Fair Work Ombudsman v Wynn Sichuan Pty Ltd and Ors and Fair Work Ombudsman v Nine Dragons Pty Ltd and Ors
[2020] FCCA 1358
•29 May 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v WYNN SICHUAN PTY LTD & ORS and FAIR WORK OMBUDSMAN v NINE DRAGONS PTY LTD & ORS | [2020] FCCA 1358 |
| Catchwords: INDUSTRIAL LAW – Application under Fair Work Act 2009 – penalty hearing – failure to pay entitlements under Restaurant Industry Award 2010 – failure to provide payslips and keep records – where parties agree to penalty range – penalties imposed. |
| Legislation: Fair Work Act 2009 (Cth), ss.45 535(1), 536(2). 550(2) and 557(1). Fair Work Regulations 2009 (Cth), regs.3.33 and 3.34. |
| Cases cited: Kelly v Fitzpatrick [2007] FCA 1080 Fair Work Ombudsman v ACC Services (Aust) Pty Ltd T/as Rapid Pak & Anor [2017] FCCA 516 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | WYNN SICHUAN PTY LTD |
| Second Respondent: | YE SHAO |
| Third Respondent: | YIZHU DING |
| File Number: | MLG 1494 of 2017 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | NINE DRAGONS PTY LTD |
| Second Respondent: | YE SHAO |
| Third Respondent: | YIZHU DING |
| File Number: | MLG 1495 of 2017 |
| Judgment of: | Judge Riethmuller |
| Hearing date: | 6 December 2019 |
| Date of Last Submission: | 6 December 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 29 May 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms Knowles |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| Counsel for the First and Second Respondents: | Mr Rinaldi |
| Solicitors for the First and Second Respondents: | Thomson Geer |
| Counsel for the Third Respondent: | Mr McKenna |
| Solicitors for the Third Respondent: | Nevett Ford Lawyers |
ORDERS
IN PROCEEDINGS MLG 1494 of 2017
THE COURT DECLARES, BY CONSENT, THAT:
The First Respondent contravened the following civil remedy provisions:
(a)Section 45 of the Fair Work Act 2009 (Cth) (‘the Act’), by failing to pay Xiao Mei Sun, Li Yuen Voo, Sun Cheng Chow, Sook Kuan Lai, Lai Yi Theng, Sey Yow Teo, Wei Zhang, Soo Khee Teoh, Lai Yew Lam, Cheong Meng Goh, Da Huang, Di Wu, Yew Hoong Hoo, Chen Liong Tan, Eng Hua Liuk, Kin Kong Low and Jianying Lu (collectively, ‘the Employees’) the minimum rates of pay prescribed by clause 20.1 of the Restaurant Industry Award 2010 (‘the Award’);
(b)Section 45 of the Act by failing to pay Li Yuen Voo and Sin Cheng Chow the Saturday penalty rate as required by clause 34.1 of the Award;
(c)Section 45 of the Act, by failing to pay Li Yuen Voo the Sunday penalty rate as required by clause 34.1 of the Award;
(d)Section 45 of the Act, by failing to pay Xiao Mei Sun, Sun Cheng Chow, Sook Kuan Lai, Yi Theng and Cheong Meng Goh the public holiday penalty rate as required by clause 34.1 of the Award;
(e)Section 45 of the Act, by failing to pay Xiao Mei Sun, Li Yuen Voo, Sun Cheng Chow, Sook Kuan Lai, Lai Yi Theng, Sey Yow Teo, Wei Zhang, Sao Khee Teoh, Lai Yew Lam, Cheong Men Goh, Da Huang, Di Wu, Yew Hoon Hoo, Kin Kong Low and Jianying Lu 150% of the ordinary base rate of pay for the first two hours of overtime worked on a Monday to Friday, and/or 200% of the ordinary base rate of pay for the rest of the overtime worked on a Monday to Friday, as required by subclause 33.2 (a) of the Award;
(f)Section 45 of the Act, by failing to pay each of the Employees 175% of the ordinary base rate of pay for the first two hours of overtime worked between midnight Friday and midnight Saturday, and/or 200% of the ordinary base rate of pay for the rest of the overtime worked between midnight Friday and midnight Saturday, as required by subclause 33.2 (b) of the Award;
(g)Section 45 of the Act, by failing to pay each of the Employees 200% of the ordinary base rate of pay for all time worked between midnight Saturday and midnight Sunday, as required by subclause 33.2 (c) of the Award;
(h)Subsection 535(1) of the Act, by failing to keep records pursuant to regulation 3.33 and regulation 3.34 of the Fair Work Regulations 2009 (Cth) (‘the Regulations’) that it was required to keep under the Act and the Regulations for 7 years; and
(i)Subsection 536(2) of the Act, by failing to ensure that payslips that it gave to each of the Employees included information prescribed by regulation 3.46 of the Regulations.
