Fair Work Ombudsman v Yuxuan Group Pty Ltd
[2023] FedCFamC2G 1081
•24 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Yuxuan Group Pty Ltd [2023] FedCFamC2G 1081
File number(s): ADG 274 of 2021 Judgment of: JUDGE LUCEV Date of judgment: 24 November 2023 Catchwords: INDUSTRIAL LAW – Alleged contraventions of Fair Work Act 2009 (Cth) – corporate respondent in liquidation – accessorially liable respondent admits certain contraventions – failure to make and keep records of employee details – failure to make and keep records of overtime worked by employees – failure to provide a pay slip to each employee within one working day of making payment – relevant principles concerning penalty – factors for assessment of appropriate penalty – penalty unit amount where penalty unit amount increased while contravention ongoing Legislation: Conciliation and Arbitration Act 1904 (Cth)
Corporations Act 2001 (Cth)s 500
Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 3, 4, 535, 536, 539, 546, 550, 557, 682
Workplace Relations Act 1996 (Cth)
Fair Work Regulations 2009 (Cth) regs 3.22, 3.32, 3.33, 3.34, 3.36
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union and Another [2018] HCA 3; (2018) 262 CLR 157; (2018) 92 ALJR 219; (2018) 273 IR 211; (2018) 351 ALR 190; (2018) 70 AILR 102-917
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 274 CLR 450; (2022) 96 ALJR 426; (2022) 314 IR 1; (2022) 399 ALR 599; (2022) 175 ALD 383
Australian Competition & Consumer Commission v ABB Transmission & Distribution Ltd (No 2) [2002] FCA 559; (2002) 190 ALR 169; [2002] ATPR 41-872
Australian Competition and Consumer Commission v ACN 135 183 372 (in liquidation) (formerly known as Energy Watch Pty Ltd) [2012] FCA 749; [2012] ATPR 42-405
Australian Competition and Consumer Commission v Reckitt Benckiser(Australia) Pty Ltd [2016] FCAFC 181; (2016) 340 ALR 25; [2016] ATPR 42-530
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560; (2008) 246 ALR 35; (2008) 60 AILR 100-089
Australian Securities Commission v Forem-Freeway Enterprises Pty Ltd [1999] FCA 179; (1999) 30 ACSR 339
BYF15 v Minister for Immigration and Border Protection [2016] FCA 774
CEPU (Western Australia Division) v Fortescue Metals Group Ltd [2016] FCCA 1227; (2016) 310 FLR 1
Cotis v Pow Juice Pty Limited [2007] FMCA 140
Ellis v Rottnest Lodge(1989) Pty Ltd trading as Rottnest Lodge (No 2) [2017] FCCA 190
Fair Work Ombudsman v 3 Rundle Mall Pty Ltd [2022] FedCFamC2G 354
Fair Work Ombudsman v Amritsaria Four Pty Ltd & Anor: [2016] FCCA 968
Fair Work Ombudsman v ANS.HL Trading Pty Ltd [2021] FCCA 1163
Fair Work Ombudsman v Ava Travel Pty Ltd & Ors [2018] FCCA 3627
Fair Work Ombudsman v Care Providers Pty Ltd & Ors [2018] FCCA 3771
Fair Work Ombudsman v Commercial and Residential Cleaning Group Pty Ltd & Ors [2017] FCCA 2838
Fair Work Ombudsman v Drivecam Pty Ltd & Ors [2011] FMCA 600; (2011) 208 IR 79
Fair Work Ombudsman v EA Fuller & Sons Pty Ltd & Anor [2013] FCCA 5
Fair Work Ombudsman v First Group Of Companies Pty Ltd (Deregistered) & Ors [2018] FCCA 1228
Fair Work Ombudsman v Han Investments Pty Ltd [2017] FCA 623
Fair Work Ombudsman v IE Enterprises Pty Ltd [2021] FCA 60
Fair Work Ombudsman v JS Top Pty Ltd [2017] FCCA 1689
Fair Work Ombudsman v Kojima & Anor [2013] FCCA 976
Fair Work Ombudsman v Koojedda Carpentry Pty Ltd ACN 111 218 476 ATFThe Gumley Trust & Ors (No 2) [2017] FCCA 2577
Fair Work Ombudsman v Lohr [2018] FCA 5; (2018) 356 ALR 424; (2018) 158 ALD 457; (2018) 70 AILR 102-906
Fair Work Ombudsman v New Shanghai North t/a New Shanghai Charlestown [2017] FCA 1301; (2017) 275 IR 148; [2017] 69 AILR 102-890
Fair Work Ombudsman v Orwill Pty Ltd & Ors [2011] FMCA 730; (2011) 63 AILR 101-461
Fair Work Ombudsman v Panol DC Pty Ltd & Ors [2021] FCCA 373
Fair Work Ombudsman v QHA Foods Pty Ltd [2019] FCCA 3120
Fair Work Ombudsman v Skyter Trade Pty Ltd & Anor [2018] FCCA 1483
Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832
Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456
Fair Work Ombudsman vTaj Palace Tandoori Indian Restaurant Pty Ltd [2012] FMCA 258
Fair Work Ombudsman v Tsurc Pty Ltd & Anor (No 2) [2015] FCCA 2148
Fair Work Ombudsmen v Ultra Tune Australia Pty Ltd [2012] FMCA 560
Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290; (2016) AILR 102-690
Hansen v Mt Martha Community Learning Centre Inc (No 2) [2015] FCA 1283
Hanssen Pty Ltd v Jones [2009] FCA 192; (2009) 179 IR 57
Jordan v Mornington Inn Pty Ltd [2007] FCA 1384; (2007) 166 IR 33; (2007) 60 AILR 100-744
Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14
Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
NW Frozen Foods Pty Ltd v Australian Competition & Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285; (1996) 141 ALR 640; [1997] ATPR 41-546
Olsen v Sterling Crown Pty Ltd [2008] FMCA 1392; (2008) 177 IR 337
Plancor Pty Ltd v Liquor, Hospitality & Miscellaneous Union [2008] FCAFC 170; (2008) 171 FCR 357; (2008) 177 IR 243
Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543; (2007) 162 IR 444; (2007) 59 ALJR 100-669
Printing & Kindred Industries Union & Ors v Vista Paper Products Pty Ltd & Anor (1994) 57 IR 414; (1994) 127 ALR 673; (1994) 1 IRCR 413; (1994) 37 AILR 3-053
Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412
Secretary, Department of Health and Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545
Singtel Optus Pty Ltd v Australian Competition & Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249; (2012) ATPR 42-387
Suh & Ors v Minister for Immigration & Citizenship & Anor [2009] FCAFC 42; (2009) 175 FCR 515; (2009) 108 ALD 470
Textile Clothing and Footwear Union of Australia v Lotus Cove Pty Ltd [2004] FCA 43
The Commonwealth of Australia v Director, Fair Work Building Inspectorate and Others (“Agreed Penalties Case”) [2015] HCA 46; (2015) 258 CLR 482; (2015) 90 ALJR 113; (2015) 255 IR 87; (2015) 326 ALR 476; (2015) 67 AILR 102-494
Trade Practices Commission v CSR Ltd [1991] ATPR 41-076
Division: Division 2 General Federal Law Number of paragraphs: 94 Date of last submission/s: 24 November 2022 Date of hearing: 24 November 2022 Place: Adelaide Counsel for the Applicant: Ms G Walker Counsel for the Second Respondent: Ms J Battiste Solicitor for the Respondents: Townsends Solicitors ORDERS
ADG 274 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: YUXUAN GROUP PTY LTD (in liquidation)
First Respondent
YANG SU
Second Respondent
ORDER MADE BY:
JUDGE LUCEV
DATE OF ORDER:
24 NOVEMBER 2023
THE COURT DECLARES THAT:
1.The First Respondent contravened the following civil remedy provisions during periods from 29 July 2019 to 13 August 2019 and 6 April 2020 to 18 February 2021:
(a)section 535(1) of the Fair Work Act 2009 (Cth) (“FW Act”) by failing to make and keep records as required by regs 3.32(c), (d) and (e) and 3.34 of the Fair Work Regulations 2009 (Cth) (“FW Regulations”); and
(b)section 536(1) of the FW Act by failing to provide a pay slip to each of the Employees within one working day of making a payment in relation to the performance of work,
the “Employees” referred to above being those persons listed in Column A of Schedule A to the Statement of Agreed Facts filed in these proceedings on 24 March 2022.
2.The Second Respondent was involved, pursuant to s 550(1) of the FW Act, in the First Respondent’s contraventions declared at paragraph 1 above.
THE COURT ORDERS THAT:
3.The Second Respondent pay penalties pursuant to s 546(1) of the FW Act for her involvement in the First Respondent’s contraventions of:
(a)section 535(1) of the FW Act declared at paragraph 1(a) above in the amount of $3,996;
(b)section 536(1) of the FW Act declared at paragraph 1(b) above in the amount of $3,996.
4.The pecuniary penalties ordered to be paid in order 3 be paid to the Consolidated Revenue Fund of the Commonwealth of Australia by 24 February 2024.
5.The Applicant have liberty to apply within seven days if orders 3 and 4 are not complied with.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE LUCEV
THE PARTIES AND THE NATURE OF THE PROCEEDINGS
Yuxuan Group Pty Ltd (in liquidation) (“Yuxuan Group”), formerly operated three takeaway bubble tea outlets in Adelaide, South Australia, under the “FUNTEA” brand.
By an application lodged by the Fair Work Ombudsman (“FWO”) on 10 September 2021 against Yuxuan Group and Yang Su (“Su”) (together “Respondents”), the FWO alleges contraventions of the Fair Work Act 2009 (Cth) (“FW Act”) by Yuxuan Group and Su. Following an investigation by the FWO into Yuxuan Group, the FWO identified 20 individuals (“the Employees”) who were engaged by Yuxuan Group to work in its Fun Tea outlets during the periods 29 July 2019 to 13 August 2019, and 6 April 2020 to 18 February 2021 (collectively, the “Assessment Periods”) who were the subject of the alleged contraventions.
By reason of s 500(2) of the Corporations Act 2001 (Cth) these proceedings are presently stayed against Yuxuan Group as a result of it passing a resolution for voluntary winding up on 19 November 2021. The FWO therefore seeks the imposition of pecuniary penalties only on Su, a former director and manager of Yuxuan Group.
In a Statement of Agreed Facts filed on 24 March 2022 Su has admitted that within the meaning of s 550 of the FW Act she was involved in contraventions of the FW Act by Yuxuan Group.
THE ORDERS SOUGHT BY THE FWO
The FWO seeks orders from the Court that:
(a)Su pay penalties pursuant to s 546(1) of the FW Act within 28 days of this order for her involvement in Yuxuan Group’s contraventions of:
(i)section 535(1) of the FW Act by failing to make and keep records of the Employees’ commencement dates, whether the Employees were full time or part time and whether the Employees were permanent, temporary or casual as required by regs 3.32(c), (d) and (e) of the Fair Work Regulations 2009 (“FW Regulations”);
(ii)section 535(1) of the FW Act by failing to make and keep records of the overtime hours worked by the Employees as required by reg 3.34 of the FW Regulations; and
(iii)section 536(1) of the FW Act by failing to provide a pay slip to each of the Employees within one working day of making a payment in relation to the performance of work;
(b)all pecuniary penalties ordered to be paid by Su be paid into the Consolidated Revenue Fund of the Commonwealth of Australia within 28 days of any Court order; and
(c)there be liberty to apply within seven days if the orders sought, if granted, are not complied with.
THE PENALTIES SOUGHT AGAINST SU
The FWO submits that penalties in the range of $13,320 to $15,984 ought to be imposed on Su. A detailed summary of the proposed penalties is as follows:
Contravention Maximum Penalty Proposed Penalty Range Percentage Proposed Penalty Range (excluding discount for cooperation) Proposed Penalty Range (including discount for cooperation) Section 535(1) of the FW Act by failing to make and keep records relating to whether the Employees were full time or part time, whether they were permanent, temporary or casual and the date on which their employment commenced, pursuant to reg 3.32(c), (d) and (e) of the FW Regulations. $13,320 40% - 45% $5,328
-
$5,994$4,262
-
$4,795Section 535(1) of the FW Act by failing to make and keep records of overtime hours worked by employees pursuant to reg 3.34 of the FW Regulations. $13,320 30% - 40% $3,996
-
$5,328$3,196
-
$4,262Section 536(1) of the FW Act by failing to provide a pay slip to each of employees within one working day of making a payment in relation to the performance of work $13,320
55% - 65% $7,326
-
$8,658$5,860
-
$6,926Total $39,960 $16,650 - $19,980 $13,320 - $15,984 MATERIALS BEFORE THE COURT
The following materials are before the Court:
(a)the Originating Application and Statement of Claim filed by the FWO on 10 September 2021;
(b)the Defences and Responses of Su and Yuxuan Group filed on 19 November 2021;
(c)the Statement of Agreed Facts filed by the FWO on 24 March 2022 (which was marked as Exhibit 1 in the proceedings);
(d)the affidavit of a Fair Work Inspector, James Roberts, affirmed 17 May 2022 (“Roberts Affidavit”);
(e)the affidavits of Su affirmed 13 July and 18 November 2022 (“Su July 2022 Affidavit” and “Su November 2922” Affidavit respectively);
(f)outlines of submissions from the FWO dated 5 August and 10 October 2022;
(g)an outline of submissions from Su dated 13 September 2022;
(h)an extract from the Domain.com.au website in respect of a property in Campbelltown, South Australia (which was marked as Exhibit 2 in the proceedings); and
(i)the Transcript of the proceedings on 24 November 2022 (“Transcript”), which the Court has read and referred to in the course of preparing these Reasons for Judgment.
