Fair Work Ombudsman v Yorktor Pty Ltd

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FEDERAL CIRCUIT COURT OF AUSTRALIA

Fair Work Ombudsman v Yorktor Pty Ltd [2021] FCCA 779

File number(s): MLG 4550 of 2019
Judgment of: JUDGE MCNAB
Date of judgment: 16 April 2021
Catchwords: INDUSTRIAL LAW – admitted contraventions of Fair Work Act 2009 – failure to comply with a compliance notice pursuant to section 716(5) of the Fair Work Act – First Respondent in liquidation – assessment of pecuniary penalties as against Second Respondent who admitted to involvement in the contravention within the meaning of section 550 of the Fair Work Act 2009 – non-exhaustive list of factors relevant to the imposition of a penalty – imposition of penalty appropriate to discourage similar conduct in the industry.    
Legislation:

Corporations Act 2001 (Cth) ss 471B, 491.

Fair Work Act 2009 (Cth) ss 546, 550, 716.

Hospitality Industry Award 2010 cll 13.1, 32.2, 32.3.
Cases cited:

Kelly v Fitzpatrick [2007] FCA 1080

Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7

Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550
Number of paragraphs: 31
Date of last submission/s: 16 April 2021
Date of hearing: 16 April 2021
Place: Melbourne
Solicitor for the Applicant: The Fair Work Ombudsman
The Respondents: No Appearance

ORDERS

MLG 4550 of 2019
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

YORKTOR PTY LTD

First Respondent

GARY ROBERT WILLIAMS

Second Respondent

ORDER MADE BY:

JUDGE MCNAB

DATE OF ORDER:

16 APRIL 2021

THE COURT DECLARES THAT:

1.The Second Respondent, by his involvement within the meaning of section 550 of the Fair Work Act 2009 (Cth) (“the FW Act”) of the First Respondent’s failure to comply with a compliance notice issued on 25 July 2019, contravened section 716(5) of the FW Act.

THE COURT ORDERS THAT:

2.Pursuant to section 546(1) of the FW Act, the Second Respondent pay a pecuniary penalty in the total sum of $3500.00 to the Commonwealth for the contravention set out in paragraph 1 herein, within 21 days of the date of these orders.

3.Pursuant to section 546(3)(c) of the FW Act, the Applicant remit the pecuniary penalty paid to the Commonwealth, in accordance with paragraph 2 herein, to Ms Melissa Fulton.

REASONS FOR JUDGMENT
(Delivered Ex Tempore – Revised From Transcript)

Judge McNab:

INTRODUCTION

  1. This matter involves an admitted contravention by the First Respondent (“Yorktor Pty Ltd”), pursuant to s716(5) of the Fair Work Act 2009 (Cth) (“the FW Act”), in failing to comply with a compliance notice issued by a Fair Work Inspector on 25 July 2019. The Second Respondent (“Mr Gary Williams”) has admitted to his involvement in the contravention within the meaning of s550 of the FW Act.

  2. The Applicant (“the Fair Work Ombudsman”) is seeking a declaration as to that contravention and the imposition of a pecuniary penalty against the Second Respondent pursuant to s546(1) of the FW Act. The proceedings are stayed as against the First Respondent pursuant to s471B of the Corporations Act 2001 (Cth) (“the Corporations…

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Details
Case
[2021] FCCA 779
Decision Date

CaseChat Overview and Summary

In *Fair Work Ombudsman v Yorktor Pty Ltd*, McNab J of the Federal Court of Australia considered the quantum of a pecuniary penalty to be imposed on the Second Respondent, the sole director and manager of the First Respondent, Yorktor Pty Ltd (in liquidation). The dispute arose from the First Respondent's failure to comply with a compliance notice issued by the Fair Work Ombudsman, which required rectification of underpayments of wages and superannuation to a casual employee, Ms Melissa Fulton.

The court was required to determine the appropriate pecuniary penalty against the Second Respondent for contravening section 716(5) of the *Fair Work Act 2009* (Cth) by failing to comply with the compliance notice. This involved assessing the Second Respondent's accessorial liability for the contravention, given his admitted knowledge of the factual matters constituting the contravention and his responsibility for the company's compliance with its legal obligations.

McNab J accepted the admitted facts and evidence establishing the Second Respondent's knowledge and responsibility. The court noted the significant amount of the underpayments to the employee and the lack of evidence that these had been rectified. Furthermore, the court considered the broader context of widespread non-compliance within the accommodation and food services industry, as evidenced by the Fair Work Ombudsman's data. Despite a discount for cooperation, the court found that the Second Respondent had shown very little engagement in the investigation or proceedings.