The Second Respondent was involved, within the meaning of subsection 550(2) of the Act, in the contraventions committed by the First Respondent as set out in subparagraphs 1 (a) to 1 (g) above.
The Third Respondent was involved, within the meaning of subsection 550(2) of the Act, in the contraventions committed by the First Respondent as set out in paragraph 1 above.
THE COURT ORDERS, BY CONSENT, THAT:
The First Respondent pay a total penalty of $95,000 pursuant to subsection 546(1) of the Act for its contraventions set out in paragraph 1 above.
The Second Respondent pay a total penalty of $8,000 pursuant to subsection 546(1) of the Act for his involvement in the contraventions set out in subparagraphs 1 (a) to 1 (g) above.
The Third Respondent pay a total penalty of $6,000 pursuant to subsection 546(1) of the Act for her involvement in the contraventions set out in paragraph 1 above.
The parties have liberty to apply on seven days' notice.
THE COURT ORDERS THAT:
The First Respondent, Second Respondent and Third Respondent, pursuant to subsection 546(3)(a) of the Act, pay their respective penalty amounts to the Consolidated Revenue Fund of the Commonwealth within 60 days of the Court's order.
IN PROCEEDINGS MLG 1495 of 2017
THE COURT DECLARES, BY CONSENT, THAT:
The First Respondent contravened the following civil remedy provisions:
(a)Section 45 of the Fair Work Act 2009 (Cth) (‘the Act’), by failing to pay Bingjie Zhang, Su Boon Tan, Min Cai, Qiu Ye Zhang, Wei Ling Ng, Kuin Hian Pang, Genie Guan, Chia Yi Wu, Kok Wai Seow, Wai Hoe Leong, Chin Hao Toh, Kien Keat Wong and Juan Hong Lim (collectively, the Employees) the minimum rates of pay prescribed by clause 20.1 of the Restaurant Industry Award 2010 (‘the Award’);
(b)Section 45 of the Act by failing to pay Bingjie Zhang and Genie Guan the Saturday penalty rate as required by clause 34.1 of the Award;
(c)Section 45 of the Act, by failing to pay Su Boon Tan, Min Cai, Qiu Ye Zhang, Wei Ling Ng, Kuin Hian Pang and Genie Guan the public holiday penalty rate as required by clause 34.1 of the Award;
(d)Section 45 of the Act, by failing to pay Min Cai, Qiu Ye Zhang, Wei Ling Ng, Kuin Hian Pang, Chia Yi Wu, Kok Wai Seow, Wai Hoe Leong, Chin Hao Toh, Kien Keat Wong and Juan Hong Lim 150% of the ordinary base rate of pay for the first two hours of overtime worked on a Monday to Friday, and/or 200% of the ordinary base rate of pay for the rest of the overtime worked on a Monday to Friday, as required subclause 33.2(a) of the Award;
(e)Section 45 of the Act, by failing to pay Wei Ling Ng, Kiun Hian Pang, Genie Guan, Chia Yi Wu, Kok Wai Seow, Wai Hoe Leong, Chin Hao Toh, Kien Keat Wong and Juan Hong Lim 175% of the ordinary base rate of pay for the first two hours of overtime worked between midnight Friday and midnight Saturday, and 200% of the ordinary base rate of pay for the rest of the overtime worked between midnight Friday and midnight Saturday, as required by subclause 33.2(b) of the Award;
(f)Section 45 of the Act, by failing to pay Wei Ling Ng, Kuin Hian Pang, Genie Guan, Chia Yi Wu, Kok Wai Seow, Wai Hoe Leong, Chin Hao Toh, Kien Keat Wong and Juan Hong Lim 200% of the ordinary base rate of pay for all time worked between midnight Saturday and midnight Sunday, as required subclause 33.2(c) of the Award;
(g)Subsection 535(1) of the Act, by failing to keep records pursuant to regulation 3.33 and regulation 3.34 of the Fair Work Regulations 2009 (Cth) (‘the Regulations’) that it was required to keep under the Act and the Regulations for 7 years; and
(h)Subsection 536(2) of the Act, by failing to ensure that payslips that it gave to each of the Employees included information prescribed by regulation 3.46 of the Regulations;
The Second Respondent was involved, within the meaning of subsection 550(2) of the Act, in the contraventions committed by the First Respondent as set out in subparagraphs 1 (a) to 1 (f) above.
