Offer Hazan v Boys in the Hood Pty Ltd and Biu Holdings
[2008] VMC 9
•10 September 2008
IN THE MAGISTRATES COURT OF VICTORIA
AT MELBOURNE
INDUSTRIAL DIVISION
Case No. W02901375
| Offer Hazan | Plaintiff |
| v | |
| Boys in the Hood Pty Ltd | First Defendant |
| Biu Holdings Pty Ltd | Second Defendant |
| James Alexander Skiadis | Third Defendant |
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| MAGISTRATE: | K Hawkins |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 26, 27, 28 & 29 May 2008, 2 June 2008 |
| DATE OF DECISION: | 10 September 2008 |
| CASE MAY BE CITED AS: | Offer Hazan v Boys in the Hood Pty Ltd and Biu Holdings Pty Ltd and James Alexander Skiadis |
| REASONS FOR DECISION |
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Catchwords: S 719 & S 728 Workplace Relations Act 1996 - underpayment of wages - non
payment of annual leave and superannuation entitlements - S 719(7) Superannuation
Guarantee (Administration) Act 1992
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms F Ryan | |
| For the Defendant | Mr D Staindl | |
| HER HONOUR: |
1. Shortly after arriving in Australia from Israel, in September 2003 Offer Hazan began working for the first defendant at “Wise Guys Pizza” outlet in St Kilda. He progressed to become the manager of that store in February 2004, and his role expanded when a second shop was opened in South Melbourne in March 2005.
2. At this time Mr Hazan understood that the second defendant became his employer. A group certificate for the financial year ending 30 June 2005 however reveals that the second defendant was the employer from 1 July 2004.
3. Discussions between Mr Hazan and the third defendant ensued regarding the possibility of the plaintiff acquiring equity in the business. Ultimately these negotiations broke down and Mr Hazan resigned from his employment on 19 October 2007.
4. Shortly after, he commenced these proceedings, claiming underpayment of wages, non payment of annual leave upon the termination of his employment and superannuation entitlements.
5. Mr Hazan further seeks that penalties be imposed pursuant to s. 719 of the Workplace Relations Act 1996 in respect of breaches of the relevant industrial instruments pursuant to which he was employed.
6. Between 13 September 2003 and late February 2004 Mr Hazan claims he was employed by the first defendant as a full-time adult level 6 employee pursuant to the Retail Trade Industry Sector – Minimum Wage Order – Victoria 1997 (`the Retail Trade Award’). Pursuant to that award he claims he was entitled to receive $13.35 per hour. In breach of that order Mr Hazan claims to have been paid only $10 per hour cash.
7. Between late February 2004 and 25 May 2005 Mr Hazan claims he was employed by the first and/or second defendants as a full time adult level 10 employee pursuant to the Retail Trade Award. Between February 2004 and 25 July 2004 he claims he ought to have been paid at the rate of $14.51 per hour, and between 26 July 2004 and 25 May 2005, at $15.46 per hour. Instead Mr Hazan claims he was paid at the rate of $10 per hour between February 2004 and 1 July 2004; $10.70 per hour between 2 July 2004 and 17 March 2005 and $6.68 per hour between 18 March 2005 and 25 May 2005.
8. Throughout these periods Mr Hazan claims the first and second defendants were bound by the Retail Trade Award.
9. Between 26 May 2005 and 30 June 2006 Mr Hazan claims to have been employed by the second defendant as a Retail Food Employee Grade 3 pursuant to the National Fast Food Retail Award 2000 (`the Fast Food Award’).
10.By way of an amended defence filed 2 May 2008 the first defendant admits award coverage but take issue with the classification level. In respect of the period between 13 September 2003 and February 2004 they say Mr Hazan was properly classified as a part time adult level 4 employee. The second defendant denies that it was bound by the Retail Trade Award, but does not provide particulars of this denial.
11.The second defendant however to admits that between 26 May 2005 and 30 June 2006 the plaintiff was employed by it as a Retail Food Employee Grade 3 pursuant to the Fast Food Award. It pleads that the plaintiff was paid a fixed weekly sum. Award coverage for this period is admitted. Underpayment is however denied.
