Lal v Biber
[2021] FCCA 959
•7 May 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Lal v Biber [2021] FCCA 959
File number(s): MLG 422 of 2017 Judgment of: JUDGE RIETHMULLER Date of judgment: 7 May 2021 Catchwords: INDUSTRIAL LAW – Breach of terms and conditions – underpayment of entitlements – Modern Award rates – visa work requirements – business liquidation – business record keeping – contract – contraventions – application allowed. Legislation: Criminal Code 1995 (Cth) s 271.1A
Fair Work Act 2009 (Cth) ss 44, 45, 535 and 536, 557C, Part II Div 3A
Fair Work Regulations 2009 (Cth)
Food, Beverage and Tobacco Manufacturing Award 2010
Migration Act 1985 (Cth) ss 140GBA, 140UA, 235, 245AC, 245AD, 245AH, 245AJ, Part II, Div 12, Sub-div C
Migration Regulations 1994 (Cth), r 3.44
Cases cited: Allen v Hounga [2012] EWCA Civ 609; [2012] IRLR 685
Australia Meat Holdings Pty Ltd v Kazi [2004] QCA 147; [2004] 2 Qld R 485
Hussein v Lab. Ct. & Another [2012] IEHC 364
Hussein v Secretary of the Department of Immigration & Multicultural Affairs & Ors (No 2) [2006] FCA 1263; (2006) 155 FCR 304; 92 ALD 89; (2006) 157 IR 405
Nonferral (NSW) Pty Ltd v Taufia (1998) 43 NSWLR 312; (1998) 143 FLR 443; (1998) NSWLR 312; (1998) NSWCCR 130
Smallwood v Ergo Asia Pty Ltd [2014] FWC 964
Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd [2002] FCA 1406
United States in Hoffman Plastic Compounds, Inc. v National Labor Relations Board (‘NLRB’) [2002] USSC 762; (2002) 535 U.S. 137; (2002) 152 L Ed 2d 271; (2002) 122 S Ct 1275
Vakante v Addey & Stanhope School Governing Body [2004] ICR 279
Number of paragraphs: 63 Date of last submissions: 9 September 2020 Date of hearing: 27, 28, 29 July and 7, 31 August 2020 Place: Melbourne (via Microsoft Teams) Solicitor for the Applicant: McDonald Murholme Solicitors Counsel for the Applicant: Mr Lake Counsel for the Respondents: The Respondents appeared in person ORDERS
MLG 422 of 2017 BETWEEN: JEEVAN LAL
Applicant
AND: ERDENIZ BIBER
First Respondent
AND: BIBER FOODS GROUP PTY LTD (ACN 147 008 946) AS TRUSTEE FOR THE BIBER TRUST T/A NEW GENERATION FOODS (ABN 71 760 858 529)
Second Respondent
AND: MANDI BACON
Third Respondent
ORDER MADE BY:
JUDGE RIETHMULLER
DATE OF ORDER:
7 MAY 2021
THE COURT DECLARES THAT:
1.The First Respondent was involved in contraventions by the Second Respondent of the Fair Work Act 2009 (Cth), the Fair Work Regulations 2009 (Cth) (‘Fair Work Regulations’) and the Food, Beverage and Tobacco Manufacturing Award 2010 (‘the Award’) as follows:
(a)Section 45 of the Act, by failing to pay the applicant the minimum wage, as required by clause 20 of the Award;
(b)Section 45 of the Act, by failing to pay the applicant at a higher rate of pay for shifts over five hours duration, when a meal break was not taken, as required by clause 32 of the Award;
(c)Section 45 of the Act, by failing to pay the applicant overtime, as required by clause 33.1 of the Award;
(d)Section 45 of the Act, by failing to pay the applicant Saturday rates for shifts worked on Saturdays, as required by clause 33.6 of the Award;
(e)Section 45 of the Act, by failing to pay the applicant Sunday rates for shifts worked on Sundays, as required by clause 33.7 of the Award;
(f)Section 45 of the Act by failing to pay the applicant public holiday rates for shifts worked on public holidays, as required by clause 33.8 of the Award;
(g)Section 45 of the Act, by failing to pay the applicant the correct rate of superannuation, as required by clause 29 of the Award;
(h)Section 44(1) and either sections 87(1) or 90(2) of the Act, by failing to pay the applicant annual leave;
(i)Section 535 of the Act by failing to make and keep for 7 years employee records, which record the gross and net amounts the applicant was paid, and records of his overtime worked;
(j)Section 535(4) of the Act by creating pay slips which were false or misleading;
(k)Section 536 of the Act by failing to give the Applicant pay slips within a day of paying him;
(l)Section 536(3) by giving the Applicant pay slips known to be false or misleading; and
(m)Regulation 3.44(2) of the Fair Work Regulations 2009 (Cth) by failing to correct misleading payslips.