THE STATEMENT OF AGREED FACTS
The Statement of Agreed Facts provides as follows:
A. INTRODUCTION
1.This Statement of Agreed Facts (Statement) is made by the Applicant and the Second Respondent for the purposes of section 191 of the Evidence Act 1995 (Cth).
2.The Second Respondent admits that she was involved in, within the meaning of section 550 of the FW Act, the contraventions specified in Part G of this Statement.
B. PARTIES
The Applicant
3.The Applicant is and was at all relevant times a:
(a)statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to section 687(1) of the Fair Work Act 2009 (Cth) (FW Act);
(b) Fair Work Inspector pursuant to section 701 of the FW Act; and
(c)person with standing under section 539(2) of the FW Act to apply for orders in relation to contraventions of civil remedy provisions of the FW Act.
The First Respondent
4.Yuxuan Group Pty Ltd (Yuxuan Group), is and was at all relevant times:
(a)incorporated under the Corporations Act 2001 (Cth) since 12 September 2017;
(b) a company with a registered business name ‘FUNTEA’;
(c)the company that owned and operated takeaway fast food outlets trading under the name ‘FUNTEA’ at the following locations in South Australia:
(i)shop 3, 31-39 Gouger Street, Adelaide (Fun Tea Chinatown);
(ii)shop LG.21, 100 Rundle Mall, Adelaide (Fun Tea David Jones); and
(iii) 6-10 York Street, Adelaide (Fun Tea Rundle Mall);
(collectively, Fun Tea Stores);
(d)a ‘constitutional corporation’ within the meaning of section 12 of the FW Act;
(e)a company that employed individuals to work in the Fun Tea Stores; and
(f)by reason of subparagraphs (d) and (e), a ‘national system employer’ within the meaning of section 14 of the FW Act.
5.On 19 November 2021, Yuxuan Group entered into liquidation by passage of a resolution for voluntary winding up. Pursuant to section 500(2) of the Corporations Act 2001 (Cth), the proceedings as against Yuxuan Group are stayed.
Fun Tea Stores
6.At all relevant times, Fun Tea Chinatown was open to the public between 11:00 a.m. to 9:00 p.m. on Monday to Sunday.
7.At all relevant times, Fun Tea David Jones was open to the public between:
(a) 10:30 a.m. to 4:00 p.m. Monday to Friday;
(b) 11:30 a.m. to 5:00 p.m. on Saturday; and
(c) 12:00 p.m. to 5:00 p.m. on Sunday.
8.At all relevant times, Fun Tea Rundle Mall was open to the public between 11:00 a.m. to 9:00 p.m. on Monday to Sunday.
The Second Respondent
9.The Second Respondent, Ms Yang Su, is and was at all relevant times:
(a) a director of Yuxuan Group between 1 July 2019 and 1 April 2021;
(b) in respect of Yuxuan Group’s employees, a person responsible for:
(i) providing rosters;
(ii) paying wages;
(iii) making and keeping records relating to Yuxuan Group’s employees’ hours of work; and
(iv)making and keeping records relating to the amounts paid to Yuxuan Group’s employees for the performance of work;
(c)responsible for ensuring that Yuxuan Group complied with its legal obligations under the FW Act;
(d)by reason of section 793(1) of the FW Act, a person whose conduct as specified in this Statement, was conduct engaged in by Yuxuan Group; and
(e)by reason of section 793(2) of the FW Act, a person whose state of mind was the state of mind of Yuxuan Group for the purposes of the matters specified in this Statement.
C. LEGISLATION AND MODERN AWARD
10.At all material times, Yuxuan Group was required to comply with the FW Act and the Fair Work Regulations 2009 (FW Regulations) in relation to its employment of employees at the Fun Tea Stores.
11.At all material times, the Fast Food Industry Award 2010 (Fast Food Award) covered and applied to Yuxuan Group in relation to its employment of employees at the Fun Tea Stores.
D. THE INVESTIGATION
12.The Applicant commenced an investigation into Yuxuan Group on or about 3 February 2021.
13.On 8 February 2021, Townsends Solicitors acting on behalf of Yuxuan Group sent a letter to Fair Work Inspector (FWI) Dale Woods advising that Yuxuan Group had underpaid staff.
14.On 19 February 2021, FWI James Roberts sent a letter to Yuxuan Group and the Second Respondent, advising them that the Applicant was investigating whether Yuxuan Group had breached the FW Act, including potential contraventions of sections 535 and 536 of the FW Act. The letter also invited the Second Respondent to participate in a recorded interview, in her capacity as a director of Yuxuan Group, in relation to the potential contraventions and the involvement of any individuals or entities as an accessory to those contraventions.
15.Also on 19 February 2021, FWI Roberts issued a Notice to Produce Records or Documents pursuant to section 712 of the FW Act (NTP) to Yuxuan Group seeking the production of various categories of employment records, including records containing the name, start date and status of each of the Employees (as defined in paragraph 19 below), and copies of any pay slips held by Yuxuan Group.
16.On 12 March 2021, Townsends Solicitors on behalf of Yuxuan Group responded to the NTP by providing documents to the Applicant, including rosters and copies of records of payments made to the Employees. The records provided did not include records containing the name, start date and status of each the Employees, or copies of any pay slips.
17.On 28 April 2021, the Second Respondent participated in an interview conducted by the Applicant with FWI Kristen Walsh and FWI Roberts. In the course of the interview the Second Respondent discussed her role in finalising and distributing rosters for Yuxuan Group via WeChat group chats with the Employees, and her practice of attending the Fun Tea Stores to pay wages to the Employees.
18.On 8 June 2021, FWI Roberts issued a Findings of Contravention letter (Findings Letter) to Yuxuan Group which set out identified contraventions by Yuxuan Group of the Fast Food Award and the FW Act. The Findings Letter noted that the Applicant may commence proceedings against Yuxuan Group and any individuals involved in the identified contraventions.
E.THE EMPLOYEES
19.Yuxuan Group employed the individuals set out in Schedule A (Employees):
(a)in the case of Siew Lee See, during the period from 29 July 2019 to 13 August 2019; and
(b)otherwise, on the dates specified in column C of Schedule A during the period from 6 April 2020 to 18 February 2021 (Second Assessment Period);
(collectively, Assessment Periods).
20.At all relevant times during the Assessment Periods, each of the Employees was a ‘national system employee’ within the meaning of section 13 of the FW Act.
21.During the Second Assessment Period, the following Employees were in Australia on visas:
(a) Huaxuan Du;
(b) Shan Shan Kyaw Min Kahn;
(c) Yikun Peng;
(d) Danlin Cheng;
(e) Danni Yang; and
(f) Yingyi Ou.
Status of Employees
22.During the Second Assessment Period, Keyu Deng and Jun Song:
(a)were engaged by Yuxuan Group to work an average of 38 hours per week on an ongoing basis; and accordingly,
(b)were each engaged as full time employees pursuant to clause 11 of the Fast Food Award.
23.During the Assessment Periods, each of the Employees listed in rows 1 to 18 of Schedule A (Casual Employees):
(a) were engaged by Yuxuan Group:
(i) on the basis of the hours that they were available to work; and
(ii)without any offer made of a firm advance commitment to continuing and indefinite work according to an agreed pattern of work;
(b) worked hours which varied from week to week; and therefore,
(c)were engaged on a casual basis pursuant to section 15A(1) of the FW Act and clause 13 of the Fast Food Award.
Hours and overtime hours worked
24.During the Assessment Periods, the Employees performed work at the Fun Tea Stores:
(a) according to a weekly roster;
(b)on the days of the week and within the hours that the Fun Tea Stores were open to the public as admitted in paragraphs 6 to 8 above; and
(c)on some occasions, outside of the hours the Fun Tea Stores were open to the public.
25.During the Assessment Periods:
(a)Keyu Deng and Jun Song performed hours of work that were considered overtime hours pursuant to clause 26.2(a) of the Fast Food Award; and
(b)the Casual Employees performed hours of work that were considered overtime hours pursuant to clause 26.3 of the Fast Food Award.
F.CONTRAVENTIONS OF YUXUAN GROUP
Failure to make and keep required records
26.By reason of section 535(1) of the FW Act and paragraphs 22 to 25 above, during the Assessment Periods, Yuxuan Group was required to make and keep the following records in relation to the Employees as required by the FW Regulations:
(a)whether each of the Employees was full time or part time, pursuant to regulation 3.32(c);
(b)whether each of the Employees was engaged on a permanent, temporary or casual basis, pursuant to regulation 3.32(d);
(c)the date on which each of the Employees’ employment with Yuxuan Group began, pursuant to regulation 3.32(e); and
(d)the number of overtime hours worked on each day by each of the Employees who worked overtime, or when each of those Employees started and ceased working overtime hours, pursuant to regulation 3.34.
27.During the Assessment Periods, typically on a Sunday, the Second Respondent, on behalf of Yuxuan Group, would finalise a weekly roster and post a copy of the roster on an employee WeChat forum.
28.During the Assessment Periods, Yuxuan Group did not make or keep any of the records set out in paragraph 26 above in respect of the Employees and therefore contravened section 535(1) of the FW Act.
Failure to provide pay slips
29.By reason of section 536(1) of the FW Act, during the Assessment Periods Yuxuan Group was required to provide a pay slip to each of the Employees within one working day of paying an amount to them in relation to the performance of work.
30.During the Assessment Periods, on each Friday, the Second Respondent, on behalf of Yuxuan Group, paid the Employees for the performance of work in cash.
31.At the time of making each payment, the Second Respondent asked each of the Employees to sign a document called a ‘Wage Book’ confirming the amount they had received. The wage book recorded the employee’s name and hourly rate of pay, as well as the total hours worked, any bonuses and total pay for the week.
32.During the Assessment Periods, Yuxuan Group did not give the Employees a pay slip within one working day of making each payment, or at all, and therefore contravened section 536(1) of the FW Act.
G. ADMITTED CONTRAVENTIONS OF THE SECOND RESPONDENT
33. The Second Respondent admits that during the Assessment Periods she knew:
(a) the Employees were employed by Yuxuan Group;
(b)the Employees were engaged to work on either a full-time or casual basis;
(c) the days and hours that the Employees were rostered to work;
(d)the amounts Yuxuan Group paid to the Employees for the performance of work;
(e)the records kept by Yuxuan Group in respect of the Employees and the hours they worked;
(f) that the Employees were not provided with pay slips;
(g)that during the Assessment Periods Yuxuan Group failed to make and keep records of:
(i)the dates on which the Employees began working for Yuxuan Group;
(ii) whether the Employees were full-time or part-time; and
(iii) whether the Employees were permanent, temporary or casual;
(h) that during the Assessment Periods Yuxuan Group failed to make and keep records of overtime hours worked by the Employees; and
(i) that during the Assessment Periods Yuxuan Group failed to provide pay slips to the Employees within one working day of making a payment in relation to the performance of work, or at all.
34. The Second Respondent admits that she was, pursuant to section 550 of the FW Act, directly or indirectly, knowingly concerned in, or party to contraventions of, and therefore taken to have herself contravened, the provisions of the FW Act set out at paragraphs 35 and 36 below.
Involvement in failure to make and keep records
35. The Second Respondent admits that during the Assessment Periods she was involved in the contravention of section 535(1) of the FW Act set out at paragraph 28 above.
Involvement in failure to provide pay slips
36. The Second Respondent admits that during the Assessment Periods she was involved in the contravention of section 536(1) of the FW Act set out at paragraph 32 above.
37. The Proceedings were filed on 10 September 2021. The Second Respondent subsequently advised the Applicant by letter that she intended to formally admit the allegations. On 19 November 2021 the Second Respondent filed a Defence formally admitting her involvement in the contraventions at paragraph 28 and 32 above.
The table at Schedule A of the Statement of Agreed Facts listing the Employees (and other information) has not been reproduced.
