Fair Work Ombudsman v Wildernis Pty Ltd
[2022] FedCFamC2G 543
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Wildernis Pty Ltd [2022] FedCFamC2G 543
File number(s): BRG 494 of 2021 Judgment of: JUDGE EGAN Date of judgment: 5 July 2022 Catchwords: INDUSTRIAL LAW – Imposition of pecuniary penalty – effect of Covid lockdowns upon small businesses operating throughout Australia – consideration given to co-operation of respondent with applicant – consideration given to the fact of part re-payment of outstanding entitlements payable to employee – orders accordingly. Legislation: Fair Work Act 2009 (Cth) s. 716(5). Cases cited: Kelly v Fitzpatrick (2007) 166 IR 14 Division: Division 2 General Federal Law Number of paragraphs: 13 Date of last submission/s: 10 May 2022 Date of hearing:
Place
10 May 2022
Brisbane
Solicitor for the Applicant:
Respondent:
Fair Work Ombudsman
No appearance entered
ORDERS
<BRG494/2021> FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
ApplicantAND: WILDERNIS PTY LTD (ACN 626 688 588)
Respondent
ORDER MADE BY:
JUDGE EGAN
DATE OF ORDER:
6 JULY 2022
IT IS DECLARED THAT:
1.Wildernis Pty Ltd contravened s 716(5) of the Fair Work Act 2009 (Cth) (‘the Act’), by failing to comply with the Compliance Notice issued on 23 February 2021.
AND IT IS ORDERED THAT:
2.Pursuant to s 545(1) of the Act, Wildernis Pty Ltd take the steps that were required by the Compliance Notice issued 23 February 2021, by:
(i)paying the outstanding Full-time Entitlements and Casual Entitlements, totalling $3,992.55, including superannuation, as set out in paragraph 8(a) of the Statement of Claim filed on 3 November 2021; and
(ii)providing proof that the outstanding Full-time Entitlements and Casual Entitlements were rectified as set out in paragraph 16(a)(i) of the Statement of Claim filed on 3 November 2021;
to the Applicant within 28 days of the date of this order.
3.Pursuant to s 547(2) of the Act, Wildernis Pty Ltd pay interest to the Applicant on the outstanding Full-time Entitlements and Casual Entitlements pursuant to paragraph 16(a)(i) of the Statement of Claim filed on 3 November 2021 within 28 days of the date of this order.
4.The Applicant distribute the amounts set out in paragraphs 16(a)(i) and 16(b) of the Statement of Claim filed on 3 November 2021 to Ms Butcher within 14 days of receipt of proof that the outstanding Full-time Entitlements and Casual Entitlements were rectified in accordance with paragraph 16(a)(ii) of the Statement of Claim filed on 3 November 2021.
5.Pursuant to s 546(1) of the Act, Wildernis Pty Ltd pay a pecuniary penalty to the Commonwealth of $5,000.00 for the contravention pleaded in paragraph 15 of the Statement of Claim filed on 3 November 2021, within 28 days of the date of this order;
6.The Applicant have liberty to apply on the giving of seven (7) days’ notice in the event that any of the preceding orders are not complied with.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
Judge Egan
Introduction
On 23 February 2021, an inspector in the employ of the applicant gave to the respondent a Compliance Notice which required various steps to be undertaken by 26 March 2021.
The Compliance Notice was issued in respect of non-payment to an employee named Butcher of wages to which she was entitled, as well as payment due to Ms Butcher in respect of accrued and unused annual leave to which she was entitled in lieu of the giving of the required notice prior to termination of her employment. Ms Butcher was employed by the respondent on a full-time basis as a Level 5 Cook (Grade 4) under the Restaurant Industry Award 2010 for a business called “Wildernis Café and Bar” situated at 1166 Gold Coast Highway, Palm Beach in the State of Queensland.
