hours of work performed on a Saturday:
(i)Ms ST Lin;
(ii)Ms SB Lin;
(iii)Ms Weng;
(iv)Mr Xu;
(v)Mr Lin;
(e)s.45 of the FW Act, by virtue of contravening cl.25.5(c)(i) of the Modern Award, by failing to pay the Employees their minimum hourly rate of pay for all hours of work performed on a Sunday;
(f)s.45 of the FW Act, by virtue of contravening cl.30.3 of the Modern Award, by failing to pay the Employees a penalty rate for work performed on a public holiday;
(g)s.44(1) of the FW Act, by virtue of contravening s.116 of the FW Act, by failing to pay the following employees their minimum hourly rate of pay for ordinary hours absent on a public holiday:
(i)Ms ST Lin;
(ii)Ms SB Lin;
(iii)Ms Weng;
(iv)Mr Xu;
(v)Mr Lin;
(h)s.44(1) of the FW Act, by virtue of contravening s.90(1) of the FW Act, by failing to pay the following employees their minimum hourly rate of pay for annual leave taken during their employment:
(i)Ms ST Lin;
(ii)Mr Lin;
(i)s.45 of the FW Act, by virtue of contravening cl.28.3(b)(i) of the Modern Award, by failing to pay Mr Lin annual leave loading for annual leave taken during his employment;
(j)s.44(1) of the FW Act, by virtue of contravening s.90(2) of the FW Act, by failing to pay the Employees annual leave on the termination of their employment;
(k)s.45 of the FW Act, by virtue of contravening cl.28.3(b)(i) of the Modern Award, by failing to pay the Employees annual leave loading on the termination of their employment;
(l)s.44(1) of the FW Act, by virtue of contravening s.99 of the FW Act, by failing to pay Mr Lin at his minimum hourly rate of pay for personal/carer’s leave taken during his employment;
(m)s.536(1) of the FW Act by failing to provide a pay slip to each of the Employees within one day of paying an amount to the Employees in relation to the performance of work; and
(n)s.535(1) of the FW Act by failing to make and keep for 7 years employee records of the kind prescribed by regs.3.32(d), 3.32(e), 3.33(1), 3.33(3), 3.34, 3.36(1) and 3.37 of the Fair Work Regulations 2009 in relation to each of the Employees.
The second respondent was involved in the first respondent’s contraventions of ss.44(1), 45, 535(1) and 536(1) of the FW Act as set out in declaration 1.
The third respondent was involved in the first respondent’s contraventions of s.536(1) of the FW Act in relation to Ms SB Lin and Mr Chen.
THE COURT ORDERS THAT:
The first respondent pay compensation to the Employees in amounts to be quantified by further order.
The first respondent pay the Employees interest on the amounts ordered as a consequence of order 1 in amounts to be quantified by further order.
Within 28 days the applicant and the respondents file and serve a proposed minute of order quantifying the amounts owing to the Employees, including interest, calculated in accordance with the reasons for judgment in this matter published on 16 March 2018.
In the event that the first respondent is unable to locate any of the Employees, the first respondent pay the amounts due to that employee pursuant to these and any subsequent orders in this proceeding to the Consolidated Revenue Fund of the Commonwealth within 56 days.
The applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders is not complied with.
The proceeding be listed for directions on 6 April 2018.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2823 of 2013
| FAIR WORK OMBUDSMAN |
Applicant
And
| W.X.Z ENTERPRISES PTY LTD (ACN 122 695 854) |
First Respondent
| XIN TAI XU |
Second Respondent
| XIN CHUN XU |
Third Respondent
REASONS FOR JUDGMENT
INTRODUCTION
The first respondent (“WXZ”) operated several take-away shops in New South Wales and Queensland. The applicant (“Ombudsman”) alleged that WXZ contravened the Fair Work Act 2009 (“FW Act”) because it failed to pay certain of its employees their minimum rates of pay, overtime, penalty rates, public holiday pay, annual leave, annual leave loading and personal leave pay. The Ombudsman also alleged that WXZ contravened the FW Act because it failed to provide timely pay slips or to make and keep employee records.
The Ombudsman alleged that the second and third respondents, who were directors of the company at different times, were involved in WXZ’s contraventions of the FW Act.
The Ombudsman sought declarations that WXZ contravened ss.44 and 45 of the FW Act and that the second and third respondents were involved in the contraventions. She also sought declarations concerning WXZ’s alleged breaches of ss.535 and 536 and the second and third respondent’s alleged involvement in those contraventions. The Ombudsman further sought payment by WXZ of the amounts allegedly underpaid or unpaid, interest on those amounts and the imposition of pecuniary penalties on all the respondents.
At the commencement of the hearing of this matter on 4 May 2015, which was concerned with whether the respondents had contravened the FW Act, the respondents’ legal advisers withdrew with leave, advising the Court that the respondents did not intend to appear at that part of the hearing or to adduce any evidence in connection with it. The matter proceeded in their absence.
On 2 June 2015 the Ombudsman filed an application in a case seeking leave to file a further amended statement of claim. The application in a case was listed for hearing on 16 June 2015, at which time there was no appearance by or for the respondents. Leave was subsequently granted to the Ombudsman to file a further amended statement of claim.
ALLEGATIONS
The Ombudsman’s further amended statement of claim was filed on 18 June 2015. Relevant allegations are summarised below.
The Ombudsman alleged that the following employees (“Employees”) were employed by WXZ on a full-time basis:
Employee
Period of employment
Primary place of work
Duties
Ms Songtao Lin
(Ms “ST” Lin)
01/07/10 – 01/11/11
Bundaberg, Queensland shop
Cook and general duties
Ms Songbo Lin
(Ms “SB” Lin)
01/07/10 – 01/12/11
Orange, New South Wales shop
Cook and general duties
Mr Zhisheng Chen
31/07/11 – 23/12/11
Orange shop
General duties
Ms Zhiqun Weng
01/07/10 – 24/06/12
Bathurst, New South Wales shop
General duties
Mr Zhen Xu
01/07/10 – 01/06/12
Bathurst shop
Supervisor and head cook
Mr Guoyang Lin
01/07/10 – 02/03/13
Dubbo, New South Wales shop
Supervisor and head cook
It was alleged that the Employees were, at all material times, national system employees under s.13 of the FW Act.
Award coverage
The Ombudsman alleged that from March 2007 to 30 June 2010 the Employees with the exception of Mr Chen who commenced work on 31 July 2011 (“Div.2B State Award Employees”), were employed by DH Whang [sic], XT Xu (the second respondent) and G Zheng trading as Yummy Noodle Bank & Yummy Noodle Box (“Yummy Noodle Box”) and that on 30 June 2010 they were employed pursuant to Division 2B State awards:
a)as derived from the (Queensland) Retail Take-Away Food Award – South-Eastern Division 2003 (“Qld Div.2B Award”) in respect of Ms ST Lin; and
b)as derived from the (NSW) Shop Employees (State) Award (“NSW Div.2B Award) in respect of Ms SB Lin, Ms Weng, Mr Xu and Mr Lin.
The Ombudsman alleged that on 1 July 2010 there was a transfer of business from Yummy Noodle Box to WXZ as that is understood for the purposes of s.311 of the FW Act. The Ombudsman alleged that the Div.2B State Award Employees continued to perform substantially the same work as they had performed before 1 July 2010 and that, in the circumstances and pursuant to s.22(7)(b) of the FW Act, there was a transfer of employment from Yummy Noodle Box to WXZ on 1 July 2010. The Ombudsman alleged that from 1 July 2010 to 2 February 2011 the employment of the Div.2B State Award Employees remained governed by the Qld Div.2B Award (or its terms) as to Ms ST Lin and the NSW Div.2B Award (or its terms) as to Ms SB Lin, Ms Weng, Mr Xu and Mr Lin.
It was alleged that on and from 3 February 2011 WXZ was bound by the Fast Food Industry Award 2010 (“Modern Award”) in respect of the Employees.
Having regard to the duties that they were required to perform, the Ombudsman alleged that the Employees fell within the following award classifications:
Employee
Relevant Division 2B Award
Modern Award
Ms ST Lin
Food and beverage attendant grade 2
Level 1
Ms SB Lin
Group 1
Level 1
Mr Chen
Group 1
Level 1
Ms Weng
Group 1
Level 1
Mr Xu
Group 4, with the duty of buying, in charge of nil to 4 assistants
Level 3
Mr Lin
Group 4, with the duty of buying, in charge of nil to 4 assistants
Level 3
Modern Award – Transitional minimum wage instruments
The Ombudsman alleged that at all material times from 3 February 2011 WXZ was required to pay the Employees in accordance with the transitional arrangements under sch.A to the Modern Award, being transitional pay rates calculated with reference to a relevant transitional minimum wage instrument.
The Ombudsman alleged that the preserved Australian Pay and Classification Scale (“APCS”) derived from the Retail Take-Away Food Award – South-Eastern Division 2003 (in accordance with the Workplace Relations Act 1996 (“WR Act”) which Act was repealed on 1 July 2009) (“Qld preserved APCS”) became a transitional minimum wage instrument under the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“FW (TPCA) Act”) and was the relevant transitional minimum wage instrument for Ms ST Lin, who worked in Queensland at the Bundaberg shop. It was alleged that Ms ST Lin fell within the classification of a food and beverage attendant grade 2 under the Qld preserved APCS.
The Ombudsman alleged that the relevant transitional minimum wage instrument in respect of the New South Wales employees was the Shop Employees (State) Award (“NSW Award pay scale”). It was alleged that Ms SB Lin, Mr Chen and Ms Weng (“NSW Level 1 Employees”) fell within the NSW Award pay scale’s classification of group 1 employees and that Mr Xu and Mr Lin (“NSW Supervisory Employees”) fell within the NSW Award pay scale’s classification of group 4 employees with the duty of buying and in charge of up to four assistants.
Underpayment of ordinary hours worked
Division 2B State awards
The Ombudsman alleged that between 1 July 2010 and 2 February 2011 WXZ was required to pay its employees the following minimum hourly rates in accordance with the relevant Division 2B State awards:
Employee
Award
Hourly rate
Ms ST Lin
Qld Div.2B Award, cl.5.2.1 [recte: cls.5.1 and 5.3]
$15.39
Ms SB Lin, Ms Weng
NSW Div.2B Award, cl.38 and item 1 of Table 1 of pt.B
$16.40
Mr Xu, Mr Lin
NSW Div.2B Award, cl.38 and item(4)(ii) of Table 1 of pt.B
$16.74
It was alleged that WXZ failed to pay the Div.2B State Award Employees those minimum wage rates, leading to the following underpayments:
a)Ms ST Lin – $3,815.84;
b)Ms SB Lin – $4,614.74;
c)Ms Weng – $2,393.55;
d)Mr Xu – $4,584.03; and
e)Mr Lin – $5,095.30.
