Fair Work Ombusdman v ZNZ Education Pty Ltd
[2018] FCCA 3136
•17 October 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUSDMAN v ZNZ EDUCATION PTY LTD & ORS | [2018] FCCA 3136 |
| Catchwords: INDUSTRIAL LAW – Utility of agreement as to range of penalties being reached before hearing – imposition of penalties – application for imposition of “education orders” – such orders not preventative, remedial or compensatory – education orders penal in nature – lack of power in court to make such orders – application dismissed. |
| Legislation: Fair Work Act 2009 (Cth), s.545 Federal Circuit Court of Australia Act 1999 (Cth) |
| Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] 273 IR 211 |
| Applicant: | FAIR WORK OMBUSDMAN |
| First Respondent: | ZNZ EDUCATION PTY LTD |
| Second Respondent: | PING ZHANG |
| Third Respondent: | YANGYANG LI |
| File Number: | BRG 1118 of 2016 |
| Judgment of: | Judge Egan |
| Hearing date: | 17 October 2018 |
| Date of Last Submission: | 17 October 2018 |
| Delivered at: | Brisbane |
| Delivered on: | 17 October 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Spry |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Counsel for the Respondents: | Mr Latham |
| Solicitors for the Respondents: | Du and Associates Lawyers |
THE COURT DECLARES THAT:
The Second Respondent, Ping Zhang (Ms Zhang), was involved (within the meaning of subsection 550(2) of the Fair Work Act 2009 (Cth)) in the following contraventions committed by the First Respondent and is therefore taken to have committed those contraventions herself:
(a)section 293 of the Fair Work Act 2009 (Cth), by failing to pay the employee Fiona her minimum rate of pay as prescribed by clause 4.1 of the National Minimum Wage Order 2014 (NMWO 2014);
(b)section 293 of the Fair Work Act 2009 (Cth), by failing to pay the employee Fiona her minimum rate of pay as prescribed by clause 4.1 of the National Minimum Wage Order 2015 (NMWO 2015);
(c)subsection 44(1) of the Fair Work Act 2009 (Cth), by failing to pay the employee Fiona for annual leave taken, in accordance with subsection 90(1) of the Fair Work Act 2009 (Cth);
(d)subsection 44(1) of the Fair Work Act 2009 (Cth), by failing to pay the employees Fiona and Jessica for periods of personal leave taken, in accordance with section 99 of the Fair Work Act 2009 (Cth);
(e)subsection 44(1) of the Fair Work Act 2009 (Cth), by failing to pay the employees Fiona and Jessica at their base rate of pay for their absence from work on a public holiday, in accordance with section 116 of the Fair Work Act 2009 (Cth);
(f)subsection 44(1) of the Fair Work Act 2009 (Cth), by failing to pay the employees Fiona and Jessica for their accrued, untaken annual leave when their employment ended, in accordance with subsection 90(2) of the Fair Work Act 2009 (Cth);
(g)section 45 of the Fair Work Act 2009 (Cth), by failing to pay the employee Jessica, annual leave loading on any accrued, untaken annual leave when her employment ended, in accordance with clause 29.3 of the Clerks Award;
(h)subsection 535(1) of the Fair Work Act 2009 (Cth), by failing to keep employee records for the employees Fiona and Jessica as required by the Fair Work Regulations 2009 (Cth);
(i)subsection 535(2) of the Fair Work Act 2009 (Cth), by failing to keep employee records for the Employees in the form required by sub-regulation 3.31(1)(a) of the Fair Work Regulations 2009 (Cth);
(j)subsection 536(1) of the Fair Work Act 2009 (Cth), by failing to issue pay slips to:
(i)Jessica on 24 April 2015, 5 June 2015, 19 June 2015, 6 July 2015, 3 August 2015 and 14 August 2015; and
(ii)Fiona on 24 April 2015, 8 May 2015, 22 May 2015, 5 June 2015, 19 June 2015, 6 July 2015, 17 July 2015, 31 July 2015 and 3 August 2015; and
(k)subsection 536(2) of the Fair Work Act 2009 (Cth), by failing to issue pay slips to the employees Fiona and Jessica which included information prescribed by subregulation 3.46(5) (b) of the Fair Work Regulations 2009 (Cth);
The Third Respondent, Yangyang Li (Mr Li) was involved (within the meaning of subsection 550(2) of the Fair Work Act 2009 (Cth)) in the contravention committed by the First Respondent against subsection 535(2) of the Fair Work Act 2009 (Cth), by failing to keep employee records for the Employees in the form required by sub-regulation 3.31(1)(a) of the Fair Work Regulations 2009 (Cth); and is therefore taken to have committed those contraventions himself.
THE COURT ORDERS ON A FINAL BASIS THAT:
The Second Respondent pay a total penalty of $23,290 pursuant to section 546(1) of the Fair Work Act 2009, for her involvement in the contraventions set out above.
The Third Respondent pay a total penalty of $1.011.50 pursuant to section 546(1) of the Fair Work Act 2009, for his involvement in the contraventions set out above.