2.As a result of the contraventions found to have occurred in Declaration 1 herein, the Applicant was underpaid a sum total of $130,825.32 and did not receive superannuation entitlements of $17,491.20 during the course of his employment by the Second Respondent.
THE COURT ORDERS THAT:
3.The matter be listed for further hearing with respect to pecuniary penalties and any further consequential orders (including compensation) for the contraventions by the First Respondent, set out in the Declarations herein.
4.The application with respect to the third respondent be dismissed.
REASONS FOR JUDGMENT
JUDGE RIETHMULLER:
In these proceedings, the applicant, Mr Jeevan Lal (the ‘applicant’) seeks redress for alleged underpayments of entitlements during his employment with the second respondent, Biber Foods Group Pty Ltd (the ‘second respondent’). In his filed material, the applicant alleges that underpayments occurred over a significant period, during which he says he was paid less than the relevant Award minimum, pursuant to the Food, Beverage and Tobacco Manufacturing Award 2010 (‘the Award’).,Under this Award the applicant was classified as a Level 2 employee and he alleges during the relevant employment period in that role, breaches of several provisions of the Fair Work Act 2009 (Cth) (‘the Fair Work Act’) occurred, including s 44(1), 45, 535 and 536 of the Fair Work Act. The applicant seeks orders for damages and penalties for his loss as a result of the alleged underpayments and breaches of the Act.
The second respondent is now in liquidation, and so the proceedings against the second respondent are stayed and no orders can be made against the second respondent.
The matter proceeded against the first and third respondents (Mr Biber and Ms Bacon) whom the applicant says were knowingly involved in the alleged breaches by the second respondent. The first respondent was at all times the agent of the second respondent who dealt with the applicant. The third respondent is the bookkeeper in the business who also compiled some pay documents.
BACKGROUND
The applicant was engaged by, and commenced working under, the direction of the first respondent in May 2010. At that time, the applicant was employed by Denali Foods Pty Ltd (‘Denali Foods’), a company where the first respondent was concerned in the management. Denali Foods went into liquidation and the business operations were taken over by the second respondent, who was the applicant’s employer from 1 July 2011. Despite the change in the employing entity, the applicant continued to report to, and be given directions by, the first respondent.
The applicant started working for Denali Foods after he was introduced to the first respondent by a friend. He worked as a cleaner in the food factory run by the first respondent. At that time, the applicant was only legally permitted to undertake twenty (20) hours of work per week, due to the conditions of his student visa. The applicant says that he undertook more than twenty (20) hours of work per week, soon undertaking in excess of forty (40) hours work per week, until the conclusion of his employment..
The applicant said that he was engaged by the first respondent (Mr Biber) at only $8.00 per hour. The applicant says that rate increased over the course of his employment, first with Denali Foods and then when employed by the second respondent.
Although there is considerable dispute as to the actual rates paid to the applicant at various points in time, it appears that the rate was never greater than the Award minimum and was always without the relevant penalty rates required by the Award.
On various occasions the applicant requested pay slips, when such documentation were required by him for other purposes (such as to obtain leases for accommodation or a credit card). Mr Biber instructed the third respondent (Ms Bacon) to prepare pay slips in the accounting system for this purpose. The payslips prepared by Ms Bacon, whilst accurately reflecting the instructions given to her by Mr Biber, do not appear to accurately reflect the actual arrangement between the applicant and the second respondent through Mr Biber.
At the end of each financial year and the period of the applicant’s employment, the second respondent paid some amounts to the applicant, by way of tax and issued payment summaries for the tax office, as well as having made some contributions into the applicant’s nominated superannuation fund.