The Third Respondent was involved, within the meaning of subsection 550(2) of the Act, in the contraventions committed by the First Respondent as set out in paragraph 1 above.
THE COURT ORDERS, BY CONSENT, THAT:
The First Respondent pay a total penalty of $88,000 pursuant to subsection 546(1) of the Act for its contraventions set out in paragraph 1 above.
The Second Respondent pay a total penalty of $7,000 pursuant to subsection 546(1) of the Act for his involvement in the contraventions set out in subparagraphs 1 (a) to 1 (f) above.
The Third Respondent pay a total penalty of $5,000 pursuant to subsection 546(1) of the Act for her involvement in the contraventions set out in paragraph 1 above.
The parties have liberty to apply on seven days' notice.
THE COURT ORDERS THAT:
The First Respondent, Second Respondent and Third Respondent, pursuant to subsection 546(3)(a) of the Act, pay their respective penalty amounts to the Consolidated Revenue Fund of the Commonwealth within 60 days of the Court's order.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1494 of 2017
| FAIR WORK OMBUDSMAN |
Applicant
And
| WYNN SICHUAN PTY LTD |
First Respondent
| YE SHAO |
Second Respondent
| YIZHU DING |
Third Respondent
MLG 1495 of 2017
| FAIR WORK OMBUDSMAN |
Applicant
And
| NINE DRAGONS PTY LTD |
First Respondent
| YE SHAO |
Second Respondent
| YIZHU DING |
Third Respondent
REASONS FOR JUDGMENT
Overview
This matters comes before the Court as a result of applications filed 12 July 2017 by the Fair Work Ombudsman seeking declarations and penalties against the respective first respondents, Nine Dragons Pty Ltd and Wynn Sichuan Pty Ltd. The second respondent, Mr Ye Shao and the third respondent Ms Yizhu (Jessica) Ding are the same in each proceeding. Mr Shao is the sole director of the first respondents and Ms Ding is employed by Wynn Sichuan Pty Ltd and worked in the accounts department at the head office and was responsible for payroll.
The respondents have admitted to various contraventions of the Fair Work Act 2009 (Cth), the Fair Work Regulations 2009 (Cth) and the Restaurant Industry Award 2010 (‘the Award’).
The parties have reached agreement as to the groupings and penalty range, which I have accepted. The remaining issue for the Court is to determine the appropriate penalty to be imposed.
Background
The first respondents both operate Asian cuisine restaurants in and around Melbourne. In mid-2016, as part of a joint taskforce with the Department of Immigration & Border Protection (as it then was), the applicant commenced an investigation into the first respondent’s compliance with workplace laws. An officer of the applicant conducted site visits on 23 June 2016, spoke to employees, and subsequently issued Notices to Produce Records or Documents for a two week period from 13 June 2016 to 26 June 2016. The applicant concluded that the first respondents had contravened the Award by failing to pay its employees the correct rate of pay and had further contravened its record keeping obligations.
The Nine Dragons Pty Ltd contraventions involve 13 employees who worked in the day to day running of the restaurant, in the kitchen and front of house. Those employees were paid an hourly flat rate, irrespective of the times and days of their shift. The total underpayment was $12,805.10.
The Wynn Sichuan Pty Ltd contraventions involve 17 employers engaged in the same duties who were also paid a flat hourly rate. The assessment period was also from 13 June 2016 to 26 June 2016. The total underpayment was $18,189.96.