Pursuant to section 546(3)(a) of the Fair Work Act 2009, the Respondents are to pay the penalty amounts to the Consolidated Revenue Fund of the Commonwealth, within twenty-eight (28) days of this order.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 1118 of 2016
| FAIR WORK OMBUSDMAN |
Applicant
And
| ZNZ EDUCATION PTY LTD |
First Respondent
| PING ZHANG |
Second Respondent
| YANGYANG LI |
Third Respondent
REASONS FOR JUDGMENT
(As Corrected)
The applicant commenced proceedings for declarations and penalty orders against the first respondent, the second respondent and the third respondent. Since the commencement of such proceedings, the first respondent has gone in to liquidation and the applicant no longer seeks any relief against it. The second and third respondents are represented by counsel and instructing solicitors, and by statements of agreed facts the second and third respondents have admitted contraventions of provisions as set out in those statements of the Fair Work Act 2009 (Cth) (“the Act”). They have saved court time and minimised costs in doing so.
The statement of agreed facts in respect of the second respondent was filed on 25 July 2018. That statement is as follows:
STATEMENT OF AGREED FACTS
1. This Statement of Agreed Facts is made by the Applicant and the Second Respondent for the purposes of section 191 of the Evidence Act 1995 (Cth).
CONTRAVENTIONS ADMITTED BY FIRST RESPONDENT
2. The First Respondent has signed a Statement of Agreed Facts dated 27 March 2017 in which it has admitted to contravening the following civil remedy provisions:
(a) section 45 of the Fair Work Act 2009 (Cth) (FW Act), by failing to pay Ms Hui Hua, who is also known as "Jessica" (Jessica) her minimum rate of pay as prescribed by clause 16 of the Clerks- Private Sector Award 2010 (Clerks Award);
(b) section 293 of the FW Act, by failing to pay Ms Wenxin Yao, who is also known as "Fiona" (Fiona) her minimum rate of pay as prescribed by clause.4.1 of the National Minimum Wage Order 2014 (NMWO 2014);
(c) section 293 of the FW Act, by failing to pay Fiona her minimum rate of pay as prescribed by clause 4.1 of the National Minimum Wage Order 2015 (NMWO 2015);
(d) section 45 of the FW Act, by failing to pay Jessica the required loading for overtime hours worked, as prescribed by subclause 27.1(a) of the Clerks Award;
(e) section 45 of the FW Act, by failing to pay Jessica the appropriate penalty rates for public holidays worked, in accordance with clause 31.3 of the Clerks Award;
(f) subsection 44(1) of the FW Act, by failing to pay Fiona for annual leave taken, in accordance with subsection 90(1) of the FW Act;
(g) subsection 44(1) of the FW Act, by failing to pay Fiona and Jessica (together, the Employees) for periods of personal leave taken, in accordance with section 99 of the FW Act;
(h) section 45 of the FW Act, by failing to pay Jessica the appropriate penalty rates for public holidays worked, in accordance with clause 31.3 of the Clerks Award;
(i) subsection 44(1) of the FW Act, by failing to pay Fiona for annual leave taken, in accordance with subsection 90(1) of the FW Act;
(j) subsection 44(1) of the FW Act, by failing to pay Fiona and Jessica (together, the Employees) for periods of personal leave taken, in accordance with section 99 of the FW Act;
(k) subsection 535(1) of the FW Act, by failing to keep employee records for the Employees as required by the Fair Work Regulations 2009 (Cth) (FW Regulations)
(l) subsection 535(2) of the FW Act, by failing to keep employee records for the Employees in the form required by sub-regulation 3.31(1)(a) of the FW Regulations;
(m) subsection 536(1) of the FW Act, by failing to issue pay slips to:
i. Jessica on 24 April 2015, 5 June 2015, 19 June 2015, 6 July 2015, 3 August 2015 and 14 August 2015; and
ii. Fiona on 24 April 2015, 8 May 2015, 22 May 2015, 5 June 2015, 19 June 2015, 6 July 2015, 17 July 2015, 31 July 2015 and 3 August 2015; and
(n) subsection 536(2) of the FW Act, by failing to issue pay slips to the Employees which included information prescribed by sub-regulation 3.46(5)(b) of the FW Regulations.
THE PARTIES AND THE EMPLOYEES
The Applicant
3. The Applicant, the Fair Work Ombudsman (FWO) , is and was at all material times:
(a) appointed by the Governor-General by written instrument to the office of Fair Work Ombudsman pursuant to subsection 687(1) of the Fair Work Act 2009 (Cth) (FW Act);.
(b) a Fair Work Inspector pursuant to section 701 of the FW Act; and ·
(c) a person with standing under subsection 539(2) of the FW Act to apply for orders in respect of contraventions of civil remedy provisions under the FW Act.
The First Respondent
4. The First Respondent, ZNZ Education Pty Ltd (ACN 161 148 376) is and was at all material times:
(a) a body incorporated under the provisions of the Corporations Act 2001 (Cth}, having been registered on 8 November 2012;
(b) able to sue and be sued in its corporate name and style;
(c) a “constitutional corporation” within the meaning of section 12 of the FW Act;
(d) a "national system employer'' within the meaning of section 14 of the FW Act;
(e) an entity that is part of the Zhi Nan Zhen Education and Migration Group and that operates across Australia and New Zealand as a migration agency, assisting clients with visa applications and applications to universities and colleges, with one of its offices located at Level 2, 150 Edward Street Brisbane, Queensland, 4000 (Brisbane Office); and
(f) the entity that employed Fiona and Jessica.