On the applicant’s case he was significantly underpaid, compared to the Award minimums, by an amount in excess of approximately $147,900. The applicant set out his calculations on an excel spreadsheet, setting out the total amounts he says he was paid, against a column setting out the total amount to which he was entitled, based upon the Award rates over the relevant and applicable period of his respective employment. The applicant recorded his hours of work in notebooks, and used those records as the basis to compile the tendered excel spreadsheet.
The amount in the spreadsheet is adjusted to take into account tax actually withheld by the employer (according to the payment summaries issued by the second respondent), for which the applicant receives a credit on his tax returns.
The calculations in the spreadsheets were not ultimately in dispute. The issues that arise for determination in this case are as follows:
(2)Whether the hours worked, and payments received ,by the applicant are as recorded in his notebooks (and therefore consideration of the reliability of those records, having regard to the periods where there are two notebooks with different records for the same period);
(3)Whether there was an agreement between the employer and employee setting out the rates of pay, and if so, the effect of the agreement where it provided for under Award rates;
(4)Whether the hours worked by the applicant were in excess of the 20 hour per week limit stipulated by his visa condition; and if so, whether that work (in breach of a visa condition) can be the subject of a claim;
(5)Whether the first respondent was knowingly involved in the alleged contraventions of the second respondent; and finally,
(6)Whether the third respondent was knowingly involved in the alleged contraventions.
WITNESSES
The applicant
The applicant gave evidence remotely, by electronic audio-visual conference, and was cross-examined by the respondents. It was apparent that English was not the first language of the applicant, however, he appeared to generally understand the proceeding and was able to express himself as a witness. The applicant gave a credible account of his employment and the work arrangements. Whilst the applicant continues to harbour ill-will as to the underpayments, and presented with a rather flat aspect [this is unclear], which appeared in his demeanour when giving evidence. Nothing indicated that he had tailored his evidence against the respondents (beyond the difficulties with his time sheet records).
On his own evidence, the applicant was working in excess of 20 hours per week, in breach of his visa conditions at the relevant time, as he was having difficulty meeting his living expenses and took whatever work was offered. He gave evidence that he was aware that he was breaching his visa conditions.
Whilst the applicant kept contemporaneous records of the hours that he worked, and the payments that he received, he had two sets of records that were not consistent. However, the respondents were unable to provide any records (despite the statutory obligation on the employer to maintain records) and do not appear to have engaged in any proper record keeping. Indeed, the first respondent appears to have been content to rely upon the applicant’s own records during his employment when paying him at the end of pay periods.
Ultimately, I am of the view that I should generally accept the applicant’s evidence, but not uncritically.
The applicant’s wife
The applicant’s wife was called to make herself available for cross-examination by the respondents. I found the applicant’s wife a very impressive witness: she was clear and definitive in her responses, her evidence was consistent and she was clearly reticent to express negative personal comments about the first respondent. I accept her evidence.
The applicant’s solicitor
The applicant’s solicitor was called to formally prove various matters and was not challenged. I accept his evidence.
The first respondent
The first respondent gave evidence and was cross-examined at length by Counsel for the applicant.
The first respondent was quite forthright in his evidence and openly conceded that he had paid the applicant less than the Award rate requirements. He submitted that the payments were made in reliance upon the bargain that he struck with the applicant. The first respondent agreed during his evidence that he paid the applicant in cash, as alleged by the applicant, and that he only occasionally paid the applicant by bank deposit. The first respondent also agreed that he had asked for pay slips to be created by the third respondent only when the applicant specifically asked him for them.
Initially, the first respondent said that he was not aware of the Award requirements, but agreed in cross-examination that he had been informed about the minimum wage by the third respondent, as she set out in her written evidence submitted for this proceedings. The first respondent also agreed that the applicant would have worked forty-five (45) to fifty (50) hours a week on many weeks, but challenged the applicant’s evidence with respect to the number of hours across the weeks, submitting that the hours claimed where a greater numbers of hours than realistically would have been undertaken. This appeared to be based upon his impression of the work required rather than any observations or records.
It was clear that the first respondent was the person that directed the applicant and the staff of the workplace. He decided on pay rates and hours for the applicant. He also directed the methods of payment and the creation of pay records.
