Fair Work Ombudsman v Wells - [2019] FCCA 3488

FEDERAL CIRCUIT COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v WELLS

[2019] FCCA 3488

Catchwords:
INDUSTRIAL LAW – Application for imposition of pecuniary penalties – consideration of penalty – non-payment of award entitlements – where single employee was underpaid.

Legislation:

Fair Work Act 2009 (Cth), ss.45, 546 550(2), 557(1), 712

Electrical, Electronic and Communications Contracting Award 2010, cll.10.3(b), 16.2, 17.2, 22.1, 26.1, 26.4

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
Construction, Forestry, Mining and Energy Union v Australian Building and Construction Commissioner (Non-Indemnification Personal Payment Case) (2018) 280 IR 28

Applicant:

FAIR WORK OMBUDSMAN

First Respondent:

BRADLEY WELLS

File Number:

BRG 155 of 2019

Judgment of:

Judge Jarrett

Hearing date:

18 October 2019

Date of Last Submission:

18 October 2019

Delivered at:

Brisbane

Delivered on:

3 December 2019

REPRESENTATION

Counsel for the Applicant:

Mr Vincent

Solicitors for the Applicant:

Office of the Fair Work Ombudsman

No appearance for the Respondent

ORDERS

IN ADDITION TO THE DECLARATIONS MADE ON 2 AUGUST, 2019 THE COURT DECLARES THAT:

In the period of 1 June, 2017 to 26 June, 2017 the Respondent was involved, within the meaning of s.550(2) of the Fair Work Act 2009 (Cth), in the contraventions by Attain Solutions Pty Ltd (in liq) (ABN 29 600 646 491) of s.45 of the Fair Work Act 2009 (Cth) by failing to pay Amaroa Tawera the industry allowance as prescribed by cl.17.2 of the Electrical, Electronic and Communications Contracting Award 2010.

THE COURT ORDERS THAT:

The Respondent pay a total pecuniary penalty of $41,040 pursuant to s.546(1) of the Fair Work Act 2009 (Cth) for the following contraventions set out in the declarations made by the Court in this matter on 2 August, 2019 and this order, namely:
(a)for contravening s.45 of the Fair Work Act 2009 (Cth) in the following respects:
(i)a penalty of $7,560 for failing to pay Amaroa Tawera the minimum hourly wage rate prescribed by cl.16.2 of the Electrical, Electronic and Communications Contracting Award 2010;
(ii)a penalty of $5,400 for failing to pay Amaroa Tawera the casual loading prescribed by cl.10.3(b) of the Electrical, Electronic and Communications Contracting Award 2010;
(iii)a penalty of $3,240 for failing to pay Amaroa Tawera the industry allowance as prescribed by cl.17.2 of the Electrical, Electronic and Communications Contracting Award 2010;
(iv)a penalty of $5,400 for failing to pay Amaroa Tawera the overtimes rates for work performed Monday to Saturday as prescribed by cl.26.1 of the Electrical, Electronic and Communications Contracting Award 2010;
(v)a penalty of $4,320 for failing to pay Amaroa Tawera the overtimes rates for work performed on a Sunday as prescribed by cl.26.4 of the Electrical, Electronic and Communications Contracting Award 2010; and
(vi)a penalty of $7,560 for failing to pay Amaroa Tawera his wages as prescribed by cl.22.1 of the Electrical, Electronic and Communications Contracting Award 2010; and
(b) a penalty of $7,560 for contravening s.712(3) of the Fair Work Act 2009 (Cth) for failing to comply with a notice to produce issued pursuant s.712(1) of that Act.
The Respondent pay the pecuniary penalties set out at paragraph 2 hereof to the Consolidated Revenue Fund of the Commonwealth within twenty eight (28) days of these orders.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 155 of 2019