CONSIDERATION
General principles in imposing penalties
In relation to the approach to imposing penalties the general principles are uncontroversial and can be summarised as follows:
(a)the Court may impose penalties pursuant to s 546 of the FW Act if it is satisfied that a person has contravened a civil remedy provision and that the relevant sections of the FW Act in issue in these proceedings are civil remedy provisions;
(b)when applying s 546 of the FW Act, the Court’s “real task” is “fixing the penalty which it considers fairly and reasonably to be appropriate to protect the public interest from future contraventions of the [FW] Act”: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 274 CLR 450; (2022) 96 ALJR 426; (2022) 314 IR 301; (2022) 399 ALR 599; (2022) 175 ALD 383 (“Pattinson”) at [71] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ. This is because the purpose of civil penalties ordered under s 546 of the FW Act is to promote the public interest in compliance with the statutory regime: Pattinson at [15] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ, citing The Commonwealth of Australia v Director, Fair Work Building Inspectorate and Others (“Agreed Penalties Case”) [2015] HCA 46; (2015) 258 CLR 482; (2015) 90 ALJR 113; (2015) 255 IR 87; (2015) 326 ALR 476; (2015) 67 AILR 102-494 at [55] per French CJ, Kiefel, Bell, Nettle and Gordon JJ;
(c)promoting public interest in compliance with the statutory regime is achieved by putting 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: Trade Practices Commission v CSR Ltd [1991] FCA 762; [1991] ATPR 41-076 (“CSR Ltd”). More recently the High Court has further explained, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union and Another [2018] HCA 3; (2018) 262 CLR 157; (2018) 92 ALJR 219; (2018) 273 IR 211; (2018) 351 ALR 190; (2018) 70 AILR 102-917 (“ABCC v CFMEU”) at [116] per Keane, Nettle and Gordon JJ, that the “principal object” of deterrence depends on a penalty having the necessary “sting or burden” to secure the specific and general deterrent effects that are the raison d’être of its imposition. That purpose has been reinforced by the High Court in Pattinson at [9] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ where the purpose of the civil remedy regime in the FW Act was described by the majority as being the promotion of the public interest in compliance with the provisions of the FW Act by way of deterrence of further contravention. In Pattinson at [66] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ the High Court expressed the view that s 546 of the FW Act had, as its underlying theory, the notion that the financial disincentive imposed by way of pecuniary penalty will be such as to encourage compliance with the law by ensuring that contraventions are viewed by the contravener, and others, “as an economically irrational choice”. The High Court further observed that the function of the Court imposing a penalty was to give effect to the intention of the FW Act in this regard, and that the courts must do what they can to deter non-compliance with the FW Act;
(d)the maximum penalty available is a relevant consideration but “does not constrain the exercise of the discretion under s 546…beyond requiring “some reasonable relationship between the theoretical maximum and the final penalty imposed””: Pattinson at [55] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ, citing Australian Competition and Consumer Commission v Reckitt Benckiser(Australia) Pty Ltd [2016] FCAFC 181; (2016) 340 ALR 25; [2016] ATPR 42-530 at [155]-[156] per Jagot, Yates and Bromwich JJ;
(e)the “reasonable relationship” should be considered by reference to the need for deterrence: Pattinson at [55] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ, there being a requirement to ensure that any penalty “strikes a reasonable balance between deterrence and oppressive severity” and is thus proportionate: Pattinson at [41] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ;
(f)the Court has a broad discretion to assess the appropriate penalty. The discretion is approached in a process identified in Fair Work Ombudsman v NSH North Pty Ltd (t/as New Shanghai Charlestown) [2017] FCA 1301; (2017) 275 IR 148; [2017] 69 AILR 102-890 (“New Shanghai”) at [36] per Bromwich J, and relevant to this case the Court must:
(i)identify the contraventions and consider the maximum penalty a court might impose for each separate contravention;
(ii)consider whether the course of conduct provisions in s 557 of the FW Act apply to any of the contraventions: Fair Work Ombudsman v Lohr [2018] FCA 5; (2018) 356 ALR 424; (2018) 158 ALD 457; (2018) 70 AILR 102-906 at [33]-[34] per Bromwich J;
(iii)assess the appropriate penalty in respect of each contravention or group of contraventions, with reference to any factors relevant to the imposition of penalties, and to the extent that two or more contraventions have common elements, or arise out of the same course of conduct or transaction, this should be taken into account in considering what is an appropriate penalty in all the circumstances for the contravention as a respondent ought not be penalised more than once for the same conduct; and
(iv)consider the overall penalties arrived at including by reference to those which may be proposed by the parties and apply the totality principle to ensure that the penalties for the respondent are appropriate to the conduct viewed as a whole, making such adjustments as are necessary: Agreed Penalties Case at [55] per French CJ, Kiefel, Bell, Nettle and Gordon JJ; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560; (2008) 246 ALR 35; (2008) 60 AILR 100-089 (“Australian Ophthalmic Supplies”) at [96]-[97] per Buchanan J.
When assessing the seriousness of the contraventions for the purposes of imposing a penalty, it is uncontroversial that there is a non-exhaustive range of factors for consideration: Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 (“Kelly”).
Factors for consideration
A checklist of factors which first appeared in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at [26]-[55] per Mowbray FM, and was adopted in Kelly at [14] per Tracey J, is as follows:
(a)the nature and extent of the conduct which led to the contraventions;
(b)the circumstances of the conduct (including deliberate defiance or disregard of Commonwealth workplace relations legislation);
(c)the consequences of the contravening conduct;
(d)the objects of Commonwealth workplace relations legislation;
(e)whether the contraventions are distinct or arise from a single course of conduct;
(f)deterrence, both general and specific;
(g)relevant record of civil penalty contraventions;
(h)the size and financial resources of the contravener;
(i)co-operation with regulatory authorities (if any);
(j)the contravener's contrition (if any);
(k)the size of, and any recent increases to, the prescribed penalty; and
(l)the totality principle.
This list of considerations is not fixed and is not a mere check-list or catalogue of matters to be attended to: it is for the Court in exercising the discretion to impose a penalty to take into account and weigh any other factors considered relevant to the individual circumstances of the case: Pattinson at [18] and [68] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ; Kelly at [14] per Tracey J; Australian Ophthalmic Supplies at [91] per Buchanan J.
Course of conduct
Submissions
As to the course of conduct the FWO submitted that:
(a)section 557(1) of the FW Act provides that, for specified contraventions of the FW Act, two or more contraventions of a term of the same civil remedy provision will be treated as a single contravention where those contraventions were committed by the same person and arose from the same course of conduct. Where contraventions have arisen out of a single act, decision or omission, the contravention may involve a course of conduct;
(b)the FWO accepts that Su is entitled to the benefit of course of conduct provisions in s 557(2) of the FW Act in relation to the failures to make and keep records at the engagement of each of the Employees, being records of whether the Employees were full time or part time, whether they were engaged on a permanent, temporary or casual basis, and the date on which each of the Employees commenced their employment;
(c)the FWO further accepts that the repeated failures to make records of overtime hours in respect of each of the Employees, and the repeated failures to issue pay slips after payments were made to each of the Employees will also each form a separate course of conduct; and
(d)accordingly, the Court may be satisfied that Su was involved in three separate contraventions of the FW Act.
In relation to grouping the contraventions, Su submitted that:
(a)the FWO says that for the purpose of penalty and the course of conduction provisions in s 557(2) of the FW Act, that there were three separate courses of conduct, namely:
(i)the failure to make and keep certain records at the time of engagement of the Employees (in contravention of s 535 of the FW Act);
(ii)the failure to make records of overtime hours (in contravention of s 535 of the FW Act); and
(iii)the failure to issue pay slips (in contravention of s 536 of the FW Act);
(b)the Court ought to further group the two contraventions under s 535(1) of the FW Act together under s 557(1) of the FW Act as being part of a single course of conduct, namely, failure to make and keep employee records. In the circumstances of this case it is evident that there was a single decision made with respect to the keeping of employee records and thus a single course of conduct for the purposes of s 557(1) of the FW Act;
(c)alternatively there is such a substantial overlap with the conduct underlying those contraventions, being the act of failing to maintain proper employment records, it is submitted that the Court ought to find that it would be appropriate to impose a single penalty;
(d)a grouping under s 557(1) of the FW Act (or imposition of a single penalty) of this nature is consistent with the approach taken in earlier authorities where Courts have grouped together (or ascribed one maximum penalty to) various contraventions of failing to make and keep prescribed records under s 535 of the FW Act in breach of multiple different FW Regulations (including where relevant, breaches of regs 3.32 and 3.34) essentially as a result of a single decision pertaining to the failure to make and keep employee records: Fair Work Ombudsman v Panol DC Pty Ltd & Ors [2021] FCCA 373 (“Panol”) at [110]-[111] per Judge Cameron; Fair Work Ombudsman v Han Investments Pty Ltd [2017] FCA 623 (“Han Investments”) at [10] per Barker J; Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832 (“South Jin (No 2)”) at [39] per White J; Fair Work Ombudsman v Care Providers Pty Ltd & Ors [2018] FCCA 3771 (“Care Providers”) at [82] per Judge Heffernan; and
(e)if the Court does not accept this submission, then in the alternative, it is submitted that the Court, in affixing each penalty, take into account the fact that the contraventions arose from a course of conduct, or that there is relevant overlap in the elements or impacts of the particular contraventions, in order to ensure the total penalty is just and appropriate: Fair Work Ombudsman v First Group Of Companies Pty Ltd (Deregistered) & Ors [2018] FCCA 1228 (“First Group Of Companies”) at [22] per Judge Jones.
In reply to the application of courses of conduct to contraventions of s 535(1) of the FW Act, the FWO submitted that:
(a)to group the record keeping contraventions in the manner suggested by Su would be to pay insufficient attention to the separate legal character of each of the record keeping obligations and the failures that led to each of the contraventions occurring;
(b)the record keeping contraventions in this matter did not come about as a result of a single decision by Su to not make any records in respect of the Employees. Su did make and keep some records, such as the records relating to the total hours worked and total wages paid to the Employees each week;
(c)instead, the contraventions arise from failures to make and keep specific records, which came about as a result of separate failures by Su. The first of these occurred at the commencement of the employment of each of the Employees, by failing to record basic details regarding status of employment as required by regs 3.32(c) and (d) of the FW Regulations. The second was a failure to make records on each of the occasions that the Employees worked overtime hours as required by reg 3.34 of the FW Regulations; and
(d)each of these two omissions represent a failure to comply with an obligation that has a separate purpose. Given the influence that an employee’s status has on the entitlements that arise in the course of their employment, it is important that employers maintain a clear record that is available for review by all parties and the workplace regulator. Separately, the obligation to make records of overtime hours worked ensures that hours which are worked in excess of an employee’s ordinary hours are captured so that they can be paid at the appropriate additional rate.
In oral submissions the FWO submitted that treating the two alleged contraventions of s 535(1) of the FW Act as one contravention would bring down the aggregate penalty to a level that would be too low to have deterrent effect, and particularly so in relation to general deterrence: Transcript, p 20.
Course of conduct – consideration
At the outset it is convenient to deal with the FWO’s oral submission that treating the two alleged contraventions of s 535(1) of the FW Act as one contravention would bring down the aggregate penalty to a level that would be too low to have deterrent effect, and particularly so in relation to general deterrence. The Court does not accept that submission. It invites the Court to set a penalty by way of deterrence irrespective of the number of contraventions. Penalty can only be assessed by reference to the contraventions actually found, and if a respondent is entitled to the benefit of a reduction in the number of contraventions by reason of the grouping provisions of s 557(1) of the FW Act, then they are entitled to any lesser penalty assessed as a consequence.
As a matter of fact, there was only one set of non-compliant records kept by Yuxuan Group for the Employees. That set of non-compliant records failed to record the details of employee status on the one hand and overtime hours worked on the other hand, contrary to regs 3.32(c) and (d) and 3.34 respectively of the FW Regulations and s 535(1) of the FW Act. The set of non-compliant records was one that was established and maintained in this non-compliant form from the commencement of those records. The decision to establish and maintain the non-compliant records in this form was, in the Court’s view, a single decision, and did not involve the making of a separate decision or decisions for or when any of the Employees worked overtime, because Su was altogether ignorant of the relevant record-keeping requirements, and therefore could not have made a separate decision not to maintain a record of any of the Employees who worked overtime. Further, in the circumstances of this case, where there is not a discernible separate decision not to maintain a record of overtime hours worked, that contravention of reg 3.34 of the FW Regulations is the inexorable result of the initial decision to maintain a limited form of wages book and is the same conduct as that which gave rise to the failure to record employee details as required by regs 3.32(c) and (d) of the FW Regulations.
In Panol it was the FWO who submitted that contravention of s 535(1) of the FW Act as a result of failure to keep the records required by regs 3.22(2), 3.33(3)(d) and 3.33(3)(e) of the FW Regulations, could be grouped together, and the then Federal Circuit Court simply accepted that submission, which, perhaps unsurprisingly, the respondent had supported: Panol at [110] and [111] per Judge Cameron.
In Han Investments the Federal Court had before it alleged contraventions of s 535(1) of the FW Act as a result of failure to keep the records required by regs 3.33(2), 3.33(3), 3.34 and 3.36(1) of the FW Regulations: Han Investments at [1] per Barker J. In that case, the Federal Court simply agreed with a submission, again made by the FWO, that it was appropriate for the Court to deal with the matter on the basis that there be one maximum penalty, rather that a penalty for each of the four different types of contraventions under the FW Regulations: Han Investments at [10] per Barker J.
In South Jin (No 2) the Federal Court treated failures to maintain records similar to those not maintained in these proceedings as a single contravention of the relevant provisions of each of the FW Act and the Workplace Relations Act 1996 (Cth) (“WR Act”) respectively: South Jin (No 2) at [25], [42] per White J, read in conjunction with Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456 at [216]-[222] per White J.
In Care Providers at [50] and [82] per Judge Heffernan the then Federal Circuit Court grouped four contraventions as to failure to keep records in accordance with s 535(1) of the FW Act by two employers as a single contravention for each of those employers.