Due to the failure of the respondent to comply with the terms of a negotiated payment plan in respect of the amounts owing to Ms Butcher, the applicant commenced proceedings against the respondent on 3 November 2021. A Statement of Claim filed on the same date sought the following relief:
[15]A declaration that Wildernis contravened s 716(5) of the FW Act, by failing to comply with the Compliance Notice issued on 23 February 2021.
[16] Orders that:
(a)pursuant to s 545(1) of the FW Act, Wildernis take the steps that were required by the Compliance Notice issued 23 February 2021, by:
(i)paying the outstanding Full-time Entitlements and Casual Entitlements, totalling $6,654.25, including superannuation, as set out in paragraph 8(a) above; and
(ii)providing proof that the outstanding Full-time Entitlements and Casual Entitlements were rectified as set out in paragraph 16(a)(i) above;
to the Applicant within 28 days of the date of this order.
(b)pursuant to s 547(2) of the FW Act, Wildernis pay interest to the Applicant on the outstanding Full-time Entitlements and Casual Entitlements pursuant to paragraph 16(a)(i) above within 28 days of the date of this order;
(c)the Applicant distribute the amounts set out in paragraphs 16(a)(i) and 16(b) to Ms Butcher within 14 days of receipt of proof that the outstanding Full-time Entitlements and Casual Entitlements were rectified in accordance with paragraph 16(a)(ii);
(d)pursuant to s 546(1) of the FW Act, Wildernis pay a pecuniary penalty to the Commonwealth for the contravention pleaded in paragraph 15 above, within 28 days of the date of this order;
(e)the Applicant have liberty to apply on 7 days’ notice in the event that any of the preceding orders are not complied with; and
(f)such further orders as the Court considers appropriate.
On 5 April 2022, a Statement of Agreed Facts was filed in the Court registry with the consent of both parties. The Statement of Agreed Facts was as follows:
STATEMENT OF AGREED FACTS
This Statement of Agreed Facts (SOAF) is made and agreed to by the Applicant, the Fair Work Ombudsman (FWO), and the Respondent, Wildernis Pty Ltd (ACN 626 688 588), for the purposes of section 191 of the Evidence Act 1995 (Cth).
A. ADMITTED CONTRAVENTIONS
1. On the basis of the facts set out below, the Respondent admits that it contravened section 716(5) of the Fair Work Act 2009 (Cth) (FW Act), by failing to comply with a compliance notice issued under section 716 of the FW Act on 12 April 2021 (Compliance Notice) by Amey Jambekar, a Fair Work Inspector appointed under section 700 of the FW Act (FWI Jambekar).
B. THE PARTIES
The Applicant
2. The Applicant, The Fair Work Ombudsman (FWO), is and was at all material times:
(a)a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to subsection 687(1) of the FW Act;
(b)a Fair Work Inspector pursuant to section 701 of the FW Act; and
(c)a person with standing under subsection 539(2) of the FW Act to apply for orders in respect of contraventions of civil remedy provisions under the FW Act.
7.The Respondent
The Respondent, Wildernis Pty Ltd (Wildernis), is and was at all material times:
(a)a company incorporated under the Corporations Act 2001 (Cth) and registered since 8 June 2018;
(b)a “constitutional corporation” within the meaning of section 12 of the FW Act;
(c)a “national system employer” within the meaning of section 14 of the FW Act;
(d)the operator of a café trading with a principal place of business of 1166 Gold Coast Highway, Palm Beach, Queensland (Business);
(e)had a registered office located at Level 10 Suite 1004, 203 Robina Town Centre, Robina, Queensland (Registered Office); and
(f)by reason of the matters agreed in paragraphs 3 and 3(c) above, covered by the FW Act in respect of the employment of its employees.
4. Mr Andrew Canfield is and was at all material times a director of the Respondent.
C. BACKGROUND
5. During the period from 5 May 2019 and 5 April 2020 (Contravention Period), the Respondent employed Angela Butcher (Ms Butcher).
6.During the Contravention Period, the Restaurant Industry Award 2010 (Award), a modern award under the FW Act, covered and applied to Ms Butcher.
