Mishra v Monash Health (No 2)
[2022] FedCFamC2G 952
Federal Circuit and Family Court of Australia
(DIVISION 2)
Mishra v Monash Health (No 2) [2022] FedCFamC2G 952
File number(s): MLG 370 of 2021 Judgment of: JUDGE BLAKE Date of judgment: 17 November 2022 Catchwords: INDUSTRIAL LAW – whether to impose a pecuniary penalty for breach of an enterprise agreement and breach of section 323 of the Fair Work Act 2009 (Cth) – relevant factors assessed and weighed – pecuniary penalty imposed. Legislation: Fair Work Act 2009 (Cth) ss 50, 323, 340, 352, 546(1). Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Fair Work Ombudsman v NSH North Shore Pty Ltd t/a New Shanghai Charlestown [2017] FCA 1301
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7Mishra v Monash Health [2022] FedCFamC2G 240
Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65
Singh v Monash Health [2022] FedCFamC2G 229
Trade Practices Commission v CSR Ltd [1991] ATPR 41-076
Division: Division 2 General Federal Law Number of paragraphs: 43 Date of last submission: 17 May 2022 Date of hearing: On the papers Place: Melbourne Solicitor for the Applicant: Jewell Hancock Employment Lawyers Solicitor for the Respondent: Victorian Government Solicitor's Office ORDERS
MLG 370 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: TARAKUMARI MISHRA
Applicant
AND: MONAH HEALTH
Respondent
order made by:
JUDGE BLAKE
DATE OF ORDER:
17 NOVEMBER 2022
THE COURT ORDERS THAT:
1.Pursuant to section 546(1) of the Fair Work Act 2009 (Cth) (‘Act’), the Respondent pay a pecuniary penalty of $13,320 in respect of the contraventions the subject of the Declarations made by Judge McNab on 5 April 2022.
2.The penalty in Order 1 above be paid to the Applicant within 28 days of the date of these Orders.
3.The Applicant have liberty to apply on seven days notice in the event that the preceding Orders 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 BLAKE:
On 5 April 2022, Judge McNab (as His Honour then was) delivered judgment in the matter of Mishra v Monash Health [2022] FedCFamC2G 240 (‘Reasons’). Judge McNab dismissed various claims made by the Applicant under section 340 and 352 of the Fair Work Act 2009 (Cth) (‘Act’). Judge McNab, also, however, made the following declarations:
1. The Respondent has breached:
(a)clause 25.1 of the Victorian Public Health Sector (Health And Allied Services, Managers And Administrative Workers) Single Interest Enterprise Agreement 2016-2020; and
(b)section 50 and section 323(1) of the Fair Work Act 2009 (Cth) by not providing the Applicant with payment for her wages at least fortnightly for the period 28 September 2020 to 12 October 2020.
The declarations above give rise to the question of whether any pecuniary penalty should be imposed on the Respondent for the contraventions of the Act and the Victorian Public Health Sector (Health and Allied Services, Managers and Administrative Workers) Single Interest Enterprise Agreement 2016-2020 (‘Agreement’).
Judge McNab was not able to determine whether any penalty should be imposed on the Respondent, and the amount of such penalty, by reason of his elevation to Division 1 of this Court. His Honour therefore made an order that the question of any penalty be referred to me and be determined on the papers.
Due to an apparent administrative oversight within the Court, I only became aware of the order referring the matter to me in early September 2022. I called the matter on immediately for mention, apologised on behalf of the Court to the parties and sought confirmation that the matter was to be determined on the papers. Each party confirmed that to be the case. The parties also confirmed which materials the Court was to rely on. The Applicant relies on its written outline of submissions filed 19 April 2022 and the reasons of Judge McNab. The Respondent relies on its amended written outline of submissions filed 17 May 2022 and the affidavit of Gaylene Giles filed 17 May 2022.
Accordingly, the issue before the Court is to determine whether any penalty should be imposed on the Respondent, arising from the declarations made by Judge McNab and if so, the amount of such penalty.
approach to penalty
In Fair Work Ombudsman v NSH North Shore Pty Ltd t/a New Shanghai Charlestown [2017] FCA 1301 at [36], Bromwich J set out the approach to determining civil penalties under the Act.
