Fair Work Ombudsman v Wok Me Corporate NQ Pty Ltd
[2018] FCCA 2635
•18 September 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v WOK ME CORPORATE NQ PTY LTD & ANOR | [2018] FCCA 2635 |
| Catchwords: INDUSTRIAL LAW – Determination of penalties – where statement of agreed facts outlines the contraventions – where evidence of past complaints against associated companies ruled inadmissible as “unfairly prejudicial” to Respondents – where proportionality considerations form part of totality principle – where total underpayments in respect of contraventions was $12,658.23 – where FWO submissions as to penalty disproportionate to factual matrix. |
| Legislation: Fair Work Act 2009 (Cth), ss.44(1), 45, 125(1), 323(1), 535(1), 536(2), 545, 546, 550(1), 557A Fair Work Regulations 2009 (Cth), reg.3.34 |
| Cases cited: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | WOK ME CORPORATE NQ PTY LTD |
| Second Respondent: | LUKE MCGRATH |
| File Number: | BRG 1132 of 2017 |
| Judgment of: | Judge Egan |
| Hearing date: | 23 August 2018 |
| Date of Last Submission: | 29 August 2018 |
| Delivered at: | Brisbane |
| Delivered on: | 18 September 2018 |
REPRESENTATION
| Counsel for the Applicant: | Ms Kelly |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| First Respondent: | Mr McGrath with leave |
| Second Respondent: | Self-represented |
THE COURT DECLARES THAT:
The First Respondent contravened:
(a)S.323(1) of the Fair Work Act 2009 (Cth) by failing to pay to Mr Wong the correct rate of pay for ordinary hours of work;
(b)S.323(1) of the Fair Work Act 2009 (Cth) for failing to pay to Mr Wong amounts payable or work performed in full and at least monthly;
(c)S.45 of the Fair Work Act 2009 (Cth) by failing to pay to Mr Wong overtime rates as required by clause 26 of the Fast Food Award;
(d)S.44(1) of the Fair Work Act 2009 (Cth) by failing to pay Mr Wong in respect of his accrued annual leave on termination as required by s.90(2) of the Fair Work Act 2009 (Cth);
(e)S.535(1) of the Fair Work Act 2009 (Cth) by failing to keep employee records in respect of overtime as prescribed by regulation 3.34 of the Fair Work Regulations2009 (Cth);
(f)S.536(2) of the Fair Work Act 2009 (Cth) by failing to provide Mr Wong a payslip with the required information;
(g)S.44(1) of the Fair Work Act 2009 (Cth) by failing to give to Mr Wong a Fair Work Information Statement as required by s.125(1) of the Fair Work Act 2009 (Cth); and
(h)S.45 of the Fair Work Act 2009 (Cth) by failing to pay to Mr Wong superannuation as required by clause 21.2 of the Fast Food Award.
The Second Respondent was involved in each of the First Respondent's contraventions set out in paragraph 1 above pursuant to s. 550(1) of the Fair Work Act 2009 (Cth).
THE COURT ORDERS ON A FINAL BASIS THAT:
The First Respondent pay penalties pursuant to s. 546(1) of the Fair Work Act 2009 (Cth) for its contraventions as set out in the Declaration above fixed in the amount of $60,480.
The Second Respondent pay penalties pursuant to s.546(1) of the Fair Work Act 2009 (Cth) for his contraventions as set out in the Declaration above fixed in the amount of $12.096.
The First Respondent pay its penalty amount to the Consolidated Revenue Fund of the Commonwealth within sixty (60) days of the date of this order pursuant to s.546(3)(a) of the Fair Work Act 2009 (Cth).
The Second Respondent pay his penalty amount to the Consolidated Revenue Fund of the Commonwealth within sixty (60) days of the date of this order pursuant to s.546(3)(a) of the Fair Work Act 2009 (Cth).
Pursuant to s.545(1) of the Fair Work Act 2009 (Cth) the Respondents:
(a)Within two (2) months of the date of this order, register with the Applicant’s “My Account” portal at complete the profile including the Award options;
(b)Within a further month after the period in paragraph in paragraph 5(a) above, provide to the Applicant the “My Account” registration number; and
(c)Within a period of two (2) months, register with the Applicant’s Online Learning Centre at and complete all education courses designed for employers and provide the Applicant with evidence of completion of those courses within a further month.