The Second Respondent
5. The Second Respondent, Ping Zhang, is and was at all material times:
(a) also known as "Mickie";
(b) the Human Resources Manager of the First Respondent, based in the Sydney office of the First Respondent;
(c) the person who communicated with the First Respondent's legal representative during the FWO's investigation into the First Respondent;
(d) the person responsible for human resources management of the First Respondent's employees including:
i. the provision of contracts of employment to the Employees;
ii. receiving records of the Employees' finger print scans detailing their entry and exit of the Brisbane Office;
iii. the calculation and payment of wages to the Employees:
iv. the calculation and payment of superannuation to the Employees;
v. creating and issuing pay slips to the Employees; and
vi. approving requests for annual and personal leave;
(e) by reason of the matters ·pleaded in subparagraphs 5(b) to S(d) above·, a person responsible in a practical sense for ensuring that the First Respondent complied with its legal obligations to its employees under the FW Act;
(f) by reason of subsection 793(1) of the FW Act, a person whose conduct, when engaged in on behalf of the First Respondent and within the scope of her actual or apparent authority, was conduct engaged in by the First Respondent; and
(g) by reason of subsection 793(2) of the FW Act, a person whose state of mind was the state of mind of the First Respondent, for conduct engaged in within the scope of her actual or apparent authority.
The Employees
Fiona
6. The First Respondent employed Fiona in the period from 15 April 2015 to 27 August 2015 (Fiona Employment Period).
7. During the Fiona Employment Period, Fiona:
(a) was a Chinese national;
(b) was resident in Australia subject to a subclass 485 Temporary Graduate visa;
(c) performed work for the First Respondent solely at the Brisbane Office as a "Consultant";
(d) performed duties including assisting various clients and customers with queries including guidance as to appropriate courses and eligibility for visa applications, working under the general direction of Shaynna, the Brisbane branch manager;
(e) generally worked 80 hours per fortnight;
(f) entered into a 'Labour Contract' with the First Respondent on 21 July 2015 which provided:
i. for a two year period of employment, commencing on 11 June 2015 and concluding on 10 June 2017;
ii. working hours to be 9:30 a.m. to 6:00 p.m., Monday to Friday;
iii. employment as a "Consultant" in the "Consultation Group" of the Brisbane Office;
iv. a first year base salary of $400 per week (inclusive of superannuation and tax); and
v. structures for monthly entitlements to percentage-based commission drawn from the services fees charged to clients, or from the 'commissions' obtained from the institutions; and
(g) was paid a flat rate of $10 per hour (inclusive of superannuation) for all hours worked, and received three separate commission payments totalling $1,380.86 during Fiona's Employment Period.
Jessica
8. The First Respondent employed Jessica in the period from 1 April 2015 to 26 August 2015 (Jessica Employment Period).
9. During the Jessica Employment Period, Jessica:
(a) was a Chinese national;
(b) was resident in Australia, in April 2015 on a temporary resident visa, and from in or about May 2015 on a permanent resident visa:
(c) performed work for the First Respondent solely at the Brisbane Office as a "Document Consultant";
(d) performed administrative duties including managing email correspondence, reviewing, preparing and filing client documents and visa applications, booking health check appointments for clients as part of their visa applications, communicating with the Department of Immigration and Border Protection;
(e) generally worked 80 hours per fortnight; and
(f) entered into a 'Labour Contract' with the First Respondent on 27 July 2015, which provided:
i. for a two year period of employment
ii. working hours to be 9:30 a.m. to 6:00 p.m., Monday to Friday;
iii. employment as a "Document Consultant" in the "Consultation Group" of the
iv. Brisbane Office;
v. a first year base salary of $450 per week (inclusive of superannuation and tax);
vi. structures for monthly entitlements to bonuses and commission.
10. During the Jessica Employment Period, the First Respondent paid Jessica the following:
(a) nothing at all during the period 1 April 2015 to 3 April 2015 and 6 April 2015 to 10 April 2015;
(b) a flat rate of $10.00 per hour (inclusive of superannuation), for all hours worked in the period from 13 April 2015 to 30 July 2015; and
(c) a flat rate of $11.25 per hour (inclusive of superannuation,)for all hours worked in the period from 31 July 2015 to.26 August 2015.
ACCESSORIAL LIABILITY OF THE SECOND RESPONDENT
11. By reason of the matters pleaded in paragraph 5 above, at all relevant times during the Employees' respective Employment Periods, the Second Respondent had actual knowledge of:
(a) the fact that there was a national minimum wage;
(b) the employment of the Employees by the First Respondent;
(c) the duties performed by the Employees for the First Respondent;
(d) the hours worked by the Employees for the First Respondent;
(e) the payments made by the First Respondent to the Employees during their relevant Employment Periods;
(f) any annual leave taken by the Employees;
(g) any personal leave taken by the Employees;
(h) any superannuation payments to be made to the Employees; and
(i) the payments made to the Employees on the termination of their employment.