12.The plaintiff claims pursuant to the Fast Food Award he was entitled to be paid at the rate of $15.23 per hour between 26 May 2005 and 31 July 2005 and $15.68 per hour between 1 August 2005 and 30 June 2006. Instead Mr Hazan claims he was paid at the rate of $6.68 per hour between 26 May 2005 and 30 June 2005 and between 1
July 2005 and 30 June 2006, $12.30 per hour.
13.Mr Hazan further claims the defendants have failed to pay him penalty rates prescribed by the awards, and annual leave entitlements upon the termination of his employment. This is denied.
14.The defendants formally deny contravention of the Superannuation Guarantee (Administration) Act 1992 but admitted during the running of the case that no superannuation contributions have been made to a complying fund on behalf of Mr Hazan. The plaintiff seeks an order pursuant to s. 719(7) of the Act of an amount necessary to restore the plaintiff to the position that he would have been in had the defendants not failed to make the contributions to a complying superannuation fund as required pursuant to the Superannuation Guarantee (Administration) Act 1992.
15.The defendants lead no evidence to prove that annual leave payments had been made to Mr Hazan.
16.The plaintiff claims that Mr Skiadis was a person involved in the contraventions outlined above within the meaning of s.728 of the Workplace Relations Act.
Classification level under Minimum Wage Order
17. A classification structure is set out at clause 6 of the Retail Trade Award.
18.The `Retail Trade Employee Level 4’ “shall apply to employees working under supervision or in a team environment, possessing oral communication skills, having the ability to distinguish a minor fault or error, undertaking basic quality control of own work, having multiple manual skills, customer service skills and basic inventory skills.”
19.Pursuant to 6.6.2 indicative classifications include, at (m): “Restaurant Employee (equivalent to Level 2 in the Accommodation, Cafes and Restaurants Industry Sector Minimum Wage Order (Print P3852))” (This print was not tendered into evidence).
20.A Retail Trade Employee Level 6 “shall apply to employees exercising discretion within their level of skill and training, responsible for quality of their own work, possessing competent communication and written skills. Other duties may include inventory and store control, cash register and console operator skills, material handling skills, use of tools and equipment and the training of others.”
21.Indicative classifications set out at 6.8.2 include, at (n) “Restaurant Employee (equivalent to Level 3 in the Accommodation, Cafes and Restaurants Industry Sector Minimum Wage Order (Print P3852))”.
22.Retail Trade Employee Level 10 “shall apply to employees exercising discretion within their level of skill and training.”
23. Indicative classifications set out at 6.12.2 include at (a) Manager of Retail Shop.
24.Initially Mr Hazan was engaged as a pizza maker in the East St Kilda store. To begin with he was working 15-20 hours per week. His hours rapidly increased. By the end of 2003 was “working like a full time job”.
25.In January 2004 the manager, Theo Tsoulis, resigned. From February 2004 Mr Hazan took over the role of managing the store. In addition to the duties which he had been performing, he commenced the ordering, till reconciliation, wages reconciliation, lasagne preparation and other tasks incidental to the management of the store.
26.In March 2005 the plaintiff entered a lease with Mr Skiadis and opened a second `Wise Guys’ store in South Melbourne. He was instrumental in the set up and management of this business. They had plans to pursue a formal business partnership.
27.Having considered the duties performed by the plaintiff, I am satisfied that he has correctly pleaded his classification level at all relevant times.
What was the plaintiff paid?
28.The defendants discovered no wage records relating to the plaintiff. Mr Hazan produced various documents, including “log in- log out” records from the shops’ computers which give some indication about the hours he worked in the shops. He also produced lists of wages paid each week which corroborated the weekly salary he claimed to be paid. The defendants did not challenge his evidence about salary received in any meaningful way. I can therefore conclude Mr Hazan was paid the following weekly cash amounts:
a. From 13 September to November 2003 - $10 per hour; b. From December 2003 - $12 per hour;
c. From late February 2004 - $500 per week; d. From March 2005 - $750 per week;
e. From 17 April 2005 - $1000 per week; f. From 3 October 2005 - $1200 per week; g. From 11 December 2006 to 19 October 2007 - $1600 per week. 29.Mr Hazan was provided with a PAYG payment summary for the year ending 30 June 2005 from BIU Holdings Pty Ltd declaring payments made between 1 July 2004 to 30 June 2005. The gross payment declared was $27,820 with tax withheld of $4992.
30.A further PAYG payment summary provided by the second defendant for the year ending 30 June 2006 declared a gross payment of $50,180 with tax withheld of $12,012.