The Ombudsman alleged that, by reason of the above matters, WXZ breached cl.5.2.1 [recte: cls.5.1 and 5.3] of the Qld Div.2B Award and cl.38 and items 1 and 4(ii) of Table 1 of the NSW Div.2B Award, thereby contravening, by reason of item 16(1)(c) of [sch.16 to] the FW (TPCA) Act, s.45 of the FW Act.
Modern Award
The Ombudsman alleged that on and after 3 February 2011 WXZ was required to pay its employees the following minimum hourly wage rates in accordance with cl.17 of the Modern Award, as modified by sch.A to that award:
3 Feb 2011 –
30 June 2011
1 July 2011 –
30 June 2012
1 July 2012 –
30 June 2013
Ms ST Lin
$15.64
$16.41
N/R
NSW Level 1 Employees
$16.47
$17.03
N/R
NSW Supervisory Employees
$17.03
$17.81
$18.52
The Ombudsman alleged that WXZ failed to pay the Employees those minimum wage rates, leading to the following underpayments:
a)Ms ST Lin – $3,880.11;
b)Ms SB Lin – $6,592.85;
c)Mr Chen – $4,610.12;
d)Ms Weng – $9,401.56;
e)Mr Xu – $9,434.16; and
f)Mr Lin – $10,286.56.
The Ombudsman alleged that by reason of the above matters, WXZ breached cl.17 of the Modern Award, thereby contravening s.45 of the FW Act.
Underpayment of overtime
Division 2B State awards
The Ombudsman alleged that, pursuant to cl.6.6.1 of the Qld Div.2B Award, WXZ was required to pay Ms ST Lin overtime rates for hours worked in excess of thirty-eight hours per week at the rate of time and a half for the first three hours on any one day and double time thereafter.
In relation to its New South Wales employees, cl.15 of the NSW Div.2B Award required WXZ to pay those employees overtime rates for hours worked in excess of thirty-eight hours per week at the rate of time and a half for the first two hours on any one day and double time thereafter, other than on Sundays when wages were payable at double time for all hours worked.
The Ombudsman alleged that the following overtime rates were payable in the period from 1 July 2010 to 2 February 2011:
Time and a half rate
Double time rate
Ms ST Lin
$23.09
$30.78
Ms SB Lin, Ms Weng
$24.60
$32.79
Mr Xu, Mr Lin
$25.12
$33.49
The Ombudsman alleged that WXZ failed to pay the above overtime rates for hours worked in excess of thirty-eight hours per week, leading to the following underpayments:
a)Ms ST Lin – $22,661.74;
b)Ms SB Lin – $19,434.22;
c)Ms Weng – $14,599.60;
d)Mr Xu – $24,713; and
e)Mr Lin – $30,426.29.
The Ombudsman alleged that by failing to pay the Div.2B State Award Employees the correct overtime rates, WXZ breached cl.6.6.1 of the Qld Div.2B Award and cl.15 of the NSW Div.2B Award, thereby contravening, by reason of item 16(1)(c) of [sch.16 to] the FW (TPCA) Act, s.45 of the FW Act.
Modern Award
The Ombudsman alleged that on and after 3 February 2011 WXZ was, pursuant to cl.26.1(a)(i) of the Modern Award, required to pay its employees overtime rates for hours worked in excess of thirty-eight hours per week at the rate of time and a half for the first two hours on any one day and double time thereafter.
The Ombudsman alleged that the following overtime rates were payable:
3 Feb 2011 –
30 June 2011
1 July 2011 –
30 June 2012
1 July 2012 –
30 June 2013
Time and a half rate
Double time rate
Time and a half rate
Double time rate
Time and a half rate
Double time rate
Ms ST Lin
$23.46
$31.28
$24.62
$32.82
N/R
N/R
NSW Level 1 Employees
$24.71
$32.94
$25.55
$34.06
N/R
N/R
NSW Supervisory Employees
$25.55
$34.06
$26.72
$35.62
$27.78
$37.04
The Ombudsman alleged that WXZ failed to pay the Employees those overtime rates for hours worked in excess of thirty-eight hours per week, leading to the following underpayments:
a)Ms ST Lin – $24,789.16;
b)Ms SB Lin – $29,644.95;
c)Mr Chen – $10,042.58;
d)Ms Weng – $52,241.10;
e)Mr Xu – $52,503.43; and
f)Mr Lin – $93,989.61.
The Ombudsman alleged that by failing to pay the Employees the correct overtime rates, WXZ breached cl.26.1(a)(i) of the Modern Award and so contravened s.45 of the FW Act.
Underpayment of penalty rates for evening work
The Ombudsman alleged that on and after 3 February 2011 WXZ was required by cl.25.5(a)(i) of the Modern Award to pay its employees a penalty rate for ordinary hours of work performed between 9pm and midnight, Monday to Friday. Those rates were said to be:
3 Feb 2011 –
30 June 2011
1 July 2011 –
30 June 2012
1 July 2012 –
30 June 2013
Ms ST Lin
$15.95
$17.07
N/R
NSW Level 1 Employees
$16.80
$17.72
N/R
NSW Supervisory Employees
$17.37
$18.52
$19.63
The Ombudsman alleged the following underpayments in this regard:
a)Ms ST Lin – $411.10;
b)Ms SB Lin – $532.09;
c)Mr Chen – $233.70;
d)Ms Weng – $767.25;
e)Mr Xu – $767.63; and
f)Mr Lin – $1,181.67.
The Ombudsman alleged that WXZ breached cl.25.5(a)(i) of the Modern Award and so contravened s.45 of the FW Act.
Underpayment of penalty rates for Saturday work
Division 2B State awards
The Ombudsman alleged that, pursuant to cl.6.5.1 of the Qld Div.2B Award, WXZ was required to pay Ms ST Lin a penalty rate for ordinary hours of work performed on a Saturday at the rate of time and a quarter [recte: time and a half]. The Ombudsman also alleged that, pursuant to cl.14(a)(i) of the NSW Div.2B Award, WXZ was required to pay its New South Wales employees a penalty rate for ordinary hours of work performed on a Saturday at the rate of time and a quarter. During the period from 1 July 2010 to 2 February 2011, the following hourly rates were said to be applicable:
a)Ms ST Lin – $19.24;
b)Ms SB Lin and Ms Weng – $20.50; and
c)Mr Xu and Mr Lin – $20.93.
The Ombudsman alleged the following underpayments in this regard:
a)Ms ST Lin – $2,158.54;
b)Ms SB Lin – $2,044.88;
c)Ms Weng – $1,238.02;
d)Mr Xu – $2,129.62; and
e)Mr Lin – $1,855.60.
By failing to pay the Div.2B State Award Employees a penalty rate for hours worked on Saturdays, the Ombudsman alleged that WXZ breached cl.6.5.1 of the Qld Div.2B Award and cl.14(a)(i) of the NSW Div.2B Award and so contravened, by reason of item 16(1)(c) of [sch.16 to] the FW (TPCA) Act, s.45 of the FW Act.
Modern Award
The Ombudsman alleged that on and after 3 February 2011 WXZ was, pursuant to cl.25.5(b) of the Modern Award, required to pay its employees a penalty rate for ordinary hours of work performed on a Saturday. The following hourly rates were said to be applicable:
3 Feb 2011 –
30 June 2011
1 July 2011 –
30 June 2012
1 July 2012 –
30 June 2013
Ms ST Lin
$16.42
$18.05
N/R
NSW Level 1 Employees
$17.30
$18.74
N/R
NSW Supervisory Employees
$17.88
$19.59
$21.30
The Ombudsman alleged that in failing to pay its employees the above penalty rates for work performed on Saturdays, WXZ’s employees were underpaid the following amounts:
a)Ms ST Lin – $1,229.32;
b)Ms SB Lin – $2,400.98;
c)Ms Weng – $3,556.54;
d)Mr Xu – $3,602.72; and
e)Mr Lin – $3,919.42.
The Ombudsman alleged that WXZ thereby breached cl.25.5(b) of the Modern Award and so contravened s.45 of the FW Act.
Underpayment of penalty rates for Sunday work
Division 2B State awards
The Ombudsman alleged that in the period from 1 July 2010 to 2 February 2011 WXZ was required by cl.6.5.1 of the Qld Div.2B Award to pay Ms ST Lin a penalty rate for ordinary hours of work performed on a Sunday at the rate of time and a quarter [recte: time and a half]. In relation to its New South Wales employees, cl.14(b)(i) of the NSW Div.2B Award specified a penalty rate of time and a half. The following rates were said to be applicable:
a)Ms ST Lin – $19.24;
b)Ms SB Lin and Ms Weng – $24.60; and
c)Mr Xu and Mr Lin – $25.12.
The Ombudsman alleged that in failing to pay its employees those penalty rates for work performed on Sundays, WXZ’s Div.2B State Award Employees were underpaid the following amounts:
a)Ms ST Lin – $3,137.46;
b)Ms SB Lin – $4,826.79;
c)Ms Weng – $2,941.31;
d)Mr Xu – $5,066.32; and
e)Mr Lin – $5,529.76.
The Ombudsman alleged that WXZ therefore breached cl.6.5.1 of the Qld Div.2B Award and cl.14(b)(i) of the NSW Div.2B Award and so, by reason of item 16(1)(c) of [sch.16 to] the FW (TPCA) Act, contravened s.45 of the FW Act.
Modern Award
The Ombudsman also alleged that on and after 3 February 2011 WXZ was required by cl.25.5(c)(i) of the Modern Award to pay its employees a penalty rate for all hours of work performed on a Sunday, being an hourly rate of:
3 Feb 2011 –
30 June 2011
1 July 2011 –
30 June 2012
1 July 2012 –
30 June 2013
Ms ST Lin
$17.21
$19.69
N/R
NSW Level 1 Employees
$18.12
$20.44
N/R
NSW Supervisory Employees
$18.73
$21.37
$24.07
The Ombudsman alleged that WXZ failed to pay the Employees the appropriate penalty rates for work performed on Sundays, leading to the following underpayments:
a)Ms ST Lin – $3,047.66;
b)Ms SB Lin – $4,767.58;
c)Mr Chen – $862.65;
d)Ms Weng – $7,165.43;
e)Mr Xu – $7,195.88; and
f)Mr Lin – $10,635.69.
The Ombudsman alleged that WXZ thereby breached cl.25.5(c)(i) of the Modern Award and so contravened s.45 of the FW Act.