In oral submissions the FWO referred to Fair Work Ombudsman v JS Top Pty Ltd [2017] FCCA 1689 (“JS Top”) at [33] per Judge Jarrett. In JS Top the Federal Circuit Court accepted an agreed position put to it by the parties that contraventions of regs 3.33(1)(a), 3.33(2) and 3.33(3) of the FW Regulations were all separate contraventions under s 535 of the FW Act. JS Top is distinguishable as there was no consideration of the issue or the authorities by the Court, simply an acceptance of the agreed position put by the parties. Furthermore, JS Top is not consistent with more recent authority in this Court, namely Care Providers and Panol, nor is it consistent with Federal Court authority in Han Investments and South Jin (No 2). Being inconsistent with prior Federal Court authority which was not cited to the Court in JS Top is a reason not to follow JS Top: Suh & Ors v Minister for Immigration & Citizenship & Anor [2009] FCAFC 42; (2009) 175 FCR 515; (2009) 108 ALD 470 (“Suh”) at [29] per Spender, Buchanan and Perram JJ; Communications, Electrical, Electronic, Information, Postal, Plumping and Allied Service Union of Australia (Western Australia Division) v Fortescue Metals Group Ltd [2016] FCCA 1227; (2016) 310 FLR 1 (“Fortescue Metals Group”) at [50]-[55] per Judge Lucev, and the Court will not follow JS Top, preferring to follow Han Investments and South Jin (No 2) in the Federal Court and Care Providers and Panol in this Court.
There is therefore a factual and legal basis for adopting the course urged by Su of imposing one penalty for all of the contraventions of s 535(1) of the FW Act, on the basis there was just one course of conduct that resulted from the failure to make and keep records in relation to the Employees, in contravention of regs 3.32(c) and (d) and 3.34 respectively of the FW Regulations, and it is therefore appropriate for the Court to adopt that course. The Court will therefore proceed on the basis that there is a single contravention of s 535(1) of the FW Act alleged against Ms Su.
Nature, extent and circumstances of contravening conduct
Submissions
The FWO’s submissions were as follows:
(a)these proceedings relate to Su’s involvement in the contraventions by Yuxuan Group, being contraventions of s 535(1) of the FW Act for failures to make and keep records and contravention of s 536(1) of the FW Act for failing to provide pay slips;
(b)a necessary precursor to a finding of involvement in a contravention is a finding that the contraventions be made out as against the primary actor, which in this case is Yuxuan Group.; and
(c)the Court may be satisfied that there is sufficient factual basis for the Court to find as part of its reasoning process that Yuxuan Group engaged in the contraventions, because in its Defence filed on 19 November 2021 Yuxuan Group admitted the contraventions, and that as a result of Su’s own admissions, and by operation of s 550(1) of the FW Act, Su is taken to have herself contravened the relevant provisions of the FW Act.
Su’s submissions were as follows:
(a)Su admits the allegations against her but pleads that she was unaware that the failures of the Yuxuan Group were in contravention of the FW Act and the FW Regulations and that she had no intention to contravene the applicable law or had a knowing disregard of the applicable law;
(b)Su was, at all relevant times, prior to seeking legal advice, unaware of Yuxuan Group’s recording and pay slip obligations under the FW Act and FW Regulations and that this evidence is plausible and ought to be accepted;
(c)Su was born in China and came to Australia initially on a student visa and during her own time working in the hospitality industry, she did not receive a pay slip. During the relevant periods, her time was primarily taken up with the care of one, then two, young children. Su’s knowledge of these matters then came about as a result of her proactive stance in seeking legal and accounting advice and making voluntary disclosures to the FWO;
(d)there is no evidence to contradict this and the FWO has not submitted that there is evidence to contradict this; and
(e)Su accepts ultimate responsibility for her failure to enquire into the responsibilities of Yuxuan Group, but the evidence all supports that the failure arose from ignorance and at worse, carelessness, rather than being part of any reckless or deliberate conduct.
Nature, extent and circumstances of contravening conduct - consideration
Manifestly, failure to make and maintain records in relation to employee entitlements, undermines the utility and effectiveness of the FWO in its capacity as a workplace regulator, and its ability to determine whether or not there has been compliance with minimum standards and industrial instruments, and the provision of effective means for investigation and enforcement of employee entitlements: Fair Work Ombudsman v Orwill Pty Ltd & Ors [2011] FMCA 730; (2011) 63 AILR 101-461 at [21] per Lucev FM; Fair Work Ombudsman v Commercial and Residential Cleaning Group Pty Ltd & Ors [2017] FCCA 2838 (“Commercial and Residential Cleaning Group”) at [41] per Judge Lucev; thereby damaging the utility and effectiveness of the relevant statutory objective: Secretary, Department of Health and Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545 (“Pagasa Australia”) at [56] per Flick J. The Federal Court summed it up thus in Han Investments at [113]-[115] per Barker J:
113 This is an area of employment regulation where, unless record keeping obligations are met, the ability of a regulator, and indeed individual employees, to identify an employer’s breach of employment obligations is made difficult, if not on occasions impossible – as indeed this case emphasises.
114The record keeping obligations are directed at ensuring the creation and retention of records as a critical tool in the assessment of compliance with workplace laws. Unless an employer complies with the law, and makes and keeps employment records, an effective safety net for employees is difficult to maintain. The result is that employees are more vulnerable to exploitation. The job of the FW Ombudsman, as regulator, in detecting and protecting employees’ workplace entitlements is reduced in effectiveness.
115I therefore accept the submission made on behalf of the FW Ombudsman that the contraventions in this case should not be seen as mere contraventions of some lower order. The failure to maintain records truly strikes at the very foundation of the regulatory scheme which is designed to ensure that employees are paid their legal entitlements.
Likewise, the non-provision of pay slips can impact significantly on an employee’s capacity to verify and prove their income and entitlements: Han Investments at [114]-[115] per Barker J; Fair Work Ombudsman v IE Enterprises Pty Ltd [2021] FCA 60 at [53]-[54] per Anderson J; Commercial & Residential Cleaning Group at [42] per Judge Lucev.
The extent of the record-keeping and pay slips non-compliance in this case was considerable: 20 employees were affected (two full time employees and 18 casual employees) and the combined period, over two periods, of the contravention is almost 11 months. Although some wage records were maintained they appear to have been almost a bare minimum, and there were, relevantly, no records at all during these periods which complied with the obligations under regs 3.32(c) and (d) and 3.34 respectively of the FW Regulations. Su was responsible for the non-compliance and its extent.
In the circumstances, it is fair to observe that these contraventions are serious in their content and not insignificant in their extent.
Su also placed some significance upon her personal circumstances, including that she was the mother of two small children, and was suffering from depression diagnosed by a psychologist. There was no evidence from a medical practitioner or psychologist put in support of this claim which indicated why it was that any illness as alleged would have affected the capacity of Su to maintain, or organise the maintenance of, records and provide pay slips. A person who seeks an indulgence from a court, such as a reduction in penalty, and who seeks to base that indulgence upon an assertion of some form of illness or injury needs to provide not only sworn evidence concerning the medical condition from an appropriate qualified practitioner, but evidence which indicates the nature of the condition and why it did not permit the person concerned to undertake a particular activity, here, the organisation of appropriate record keeping and provision of pay slips: see NAKX v Minister for Immigration, Multicultural and Indigenous Affairs [2003] FCA 1559 at [4]-[10] per Lindgren J; Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75 at [48]-[50] per Collier, Griffiths and Mortimer JJ; BYF15 v Minister for Immigration and Border Protection [2016] FCA 774 at [35] per Perry J; Ellis v Rottnest Lodge(1989) Pty Ltd trading as Rottnest Lodge (No 2) [2017] FCCA 190 at [32]-[34] per Judge Lucev. In the circumstances, whilst the Court notes the alleged illness relied upon by Su, no real weight can be put upon the illness as a cause, or contributing factor towards, the contraventions, in circumstances where there is no medical or psychological evidence which would indicate why the illness rendered Su unable to maintain, or organise the maintenance of, records and provide pay slips. Likewise, there is no particular evidence as to how it is that having two young children significantly affected, or affected at all, Su’s capacity to understand and ensure that appropriate employment records were kept and pay slips provided to the Employees by Yuxuan Group. Given the other activities in which Su was involved, including property purchases and the business of the Allusion Wine Estate, FoodPath and other directorships that she held, the submission that having young children prevented her from understanding or attending to her responsibilities to ensure that employment records were kept and pay slips provided by Yuxuan Group is given little weight by the Court.
Su also placed some reliance upon the fact that when she first came to Australia on a student visa and worked in a sushi factory she was not provided with pay slips, and she has simply treated the Employees in the same manner in which she was treated, the inference being that Su did not, because of her prior experience, know about the necessity to provide pay slips (or by inference, seemingly, to maintain records). The Court has regard to this evidence, but also notes that Su has sufficient sophistication in a business sense to have purchased three properties, and obtained finance for those properties, and to have established and run the business the subject of these contraventions, as well as other businesses of which she is a director, including a wine estate (in respect of which her evidence is that she has sub-contracted the provision of goods and services, including cellar door and accommodation activities, to a third party, and has an involvement in a food technology company (FoodPath) from which she has drawn funds to make a mortgage payment or payments over one of the three properties which she has purchased. Furthermore, Su is sufficiently commercially intelligent to assert that two of those properties owned by her are the subject of trusts for the benefit of others, and therefore ought not to be taken into account in considering her financial capacity. In the circumstances, the Court gives little weight to Su’s evidence that she treated the Employees in the same manner that she was treated as an employee when she came to Australia and worked on a student visa.
In all the circumstances, the nature and extent of the contravening conduct was serious and relatively prolonged, and occurred in circumstances for which the explanations proffered carry little weight.
History, size and financial capacity
Submissions
The FWO’s submissions were as follows:
(a)the FWO acknowledges that the financial circumstances of a respondent may be a relevant consideration in determining the appropriate penalty and whether a penalty is “meaningful”: Fair Work Ombudsman v QHA Foods Pty Ltd [2019] FCCA 3120 at [87] per Judge Baker, citing Hansen v Mt Martha Community Learning Centre Inc (No 2) [2015] FCA 1283 at [5] per Jessup J;
(b)despite this, a contravener’s financial position does not entitle it to any discount on the penalty that would otherwise be appropriate: Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 (“Mornington Inn Appeal”) at [69] per Stone and Buchanan JJ; New Shanghai at [105]-[106] per Bromwich J;
(c)while Su has given evidence as to her income and financial position: Su November 2022 Affidavit at [17]-[23], she is presently the owner of three properties, one of which is currently operated as a winery, and another as a rental property: Roberts Affidavits at [29], Su November 2022 Affidavit at [17];
(d)despite the other interests that may exist in relation to these properties, the FWO submits that the ownership of these properties by Su should be considered by the Court as weighing against any claims of financial incapacity to pay penalties; and
(e)further, the Court should still impose penalties that are appropriate regardless of Su’s financial situation, as “[o]therwise, insufficient attention will be paid to the very important consideration of general deterrence”: Australian Competition and Consumer Commission v ACN 135 183 372 (in liquidation) (formerly known as Energy Watch Pty Ltd) [2012] FCA 749; [2012] ATPR 42-405 (“Energy Watch”) at [19] per Marshall J, and that the penalty that is imposed must reflect the seriousness of the conduct and achieve the prime objective of general deterrence.
Su’s submissions were as follows
(a)as acknowledged by the FWO, the financial circumstances of a respondent may be relevant in determining the appropriate penalty and whether it is “meaningful” and the FWO appears to accept Su’s evidence as to her income and financial position. However, the FWO submits, despite other interests in real estate owned by Su, her ownership ought to be considered as weighing against claims of financial incapacity. It is submitted that this is incorrect. The Court ought not to ignore the reality of the nature of Su’s ownership of these properties or her limited ability to access their, also limited, underlying equity. A failure to do so would mean the Court has not truly taken into account her financial circumstances; and
(b)given the limits on her financial position, a penalty in the lower range may still be relevantly meaningful to Su.
History, size and financial capacity - consideration
Whilst employers, large, medium or small, cannot overcome financial difficulties by underpaying employees or avoiding statutory entitlements: Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 (“Rajagopalan”) at [27] per Driver FM; Kelly at [28] per Tracey J, properly evidenced, and for proper reasons, incapacity to pay may afford some relief by way of mitigation of penalty: Olsen v Sterling Crown Pty Ltd [2008] FMCA 1392; (2008) 177 IR 337 (“Olsen”) at [58]-[76] per Lucev FM and the cases there cited, including:
(a)Australian Competition & Consumer Commission v ABB Transmission & Distribution Ltd (No 2) [2002] FCA 559; (2002) 190 ALR 169; [2002] ATPR 41-872 at [42] per Finkelstein J (“necessary to have regard to the capacity of the parties to bear the penalty”);
(b)Australian Securities Commission v Forem-Freeway Enterprises Pty Ltd [1999] FCA 179; (1999) 30 ACSR 339 at 351-352 per Madgwick J (liberty to apply in relation to the imposition of a penalty on the basis that an individual might come into funds in the future and might be able to pay a penalty at a future time); and
(c)Printing & Kindred Industries Union & Ors v Vista Paper Products Pty Ltd & Anor (1994) 57 IR 414; (1994) 127 ALR 673; (1994) 1 IRCR 413; (1994) 37 AILR 3-053; ALR at 686 per Wilcox J (usual for a court to take into account an offender’s capacity to pay in determining monetary penalty).