12. By reason of the matters pleaded in paragraph 5 above, the Second Respondent:
(a) had actual knowledge of; and
(b) was an intentional participant in, the factual matters which comprise each of the contraventions pleaded against the First Respondent and set out in paragraphs 2(b), 2(c), 2(f), 2(g), 2(h), 2(i), 2(k), 2(1), 2(m) and 2(n) above; and
13. By reason of the matters pleaded in paragraphs 11 and 12 above, the Second Respondent:
(a) Aided, abetted, counselled or procured; and/or
(b) was, by her acts or omissions, directly or indirectly, knowingly concerned in or a party to,
(c) the pleaded contraventions set out in paragraphs 2(b), 2(c), 2(f), 2(g), 2(h), 2(i), 2(k), 2(1),
(d) 2(m) and 2(n) above.
14. By reason of the matters pleaded in paragraphs 11 to 13 above, the Second Respondent was involved in, within the meaning of subsection 550(1) of the FW Act, the contraventions by the First Respondent pleaded in paragraphs 2(b), 2(c), 2(f), 2(g), 2(h), 2(i), 2(k), 2(1), 2(m) and 2(n) above and is therefore to be treated as having personally contravened those provisions.
DECLARATIONS AND ORDERS
15. The Second Respondent opposes the declarations and orders set out at paragraphs 100, 102, 103(a)(c), as to the First and Third Respondent, 104 as to the First Respondent and Third respondent and 105 to 110 of the Applicant's Statement of Claim filed 1 December 2016 (Orders and Declarations).
16. The Applicant continues to press the making of the Orders and Declarations.
17. The parties wish to be heard by the Court as to the making of the Orders and Declarations.
The statement of agreed facts in respect of the third respondent was filed on 24 July 2018 and is as follows:
STATEMENT OF AGREED FACTS
This Statement of Agreed Facts is made by the Applicant and the Third Respondent for the purposes of section 191 of the Evidence Act 1995 (Cth).
CONTRAVENTIONS ADMITTED BY THE FIRST RESPONDENT
The First Respondent has signed a Statement of Agreed Facts dated 27 March 2017 in which it has admitted to contravening subsection 535(2) of the FW Act, by failing to keep employee records for Ms Hui Hua, who is also known as "Jessica" (Jessica) and Ms Wenxin Yao, who is also known as "Fiona" (Fiona) (together, the Employees) in a legible form in the English language in accordance with subregulation 3.31(1)(a) of the FW Regulations (amongst other contraventions).
THE PARTIES AND THE EMPLOYEES
The Applicant
The Applicant, the Fair Work Ombudsman (FWO), is and was at all material times:
appointed by the Governor−General by written instrument to the office of Fair Work Ombudsman pursuant to subsection 687(1) of the FW Act;
a Fair Work Inspector pursuant to section 701 of the FW Act; and
a person with standing under subsection 539(2) of the FW Act to apply for orders in respect of contraventions of civil remedy provisions under the FW Act.
The First Respondent
The First Respondent is and was at all material times:
a body incorporated under the provisions of the Corporations Act 2001 (Cth), having been registered on 8 November 2012;
able to sue and be sued in its corporate name and style;
a "constitutional corporation" within the meaning of section 12 of the FW Act;
a "national system within the meaning of section 14 of the FW Act;
an entity is part of the Zhi Nan Zhen Education and Migration Group and that
operates across Australia and New Zealand as a migration agency, assisting clients with visa applications and applications to universities and colleges, with one of its offices located at Level 2, 150 Edward Street Brisbane, Queensland, 4000 (Brisbane Office); and
the entity that employed Fiona and Jessica.
The Third Respondent
The Third Respondent, YangYang Li, is and was at all material times:
also known as "Paul";
a Director of the First Respondent from its date of registration on 8 November 2012 to 24 2016;
based in the Sydney office of the First Respondent;
a person acknowledged by the Employees of the First Respondent as the "boss";
a registered migration agent whose details automatically appeared as the default option for ZNZ at the end of each online visa application and student enrolment form;
the person who, in relation to the employment of the Employees:
signed the Employees' employment contracts;
authorised all payments of wages to the Employees;
authorised all superannuation contributions in respect of the Employees;
authorised Fiona's commission payments; and
was responsible for setting the pay rates of ZNZ employees;
by reason of the matters pleaded in subparagraphs 5(b) to 5(f) above, a person responsible in a practical sense for ensuring that the First Respondent complied with its legal obligations to its employees under the FW Act;
by reason of subsection 793(1) of the FW Act, a person whose conduct, when engaged in on behalf of the First Respondent and within the scope of his actual or apparent authority, was conduct engaged in by the First Respondent; and
by reason of subsection 793(2) of the FW Act, a person whose state of mind was the state of mind of the First Respondent, for conduct engaged in within the scope of his actual or apparent authority.
The Employees
Fiona
The First Respondent employed Fiona in the period from 15 April 2015 to 27 August 2015 (Fiona Employment Period).
During the Fiona Employment Period, Fiona entered into a 'Labour Contract' with the First Respondent on 21 July 2015 which provided:
for a two year period of employment, commencing on 11 June 2015 and concluding on 10 June 2017;
working hours to be 9:30 a.m. to 6:00 p.m., Monday to Friday;
employment as a "Consultant" in the "Consultation Group" of the Brisbane Office;
a first year base salary of $400 per week (inclusive of superannuation and tax); and
structures for monthly entitlements to commission drawn from the services fees charged to clients, or from the 'commissions' obtained from the institutions.