The Respondent has been found to have committed two contraventions. One contravention relates to a breach of the Agreement. The breach of clause 25.1 of the Agreement gives rise to the breach of section 50 of the Act. The other contravention relates to a breach of section 323 of the Act. These contraventions arise from a failure by the Respondent to pay the Applicant her wages in the period from 28 September 2020 to 12 October 2020. In her written submissions, the Applicant accepts that the two contraventions involve the same conduct engaged in by the Respondent and therefore have common elements. The Court, therefore, will exercise its discretion to group together the contraventions of clause 25.1 of the Agreement and section 50 and section 323 of the Act.
The maximum penalty that can be imposed on the Respondent at the time the contravention occurred is $66,600. The Applicant contends that a penalty in the range of 50%-75% of the maximum penalty should be imposed. The Respondent contends that the Court should order no penalty or in the alternative, a penalty at the lowest end of the range of no more than $1,000 (being a figure which is relative to the amount of the underpaid wages of $1,861).
principles relating to the assessment of penalty
Section 546 of the Act empowers the Court to impose a penalty. In ABCC v Pattinson [2022] HCA 13 (‘Pattinson’), the High Court noted that the primary purpose of the civil penalty regime under the Act is the promotion of public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act: at [18].
At [46], the High Court stated: ‘that an “appropriate” penalty is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case. A contravention may be a “one-off” result of inadvertence by the contravener, rather than the latest instance of the contravener’s pursuit of a strategy of deliberate recalcitrance in order to have its way. There may also be cases, for example, where a contravention has occurred through ignorance of the law on the part of a union official, or where the official responsible for a deliberate breach has been disciplined by the union. In such cases, a modest penalty, if any, may reasonably be thought to be sufficient to provide effective deterrence against further contraventions’.
At [47], the High Court noted also that:
[47]The penalty that is appropriate to protect the public interest by deterring future contraventions of the Act may also be moderated by taking into account other factors of the kind adverted to by French J in CSR. For example, where those responsible for a contravention of the Act express genuine remorse for the contravention, it might be considered appropriate to impose only a moderate penalty because no more would be necessary to incentivise the contravenors to remain mindful of their remorse and their public expressions of that remorse to the court. Similarly, where the occasion in which a contravention occurred is unlikely to arise in the future because of changes in the membership of an industrial organisation, a modest penalty may be appropriate having regard to the reduced risk of future contraventions.
The list of factors of French J to which the High Court refers is a reference to factors set out by French J in Trade Practices Commission v CSR Ltd [1991] ATPR 41-076 (‘CSR’) at [42, 152-153]. These factors have been repeatedly used in cases such as this: see for example Kelly v Fitzpatrick [2007] FCA 1080 at [14] and Mason v Harrington Corporation Pty Ltd [2007] FMCA 7. While regard may be had to this list, it is not a ‘rigid catalogue of matters for attention’: see Pattinson at [19].
I turn now to address the relevant factors and the question of penalty.
consideration
Nature, extent and circumstances of the conduct that led to the contraventions and whether the contraventions were deliberate
At trial, the Applicant claimed that the Respondent had breached clause 25 of the Agreement, and sections 50 and 323(1) of the Act by failing to pay her wages for the period 28 September 2020 to 12 October 2020. The Respondent defended the claim on the basis that the Applicant did not actually perform work during those two weeks: see Reasons at [2] and [3]. Prior to the contravention occurring, the Applicant had been on extended personal leave and had made WorkCover claims: see Reasons at [14], [17], [18], [19] and [20].
In the Reasons, Judge McNab then records the following:
[21]On 26 September 2020, the Applicant provided the Respondent with a certificate stating that she was fit to return to work at a site away from the current conflict. Ms McNulty sought clarification as to the Applicant’s capacity to return to her normal duties and scheduled a meeting with the Applicant on 12 October 2020. The Respondent recommenced the Applicant’s suspension on full pay on 12 October 2020. The Applicant was not paid between 26 September 2020 and 12 October 2020.