In Kelly at [28] per Tracey J, the Federal Court did not disavow size as a factor to be considered in relation to penalty. What the Federal Court there said was:
(a)regardless of size, corporate employers are obliged to meet minimum employment standards;
(b)when corporate employers do not meet minimum employment standards it will be normal to impose an “appropriate” monetary sanction; and
(c)the sanction must be at a meaningful level.
In Textile Clothing and Footwear Union of Australia v Lotus Cove Pty Ltd [2004] FCA 43 at [47] per Merkel J, the Federal Court, as a factor in mitigation of penalty, had regard to the fact that the employer respondent was a small enterprise upon whom the imposition of a large fine was likely to be oppressive.
In Olsen at [76] per Lucev FM following an extensive review of the authorities on payment of civil penalties it was said that:
It therefore appears that the size and financial resources of a contravener are factors to be considered, and the impact of those factors upon the setting of penalty is in each case a matter for consideration of the particular circumstances of the size and financial resources of the contravener, plus the other factors which are relevant.
The Court should not, however, be deterred from imposing the appropriate penalty only because there may be a difficulty paying it: Energy Watch at [19] per Marshall J; Cotis v Pow Juice Pty Limited [2007] FMCA 140 at [68] per Lloyd-Jones FM.
In Jordan v Mornington Inn Pty Ltd [2007] FCA 1384; (2007) 166 IR 33; (2007) 60 AILR 100-744 (“Mornington Inn”) the Federal Court was required to determine the appropriate penalties to be imposed on an employer for admitted contraventions of the WR Act, and at [99] per Heerey J stated:
…[a]s to the respondent’s own financial position, however, in considering the size of a penalty, capacity to pay is of less relevance than the objective of general deterrence: [Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281] at [9]. In any event, to the extent that financial hardship might mitigate what would otherwise be an appropriate penalty, such an argument would need to be based on evidence. Apart from the income figures mentioned above, which were advanced from the Bar table, no such evidence was forthcoming.
Mornington Inn went on appeal. In Mornington Inn Appeal at [69] per Stone and Buchanan JJ the statement of principle in Mornington Inn at [99] per Heerey J was described as being “unimpeachable”. Thus, financial hardship might mitigate penalty if there is evidence to support that course.
Whilst a lot of time and effort was expended by both parties in endeavouring to persuade the Court that Su either:
(a)had the capacity to pay a penalty sought by the FWO (the FWO’s submission); or
(b)had no capacity, or a significantly diminished capacity, to pay any penalty that might be imposed, at least at the level of penalty sought by the FWO (Su’s submission,
the FWO did not seek to cross-examine Su with respect to her evidence concerning her financial position. Because Su’s evidence as to her financial position was relatively general (there was, for example, no tender of a Statement of Financial Affairs, such as the Court might see in family law or bankruptcy proceedings) and not the subject of challenge by way of cross-examination, there was, to some degree, a lack of suitably detailed financial evidence as to Su’s income, assets or liabilities. The Court can however only work with the evidence given.
The evidence establishes that a residential property in the Adelaide suburb of Burnside (“Burnside Property”) was purchased entirely with funds provided by Su’s parents, and it is where those parents now live. The Burnside Property has also been used as security for a loan to purchase a second property: Allusion Wine Estate, a vineyard with cellar door and accommodation, in relation to which Su’s parents also loaned Su $270,000 as a deposit for its purchase.
The evidence establishes that the Burnside Property and the Allusion Wine Estate owned by Su are held by her as trustee for the benefit of her parents, albeit that it appears the trusts were only reduced to writing following the filing of the FWO’s submissions in these proceedings. Without the benefit of cross-examination of Su it is not possible to determine the reason for lateness of the emergence of the trusts in writing, but on the evidence it is apparent that she holds both properties on trust for her parents.
The evidence indicates that Su has a rental investment property in the Adelaide suburb of Campbelltown (“Campbelltown Property”). There is some equity in the Campbelltown Property, but the FWO’s evidence about the value of the Campbelltown Property is very general, and as Su submits account needs to be taken of capital gains tax and fees and charges in assessing whether, if the Campbelltown Property were sold, any funds would become available. It is evident that funds have been drawn from FoodPath (a company of which Su is a director) to make a mortgage repayment or repayments on at least one occasion, indicating that at least one other source of funds may be available to Su. The evidence in relation to financial capacity is unsatisfactory. There is no adequate accounting for Su’s income or assets in a manner which would enable the Court to make a proper assessment of Su’s financial capacity, as there would be if a comprehensive Statement of Financial Affairs had been put into evidence. In the circumstances whilst there is evidence that Su owns property, there is evidence that indicates that she may not be able to fully realise any equity in the properties, or because there may not be significant realisable equity in respect of the Campbelltown Property, because taxes and charges may minimise the amount that may be realised. There is also evidence that Su may have access to funds from FoodPath. The Court also bears in mind that the total penalty sought by the FWO is not that significant being a maximum of $15,984, and the total penalty that they Court has determined ought to be imposed is less again, being $7,992: see [92] below. Given Su’s various property and commercial interests, her access to funds from other sources (FoodPath) and her past access to significant sums by way of loans to purchase property from her parents and aunt, the Court is not satisfied that Su would not be able to access funds to pay the total penalty. In the circumstances, the evidence is not sufficient to establish financial incapacity on the part of Su to pay any penalty that might be imposed.
Prior record of civil contraventions
Su has not previously been found to have contravened the FW Act. As such Su is a first time contravener of the FW Act. Ordinarily, and subject to consideration of the other factors, her status as first time contravener would ordinarily entitle her to some discount on penalty.
Deliberateness and senior management
Su asserts, and the FWO accepts, that the contraventions were not deliberate in that Su did not know of the requirements in the record keeping and pay slip provisions of the FW Regulations. It is fair to observe that the contraventions were, however, deliberate in the sense that Su failed to ascertain her obligations as an employer, and did so, in circumstances where it appears that she is not without a certain degree of commercial acumen. Further, she was, during at least part of the relevant times, a director of Yuxuan Group, and at all relevant times, the person responsible for human resources and payroll functions in respect of the Employees. It would appear that she was the senior manager responsible for the Employees, there being no evidence that any other person fulfilled a relevant management function, particularly with respect to the maintenance of employment records and the provision of pay slips. In the above circumstances, the Court will have regard to the fact that the contraventions are a result of inadvertent deliberateness by a senior manager responsible for the Employees.
Contrition and cooperation
Submissions
The FWO’s submissions were as follows:
(a)where respondents cooperate and make admissions early in the course of an investigation or soon after the commencement of proceedings, it is appropriate to allow a discount on penalty: Mornington Inn Appeal at [75] per Stone and Buchanan JJ;
(b)the FWO accepts that Su cooperated fully with the FWO’s investigation, participating in a recorded interview and providing documents and information as requested: Agreed Facts at [15]-[17];
(c)the FWO also accepts that Su made full admissions of liability early in the proceedings and Su has therefore has demonstrated a willingness to facilitate the course of justice and should be entitled to a discount on penalties; and
(d)a 20 percent discount for cooperation would be appropriate in this case.
Su’s submissions were as follows:
(a)Su has expressed her contrition and remorse at her conduct and it is submitted the Court should accept that as being genuine;
(b)that Su’s expression of remorse should be accepted as genuine is supported by the fact that:
(i)her conduct was not deliberate or reckless;
(ii)her co-operative conduct throughout the course of the FWO’s investigation and these proceedings, initiated by proactively seeking legal advice and the making of voluntary disclosures; and
(iii)borrowing money in order to make rectification payments to the Employees with respect to the Company’s underpayments despite there being no legal obligation to do so;
(c)although the underpayments relate to contraventions in which Su was not involved, this is evidence of Su seeking to assist the Employees as best as she is capable and reflective of her contrition generally. Further, although Su resigned as a director on 1 April 2021, Su was part of the initial process in ensuring that Yuxuan Group met its obligations under the FW Act and FW Regulations by seeking legal and accounting advice with respect to these issues and understands that these issues, including the record-keeping and pay slip issues, were addressed by Yuxuan Group; and
(d)Su’s cooperation with the FWO in its investigation and throughout these proceedings has been frank, fulsome and complete.
Contrition and cooperation - consideration
Preparedness to cooperate has been considered evidence of contrition and thus a matter to be considered in mitigation of a penalty: Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543; (2007) 162 IR 444; (2007) 59 AILR 100-669 (“Ponzio”) at [99] per Lander J and [165] per Jessup J; Fair Work Ombudsman v Drivecam Pty Ltd & Ors [2011] FMCA 600; (2011) 208 IR 79 at [77] per Emmett FM. Where respondents cooperate and make admissions early in the course of an investigation or soon after the commencement of proceedings, it is appropriate to allow a discount on penalty: Mornington Inn Appeal at [75]-[76] per Stone and Buchanan JJ.
The evidence establishes that Su:
(a)was responsible, at least in part, for the making of voluntary disclosures to the FWO concerning the contraventions (and more broadly various underpayments which are not the subject of these proceedings), albeit that the disclosures may have been prompted by some tangentially related media coverage of the Fun Tea Stores;
(b)she cooperated throughout the course of the FWO investigation, willingly providing relevant documents and participating in an interview with the FWO;
(c)borrowed money in order to rectify underpayments to the Employees; and
(d)has expressed contrition and remorse concerning her conduct, which the Court accepts as genuine.
In the above circumstances, the Court will have regard to the contrition and cooperation which Su has demonstrated in relation to the contraventions, noting that her conduct in that respect preceded any indication from the FWO that proceedings were to be instituted, and that the repayments to the Employees have been made out of personal funds, not the corporate funds of Yuxuan Group which is now in liquidation. These are all matters very much to Su’s credit, and warrant at least the 20 percent discount on penalty put forward by the FWO.
Compliance with minimum standards
Submissions
The FWO’s submissions were as follows:
(a)one of the principal purposes of the FW Act is to provide a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions for all employees: FW Act, s 3(b), and a key function of the FWO is to monitor and enforce compliance with minimum standards and investigate conduct that may contravene those standards: FW Act, s 682(b) and (c);
(b)both the keeping of accurate records and the provision of pay slips to employees “play a central role in the capacity of the applicant as a regulator to monitor and enforce compliance with minimum employment standards”: Fair Work Ombudsman v ANS.HL Trading Pty Ltd [2021] FCCA 1163 (“ANS.HL Trading”) at [46] per Judge Jarrett;
(c)pay slips in particular are “an essential component of a fair system of wage regulation”: Fair Work Ombudsman v 3 Rundle Mall Pty Ltd [2022] FedCFamC2G 354 (“3 Rundle Mall”) at [60] per Judge Brown, as pay slips that are properly issued and contain all required details provide employees with a clear explanation of the components that make up their wage, while also providing information of the entity that is employing them. This information allows an employee to quickly assess whether there are any irregularities in their wage and, if so, promptly address them with their employer or the workplace regulator: 3 Rundle Mall at [60]-[61] per Judge Brown;
(d)a failure to issue detailed pay slips may significantly disempower employees and create “a structure within which breaches of industrial laws can easily be perpetrated”: Fair Work Ombudsman vTaj Palace Tandoori Indian Restaurant Pty Ltd [2012] FMCA 258 (“Taj Palace Tandoori”) at [67] per Riethmuller FM;
(e)in the present matter, the Employees were not given any pay slips and therefore did not have the opportunity to review the information about their wages themselves or provide it to the regulator to seek assistance in assessing their entitlements: Roberts Affidavit at [24];
(f)a failure by an employer to make and keep accurate records has the effect of impeding the FWO in determining whether minimum standards have been complied with, or even prevent it from being able to make final determinations entirely. In this particular matter, Su’s involvement in the failures to maintain records of the status of each of the Employees resulted in delays in assessing the basic details of the Employees; similarly, the failure to make and keep overtime records resulted in additional delays in assessing the overtime entitlements of the Employees: Roberts Affidavit at [10]-[16] and [21]-[23];
(g)while the FWO accepts that the record keeping contraventions did not prevent the FWO from ultimately assessing the entitlements of the Employees, Yuxuan Group’s and Su’s overall approach to record keeping resulted in failures to capture basic details which would enable the identification of all employees, such as their names (as required by reg 3.32(b) of the FW Regulations and dates of birth, which actively impeded the FWO’s ability to assess entitlements for other employees: Roberts Affidavit at [17];
(h)in making an assessment of appropriate penalties the FWO submits that to focus entirely on the actual effects of the contraventions on the Employees would be to risk paying “insufficient attention to the deterrence aspect of the pecuniary penalty regime”, while “diluting the message that the relevant provisions must be properly observed”: ANS.HL Trading at [31] per Judge Jarrett; and
(i)when considering the impact of these contraventions and the need to comply with minimum standards, the Court should set penalties at a meaningful level that will send a clear message to the public including other directors regarding the importance of keeping full and accurate records and issuing pay slips to employees.