Ultimately, I form the view that the first respondent was minimising and justifying the events that took place, and his involvement in those events. Where his evidence differed from others, I have found his evidence less than compelling and prefer the evidence of the other witnesses.
The third respondent
The third respondent presented as a forthright witness who was clear about her evidence. She was in a difficult situation, as she still works at the business operated by the first respondent.
The third respondent has no ownership interest in the business, but works as a book-keeper. She assisted the first respondent in reviewing the spreadsheets of calculations and appeared quite adept at working with figures and accounts.I generally accept her evidence.
ISSUES
1. The agreement of the parties and hours worked
The applicant and his wife gave evidence that they had been introduced to the first respondent in 2010 by a friend, when they were searching for work in Australia. As set out above, the applicant was on a visa that only permitted him to work for twenty (20) hours per week.
The applicant was engaged by the first respondent (who initially as an agent of Denali Foods Pty Ltd and later as the agent of the second respondent). The applicant’s role was that of a cleaner. The first respondent told him that the work would take around four (4) hours per evening to complete.
After Denali Foods Pty Ltd went into liquidation, the first respondent ‘took over the management of the whole business,’ and relied upon the third respondent for administrative assistance.
The applicant said that the original oral agreement between the parties was for the applicant to be paid $8 for each hour he worked. Whilst a higher hourly rate was alleged by the first respondent in his Affidavit, it was put to the applicant by the first respondent in cross-examination that he had paid the $8 per hour (as alleged by the applicant) for each hour that the applicant had worked. I accept that the original rate agreed upon and paid to the applicant was $8 per hour.
The rates increased over time, but it appears that the rate, at least in 2011, when the applicant’s employment transferred to the second respondent, was a flat rate of $12 per hour (as set out in the first respondent’s Affidavit material). No overtime or penalty rates were paid.
The applicant was paid in cash, but not on a regular basis. The applicant kept notebooks recording his hours and pay, confirming this claim. The respondents kept no work records of the applicant’s hours, save the records that the third respondent generated when directed to do so by the first respondent and provided no pay slips.
The applicant was cross-examined about breaching his visa condition by working for more than 20 hours per week. The restrictions of the visa conditions provide a potential motive for an employee to seek cash payments, rather than receiving payments by bank transfers recorded in the employer’s accounts. Payment of rates at less than Award minimums (without pay slips) also provide a motive for cash payments to be made by employers.
Such cash arrangements are difficult to sustain, as employees ultimately require evidence of earnings for other purposes (such as for renting accommodation, obtaining credit cards and loans, etc). In this case, the applicant did require payslips for such purposes and asked for them. The first respondent had the third respondent prepare a payslip on the accounting package, telling her that the accountant would correct the figures and entries in due course. She complied with this instruction and the applicant was given a pay slip reflecting the employment details the first respondent gave the second respondent. Unbeknown to the third respondent, those details did not reflect the actual arrangement between the applicant and the first respondent, either with respect to the hours worked by the applicant, or the hourly rates he received for that work. The pay records generated in the accounting system simply showed the applicant working thirty-eight (38) hours per week. Thus, false pay records were created and provided to the applicant. These records were never corrected.
From July 2011 until 22 Feb 2015, the pay rate was recorded at $16 per hour. From 6 March 2015 onwards the rate of pay increased to $18 per hour, before being set at $26.40 per hour from 27 May 2016. As a result, the applicant received yearly payment summaries showing these wage amounts and the amount of tax that the second respondent had apparently withheld from his wages and paid to the Australian Tax Office. It would not have been apparent to the third respondent that the payslip (and the entries on the accounting system) did not reflect the reality for the employment of the applicant, as the first respondent told her the details to enter into the system; further, he paid the applicant in cash (save for occasional times when sums were transferred to the applicant’s account). The third respondent was an employee and was under the first respondent’s direction with respect to the events relevant to this matter.
Having regard to the evidence of the parties, I accept that the cash payment arrangement was what suited the first respondent, rather than an arrangement sought by the applicant. I am also persuaded that the records in the MYOB accounting system bear no real relationship to the actual work hours of the applicant, nor the amounts paid to him.