Pursuant to s.545(1) of the Fair Work Act 2009 (Cth), the Second Respondent will, at his own expense, engage a third party or third parties with appropriate workplace relations qualifications to undertake an audit of any Individual Flexibility Arrangements (“IFAs”) used in businesses in which he has a managerial or company officer role, on the following terms:
(a)The audit period will relate to any IFAs in place as at or during the one month period commencing the date of this order;
(b)The audit is to assess the compliance of the IFAs with the requirements of the Fair Work Act 2009 (Cth) and relevant modern award, and the relevant Employer’s compliance with the terms of the IFAs;
(c)Within three (3) months of the date of these orders the Second Respondent is to provide the Applicant with:
(i)A copy of the audit report, outlining the methodology used in the audit and its findings;
(ii)Copies of the IFAs and any other source documents used in the audit; and
(iii)Details of all reasonable steps taken by the Second Respondent, within the scope of his role in the relevant business, to address any issues identified in the course of the audit.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 1132 of 2017
| FAIR WORK OMBUDSMAN |
Applicant
And
| WOK ME CORPORATE NQ PTY LTD |
First Respondent
| LUKE MCGRATH |
Second Respondent
REASONS FOR JUDGMENT
Introduction
The Fair Work Ombudsman (“FWO”), in its Statement of Claim, seeks declarations as follows:
54. Declarations that the First Respondent contravened:
a. section 323(1) of the FW Act by failing to pay to Mr Wong the correct rate of pay for ordinary hours of work;
b. section 323(1) of the FW Act for failing to pay to Mr Wong amounts payable for work performed in full and at least monthly;
c. section 45 of the FW Act by failing to pay to Mr Wong overtime rates as required by clause 26 of the Fast Food Award;
d. section 44(1) of the FW Act by failing to pay Mr Wong in respect of his accrued annual leave on termination as required by section 90(2) of the FW Act;
e. section 535(1) of the FW Act by failing to keep Overtime Records as prescribed by regulation 3.34 of the FW Regulations;
f. section 536(2) of the FW Act by failing to provide Mr Wong a payslip with the required information;
g. section 44(1) of the FW Act by failing to give to Mr Wong a FWIS as required by section 125(1) of the FW Act; and
h. section 45 of the FW Act by failing to pay to Mr Wong superannuation as required by clause 21.2 of the Fast Food Award.
55. A declaration that the Second Respondent was involved in each of the First Respondent's contraventions identified in paragraph 54 above pursuant to section 550(1) of the FW Act.
The FWO also seeks the imposition of civil penalties.
The First Respondent (“Wok Me”) is, and was at all relevant times, a Corporation duly incorporated and capable of suing and being sued.
The Second Respondent is, and was at all relevant times, the Sole Director, Secretary and shareholder of Wok Me. He was responsible for the overall management and operation of Wok Me and of the Wok Me business, which involved operating fast food outlets in Queensland and the Australian Capital Territory selling noodles, rice and sushi dishes served in disposable take-away containers. Accessorial liability is claimed against him.
One Edmond Wong was employed by Wok Me on a full-time basis as a cook pursuant to an Individual Flexibility Arrangement (“IFA”) made pursuant to clause 7 of the Fast Food Award. Born in 1945, a former citizen of China, Mr Wong had nonetheless lived in Australia, as an Australian citizen, for 45 years.
Background
Mr Wong was employed by Wok Me as a Level 1 full-time employee under the Fast Food Award. His hours of work were between 7.00 am – 10.00 pm and his days of work were from Monday to Sunday. His hourly rate of pay was $22.52 plus a laundry allowance of $6.25 per week added to his hourly wage.
Mr Wong worked as a cook at Wok Me Rockhampton between 28 – 56 hours per week. On average, he worked in excess of forty-five (45) hours per week. The employment period was between about 16 June 2016 until 16 October 2016 – some four (4) months. Mr Wong was not paid for work he performed on 16 June 2016, between 1 August 2016 and 4 September 2016, between 12 September 2016 and 25 September 2016 and from 6 October 2016 until 9 October 2016.
