Fair Work Ombudsman v Yarraville Business Pty Ltd (No 2)
[2024] FedCFamC2G 830
•12 September 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Yarraville Business Pty Ltd (No 2) [2024] FedCFamC2G 830
File number(s): MLG 360 of 2022 Judgment of: JUDGE MANSINI Date of judgment: 12 September 2024 Catchwords: INDUSTRIAL LAW – FAIR WORK – contravention of a statutory compliance notice – application for relief – non-participation of Respondent in relation to question of appropriate relief – whether an order under s.545(1) requiring compliance with a statutory compliance notice is an order in relation to an underpayment for purposes of the time limitation at s.545(5) and whether appropriate to order interest on an amount owed under s.547 – application granted, with orders that the Respondent must comply with the statutory compliance notice and pay a pecuniary penalty. Legislation: Fair Work Act 2009 (Cth) ss. 535, 545, 546, 547, 716
Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr. 13.06.
Banking, Finance and Insurance Award 2010
Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
CFMMEU v ABCC [2018] FCAFC 97
Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Trade Practices Commission v CSR Ltd (1991) ATPR 41-076
Division: Division 2 General Federal Law Number of paragraphs: 35 Date of last submission/s: 11 September 2024 Date of hearing: 24 April 2024 Place: Melbourne Counsel for the Applicant: Ms Campbell Solicitor for the Applicant: Australian Government Solicitor The Respondent: No appearance ORDERS
MLG 360 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: YARRAVILLE BUSINESS PTY LTD
Respondent
ORDER MADE BY:
JUDGE MANSINI
DATE OF ORDER:
12 SEPTEMBER 2024
For the Respondent’s contravention of s.716(5) of the Fair Work Act 2009 (Cth) (the Act) as declared on 24 November 2023,
THE COURT ORDERS THAT:
1.Pursuant to s.545(1) of the Act, within 120 days of this order, the Respondent is required to take the steps that were required to comply with the statutory compliance notice dated 22 July 2021 (the Notice) as specified on the Notice, subject only to the following:
(a)The Notice is not taken to require calculations to be prepared for or payment that relates to the day of 30 April 2018; and
(b)The Notice is taken to require calculations to be prepared for and payment of any outstanding entitlements to Mr Lawrence Pinto limited to the period 21 February 2016 to 21 February 2022.
2.Pursuant to s.546(1) of the Act, within 60 days of this order, the Respondent is to pay to the Commonwealth a pecuniary penalty in the amount of $16,000.
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 MANSINI
IN SUMMARY
For the reasons delivered on 24 November 2023, it was declared that the Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (Act) by its failure to comply with a statutory compliance notice.
The Respondent did not participate in a further directions hearing and did not file any further materials in relation to relief as ordered or at all. Being satisfied that the Respondent was on notice of the fact of the proceedings and afforded ample opportunity to participate, the question of relief proceeded to be heard in default of the Respondent pursuant to r.13.06(e) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
These reasons address the remaining questions as to the appropriate relief to be ordered for the Respondent’s declared contravention.
APPLICATION BEFORE THE COURT
The relevant context to the application is set out in the reasons of 24 November 2023 and is not repeated here. For those reasons, the Respondent was declared to have contravened s.716(5) by its failure to comply with a statutory compliance notice dated 22 July 2021.
The primary relief sought by the FWO for the Respondent’s declared contravention of s.716(5) was:
(a)An order requiring the Respondent to comply with the statutory compliance notice dated 22 July 2021, with any payment of outstanding entitlements owed to include an amount for interest calculated at the pre-judgement rate; and
(b)Imposition of a pecuniary penalty on the Respondent in the range of $23,310 to $26,640.
I turn to consider the precise relief sought.
Orders requiring compliance with the notice
The FWO sought orders of the Court directed at requiring compliance with the statutory compliance notice as follows:
(a)Pursuant to s.545(1):
(i)An order requiring the Respondent to calculate and pay to a former employee (a Mr Lawrence Pinto) any outstanding entitlements plus superannuation that it was required to pay to him, in respect of contraventions that were set out in the statutory compliance notice (excluding a single day of 30 April 2018) (first proposed order);
(ii)An order requiring the Respondent to prepare and produce a schedule outlining the calculations made in accordance with the first proposed order (second proposed order); and
(iii)An order requiring the Respondent to provide evidence to the FWO of compliance with the first and second proposed orders (third proposed order).
(b)Pursuant to s.547(2), an order that the Respondent pay interest calculated in accordance with pre-judgement rates prescribed by the Federal Court of Australia on any outstanding entitlements amount to be paid pursuant to the first proposed order (fourth proposed order).