Underpayment of penalty rates for public holiday work
Division 2B State awards
In the period from 1 July 2010 to 2 February 2011 WXZ was required by cl.7.6.3 of the Qld Div.2B Award to pay Ms ST Lin a penalty rate for work performed on public holidays at 250% of the ordinary rate. In relation to its New South Wales employees, cl.17(A)(i) of the NSW Div.2B Award specified a penalty rate of double time and a half with a minimum payment of three hours. The Ombudsman alleged that the following minimum hourly rates were payable for such work:
a)Ms ST Lin – $38.48;
b)Ms SB Lin and Ms Weng – $40.99; and
c)Mr Xu and Mr Lin – $41.86.
The Ombudsman alleged that WXZ underpaid the Div.2B State Award Employees the following amounts in this regard:
a)Ms ST Lin – $1,635.70;
b)Ms SB Lin – $1,467.32;
c)Ms Weng – $2,029.45;
d)Mr Xu – $2,084.60; and
e)Mr Lin – $2,311.61.
The Ombudsman alleged that WXZ thereby breached cl.7.6.3 of the Qld Div.2B Award and cl.17(A)(i) of the NSW Div.2B Award and so, by reason of item 16(1)(c) of [sch.16 to] the FW (TPCA) Act, contravened s.45 of the FW Act.
Modern Award
The Ombudsman also alleged that on and after 3 February 2011, cl.30.3 of the Modern Award required WXZ to pay its employees a penalty rate for work performed on public holidays, being:
3 Feb 2011 –
30 June 2011
1 July 2011 –
30 June 2012
1 July 2012 –
30 June 2013
Ms ST Lin
$20.33
N/R
N/R
NSW Level 1 Employees
$21.42
$27.25
N/R
NSW Supervisory Employees
$22.14
$28.50
$35.18
The Ombudsman alleged that WXZ failed to pay the Employees the appropriate penalty rates for work performed on public holidays, leading to the following underpayments:
a)Ms ST Lin – $892.77;
b)Ms SB Lin – $742.66;
c)Mr Chen – $177.58;
d)Ms Weng – $1,945.47;
e)Mr Xu – $2,910.35; and
f)Mr Lin – $3,510.80.
In this regard, the Ombudsman alleged that WXZ thereby breached cl.30.3 of the Modern Award and so contravened s.45 of the FW Act.
Failure to pay ordinary hours when absent on a public holiday
The Ombudsman alleged that pursuant to s.116 of the FW Act, when they were absent from work on a public holiday, WXZ’s employees were entitled to be paid their base rate of pay for ordinary hours which fell on that public holiday, namely:
1 July 2010 –
2 Feb 2011
1 July 2011 –
30 June 2012
1 July 2012 –
30 June 2013
Ms ST Lin
$15.39
N/R
N/R
NSW Level 1 Employees
$16.40
$17.03
N/R
NSW Supervisory Employees
$16.74
$17.81
$18.52
The Ombudsman alleged the following underpayments in this regard:
a)Ms ST Lin – $116.98;
b)Ms SB Lin – $124.62;
c)Ms Weng – $1,030.84;
d)Mr Xu – $525.23; and
e)Mr Lin – $806.70.
It was alleged that WXZ therefore contravened s.116 of the FW Act and, consequently, s.44(1) of the FW Act.
Underpayment of annual leave taken and failure to pay annual leave loading
Pursuant to s.90(1) of the FW Act, WXZ was required to pay its employees their base rate of pay for ordinary hours of work for days taken as annual leave. The Ombudsman alleged that Ms ST Lin was underpaid $135.72 in this regard and that Mr Lin was underpaid $39.60. It was alleged that WXZ thereby contravened s.90(1) of the FW Act and so also contravened s.44(1) of the FW Act.
The Ombudsman also alleged that by virtue of cl.28.3(b)(i) of the Modern Award, Mr Lin was entitled to an annual leave loading of 17.5%. It was alleged that WXZ failed to pay Mr Lin $72.95 in respect of his entitlement to annual leave loading, thereby breaching cl.28.3(b)(i) of the Modern Award and thus s.45 of the FW Act.
Failure to pay accrued annual leave and annual leave loading on termination of employment
The Ombudsman alleged that s.90(2) of the FW Act required WXZ to pay its employees, upon termination of their employment, any untaken, accrued annual leave. It was alleged that as there was a transfer of employment, the Employees’ period of service with Yummy Noodle Box counted as service with WXZ: s.22(5) of the FW Act.
It was also alleged that the Employees were entitled to be paid a loading of 17.5% on accrued annual leave: cl.28.3(b)(i) of the Modern Award and s.90(2) of the FW Act.
The Ombudsman alleged the following underpayments in this regard:
Employee
Hours of accrued annual leave
Hourly rate of pay
Underpayment of accrued annual leave
Underpayment of annual leave loading
Ms ST Lin
669.22
$16.41
$10,608.03
$1,856.41
Ms SB Lin
704.20
$17.03
$11,992.53
$2,098.69
Mr Chen
60.80
$17.03
$1,035.42
$181.20
Ms Weng
686.29
$17.03
$11,687.52
$2,045.32
Mr Xu
770.20
$17.81
$13,717.26
$2,400.52
Mr Lin
901.17
$18.52
$16,265.71
$2,846.50
The Ombudsman alleged that WXZ thereby breached s.90(2) of the FW Act and cl.28.3(b)(i) of the Modern Award and so contravened ss.44(1) and 45 of the FW Act respectively.
Failure to pay base rate of pay for a period of personal leave
Pursuant to s.99 of the FW Act, WXZ was required to pay its employees, in respect of a period of paid personal/carer’s leave taken, their base rate of pay for ordinary hours of work in that period. The Ombudsman alleged that from 1 July 2012 to 30 June 2013 Mr Lin took 119.43 hours of paid personal/carer’s leave. It was alleged that WXZ failed to pay Mr Lin the minimum hourly rate of $18.52, leading to a total underpayment of $2,211.84 in contravention of s.99 and thus also s.44(1) of the FW Act.
Total underpayments
The Ombudsman alleged that in total WXZ had underpaid the Employees $624,504.54. It alleged that the individual employees were underpaid the following amounts:
a)Ms ST Lin – $80,376.54;
b)Ms SB Lin – $91,288.32;
c)Mr Chen – $17,143.25;
d)Ms Weng – $113,046.36;
e)Mr Xu – $131,634.72; and
f)Mr Lin – $191,015.35.
Failure to keep records
The Ombudsman alleged that WXZ contravened s.536(1) of the FW Act because it failed to provide the Employees with pay slips within one working day of wages being paid.
The Ombudsman also alleged that WXZ contravened s.535(1) of the FW Act and the Fair Work Regulations 2009 (“FW Regulations”) because it failed to make, and keep for seven years, employee records in relation to starting dates, rates of remuneration, loading and penalty rates, overtime hours, details of leave, details of superannuation contributions and records in relation to whether employees were employed on a permanent, temporary or casual basis.
Accessorial liability
Second respondent
The Ombudsman alleged that the second respondent was a director of WXZ from 15 November 2006 to 6 March 2009 and was a person responsible for its management and control. It was alleged that he:
a)had knowledge of all of WXZ’s alleged contraventions;
b)was involved in WXZ’s contraventions of ss.45, 535(1) and 536(1) of the FW Act by having knowledge of, and by being knowingly concerned and an intentional participant in, the relevant conduct; and
c)was involved in WXZ’s contraventions of s.44(1) of the FW Act in that he had knowledge that:
i)the Div.2B State Award Employees were not paid for ordinary hours when absent on a public holiday;
ii)Ms ST Lin and Mr Lin were not paid their full entitlements for periods of annual leave taken;
iii)Mr Lin was not paid at all for a period of personal leave; and
iv)none of the Employees were paid their accrued annual leave;
and was knowingly concerned and an intentional participant in that conduct.
Third respondent
The Ombudsman alleged that the third respondent had been a director of WXZ since 9 November 2010 and was a person responsible for its management and control. It was alleged that the third respondent had knowledge of, and was knowingly concerned and an intentional participant in, the relevant conduct and was thereby involved in WXZ’s contraventions of ss.44(1), 45, 535(1) and 536(1) of the FW Act insofar as they related to Ms SB Lin and Mr Chen.
RESPONSE
Apart from making a small number of allegations principally on questions of detail, the respondents’ response was concerned with traversing allegations made in the amended statement of claim, including denying that the third respondent had been involved “in any aspect of the operation of the first respondent or at all”. However, a number of admissions were made, including admissions:
a)by all respondents that the second respondent had the role in WXZ and its operations which the Ombudsman alleged and that the third respondent was a director of WXZ;
b)by WXZ and the second respondent that WXZ had not provided pay slips as required by the FW Act;
c)by WXZ and the second respondent, while contesting certain details, that the Employees had been employed by WXZ and that the Div.2B State Award Employees had been employed by Yummy Noodle Box from various dates until 30 June 2010 when their employment was terminated;
d)by all respondents that on 1 July 2010 WXZ began to operate Yummy Noodle Box stores in Bundaberg, Orange, Bathurst and Dubbo using the same premises and equipment and serving the same sorts of meals to the public as Yummy Noodle Box had; and
e)by all respondents that the work performed by the Div.2B State Award Employees for WXZ was substantially the same as the work they had performed for Yummy Noodle Box.
A defence to the further amended statement of claim was not filed.
RELEVANT LEGISLATION
Division 2B State awards
The provisions of the FW Act relevant to this matter generally apply only to “national system employees” and “national system employers”: ss.42, 60, 308, 529, FW Act. The definition of “national system employee” in s.13 of the FW Act depends on the definition of “national system employer” in s.14 which relevantly provides:
14 Meaning of national system employer
(1) A national system employer is:
(a)a constitutional corporation, so far as it employs, or usually employs, an individual; or
(b)the Commonwealth, so far as it employs, or usually employs, an individual; or
(c)a Commonwealth authority, so far as it employs, or usually employs, an individual; or
(d)a person so far as the person, in connection with constitutional trade or commerce, employs, or usually employs, an individual as:
(i)a flight crew officer; or
(ii)a maritime employee; or
(iii)a waterside worker; or
(e)a body corporate incorporated in a Territory, so far as the body employs, or usually employs, an individual; or
(f)a person who carries on an activity (whether of a commercial, governmental or other nature) in a Territory in Australia, so far as the person employs, or usually employs, an individual in connection with the activity carried on in the Territory.