In respect of work performed by Mr Wong during the employment period for which he was paid, the weekly amounts paid to Mr Wong equated to hourly rates of:
a)$22.00 for the period from 20 June 2016 to 3 July 2016;
b)$20.92 for the period from 4 July 2016 to 31 July 2016;
c)$20.92 for the period from 5 September 2016 to 11 September 2016;
d)$22.37 for the period from 26 September 2016 to 2 October2016; and
e)$25.20 for the period from 10 October 2016 to 16 October 2016.
The total amount admitted as having been underpaid to Mr Wong was $12,658.23 (notwithstanding that when added together the total of the claims is in the amount of $12,914.32). All such money was paid to Mr Wong over a period of time from the Second Respondent’s personal funds.
The admitted contraventions are as follows:
a)A breach of s. 323(1) of the Fair Work Act 2009 (Cth) (“FWA”) requiring payment to an employee in respect of the performance of work in full, being an underpayment of $343.52 in respect of underpaid ordinary hours.
b)A breach of s. 323(1) of the FWA requiring payment to an employee in respect of the performance of work in full, being an underpayment of $7,493.53 in respect of unpaid ordinary hours.
c)A breach of s. 45 of the FWA requiring payment to an employee for overtime performed, being an underpayment of $3,735.65 in respect of overtime hours.
d)A breach of s. 44(1) of the FWA which required the payment to Mr Wong of untaken annual leave on termination, being $1,341.62 in respect of unpaid annual leave entitlements.
e)A breach of s. 535(1) of the FWA which required Wok Me to make and to keep employee records, in respect of the failure of Wok Me to make or keep overtime records.
f)A breach of s. 536 of the FWA which required Mr Wong to be provided with a payslip within one (1) day of paying an amount to him for the performance of work, which payslip was to contain information as prescribed by the FW Regulations. The breach was in respect of the recording of an amount on payslips for a superannuation contribution where the payslip did not include the details of the superannuation fund to which the contribution was to be made.
g)A breach of s. 44(1) of the FWA in respect of the failure of Wok Me to provide to Mr Wong a Fair Work Information Statement (“FWIS”) as required by s. 125(1) of the FWA.
h)A breach of s. 45 of the FWA in respect of the failure to pay superannuation contributions in the amount of $1,443.91.
Mr Wong’s unpaid superannuation was ultimately paid by the Second Respondent out of his personal funds.
Agreed Relief
The parties agreed to the following declarations and orders:
61. Declarations that the First Respondent contravened:
a. Section 323(1) of the FW Act by failing to pay to Mr Wong the correct rate of pay for ordinary hours of work;
b. Section 323(1) of the FW Act for failing to pay to Mr Wong amounts payable or work performed in full and at least monthly;
c. Section 45 of the FW Act by failing to pay to Mr Wong overtime rates as required by clause 26 of the Fast Food Award;
d. Section 44(1) of the FW Act by failing to pay Mr Wong in respect of his accrued annual leave on termination as required by section 90(2) of the FW Act;
e. Section 535(1) of the FW Act by failing to keep employee records in respect of overtime as prescribed by regulation 3.34 of the FW Regulations;
f. Section 536(2) of the FW Act by failing to provide Mr Wong a payslip with the required information;
g. Section 44(1) of the FW Act by failing to give to Mr Wong a FWIS as required by section 125(1) of the FW Act; and
h. Section 45 of the FW Act by failing to pay to Mr Wong superannuation as required by clause 21.2 of the Fast Food Award.
62. A declaration that the Second Respondent was involved in each of the First Respondent's contraventions set out in paragraph 61 above pursuant to section 550(1) of the FW Act.
63. An order that the First Respondent pay penalties pursuant to section 546(1) of the FW Act in respect of the contraventions set out in paragraph 61 above.
64. An order that the Second Respondent pay penalties pursuant to section 546(1) of the FW Act in respect of his involvement in the contraventions set out in paragraph 61 above.