Section 545(1) of the Act contains a broad discretionary power for the Court to make any order it considers appropriate if the Court is satisfied that a person has contravened a civil remedy provision. As explained in the reasons of 24 November 2023, that state of satisfaction exists. In passing the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) (operative since 27 February 2024), the legislature has quite recently clarified that the type of remedial order the Court may make under s.545(1) includes that which requires a person to comply, either wholly or partly, with a notice (other than an infringement notice) given to the person by an inspector or the Fair Work Ombudsman: s.545(2)(d). There is also a time limitation such that a court must not make an order under s.545 in relation to an underpayment that relates to a period that is more than 6 years before the proceedings concerned commenced: s.545(5).
Section 547 of the Act provides that, in making an order in relation to an amount that a person was required to pay to, or on behalf of, another person under the Act or a fair work instrument (other than a pecuniary penalty), the Court must on application include an amount of interest unless good cause is shown to the contrary.
The FWO submitted that their proposed orders would have the utility of rectifying the Respondent’s non-compliance with the statutory compliance notice in circumstances where no other action has secured compliance and some of the underlying contraventions are not now able to be rectified (the time limitation having expired). At the same time, the FWO submitted an order effectively requiring compliance with the statutory compliance notice under s.545(1) was not “in relation to underpayment” and not subject of a time limitation for purposes of s.545(5) yet should be accompanied by an order that interest be paid on any outstanding entitlements pursuant to s.547. The difficulty with this submission is borne out by the inherent contradiction.
Absent the Respondent’s participation, there is no opposition to the first, second, third and fourth proposed orders or any suggestion of futility.
In all of the circumstances of the present case, I consider it is appropriate that the Respondent be required to comply with the statutory compliance notice dated 22 July 2021 by order pursuant to s.545(1) of the Act. The effect of such order is to require the Respondent to: determine what (if any) entitlements were owed to the former employee subject of the FWO inspector’s reasonable belief as set out in the statutory compliance notice dated 22 July 2021; and, if any outstanding entitlements are identified, to rectify those outstanding entitlements (these being the steps that the statutory compliance notice itself required the Respondent to take).
In the exercise of the Court’s discretion as to the appropriate form of the first order to be made pursuant to s.545(1) of the Act, there will be two modifications to the language proposed:
(a)First, the order will reflect that the Respondent is required to ensure compliance with the steps that the statutory compliance notice dated 22 July 2021 required it to take. That is, as distinct from calculating and paying the outstanding entitlements it was required to pay him in respect of the “contraventions” set out in the notice - where the substance of the inspector’s reasonable belief of those alleged contraventions are not subject of the application before the Court or otherwise subject of findings of fact.
(b)Second, by operation of s.545(5), the order will necessarily confine the period specified in the statutory compliance notice dated 22 July 2021 to that being within 6 years of when these proceedings commenced on 21 February 2022. Whether such order requiring compliance with the statutory compliance notice is properly characterised as being an order in relation to an underpayment is strictly contingent on the Respondent taking the first step to calculate the entitlements owed to the former employee and arriving at an identification of outstanding entitlements. However, as the order to be made under s.545(1) has the effect of enforcing the statutory compliance notice and requires the Respondent to pay any outstanding entitlements owed to the former employee it is plainly within the breadth of the phrase “in relation to” (if not directed squarely at) an underpayment. For completeness, even if it were not an order in relation to underpayment for purposes of s.545(5), when regard is had to the obligation to keep records for a period of up to 7 years, I would not consider it appropriate to order a wider date range. In the exercise of the Court’s discretion, the period for both calculation and payment of any outstanding entitlements specified in the statutory compliance notice will be taken to be 21 February 2016 to 21 February 2022.
Further, the date 30 April 2018 will be excluded from the period covered by the notice as sought by the FWO.
There is then the question of whether to order interest on any outstanding entitlements amount ordered to be paid pursuant to the first order. In the present case there has been no finding of an amount required to be paid (indeed, if there is any such amount, it is not presently known). In all of the circumstances, I am not minded to order interest pursuant to s.547 or the broader power at s.545 of the Act.
Having regard to the opportunities afforded to the Respondent to participate in these proceedings and to raise any practical or actual difficulty with compliance with the orders proposed by the FWO, I do not consider it appropriate that there be liberty to apply in respect of the order to be made pursuant to s.545 of the Act.
Imposition of a pecuniary penalty
The second form of relief sought by the FWO is the imposition of a pecuniary penalty for the Respondent’s declared contravention of s.716(5) in the range of $23,310 to $26,640.
Section 546(1) permits the Court to impose a pecuniary penalty “that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision”. As above, that state of satisfaction exists.
It falls to determine what level of penalty (if any) is appropriate as against the Respondent in light of the established contravention.
The single contravention of s.716(5) by the Respondent, being a corporation, attracts a maximum penalty of $33,300. The FWO’s recommended penalty range equates to approximately 70% to 80% of the maximum that may be imposed.