31.No PAYG payment summary was provided for the year ending 30 June 2004 or 30 June 2007.
32.Mr Skiadis did not supply a group certificate in the first year to the plaintiff, because he claims that he understood Mr Hazan was in receipt of Centrelink benefits during the period of employment. Mr Skiadis determined that this excused him from
complying with his lawful obligations.
33. I accept Mr Hazan’s evidence that he was paid the net amounts as claimed.
Hours worked by Mr Hazan
34.The hours worked by the plaintiff prior to December 2003 were less than full time. I conclude they were on average 20 hours per week.
| 35. | plaintiff. Mr Hazan’s evidence was: “I worked public holidays. I didn’t take leave. Only |
The hotly contested issue in this case were the number of hours worked by the we worked including Christmas day in 2005 and 2004. I didn’t know I was entitled to annual leave. I didn’t receive documents about annual leave entitlements. I am not aware that any superannuation was paid on my behalf. The only time I heard of a super fund they had was when they did an interview with Mr Skiadis and a picture was taken of me in front of the shop in my uniform. I was his new employee he was very happy. The interview was with the super fund - “Wise guys find Host Plus perfect partner in crime”.
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38.In March 2005 the South Melbourne store opened. It opened at 10am and was generally open until midnight, 7 days per week.
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Mr Hazan described his hours as then: “March 2005 started working on Monday from “Normally finished between 10:30 – 12. Sometimes 3am”
40.Mr Hazan claimed that he worked many extra hours performing such duties as making lasagne, calculating employee’s wages, preparing spread sheets, reconciling orders against deliveries, opening the store for tradesmen and preparing an operating manual. I accept that he did these things from time to time, but given the quality of his evidence about the time these tasks took, I cannot on the balance of probabilities attribute a reliable figure to this claim. I will not allow the aspect of the claim that relates to these matters.
41.The plaintiff called several co-workers to give evidence regarding his hours of work. Victor Ramshaok worked as a delivery driver from August 2002. He still works for Wise Guys St Kilda store on casual basis mainly on Friday and Saturday nights. His normal hours of work are 5pm – 11pm or midnight, 3 to 4 days per week.
42.Mr Ramshaok described the Plaintiff’s role: “He was manager, did the rosters, stock ordering, and ensured the smooth running of shop. He supervised the shop and kitchen. He answered the phone. If there was any problem in the shop he’d be the one to talk to”.
43.Regarding the hours worked by Mr Hazan: “he would come to shop around 6pm… he’s there to assist us. He’d stay there until 10pm and sometimes close. If a problem at South Melbourne he would sort it out and come back. He would do (…) long hours...” “Sometimes I’d go for lunch during the day and see him at the South Melbourne store. It opened at 10:30- 11am.”
44.Mr Ramshaok also volunteered – “I don’t recall him being on leave or taking a holiday. No one else had to manage the shop because he was away.” “Most of the time he was in either shop or (we would) ring him on mobile, he would come straight away.”
45.This witness agreed that Mr Hazan did not usually close up the South Melbourne stores between Monday to Thursday.
46.Mr Ramshaok presented as a reliable witness. He still works for the defendant and is obviously not a friend of the plaintiff. He agreed under cross examination that he never took deliveries to Crown Casino, and only used Mr Hazan’s car once or twice to make deliveries. These points are important because Mr Hazan attempted to explain the use of his Casino card during times he was logged onto work, by alleging that other staff were using his car to take deliveries to Casino. On Mr Ramshaok’s evidence, this appears to be an unlikely event.
47.Nadav Amstel was employed by the plaintiff and worked at the defendant’s St Kilda shop during 2005, 2-3 days per week. He again worked Wise Guys as a delivery driver from late 2006-late 2007. His evidence was consistent with the plaintiff and Mr Ramshaok regarding the duties performed by Mr Hazan.
48.Regarding hours, Mr Amstel confirmed that Mr Hazan worked full time, but that he might leave after the evening rush was over on weekends at approximately 9:30pm or 10pm. He confirmed that Mr Hazan never took a holiday break.
49.Mr Amstel agreed that he had never used Mr Hazan’s personal car, not had he ever made a delivery to Crown Casino.