Statement of Agreed Facts
Nine Dragons Pty Ltd
The applicant and Nine Dragons Pty Ltd entered into a Statement of Agreed Facts on 21 September 2017, and filed an Amended Statement of Agreed Facts on 21 March 2019. It is agreed that Nine Dragons Pty Ltd contravened:
a)Section 45 of the Act, by failing to pay 13 employees the minimum rates of pay as required by cl.20.1 of the Award;
b)Section 45 of the Act, by failing to pay 2 employees the Saturday penalty rate as required by cl.34.1 of the Award;
c)Section 45 of the Act, by failing to pay 6 employees the public holiday penalty rate as required by cl.34.1 of the Award;
d)Section 45 of the Act, by failing to pay 10 employees the Initial Weekday Overtime and 9 employees the Weekday Overtime Thereafter as required by sub-cl.33.2(a) of the Award;
e)Section 45 of the Act, by failing to pay 9 employees the Initial Saturday Overtime and Saturday Overtime Thereafter as required by sub-cl.33.2(b) of the Award;
f)Section 45 of the Act, by failing to pay 9 employees the Sunday Overtime as required by sub-cl.33.2(c) of the Award;
g)Subsection 535(1) of the Act, by failing to keep records pursuant to regs.3.33 and 3.34 of the Regulations that it was required to keep under the Act and the Regulations for 7 years; and
h)Subsection 536(2) of the Act, by failing to ensure that payslips that it gave to all 13 employees included information prescribed by the Regulations.
The employees affected were both part time and full time employees and were classified as either Food and Beverage Attendants (performing duties of wait staff, collecting glasses, plates, cutlery, and setting and cleaning tables) or Kitchen Attendants (performing duties of preparing food and cooking and general cleaning duties). They were paid flat hourly rates of between $10 per hour and $16.67 per hour.
Wynn Sichuan Pty Ltd
The applicant and Wynn Sichuan Pty Ltd entered into a Statement of Agreed Facts on 21 September 2017, and filed an Amended Statement of Agreed Facts on 21 March 2019. It is agreed that Wynn Sichuan Pty Ltd contravened:
a)Section 45 of the Act, by failing to pay 17 employees the minimum rates of pay as required by cl.20.1 of the Award;
b)Section 45 of the Act, by failing to pay 2 employees the Saturday penalty rate as required by cl.34.1 of the Award;
c)Section 45 of the Act, by failing to pay 1 employee the Sunday penalty rate as required by cl.34.1 of the Award;
d)Section 45 of the Act, by failing to pay 5 employees the public holiday penalty rate as required by cl.34.1 of the Award;
e)Section 45 of the Act, by failing to pay 15 employees overtime worked on a Monday to Friday as required by sub-cl.33.2(a) of the Award;
f)Section 45 of the Act, by failing to pay 17 employees overtime worked between midnight Friday and midnight Saturday as required by sub-cl.33.2(b) of the Award;
g)Section 45 of the Act, by failing to pay the 17 employees 200& of the ordinary base rate between midnight Saturday and midnight Sunday as required by sub-cl.33.2(c) of the Award;
h)Subsection 535(1) of the Act, by failing to keep records pursuant to regs.3.33 and 3.34 of the Regulations that it was required to keep under the Act and the Regulations for 7 years; and
i)Subsection 536(2) of the Act, by failing to ensure that payslips that it gave to all 13 employees included information prescribed by the Regulations.
The employees were full time employees of Wynn Sichuan. They were paid flat hourly rates between $12.50 per hour and $23.33 per hour.
The Second Respondent
The applicant and the second respondent, Mr Shao entered into a Statement of Agreed Facts on 24 May 2018, and filed an Amended Statement of Agreed Facts on 21 March 2019. It is agreed that Mr Shao was at all relevant times the sole director of the first respondents. Mr Shao was responsible for the “overall direction, management and supervision” of the restaurants operations, including “determining wages and conditions of employment” and “setting pay rates for the kitchen and front of house staff”: see paragraph [5(f)].
Mr Shao was aware of the nature of the work at the restaurants, including the duties performed by the employees, and the fact that the restaurants were open weekends and public holidays. Mr Shao was also aware of the pay roll and record keepings processes at each of the restaurants: see paragraph [5(g)].
It is agreed that, in accordance with s.550(2) of the Act, Mr Shao was involved in the admitted contraventions of each of the first respondents.