On 1 January 2010, the definitions of “national system employee” and “national system employer” were extended by ss.30M and 30N of the FW Act to include, relevantly, private sector employees and employers in New South Wales and Queensland: Fair Work Amendment (State Referrals and Other Measures) Act 2009; Industrial Relations (Commonwealth Powers) Act 2009 (NSW); Fair Work (Commonwealth Powers) and Other Provisions Act 2009 (Qld).
If an employment relationship between an employee and an employer who entered the national system by a State referral on 1 January 2010 had until then been governed by a State award, that award continued to apply as a “Division 2B State award” until 31 December 2010: items 3 and 21, sch.3A to the FW (TPCA) Act. Service in the period before 1 January 2010 counts as service under the Division 2B State award: item 14, sch.3A, and leave accrued in that period is taken to have accrued under the Division 2B State award: item 15, sch.3A to the FW (TPCA) Act.
Item 4(2) of sch.3A to the FW (TPCA) Act provides that:
The Division 2B State award also covers any employees who become employed by an employer on or after the Division 2B referral commencement, and who would have been covered by the source award if they had become so employed immediately before that commencement.
Clause 8 of sch.A to the Modern Award provided that the terms of the two Division 2B State awards relevant to this case continued to apply to the Employees and WXZ until the end of the (last) full pay period commencing before 1 February 2011. The relevant provisions of those awards are set out later in these reasons.
Modern award
The Modern Award operated on and from 1 January 2010. However, because, as stated earlier, the Modern Award provided for what was, in effect, the continuation of the Division 2B State awards until the end of the last full pay period commencing before 1 February 2011, its principal provisions concerning terms and conditions of employment did not apply to the Employees and WXZ until 3 February 2011.
Transitional provisions relating to pay rates under the Modern Award
Division 2B State awards
Division 2B State awards operated from 1 January 2010 until 31 December 2010: items 3 and 21, sch.3A to the FW (TPCA) Act. Any relevant wages determination which had been made by a State court or tribunal in relation to the antecedent State award also applied to the Division 2B State award: item 3(3), sch.3A to the FW (TPCA) Act.
The transitional provisions of the Modern Award, set out in detail later in these reasons, provide that all the terms of the relevant Div.2B State awards continued to apply from 1 January 2011, when the Modern Award commenced to apply to employers who had until then been Div.2B State award employers, until the end of the first full pay period commencing before 1 February 2011.
NAPSAs and APCSs and FW Act transitional instruments based on them
Part 3 of sch.8 to the WR Act preserved former State awards as notional agreements preserving State awards (“NAPSAs”) with the consequence, by virtue of s.208 of the WR Act, that the pay rates each prescribed became a “preserved APCS”, i.e. Australian Pay and Classification Scale. Upon the repeal of the WR Act on 1 July 2009, by virtue of item 5(3) of sch.9 to the FW (TPCA) Act preserved APCSs continued in force as transitional minimum wage instruments (“transitional APCSs”) under the FW (TPCA) Act until the commencement of the relevant modern award: item 11 of sch.9 to the FW (TPCA) Act.
The transitional provisions of the Modern Award, also set out in detail later in these reasons, provide that until the first pay period commencing in July 2010, the pay rates set out in applicable transitional APCSs were to continue to apply. The Modern Award also provides that starting with the first pay period commencing in July 2010, the pay scales provided by the Modern Award applied to employers and employees who had previously been covered by a transitional APCS, subject to modifications which adjusted the Modern Award’s pay scales by reference to that transitional APCS.
Transfer of business
Under s.22(5) of the FW Act, service with one employer counts as service with another employer if there is a transfer of employment in relation to a national system employee.
Section 22(7) provides that:
(7)There is a transfer of employment of a national system employee from one national system employer (the first employer) to another national system employer (the second employer) if:
(a) …
(b) the following conditions are satisfied:
(i) the employee is a transferring employee in relation to a transfer of business from the first employer to the second employer;
(ii) the first employer and the second employer are not associated entities when the employee becomes employed by the second employer.
Section 311 of the FW Act relevantly provides:
311 When does a transfer of business occur
Meanings of transfer of business, old employer, new employer and transferring work
(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:
(a) the employment of an employee of the old employer has terminated;
(b) within 3 months after the termination, the employee becomes employed by the new employer;
(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;
(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).
Meaning of transferring employee
(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.
Transfer of assets from old employer to new employer
(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:
(a) the old employer or an associated entity of the old employer; and
(b) the new employer or an associated entity of the new employer;
the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):
(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and
(d) that relate to, or are used in connection with, the transferring work.
…
Item 2 of Sch.3A to the FW (TPCA) Act provides that a Division 2B State award is a “Division 2B State instrument”. Section 312 of the FW Act, as amended by item 16(1) of sch.11 to the FW (TPCA) Act, provides that a Division 2B State instrument is a “transferable instrument”. Item 15(1) of sch.11 to the FW (TPCA) Act provides that item 16(1) of that schedule will amend s.312 of the FW Act as described above if the connection between the old and new employer referred to in s.311(1)(d) occurs on or after 1 January 2010.
Section 313 of the FW Act provides that if a transferable instrument covered an old employer and a transferring employee immediately before the termination of the transferring employee’s employment with the old employer, then the transferable instrument covers the new employer and the transferring employee in relation to the transferring work once the transferring employee becomes employed by the new employer.
National Employment Standards
Part 2-2 of the FW Act contains the National Employment Standards (“NES”) which are minimum standards of employment which cannot be displaced. Sections 90, 99 and 116 of the FW Act are provisions within pt.2-2 and relevantly provide:
90 Payment for annual leave
(1) If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period.
(2) If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.
…
99 Payment for paid personal/carer’s leave
If, in accordance with this Subdivision, an employee takes a period of paid personal/carer’s leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period.
…
116 Payment for absence on public holiday
If, in accordance with this Division, an employee is absent from his or her employment on a day or part‑day that is a public holiday, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work on the day or part‑day.
Section 44(1) of the FW Act provides that an employer must not contravene a provision of the NES.
Award contraventions
Section 45 of the FW Act provides that a person must not contravene a term of a modern award.
Item 4A of sch.16 to the FW (TPCA) Act provides that a person must not contravene a term of a Division 2B State award that applies to the person.
Records and pay slips
Sections 535 and 536 of the FW Act relevantly provide:
535 Employer obligations in relation to employee records
(1) An employer must make, and keep for 7 years, employee records of the kind prescribed by the regulations in relation to each of its employees.
(2) The records must:
(a) if a form is prescribed by the regulations—be in that form; and
(b) include any information prescribed by the regulations.
…
536 Employer obligations in relation to pay slips
(1) An employer must give a pay slip to each of its employees within one working day of paying an amount to the employee in relation to the performance of work.
…
Division 3 of pt.3-6 of the FW Regulations sets out the information which is to be contained in employee records and pay slips. Relevantly, the FW Regulations require such records to contain information concerning:
a)whether an employee was employed on a permanent, temporary or casual basis;
b)the date the employee’s employment started;
c)the employee’s rate of remuneration including the gross and net amounts paid and the deductions made from that remuneration;
d)what, if any, loadings, penalty rates, monetary allowances or other separately identifiable entitlements the employee was entitled to;
e)if an employee was entitled to overtime rates of pay, the number of overtime hours worked by the employee on any day and when those hours started and ended; and
f)details of leave taken and leave balances; and
g)details of superannuation contributions.
Accessorial liability
Section 550 of the FW Act states:
550 Involvement in contravention treated in same way as actual contravention
(1) A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2) A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
Compensation and interest
Section 539 of the FW Act as affected by item 16 of sch.16 to the FW (TPCA) Act provides that ss.44(1), 45, 535(1) and 536(1) and item 4A(1) of sch.16 of the FW (TCPA) Act are civil remedy provisions.
Section 545(2)(b) of the FW Act provides that the Court may award compensation for loss suffered because of a contravention of any of the civil remedy provisions.
Section 547 of the FW Act provides that, unless good cause is shown to the contrary, if an order for interest is sought the Court must include interest up to the date of judgment on any sum for compensation ordered to be paid under that Act.
INDUSTRIAL INSTRUMENTS
Queensland Div.2B Award
The Qld Div.2B Award relevantly provided:
1.4 AWARD COVERAGE
1.4.1 This Award applies:
(a)to all employees employed in all work in or in connection with the preparation and sale of meals, snacks and/or beverages which are sold to the public primarily to take away:
(i)…
(ii)in food service establishments which primarily provide a take away service where no alcohol is sold.
…
within the South-Eastern Division of Queensland as described in clause 1.6.
The Qld Div.2B Award also provided:
5.2 DEFINITIONS OF CLASSIFICATION
5.2.1 Food and Beverage Stream -
(a) …
(b)“Food and Beverage Attendant Grade 2” shall mean an employee who has not achieved the Appropriate Level of Training and who is engaged in any of the following:
-undertaking of general waiting duties of both food and/or beverages including cleaning of tables and restaurant equipment;
-receipt of monies;
-selling of specialist stock lines;
-attending a snack bar;
-engaged on delivery duties;
-general receival and distribution of goods;
-taking reservations, greeting and seating guests under general supervision;
-assist in maintenance of dress standards and good order in the establishment; and
-setting up on site for small parties.
NSW Div.2B Award
The NSW Div.2B Award relevantly provided:
37 AREA, INCIDENCE AND DURATION
[The Award] shall apply to all classes of employees employed under classifications in this award who work in or in connection with a retail shop, … within the jurisdiction of the Retail Employees (State) Industrial Committee …
and that those falling within the jurisdiction of the Retail Employees (State) Industrial Committee relevantly were:
All persons employed in or in connection with a shop …
The NSW Div.2B Award classified employees according to the work they performed. It relevantly defined classification 1 employees in the following terms:
Shop assistants … employees engaged in the cooking or the preparation of provisions for sale in the shop of the employer, cashiers in special shops…
The NSW Div.2B Award relevantly defined group 4 employees as:
Shop Assistants in charge of a shop or a department in a shop not being a shop assistant temporarily in charge during the absence of persons ordinarily in charge of the shop or department, but including employees employed as relieving shop assistants in charge of a shop …
Within that classification were two sub-classifications concerning individuals who did or did not have “the duty of buying”, the rates within those sub-classifications increasing with the number of staff supervised.
Clause 2(ii) of the NSW Div.2B Award defined “special shops” to include take-away food shops.
Division 2B State awards and Modern Award transitional provisions
Clauses 8.1, 8.2 and 8.3 of sch.A to the Modern Award provide:
A.8.1 This clause applies to an employer which, immediately prior to 1 January 2011, was covered by a Division 2B State award.