In order to ascertain the actual hours worked by the applicant, one would ordinarily turn to the employee records and pay slips that employers are required to maintain under the Act and respective Fair Work Regulations. Modern software packages provide templates and processes for maintaining such records in the accounts set up for the business, just as occurred in this case, with the entries the third respondent made in the MYOB software records. However, the business, as operated by the first respondent, retained no records of either the hours worked by the applicant or the amounts paid to him in cash. The only records that were retained were those of the applicant, set out in books that he maintained.
It is clear that the applicant kept two copies of his records, a personal one and one for the first respondent. The books maintained for the first respondent were held by the applicant and contain entries showing his work hours and payments received. The records have a number of errors in calculating the total hours worked in some weeks and occasionally the amount paid does not correspond directly to the hours recorded as having been worked, which are multiplied by the then applicable hourly rate.
The first respondent challenges the accuracy of the records maintained by the applicant. In cross-examination, the first respondent estimated that the applicant would not have worked more than 45 to 50 hours in a given week and specifically challenged any claims that more hours were done in a particular week. This is a difficult argument for the first respondent as there is a clear statutory obligation (beyond the obvious good business sense) upon an employer to maintain proper records of employee hours and payments, which he has not practiced. Because of the first respondent’s failure to keep records, he cannot rely upon any records for evidence to support his claim. Whilst it was a company that was the employer, it is clear from the evidence that the first respondent was the person managing the company on a day-to-day basis, at least with respect to interactions with the applicant and also supervising the applicant.
Not only were no relevant books or records produced, it appears that any records the first respondent did have were destroyed by him in circumstances where he claims privilege against self-discrimination. The accounting records that he directed the third respondent to create bear no correlation to the actual work of the applicant on either the applicant’s evidence or his own.
The best evidence of the work carried out by the applicant are the records that the applicant kept. Whist they contain some inconsistencies, they are nonetheless the only contemporaneous record. It will commonly be the case that employees have imperfect records, or sometimes even only imperfect recollections of their hours of work. However, the statutory scheme imposes record keeping obligations upon employers to avoid this very problem: employees are not the accounts department of a business.
In circumstances where the employer has failed to keep proper records, it is appropriate to consider whatever evidence is available (even if it be vague or imperfect) in order to draw inferences as to the hours worked. It cannot be the situation that an employee’s case should fail due to vague or imperfect evidence by the employee as to the hours worked, in circumstances where the employer has failed to maintain the records required by statute. Rather, in circumstances where an employer has failed to keep proper records, it is appropriate for the court to draw such inferences as are reasonably open from the employee’s recollections.
In this case, I am comfortably satisfied that the hours worked were as reflected in the log books kept by the applicant where entries were made as to the hours and payments. To the extent that the note books show differing entries, I am persuaded that those books which also record the payments are more reliable. Whilst there are some errors in the log books, this is not unexpected in record keeping. Evidence need not be perfect to be accepted and in most record keeping there are errors and imperfections, indeed the court must make an assessment of the records in the context of each particular case. Even where there are errors, it is possible to use the lesser hours as recorded in the books.
As I have accepted the evidence of the applicant with respect to the hours worked and the amounts he was paid, I need not consider the operation of s 557C of the Act, which reverses the onus of proof in certain respects.
2. Effect of the agreement
The first respondent alleges that he paid the applicant in accordance with the agreement that they entered into. Whilst the agreement is the contract that governs the rights of the parties at common law, it cannot override the obligations upon employers pursuant to the Act and the relevant modern Awards. That is, whilst the second respondent may have had a contractual obligation to pay particular rates, it also had a statutory obligation to pay the minimum Award rates (and other statutory obligations imported under the legislation). Whilst the statutory obligation is usually fulfilled by way of contractual payments, the terms of any contract cannot reduce the statutory obligation: see Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd [2002] FCA 1406 at paragraph [32]. This argument must fail.
3. Effect of the applicant’s visa condition
To the extent that the working hours exceeded those permitted by the applicant’s visa conditions, the arrangement was in breach of the relevant migration laws (because as set out above, in working more than 20 hours per week, the applicant was in breach of his visa conditions and the first and second respondents were aiding and abetting said breach).