7.During the period from 5 May 2019 until 24 March 2020, Ms Butcher was employed as a full-time employee (Full-time Employment).
8.On about 25 March 2020, Ms Butcher’s Full-time Employment was terminated. Upon termination the Respondent failed to pay Ms Butcher’s accrued and unused annual leave and notice in lieu of termination.
9. During the period from 25 March 2020 until 5 April 2020, Ms Butcher was employed as a casual employee (Casual Employment Period).
10.During the Casual Employment Period, Ms Butcher was not paid the casual minimum wage, Saturday penalty and Sunday penalty rates as required by the Award.
Inspector
11.FWI Jambekar is and was at all relevant times a Fair Work Inspector appointed under section 700 of the FW Act.
Investigation
12. In or around January 2021, FWO Jambekar commenced an investigation into the Respondent in respect of Ms Butcher (Investigation).
13.Between 4 February 2021 and and 17 February 2021, Inspector Jambekar unsuccessfully attempted to make contact with the Respondent by phone and email in respect of the investigation.
14.Due to being unable to contact the Respondent, Inspector Jambekar relied on information supplied by Ms Butcher.
15. Based on the information obtained in the course of the Investigation, Inspector Jambekar formed a belief, that:
(a)the Respondent employed Ms Butcher to work at the Business;
(b)on termination of Full-Time Employment, the Respodnent failed to pay Ms Butcher’s accrued and unused annual leave and notice in lieu of termination; and
(c)during the Casual Employment Period, Ms Butcher was not paid the casual minimum wage, Saturday penalty and Sunday penalty.
16. Inspector Jambekar formed a a reasonable belief within the meaning of s 716(1)(b) of the FW Act that Wildernis contravened the following clauses of the Award and provisions of the National Employment Standards (Contraventions):
(a)clauses 13.1 and 20 of the Award – casual minimum wages;
(b)clause 34.1 of the Award – Saturday casual penalty;
(c)clause 34.1 of the Award – Sunday casual penalty (collectively, Casual Pay Contraventions);
(d)section 90(2) – payment of accrued annual leave on termination of employment (Annual Leave Contravention); and
(e)section 117(2)(b) of the FW Act – payment in lieu of notice of termination (Payment
(f)in Lieu of Notice Contravention).
D. COMPLIANCE NOTICE CONTRAVENTION
The Compliance Notice
17.On 23 February 2021, Inspector Jambekar gave a compliance notice to the Respondent in respect of the Contravention pursuant to section 716(2) of the FW Act (Compliance Notice):
(a)by sending it by express post to the Business of the Respondent;
(b)by sending it by express post to the Registered Office; and
(c)by sending it by email on 21 December 2020 to ‘[email protected]’, being the professional email address of Mr Andrew Canfield, Director of the Respondent.
18.In accordance with section 716(2) of the FW Act, the Compliance Notice required the Respondent to:
(a)to take the following specified action by 26 March 2021 to remedy the direct effects of the Contraventions:
Annual Leave Contravention
(i)calculate the number of hours of annual leave accrued by Ms Butcher when her full-time employment ended;
(ii)calculate the full amount Ms Butcher should have been paid in respect of accrued but unsused annual leave owing when her full-time employment ended;
(iii)make a payment to Ms Butcher in respect of the accrued but untaken annual leave entitlement when the full-time employment ended;
(iv)make a record of the calculations and payment in respect of the amounts calculated in (i) - (iii) above;
Payment in Lieu of Notice Contravention
(v)calculate the minimum period of notice the Employer was required to provide to Ms Butcher when the full-time employment was terminated on or about 24 March 2020;
(vi)calculate the amount that should have been paid to Ms Bucther as payment in lieu of notice;
(vii)identify any amount the Employer paid to Ms Butcher in lieu of continuing fulltime employment until the end of the minimum period of notice;
(viii)make a payment to Ms Butcher for the difference, if any, between the amounts referred to in (vi) and (vii) above;
(ix)make a record of the calculations and payment in respect of the amounts calculated in (vi) - (viii) above;
Casual Pay Contravention
(x)identify the number of hours Ms Butcher worked during the Casual Employment period;
(xi)identify the amount the Employer paid to Ms Butcher during the Casual Employment period;
(xii)calculate the amount the Employer should have paid Ms Butcher during the Casual Employment period;
(xiii)make a payment to Ms Butcher of the difference between the amount referred to in (xi) and (xii) above; and
(xiv)make a record of the calculations and payments referred to in (x) – (xiii) above.