A.8.2 All of the terms of a Division 2B State award applying to a Division 2B employer are continued in effect until the end of the full pay period commencing before 1 February 2011.
A.8.3Subject to this clause, from the first full pay period commencing on or after 1 February 2011 a Division 2B employer must pay no less than the minimum wages, loadings and penalty rates which it would be required to pay under this Schedule if it had been a national system employer immediately prior to 1 January 2010.
Clauses A.8.4 and A.8.5 reinforce cl.A.8.3, to the effect that nothing in sch.A to the Modern Award required a former Division 2B State award employer to pay amounts other than those prescribed by the Modern Award.
The, at least, ostensible effect of those provisions was that an employer covered by a Division 2B State award was required to pay its employees in accordance with the relevant transitional APCS as affected, if at all, by the Modern Award’s transitional provisions.
APCSs and transitional minimum wage instruments
Relevantly for this case, from 1 July 2010 until 31 December 2010 the transitional APCS derived from the preserved APCS derived from the Retail Take-Away Food Award – South-Eastern Division 2003 (“Qld transitional APCS”) and then from 1 January 2011 until 2 February 2011 the terms of the Qld transitional APCS, ostensibly applied to Ms ST Lin’s employment (see [75]-[76] above). It was not contested that the ordinary time hourly wage which would be due to Ms ST Lin in accordance with those instruments was $15.39.
Relevantly, from 1 July 2010 until 31 December 2010 the transitional APCS derived from the preserved APCS derived from the NSW Shop Employees (State) Award (“NSW transitional APCS”), and then from 1 January 2011 until 2 February 2011 the terms of the NSW transitional APCS, ostensibly applied to the remainder of the Employees (see [75]-[76] above). It was not contested that the ordinary time hourly wage which would be due to group 1 shop assistants in accordance with those instruments was $16.40 and that the ordinary time hourly wage which would be due in accordance with those instruments to group 4 shop assistants in charge of a shop, with a duty of buying and in charge of up to four assistants, was $16.74.
Modern Award
Schedule B to the Modern Award defined the award’s job classifications. It provided:
Schedule B—Classifications
B.1 Fast Food Employee Level 1
B.1.1An employee engaged in the preparation, the receipt of orders, cooking, sale, serving or delivery of meals, snacks and/or beverages which are sold to the public primarily to take away or in food courts in shopping centres.
B.1.2A Fast Food Employee Level 1 will undertake duties as directed within the limits of their competence, skills and training including incidental cleaning and cleaning of toilets.
B.2 Fast Food Employee Level 2
An employee who has the major responsibility on a day to day basis for supervising Fast Food employees Level 1 and/or training new employees or an employee required to exercise trade skills.
B.3 Fast Food Employee Level 3
An employee appointed by the employer to be in charge of a shop, food outlet, or delivery outlet.
From 1 July 2010 to 30 June 2011, cl.17 of the Modern Award provided:
Classifications Per week $ Level 1 626.00 Level 2 663.60 Level 3—In charge of one or no persons 674.00 —In charge of two or more persons 682.00
From 1 July 2011 to 30 June 2012, cl.17 of the Modern Award provided:
Classifications Per week $ Level 1 647.30 Level 2 686.20 Level 3—In charge of one or no persons 696.90 —In charge of two or more persons 705.20
From 1 July 2012 to 30 June 2013, cl.17 of the Modern Award provided:
Classifications Per week $ Level 1 666.10 Level 2 706.10 Level 3—In charge of one or no persons 717.10 —In charge of two or more persons 725.70
Schedule A to the Modern Award relevantly provides:
Schedule A—Transitional Provisions
…
A.2 Minimum wages – existing minimum wage lower
A.2.1The following transitional arrangements apply to an employer which, immediately prior to 1 January 2010:
…
(c) if it had been an employer in the industry or of the occupations covered by this award would have been obliged
by a transitional minimum wage instrument and/or an award-based transitional instrument to pay a minimum wage lower than that in this award for any classification of employee.
…
A.2.5From the following dates the employer must pay no less than the minimum wage for the classification in this award minus the specified proportion of the transitional amount:
First full pay period on or after 1 July 2010 80% 1 July 2011 60% 1 July 2012 40%
Similar provision is made by:
a)cl.A.3.1 in relation to transitional minimum wage instruments and award-based transitional instruments which would have required an employer to pay a minimum wage higher than the Modern Award stipulated; and
b)cls.A.5.1 and A.6.1 in relation to penalty rates and similar loadings (such as overtime).
As noted earlier, the Qld transitional APCS and the NSW transitional APCS were transitional minimum wage instruments: item 5(3) of sch.9 to the FW (TPCA) Act. A NAPSA was an award-based transitional instrument: item 2(5) of sch.3 to the FW (TPCA) Act.
Other relevant clauses of the Modern Award are set out below:
25.5 Penalty rates
(a) Evening work Monday to Friday
(i) A loading of 10% will apply for ordinary hours of work within the span of hours between 9.00 pm and midnight, and for casual employees this loading will apply in addition to their 25% casual loading.
…
(b) Saturday work
A loading of 25% will apply for ordinary hours of work within the span of hours on a Saturday, and for casual employees an additional 25% on top of the casual rate.
(c) Sunday work
(i) A 50% loading will apply for all hours of work on a Sunday for full-time and part-time employees.
…
26. Overtime
The rate of overtime shall be time and a half for the first two hours on any one day and at the rate of double time thereafter, except on a Sunday which shall be paid for at the rate of double time and on a Public Holiday which shall be paid for at the rate of double time and a half. Casual employees shall be paid 275% on a Public Holiday.
26.1 An employee shall be paid overtime for all work as follows:
(a) In excess of:
(i) 38 hours per week or an average of 38 hours per week averaged over a four week period; …
…
28. Annual leave
28.1 Annual leave is provided for in the NES.
…
28.3 Annual leave loading
(a)During a period of annual leave an employee will receive a loading calculated on the wage rate prescribed in clause 17—Minimum weekly wages. Annual leave loading is payable on leave accrued.
(b)The loading will be as follows:
(i) Day work
Employees who would have worked on day work only had they not been on leave—17.5% or the relevant weekend penalty rates, whichever is the greater but not both.
…
30. Public holidays
…
30.3Work on a public holiday must be compensated by payment at the rate of 250% (275% for casual employees).
APPLICANT’S EVIDENCE
Ms Songtao Lin
Ms ST Lin deposed that she arrived in Australia on 9 March 2007 on a 457 working visa which had been sponsored by Yummy Noodle Box. According to her offer of employment, Ms ST Lin was employed by Yummy Noodle Box as a cook and was required to work thirty-eight hours per week on an annual salary of $41,850.
Ms ST Lin deposed that she initially worked at the Yummy Noodle shop in Orange, New South Wales. However, from 17 March 2007 until November 2011 she worked at the shop in Bundaberg, Queensland.
Ms ST Lin deposed that the Bundaberg shop was open from 11am to 9:30pm from Sunday to Thursday and from 11am to 10pm on Friday and Saturday. She deposed that she initially worked six and a half days a week but started working seven days a week from March 2008 at the direction of the second respondent. She deposed that she started work at 10am each day and finished at around 10pm, Sunday to Thursday, and at around 10:30pm on Fridays and Saturdays. Her duties included cooking and preparing food, serving customers, managing and paying the other employees, ordering food and ingredients, paying the bills and rent for the shop, opening and closing the shop, cleaning and general accounting duties. After 1 September 2011, her duties were confined to cooking and preparing food, serving customers and cleaning the shop. She deposed that she did not take proper breaks while she was working.
Ms ST Lin deposed that she worked on public holidays, except on Christmas Day and Boxing Day when the Bundaberg shop was closed. She deposed that she was paid her normal rate for working on public holidays and was not paid at all when the shop was closed.
Ms ST Lin deposed that she was paid $590 in cash every week. She would be given a post-it note to sign which set out how much she had been paid. Ms ST Lin deposed that not long after she started working for Yummy Noodle Box she asked the second respondent why her pay and hours were different from the conditions stipulated on her visa. She deposed that the second respondent replied with words to the effect of:
In Australia, this is how it works.
Ms ST Lin deposed that in late 2010 she noticed that the name of the Bundaberg shop had changed from “Yummy Noodle” to “Yummy Star Noodle and Sushi” and that a number of new dishes had been added to the menu. However, she was never told directly about the shop’s change in ownership. She deposed that there were no changes to her employment conditions at the time nor were there any changes to the shop’s business practices.
In the period after 1 July 2010, Ms ST Lin took three days off in October 2010 to obtain further qualifications. She deposed that she was paid for those three days because her husband had worked at the Bundaberg shop while she was away and she was paid for his work. Ms ST Lin deposed that she also took time off work from 30 June 2011 to 13 July 2011. She deposed that she wanted to return to work but the second respondent did not allow her to do so until 1 September 2011.
Ms ST Lin deposed that the second respondent was the “main boss” throughout her employment: he told her what to do, called once a week to check that the staff were working and visited the Bundaberg shop a few times a year.
Ms ST Lin deposed that during the time that she was working at the Bundaberg shop she and her husband, as well as other staff, lived in an apartment paid for by her employer. She deposed that there was no agreement linking her accommodation with her wages and it was her understanding that she would still be paid $590 per week even if she rented her own accommodation.
Ms Songbo Lin
Ms SB Lin also arrived in Australia on a 457 working visa which had been sponsored by Yummy Noodle Box. She deposed that she was employed as a cook and was required to work thirty-eight hours per week on an annual salary of $41,850.
Ms SB Lin deposed that she worked at a number of different Yummy Noodle shops in New South Wales between March and October 2007. She then moved to the shop in Orange where she worked from November 2007 to December 2011, cooking and preparing food, serving customers, ordering stock, opening the shop and cleaning the shop. She deposed that the third respondent also worked at the Orange shop from mid-2008 and subsequently took over as manager in April 2009.
Ms SB Lin deposed that the Orange shop was open from 11am to 9:30pm from Sunday to Thursday and from 11am to 10pm on Friday and Saturday. She deposed that not long after she started working for Yummy Noodle Box, the second respondent directed her to work seven days a week. Once the third respondent started working at the Orange shop he directed Ms SB Lin as to her duties and hours of work. She deposed that she started work at 10am each day and finished at around 9:30pm, Sunday to Thursday, and 10pm on Fridays and Saturdays. From about January 2011 to the end of her employment in December 2011, Ms SB Lin was directed to work six and a half days a week by the third respondent for which she was paid $530 in cash by him. When she was paid he gave her a piece of paper to sign which she would then return to him.
Ms SB Lin deposed that her only days off were on Christmas Day and Boxing Day, for which she was not paid. She also deposed that she was paid her normal rate of pay for work performed on public holidays.