The 'Labour Contract':
was prepared in the Chinese language;
was signed by the Third Respondent on behalf of the First Respondent; and
was not kept in the English language.
Jessica
The First Respondent employed Jessica in the period from 1 April 2015 to 26 August 2015 (Jessica Employment Period).
During the Jessica Employment Period, Jessica entered into a 'Labour Contract' with the First Respondent on 27 July 2015, which provided:
for a two year period of employment;
working hours to be 9:30 a.m. to 6:00 p.m., Monday to Friday;
employment as a "Document Consultant" in the "Consultation Group" of the Brisbane Office;
a first year base salary of $450 per week (inclusive of superannuation and tax);
structures for monthly entitlements to bonuses and commission.
The 'Labour Contract':
was prepared in the Chinese language;
was signed by the Third Respondent on behalf of the First Respondent; and
was not kept in the English language.
ACCESSORIAL LIABILITY OF THE THIRD RESPONDENT
By reason of the matters pleaded in paragraph 5 above, at all relevant times during the Employees' respective Employment Periods, the Third Respondent had actual knowledge of:
the employment of the Employees by the First Respondent;
the entering into of the Contract' between the First Respondent and the Employees;
the Contract' being prepared in the Chinese language; and
the failure by the First Respondent to have the 'Labour Contract' kept in the English language.
By reason of the matters pleaded in paragraph 5 above, the Third Respondent:
had actual knowledge of; and
was an intentional participant in, the factual which comprise the contravention pleaded against the First Respondent as set out in paragraph 2 above.
By reason of the matters pleaded in paragraphs 12 to 13 above, the Third Respondent:
aided, abetted, counselled or procured; and/or
was, by his acts or omissions, directly or indirectly, knowingly concerned in or a party to;
the pleaded contravention set out in paragraph 2 above.
By reason of the matters pleaded in paragraphs 12 to 14 above, the Third Respondent was involved in, within the meaning of subsection 550(1) of the FW Act, the contraventions by the First Respondent of the provisions of the FW Act pleaded in paragraph 2 above, and is therefore to be treated as having personally contravened those provisions.
DECLARATIONS AND ORDERS
The First Respondent contravened the following civil remedy provision:
Subsection 535(2) of the FW Act, by failing to keep employee records for the Employees in the form required by subregulation of the FW Regulations (amongst other contraventions).
The Applicant seeks a declaration that the Third Respondent was involved, within the meaning of subsection 550(2) of the FW Act, in the contraventions committed by the First Respondent as set out in subparagraph 16(a) above.
The Applicant seeks an order that the Third Respondent pay penalties pursuant to subsection 546(1) of the FW Act for his involvement in the contraventions set out in subparagraph 16(a).
The Applicant seeks an order pursuant to subsection 546(3)(a) of the FW Act requiring the Third Respondent to pay his respective penalty amounts to the Consolidated Revenue Fund of the Commonwealth within 28 days of the Court's order.
The Applicant seeks an order pursuant to subsection 545(1) of the FW Act that the Third Respondent, within a period of two months register with the Applicant's Online Learning Centre at and complete all education courses designed for employers and provide the Applicant with evidence of completion of those courses within a further one month.
Such further orders as the Court deems fit.
As a consequence of the admission by the second and third respondents of contraventions of the Act, it is, in all of the circumstances, appropriate that, to the exclusion of the first respondent, declarations and orders be made in this matter pursuant to paragraphs of the statement of claim numbered 101, 102, 103(b), 103(c) and 104.
The parties, through their respective lawyers, have sensibly arrived at consensus as to the range of penalties within which the court might duly exercise its discretion in terms of the imposition of penalties. That was reflected on pages 23 and 24 of the outline of submissions of the applicant filed on 21 September 2018. Those ranges of agreed penalty have been the subject of appropriate grouping and assessment by way of totality in all of the circumstances.
It is not necessary, therefore, for the court to undertake a minute examination of the respective submissions made by each of the parties on those range of penalty points. Save to say, regard has been had by the court to the written submissions made on behalf of both the applicant and the second and third respondents as set out in the detailed written submissions which have been filed.
When assessing the appropriate penalty to be imposed upon each of the second and third respondents, due regard has been had to the matters as set out in paragraph 7 of the second respondent's submissions, those being matters which ought properly to be taken into account by the court when arriving at a quantum figure for penalty.
There has been an apology, albeit late, and not made directly to the two employees the subject of the contraventions. There has been rectification of underpayments, albeit by the company prior to liquidation, and not by the second or third respondents personally. There has been adverse publicity which is a factor which must be taken into account when assessing penalty. Though submissions were made to the effect that the extent of publicity was not necessarily known, it is uncontested that there was adverse publicity published, and able to be understood, by members of the Chinese community, and that, as a result, the second respondent has suffered considerable embarrassment.