Consequently, McNab J imposed a penalty of $3,500.00 against the Second Respondent pursuant to section 546(1) of the *Fair Work Act 2009* (Cth). This amount was ordered to be paid to the Commonwealth, with the Commonwealth to remit it to the employee, as provided by section 546(3) of the Act.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

The issue to be determined is the quantum of the penalty to be imposed on the Second Respondent. BACKGROUND In this matter the Court has the benefit of an agreed statement of facts filed on 27 November 2020, which was signed by the Second Respondent on 9 November 2020. From 16 May 2015 until 24 November 2018, Yorktor Pty Ltd (“the First Respondent”), who is in liquidation, employed Ms Melissa Fulton (“the employee”) on a casual basis as a bar attendant and kitchen hand. She was classified as a 'Food and Beverage Attendant Grade 2' and a 'Kitchen Attendant Grade 1', as set out in clause A.2 of Schedule B to the Hospitality Industry Award 2010 (“the award”), and was paid a flat hourly rate of:(1)$21 for all hours work when she performed duties as a bar attendant; and(2)$23 for all hours of work performing duties as a kitchen hand. Due to enquiries made by the employee to the Applicant in May 2019 in relation to her rate of remuneration, Fair Work Investigator Melissa King (“FWI King”) commenced an investigation on 21 May 2019 in relation to the employee’s employment with the First Respondent. As a result of the investigation, FWI King formed a reasonable belief, pursuant to s716(1) of the FW Act, that the First Respondent contravened the following terms of the award: (1)clause 13.1 (minimum wages);(2)clause 32.1 (Saturday, Sunday and Public Holiday penalties); and(3)clause 32.3(e) (evening penalty). On 24 July 2019, FWI King had a telephone conversation with the Second Respondent, who was the Manager of the business and a Director of the First Respondent since 2008. The Second Respondent was responsible for the overall operation and management control of the First Respondent and the person who was responsible for ensuring the that First Respondent complied with its legal obligations under the FW Act. During the telephone conversation, FWI King advised the Second Respondent of the findings from the investigation, and that she would be issuing a compliance notice to the First Respondent, pursuant to s716 of the FW Act. On 25 July 2019, FWI King issued a compliance notice to the First Respondent pursuant to s716(2) of the FW Act (“the compliance notice”) in respect of the employee. The notice was served at the registered office of the First Respondent by FWI Caroline Weston. It is admitted that the compliance notice satisfied the requirements of s716(3) of the FW Act. The compliance notice required the First Respondent: (a)to take the following specified actions by 6 September 2019:(i)calculate the amounts that were paid and that should have been paid for the hours worked by the Employee during the Employment Period;(ii)make a payment to the Employee in the amount of the difference between what the Employee was entitled to be paid and what the Employee was actually paid during the Employment Period, and the superannuation payable to the Employee in respect of those amounts;(iii)prepare a schedule outlining the amounts calculated and amounts paid to the Employee to remedy any underpayment identified;(b)to produce reasonable evidence to the Applicant of its compliance with the Compliance Notice by 12 September 2019, by producing:(i)a copy of the schedule referred to at paragraph 12(a)(iii) above; and(ii)evidence that the outstanding amounts had been paid to the Employee and the outstanding superannuation contributions had been made to her superannuation Fund.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

I agree with that submission and I will order accordingly. CONCLUSION For these reasons, I will impose a penalty in the total sum of $3,500.00 as against the Second Respondent, pursuant to s546(1) of the FW Act. I will also make an order for that amount to be paid to the Commonwealth, with the Commonwealth to remit that amount to the employee, pursuant to s546(3) of the FW Act.

Ratio Decidendi

Legal Principle Established

The Second Respondent has not filed material in relation to orders he seeks, or made submissions in respect of pecuniary penalty.CONSIDERATION The Applicant has filed and served submissions on penalty. A declaration is sought in relation to a contravention of s716(5) of the FW Act arising from the failure of the First Respondent, and by way of accessorial liability the Second Respondent, to comply with the compliance notice issued by the Applicant. Further, pursuant to s546(1) of the FW Act, the Applicant is seeking the imposition of a pecuniary penalty against the Second Respondent in relation to the admitted contravention. I accept the evidence and admitted facts have established that the Second Respondent had actual knowledge of the factual matters which comprised the admitted contravention. I also accept that the Second Respondent was the sole director of the First Respondent, and was the person responsible for the overall operation, management, and control of the First Respondent. The Second Respondent admits to being responsible for ensuring that the First Respondent complied with its legal obligations under the Fair Work Act. The Applicant submits that a penalty in the range of $3,402 to $3,969 in respect of the Second Respondent for the admitted contravention is appropriate. That range represents 60% to 70% of the maximum penalty able to be imposed, as well as a 10% discount for cooperation by the Second Respondent. The maximum penalty is 6,300. I think it is relevant in this case that there has been very little engagement by the Second Respondent in the investigation process or in the proceeding generally. He has not appeared in Court throughout these proceedings, and does not appear today to make submissions. The sum of $11,679.78, which I referred to earlier, is a significant amount of money for the casual employee who was affected by the underpayments. There is no evidence that the underpayments have been rectified. Further, by way of her affidavit filed on 15 December 2020, FWI King gives evidence of the very large or very significant number of complaints that are made to the Applicant arising from employment in the accommodation and food services industry. FWI King states at [12] that:12. The Industry Report summarises data for the period July 2014 to June 2020 (Industry Report Period) regarding compliance with workplace laws in the accommodation and food services industry. I have accessed and reviewed the Industry Report and among other things, have identified the following findings:(a) during the Industry Report Period:(i) the FWO completed 22,277 physical or online requests for assistance (Dispute Forms) from workers in the accommodation and food services industry, which represents 16.7% of all Dispute Forms completed by the FWO;(ii) 21 % of all Disputes Forms completed by the FWO involved an underpayment of minimum hourly rates of pay; and(b) 38.2% of all Compliance Notices issued by the FWO in the period July 2019 to June 2020 were issued to employers within the accommodation and food services industry for non-compliance with Commonwealth workplace laws.