Su’s submissions were as follows:
(a)the importance of record-keeping and pay slips generally and the impact of failing to keep proper records or provide pay slips to employees, as set out in the FWO’s submissions on penalty, are not disputed;
(b)these factors may be relevant to issues of general deterrence, nonetheless, the Court still needs to consider these observations within the context of the specific circumstances of this case in order to assess the objective seriousness of the contraventions;
(c)in this case, there is no evidence from any of the Employees as to the impact of the failure to provide pay slips (or keep proper records) on them directly;
(d)the evidence relied on by the FWO in this matter is that as a result of the record-keeping failures there was a delay (of an unspecified period) in making appropriate assessments with respect to the Employees, but it did not prevent the FWO from ultimately assessing the entitlements of the Employees; and
(e)insofar as the FWO has submitted that it was impeded in its ability to assess entitlements for other employees, the Court should not draw inferences or have regard to speculation with respect to possible past losses where there is no evidence of other loss, even where the FWO has alleged this is as a result of the Respondents’ failure to keep records: Taj Palace Tandoori at [44] per Riethmuller FM.
Compliance with minimum standards - consideration
As already alluded to (see [28] above) the damage in a case such as this is often to the utility and effectiveness of the relevant statutory objective: Pagasa Australia at [56] per Flick J. A principal and fundamental object of the FW Act is the preservation of an effective safety net for employee entitlements and effective enforcement mechanisms: FW Act, s 3. The substantial penalties set by Parliament and awarded by the Courts for failing to comply with minimum award obligations reinforce the importance placed on compliance with minimum standards and an effective enforcement framework: FW Act, s 539(2).
The maintenance of the safety net is particularly pertinent in industries such as hospitality, restaurant and fast food, where it is now almost notorious that there are significant pockets of non-compliance in relation to the payment of wages and entitlements, either at all or correctly: Plancor Pty Ltd v Liquor, Hospitality & Miscellaneous Union [2008] FCAFC 170; (2008) 171 FCR 357; (2008) 177 IR 243 (“Plancor”) at [37] per Gray J; Fair Work Ombudsman v Kojima & Anor [2013] FCCA 976 (“Kojima”) at [1] per Judge O’Sullivan; Fair Work Ombudsman v Koojedda Carpentry Pty Ltd as trustee forThe Gumley Trust & Ors (No 2) [2017] FCCA 2577 at [72] per Judge Lucev (“Koojedda Carpentry (No 2)”), and see too, in a general sense, the Industry Report annexed to the Roberts Affidavit.
In relation to Su’s submission that the Court ought not draw inferences or have regard to speculation with respect to possible past losses when there is no evidence of such loss, the Court does not need to indulge in either the drawing of inferences or speculation in circumstances where there is plain evidence that the Employees were underpaid, that evidence coming from Su herself, and the evidence of Roberts as to the difficulty of calculating the relevant assessments because of the lack of records (including overtime hours worked), which relates directly to the contraventions which have occurred. The fact that the assessment process had to be carried out at all, and that Su and her husband (to their credit) had to remedy underpayments at all, is a clear example of why there are minimum standards in relation to matters such as record keeping and pay slips. Employees ought not be underpaid, and the workplace regulator ought not have to engage, at the taxpayer’s expense, in prolonged assessments to determine the quantum of any such under payments, those being matter which it would be unnecessary to deal with if proper records had been kept and pay slips provided.
In the context of the objects of the FW Act requiring compliance with minimum standards, the contraventions in this case involve an undermining of the statutory objects and purpose of the FW Act, and require a meaningful penalty to demonstrate the consequences for failing to comply with the FW Act, and to act as an incentive for other employers to ensure that they comply with minimum standards.
General deterrence
Submissions
The FWO’s submissions were as follows:
(a)general deterrence must serve a purpose such that the penalty is not seen by others as just “the cost of doing business”: Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290; (2016) AILR 102-690 at [27] per Flick J;
(b)in order to be useful as a general deterrent, a penalty “should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like-minded persons or organisations”: Ponzio at [93] per Lander J;
(c)there are two key features to this matter that call for meaningful penalties in order to achieve the purpose of general deterrence, being the industry Su and Yuxuan Group operated in and the vulnerable nature of the Employees;
(d)courts have recognised that the fast food industry in particular is ““notorious” for non-compliance” and, compounded with employees in the fast food industry generally working irregular hours, being low paid and typically employed by employers who lack sophisticated human resources support, has a greater need for general deterrence: Fair Work Ombudsman v Tsurc Pty Ltd & Anor (No 2) [2015] FCCA 2148 at [40]-[41] per Judge Nicholls;
(e)the widespread nature of non-compliance within the fast food industry is supported by research conducted by the FWO, which indicates that in the 2019–2020 financial year disputes within the Takeaway Food Services industry class ranked fifth in terms of the number of disputes dealt with by the FWO. The top-ranked industry class for disputes in this period was another subset of the hospitality industry, being the Cafes and Restaurants industry class: Roberts Affidavit at [27];
(f)as well as the need to send a message to employers and directors of employers within the fast food industry, general deterrence is particularly important where pay slip and record keeping contraventions affect employees who are more vulnerable to exploitation. Courts have recognised that workers who are young or from a non-English speaking background may be more vulnerable to exploitation than employees whose first language is English, or who have more work experience: Fair Work Ombudsman v EA Fuller & Sons Pty Ltd & Anor [2013] FCCA 5 at [55] per Judge Driver;
(g)it is particularly important that employers of these individuals are deterred from contravening the FW Act by failing to maintain accurate records and provide employees with pay slips that give a full account of their earnings and entitlements;
(h)at least six of the Employees were in Australia on visas: Agreed Facts at [21], with at least three of those being on student visas and aged between 22-23 at the time of the Assessment Periods: Roberts Affidavit at [20] and Annexure JR-8;
(i)more generally, it can be seen that vulnerable workers are overrepresented in disputes, and particularly in disputes within the fast food industry. In the period of July 2018-June 2021 27 percent of disputes within the Takeaway Food Services industry class related to employees on visas, while 19 percent of all disputes dealt with by the FWO involved visa holders (despite making up just 4 percent of the labour force in this period). Additionally, 50 percent of all disputes in the Takeaway Food Services industry class involved young workers who were under the age of 25; and
(j)the above factors highlight the importance of general deterrence within the fast food industry and particularly in relation to the employment of vulnerable workers, such as the Employees.
Su’s submissions were as follows:
(a)it is accepted that even where there is no need for specific deterrence, general deterrence is still a relevant factor;
(a)the FWO has identified the nature of the relevant industry (fast food) and employees who are more vulnerable to exploitation are relevant to general deterrence;
(b)while it is accepted that a purpose of general deterrence is to send a message to the industry about the treatment of vulnerable employees, it is submitted that the Court should not be too quick to accept a blanket assertion that the Employees in this case were necessarily vulnerable, given the particular circumstances of this case;
(c)in Fair Work Ombudsman v Amritsaria Four Pty Ltd & Anor: [2016] FCCA 968 (“Amritsaria”) at [60] per Judge Smith it was relevantly observed that:
The evidence of the vulnerability of the employees was sketchy. In their complaints to [the FWO], both [the employees] claimed that they were new to this country and jobless. [One such employee] claimed that he had found it difficult to find a job. I accept that this was the case and that this made them both vulnerable to exploitation. However, I do not think that this goes very far. Many employees are vulnerable to a certain extent and for different reasons: age, employment experience, financial needs, lack of control of record-keeping, and lack of knowledge of workplace rights. As Lucev FM (as his Honour then was) said in Fair Work Ombudsman v Ultra Tune Australia Ltd (2012) 225 IR 326; [2012] FMCA 560 at 336 [14], one cannot simply assume that because an employee is a foreign national, he or she is unfamiliar with Australia’s labour practices, or more vulnerable to underpayment or exploitation than any other employee.
(d)in Fair Work Ombudsman v Skyter Trade Pty Ltd & Anor [2018] FCCA 1483 at [10] per Judge Jarrett it was noted that:
It is often submitted by the applicant in cases such as the present that the worker or workers concerned are vulnerable workers because they fall within a particular class of employees. Often, they are said lo be vulnerable simply because they are foreign nationals working in Australia pursuant to a visa performing unskilled work. But as Lucev FM (as his Honour then was) said in Fair Work Ombudsman v Ultra Tune Australia Ltd [2012] FMCA 560; (2012) 225 IR 326 at [14], it is not correct to simply assume that because an employee is a foreign national, he or she is unfamiliar with Australia’s labour practices, or more vulnerable to underpayment or exploitation than any other employee. Membership of a class of vulnerable workers might be relevant to fixing a penalty because it might represent an attempt by an employer to exploit a worker by employing that person because of perceived vulnerabilities. But unless there has been exploitation of the worker because of those qualities, that the worker is a member of a particular class of employees said to vulnerable will not be to the point.
(e)similarly, referring to earlier case law, in First Group Of Companies at [44]-[47] per Judge Jones, the Federal Circuit Court was not prepared to give significant weight to the fact that all of the employees were student visa holders in the absence of sufficient evidence as to the impact of this on the employees (aside from one);
(f)in Fair Work Ombudsman v Ava Travel Pty Ltd & Ors [2018] FCCA 3627 at [24] per Judge Jarrett the Federal Circuit Court further rejected a submission that by reason of the low skilled work undertaken by the employees and the fact that English was their second language that the employer and its officers ought to have had a heightened awareness of the need to ensure proactive compliance with workplace relations obligations;
(g)in this case, the FWO has not produced any evidence from any employee as to their vulnerability or any impact of their visa on their employment or their (lack of) past work history, nor is there any evidence to suggest there was an attempt by Yuxuan Group to exploit any employee by reason of their visa status or by reason of their speaking English as a second language;
(h)there is further no evidence that this was a case where an employee was necessarily disadvantaged with respect to an employer because of a language barrier. Plainly, the Employees were at least primarily (if not wholly) Chinese nationals, as was Su, the other directors and the store supervisor. The Employees were also members of a “group chat” on “WeChat”, giving them the means to communicate with Su, the store supervisor and/or fellow employees, including those they did not share shifts with;
(i)the FWO also published on its website, at the relevant time, information regarding workers and workplace rights, including with respect to pay slips and record-keeping in simplified and traditional Chinese;
(j)the fact that some of the Employees were also on student visas also does not necessarily make them especially vulnerable. Retention of their visa was not dependent on employment and it can be inferred that, for those Employees who were on student visas, they were sufficiently fluent in English to study at a tertiary level;
(k)given the lack of evidence and under the circumstances of this particular case, the Court should not give significant weight, if any, to the allegation that the Employees were vulnerable workers; and
(l)similarly, whilst the Court may consider it necessary, to some extent, to “send a message” to the relevant industry, given the lack of any deliberate exploitation of workers within the industry, and the fact that sufficient records were kept to allow the Employees’ entitlements to be assessed, this factor carries less weight. Logically, the Court is not sending any mixed message for inadvertent breaches that ultimately does not affect the ability to assess employees’ entitlements.
In reply to the relevance of the vulnerability of the Employees in considering general deterrence, the FWO submitted that:
(a)the FWO previously made brief submissions regarding the importance of imposing penalties to deter employers in general from failing to comply with record keeping and pay slip obligations where those employers are employing individuals who are more likely to be vulnerable, by reason of English not being their first language or their age indicating that they would be relatively new to the workforce; and
(b)the FWO did not, and does not, suggest that the particular Employees in this matter are inherently more vulnerable to exploitation or that higher penalties should be imposed for the specific conduct of Su in relation to the Employees. Rather, the FWO’s submission is that the Court should have in mind the character of the Employees when considering the general deterrent value of penalties: Fair Work Ombudsman v Java Spice Australia Pty Ltd [2015] FCCA 2930 at [103] per Judge Brown, particularly in circumstances where workers below the age of 25 and workers who are visa holders are highly (and, in the case of visa holders, disproportionately) represented in disputes dealt with by the FWO.
General deterrence - consideration
General deterrence is an important factor in fixing penalty in these proceedings, and employers and their officers both in the fast food industry and generally should be in no doubt that they have a positive obligation to ensure compliance with the obligations they owe to their employees under the law, and that they must provide their employees with pay slips and keep proper records, and that significant penalties may be imposed upon individual directors of, and managers in, corporations, who fail to comply with such obligations. Those employers who fail to comply with minimum obligations gain an unfair competitive advantage over those employers who do comply with their workplace obligations.
The Court is of the view that this is a case in respect of which general deterrence is important. At a broad level, this Court continues to see and hear and impose penalties in numerous cases where employers have failed to comply with their record keeping requirements under regs 3.32 and 3.33 of the FW Regulations in particular, and also with respect to the failure to provide pay slips under reg 3.34 of the FW Regulations. Furthermore, the hospitality industry, including the restaurant and fast food sectors thereof, continue to be notorious in respect of contraventions of the FW Act, both generally and in respect of record keeping and pay slip provision: see, for example, the authorities cited at [61(d)-(f)] above. Although the Court does not need the Industry Report in evidence in this case to necessarily reach the conclusion that general deterrence is important in the fast food industry, the Industry Report in evidence does reinforce the need for general deterrence in the fast food industry.