50.Keren Dado started at Wise Guys in approximately March 2006, initially for 4 days per week, and later for 6 or 7. She worked at the South Melbourne store. She had a three month break whilst she went overseas in Jan 2007. She resumed her job when she got back, but at the St Kilda store. Ms Dado is presently living with the plaintiff and his wife.
51.She confirmed the duties performed by Mr Hazan. She gave evidence that he sometimes would start at 10:30am or even earlier if the shop had lots of orders. Ms Dado said: “He start with me in the morning at 10:30, sometimes if busy had lots of orders he would come at 9am to make the dough. Monday to Friday I worked to midnight. He worked with me in the morning, afterwards he used to go to St Kilda and he would talk to me on the phone. On Friday he came in at 10:30 and stayed until midnight, sometimes later.”
52.Ms Dado volunteered that she took deliveries to Crown Casino, and that she had used his Crown Casino 8 or 10 times. She stated: “I asked him, he said don’t forget to use the card so I get free parking. I used it to play at the casino, blackjack, $10 table. Used card when entered, then parked car and then use card at the table.”
53.Ms Dado resigned from her employment at the same time as Mr Hazan. As a consequence she was evicted from a flat she occupied above the pizza shop. She appeared bitter about her treatment by the defendants. She is friends with the plaintiff and lives with him. In so far as her evidence contradicts that of the other two witnesses called by the plaintiff I prefer that of Mr Ramshaok and Mr Amstel.
54.The defendants called Matthew Carter who is also a casual delivery driver for Wise Guys pizzas. He began on a part time basis until his hours increased to a full time role. He has worked there for some three years. Mr Carter claims that when he started work at the South Melbourne store he did not see Mr Hazan for at least one week.
55.Mr Carter agreed he had made deliveries to the Casino 5-6 times, but had never parked in the car park; he waited outside and called the customer to collect the pizza.
56.During 2007 he claims that Mr Hazan would only come in to the South Melbourne store for a “flying visit” for 5 minutes about once per week. Mr Carter claims that when he tried to call the plaintiff he had trouble reaching him on his mobile phone. He further asserts that at times the plaintiff’s wife told him not to call as Mr Hazan was at a poker tournament.
57.Mr Carter is reliant on the defendant for his income. He appeared keen to give evidence to downplay the amount of work done by the plaintiff. His evidence is inconsistent with all other witnesses in this regard. Accordingly I am not assisted by
his evidence.
58.Theo Tsiloulis was the previous manager of Wise Guys St Kilda store. He is also related by marriage to Mr Skiadis. He gave evidence that it took him 30 – 35 hours to manage the store. He also claimed that the plaintiff received $12 per hour when he commenced work, because “that’s what everyone was paid”. I prefer the plaintiff’s evidence on this point, as I can not be satisfied that Mr Tsioulis has an independent recollection of the payments made to Mr Hazan in 2003.
59.Eve Theodorou started working for the defendant a few months before the plaintiff in 2003. She claims she was the manager of the South Melbourne store. Her hours of work varied. I accept that she and Mr Hazan overlapped at some times, but generally only one of them needed to be present to open and close the stores.
60.Ms Theodorou’s evidence confirms that the hours worked by Mr Hazan were not set and varied enormously. Without any accurate documentary evidence to assist, it is impossible to conclude with any precision, from the evidence of these witnesses just how many hours he worked, let alone when they were.
61.Jenny Skiadis is the sister in law of the third defendant. She runs the milk bar located next to the St Kilda Wise Guys store. Until these proceedings she was unaware that she is a director of the first defendant. She was responsible for the safekeeping of takings from the pizza stores, and the preparation of wages. She received pay slips printed by the Pizza store’s cash registers. She filed these records in an archive box, but was unable to locate these records.
62.Mrs Skiadis confirmed that the plaintiff did prepare excel spreadsheets about hours worked by staff and the like. She received deliveries for the Pizza shop at the milk bar, when the plaintiff was not around.
63.Jim Skiadis is the third defendant and was a director of the first and second defendants. He agreed that in the later stages of employment, the plaintiff was an “operations manager” of the business. He was not required to do any administration. He strongly disagreed that Mr Hazan was required to put in the extra hours he claimed. He gave evidence (which was corroborated by Mr Catalano) that many evenings Mr Hazan came to his office and discussed business matters generally, but also joined in games of online poker. I accept this was a common feature of the business relationship.
64.Mr Skiadis confirmed that over the course of two years he and Hazan held discussions with a view to entering a partnership. This did not conclude.