The Third Respondent
The applicant and the third respondent, Ms Ding entered into a Statement of Agreed Facts in each of the proceedings on 3 May 2018. The third respondent is an employee of Wynn Sichuan Pty Ltd who worked in the accounts department. She holds a post graduate qualification in accounting, however, was not a registered accountant. In her Affidavit, Ms Ding states that in 2012 she commenced the Certified Public Accountant (‘CPA’) program but has not completed it.
Ms Ding was responsible for a number of duties concerning payroll, including “receiving timesheets”, “reviewing payslips”, “creating, reviewing and maintaining employee records”, and processing wages: see paragraph [5].
It is agreed that Ms Ding was aware of the nature of the duties performed by the employees, the opening hours of the restaurants, including weekends and public holidays, the status of the employees and that pay slips ought to be provided.
It is also agreed Ms Ding was aware of the Award applicable and the role of the applicant in providing assistance on pay and conditions.
It is agreed that, in accordance with s.550(2) of the Act, Ms Ding was involved in the admitted contraventions of each of the first respondents.
Groupings
In accordance with s.557(1) of the Act, the parties agree to group the contraventions for failing to pay overtime as required by cl.33.2 of the Award into a single contravention. I accept the parties’ submissions on the conduct and common elements of the contraventions and do not propose to alter the proposed groupings.
The maximum penalties applicable in each matter for the contraventions are therefore as follows:
Nine Dragons Pty Ltd
Contravention
First Respondent
Second Respondent
Third Respondent
Failure to pay minimum rate of pay
$54,000
$10,800
$10,800
Failure to pay Saturday penalty loading
$54,000
$10,800
$10,800
Failure to pay public holiday penalty loading
$54,000
$10,800
$10,800
Failure to pay overtime
$54,000
$10,800
$10,800
Fail to keep records
$27,000
$5,400
Fail to provide pay slips
$27,000
$5,400
Total
$270,000
$43,200
$54,800
Wynn Sichuan Pty Ltd
Contravention
First Respondent
Second Respondent
Third Respondent
Failure to pay minimum rate of pay
$54,000
$10,800
$10,800
Failure to pay Saturday penalty loadings
$54,000
$10,800
$10,800
Failure to pay Sunday penalty loadings
$54,000
$10,800
$10,800
Failure to pay public holiday penalty loading
$54,000
$10,800
$10,800
Failure to pay overtime
$54,000
$10,800
$10,800
Failure to keep records
$27,000
$5,400
Failure to provide pay slips
$27,000
$5,400
Total
$324,000
$54,000
$64,800
The parties agree to a discount of 15 percent to the first respondents and a 10 per cent discount to the second and third respondents reflecting their cooperation.
The agreements between the parties result in an agreed penalty range as follows:
a)$88,000 to $105,000 for Nine Dragons;
b)$88,000 to $105,000 for Wynn Sichuan;
c)$10,000 to $15,000 in each proceeding for the second respondent; and
d)$10,000 to $15,000 in each proceeding for the third respondent.
Consideration of relevant factors
The parties acknowledged that even with proposed penalty ranges submitted by the parties, the Court must still be satisfied the penalties are appropriate. There are a number of factors the Court should consider in determining an appropriate penalty, as referred to in Kelly v Fitzpatrick [2007] FCA 1080. The principles are not in dispute. I turn now to consider the relevant factors.
The nature and extent of the conduct which led to the breaches and the circumstances in which that conduct took place
The contraventions that come before the Court arose out of an assessment period of two weeks in June 2016, in which 30 employees of the first respondents were underpaid an amount totalling nearly $31,000 (between the two first respondents) during that period. It is important to base penalty amounts for the first respondent’s only on the amount involved in their respective cases. The second and third respondents, however, were involved in both cases.
The applicant submits that the nature of the conduct is significant as it accrued over a very short period of time: see paragraph [36] of Applicant’s submission on Penalty. In this context it is remarkable that a greater period would not have been investigated by the applicant to establish whether it was a lapse for a short period, or a course of conduct. In the absence of a more detailed investigation the evidence only supports a finding of misconduct for a period of 2 weeks.