The Migration Act 1985 (Cth) (‘Migration Act’) makes it an offence to breach the work conditions of a visa: see s 235(1). The penalty is a fine of 100 penalty units: see s.235 (5). Part II, Div 12, Sub-div C sets out a number of offence provisions related to work by non-citizens of Australia (including offences for executive officers of corporations: see s 245AJ). Section 245AC makes it an offence for the employer to employ a person to work in contravention of a visa condition. Section 245AD provides for aggravated offences if the employee is ‘exploited’. The term ‘exploited’ is as defined in s 271.1A of the Criminal Code 1995 (Cth) (‘Criminal Code’) (see s 245AH of the Migration Act). In this case, it does not appear that the applicant would fall within the definition of ‘exploited’, as it is used in the context of that part of the Criminal Code concerning slavery, and turns upon whether a person is free to leave.
The Migration Act has, as one of its underlying policy objectives, provisions such as s 140GBA which provide for labour market testing, to ensure that there are not Australian citizens who may be available to be employed in such positions. Other provisions within Part II Div 3A of the Act (relating to work sponsors) ensure that wages paid to visa holders are not only in accordance with Australian industrial laws, but also make specific provision for inspection by Fair Work Ombudsman inspectors (see s 140UA and following in the Migration Act).
In this case, I note that the contract of employment, as initially entered into, was not in breach of the Migration Act, nor the visa conditions: the applicant was permitted to work for 20 hours per week. However, in carrying out the contract of employment, the employer offered and the applicant accepted more hours of work, in breach of the condition in the visa.
The issue of employment contracts made in breach of Migration Regulations 1994 (Cth) has been the subject of a number of decisions with respect to claims for workers compensation, such as:
(1)Nonferral (NSW) Pty Ltd v Taufia (1998) 43 NSWLR 312; (1998) 143 FLR 443; (1998) NSWLR 312; (1998) NSWCCR 130, where the New South Wales (‘NSW’) Court of Appeal considered an illegal entrant to Australia and his rights under the NSW worker’s compensation scheme, concluding that the worker was still covered by the NSW scheme.
(2)Australia Meat Holdings Pty Ltd v Kazi [2004] QCA 147; [2004] 2 Qld R 485, where the Queensland Court of Appeal found that a worker was not covered by the state worker’s compensation scheme. However, in that case the worker had no work rights, making any employment contract illegal.
(3)Smallwood v Ergo Asia Pty Ltd [2014] FWC 964, where the contract was found to be illegal, as the applicant was prohibited from working for an employer who was not an employer who had been approved as a sponsor. Thus, the contact itself was illegal.
(4)Hussein v Secretary of the Department of Immigration & Multicultural Affairs & Ors (No 2) [2006] FCA 1263; (2006) 155 FCR 304; 92 ALD 89; (2006) 157 IR 405, where the Federal Court of Australia considered a case where an applicant in detention said that he had entered into an employment agreement when he agreed to carry out work at the centre. As a person in detention he had no work rights. Graham J noted a number of overseas cases there employment claims have been refused where there were no work rights held by the employee: Vakante v Addey & Stanhope School Governing Body [2004] ICR 279; Allen v Hounga [2012] EWCA Civ 609; [2012] IRLR 685; Hussein v Lab. Ct. & Another [2012] IEHC 364; and United States in Hoffman Plastic Compounds, Inc. v National Labor Relations Board (‘NLRB’) [2002] USSC 762; (2002) 535 U.S. 137; (2002) 152 L Ed 2d 271; (2002) 122 S Ct 1275.
In this case, the applicant was permitted to engage in employment in Australia. He was not an illegal entrant, nor remaining in Australia illegally. The initial contract of employment to carry out cleaning work appears to have been within the terms of his visa conditions, and therefore the contract itself was not illegal. In these circumstances, I am not persuaded that the breach of the visa condition results in an unenforceable contract of employment, nor, more importantly, that the breach of the visa condition should impact upon the applicant’s clear statutory entitlements under the Fair Work Act, which arise separately from his employment contract. The clear policy of the Fair Work Act is to ensure that all those who work in Australia receive a minimum rate of pay. To limit such protections to Australian citizens would be to create a class of people ripe for exploitation. To fail to ensure that employers fulfil all of the obligations imposed by the Fair Work Act, in cases where there are breaches of visa conditions ultimately disadvantages Australian citizens, as it creates an incentive for unscrupulous employers to engage immigrants in breach of the Migration Act, for lower wages than would be payable to Australian workers. If employers must engage all workers at the same minimum rates, then the offences in Migration Act create an incentive to only employ workers who are citizens or who have appropriate work rights.