Judge McNab’s consideration of these matters and whether they constitute a contravention of the Agreement or the Act is set out at paragraphs [81]-[86] of the Reasons. After having weighed the parties respective contentions and considered the evidence, Judge McNab concluded as follows:
[85]The Applicant is entitled to the payment of wages pursuant to an industrial instrument and that entitlement is independent of rights arising under contract. The Applicant had provided a certificate of capacity for work and therefore was entitled to be paid unless her employment was terminated. The submission that she was not available to perform her contracted position does not undermine her entitlement to wages under the Enterprise Agreement. There is no evidence that the Applicant refused to follow a direction to return to work whether in her original position or in some other position. Therefore I find that there has been a breach of the Enterprise Agreement. The amount of money involved in the breach is modest and has been repaid and therefore any penalty that is likely to be imposed (if any) is also likely to take those matters into account.
It is apparent from the Reasons and from the affidavit of Ms Giles filed 17 May 2022 that at the time the Applicant sought to return to work there remained a number of issues between her and the Respondent, including the status of an ongoing investigation into her conduct. Ms Giles affidavit records the following:
(a)the Applicant sent an email to the Respondent on 26 September 2020 stating that she was fit to return to work save that she had to be located at a site away from the current conflict. The Applicant also sent an email on 1 October 2020 containing a letter from a doctor indicating that she was fit to return to work in an area away from the current conflict;
(b)on 2 October 2020, the Respondent wrote to the Applicant’s lawyers asking that they confirm the Applicant’s capacity to participate in the investigation into her conduct;
(c)on 7 October 2020, the Respondent sent an email to the Applicant asking whether she was still being supported through the investigation process and subsequently called to offer days and times for a proposed meeting with the Applicant;
(d)subsequently, a meeting was arranged between the Applicant and the Respondent on 12 October 2020 and the Applicant commenced receiving her wages from this point in time;
(e)Ms Giles believed that the Applicant was not entitled to be paid her wages until she made herself available to continue with the investigation;
(f)Ms Giles now understands, given the Reasons, that the Applicant was entitled to be paid wages from the date she provided a Certificate of Capacity and that the Respondent regrets and apologises for not paying the Applicant her wages as required by law.
I accept the evidence above given it was not challenged.
The Applicant submits that the Respondent made a deliberate and conscious decision not to pay the Applicant her minimum salary entitlements. I accept that the decision not to pay the Applicant was a deliberate one. It was a deliberate decision made, however, in the following context. First, there was an ongoing investigation into the Applicant’s alleged misconduct and it was reasonable for the Respondent to enquire into the Applicant’s capacity to participate in that process, given the content of the Certificate of Capacity received on 26 September 2020. Second, the contravention occurred in circumstances where the Respondent was not aware that the Applicant was entitled to be paid her wages from the date she provided the Certificate of Capacity. While there was, therefore, a deliberate decision not to pay wages, that decision did not flow from a deliberate decision to disregard the law in relation to the Applicant’s entitlements. Rather, the decision not to pay the Applicant arose from a mistaken view of the legal requirements imposed on the Respondent, and from the surrounding circumstances.
The Respondent submits that the contraventions arose from a one-off failure, and that the failures in this case are not emblematic or part of a pattern of systematic and repeated contraventions. I note that the Applicant was employed for a period spanning more than eight years and otherwise makes no complaint about being underpaid. The period of the underpayment was two weeks. I also note the statement of Ms Giles in her affidavit that the Respondent takes its statutory obligations seriously and always tries to follow the correct approach. That is appropriate given it is incumbent on an employer to ensure an employee is paid correctly. In the circumstances, I accept that the contraventions are a one-off failure and not part of a repeated or systematic pattern.
Nature and extent of loss
The total amount of the underpayment was $1,861 (gross). Judge McNab described this amount as ‘modest’. The amount is capable of being described as modest. It needs to be borne in mind, however, that the Applicant was not highly paid employee. Moreover, the underpayment occurred in circumstances where it is conceded by the Respondent that she had been on a period of unpaid leave for some time. The combination of these factors means that the Applicant was in a somewhat vulnerable state, notwithstanding that the amount in question was modest.
The Respondent submits that the amount of the underpayment was nevertheless rectified prior to trial. Judge McNab accepted that such rectification occurred. While that rectification did occur, and may be relevant to contrition which I discuss later, I observe that an employee on a low-wage is very likely to experience significant financial hardship in circumstances where they do not receive their wages on time.