(b)also, by 26 March 2021:
(i)(i) calculate additional superannuation contributions required by clause 30.2 of the Award in respect of the amounts required to be paid to Ms Butcher as a result of the payments required in (a); and
(ii)pay the additional superannuation contributions to Ms Butcher’s chosen Superannuation Fund.
(c)by 2 April 2021, produce reasonable evidence to the Applicant of the Respondent’s compliance with the Compliance Notice, by producing a schedule of underpayment amounts and payments rectifying those underpayments, and evidence that the amounts owed had been paid to Ms Butcher.
19.The Compliance Notice met the requirements as set out in section 716(3) of the FW Act.
20. The Respondent received the Compliance Notice.
Failure to comply with the Compliance Notice
21.The Respondent failed to take the specified action set out in the Compliance Notice by 26 March 2021, and failed to produce to the Applicant reasonable evidence of compliance with the Compliance Notice by 2 April 2021.
22. Specifically, the Respondent did not:
(a)by 26 March 2021, calculate and rectify any of the amounts referred to in 18(a) owing to Ms Butcher;
(b)by 26 March 2021, calculate and rectify the amount owing to Ms Bucther in respect of any superannuation amount arising out of the amounts referred to in 18(b); and
(c)by 2 April 2021, produce reasonable evidence to the Applicant of its compliance with the Compliance Notice.
23. The Respondent did not apply for a review of the Compliance Notice pursuant to section 717 of the FW Act.
24.The Respondent did not have a reasonable excuse for failing to comply with the Compliance Notice pursuant to section 716(6) of the FW Act.
25.By reason of the the facts agreed to in paragraphs 17 to 24 above, the Respondent failed to comply with the Compliance notice and thereby contravened section 716(5) of the FW Act.
Correspondence with the Respondent
26.On 29 March 2021, Inspector Jambekar sent a letter (Failure to Comply Letter) to the Respondent at the Place of Business, Registered Office and at the email addresses ‘[email protected]’. The Failure to Comply Letter:
(a)noted the Respondent’s failure to comply with the Compliance Notice;
(b)requested the Respondent advise whether there was a reasonable excuse for not complying with the Compliance Notice;
(c)stated that if the Respondent did not provide a reasonable excuse for his failure to comply with the Compliance Notice, the Applicant may commence legal action against the Respondent without further notice;
(d)noted the failure to comply with a compliance notice is a contravention under section 716(5) of the FW Act and a court may order a maximum penalty of $6,600 in respect of an individual or $33,300 in respect of a body corporate for each failure to comply with a compliance notice;
(e)noted that in addition to seeking civil penalties, the Applicant could also seek recovery of any outstanding monies the Compliance Notice required the Respondent to pay;
(f)strongly encouraged the Respondent to obtain independent legal advice in respect of the matter and, in particular, the Failure to Comply Letter;
(g)noted that the Failure to Comply Letter could be produced to a court in relation to the matter; and
(h)requested the Respondent contact Inspector Jambekar to discuss the letter and provided Inspector Jambekar’s contact telephone number and email address.
27.The Failure to Comply Letter was received by the Respondent.
28. Between 4 May 2021 and 1 June 2021, Inspector Jambekar attempted to contact the Respondent by phone on five occasions and left voice or text messages warning of the consequences of failing to comply with the Compliance Notice.