As a result, in this case I am ultimately not persuaded that the contract of employment was illegal, and in these circumstances the applicant should be permitted to recover his minimum entitlements under the Fair Work Act. To the extent that there are breaches of the Migration Act these can be the subject of prosecutions by the appropriate enforcement agency.
CONTRAVENTIONS PROVED BY THE APPLICANT
In this case, the proceedings against the second respondent have been stayed as a result of the company being placed in liquidation. As a result, the findings as to the conduct of the second applicant are only binding as between the applicant, the first and the third respondent.
Fortunately, the parties were able to work through the applicant’s notes and in turn the spreadsheet tendered, by consent, sets out all of his figures and the relevant Award rates, as well as agreed upon calculations. I accept that the spreadsheet (marked ‘Ex 8’) sets out the detail of the work undertaken by the applicant during the course of his employment, as extracted from the applicant’s notes, and the relevant rates payable under the Award and the amounts actually paid. Based upon these figures the applicant prepared a table of his revised claim, which I accept:
Ref Claim Amount claimed Revised Claim 1 Minimum wage claim $48,700.30 $44,140.11 2 Meal breaks claim $1,726.25 $1,683.82 3 Overtime claim $35,456.72 $33,785.95 4 Saturday rates claim $30,066.27 $28,679.83 5 Sunday rates claim $12,318 $12,011.96 6 Public holiday rates claim $7,576 $6,861.17 7 Annual leave claim $18,263.34 $15,068.48 8 Super claim $30,635.26 $17,491.20 Total $184,742.14 $159,722.52
There has been tax withheld by the employer, for which the applicant will receive a credit, when lodging his tax returns, which I find, doing the best that I can on the limited evidence, is as follows:
Year Amount Explanation 2011/12 $3,350 The amount recorded in the ‘total tax withheld’ section of the Applicant’s payment summary for year ended 30 June 2012 at ‘JL-8’. 2012/13 $3,252 The amount recorded in the ‘total tax withheld’ section of the Applicant’s payment summary for year ended 30 June 2013 at ‘JL-8’. 2013/14 $2,793
The Applicant estimated $2,631.50 on the basis of an average of the previous and following year, however, the actual figure appears on the Notice of assessment at CB387. 2014/15 $2,011 The amount recorded in the ‘total tax withheld’ row for the Applicant in the ‘Payment Summaries Verification’ document for the year ending 30 June 2015 at Tab 120 of the Further Court Book 2015/16 $874 The amount recorded in the ‘total tax withheld’ row for the Applicant in the ‘Payment Summaries Verification’ document for the year ending 30 June 2016 at Tab 121 of the Further Court Book. Total
$12,280.00
I therefore find that the applicant was underpaid during the relevant period by the sum of $130,825.32 (being the underpayments amount, less the superannuation and tax amounts). In addition to the underpayment, the applicant did not receive superannuation entitlements of $17,491.20.