The Court was urged by the FWO to find that general deterrence was necessary in this case because at least some of the Employees were young people on visas, and that all of the Employees were seemingly Chinese nationals, and were therefore part of a cohort of employees who were more likely to be vulnerable. The mere fact that people are young, citizens of another country, and in Australia on visas does not necessarily lead to the conclusion that those persons are vulnerable employees: Fair Work Ombudsmen v Ultra Tune Australia Pty Ltd [2012] FMCA 560 at [14] per Lucev FM citing Hanssen Pty Ltd v Jones [2009] FCA 192; (2009) 179 IR 57. In this case, there is no evidence that any of the Employees considered themselves to be vulnerable or exploited by the employer Yuxuan Group as a result of any deliberate act of non-compliance by Yuxuan Group, or any pressure applied to the Employees concerned. With respect to the six visa holders referred to by the FWO, five of them were in Australia on student or graduate visas and one on a partner visa, and there is simply nothing in the evidence which would suggest that their visa status was a factor in these contraventions.
In all the circumstances, the Court accepts that these are serious contraventions which require a not insignificant measure of general deterrence.
Specific deterrence
Submissions
The FWO’s submissions were as follows:
(a)it is necessary that any penalty imposed on Su contain sufficient “sting or burden” that will cause Su to “seek to avoid the risk of subjection to future penalties” and therefore be “deterred from future contraventions”: Australian Building and Construction Commissioner v J Hutchinson Pty Ltd T/A Hutchinson Builders [2019] FCA 667 at [15] per Logan J;
(b)while Su has not been a director of Yuxuan Group since April 2021, she is presently the director of five companies: Roberts Affidavit at [29], including Allusion Wine Estate, which operates a winery and accommodation business in Yankalilla, South Australia: Roberts Affidavit at [30]-[31];
(c)Su has an “entrepreneurial bent” which suggests that she may operate businesses and employ individuals in the future, and it is therefore appropriate to impose a penalty with the aim of specific deterrence: 3 Rundle Mall at [108] per Judge Brown; and
(d)the evidence establishes that Su is a business operator who is likely to employ staff again in the future through corporate entities. Su must therefore be cognisant of the obligations imposed by the FW Act on the companies she controls and by reason of s 550 of the FW Act, herself, particularly in respect of record keeping and pay slip obligations.
Su’s submissions were as follows:
(a)the Court ought to be cautious not to give too much weight to the factor of specific deterrence in this case as the risk of re-offending is negligible;
(b)in relation to the FWO’s written submission that because of Su’s “entrepreneurial bent” specific deterrence is an important factor, an “entrepreneurial bent” in Su’s past is not disputed, however, the Court ought to be satisfied that nonetheless the likelihood of Su engaging in similar offending is negligible given:
(i)that Su’s conduct was not deliberate or reckless;
(ii)Su’s genuine contrition and remorse;
(iii)Su is proactively educating herself and the Yuxuan Group as to their legal responsibilities and Yuxuan Group addressing those responsibilities;
(iv)Yuxuan Group is now in liquidation; and
(v)the undoubted impact that the FWO’s investigation and these proceedings had on Su’s emotional and financial capacity;
(c)Su has deposed to her limited active role as a director of Allusion Wine Estate (which does not have any employees), her current ability to engage in any further work at all is limited by her current diagnosis of depression and her role as primary carer for three young children; and
(d)given the negligible risk of engaging in similar conduct, specific deterrence ought to carry less weight, if any, when setting penalty than it might ordinarily in matters of this type.
Specific deterrence - submissions
In relation to specific deterrence the Court does not consider that there is a need for significant specific deterrence in this case. In that regard, the Court notes those factors set out at [53] above in relation to Su’s contrition and cooperation with the FWO, and takes the view that it is unlikely that Su will need to be specifically deterred from further contraventions of the FW Act. The Court is cognisant of the fact that Su would appear to be involved in other businesses, in particular Allusion Wine Estate which, setting aside the third party involvement in the cellar door and accommodation services, is a business which Su appears to be involved in on an ongoing basis. Su also appears to be involved in the FoodPath business, although the detail in relation to that is scant. Notwithstanding Su’s ongoing involvement in other businesses, the Court is satisfied that Su appreciates what she has done, the need not to repeat such conduct in the future, and that her contrition and cooperation in relation to this matter has been such, that there is not a need for significant specific deterrence.
Value of penalty unit
Submissions
In relation to maximum penalty, Su submitted that:
(a)it is uncontroversial that the penalty, as specified in s 539 of the FW Act for each (grouped as the Court decides) contravention of the FW Act is 60 penalty units for an individual and that the amount of a penalty unit is that specified in s 4AA of the Crimes Act 1914 (Cth) (“Crimes Act”).
(b)the maximum penalty is $222 and this is the current value of a penalty unit, which commenced on 1 July 2020. Between 1 July 2017 and 30 June 2020, the value of a penalty unit was $210. Insofar as it may be found that Su embarked on a course of conduct (whether that is found to be two or three courses of conduct), it could be said to have commenced prior to 1 July 2020;
(c)in Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd (No 2) [2016] FCA 727 (“Hail Creek (No 2)”) at [70] per Logan J the Federal Court found that the relevant maximum penalty is that at the time when the offender embarked on what is taken by s 557 of the FW Act to be a single course of conduct and therefore that the maximum penalty for each contravention must be found to be $12,600 and not $13,320 as submitted by the FWO;
(d)there are decisions from this Court which apply the penalty that was in effect later in time when a course of conduct spans a period of time with two different maximum penalties. However, none of these decisions appear to have considered Federal Court’s decision in Hail Creek (No 2); and
(e)in the alternative, if the Court considers it is not bound to follow Hail Creek (No 2), it is submitted that the Court when setting a penalty for each contravention should at least take into account as a mitigating factor the fact that the contravening conduct included a not insignificant span of time where the lower penalty applied: Amritsaria at [52] per Judge Smith.
In reply to the value of the applicable penalty unit when determining the maximum penalties available, the FWO submitted that:
(a)Su’s proposed approach is inconsistent with that taken by the Federal Court in Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 (“Grouped Property Services (No 2)”). The Federal Court in Group Property Services found that contraventions which involve a course of conduct that spans a period both before and after an increase in the value of a penalty unit should apply the higher penalty unit when determining maximum penalties, but that it may be appropriate to take into consideration, as a factor in mitigation of penalty, that the lower unit applied for part of the contravention period: Group Property Services(No 2) at [396]-[401]. In reaching this conclusion, the Federal Court referred to remarks in R v White (BC9101745, New South Wales Court of Criminal Appeal, 25 July 1991, unreported, Gleeson CJ) that there is “no reason to attribute to Parliament an intention that the amended maximum penalty should apply only in cases where the conspiracy in question was first entered into subsequent to the amendment, and should not apply to conspiracies that were on foot at the time of the amending legislation”;
(b)this approach has been subsequently adopted in several matters in the Federal Court: see: Fair Work Ombudsman v Tac Pham Pty Ltd [2018] FCA 120 (“Tac Pham”) at [67] per Siopis J; Fair Work Ombudsman v Australian Workers’ Union [2020] FCA 60 (“Australian Workers’ Union”) at [47]-[48] per Snaden J, also referring to Ahmed v Al-Hussain Pty Ltd t/as The Cheesecake Shop (No 3) [2019] FCA 848 (“Ahmed (“No 3”)) at [35]-[36] per Rares J and Registered Organisations Commissioner v Australian Nursing and Midwifery Federation (No 2) [2018] FCA 2004 (“Australian Nursing and Midwifery Federation (No 2)”) at [123]-[126] per Barker J; and
(c)it should also be noted that the majority of the contraventions occurred after the value of the penalty unit increased on 1 July 2020, with approximately three months of the Assessment Periods occurring before that date and just over seven months taking place after.
Value of penalty unit – consideration
Section 539(2) of the FW Act prescribes the individual penalty units for contraventions of civil remedy provisions of the FW Act. These maximum penalties form the basis for the Court’s assessment as to where contraventions sit when taken and balanced with all other factors: Mornington Inn Appeal at [41]-[46] per Stone and Buchanan JJ.
The power of the Court to impose pecuniary penalties in respect of contraventions of the FW Act arises from s 546(1) of the FW Act. In relation to these contraventions, the maximum penalty that may be imposed under s 546(2) of the FW Act for a contravention of a civil remedy provision by an individual is 60 penalty units
Section 4(1) of the FW Act provides that “penalty unit” has the same meaning as in s 4AA of the Crimes Act. Prior to 1 July 2020 the amount of a penalty unit in the Crimes Act was $210. From 1 July 2020 this amount increased to $222.
In relation to the value of the penalty unit the Court notes that in Hail Creek (No 2) it was said at [70] per Logan J that:
…[t]he applicable specification is determined by the date of the contravening conduct: Murrihy v Betezy.com.au Pty Ltd (No 2) (2013) 221 FCR 118 at 121-127 [6]-[28]. At the time when the company embarked in December 2013 on what is taken by s 557 of the Act to be a single course of conduct, the effect of s 4AA of the Crimes Act 1914 [(Cth)] was that the amount of a penalty unit was $170.
In Hail Creek (No 2)] reference was made to Murrihy v Betezy.com.au Pty Ltd (No 2) [2013] FCA 1146; (2013) 221 FCR 118; (2013) 66 AILR 102-078 (“Murrihy (No 2”). In Murrihy (No 2) the Federal Court examined the history of what is now s 546(1) of the FW Act going back to the original provisions in the Conciliation and Arbitration Act 1904 (Cth), and all succeeding legislation in relation to circumstances where a federal court may impose a penalty for a contravention of a federal law. Having extensively reviewed the relevant legislative history, English war time cases which found that relevant legislation imposed penalties retrospectively, a judgment of the Full Court of the Supreme Court of South Australia which followed the common law in determining that penalties ought not be imposed retrospectively, and a judgment of the Full Court of the Federal Court dealing, not with retrospective penal liability, but with punishment for professional misconduct
,the Federal Court in Murrihy (No 2) at [28] per Jessup J found that:…[o]n any view, punishment is involved in the exercise of the Court's jurisdiction under s 546 of the FW Act. It follows that I must decide the present case by reference to the value of a penalty unit before the commencement of the Amendment Act.
It is relevant to observe in relation to Murrihy (No 2) that the penalties to be imposed related to conduct which preceded the passage of the legislation amending the value of the penalty unit. It was not a case, such as is the case here, where the relevant conduct occurred both before and after the legislative amendments increasing the value of the penalty unit. It is not apparent that that distinction was given any consideration in Hail Creek (No 2). In Tac Pham at [66]-[68] per Siopis J the Federal Court observed as follows:
66 As mentioned, the contravening conduct occurred between 22 December 2014 and 20 December 2015. A complicating factor in this case is that during the relevant period, the value of a penalty unit was increased from $170 to $180. This occurred on 31 July 2015. The admitted contraventions, therefore, span a period during which there were two different penalty unit values.
67I propose to follow the approach of Katzmann J in Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 at [396]-[398] where Katzmann J applied the higher penalty unit value in respect of the contraventions where there had been a continuing course of conduct commencing prior to the increase and continuing after the increase came into effect.
68Accordingly, as each of the contraventions in this case is premised upon there being a continuing course of conduct, I will assess the maximum penalty by reference to the $180 penalty unit.
It is apparent that no consideration was given to what was said in either Hail Creek (No 2) or Murrihy (No 2) in following the approach adopted in Grouped Property Services (No 2).
In Australian Workers’ Union at [46]-[48] per Snaden J the Federal Court observed as follows:
46 As is outlined above, the value of a penalty unit increased with effect from 31 July 2015 from $170 to $180. Prior to that date, the maximum penalty that could be imposed for each contravention was $51,000.00; after it, it was $54,000.00. The Ombudsman contends that the court should impose penalties that take account of that larger maximum. The AWU submits that, as the bulk of the Contravening Conduct occurred prior to the increase, the penalties to be imposed should assume that the maximum is the smaller amount.
47A similar situation confronted this court in Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557. There, Katzmann J, referring to an earlier increase in the value of a penalty unit (prior to the increase that confronts the court presently), noted as follows (at [394]-[401]):
The penalty increase only applies to offences committed after the amendment commenced: Crimes Act [1914 (Cth) (“Crimes Act”)], s 4F(1). Contraventions of the civil remedy provisions of the FW Act, however, are not offences (FW Act, s 549) and s 7(2)(d) of the Acts Interpretation Act 1901 (Cth), which preserves existing penalties where Acts have been amended, only applies to penalties for offences. Does this mean that the amendment applies regardless of when the contraventions took place? I think not. Although the definition of “penalty unit” in the FW Act does not refer to s 4F of the Crimes Act, it is inconceivable that, in specifying that a penalty unit has the meaning given by s 4AA of that Act, Parliament did not intend that the section would apply according to its operation under that Act. In any case, the presumption against retrospectivity would apply such that, absent express words or necessary intendment, the new provision would not have retrospective effect.
…
[C]ontraventions occurring before the commencement of the amending Act must be determined by reference to the definition of “penalty unit” as it stood at the time of the contraventions.