65. An order pursuant to section 546(3)(a) of the FW Act that the penalties be paid to the Commonwealth within 60 days.
66. An order pursuant to section 545(1) of the FW Act that the Respondents:
a. within two months of the date of this order, register with the Applicant's "My Account" portal at and complete the profile including the Award options;
b. within a further month after the period in paragraph 66(a) above, provide to the Applicant the "My Account" registration number; and
c. within a period of two months, register with the Applicant's Online Learning Centre at and complete all education courses designed for employers and provide the Applicant with evidence of completion of those courses within a further one month. .
67. An order pursuant to section 545(1) of the FW Act that the Second Respondent will, at his own expense, engage a third party or third parties with appropriate workplace relations qualifications to undertake an audit of any IFAs used in businesses in which he has a managerial or company officer role, on the following terms:
a. the audit period will relate to any IFAs in place as at or during the one month period commencing the date of this order;
b. the audit is to assess the compliance of the IFAs with the requirements of the FW Act and relevant modern award, and the relevant Employer's compliance with the terms of the IFAs;
c. within three months of the date of these orders the Second Respondent is to provide to the Applicant:
i. A copy of the audit report, outlining the methodology used in the audit and its findings;
ii. Copies of the IFAs and any other source documents used in the audit; and
iii. Details of all reasonable steps taken by the Second Respondent, within the scope of his role in the relevant business, to address any issues identified in the course of the audit.
Affidavit Evidence
Mr Wong deposes that after he was terminated from his former employment in Townsville, he was offered a job at Wok Me Rockhampton because he had financial difficulties. He stated that after he arrived in Rockhampton he stayed at a hotel paid for by Wok Me/Luke McGrath at a cost of $600 - $700 per week. He said that he worked five (5) or six (6) days per week and that he would usually take Monday off. He normally worked from about 10.00 am – 11.00 am until about 9.00 pm. He stated that he complained that he was not getting paid properly and that he had not received superannuation payments. He said that he stayed on because he needed a job and as he was a loyal person he thought he should keep working there as promised by him.
Mr McGrath is the Second Respondent. Mr McGrath made oral submissions in mitigation of penalty at the time of the hearing. He impressed the Court as someone who was truly regretful of any inconvenience or hurt suffered by Mr Wong as a result of the admitted breaches of Fair Work legislation. His co-operation in admitting the breaches is deserving of due recognition, as it has saved considerable court time and expense in the disposition of this matter. He said that he had been contacted by Mr Wong in about May 2016. Mr Wong said to him that the new owners of Wok Me Townsville had terminated his employment and that he needed a job. After that conversation, Mr Wong was offered a job at Wok Me Rockhampton. Mr McGrath agreed to pay for, and arrange accommodation for Mr Wong, because Mr Wong had said that he would have difficulty in doing so because of language difficulties. Mr McGrath regrets having entered into an arrangement for the payment of Mr Wong’s accommodation expenses, acknowledging that though it was the first time that he had done so, the arrangement was unorthodox and was one which contributed to the later confusion regarding Mr Wong’s remuneration. He realised that he should have insisted that Mr Wong make his own arrangements for accommodation, but said that at the time he thought he was helping him out in accordance with his request. Exhibit LM-2 to the Affidavit of Mr McGrath is an email from the Fitzroy Motor Inn Rockhampton which points to difficulties in the retrieval of amounts paid for Mr Wong’s accommodation during the employment period. That was only one aspect of the confusion surrounding Mr Wong’s employment, Mr McGrath, having been granted leave to adduce the evidence, noting the following:
a)There were difficulties with Mr Wong’s compliance with the employee “sign in” and “sign out” registration system. Mr Wong’s non-compliance issues related to his non-use, or intermittent use, of the system, thereby giving rise to work verification difficulties. In the absence of compliance, there were flow-on problems associated with payment for overtime as well as for ordinary work pay.
b)The practice of providing employees with a Fair Work Information Statement had previously been adhered to with other employees, and Mr McGrath was unable to verify whether there had been compliance in respect of Mr Wong or not. That having been said, Mr McGrath nevertheless conceded the non-provision of such documentation – thereby saving court time and costs - for which he should be commended.