Ms SB Lin deposed that she was not told directly about the business’s change in ownership in 2010. She deposed that at the time she did not notice any changes to her employment conditions or to the business practices of the shop. She deposed that she only became aware of the change of ownership when, in December 2010 or early 2011, she filed her application for permanent residency and saw that the form referred to a different shop name and a “different boss”. Ms SB Lin deposed that her application form also indicated that she was being paid more than she was actually receiving. She deposed that when she raised this discrepancy with the second and third respondents, they told her that she would be repaid the difference but she never was.
Annexed to Ms SB Lin’s affidavit was a copy of a contract between her and WXZ dated 3 December 2010. The schedule to the contract refers to the “Restaurant [sic] Employees (State) Award” but Ms SB Lin did not identify in her affidavit who signed the contract on behalf of WXZ and it is illegible to me, being in Chinese script.
On 3 December 2010 Ms SB Lin signed an offer of employment with WXZ for the position of cook, working thirty-eight hours per week on an annual salary of $47,480. The offer of employment was also signed by the third respondent.
Ms SB Lin deposed that in the period after 1 July 2010, she was away from work from 25 to 31 August 2010 and was not paid for these days. She also deposed that she did not take leave from 28 February 2011 to 1 July 2011 and in fact continued to work during this period. She deposed that her 457 visa expired on 28 February 2011 and that the second respondent told her at the time that he would no longer be making tax payments on her behalf as any work she performed thereafter would be illegal.
Ms SB Lin deposed that from November 2007 she lived with her husband and son in a small apartment above the Orange shop, as did other staff who worked there (including the third respondent and his family). The rent and bills for the apartment were combined as part of the shop and were paid for by the second respondent. Ms SB Lin deposed that this arrangement was not related to the wages she received every week.
Ms SB Lin deposed that when she first started working at the Yummy Noodle shops in March 2007 she understood that the second respondent was one of three bosses who ran the company although she considered him to be the “main boss” during her employment. She deposed that she considered the third respondent to be the second person in charge.
Mr Zhisheng Chen
Mr Chen and Ms SB Lin are husband and wife. Mr Chen deposed that he came to Australia as Ms SB Lin’s dependant spouse.
Mr Chen deposed that he worked at the Yummy Noodle shop in Orange from 1 November 2007 to 1 April 2009 and from 1 July 2011 to the end of December 2011. He deposed that his duties during the first period included cooking and preparing food, serving customers, managing and paying the other employees in the shop, ordering food and ingredients, paying the bills and rent for the shop, opening and closing the shop and general accounting duties. However, his duties during the second period were confined to assisting the chefs to cook and prepare food, serving customers and cleaning the shop.
Mr Chen deposed that the Orange shop was open from 11am to 9:30pm from Sunday to Thursday and from 11am to 10pm on Friday and Saturday. He deposed that he usually worked six and a half days a week unless the shop was short staffed, in which case he would work seven days a week. Mr Chen deposed that he started work at 10am each day, except on Sundays when he would normally start at 4pm, and finished at around 9:30pm, Sunday to Thursday, and at around 10pm on Fridays and Saturdays. On days when his son attended school, he would normally be away from the shop between about 2:45pm and 3:15pm to pick up his son.
Mr Chen deposed that he had worked on the Labour Day public holiday on 3 October 2011. He deposed that he was paid his normal wage, which was $550 in cash per week, by the third respondent. Mr Chen deposed that when he was paid, the third respondent would give him a piece of paper to sign which Mr Chen would then return to him.
Mr Chen deposed that he did not work in any Yummy Noodle shop between April 2009 and July 2011. He later became aware, however, that tax had been paid on his behalf by the business in 2010 and not in 2011.
During his employment, Mr Chen considered the second respondent to be the “main boss”, who told him what to do including the sort of hours he was expected to work, and the third respondent to be second in charge, who would also direct him on what duties to perform and the hours he was to work.
Mr Zhen Xu
Mr Xu arrived in Australia on a 457 working visa sponsored by Yummy Noodle Box. According to his offer of employment, Mr Xu was to be employed as a cook working thirty-eight hours per week on an annual salary of $41,850.
Mr Xu deposed that he worked at various Yummy Noodle shops from March 2007 to September 2008. He then moved to the Bathurst shop where he worked from late September 2008 until the end of his employment in June 2012.
Mr Xu deposed that the Bathurst shop was open from 11am to 9:30pm from Sunday to Thursday and from 11am to 10pm on Friday and Saturday. Except for the period from September 2008 to November 2009 when he worked six and a half days a week, Mr Xu worked seven days a week, starting at 10am each day and finishing at around 10pm, Sunday to Thursday, and at around 10:30pm on Fridays and Saturdays. He deposed that he did not take proper breaks while he was working.
Mr Xu deposed that the Bathurst shop was open every day except Christmas Eve, Christmas Day and Boxing Day. As a consequence, he worked on most public holidays. He deposed that he was paid his normal rate on those occasions.
Mr Xu deposed that his duties at the Bathurst shop included cooking and preparing food, serving customers, managing and paying the other employees in the shop, ordering food and ingredients, paying the bills and rent for the shop, opening and closing the shop and general accounting duties. He deposed that the second respondent would tell him how much money to pay the other employees and that he would write a receipt for each employee which he would then send to the second respondent.
Mr Xu deposed that his weekly wage from April 2008 was $590 for seven days of work.
Mr Xu deposed that Yummy Noodle Box was initially run by three bosses, one of whom was the second respondent. In November 2009 he became aware that the business was being transferred and that thereafter the second respondent would be the only boss. Mr Xu deposed that when the business was transferred to WXZ in 2010, there were no changes to his employment conditions or to the shop’s business practices. He noticed, however, that from that point superannuation was no longer being paid into his fund.
Mr Xu deposed that in the period after 1 July 2010 he was away from work for the following periods:
a)a half-day in September 2010 when he went to Sydney;
b)two days in October 2010 to go to Melbourne;
c)one day in April 2011 to obtain a new passport; and
d)from 19 March 2012 to 13 May 2012 when he went to China to have an operation.
He deposed that he was not paid for any of these days.
Mr Xu deposed that his hours of work were set by the second respondent. He deposed to two occasions where he questioned the second respondent about the long hours he was required to work and how the second respondent responded with words to the effect of:
Do it or you’re going home
and
That is just how it is here. Keep asking and I will send you back to China.
Mr Xu also deposed to having had a number of conversations with the second respondent about his low wages. He deposed that the second respondent refused to increase them.
Mr Xu also deposed that the second respondent would visit the Bathurst shop about once a fortnight and would call the shop regularly to check that it was opened and closed at the right times.
Mr Xu deposed that while he was living in Bathurst, the second respondent would reimburse him for the money he paid in rent, which was $210 a week. The second respondent also paid his electricity and water bills. Mr Xu deposed that this arrangement was not connected to the wages he received every week.
Ms Zhiqun Weng
Ms Weng arrived in Australia on 13 March 2007 as Mr Xu’s dependent spouse. She deposed that soon after she arrived one of the bosses of Yummy Noodle Box told her that she was required to work in the shops or she would not be able to live with her husband in accommodation paid for by the company. She deposed that she started working for Yummy Noodle Box in March 2007.
Ms Weng worked at the Bathurst shop from September 2008 to June 2012. She deposed that she worked the same days and hours as her husband, except for a period from October 2009 to the end of January 2010 when she worked part-time. She deposed that her duties included cooking and preparing food, handling cash, serving customers and cleaning the shop. She deposed that she was paid a weekly wage of $590.
In the period after 1 July 2010, Ms Weng was away from work on the following days:
a)from February 2010 to 18 September 2010, when she went to China to give birth to her daughter; and
b)from 19 March 2012 to 13 May 2012, when she accompanied her husband to China.
She deposed that she was not paid for any of the days she was off work.
Ms Weng deposed that she was advised by the second respondent in 2010 that the directors of Yummy Noodle Box had gone their separate ways and that henceforth all documents and money were to be sent to him only. She deposed that there were no subsequent changes to her employment conditions.
Ms Weng deposed that her hours of work were set by the second respondent. She deposed that he would visit the Bathurst shop about once a fortnight and that she would regularly ask him about the low wages she and her husband were receiving. Ms Weng deposed that the second respondent would typically respond by saying that the wages were set and that she and her husband could leave if they did not want to work at the shop anymore.
Mr Guoyang Lin
Mr Lin deposed that he was related by marriage to the second and third respondents, who are brothers. He deposed that he came to Australia in March 2007 on a 457 visa sponsored by Yummy Noodle Box on the basis that he would be employed as a cook working thirty-eight hours per week on an annual salary of $41,850.
Mr Lin deposed that he worked at the Yummy Noodle shop in Dubbo from 28 May 2007 until the end of his employment on 2 March 2013, cooking and preparing food, managing and paying other employees, ordering food and ingredients, paying the bills and rent for the shop, opening and closing the shop and performing general accounting duties. He deposed that the shop was open between 11am and 9:30pm from Sunday to Thursday and between 11am and 10pm on Friday and Saturday. At the outset of his employment he was told by the second respondent that he had to work every day because the shop was open every day. From May 2007 until early February 2013, he worked seven days a week starting at 10am and finishing at between 10:30pm and 11pm. Mr Lin deposed that the second respondent used to telephone the shop before opening time to see if he and his wife were in the shop. He deposed that in early February 2013 the shop changed its hours of operation and was open from 11:30am to 2:30pm and from 4:30pm to 9:30pm.
Mr Lin deposed that he was advised by the second respondent in about 2009 or 2010 that the other directors of Yummy Noodle Box had quit. Thereafter, he sent all documents to the second respondent only, but his duties at the shop did not otherwise change.
Mr Lin deposed that the Dubbo shop was closed on the following days:
a)in 2010 – 25 and 26 December;
b)in 2011 – 24 to 26 December; and
c)in 2012 – 24 to 27 December.
He deposed that it was otherwise open every day, including on public holidays. He deposed that he did not receive any additional money for working on a public holiday nor was he paid on any of the days when the shop was closed.
Mr Lin deposed that when he complained about his hours or his pay, the second respondent would threaten to send him back to China.
Mr Lin deposed that from March 2007 to February 2012 he was paid $590 for working seven days a week and $530 for occasionally working six and a half days a week. From February 2012 until the end of his employment in March 2013, Mr Lin was paid $810 for working seven days a week and $750 on the rare occasions that he worked six and a half days a week. He deposed that he did not receive pay slips.
Mr Lin also deposed that his rent and bills were paid by the second respondent. He deposed that these payments were not deducted from his wages.