Thus, in the present case, for those contraventions that occurred before 28 December 2012, a penalty unit is $110, and for those that occurred on and after that date it is $170. Some of the contraventions, however, occurred both before and after the increased penalty came into effect. The Ombudsman submitted that, where contraventions involve a course of conduct spanning the period both before and after the increase, the higher amount should apply or at least be taken into account. She relied on R v White (BC9101745, NSWCCA, 25 July 1991, unreported), a case in which the Court of Criminal Appeal was concerned to determine the maximum penalty for a conspiracy to defraud the Commonwealth of sales tax which had occurred over a period of time during which the maximum penalty had increased. In that case, Gleeson CJ, with whom Hunt J agreed, said (at 12):
The question whether the relevant maximum penalty in the present case was the penalty as amended or the penalty prior to amendment is one to be answered by reference to the intention of Parliament, which in turn is to be discerned by the application of the ordinary principles of statutory construction. I can see no reason to attribute to Parliament an intention that the amended maximum penalty should apply only in cases where the conspiracy in question was first entered into subsequent to the amendment, and should not apply to conspiracies that were on foot at the time of the amending legislation. In particular I can see no reason for concluding that Parliament intended that conspiracies pursued following the amendment would be punished more severely if they were entered into after the amendment, and less severely if they were entered into prior to the amendment.
Lee J, with whom Gleeson CJ and Hunt J agreed, observed that ‘it would not be inappropriate’ for a sentencing judge to bear in mind an increase in penalty that has taken place during the currency of the conspiracy and take it into account in fixing sentence (at 11).
While the analogy is not a perfect one, I conclude that by parity of reasoning the same principle applies to contraventions of the FW Act involving a course of conduct which began before the amendment and continued after it came into effect.
It follows that, save for the contraventions of ss 535(2) and 536(1), the maximum penalties are these:
(1)for each contravention that occurred entirely before 28 December 2012: $33,000 for GPS and $6,600 for Rosario;
(2)for each contravention that occurred entirely on or after 28 December 2012: $51,000 for GPS and $10,200 for Enrico and Rosario; and
(3)for each contravention that involved conduct that occurred both before and after 28 December 2012: $51,000 for GPS and $10,200 for Rosario.
For the contraventions of ss 535(2) and 536(1) they are either $16,500 or $25,500 for GPS and $3,300 or $5,100 for Rosario.
Nonetheless, in relation to the contraventions involving courses of conduct spanning the two periods, I will take into account in the determination of the penalty the fact that the lower amount applied for part of the period.”
48Her Honour's reasoning has been applied since: Ahmed v Al-Hussain Pty Ltd t/as The Cheesecake Shop (No 3) [2019] FCA 848, [35]-[36] (Rares J); see also Registered Organisations Commissioner v Australian Nursing and Midwifery Federation (No 2) [2018] FCA 2004, [123]-[126] (Barker J). I am bound to apply—indeed, I gratefully adopt—her Honour's analysis.
In Ahmed (No 3) and Australian Nursing and Midwifery Federation (No 2) the Federal Court adopted the rationale in Grouped Property Services (No 2), as set out above.
In Ahmed (No 3) at [35] per Rares J the Federal Court explained the reasoning in Grouped Property Services (No 2) as follows:
In Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 at [392]-[397], Katzmann J considered the effect of a change in the value of a penalty unit that straddled the period of a course of conduct for the purposes of determining the maximum penalty for a contravention under the Act based on that course of conduct. Her Honour followed what Jessup J had decided in Murrihy v Betezy.com.au Pty Ltd (No 2) (2013) 221 FCR 118 at 125 [22] and 127 [28], namely that the increased penalty did not apply retrospectively to a contravention that was complete in the period before which the new penalty came into force. However, Katzmann J held, following the reasoning of Gleeson CJ and Lee J in R v White (Court of Criminal Appeal of the Supreme Court of New South Wales, unreported 25 July 1991), that it would not be inappropriate for a sentencing judge to determine that the level of penalty had increased over the period of a conspiracy and to put that consideration into effect in any sentencing: Gleeson CJ, with whom Allen and James JJ agreed, applied that reasoning in R v Annecchini (Court of Criminal Appeal of the Supreme Court of New South Wales, unreported 24 April 1996, BC9601668 at pp.4-5).
In Australian Nursing and Midwifery Federation (No 2) the Federal Court, in taking into account the fact that the penalty maximum increased during the period of the relevant contraventions, calculated the penalty in such a way (albeit with no mathematical reduction according to time periods in which the particular maximum penalties applied) to recognise that a lower maximum applied for the first two periods of the contravention: at [123]-[126] per Barker J. The Federal Court did so without referring to any prior authority at all. The Court is bound to follow relevant Federal Court authority which is on point: Suh at [29] per Spender, Buchanan and Perram JJ; Fortescue Metals Group at [50]-[55] per Judge Lucev. In this case, the Federal Court has determined, in cases where the contraventions bridge a lower and a higher penalty unit value, that the higher penalty unit value applies: see Grouped Property Services (No 2), Tac Pham, Ahmed and Australian Nursing and Midwifery Federation (No 2). It follows, therefore, that the penalty unit value to be applied in this case is $222. The Court nevertheless observes that it feels instinctively wrong that the law should impose on a contravention an amount of penalty which did not exist at the time that at least some of the contraventions occurred. Having regard, however, to the number of Federal Court judgments dealing with this matter, and the terms in which it has been dealt with, it cannot be said that the Federal Court judgments are plainly wrong. It follows that the penalty unit value in this case must therefore be the higher penalty unit value of $222.
Assessment of penalty
Submissions
In relation to determining the appropriate penalty the FWO submitted that:
(a)the process of determining the appropriate penalty to impose for each contravention is discretionary and involves an evaluative judgment as to what should be appropriate: Registered Organisations Commissioner v Communications, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2020] FCA 96 at [23] per Flick J;
(b)the appropriate deterrent value of a penalty may be assessed by reference to the non-exhaustive list of the factors identified by the Court in CSR Ltd at 52, 152–52,153 per French J, which relate to both the character of the contraventions and the character of the contravenor: Pattinson at [19] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ ; and
(c)a (non-exhaustive) list of factors relevant to the imposition of penalty in an industrial regulatory context was also summarised in Kelly.
The FWO’s submissions were as follows:
(a)the total maximum penalty available against Su is $39,960. The FWO asks that the Court consider imposing upon Su a penalty in the range of $13,320 - $15,984; and
(b)no further reduction on totality is appropriate as the contraventions have had courses of conduct applied to them to limit the total number of contraventions, and the suggested penalty ranges strike “a reasonable balance between deterrence and oppressive severity”: Pattinson at [41] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ.
Su’s submissions were as follows:
(a)consistency and proportionality require that like cases are treated in a like manner. In doing so, it is necessary to consider similar cases, whilst acknowledging that there can be no exact comparator and the Court’s role of instinctive synthesis in imposing penalty;
(b)when considering past cases concerning like contraventions, it is submitted that the ranges proposed by the applicant (prior to discount) are objectively disproportionately high in all the circumstances of this case and that consistency and proportionality would indicate a lower range would be appropriate;
(c)the purpose of the proposed discount is to recognise an acceptance of wrongdoing, genuine expressions of contrition and remorse and an acknowledgement of Su’s willingness to facilitate the interests of justice by timely admissions: Care Providers at [88] per Judge Heffernan. These matters are addressed at Su’s submissions relating to the circumstances in which the conduct took place and whether the breaches were deliberate. Taken together, these actions demonstrate a discount at the higher end is called for;
(d)when considering like cases, the discount proposed by the FWO with respect to penalty (20 percent) is insufficient in all the circumstances of this case. It is submitted a more appropriate discount would be in the range of 25 percent -35 percent;
(e)if the Court is minded to impose a penalty in the vicinity of that sought by the FWO, it is submitted that given all of the relevant circumstances the Court ought to consider making the following additional orders:
(i)suspension of the ordered penalty until such time as Su is found in any other proceeding to have committed, after the pronouncement of these orders, a contravention of the FW Act;
(ii)that the ordered penalty be wholly discharged at the conclusion of a three year period commencing upon the pronouncement of these orders if, during that period, Su has not been found in any other proceeding to have committed, after the pronouncement of these orders, a contravention of the FW Act; and
(iii)the FWO have liberty to apply for variation of the above orders if, in the three year period commencing upon the pronouncement of these orders, Su has been found in any other proceeding to have committed, after the pronouncement of these orders, a contravention of the FW Act;
(f)in the alternative, an order be made with respect to payment by instalments, or allowing a lengthier period of time for payment, to enable Su to realistically pay the amount ordered as a penalty without risk of being in breach of this Court’s order; and
(g)the totality principle requires that after fixing a penalty appropriate for each individual contravention, the Court will need to consider whether the total aggregate penalty imposed is appropriate for all of the contravening conduct in all the circumstances.
In reply to Su’s approach of comparing the penalties applied in other cases to arrive at an appropriate penalty range in this matter, the FWO submitted that:
(a)Su submits that the penalty set by the Court must take into consideration the concepts of proportionality and consistency. She has set out a list of other matters involving contraventions of ss 535 and 536 of the FW Act and, in doing so, suggested that these cases may be considered to demonstrate that the penalty ranges sought by the Applicant in the present matter are disproportionately high;
(b)the High Court in Pattinson held that civil penalties are not retributive, but are instead aimed at deterring the contravenor and the general public from engaging in the same type of behaviour again. Any attempt at introducing concepts drawn from theories of retributive justice to the imposition of penalties under s 546 of the FW Act, such as proportionality, “undermines the primary significance of deterrence”: Pattinson at [42] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ;
(c)the FWO submits that drawing comparisons between the present matter and past matters in order to determine an appropriate penalty range are unhelpful and inappropriate. As noted in NW Frozen Foods Pty Ltd v Australian Competition & Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285; (1996) 141 ALR 640; [1997] ATPR 41-546 (“NW Frozen Foods”) at 295 per Burchett and Kiefel JJ:
Cases are authorities for matters of principle; but the penalty found to be appropriate, as a matter of fact, in the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case.
(d)the FWO further submits that in arriving at an appropriate penalty in the present matter the Court may have regard to the deterrent value of the penalty, both to Su and the community at large, balanced against ensuring that the penalty imposed upon Su does not fall into the category of “oppressive severity”: Pattinson at [46] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ.
In reply to the impact on the deterrent value of penalties that would result from suspending or discharging penalties, the FWO submitted that:
(a)while Su has provided copies of tax returns for her and her husband, she has not provided any financial records regarding the Allusion Wine Estate of which she is a director of: Su Affidavit at [21], or evidence to support her expectations that it will be unprofitable for the foreseeable future: Su November 2022 Affidavit at [22];
(b)the penalty imposed on Su should be meaningful, should reflect the seriousness of the conduct and should achieve the prime objective of deterrence;
(c)to suspend or discharge penalties for Su, particularly where no penalties are being imposed on Yuxuan Group, would be to undercut those objectives and run the risk of the penalties being seen as an “acceptable cost of doing business”; and
(d)it accepts that it may be appropriate to provide a longer period of time for a respondent to pay penalties where there are concerns around a respondent’s financial capacity. However, the period of time provided should not be so long as to detract from the general and specific deterrent value of penalties.
Assessment of penalty - consideration
The Court notes that where it is necessary to impose a civil penalty it ought to be fixed at a level which ensures that the penalty cannot be regarded simply as part of an acceptable or usual cost of doing business: Pattison at [55] and [66] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ; ABCC v CFMEU at [116] per Keane, Nettle and Gordon JJ.
The totality principle requires the Court, once it has made a judicial evaluation of what it considers to be an appropriate aggregate penalty, to examine one final time, the aggregate penalty in order to determine whether it appears wrong: Mornington Inn Appeal at [42]-[43] and [91] per Stone and Buchanan JJ; Australian Ophthalmic Supplies at [27]-[28] per Gray J and [78] per Graham J.
In assessing penalty the Court has regard to the need for deterrence, and in this case general deterrence in particular, the other factors for consideration discussed above, including the fact that there has been contrition expressed and considerable co-operation by Su, who is a first time contravener. Further, although the two contraventions are serious, they are not advertently egregious contraventions, nor are they contraventions of the most serious kind in ther scope or extent. The Court has endeavoured in determining penalty to strike the balance between deterrence and severity referred to in Pattinson at [41] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ. The Court has determined the penalties to be applied having regard to the circumstances of this case, and without the necessity to make overt comparisons with penalties in other cases.
Having regard to all of the submissions made (both orally and in writing) by the FWO and Su, and its consideration if the factors set out above, the Court considers that the penalty which is appropriate for both contraventions is 40 percent of the maximum penalty of 60 penalty units, or 24 penalty units. A discount of 25 percent should be applied, co-operation with the FWO and because Su is a first time contravener so that the penalty for each contravention is 18 units. In monetary terms the penalty for each contravention is therefore $3,996 (18 x $222), giving a total penalty of $7,992. Having regard to the totality principle the Court is satisfied that no further reduction in penalty is necessary. Having regard to all of Su’s circumstances the Court considers that Su ought to be given 3 months to pay the penalties, rather than the usual 28 days.
CONCLUSION AND ORDERS
The Court has concluded that:
(a)Su is liable for two contraventions of the FW Act under:
(i)section 535(1) of the FW Act for failing to keep records as required by regs 3.32(c), (d) and (e) and 3.34 of the FW Regulations; and
(ii)section 536(1) of the FW Act by failing to provide pay slips to the Employees within one working day of making payment in relation to the performance of work; and
(b)in relation to each contravention a penalty of $3,996 is to be imposed, with 3 months to pay.
The Court will hear the parties as to costs, if any: FW Act, s 570(2).
I certify that the preceding ninety-four (94) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Lucev. Associate:
Dated: 24 November 2023
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