FAIR WORK OMBUDSMAN

Applicant

And

BRADLEY WELLS

Respondent

REASONS FOR JUDGMENT

Mr Amaroa Tawera was 18 years old when he worked as a casual labourer during the period 1 June to 26 June, 2017 for Attain Solutions Pty Ltd. Attain Solutions provided civil works and underground services under contract to entities contracting to the NBN Co Ltd for work on the National Broadband Network.
However, despite its obligation to do so, Attain Solutions did not pay Mr Tawera anything for his work as an employee of the company. Nothing at all. By failing to pay Mr Tawera for his work, Attain Solutions contravened the Fair Work Act 2009 (Cth) in a number of respects, details of which I have set out later in these reasons.
Mr Tawera complained about his treatment to the applicant on 13 July, 2017. The applicant commenced an investigation soon thereafter. The investigation was handled by Fair Work Inspector Natalie Johnson. She sought the production of records that, as an employer, Attain Solutions was required to keep pursuant to the Act and the Fair Work Regulations 2009 (Cth). She did that by issuing and giving to the company a notice to produce pursuant to s.712 of the Act on 7 August, 2017. The company did not respond. Ever.
At all relevant times he was the sole director and secretary of Attain Solutions. Mr Wells was served personally with the notice to produce on 28 September, 2017. He did not respond to the notice. Again, ever.
On 18 February, 2019 the applicant commenced these proceedings by way of Application and Statement of Claim against Mr Wells. Attain Solutions was wound up on 11 May, 2018 upon application of the Australian Taxation Office.
Mr Wells has not participated in these proceedings. On 2 August, 2019 I declared that Mr Wells was involved, within the meaning of s.550(2) of the Fair Work Act, in Attain Solutions’s contraventions of:
a)s.45 of the Act by failing to pay Mr Tawera the minimum hourly wage rate prescribed by cl.16.2 of the Electrical, Electronic and Communications Contracting Award 2010;
b)s.45 of the Act by failing to pay Mr Tawera casual loading as prescribed by cl.10.3(b) of the Electrical Award;
c)s.45 of the Act by failing to pay Mr Tawera overtime rates for work performed from Monday to Saturday as prescribed by cl.26.1 of the Electrical Award;
d)s.45 of the Act by failing to pay Mr Tawera overtime rates for work performed on a Sunday as prescribed by cl.26.4 of the Electrical Award;
e)s.45 of the Act by failing to pay Mr Tawera his wages as prescribed by cl.22.1 of the Electrical Award; and
f)s.712(3) of the FW Act by failing to comply with a Notice to Produce Records or Documents.
I also made an order against Mr Wells requiring him to pay to Mr Tawera all that he is owed. At the applicant’s request the proceedings were then adjourned for a hearing to determine the amount of the penalties, if any, to be imposed upon the respondent for his contraventions of the Act. I have now held that hearing. Mr Wells did not participate.
In addition to the above contraventions, the applicant now seeks a further declaration and pecuniary penalty against Mr Wells for his involvement, in Attain Solutions’s contravention of s.45 of the Act by failing to pay Mr Tawera the industry allowance as prescribed by cl.17.2 of the Electrical Award.

The Contraventions

There are seven separate contraventions I need to consider. They are contraventions of:
a)s.45 of the Act by failing to pay Mr Tawera the minimum hourly wage rate prescribed by cl.16.2 of the Electrical Award;
b)s.45 of the Act by failing to pay Mr Tawera the casual loading prescribed by cl.10.3(b) of the Electrical Award;
c)s.45 of the Act by failing to pay Mr Tawera the industry allowance as prescribed by cl.17.2 of the Electrical Award;
d)s.45 of the Act by failing to pay Mr Tawera the overtimes rates for work performed Monday to Saturday as prescribed by cl.26.1 of the Electrical Award;
e)s.45 of the Act by failing to pay Mr Tawera the overtimes rates for work performed on a Sunday as prescribed by cl.26.4 of the Electrical Award;
f)s.45 of the Act by failing to pay Mr Tawera his wages as prescribed by cl.22.1 of the Electrical Award;
g)s.712(3) of the Act by failing to comply with a notice to produce.
Each of the first six contraventions set out above comprises more than one occasion of a particular underpayment. However, s.557(1) of the Act provides that two or more contraventions of the same civil remedy provision will be treated as a single contravention where that contravention was committed by the same person, and arose from the same course of conduct. The applicant accepts that Mr Wells is entitled to the benefit of s.557(1) of the Act and the Court must treat multiple contraventions of the same term of the Electrical Award as a single breach of that particular term.
The maximum penalties that may be imposed for contraventions of the Act are:
a)$64,800 for the six contraventions of s.45 of the FW Act and Electrical Award; and
b)$12,600 for the contraventions of s.712(3) of the FW Act by failing to comply with an NTP.