As a result of the evidence that I have accepted, I find that the second respondent committed the following contraventions:
No Contravention Breach Amount 1 Failure to pay the applicant the minimum wage (the minimum wage claim) Breach of s 45 of the Act because of breach of clause 20 of the Award $44,140.11 2 Failure to pay the applicant at a higher rate of pay for shifts over five hours when a meal break was not taken (the meal breaks claim) Breach of s 45 of the Act because of breach of clause 32 of the Award $1,683.82 3 Failure to pay the applicant overtime (the overtime claim) Breach of s 45 of the Act because of breach of clause 33.1 of the Award $33,785.95 4 Failure to pay the applicant Saturday rates for shifts worked on Saturdays (the Saturday rates claim) Breach of s 45 of the Act because of breach of clause 33.6 of the Award $28,679.83 5 Failure to pay the applicant Sunday rates for shifts worked on Sundays (the
Sunday rates claim)
Breach of s 45 of the Act because of breach of clause 33.7 of the Award $12,011.96 6 Failure to pay the applicant public holiday rates for shifts worked on public holidays (the public
holiday rates claim)
Breach of s 45 of the Act because of breach of clause 33.8 of the Award $6,861.17 7 Failure to pay the applicant the correct rate of superannuation
(the super claim)
Breach of s 45 of the Act because of breach of clause 29 of the Award $17,491.20 8 Failure to pay the applicant annual leave (the annual leave claim) Breach of ss 44(1) and either 87(1) or 90(2)) because annual leave not provided and not paid out when the employment ceased $15,068.48 9 Failure to make and keep for 7 years employee records (the failure to keep employee records breach) Breach of s 535 because second respondent did not make and keep for 7 years employee records which, amongst other things, recorded the gross and net amounts the applicant was paid and which recorded his overtime worked Not quantifiable 10 Made or kept records which the Second Respondent knew were false or misleading (creation of false and misleading pay slips)
Breach of s 535(4) because the pay slips which were created for the applicant were false or misleading Not quantifiable 11 Failure to give the applicant a pay slip within a day of paying him (failure to give pay slips) Breach of s 536 because applicant was not given pay slips within a day of him being paid Not quantifiable 12 The second respondent gave the applicant pay slips it knew were false and misleading (giving a false or misleading pay slip). Breach of s 536(3) because the second respondent gave the applicant pay slips it knew were false or misleading Not quantifiable 13 The second respondent failed to correct the misleading payslips Breach of Reg 3.44(2) Not quantifiable 4. Whether the first respondent was knowingly involved in the alleged contraventions of the second respondent
It was clear from the evidence that during the course of the applicant’s employment, the first respondent was the applicant’s manager, determining his duties and pay rates. The first respondent was the director of the company and, in substance, the controlling mind of the second respondent, to the extent that it had dealings with the applicant.
The first respondent was aware of the obligations under the Fair Work Act, having been told of the obligations by the third respondent, after she rang the Fair Work Ombudsman’s Office in April 2011 and again in June 2012. The first respondent determined the rates of pay for employees, and directed the applicant as to his work, knowing that there were minimum rates that must be paid, and had even received a Schedule of Rates from the third respondent. The first respondent directed the applicant to keep records, and directed the third respondent to create records that were false (although unbeknownst to the third respondent at the time). The first respondent had actual knowledge of the applicant’s duties and hours.
The first respondent was aware that the applicant was generally not receiving pay slips, and the few documents he did receive did not reflect his actual earnings. He made no effort to correct the pay slips. He was aware that no holiday pay had been included.
The first respondent has clearly been involved in the contraventions of the second applicant in the sense set out in s 550 of the Fair Work Act. In short, there was no other person knowingly involved in the relevant events and transactions.
5. Whether the third respondent was knowingly involved in the alleged contravention.
I am not persuaded that the third respondent was knowingly involved in the contraventions of the second respondent. She was in an invidious position, as she is an employee and subject to the first respondent’s direction. She did take time to check Award rates and pass on the information to the first respondent, as one would expect from an employee in her position. I am not persuaded that the records she generated were so obviously false (based on her own knowledge) as to cause her to reasonably suspect that she was participating in a breach of the Fair Work Act, I make this finding based on her position in the respective workplace and her lack of direct knowledge of the applicant’s work arrangements.
I therefore dismiss the claims against the third respondent. However, I am persuaded that in the circumstances of this case it was appropriate to join the third respondent to proceedings, as it was apparent that either her, and or, the first respondent were the only people that were likely to be knowingly involved in the contraventions I have found to have occurred.
CONCLUSION
I am satisfied that the first respondent was knowingly involved with the contraventions of the second respondent as set out above. Had the second respondent not been in liquidation, I would have ordered it to pay the applicant the underpayment amount, however, it is not open to the court to make such orders against the second respondent. As the first respondent was not the employer, orders cannot be made for payments due to the applicant in unpaid wages. Whether penalty or compensation orders are made against the first respondent should be the subject of further submissions now that findings as to the contraventions have been made. I will therefore direct that the matter be listed for further hearing on penalties and consequential orders, having regard to these findings.
I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Riethmuller. Associate:
Dated: 7 May 2021
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