The Respondent submits further that given the amount of the underpayment was $1,861, the penalty should be a figure that is relative to the amount of the underpayment. I am unable to accept that submission. Adopting that approach would tend to produce the result that a breach of a term of an industrial instrument that does not sound in monetary loss (for example, breach of a term requiring parties to consult prior to significant change) ought not be subject to the imposition of a pecuniary penalty. Or that underpayments totalling many millions of dollars should lead to a commensurate penalty. The effect of accepting the Respondent’s submission would also mean the Court was not giving due weight to the other matters noted by the High Court in Pattinson and French J in CSR.
Previous similar conduct by the Respondent
The Court is not aware of any previous conduct of the Respondent which has resulted in a contravention of either section 50 or section 323 of the Act. The Respondent has recently been found to have contravened section 340(1)(a)(ii) of the Act by Judge Riley: see Singh v Monash Health [2022] FedCFamC2G 229 (‘Singh’), though that judgment is subject to appeal, and deals with a contravention of a different provision to that under consideration here. I therefore attach no weight to the decision in Singh and am satisfied that the Respondent has not engaged in previous similar conduct.
Size and financial position of the Respondent
The Respondent is a large employer that operates across multiple sites in Victoria. It is a public health service and it is to be inferred has access to sufficient resources to ensure compliance with its obligations. No evidence was placed before the Court as to the financial circumstances of the Respondent and it was not submitted by the Respondent that any pecuniary penalty should be reduced having regard to its financial position.
Involvement of senior management
The Applicant contends that it ‘appears’ that Sharon McNulty, Director of Support Services at Monash Health, was involved in the decision not to pay the Applicant. Judge McNab did not make any finding in relation to the involvement of Ms McNulty in the contraventions. It is not alleged that any other person in senior management was involved in the decision not to pay the Applicants wages.
Ms Giles’s affidavit does not explicitly address who made the decision not to pay the Applicant her wages. Ms Giles communicated that the Applicant would receive her wages when she made herself available to meet as part of the investigation process, and that the Applicant received her wages from 12 October 2020. Ms Giles also deposes as to her belief that the Applicant was not entitled to the wages until she made herself available to continue with the investigation. One inference to be drawn from this is that Ms Giles was involved in the decision not to pay the Applicant her wages, but there can be no certainty about this. I also note that Ms Giles bears the title of Senior Manager in the People and Culture Team of the Respondent. She reports to the Executive Director of People and Culture. Even assuming that Ms Giles was involved in the decision not to pay the Applicant, the facts before me do not lead to a conclusion that Ms Giles is a member of senior management. She is more likely to be described, as the Respondent submits, as a mid-level manager. Accordingly, I am not satisfied that there was any involvement of senior management in the contraventions.
Contrition, corrective action and compliance with minimum standards
The Applicant submitted that the Respondent has not demonstrated any contrition. I reject that submission. Ms Giles unchallenged evidence is that the Respondent regrets and apologises for its actions.
The Respondent paid the Applicant her wages prior to the trial commencing. The Applicant submits that no weight should be given to that because it was made on a without prejudice basis, the repayment was delayed by 47 weeks, and the Applicant was nevertheless required to pursue the alleged contravention at the trial. There is some force in the Applicant’s submissions and I give them weight, but I also take into account the fact that payment was made before the trial commenced.
As to other corrective action, Ms Giles in her affidavit deposes that the Respondent has accepted the decision of the Court. It appears from Ms Giles affidavit that on 2 May 2022, approximately one month after Judge McNab made his decision, the Executive Director of People and Culture sent an email to members of the People and Culture team, alerting them to the decision of the Court and informing them that ‘when managing an employee’s return to work after a period of absence, an employee’s wages should be reinstated (if they are not already being paid) as soon as they demonstrate that they have the capacity to return to work’. In my view, this represents a concrete step taken by the Respondent to ensure that similar contraventions do not occur in the future.
It is well accepted that an object of the Act is to ensure an effective safety net for employees. The failure that occurred here was a failure to pay wages pursuant to the Agreement. There was also a failure to pay wages on time - section 323(1) of the Act is concerned not with the amount of pay, but the time when wages are to be paid. That is an important standalone minimum protection for employees, designed to ensure the timely receipt of wages owed, and it is important that it be complied with. I give these matters some weight.
Deterrence
As noted earlier, deterrence is the principal purpose behind the imposition of civil penalties: see Pattinson.