29.On 1 June 2021, the Respondent agreed that the payment owed to Ms Butcher was $7,985.10.
30.On 21 June 2021, Inspector Jambekar sent an ‘Offer of Payment Arrangement’ letter to the Respondent. The Offer proposed a payment plan for the amount of $7,985.10. Under the payment plan the Respondent:
(a)would make monthly payments of $1,330.85 plus superannuation contributions;
(b)the payment plan would commence on 28 June 2021 and conclude on 28 November 2021.
31. On 28 June 2021, Wildernis made a payment to Ms Butcher of $1,330.85.
32. On 19 July 2021, Mr Canfield sent an email to Inspector Jambekar cancelling the payment plan.
33. Between 19 July 2021 and 1 September 2021, Inspector Jambekar attempte to contact the Respondent by phone, email and text regarding the consequences of terminating the payment plan and non-compliance with the Compliance Notice.
Commencement of Proceedings
34.On 27 October 2021, Christina Candilaro (Ms Candilaro), a lawyer seconded to the Applicant, sent an email to the Respondent at ‘[email protected]’ attaching a letter and copy of the Compliance Notice. The letter notified the Respondent that the Applicant would commence legal proceedings in relation to his failure to comply with the Compliance Notice. On the same date, the Applicant sent a copy of the letter by Express Post to the Respondent at the Business and Registered Office.
35. The Respondent received the email and letter.
36.By reason of the matters agreed in paragraphs 21 to 25 above, the Applicant commenced proceedings in the Division 2 of the Federal Circuit and Family Court of Australia by way of Originating Application filed on 3 November 2021. A Statement of Claim was filed on the same date (collectively, the Originating Documents).
37.On the 4 November 2021, Ms Candilaro caused the Originating Documents to be delivered to the Respondent by:
(a)sending copies by express post to Registered Office and Place of Business; and
(b)sending an email with the documents attached to ‘[email protected]’.
38.On 18 November 2021, Ms Candilaro resent the Originating Documents by express post to the Registered Office and Place of Business.
39. The Respondent received the Originating Documents.
40. On 24 November 2021, Myles Bayliss (Mr Bayliss) a lawyer seconded to the Applicant, sent an email to the Respondent at ‘[email protected]’ notifying the Respondent that the matter had been listed for a first directions hearing on 2 December 2021.
41. The Respondent received the email.
42. On 2 December 2021, the first directions hearing occurred with no appearance being recorded for or on behalf of the Respondent.
43.Also on 2 December 2021, Judge Egan made Orders requiring the Respondent to:
(a)file and serve a Response and Notice of Address for Service on or before 4:00pm on 9 December 2021; and
(b)file and serve a Defence on or before 4.00pm on 16 December 2021.
44.Also on 2 December 2021, Mr Bayliss sent an email to the Respondent attaching a copy of the Orders and notifying the Respondent if the Orders were not complied with that the Respondent would be in default.
45. The Respondent received the email.
46.Also on 2 December 2021, Mr Bayliss caused to be sent to the Respondent by registered post at the Registered Office and Place of Business:
(a)A copy of the Orders dated 2 December 2021;
(b)A copy of the Originating Documents; and
(c)A letter dated 2 December 2021.
47. The Respondent received the documents by registered post.
48.The Respondent did not comply with the Orders above at 43(a) and (b) by 9 and 16 December 2021 respectively, or at all.
49.On 17 December 2021, Mr Bayliss sent an email to the Respondent noting that the Respondent had failed to comply with the Orders.
50.On 21 December 2021, Mr Bayliss caused the Originating Documents and copy of the Orders dated 2 December 2021 to be resent to the Respondent at the Registered Office and Place of Business by express post.
51.No response was received from the Respondent to any of the letters or emails noted in paragraphs 34 – 50 until 23 February 2022.
Correspondence with the Respondent
52.On 23 February 2022, Mr Canfield contacted Mr Bayliss by email regarding the progress of the proceedings.