Mr Lin deposed that he took sick leave on 29 and 30 January 2013 and from 11 February to 13 March 2013. He deposed that he was not paid for these days either.
Ms Ruijing Huang
Ms Huang is Mr Lin’s wife. She deposed that she came to Australia in July 2007 as Mr Lin’s dependent spouse and also worked at various Yummy Noodle shops between July 2007 and March 2013. She deposed that she worked the same hours at the Dubbo shop as her husband. She also deposed that the second respondent was always the “main boss” who told them what to do.
Mr Kez Ma
Mr Ma was the Fair Work Inspector who enquired into complaints the Employees made to the Ombudsman about their employment with WXZ. He affirmed an affidavit on 22 August 2014. Mr Ma deposed that the Ombudsman served various notices to produce on WXZ seeking, most relevantly, the following types of documents relating to the Employees:
a)contracts of employment/letters of offer;
b)a description of duties and responsibilities;
c)employment documents detailing employment status e.g. full time, part time or casual;
d)employment documents detailing job classifications and applicable awards or agreements;
e)time records;
f)pay records;
g)annual leave records;
h)sick leave records;
i)records of payments made on termination of employment; and
j)457 visa documentation.
The following classes of documents were produced:
a)in relation to Mr Chen:
i)visa documentation; and
ii)PAYG summaries;
b)in relation to Mr Lin and Ms ST Lin:
i)visa documentation; and
ii)PAYG summaries;
c)in relation to Mr Xu and Ms SB Lin:
i)visa documentation;
ii)PAYG summaries; and
iii)letters offering employment;
d)in relation to Ms Weng:
i)visa documentation; and
ii)PAYG summaries.
In a letter dated 25 January 2013, WXZ’s solicitors advised the Ombudsman that the company was unable to produce the following documents for all employees at Yummy Noodle Dubbo:
a)time records;
b)pay records other than PAYG summaries;
c)annual leave records;
d)sick leave records; and
e)records of payments made on termination.
Annexed to Mr Ma’s affidavit were several relevant documents. These included:
a)an Australian Business Register search of an Australian Business Number which identified DH Wang, XT Xu and G Zheng as having been in partnership until 28 February 2011 trading as Yummy Noodle Bank and Yummy Noodle Box;
b)an ASIC search of WXZ, that Mr Ma deposed had been performed on 27 November 2012, which recorded that that company held the following business names, amongst others:
i)Noodle Box Bundaberg;
ii)Yummy Star Noodle & Sushi Bundaberg;
iii)Noodle House Bundaberg;
iv)The Best Noodle Bundaberg;
v)Yummy Noodle Bathurst;
vi)Noodle Box Dubbo; and
vii)Yummy Noodle Dubbo;
c)an ASIC company search of WXZ dated 6 May 2013 which recorded that the third respondent had been a director of WXZ since 9 November 2010 and its sole director since 28 February 2011. At the time of the search he was also the sole shareholder. According to Mr Ma, WXZ’s address was the same address as that of the Yummy Noodle shop in Orange. That search also recorded that the second respondent had been a director of WXZ from 15 November 2006 to 6 March 2009 and had been one of its shareholders for an unspecified period at some time prior to the search;
d)a letter dated 28 May 2013 from the respondents’ then-solicitors to Mr Ma advising that the transfer of the business from DH Wang, XT Xu and G Zheng to WXZ occurred on 1 July 2010; and
e)copies of menus from the Yummy Noodle shops in Dubbo, Orange and Bathurst showing their opening hours before February 2013 and from February 2013.
RESPONDENTS’ EVIDENCE
The respondents took no part in the hearing. They read no affidavits and tendered no documents or other evidence.
CONSIDERATION
Transfer of business and employment
As a preliminary point I find that the Employees were, at various times, employed by WXZ and that the Div.2B State Award Employees had also been employed by Yummy Noodle Box until 30 June 2010. I base these findings on the evidence in the Employees’ affidavits, which I accept, together with the relevant admissions made by WXZ and the second respondent.
I find that there was a transfer of business between the Wang, Xu and Zheng partnership and WXZ on 1 July 2010, that is to say after 1 January 2010, and that the Division 2B State awards were transferrable instruments for the purposes of s.313 of the FW Act, as that section is affected by items 15 and 16 of sch.11 to the FW (TPCA) Act. In reaching this finding I have had regard to WXZ’s solicitors’ letter dated 28 May 2013 to the effect that the transfer occurred on that date, to the evidence that the business appeared to continue seamlessly throughout 2010 despite the change in ownership, to the fact that the business continued to operate using the word “Yummy” which had been used previously and thus it enjoyed the related names’ goodwill and to the fact that there was no break in the work of those employees who had worked for Yummy Noodle Box, albeit that their employment with it had ceased and they had commenced work with WXZ.
That finding has two relevant consequences. First, because the Div.2B State Award Employees had been employed by Yummy Noodle Box pursuant to Division 2B State awards, a conclusion which is discussed in more detail below, by virtue of item 16(1) of sch.11 to the FW (TPCA) Act, those awards continued to apply to them in their employment with WXZ until the application to them of the Modern Award on 1 January 2011, albeit that the Modern Award continued the effective operation of the Division 2B State awards until 2 February 2011. Secondly, there was continuity of service from the date of their original employment with the partnership until their separation from WXZ.
Classification of Div.2B State Award Employees
Ms ST Lin
Based on its latitude and longitude, I find that Bundaberg falls within the South-Eastern Division of Queensland as defined by cl.1.6 of the Qld Div.2B Award.
Given the evidence of the work she performed, I find that Ms ST Lin performed work which met the job classification of Food and Beverage Attendant Grade 2 which in turn fell within the Qld Div.2B Award’s level 2 classification.
Ms SB Lin, Mr Chen, Ms Weng – (NSW Level 1 Employees)
Given the evidence of the work they performed, I find that the NSW Level 1 Employees performed work which fell within the NSW Div.2B Award’s group 1 classification. Although Mr Chen was employed after the commencement of the Modern Award, he is included here for the reasons expressed later at [190].
Mr Xu, Mr Lin – (NSW Supervisory Employees)
Given the evidence of the work they performed I find that the NSW Supervisory Employees performed work which fell within the NSW Div.2B Award’s “group 4(ii) employees, with the duty of buying, in charge of up to four employees” classification.
Div.2B State Award Employees’ pay rates under the Division 2B State awards
The combined effect of items 3 and 21 of sch.3A to the FW (TPCA) Act and cl.A.8.2 of the Modern Award is that the pay rates prescribed by the relevant State tribunals for the State awards which went on to become Division 2B State awards applied to the relevant Div.2B State Award Employees from the transfer of their employment to WXZ on 1 July 2010 until the end of the last full pay period commencing before 1 February 2011. It can be inferred that those were the rates set out in the further amended statement of claim as recorded earlier in these reasons.
I note that at the hearing of this matter on 4 May 2015 the respondents advised the Court that they did not seek to contest liability and then did not appear on 16 June 2015 on the subsequent application to amend further the statement of claim to make certain corrections to the pleading. In those circumstances, I accept the Ombudsman’s allegations concerning the rates applicable to the Div.2B State Award Employees and, subject to the comments which follow, the calculations that were based on those rates.
Contraventions of the Division 2B State awards
A failure to pay wages in accordance with a Division 2B State award is a breach of item 4A of sch.16 to the FW (TPCA) Act, not s.45 of the FW Act, as the Ombudsman alleged. It can only be assumed that that particular aspect of the allegation was a drafting error associated with the post-hearing amendment of the amended statement of claim to include reference to the Division 2B State awards. However, it is too significant a matter to let pass as I have other, less significant, drafting errors. Consequently, although I find that WXZ contravened the Qld Div.2B Award and the NSW Div.2B Award as alleged, the related alleged statutory contraventions have not been made out.
Contraventions of the Modern Award
The Ombudsman argued that although the Modern Award’s transitional provisions applied to the Employees’ wages, they did not apply to their loadings and penalty rates because WXZ could not meet the relevant pre-condition to the application of cls.A.5.1 and A.6.1 - that it was an employer who, if it had been an employer in the relevant industry or of the relevant occupations immediately before 1 January 2010, would have been bound by an award-based transitional instrument. This was said to be the case because WXZ had not been in existence when the WR Act was on foot, could not have employed any of the Employees at that time and so could not have been subject to a NAPSA. It was argued in that connection that because WXZ could not have been subject to a NAPSA it could not have been subject to a transitional award-based transitional instrument derived from a NAPSA.
The difficulty with that submission is that, if the facts of a particular case are relevant to the application of the relevant part of the Modern Award’s transitional provisions as the argument implies, the same reasoning also applies to the Employees’ wage rates. However, such an approach contradicts the Ombudsman’s position that the transitional provisions applied to ordinary time wage rates. That is because the Employees, either as employees of Yummy Noodle Box or of WXZ, had never been covered by preserved APCSs. The WR Act never applied to the Employees because, during its operation which ceased on 30 June 2009, and in the subsequent bridging period during which parts of the WR Act continued to operate and which ceased on 31 December 2009, they were employed by the Yummy Noodle Box partnership and so their employment was governed by the laws of the States in which they worked. Moreover, Division 2B State awards never became transitional instruments: item 2(3) of sch.3 to the FW (TPCA) Act. The Employees only came under Federal law on 1 January 2010 with the advent of the Division 2B State awards under the FW Act. Therefore, on the Ombudsman’s reasoning, even if WXZ had been an employer in the relevant industry or of the relevant occupations immediately before 1 January 2010, it would not have been bound by a transitional minimum wage instrument in relation to the Employees because none of the Employees was covered by one.
To interpret the Modern Award’s transitional provisions in the way advocated by the Ombudsman appears to contradict the terms of the Modern Award’s transitional provisions. The meaning of an award’s provisions is to be determined by a construction of those provisions to determine their objective meaning. That analysis is not to be undertaken in a narrow or pedantic way. The intentions of the framers of the award are to be inferred from the terms of the award and its context: United Firefighters’ Union of Australia v Metropolitan Fire and Emergency Services Board (2006) 152 FCR 18; Kenoss Contractors Pty Ltd v Warren (2005) 147 IR 390.
Relevantly for this case, the Modern Award’s transitional provisions will apply to an employer if that employer is one which, “if it had been an employer” in the relevant industry or of the relevant occupations immediately before 1 January 2010 would have been bound by a transitional minimum wage instrument or an award-based transitional instrument (“hypothetical employer test”). Those provisions do not rely on an individual employer’s particular circumstances but simply identify a hypothetical circumstance. Importantly, they do not suggest that any qualification or conditions precedent have to be satisfied before the hypothetical circumstance can be applied to an employer in order to see whether the Modern Award’s transitional provisions applied to it. The transitional provisions simply require the employer to be put in the shoes of an employer in the relevant industry or of the relevant occupations as at a specific moment, namely immediately before 1 January 2010.