The nature of the first respondent’s businesses in providing traditional Chinese cuisine, employed a ‘large proportion’ of restaurant staff who were visa holders and who spoke Mandarin as their primary language. Employees with these backgrounds are in a particularly vulnerable position, and that is a factor to which I give significant weight. The contraventions came out of an investigation by the applicant and not by any complaint from an employee, which the applicant notes may infer the employees were either ‘reluctant to complain’ or ‘unfamiliar’ with their entitlements: see paragraph [41]. I accept this submission.
The nature and extent of any loss or damage sustained as a result of the breaches
The result of the breaches was that a large number of employees were underpaid a significant amount in a short period of time. The employees were all the subject of visas, predominantly student visas and would be relying upon their income. Furthermore, while the payments have been rectified, one employee of Nine Dragons and three employees of Wynn Sichuan were unable to be located, as they appear to have returned overseas. The consequences of the failure to pay their correct rate at the time has resulted in them realistically not ever being properly compensated for their work.
Whether there had been similar previous conduct by the respondent
Despite a finding of approximately $30,000 in under payments over a two week period (between both first respondents), no further detailed audit of the first respondent’s records for a lengthier period of time prior to the taskforce was conducted. The applicant submits it was a strategic decision based on a lack of witnesses and due to the nature of the immigration department taskforce. There is no evidence of any previous conduct and I can only proceed on the basis of the two week period of breaches admitted.
I note a further audit was conducted for a period in November 2016, at which no contraventions were identified.
The second respondent submits that consideration should be given to a penalty in the lower range of the agreed proposal given that the respondents have, “not previously contravened workplace laws and their post-contravention conduct is meritorious”: see paragraph [25] of second respondent’s penalty submissions.
Whether the breaches were properly distinct or arose out of the one course of conduct
As discussed above, the parties have agreed that the contraventions relating to the underpayment of overtime arose out of one course of conduct and accordingly have been grouped as a single contravention. I accept those submissions.
Given the limited period of which the audit was conducted, it is difficult to determine that there was a course of conduct involved.
The size of the business enterprise involved
The first respondents are part of the ‘Dainty Sichuan Group’ which operates twelve restaurants.
Counsel for the first and second respondents made submissions that the restaurants have suffered a down turn, however, conceded that no evidence has been put forward in relation to the financial capacity of the first respondents or the second respondent.
In her Affidavit, the third respondent annexes her payment summary for the financial year ending June 2016, where she earned $55,729 in her employment with Wynn Sichuan Pty Ltd.
Whether or not the breaches were deliberate
Mr Shao, as the sole director was responsible for overall management of the first respondents, including setting wages. He submits that he relied upon the accounts department to pay appropriate rates and maintain records, but accepts responsibility for the breaches: see paragraph [6] of first and second respondent’s submissions.
Ms Ding agrees she had knowledge that there was an applicable award and in her duties she was aware of what the employees were getting paid, however Counsel for the third respondent submits it can be taken no higher than that and there is no admitted fact of Ms Ding being aware of or involved in a deliberate breach.
Whether senior management was involved in the breaches
As discussed, the second respondent is the sole director of the first respondents and operates both restaurants involved.
The third respondent has no financial or familial connection to the first and second respondents. She was one of four people employed within the accounts department at the Head Office. The third respondent submits that her involvement should be taken to be minimal and she was not a ‘managerial employee’. I find that the evidence of the third respondent on her involvement in the breaches is lacking detail and remarkably thin.
Whether the party committing the breach had exhibited contrition
Both the second respondent and third respondent have expressed contrition. At paragraph [22] of his Affidavit, Mr Shao states, “I am deeply sorry that the relevant contraventions occurred”. Further, in her Affidavit, Ms Ding states (at paragraph [12]) “I regret that employees of Wynn Sichuan and Nine Dragons were underpaid. I feel bad for them”. It is further submitted that Ms Ding’s admission of liability reflects her contrition.
Whether the party committing the breach had taken corrective action
The purpose of the regulatory authorities and of the legislation is to ensure employees get paid and at the correct rates with the correct entitlements. In this matter it is important to note that the underpayments were rectified prior to these proceedings commencing. Rectification is a significant factor and should be given real weight in assessing penalties.
In May 2017, the underpayments were rectified to 14 of the 17 employees of Wynn Sichuan Pty Ltd and 12 of the 13 employees of Nine Dragons Pty Ltd. The remaining employees were unable to be contacted, as they had returned overseas: see Shao Affidavit at paragraph [19]. In August 2017 the remaining underpayments were made to the applicant as unclaimed monies.