65.Mr Skiadis set up a remote video monitoring system of the pizza shops. Through this he could view the stores. He could also access the ordering system from the `backend’. He began to notice that Mr Hazan was not at the shop where he was logged on.
66.Mr Skiadis admits that superannuation has not been paid into a complying fund on behalf of the plaintiff. He also notes that not all employees engaged by the business provided their tax file numbers. For this he blames the plaintiff.
67.From 13 September 2003 to 31 December 2003, the plaintiff was paid at an hourly rate of $10. (`the first period’). I have concluded he worked on average 20 hours per week. From 1 January 2004 to 1 February 2004, he was paid at an hourly rate of $12 (“the second period”). From this point on he worked at least 40 hours per week. During both periods I can be satisfied on the balance of probabilities of the number of hours worked.
68.During both periods the normal rate of pay was $13.35 per hour. On the basis of the plaintiff’s calculations which were not contradicted by the defendant, I conclude he was underpaid in the first period, $1,052.86, and in the second, $348.30. A total of $1401.16.
69.For the remaining period of employment Mr Hazan was paid a flat rate per week. Mr Skiadis concedes Hazan worked in excess of 40 hours per week, and on occasions he worked 60 hours per week.
70.The defendants allege that on many occasions when Mr Hazan was logged on to duty at the pizza shops he was actually at the casino playing poker, or was socially engaged with Mr Skiadis and others at Skiadis’ office. It seems the love of poker was shared by all involved in this operation and much time was consumed betting on line. Mr Hazan denied that he was engaged in personal activities when he was at the shop. An analysis of log in records compared with records from Crown Casino demonstrates that the plaintiff’s card was used at the Casino when he was logged in at the shop. Mr Hazan tried to explain away these incidents as others using his card and car. This may account for a few occasions, but clearly there were occasions when Mr Hazan attended the casino when he was logged on to work.
71.Mr Hazan admits that others used his log on code at the shop. His wife and his son also worked at the shop and knew his code. Accordingly the Court can not safely rely on the log in records to corroborate his hours of work.
72.What I can easily infer is that Mr Hazan was on call during the evening rush hours from about 6pm until 10:30pm each night. He was not required to physically attend at the stores to manage them. He had the capacity, certainly in later times, to remotely manage. He was available for the opening hours of the shops. He generally had a physical presence at the shops during rush hour, but was not there all the time. He covered when people were sick.
73.I am satisfied Mr Hazan worked seven days per week, and only took Christmas days off.
74.Mr Skiadis volunteered that his managerial input was often required when the plaintiff left his employ - “I got 12 phone calls each 2 hours.”
75.Mr Hazan’s role was to cover all of this management function. He drove between the two shops; he picked up deliveries, sorted out maintenance and staffing issues. These things did not need Mr Hazan to be present in the shop to be `working’. Of course he did personal things like pick up his children, and occasionally plays poker. His job had the flexibility to do these things. Given that he was working 7 days per week, 364 days per year, that flexibility was essential.
76.I can not however be satisfied precisely what hours he worked beyond those opening hours. Clearly he worked when the shops were closed, but I can not be reliably satisfied on the balance of probabilities as to how many hours he did so.
77.Mr Hazan was not given time off. He did not take annual leave. I am satisfied that he took only 3-4 days off in the whole time he was working for the organisation. He did take day trips, but only on 2 or 3 occasions. He attended at Crown Casino to play poker approximately 4 -5 times, during the evening. It is completely unreasonable of the employer to suggest that he should not have taken any time off.
78.The St Kilda shop was open 42 hours per week. The South Melbourne store, from 10am until around midnight each day, or approximately 98 hours per week.
79.Mr Hazan agreed with the proposition put that he did not regard himself as being paid by the hour but instead was paid a salary or wage and did not have to account for his hours. “I put down hours but I didn’t need to put them down because was paid a set amount”.
Q: “You said that you recorded your hours but didn’t need to” A: “if I didn’t need to log in I didn’t” 80.The plaintiff’s email of 3 August 2007 further recorded his understanding - “I do not get paid by the hour…..”