The purpose of a civil penalty under the regime provided by the Act is primarily, if not wholly, protective in the promotion of the public interest in compliance with the provisions of the Act and in (general and specific) deterrence of further contraventions: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 at [15]-[16] (Pattinson) citing the plurality in Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 and French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 (CSR Ltd). An “appropriate” penalty being one that “strikes a reasonable balance between oppressive severity and the need for deterrence in a particular case”: Pattinson at [41].
The task of assessing what amount to impose involves the selection of a figure taking into account all factors relevant to the particular case: CSR Ltd, as applied in this context see for example CFMMEU v ABCC [2018] FCAFC 97. I turn to consider the appropriate penalty in light of those well established principles and non-exhaustive list of factors from the case authorities.
The relevant conduct in the present case is the Respondent’s failure to comply with the statutory compliance notice dated 22 July 2021. Compliance with the notice required the Respondent to prepare certain calculations and take the specified remedial action by 31 August 2021 and to provide reasonable proof of this to the FWO by 7 September 2021. On the evidence before the Court, the Respondent was afforded ample opportunity but did not take the action required by the notice and did not provide reasonable proof of this to the FWO by those dates or at all.
The effect of the Respondent’s contravention is that the former employee subject of the notice, Mr Pinto, has been prevented from knowing his proper entitlements spanning a lengthy period of employment (from 11 February 2014 to 21 March 2020, across the Respondent’s 2 stores). Mr Pinto was also denied a resolution to any outstanding entitlements owed that may be calculated if the Respondent had so complied with the notice (which the FWO inspector reasonably believed were owed). It is also relevant that there is no history of prior non-compliance. However, the fact of no prior history does not alter my view that the Respondent’s ongoing non-compliance with the compliance notice is objectively serious.
The evidence establishes that the FWO made considerable efforts to contact the Respondent prior to the time for compliance with the statutory compliance notice and since. The Respondent was aware of the statutory compliance notice but chose not to comply with the notice. The Respondent’s contravention was deliberate.
The Respondent’s cooperation with the FWO and in these proceedings has been limited. There is some evidence of early cooperation and engagement with the FWO’s investigation (prior to the issue of the statutory compliance notice on 22 July 2021), which included a series of telephone calls with a Mr Borruso (who was the director of the company). During the course of the investigation and before the notice was issued, the FWO also communicated with the National Franchise Manager of Cash Convertors, the Head of People and Culture and the Employee Relations Specialist, who also provided the FWO with position descriptions and a series of calculations of Mr Pinto’s possible entitlements prepared by third party advisor Employsure which were based on different assumptions as to his appropriate classification under the Banking, Finance and Insurance Award 2010. Since these proceedings commenced, the Respondent’s engagement was sporadic at best and most recently the Respondent has not engaged with the proceedings at all.
There has been no statement of contrition or regret by or on behalf of the Respondent as may otherwise have been relevant to an assessment of the appropriate penalty.
The evidence indicated that the business that employed the former employee subject of the statutory compliance notice no longer continued to trade under the name “Cash Converters” at either of its former locations but yet the Respondent remains a registered entity. Beyond this, there is no evidence before the Court as to the Respondent’s size and financial circumstances, nor is there any proper basis to draw inferences in the Respondent’s favour in these respects.
In my view, there is a need for general deterrence in this matter, to emphasise the importance of an effective compliance framework and at a sufficient level to impress upon other employers the importance of complying with the legal obligations owed to their employees. That is particularly so in the retail industry which, on the evidence before the Court, is prone to disputes of this kind. It is important that there be a penalty fixed at a level as to incentivise compliance with statutory compliance notices.
There is a need for specific deterrence in the present case as to demonstrate that non-compliance with a statutory compliance notice is not acceptable, especially given that the Respondent continues to be registered and has the potential to operate future businesses in the retail and/or banking and finance industries.
A further and important consideration in this case is the need for compliance with the statutory framework. The statutory framework concerning compliance notices is an important mechanism for an inspector to deal with non-compliance with minimum entitlements in the Act as an alternative to commencing litigation. It also provides a means of early resolution and rectification without penalty. The failure to comply with a statutory compliance notice issued by the FWO is serious and such conduct ultimately undermines the Act’s enforcement framework and the safety net of entitlements it is designed to protect.
Resolution
When all of the above factors are considered, I am satisfied that it is appropriate to impose a pecuniary penalty on the Respondent for its contravention of s.716(5).
Weighing the various competing factors and in the particular circumstances, a penalty in the range of 70 to 80% of the maximum that may be imposed is excessive and, in my view, it is appropriate to fix the penalty in the amount of $16,000. This is a proportionate response to the Respondent’s contravention of s.716(5) and strikes a reasonable balance between oppressive severity and the need for both general and specific deterrence in this particular case.
The FWO sought an order that the penalty be payable to the Commonwealth of Australia within 60 days of these orders.
CONCLUSION
For the above reasons, I will make orders accordingly.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansini. Associate:
Dated: 12 September 2024
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