At the hearing, the issue of whether superannuation has been paid was raised and the second respondent submitted that at the time the underpayments were rectified, superannuation payments were also made to the employees known. There remains three employees whose whereabouts remain unknown and there is no evidence superannuation was made.
Whether the party committing the breach had cooperated with the enforcement authorities
The applicant accepts that the respondents have cooperated throughout the investigation and proceedings. The second respondent deposes to his cooperation with the applicant in responding to the Notices to Produce Records and Documents, as well as attending for interviews and face to face meetings.
The applicant submits that the respondents made early admissions and rectified the underpayments. Upon proceedings commencing, the parties attend mediation, following which Statements of Agreed Facts were entered into.
The applicant submits that Defences were filed denying liability and it was not until almost a year later that the parties entered into Statement of Agreed Facts. The respondents however submit that the filing of Defences in the proceedings should not be held as a factor against them or be considered as a denial.
The parties all agree that there has been cooperation and discounts should apply.
The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements
The applicant submits that compliance with minimum standards is a principle object of the Act and the failure to meets those standards deprives employees of that safety net: see paragraph [53] of the applicant’s submissions. Further, the failing to keep records contraventions result in difficulties in the regulators monitoring and enforcing compliance.
The second respondent submits generally that positive steps have been taken to ensure compliance, saying (at paragraph [23] of the Shao Affidavit), “I have also taken steps to ensure there will be no future contraventions by setting up systems within the workplace to ensure compliance”.
The third respondent Ms Ding, goes further to advise the respondents have engaged the services of an employee relations company. Ms Ding states (at paragraph [14]):
Since the investigation by the FWO, Wynn Sichuan is now a member of Employer Relations Strategies Pty Ltd (“ER Strategies”). ER Strategies provide updates about minimum wages and other award entitlements. When this happens, I work with Ye Shao to ensure that all employees receive their full entitlements”.
The need for specific and general deterrence
The applicant submits that general deterrence is a significant factor within the restaurant industry, particularly in circumstances where employees are vulnerable because of their “visa status, limited education and limited English skills”: see paragraph [26] of applicant’s submissions. Twenty four of the thirty employees underpaid in these proceedings were the subject of student visas. The applicant submits that the café and restaurant industry account for the highest proportion of disputes with visa workers and general deterrence is an important factor within those industries. I accept the submission, even though the limited investigation does not appear to reflect the seriousness of the issues (as was also the situation in Fair Work Ombudsman v ACC Services (Aust) Pty Ltd T/as Rapid Pak & Anor [2017] FCCA 516).
In relation to specific deterrence, the applicant submits that the second respondent remains the sole director of twelve restaurants under the Dainty Sichuan Group and Ms Ding remains employed in the accounts department
The respondents recognise the need for general and specific deterrence and submit that this was achieved through the media release issued by the applicant.
The media release
On 17 July 2017, the applicant issued a media release in relation to the proceedings: see Annexure ‘YS-5’ to the Shao Affidavit. The media release names all of the respondents and outlines the underpayments of the employees, noting their vulnerability as overseas works on visas.
The applicant submits that the media release is within the scope of the policy of the applicant as a regulator and as a means of providing general deterrence in the restaurant industry. The applicant argues the media release was fair and accurate and was positive for the respondents in noting the companies had commenced back paying employees. The applicant argued that the media release was a consequence of breaching workplace laws.
The first and second respondents submit that the media release resulted in further negative media coverage, with articles appearing in national newspapers and restaurant and business publications, including in Mandarin: see paragraph [25] of the Shao Affidavit and Annexure ‘YS-6’.