81.This evidence is consistent with payment by salary, rather than by hours worked after the first two periods. Accordingly I conclude that he was paid a salary to do the role, which was not based on the hours of work actually performed. Whether he was underpaid therefore depends upon whether the Award rate of pay for the hours I can be satisfied he worked is greater than that he was actually paid.
| 82. | comparison of the relevant award rate at the material time to the salary actually paid |
I am satisfied on the evidence that he worked at least 40 hours per week. A two periods, from 13 September 2003 to 1 February 2004.
83.He was not paid for the last week of his employment. For this he is owed $1600. I accept the plaintiff’s final calculations of superannuation and annual leave owing as accurate.
84.I conclude on the balance of probabilities that the defendants have failed to pay the plaintiff the following amounts:
• Salary for the final week of employment $1600 • Underpayment of wages $1401.16
• Superannuation $28,094.82
• Annual leave $36,048.75 • TOTAL $67,144.73
85.Pursuant to s.722 (1) (b) of the Workplace Relations Act I direct that the second defendant pay a lump sum of $10,000 in lieu of interest to the Plaintiff.
86.The total calculation for salary for the last week of employment, underpayment of wages, annual leave and interest is $49,049.91.
Matters relevant to penalty
87.The first defendant was the employer up until 30 June 2004. I have concluded that the plaintiff has proven he was paid less than the prescribed minimum wage rates for the period 13 September 2003 to 1 February 2004. Accordingly I find the breach of clause 5.2 of the Retail Trade Award proven.
88.The total maximum penalty which may be imposed by the Court in respect of this breach is $10,000[1] for a body corporate.
[1] See s.178(4)(a)(ii) of the pre reform Workplace Relations Act 1996
89.The second defendant was the employer from 1 July 2004 for the balance of the employment. The plaintiff has been unable to prove that he was underpaid the minimum wage rate either pursuant to the Retail Trade Award or the Fast Food Award during this period of employment. He has also failed to prove the alleged underpayment of penalty rates.
90.I am satisfied that the second defendant has failed to make superannuation contributions to a nominated fund and has therefore breached clause 21 of the Fast Food Award.
91.I am satisfied that the second defendant has failed to pay accrued annual leave upon the termination of employment. It is therefore in breach of clause 33.4 of the Fast Food Award.
92.The total maximum penalty which may be imposed in respect of these two breaches was increased by the amendments to the Workplace Relations Act to $33,000 per breach. The relevant total maximum penalty for the second defendant is $66,000.
93.I am satisfied that at all relevant times the third defendant was a person directly involved in the contravention of all acts of the first and second defendants, for the provisions of section 728 of the Workplace Relations Act. This section commenced operation with the WorkChoices amendments on 27 March 2006. I therefore conclude that the third defendant is liable for the breaches which occurred after that date. These are the two breaches of the Fast Food Award outlined above. The total maximum penalty faced by Mr Skiadis is $6,600 per breach, or $13,200.
Legislative provisions relating to penalty
94.Section 719 of the Workplace Relations Act 1996 ("the Act") enables a court of competent jurisdiction' to impose a penalty in respect of a breach of a term of an award. Section 719(2) provides that where two or more breaches of a term of an award are committed by the same person, and the breaches arose out of a course of conduct by the person, the breaches shall, for the purposes of s 719(2), be taken to constitute a single breach of the term.
Factors relevant to penalty
95.The factors relevant to the imposition of a penalty under the Workplace Relations Act have been summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7, [26]-[59], as follows:
• the nature and extent of the conduct which led to the breaches; • the circumstances in which that conduct took place; •
the nature and extent of any loss or damage sustained as a result of the breaches;
• whether there had been similar previous conduct by the respondent; •
whether the breaches were properly distinct or arose out of the one course of conduct;
• the size of the business involved; • whether or not the breaches were deliberate; • whether senior management was involved in the breaches; • whether the party committing the breach had exhibited contrition; • whether the party committing the breach had taken corrective action; •
whether the party committing the breach had cooperated with the enforcement authorities;
• the need to ensure compliance with minimum standards by provision of and
• the need for specific and general deterrence. 96.This summary was adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080, [14]. While the summary is a convenient checklist, it does not prescribe or restrict the matters which may be taken into account in the exercise of
the Court's discretion: Sharpe v Dogma Enterprises Pty Ltd [2007] FAC 1550, [ I I];
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith 120081 FCAFC 8
(Merringtons) at [91] per Buchanan J. The factors identified in Pangaea relevant to
this case are addressed below.Nature and extent of the conduct
97.The defendants paid the plaintiff at below the minimum rate prescribed by the awards, at least for the period up to February 2004. The defendants failed to pay to the plaintiff penalty rates, annual leave upon termination and superannuation. The breaches in relation to annual leave and superannuation continued during the whole of the plaintiffs employment, a period of four years and one month.