Consideration

Mr Wells’s contraventions arose from Attain Solutions’s failure to pay Mr Tawera anything at all during the period he worked as a casual labourer. Mr Tawera was 18 years old at the time. The non-payment occurred in circumstances where:
a)Mr Wells had knowledge of Attain Solutions’s obligations under the Electrical Award, including with respect to the frequency of payment and overtime rates, based on his prior interactions with inspectors from the Fair Work Ombudsman’s office;
b)Mr Wells directed Mr Tawera to work during the underpayment period; and
c)Attain Solutions continued to invoice and receive payments from its clients before, during and after Mr Tawera’s employment period.
The failure to pay Mr Tawera was not inadvertent. Text messages exchanged between Mr Tawera and Mr Wells both during and following his employment with Attain Solutions demonstrate that Mr Wells clearly knew that Mr Tawera was not being paid for his work while others in Attain Solutions’s employment were being paid. I accept the applicant’s submission that the contraventions in this matter can only be seen as deliberate. That is underscored by Mr Wells’s prior interactions with the applicant’s office, including the following matters:
a)a telephone call to the applicant’s “Small Business Helpline” in November, 2015 during which Mr Wells received information regarding the obligations in the Electrical Award in respect of frequency of payment to employees;
b)four compliance notices issued pursuant to the Fair Work Act to Mr Wells in April, 2016 relating to the alleged failure to pay minimum entitlements under the Electrical Award to four former employees of Attain Solutions;
c)a letter of caution being issued to Mr Wells in May, 2016 in respect of the four compliance notices issued in April, 2016 warning him that further contraventions could lead to the commencement of proceedings seeking civil penalties;
d)a further letter of caution being issued to Mr Wells in October, 2016 relating to alleged unpaid wages to a former employee of Attain Solutions, again warning him that further contraventions could lead to the commencement of proceedings seeking civil penalties; and
e)two telephone calls to the applicant’s “Info-Line” in December, 2016 during which Mr Wells sought advice around a potential underpayment of wages for his 14 year old son. He told the applicant’s representative that he had checked pay rates on the applicant’s website and believed his son’s employer should be “fined” like he had been.
Mr Wells failed to ensure Attain Solutions paid Mr Tawera despite the fact it was invoicing and receiving payments from one of its clients throughout both May and July, 2017.
Significantly, Mr Wells, on behalf of Attain Solutions, warranted in the contracts it executed with its clients that it would comply with its obligations under Commonwealth workplace relations laws and any applicable industrial instruments. The company and Mr Wells plainly failed to do that.
Mr Wells’s failure to ensure that Attain Solutions complied with the notice to produce occurred despite it being personally served on him, and in circumstances where he failed to engage with the applicant during her investigation. That contravention too, can only be seen as deliberate.
The $3,945.24 underpayment amount in this matter is significant given it relates to only a four week period, involved the complete non-payment to Mr Tawera for his entire employment period and remains outstanding. Mr Tawera’s text messages to Mr Wells demonstrates the impact of Mr Wells’s conduct upon him. One example will suffice:
Just like you I’ve got a family to feed and just like you I have bills to pay, even if you were to tell me why I’m not getting paid so I know why instead of not saying a word, it’s frustrating for me to put those hours of work in despite the quality of work, I did my part and worked my hours. I would like a reason as to why I’m not getting paid but others are, I would like something from you. I would appreciate it so I can tell my misses why our bills aren’t getting paid and why we don’t have food. I’m starting to get pissed off because I’ve only had one reply back from you and that was it
It is well established that the size and financial circumstances of a respondent do not exculpate breaches of workplace laws. Smaller businesses and individuals have the same obligation as larger employers to meet minimum employment standards. In any event, in these proceedings there is no evidence of an incapacity to pay on the part of Mr Wells.
Mr Wells was sole director and controlling mind of Attain Solutions and the person who should have been ensuring it was complying with its minimum obligations. He was the person who recruited Mr Tawera and offered him employment with Attain Solutions, the person who signed his employment contract in which it was stated he would be paid $23 per hour and the person who had final responsibility for facilitating payment to employees.
Moreover, as the person personally served with the notice to produce and as the controlling mind of Attain Solutions, Mr Wells was the person ultimately responsible for Attain Solutions’s failure to produce documents to the applicant in compliance with the notice.
There has been no expression of contrition by Mr Wells and despite the Court’s orders of 2 August, 2019 requiring him to rectify the underpayment to Mr Tawera, it remains outstanding. Further, Mr Wells has at no point engaged with the proceedings before this Court. He has been entirely uncooperative.
One of the principal objects of the Fair Work Act is to ensure “a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders” for all employees. The conduct underpinning the underpayment contraventions of the Electrical Award deprived Mr Tawera of the protection of that safety net. Failing to comply with the notice to produce compromised the applicant’s ability to meet the legislative objective of ensuring compliance with minimum standards by making it more difficult to assess compliance with those minimum standards.
The principal object of pecuniary penalties under s.546 of the Fair Work Act is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at [116].
A pecuniary penalty for a contravention of the Fair Work Act must be ﬁxed with a view to ensuring that the penalty is not to be regarded by the offender or others as an acceptable cost of doing business. It is important to send a message that contraventions of the Act are serious and not acceptable: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68 at [98]. Retribution, denunciation and rehabilitation have no part to play: Construction, Forestry, Mining and Energy Union v Australian Building and Construction Commissioner (Non-Indemnification Personal Payment Case) (2018) 280 IR 28 at [19].
In this case, there is strong need for both general and specific deterrence given the principal purpose of ordering payment of a penalty is “to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act.” Mr Wells remains the director of another company operating in the civil construction industry, namely Attain Infrastructure Pty Ltd. He continues to be concerned with employing others to perform similar work to that performed by Mr Tawera. The need for specific deterrence is heightened given that Mr Wells failed take the previous opportunities offered by the applicant to voluntarily comply with the law, even after being issued with letters of caution.