c)Mr McGrath stated that he asked Mr Wong for his superannuation details but that they were never provided. That coupled with administrative error on the part of store management was the explanation for non-payment rather than an intention to underpay.
d)Mr McGrath now acknowledges that there were serious communication difficulties between him and Mr Wong due to Mr Wong’s lack of command of the English language. Had he appreciated that Mr Wong was not as comprehending as he anticipated, Mr McGrath said that he would have been much more involved with the active monitoring of Mr Wong’s employment rather than leaving it to subordinate staff.
e)Mr McGrath said that it was Wok Me that first brought underpayments to Mr Wong’s attention with a view to correcting the situation. What Mr McGrath regretted was leaving the situation to be sorted out by the Rockhampton store manager who compounded the problem by seeking to offset accommodation expenses against what was owing. Though not a reason for underpayment or non-payment, one can well understand that the payment of substantial accommodation expenses over a four (4) month period was nevertheless a source of confusion.
Approach to Imposition of Penalty
Factors to be taken into account were identified in Gibbs v The Mayor, Councillors and Citizens of City of Altona (1992) FCA 374 at [24], and relevantly, are addressed as follows:
a)The contraventions have been identified at paragraph 10 above.
b)The admitted contraventions fall into different categories which, as submitted on behalf of the Applicant, do not constitute a single course of conduct pursuant to s. 557(1) of the FWA. There were no multiple contraventions the subject of similar claims for relief which fell into that category.
c)On the question of penalty, regard is to be had to the joint judgment of French CJ and Kiefel, Bell, Nettle and Gordon JJ in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 where it was said:
"... whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]...The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act."
d)An appropriate penalty for each breach is one where due regard has been had to the factors as succinctly set out in Trade Practices Commission v CSR Ltd [1990] FCA 521 per French J (as he then was), namely:
i)the nature and extent of the conduct which led to the breaches;
ii)the circumstances in which that conduct took place;
iii)the nature and extent of any loss or damage sustained as a result of the breaches;
iv)whether there had been similar previous conduct by the Respondent;
v)whether the breaches were properly distinct or arose out of the one course of conduct;
vi)the size of the business and enterprise involved;
vii)whether or not the breaches were deliberate;
viii)whether senior management was involved in the breaches;
ix)whether the party committing the breach had exhibited contrition, taken corrective action and cooperated with the enforcement authorities;
x)the need to ensure compliance with minimum standards by provision of effective means for investigation; and
xi)the need for specific and general deterrence.
Analysis of Penalty Factors
Factors:
a)The impugned conduct occurred over a relatively short period of time. It was limited to one employee whose employment was commenced in unusual circumstances, including his request for re-employment after his termination in Townsville, his request that his employer be responsible for arranging for and paying for his accommodation, and a lack of supervision leading to unintended non-compliance with Fair Work legislative requirements.
b)The impugned conduct referred to in a) above took place in the context of Mr McGrath, on behalf of Wok Me, helping Mr Wong out when he found himself unemployed and in some financial embarrassment. It was not a situation where an employee had been duped or lured, unsuspecting, into a pre-meditated trap. The breaches occurred more as an unintended unravelling of a stressed and declining business unable to make ends meet, rather than an intentional plan to take advantage of a defenceless employee.
c)Mr Wong no doubt experienced some anxiety associated with his underpayment but he has been compensated in full for his loss.
d)There was no evidence that Wok Me or Mr McGrath had previously contravened Fair Work legislative obligations. The Applicant sought, however, to introduce evidence of prior complaints having been made against companies of which Mr McGrath was a Director (by paragraph 40 of the affidavit of Lisa Rossow filed on 27 April 2018) in an attempt to invite the court to draw the inference that Wok Me and Mr McGrath were well familiar with their workplace obligations, and that the subject transgressions must therefore be viewed as having been deliberate. Further submissions were sought by the Court as to the admissibility of such evidence, in circumstances where the evidence went not to recording prior convictions against, or breaches of Fair Work legislation by, Mr McGrath or any companies with which he was, or had in the past, been associated, but rather to unsubstantiated complaints having been made against such companies.