Nature and extent of loss and damage
98.The underpayment is huge. Even with the evidentiary difficulties cause by the defendants' failure to discover documentation in relation to the plaintiffs remuneration and hours worked, he has proven an underpayment of $67,144.73.
99.After four years of employment, no provision was made for the plaintiff in relation to superannuation, and the plaintiff was not credited annual leave, nor were these entitlements paid upon termination of employment.
Whether the breaches were distinct or arose out of the one course of conduct.
100. The defendant will receive the benefit of s 719(2) in respect of repeated breaches of the respective award terms, as the breaches clearly arose in a course of conduct.
Circumstances in which the conduct took place, deliberateness of the breaches and involvement of senior management
101. The breaches were deliberate. The third defendant knew of the existence of the Award and was aware that the defendants had obligations under that Award.
102. Further, the defendants failed to pay important entitlements such as superannuation and annual leave and this failure extended over the entire four years of the plaintiffs employment. These entitlements are well known through out the community and do not require a complex understanding of industrial instruments in order to achieve
compliance.
103. At all relevant times the third defendant was the sole director and company secretary of the defendants and was directly involved in the breaches of the Awards.
104. The third defendant ceased his directorship of the first and second defendants several weeks prior to trial. He admits that he was previously the sole director of the first defendant and was at all material times the controlling mind of that entity.
| 105. | years experience in business. He had hands on role in the administration of the pizza |
Mr Skiadis had not previously had experience in the pizza business, but has 20 was aware that the employees were covered by a federal award. He had reference to such a document. He acknowledged he was aware that he was obliged to credit the plaintiff with annual leave, yet he did not keep records to do so.
106. By arranging an interview with “Host Plus” a superannuation fund, and for photographs to be taken, promoting his business in their newsletter, the third defendant further illustrates his awareness of his obligation to pay superannuation, but did not do so.
107. The third defendant also engaged Mr Catalano, a solicitor, as a `corporate advisor’, and therefore had ready access to compliance advice.
108. Mr Skiadis is clearly a man experienced in business matters. He is presently an insurance broker. He had the capacity and resources to ensure that the defendants were meeting their legal obligations. He failed to do so.
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Joseph Catalano is a “corporate advisor” to the second defendant. He was registered qualified as a barrister and solicitor. He agrees that discussions were held with a view to the plaintiff becoming a partner in the business of the defendants. Discussions ultimately broke down and no agreement reached.
110. Mr Catalano confirmed that the Profit and Loss statements of the second defendant had made provision for superannuation payments. He was however unable to confirm that any superannuation payments had been made on behalf of staff to complying funds.
111. It was apparent from the evidence of Mr Catalano that many relevant documents have not been discovered by the defendants. Whilst the plaintiff elected to proceed with the case regardless, this conduct has undoubtedly prejudiced his ability to prosecute his claim. Mr Catalano was also keen to make serious allegations about the plaintiff which had not been pleaded, nor put to him.
Contrition, corrective action, co-operation with authorities
112. The defendants have demonstrated no contrition. No attempt has been made to pay amounts owing to the plaintiff.
Failure to make discovery and comply with Court orders
| 113. | had no documents relevant to this case. That was patently incorrect. The plaintiff had |
Mr Skiadis swore an affidavit of documents in May 2008 stating that the defendant discovery and particulars of defence: (20 February 2008, 23 April 2008 and 7 May 2008). Yet in contravention of express court orders, discovery was not made prior to the commencement of the trial. During the trial itself, it was ordered that a further affidavit of documents be filed by the defendants when a document that had not been discovered purporting to be "log-in" and "log-out" records was used during the cross-examination of the plaintiff.
114. The deficiency of the defendants’ discovery caused substantial delays and unnecessarily prolonged the hearing of the case. The defendants continued to blatantly ignore orders of this Court to provide adequate discovery.
115. The defendants have acted with wilful disregard to express court orders requiring the provision of a further affidavit of documents. They have failed and/or refused to provide documentary confirmation of wage records or hours worked by the plaintiff. I have formed a conclusion that many relevant documents have not been discovered, without adequate explanation.