The other factors referred to in paragraph 7 of those submissions, such as lack of past contraventions, the need for specific deterrence and agreement as to penalty, have all been taken into account by the court. It is difficult in circumstances such as the present to assess objective seriousness, but it is clear that, as a matter of policy, members of the employer class need to be brought to account when contraventions have occurred. The co-operation of the contraveners, albeit late, is a factor which has been considered. Having had regard to the nature of the contraventions as set out in the statement of agreed facts which have been filed, penalty schedules are accordingly distributed to the parties.
The court has assessed penalties as follows:
Penalties – Second Respondent
| Provision | Contravention | Maximum Penalty | Range of penalty | Total penalty |
| FW Act S 293 | Minimum wages Failing to pay the minimum rate of pay as prescribed by the NMWO 2014 and the NMWO 2015 (these contraventions have been grouped) | $10,200 | 63.33% | $6,460 |
| FW Act S 44 | Annual leave taken Failing to pay Fiona for annual leave taken, in accordance with section 90(1) of the FW Act | $10,200 | 23.33% | $2,380 |
| FW Act S 44 | Personal leave taken Failing to pay the Employees for periods of personal leave taken, in accordance with section 99 of the FW Act | $10,200 | 23.33% | $2,380 |
| FW Act S 44 | Absent from work on a public holiday Failing to pay the Employees at their base rate of pay for their absence from work on a public holiday, in accordance with section 116 of the FW Act | $10,200 | 23.33% | $2,380 |
| FW Act S 44 | Annual leave on termination Failing to pay the Employees for their accrued, untaken annual leave when their employment ended, in accordance with section 90(2) of the FW Act | $10,200 | 33.33% | $3,400 |
| FW Act S 535(1) | Failing to keep employee records Failing to keep employee records as required by the FW Regulations | $5,100 | 43.44% | $2,210 |
| FW Act S 535(2) | Failing to keep employee records in the form required Failing to keep employee records in the form required by the FW Regulations | $5,100 | 23.33% | $1,190 |
| FW Act S 536(1) | Failing to issue pay slips on specified dates Failing to issue payslips to the Employees on specified dates during their employment as required by the FW Regulations | $5,100 | 43.33% | $2,210 |
| FW Act S 536(2) | Failing to issue pay slips with correct information Failing to issue pay slips that included all of the information required by regulation 3.46 of the FW Regulations | $5,100 | 13.33% | $680 |
| TOTAL | $23,290 |
Penalties – Third Respondent
| Provision | Contravention | Maximum Penalty | Maximum penalty after proposed discount (15%) for admissions | Range of penalty | Total penalty |
| FW Act S 535(2) | Failing to keep employee records in the form required Failing to keep employee records in the form required by the FW Regulations | $5,100 | $4,335 | 23.33% | $1,011.50 |
| TOTAL | $1,011.50 |
Those schedules are respectively for contraventions committed by the second respondent and the third respondent.
The result, as can be seen from the tables, is that the total of penalties to be imposed against the second respondent is in the amount of $23,290 and the total to be imposed against the third respondent is in the amount of $1,011.50.
Further Orders SoughtThe applicant has sought further orders as follows:
4. An order pursuant to subsection 545(1) of the FW Act that the Second Respondent, within a period of two months register with the Applicant’s Online Learning Centre at and complete all education courses designed for employers and provide the Applicant with evidence of completion of those courses within a further one month.
5. An order pursuant to subsection 545(1) of the FW Act that the Third Respondent, within a period of two months register with the Applicant’s Online Learning Centre at and complete all education courses designed for employers and provide the Applicant with evidence of completion of those courses within a further one month.
Those orders were as sought in paragraphs 107 and 108 respectively of the statement of claim. Those proposed orders have been referred to by respective counsel as "education orders". The making of such orders in the past has been commonplace.
It was submitted by Mr Spry of Counsel, on behalf of the applicant, that such orders were both remedial and preventative in the sense that the making of such orders imposed upon those who have contravened provisions of the Act an obligation to carry out a form of education which would relevantly inform them of their employment responsibilities, such that they would be loath to similarly contravene in the future.
Such orders were submitted as being consistent with the purpose of the Act, and within the court's power, pursuant to the provisions of section 545 of the Act. Such orders could also be seen as having a deterrence aspect to them. That section provides as follows:
Orders that can be made by particular courts
Federal Court and Federal Circuit Court
545. (1) The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.
Note 1: For the court's power to make pecuniary penalty orders, see section 546.
Note 2: For limitations on orders in relation to costs, see section 570.
Note 3: The Federal Court and the Federal Circuit Court may grant injunctions in relation to industrial action under subsections 417(3) and 421(3).
Note 4: There are limitations on orders that can be made in relation to contraventions of subsection 65(5), 76(4), 463(1) or 463(2) (which deal with reasonable business grounds and protected action ballot orders) (see subsections 44(2), 463(3) and 745(2)).
(2) Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:
(a) an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;
(b) an order awarding compensation for loss that a person has suffered because of the contravention;
(c) an order for reinstatement of a person.
Eligible State or Territory courts
(3) An eligible State or Territory court may order an employer to pay an amount to, or on behalf of, an employee of the employer if the court is satisfied that:
(a) the employer was required to pay the amount under this Act or a fair work instrument; and
(b) the employer has contravened a civil remedy provision by failing to pay the amount.
Note 1: For the court's power to make pecuniary penalty orders, see section 546.