e)A case erroneously referred to in purported support of such submissions – submitted as being supportive of the proposition that evidence of mere prior complaints made to the FWO were relevant to the assessment of penalty “insofar as they may shed light on the deliberateness of the contravening conduct and the need for specific and general deterrence” – was a decision of Judge Lucev in Fair Work Ombudsman v ACN 146 435 118 Pty Ltd (No.2) [2013] FCCA 1270 at [58]. Paragraphs [58] and [59] of the judgment of His Honour are of a different effect to the submission above, and are as follows:
[58] The FW Ombudsman suggested that the court may consider it appropriate to place some weight on matters associated with the Corporation and Ms Paino-Povey, and other entities of which Ms Paino-Povey’s husband (Mr Povey) and Ms Paino-Povey have been directors, which were said to demonstrate a significant history of past involvement with the FW Ombudsman, and on that basis it ought to be accepted that they were on notice of their obligations as employers and the potential consequences of a failure to comply. In that regard, the court notes that it is conduct relevant to the contraventions complained of which might go to the question of the circumstances in which the conduct took place, and might include for example, opportunities to remedy that conduct, or to make payment of underpayments, prior to, and during the course of, any proceedings instituted in respect of the contraventions which is relevant. As for other conduct of the directors and related entities which has not resulted in contravention findings, that conduct must be accorded very limited weight. That said, such conduct of directors and related entities may still be relevant for the purposes of the specific and general deterrence and deliberateness factors to be considered by the court in imposing penalty. It is to prior contraventions and conduct of respondents that the court must primarily look for the purposes of this factor, and not the investigative record of the regulator. The court must be careful not to impose sentence in respect of matters which have not, and may not, ever result in contravention proceedings, and which may not, in any event, constitute a contravention of the statute. Worse than that, it ought not contribute to an inappropriate over-zealousness on the part of the regulator if courts were to consider prior involvement with the regulator as a significant sentencing factor, except as it relates to the circumstances of the particular contraventions before the court.
[59] There is no evidence that either the Corporation or Ms Paino-Povey have a record of prior contraventions. They are entitled to be considered to be, and to be treated as, first time contraveners for penalty purposes. Ordinarily, that might entitle them to a significant discount on penalty.
The approach adopted by His Honour Judge Lucev is that which ought to be preferred to others where unsubstantiated complaints against individuals, or companies, have sought to be elevated to the level of adverse court findings. Submissions to the contrary advanced on behalf of the Applicant, if adopted, would impose inherently unfair burdens upon employers when defending civil penalty proceedings launched against them by the FWO, and would be apt to lead to miscarriages of justice.
It is also inappropriate and unfair for the FWO to seek to rely upon an affidavit (filed in late April 2018) which in part deposed to past unsubstantiated complaints against McGrath associated companies, where the subject contraventions had earlier been unconditionally admitted by Wok Me and Mr McGrath in a Statement of Agreed Facts executed by the parties in early April 2018.
Paragraph 40 of the affidavit of Ms Rossow falls into that category, and, in the interests of justice, ought not be admitted into evidence. It is inadmissible, pursuant to the provisions of s. 135(a) of the Evidence Act 1995 (Cth), on the ground that its admission would be “unfairly prejudicial” to the Respondents should it be before the Court for its consideration. That section relevantly provides as follows:
EVIDENCE ACT 1995 - SECT 135
General discretion to exclude evidence
The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might:
(a) be unfairly prejudicial to a party; or
(b) be misleading or confusing; or
(c) cause or result in undue waste of time.
f)The breaches were distinct and, though temporally associated, did not constitute a single course of conduct when viewed together.
g)The Rockhampton franchise of Wok Me was a small business which ultimately failed.
h)The breaches were not deliberate, but rather occurred in the context of a lack of punctilious supervision in a downwardly spiralling business enterprise.
i)Senior management, by Mr McGrath, was involved in negotiating the payment of Mr Wong’s accommodation, which was likely to have been the cause of the underpayments or non-payments. Mr McGrath was not predatory in doing so, and regrets his unusual departure from his usual business practice in that regard.
j)Mr McGrath impressed as someone truly sorry for the inconvenience caused to Mr Wong as well as for the occurrence of the breaches. He paid monies due to Mr Wong from his own funds in circumstances where the business of Wok Me had failed. He has admitted the breaches and has exhibited true contrition. He has co-operated with the Applicant.
k)There is an obvious need for companies to comply with minimum standards, both in relation to issues of pay as well as in respect of document keeping. The non-compliance in this case was an unfortunate aberration.
l)To the extent necessary, the penalty must deter others from breaching legislative provisions, whilst at the same time recognising that perfect compliance is, even in the most regulated of employment environments, unattainable.