Penalties

The applicant recommends the following penalties:

s.45 of the Act by failing to pay the minimum hourly wage rate prescribed by cl.16.2 of the Electrical Award	$10,800	$7,560 (70%)
s.45 of the Act by failing to pay the casual loading prescribed by cl.10.3(b) of the Electrical Award	$10,800	$5,400 (50%)
s.45 of the Act by failing to pay the industry allowance as prescribed by cl.17.2 of the Electrical Award	$10,800	$3,240 (30%)
s.45 of the Act by failing to pay the overtimes rates for work performed Monday to Saturday as prescribed by cl.26.1 of the Electrical Award	$10,800	$5,400 (50%)
s.45 of the Act by failing to pay the overtimes rates for work performed on a Sunday as prescribed by cl.26.4 of the Electrical Award	$10,800	$4,320 (40%)
s.45 of the Act by failing to pay his wages as prescribed by cl.22.1 of the Electrical Award	$10,800	$7,560 (70%)
s.712(3) of the Act by failing to comply with a notice to produce	$12,600	$7,560 (60%)
Total	$77,400	$41,040 (53%)

Having regard to the matters I have set out above, I accept the applicant’s recommendations as to penalty set out above.
I have considered whether the aggregate of the non-payment contraventions (the first six contraventions listed above) exceeds an appropriate response to Mr Wells’s offending conduct. I have not included the last contravention in that consideration because it stands on its own.
I have concluded that the aggregate of the non-payment contraventions does not exceed an appropriate response to the offending conduct, principally for two reasons. First, this is not a case of an employee being underpaid – that is to say, being paid an amount, but simply not enough. This is a case where an employee has been paid nothing. Second, there has been absolutely no rectification of the non-payment to the employee. Those matters add considerably to the objective seriousness of these contraventions and a consideration of whether the aggregate penalty is an appropriate response to the offending conduct.
Accordingly, I make the orders set out at the commencement of these reasons.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Judge Jarrett

Associate:

Date: 3 December 2019