Note 2: For limitations on orders in relation to costs, see section 570.
(3A) An eligible State or Territory court may order an outworker entity to pay an amount to, or on behalf of, an outworker if the court is satisfied that:
(a) the outworker entity was required to pay the amount under a modern award; and
(b) the outworker entity has contravened a civil remedy provision by failing to pay the amount.
Note 1: For the court's power to make pecuniary penalty orders, see section 546.
Note 2: For limitations on orders in relation to costs, see section 570.
When orders may be made
(4) A court may make an order under this section:
(a) on its own initiative, during proceedings before the court; or
(b) on application.
Time limit for orders in relation to underpayments
(5) A court must not make an order under this section in relation to an underpayment that relates to a period that is more than 6 years before the proceedings concerned commenced.
It was submitted by Mr Spry of Counsel, on behalf of the applicant, that the words -
The Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that the person has contravened a civil remedy provision.
are very wide in ambit, and that they allow the court an unfettered discretion as to what orders it might make in addition to the making of a pecuniary penalty order. He submitted that the types of orders as set out in section 545(2)(a) to (c) inclusive were not exhaustive, and that, as a matter of construction, such subsection should not be looked to for the purpose of construing section 545(1) in respect of the type of "appropriate" orders which the court was empowered to, and ought to, make.
Mr Latham of Counsel, on behalf of the second and third respondents, submitted that the court had no jurisdiction to make "education orders". He submitted that section 545(1) of the Fair Work Act ought to be so construed by reference to the types of orders set out in section 545(2), and that, therefore, the court was limited to the making of orders similar in nature and substance to those set out in subparagraphs (a) to (c) inclusive thereof. He referred the court to the decision of the High Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] 273 IR 211 (“ABCC v CFMEU”) where it was held, in respect of the making of a non‑indemnification order (found to be a penalty order) that:
Despite the breadth of the power conferred by section 545(1) of the Act, it was limited to empowering the making of appropriate preventative, remedial and compensatory orders and, as such, did not include a power to make penal orders.
Mr Latham submitted, similarly, that the breadth of the power conferred by section 545(1) of the Act was limited in respect of contraventions falling within section 545(1) to orders of the type prescribed in 545(2)(a) to (c) inclusive.
In ABCC v CFMEU, Kiefel CJ, at [22] to [25] inclusive, said as follows:
22. It cannot be doubted that s 546(1) is the sole source of the power for the Federal Court to make an order that a person pay a pecuniary penalty when that person has contravened a civil remedy provision. The specific grant of power in s 546(1) involves a denial of a power to do the same thing in the same case free from the conditions and the qualification prescribed by the provision. The primary judge's reasons do not suggest that her Honour regarded s 545(1) as containing a power to penalise; rather, her Honour considered it might be used in aid of, and to reinforce, the penalty imposed under s 546(1).
23. Section 545(1) is not directed to the subject of penalties. By its terms, its sphere of operation is circumscribed. The express terms of s 545(1) permit the Federal Court only to make orders which it considers to be "appropriate" in the circumstance where it is satisfied that a person has contravened or proposes to contravene a civil remedy provision. The Court is therefore restricted to making the kinds of orders which are capable of properly being seen as appropriate to be made by the Court in the exercise of its jurisdiction. The ABCC's reliance on the principle that a power conferred on a court should not be construed by reference to unexpressed limitations is misplaced.
24. The terms of s 545(2) do not suggest that s 545(1) should be read more widely. Its opening words, "[w]ithout limiting subsection (1)", go no further than to ensure that s 545(1) is not read down in light of the specific orders set out in s 545(2) as examples of what orders may be made under s 545(1). In stating that "orders the Federal Court … may make include the following", s 545(2) is to be read as conferring power to make orders of the kinds specified whether or not orders of those kinds would always or sometimes fall within the scope of s 545(1). Section 545(2) is not cast as an amplification of the power conferred by s 545(1). Section 545(2) cannot be read as if it commenced, "The orders the Federal Court may make under subsection (1) include, but are not limited to, the following".
25. The terms of s 545(2) provide the context for the kinds of orders which may be made under s 545(1). The examples given in s 545(2) are directed to preventing contraventions or addressing or remedying the effects of a contravention, including compensating victims of a contravention. A non-indemnification order is not an order of these kinds. It is addressed to the penalty made in s 546(1).
At paragraphs [30]-[31] the Chief Justice further said:
30. Section 545(1) of the FWA does not provide a general power to add to or enhance the effect of other remedies or orders such as a pecuniary penalty order. In Pelechowski v Registrar, Court of Appeal (NSW), Gaudron, Gummow and Callinan JJ, after observing that an asset preservation order for a short period might have been considered reasonably required in aid of execution, explained that the effect of an order made under the court's inherent power which restrained the judgment debtors altogether from selling their only asset was to give the judgment creditor additional security and could not be regarded as reasonably required for execution. In Jackson v Sterling Industries Ltd, Deane J said that the purpose of an order for the preservation of assets is not to create security for the plaintiff but to prevent the defendant from frustrating the processes of the court. Likewise, the power given under s 545(1) is not to add to the penalty made under s 546(1).