Deliberateness
It was submitted on behalf of the Applicant that deliberateness ought to be inferred because of what has now been ruled inadmissible. There is accordingly no force in such submission. Wok Me and Mr McGrath ought to be treated as “first offenders”.
Co-operation
It is apparent from the agreed relief, as set out in paragraphs 61 – 67 inclusive of the Statement of Agreed Facts that the Respondents have consented to orders whereby they are to facilitate audits and undertake education courses for employers where best business and compliance practices are taught. Mr McGrath is a well-known businessman whose reputation has already suffered by reason of the release of a Fair Work Ombudsman media release dated 15 December 2017 concerning the underpayment of Mr Wong, and of the other breaches the subject of the Application. The Wok Me business was, like Mr McGrath, named, and has suffered reputational damage thereby.
There should be substantial discounting of any penalty due to the accepted contrition on the part of Mr McGrath as well as the admissions having been made and recorded in the Statement of Agreed Facts. The discount should be one which reflects a “one off” infraction.
Penalty
The breaches do not warrant the imposition of harsh penalties. The infringements occurred in circumstances where evident human error, though misplaced, gave rise to a regrettable underpayment of a worker who was subsequently paid all of his entitlements.
The breaches were not “serious” contraventions as provided for in s. 557A of the FWA. The breaches occurred in a context where insufficient attention was paid to detail in a business suffering an economic downturn. There was neither a knowing contravention of the provisions of the Act, nor circumstances which would either singly or cumulatively constitute a systematic pattern of conduct as set out in s. 557A(2) of the FWA.
The penalties ought to be looked at in accordance with the totality principle. Penalties ordered should be proportionate to the factual context in which the breaches occurred. The range of penalties submitted as being appropriate by the Applicant are disproportionate to the facts as found by the court in respect of the subject breaches. Penalties are accordingly imposed, in accordance with the admitted contraventions as set out in paragraph 10. above, as follows:
Wok Me
Provision
Contravention
Maximum Penalty
Range of Penalty
Total Penalty including discount of 20%
s.323(1) FWA
Underpaid ordinary hours
$54,000
20%
$8,640
s.323(1) FWA
Unpaid ordinary hours
$54,000
20%
$8,640
s.45 FWA
Unpaid overtime
$54,000
20%
$8,640
s.44(1) FWA
Unpaid annual leave entitlements
$54,000
20%
$8,640
s.535(1) FWA
Failure to keep overtime records
$27,000
20%
$4,320
s.536(2) FWA
Failure to record on payslip relevant superannuation fund details
$27,000
20%
$4,320
s.44(1) FWA
Failure to provide FWIS
$54,000
20%
$8,640
s.45 FWA
Failure to pay superannuation
$54,000
20%
$8,640
Total
$60,480
McGrath Accessorial Penalty
Provision
Contravention
Maximum Penalty
Range of Penalty
Total Penalty including discount of 20%
s.323(1) FWA
Underpaid ordinary hours
$10,800
20%
$1,728
s.323(1) FWA
Unpaid ordinary hours
$10,800
20%
$1,728
s.45 FWA
Unpaid overtime
$10,800
20%
$1,728
s.44(1) FWA
Unpaid annual leave entitlements
$10,800
20%
$1,728
s.535(1) FWA
Failure to keep overtime records
$5,400
20%
$864
s.536(2) FWA
Failure to record on payslip relevant superannuation fund details
$5,400
20%
$864
s.44(1) FWA
Failure to provide FWIS
$10,800
20%
$1,728
s.45 FWA
Failure to pay superannuation
$10,800
20%
$1,728
Total
$12,096
I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Judge Egan
Associate:
Date: 18 September 2018
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3
3