The Applicant submits that the need for specific deterrence in this case falls within the middle of the range. That submission is advanced because it is said that the Respondent and Ms McNulty have not shown remorse or contrition, this was a conscious and intentional decision and the conduct relates to the failure to pay an employee’s base wage. The Applicant submits that specific deterrence is also called for given the size of the Respondent.
The submission that there has been a lack of contrition or remorse should be rejected, given what I have said above. The submission that this was a deliberate decision needs to be considered and weighed in light of the circumstances that I have referred to above.
In my view, the need for specific deterrence is low in this case. There is no evidence that the Respondent has previously committed similar contraventions. The Respondent has expressed remorse and regret for what occurred, and the Applicant has been repaid, notwithstanding any delay. Moreover, the Respondent has taken concrete steps to ensure that a similar mistake does not occur again in the future.
The Applicant also submitted that there was a need for general deterrence, and that such need was at the ‘higher end of the range’. In that respect, the Applicant relied on the statement of Lander J in Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65 at [93] and submitted that the need for general deterrence is high given that the Respondent is a large employer with influence and there is a need for employers to understand the importance of paying employees correctly, and because the relevant breach related to underpayment of base wages. The Applicant also submitted that the Respondent’s defence was weak at best and that this was not a circumstance where there was a genuine or mistaken view as to the interpretation of an enterprise agreement. The Respondent submitted that there was little need for any deterrence when all the circumstances of the case were considered. It further submitted that the contravening conduct was at the low end of the range, there were mitigating circumstances which existed and that the contravention occurred in unusual and complex circumstances.
There is some need for general deterrence in this case. It is important that employers large and small understand the importance of paying employees correctly. While the amount of the underpayment was modest, as I have noted above, that needs to be weighed in the context of the particular circumstances of the Applicant.
The Respondents submission that the circumstances of this case are ‘unusual and complex’ are worthy of some comment. As I have noted above, the contravention occurred in circumstances where it was alleged the Applicant had engaged in misconduct, where an investigation was on foot into that conduct, where the Applicant took leave from work and where the Applicant submitted a WorkCover claim. That combination of factors does, in my experience, produce a level of complexity. It is not, however, an unusual situation in my experience. By reason of those observations, it is important that some weight to be given to general deterrence. Complexity of the surrounding circumstances ought not excuse underpayment of wages, particularly in situations which arise with a reasonable degree of regularity from time to time.
asssessment of penalty and totality
As I have noted earlier, the Applicant seeks a penalty in the range of 50%-75% of the maximum. The Respondent seeks that no penalty be imposed or alternatively, that the penalty not exceed $1,000.
At the outset, it is appropriate to record that this is not a case in which the maximum penalty is called for or warranted. Nor is it a case in which no penalty should be imposed.
There are a number of factors in the present matter that suggest that the Court impose a penalty at the higher end of the scale. These include that the employee was wrongfully deprived of her wages for a period, that she was deprived of those wages in circumstances where she had been on unpaid leave for a significant period of time, that the Respondent is a significant enterprise, that there is no evidence it cannot bear any penalty that might be imposed and the need for some level of general deterrence. There are, however, a significant number of other factors that suggest that any penalty should be set at the lower end of the range. These include the circumstances in which the contraventions arose (including all the background circumstances and the mistaken view taken by the Respondent as to its obligations), the somewhat modest amount of the underpayment involved, the fact that this was a ‘one off’ contravention by the Respondent, the fact that the Respondent has not been found to have committed similar contraventions in the past, the fact that no one from senior management was involved in the breaches, the fact that Respondent has exhibited contrition and has taken corrective action in this case, the fact that the Respondent has taken steps to ensure compliance with the relevant requirements in the future, and the lack of any serious need, in my view, for specific deterrence in this case.
When all of these matters are weighed, in my view, the penalty should be set at 20% of the maximum penalty. That means that the Respondent should pay a penalty of $13,320 for the contravention. Nothing arises in my view which warrants this amount being reduced by reference to the application of the totality principle.
The Applicant seeks an order that the penalty imposed be paid to her as a person directly affected by the contravention and as the person who brought the proceedings to Court. That course of action was not opposed by the Respondent. Accordingly, the Court will make an order that the amount of the penalty be paid to the Applicant within 28 days of the date of this order.
I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Blake. Associate:
Dated: 17 November 2022
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