116. The plaintiff elected not to seek the further adjournment to force compliance.
117. The defendants' conduct in failing to provide discovery in an appropriate and timely and manner obstructed the carriage of this matter generally and the carriage of the trial. Further, this failure obfuscated the defendant's position and hindered the ability
of the plaintiff to assess and prove his claim.
118. The defendants defended all aspects of the plaintiff's claim to judgment and the trial ran for five days. A sixth day was lost when the matter had to be adjourned for the defendants to provide further discovery.
Ensuring compliance with minimum standards
119. The principal objects of the Act emphasise the importance of minimum standards, including wages, and the enforcement of those standards. The substantial penalties fixed for breaches of awards reinforce the importance placed by the legislature on compliance with minimum standards.
Specific and general deterrence
120. Specific deterrence looms very large in this case. The St Kilda and South Melbourne shops are still trading. They engage approximately 20 casual staff, and 3 full time. The business purports to engage these staff as `contractors’.
121. The attitude of Mr Skiadis towards the engagement of these employees is demonstrated by the following exchange:
Q: “Do you pay super to contractors?” – because (of the) incentive for a meal, they can eat along the way”.
A: “if (they are) entitled to super someone else tells me, I don’t make decision (I)
rely on advice”
Q: “Are you aware that you are obliged to pay super to contractors?122. The defendants have at all times failed to demonstrate any compliance with award obligations and minimum standards.
123. The imposition of appropriate penalties will serve as a general deterrent to business operators, particularly those in this industry, from avoiding their legal obligations.
Totality principle
124. The maximum penalty that could be imposed in this case is $10,000 against the first defendant, $66,000 against the second defendant and $13,200 against the third defendant.
125. The defendants were invited to tender financial information to the Court to demonstrate their present circumstances. They declined to do so. Previous profit and loss statements show a modest turnover. Mrs Skiadis however made mention that only a proportion of the shop takings were banked.
126. Having regard to the factors outlined above, the court must again consider the total penalty and apply an `instinctive synthesis’ test to ensure that the penalty is an appropriate response to what the defendants did: Merringtons at [46] per Graham J.
127. The court must also ensure the total penalty is not be harsh or oppressive in all the circumstances: Merringtons at [23] per Gray J, [71] per Graham J, [ I 021 per Buchanen J. I have given consideration to all of these factors.
Conclusion
128. Given the conduct of the defendants in this case a penalty at the higher end of the range is most appropriate. I will impose a penalty of 80% of the maximum in respect of each defendant as follows:
• The first defendant is directed to pay a penalty of $8000; • The second defendant is directed to pay a penalty of $52,800; and • The third defendant is directed to pay a penalty of $10,560. 129. Pursuant to s.841 (b) of the Workplace Relations Act the penalties imposed above are to be paid to the plaintiff, within one month.
The court declares that:
1. The first defendant has breached clause 5.2 of the Retail Trade Industry Sector – Minimum Wage Order – Victoria 1997 by failing to pay the prescribed minimum wage rates for the period 13 September 2003 to 1 February 2004;
2. The second defendant has breached clause 21 of the National Fast Food Retail Award 2000 by failing to make superannuation contributions on behalf of the plaintiff between 13 September 2003 and 19 October 2007;
3. The second defendant has breached clause 33.4 of the National Fast Food Retail Award 2000 by failing to pay accrued annual leave upon the termination of the plaintiff’s employment on 19 October 2007; and
4. The third defendant is a person directly involved in the contravention of all acts of the first and second defendants and is therefore liable pursuant to s.728 of the Workplace Relations Act 1996 for the breaches of clauses 21 and 33.4 of the National Fast Food Retail Award 2000.
ORDERS:
130. Pursuant to s.719 (8) of the Workplace Relations Act the Second Defendant pay $28,094.82 to a complying superannuation fund nominated by the Plaintiff;
131. The second defendant pay to the plaintiff the total amount of $49,049.91, being for salary for the last week of employment, underpayment of wages, annual leave and interest within 30 days;
132. The first defendant pay to the plaintiff a penalty of $8000;
133. The second defendant pay to the plaintiff a penalty of $52,800; and
134. The third defendant pay to the plaintiff a penalty of $10,560.
135. The payments referred to in orders 1-5 above are to be made within 30 days.
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