53. On 25 February 2022, the Respondent agreed to enter into a SOAF and payment plan in respect of the outstanding amount of $6,654.25. Under the payment plan the Respondent:
(a)would make monthly payments of $1,330.85 plus required superannuation contributions;
(b)the payment plan would commence on 4 March 2022 and conclude on 8 July 2022.
54.On 4 March 2022, the Respondent made a payment of $1,330.85 to Ms Butcher and provided evidence of the payment to the applicant.
The respondent failed to comply with orders of the Court requiring it to file and serve affidavit evidence going to the question of what pecuniary penalties ought to be ordered to be paid by it by reason of its contravention of the provisions of s. 716(5) of the Fair Work Act 2009 (Cth) (‘the Act’).
In correspondence with the applicant, a claim was made by the respondent that the Covid lockdowns had adversely affected its business leading to its non-compliance with its payment obligations. [1] The Court has some sympathy with the respondent in that regard. Further, the Court notes that the applicant has conceded that the respondent has co-operated with the applicant during the Court process. [2]
[1] Exhibit 2 – email from Canfield to Bayliss of 16 April 2022 sent at 4.50am.
[2] Exhibit 2 – Email from Bayliss to Canfield sent on 21 April 2022 at 8.47am.
Relevant Considerations To Be Taken Into Account
The respondent employed Ms Butcher for almost a one year period between 5 May 2019 and 5 April 2020. The total amount owed to Ms Butcher was in the amount of $7,985.10. The sum of $1,330.85 was paid to Ms Butcher on 28 June 2021 under a payment plan. After the commencement of proceedings on 4 November 2021, two further payments were made by the respondent to Ms Butcher – namely the sum of $1,330.85 made on 4 March 2022 and the sum of $1,330.85 made on 4 April 2022. The amount which remains outstanding is the sum of $3,992.55.
The maximum penalty that the Court may impose for a contravention of s. 716(5) of the FWA is in the amount of $33,300.00 for a corporate entity. The Court is required to impose a penalty which acknowledges the circumstances in which the contravention occurred, and the need to sustain public confidence in the statutory regime which imposes the obligations. [3]
[3] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [91] per Buchanan J.
The Court adopts the principles laid down in Kelly v Fitzpatrick (2007) 166 IR 14 at [14] where Tracey J held that the relevant factors to be taken into account when approaching the issue of the imposition of a pecuniary penalty were as follows:
a)The nature and extent of the conduct which led to the breaches.
b)The circumstances in which that conduct took place.
c)The nature and extent of any loss or damage sustained as a result of the breaches.
d)Whether there had been similar previous conduct by the respondent.
e)Whether the breaches were properly distinct or arose out of the one course of conduct.
f)The size of the business enterprise involved.
g)Whether or not the breaches were deliberate.
h)Whether senior management was involved in the breaches.
i)Whether the party committing the breaches had exhibited contrition.
j)Whether the party committing the breach had taken corrective action.
k)Whether the party committing the breach had cooperated with the enforcement authorities.
l)The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
m)The need for specific and general deterrence.
It was submitted on behalf of the applicant that in all of the circumstances the imposition of a pecuniary penalty in the range of $14,985.00 - $17,982.00 would be appropriate.
Having regard to all of the factors relevant to the imposition of penalty, and further taking judicial notice of the fact that many businesses throughout the nation have failed as a result of business disruptions caused by the Covid virus and the reactions of State Governments to it, the Court considers that the range proposed on behalf of the applicant is too high. It is evident that the respondent endeavoured to pay what was outstanding but was unable to do so even though the final sum due and payable to Ms Butcher was modest.
The Court considers that an appropriate penalty in the circumstances is in the amount of $5,000.00. Such sum is ordered to be paid by the respondent to the Consolidated Revenue Fund of the Commonwealth of Australia in accordance with the terms of the Agreed Statement of Facts.
And it is so ordered.
I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Egan. Associate:
Dated: 6 July 2022
0
1
0