31 The primary judge was minded to make the non-indemnification order because her Honour considered that it was consistent with the purpose of a pecuniary penalty order that it have a stronger deterrent effect. Her Honour said that the "effectiveness of an exercise of judicial power to impose penalties is significantly impaired where the reality is that the contravener is likely to be entirely indemnified from the consequences of the order"
In the joint judgment of Keane, Nettle and Gordon JJ at [103]-[104] it was said:
103. As Jessup J observed in the Full Court, it assists in the construction of s 545(1) to have regard to its legislative history. But the starting point of the process must be the text of s 545(1) read in the context of the Fair Work Act as a whole and, in particular, in light of s 546. So approached, the first and most immediate point of significance is the breadth of the terms in which s 545(1) empowers the court to make any order the court considers appropriate. What is "appropriate" for the purpose of s 545(1) falls to be determined in light of the purpose of the section and is not to be artificially limited. As the ABCC submitted, such broad terms of empowerment are constrained only by limitations that are strictly required by the language and purpose of the section. To adopt and adapt the language of Flick J in Transport Workers' Union of Australia, NSW Branch v No Fuss Liquid Waste Pty Ltd, the object and purpose of the power under s 545(1) is quite separate and distinct from that of the power under s 546 to order that a contravener pay a pecuniary penalty.
104. The second point of significance is contextual, and it points the other way. It will be observed that all of the example orders listed in s 545(2) are directed to preventing the occurrence of an apprehended contravention, remedying the effects of a committed contravention or compensating victims of a contravention for the consequences of the contravention. None of the example orders is penal. That suggests that the types of orders that may be regarded as "appropriate" within the meaning of s 545(1) are limited to preventative, remedial or compensatory orders, or at least do not include penal orders.
Section 568 of the Act provides:
No limitation on Federal Circuit Court's powers
To avoid doubt nothing in this Act limits the Federal Circuit Court's powers under section 14, 15 or 16 of the Federal Circuit Court of Australia Act 1999.
Those sections confer upon the Federal Circuit Court the power to make such orders as the court considers appropriate so as to finally determine issues before it. Keane, Nettle and Gordon JJ, when considering similar provisions in section 23 of the Federal Court of Australia Act 1999 (Cth), insofar as that section might have impacted upon the provisions of section 545(1) of the Act, said as follows at [109]-[110]:
The final consideration is s 564 of the Fair Work Act. Section 23 of the Federal Court of Australia Act empowers the Federal Court to make such orders as it considers "appropriate" to be made in the exercise of its jurisdiction and powers, as an incident of the general grant to it as a superior court of law and equity of the jurisdiction to deal with such matters. The power conferred by s 23 extends to making orders necessary to ensure the effective exercise of the determination of a matter and orders reasonably required or legally ancillary to ensuring that the court's order is effective according to its tenor. But the power conferred by s 23 does not extend to making penal orders. Consequently, the fact that s 564 provides that nothing in the Fair Work Act limits the orders that may be made under s 23 of the Federal Court of Australia Act does not suggest that the power conferred by s 545(1) extends to making penal orders. Rather, s 564 serves to make clear that the range of preventative, remedial and compensatory orders which may be made under s 545 does not, by implication, restrict the range of non-penal orders open to be made under s 23.
In the result, despite the breadth of the power conferred by s 545(1), it should be concluded that it is limited to making appropriate preventative, remedial and compensatory orders and as such does not include a power to make penal orders.
Section 545(1) countenances the making of "appropriate orders", either where a person has contravened a provision of the Act, or where a person "proposes to contravene a provision of the Act". It cannot be said that the making of an education order in respect of a past contravention could be preventative, remedial or compensatory, in the sense of those words as used in the joint judgment of Keane, Nettle and Gordon JJ. The making of an education order, as contended for by the applicant as being appropriate and within power:
a)Would post-date the occurrence of any contravention and, therefore, not be preventative;
b)Would not remedy or cure the past occurrence of a contravention;
c)Is not compensatory in character; and
d)Has a penal character to it - namely, the imposition upon the respondents of an obligation to undertake tasks (over and above the payment by them of a monetary penalty as ordered) which were not prescribed by law, or otherwise flagged by Parliament as being penalties of the kind open to be imposed in the event of proven statutory breach.
Section 545(1) does not permit the court to make penal “education orders” in respect of past contraventions. For it to do so, particular language would have needed to have been used by the legislature had that been the intention.
It may be that in circumstances where there is clear evidence that a person "proposes to contravene" a civil remedy provision that, in addition to the making of an order granting an interim injunction pursuant to section 545(2) of the Act, the court might have power to make an education order. But that is a moot point for present purposes which need not be addressed further.
The making of an education order as here contended for by the applicant is beyond the power of the court, and the application made on behalf of the applicant for such orders is dismissed.
I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Judge Egan
Date: 5 November 2018
CORRECTIONS:
The heading above paragraph 13 has been amended to remove extra text.
The quotation under paragraph 16 has been amended to remove extra text.
The quotation under paragraph 23 has been amended to show ‘or’ instead of ‘of’.
Paragraph 27 has been amended to include ‘of.’
Key Legal Topics
Areas of Law
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Employment Law
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Statutory Interpretation
Legal Concepts
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Penalty
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Remedies
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Jurisdiction
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Statutory Construction
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