The purpose of the Modern Award’s transitional provisions was to provide, in respect of any particular job classification, a smooth and predictable transition from various different State rates to one national set of rates. There is no reason to think that the Modern Award sought to transition from Division 2B State awards in a manner different from the transition from NAPSAs and preserved APCSs, where there was no question of qualifications or conditions precedent being applicable to the transitional provisions other than that an employer was, or would have been if an agreement did not apply, an employer governed by a NAPSA or a preserved APCS (as continued as transitional instruments during the bridging period) immediately before 1 January 2010. Indeed, there is reason to think that the intention was that the process be the same. As Fair Work Australia said:
We have decided that, so far as possible, the phasing schedule should apply to employers covered by Division 2B State awards in the same way as it applies to other national system employers …. The effect will be that the phasing schedule will apply to employers covered by Division 2B State awards on 31 December 2010 as if they had been national system employers immediately prior to 1 January 2010. Division 2B employers will in that sense be subject to the same transitional arrangements as employers covered by NAPSAs prior to 1 January 2010. Nonetheless the provisions of the Division 2B State awards will continue to apply until the end of January 2011.
(Award Modernisation – Division 2B State Awards [2010] FWAFB 8558 at [27]).
I therefore conclude that the hypothetical employer test is to be applied without reference to the particular circumstances of an individual employer. As a consequence I find that the Modern Award’s transitional provisions applied not only to the Employees’ ordinary time wages but also to their loading and penalty rate entitlements.
Classification of the Employees under the Modern Award
Given their evidence of their duties, I find that Ms ST Lin and the NSW Level 1 Employees performed tasks which fell within the Modern Award’s classification “Fast Food Employee level 1”.
I also find, given their evidence of their duties, that the NSW Supervisory Employees performed tasks which fell within the Modern Award’s classification “Fast Food Employee level 3”. The evidence does indicate that each supervised other employees from time to time even if it is not clear enough to conclude that at any particular time the NSW Supervisory Employees supervised any identifiable employee other than their respective wives who were also working in the shops which they ran.
Rates under the Modern Award
As noted earlier, commencing with the first pay period in July 2010, the Modern Award’s pay scales applied to employment relationships formerly covered by NAPSAs and preserved APCSs, subject to modifications which adjusted the new pay scales by reference to the preserved APCSs which on 1 July 2009 had become transitional APCSs. As also noted earlier, commencing with the first full pay period after 1 February 2011, cl.A.8 of sch.A to the Modern Award applied the Modern Award’s pay scales, as adjusted by reference to the transitional APCSs, to Division 2B State awards.
In the circumstances, cl.A.8.3 of sch.A to the Modern Award required WXZ, commencing on the first pay period after 1 February 2011, to pay the Div.2B State Award Employees no less than their minimum wage as provided by that award less a proportion of the difference between that figure and the Qld transitional minimum wage instrument in Ms ST Lin’s case and the NSW transitional minimum wage instrument in the case of the other employees. That proportion diminished over time as provided in cl.A.2.5 of sch.A to the Modern Award. What those amounts were said to be was set out in the further amended statement of claim.
As recorded earlier, the Ombudsman alleged that the preserved APCS derived from the Retail Take-Away Food Award – South-Eastern Division 2003 (“Qld preserved APCS”) was the relevant transitional minimum wage instrument to be used when calculating the transitional rates payable to Ms ST Lin, under the Modern Award. She also alleged that the relevant transitional minimum wage instrument to be used when calculating the transitional rates payable under the Modern Award to the NSW Level 1 Employees and the NSW Supervisory Employees was the Shop Employees (State) Award. As expressed, those contentions were erroneous but it may only have been a matter of expression. Although a distinction without a difference, and having no effect on the amounts alleged to be payable under the Modern Award, the relevant transitional instrument was that created by the FW (TPCA) Act, the Qld transitional minimum wage instrument, not the Qld preserved APCS earlier created by the WR Act which the FW (TPCA) Act would later copy into the Qld transitional minimum wage instrument; or the NSW Shop Employees (State) Award whose pay rates were made a preserved APCS by the WR Act and then made a transitional minimum wage instrument, ie the NSW transitional minimum wage instrument, by the FW (TPCA) Act.
Further, it was not explained why Mr Chen, who was employed after the commencement of the Modern Award, would be covered by the terms of the NSW Div.2B Award and the Modern Award’s transitional provisions rather than just the Modern Award. The answer to this appears to lie in item 4(2) of sch.3A to the FW (TPCA) Act, quoted earlier in these reasons.
Finally, although I have accepted as correct most of the Ombudsman’s calculations concerning underpayments, because I have rejected her argument that the Modern Award’s transitional provisions did not apply to the Employees’ loadings and penalty rates, I reject her calculations of those entitlements. The applicant and the respondents are to submit a proposed minute of orders setting out the amounts owed to the Employees, including amounts for loadings and penalty rates under the Modern Award, calculated in accordance with these reasons.
Contraventions of the Modern Award
I find that WXZ contravened the minimum rates, overtime, penalty rates and loading provisions of the Modern Award notwithstanding that the underpayments of loadings and penalty rates remain to be quantified correctly.
Contraventions of the FW Act
Each of the contraventions of the Modern Award was also a contravention of s.45 of the FW Act.
The Ombudsman also alleged contraventions of the NES in relation to the Employees’ rights to public holiday pay, payment of annual leave entitlements, and personal leave pay. I accept the Employees’ evidence that they were not paid those entitlements as the Ombudsman alleged. Each of those breaches was a contravention of s.44 of the FW Act.
The Ombudsman also alleged that WXZ contravened the FW Act because it failed to provide timely pay slips and failed to make and keep employee records. The evidence of the Employees satisfies me that they were not provided with pay slips as required by s.536(1) of the FW Act and Mr Ma’s affidavit and the documents referred to in it make it plain that WXZ contravened the record keeping requirements of the FW Act and FW Regulations.
Liability as accessories
I find, based on the admissions made in the defence to the amended statement of claim and on the evidence of the Employees, that the second respondent was a person responsible for the overall direction, management and supervision of WXZ and was responsible in a practical sense for ensuring that WXZ complied with its FW Act obligations to the Employees.
Although it can be inferred that the second respondent was knowingly concerned in WXZ’s operations and business activities as far as they concerned the Employees, the respondents’ admissions and the evidence do not support a finding that he was knowingly concerned in the award contraventions which have been found to have occurred. In her address to the Court on 4 May 2015 the Ombudsman submitted that it was not necessary for her to prove that each of the second and third respondents knew the exact name of the relevant awards or the exact provisions which have been contravened. However, the law does require specific knowledge before a person will be held to be an accessory to conduct which contravenes an industrial award. In this connection and for the reasons I gave in Fair Work Ombudsman v Raying Holding (No 2) [2017] FCCA 2148 at [108]-[111], the material reasoning in Potter v Fair Work Ombudsman [2014] FCA 187 is binding on me, being an appeal from various related decisions of this Court. That reasoning is to the effect that to be liable as an accessory to another’s breaches of an award, a person must have known that a particular award applied to the employees whose rights are said to have been violated. Such knowledge on the part of the second respondent has not been demonstrated. In this connection, the only evidence which might have pointed to such knowledge was Ms SB Lin’s December 2010 employment contract but it was not shown who signed it on behalf of WXZ, it referred to a State award which did not apply and, in any event, for the reasons already given, no related breach by WXZ of s.45 of the FW Act concerning the breaches of the two Division 2B State awards has been proved. Consequently, I find that it has not been proved that the second respondent is liable as an accessory to WXZ’s award contraventions.
However, different considerations apply to statutory and regulatory breaches. Ignorance of the law is not a defence and so an accessory need not know that particular matters amount to a contravention; it is sufficient that he or she know the essential matters which comprised the contravention committed by the principal and intentionally participated in the contravention: Yorke v Lucas (1985) 158 CLR 661; Giorgianni v The Queen (1985) 156 CLR 473.
I infer, based on the second respondent’s involvement in the operations of WXZ, that he was aware of and participated in the conduct which constituted contraventions of ss.90(1), 90(2), 99, 116, 535(1) and 536(1) of the FW Act. I find him to have been involved in those contraventions for the purposes of s.550 of the FW Act.
Based on the admissions and the evidence of Ms SB Lin and Mr Chen, I find that the third respondent was knowingly concerned in WXZ’s contraventions of the Modern Award relating to them. However, knowledge of the Modern Award by the third respondent has not been demonstrated. Consequently, for the reasons already given in connection with the second respondent, I find that he is not liable as an accessory to WXZ’s Modern Award contraventions in relation to Ms SB Lin and Mr Chen.
Ignorance of the law provides no defence to an allegation of breach of the FW Act. The first and second respondents admitted that pay slips were not provided to the Employees. Although the third respondent did not make a similar admission, I infer from the evidence of Ms SB Lin and Mr Chen that the third respondent did not provide pay slips to them in association with the pays he distributed in the Orange shop. I conclude that he was involved in those contraventions, at least in relation to Ms SB Lin and Mr Chen.
Finally, the fact that the third respondent was the shareholder and director of WXZ does not, in circumstances where the evidence indicates that it was the second respondent who actually ran the business as a whole and the third respondent only managed the Orange shop, persuade me that the latter’s corporate roles were of any practical significance to this proceeding, most specifically in relation to record keeping and the payment of accrued leave entitlements. It has not been proved that he was involved in those contraventions.
CONCLUSION
Although it is apparent that WXZ contravened the relevant awards and statutes on many occasions, for the reasons given the only breaches of the FW Act which have been proved against it are those concerning the Modern Award, leading to breaches of s.45 of the FW Act; the breaches of the NES, leading to breaches of s.44(1) of that Act; and the breaches of ss.535(1) and 536(1).
The allegations that the second and third respondents were liable as accessories for WXZ’s contraventions of the three awards have not been proved. However, the second respondent has been found to have been involved as an accessory in WXZ’s contraventions of the NES and of ss.535(1) and 536(1) of the FW Act and the third respondent has been found to have been involved as an accessory in WXZ’s contraventions of s.536(1).
The matter will be listed on a date to be fixed for the determination of penalties.
I certify that the preceding two hundred and five (205) paragraphs are a true copy of the reasons for judgment of Judge Cameron
Associate:
Date: 16 March 2018
6
0