The impact of adverse publicity can be significant on businesses such as those run by the first respondents. As I accepted in Fair Work Ombudsman v Finn Fish Pty Ltd & Anor [2018] FCCA 203 the relevant principles appear to be that:
a)It is not inappropriate for a regulator to publicise enforcement of the law, including prosecutions, as this has an impact on the behaviour of others who may be tempted to breach their obligations: see Fair Work Ombudsman v Cleaners New South Wales Pty Ltd[2009] FMCA 683; (2009) 186 IR 467 at 476-477; Cousins v Merringtons Pty Ltd (No 2)[2008] VSC 340 at [63]-[64] (‘Cousins case’); Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832.
b)Embarrassment as a result of publicity about wrongdoing is an almost inevitable result of the conduct and is not usually relevant to penalty: see Eva v Southern Motors Box Hill Pty Ltd [1977] FCA 2; (1977) 30 FLR 213 at 222 (‘Eva case’); Trade Practices Commission v Cue Design Pty Ltd and Cue and Co Pty Ltd[1996] FCA 1343 at [23] (‘Cue case’); Fair Work Ombudsman v Symes[2013] FMCA 38 at [28].
c)Unfair or inaccurate reporting caused by the regulator may be taken into account to avoid the risk of additional punishment as a result of the inaccurate reporting: see the Eva Case; Cue Case at [25]; and Cousins case at [63].
The first and second respondents rely on the decision of Judge McNab in Fair Work Ombudsman v The Meatball And Wine Bar Pty Ltd [2018] FCCA 2288, where his Honour stated (at paragraph [52]) that he did “not see a substantial role for general deterrence in circumstances where there has been significant negative publicity….” However, McNab J explains (at paragraph [29]) that the publicity reported that, ‘deliberate breaches’ had occurred, however, it was not accepted by the court that breaches were deliberate. Thus the publicity was ‘adverse’ in that it was based upon aggravating conduct that was not accepted by the court, in the context where the respondent’s property had been subject to criminal damage soon after the ‘adverse’ publicity. I am not persuaded that this case departs from the general principles, nor that it assists the respondents in these proceedings.
The media certainly used colourful headlines such as “blatant exploitation”, and “dodgy businesses”, however this is how the conduct is likely to have be seen by many members of the community and does not change the fact that the press releases of the regulator were accurate.
Counsel for the third respondent submits that Ms Ding has suffered reputational damage by being named in the media release: see paragraph [18] of the third respondent’s submissions on penalty. At paragraph [15] of her Affidavit, Ms Ding says she was immediately contacted by CPA Australia seeking confirmation as to whether she was the person named in the media release. The third respondent has put her studies on hold and is concerned her involvement in the breaches may affect her future. Conduct of the type engaged in by Ms Ding is antithetical to the qualities that are expected of CPA’s and therefore this conduct is likely to impede her career. I have reflected upon the fact that the second respondent does not appear to have had any interest in the businesses and was receiving only a salary. However, she was a well-educated woman pursuing a respected professional qualification. She does not allege that she was overborne.
In the media reports there is mention of a contribution of $80,000 made by the Dainty Sichuan Group to a political campaign. While the contribution was said to be a smaller amount, it demonstrates that this conduct was not due to lack of funds: employees were being underpaid while contributions were being made to a political campaign.
Conclusion
In considering the circumstances as a whole, I find that the penalties for both first respondents should fall in the lower end of the agreed range, particularly having regard to the fact that they have rectified the underpayments. The second respondent was the controlling mind of the companies and should bear significant responsibility, such that the upper end of the range is appropriate for his penalty. The penalty for the third respondent must reflect conduct similar to that of the second respondent, but with key differences in that she does not have a financial interest in the businesses, was not the company director and is likely to suffer an impediment to her career path, at least if she attempts to become a CPA. I therefore place her penalty in the lower end of the range.
The applicant seeks for the penalties to be paid within 28 days, whereas the first and second respondents initially sought 180 days in their submission. Counsel advised at the hearing that they now sought 90 days. I am normally inclined towards the proposition of 60 days, as it allows a reasonable time for financial arrangements, if they require assistance of a financier; and find that a penalty should be paid at the first reasonable opportunity. There is no evidence to show that the penalty could not be met within 60 days.
Accordingly, I make the declarations as set by consent, and for the respondents to pay penalties as follows:
a)In proceedings MLG1494/2017:
i)$95.000 for the first respondent, Wynn Sichuan Pty Ltd;
ii)$8,000 for the second respondent; and
iii)$6,000 for the third respondent.
b)In proceedings MLG1495/2017:
i)$88,000 for the first respondent, Nine Dragons Pty Ltd;
ii)$7,000 for the second respondent; and
iii)$5,000 for the third respondent.
I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller
Associate:
Date: 29 May 2020
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