Power v BOC Pty Ltd and Ors (No.2)
[2017] FCCA 2387
•3 October 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| POWER v BOC PTY LTD & ORS (No.2) | [2017] FCCA 2387 |
| Catchwords: INDUSTRIAL LAW –Assessment of compensation for breach of s.340 of Fair Work Act 2009 (Cth) – whether employer can dismiss an employee when on maternity leave – pecuniary penalty. |
| Legislation: Fair Work Act 2009 (Cth), ss.70, 71, 75, 79, 83, 84, 340, 545 |
| Cases cited: Stanley v Service to Youth Council Incorporated [2014] FCA 643 Commonwealth of Australia v Director, Fair Work Building Industry Assessment [2015] HCA 46 Mason & Harrington Corporation Pty Ltd t/as Pangea Restaurant & Bar [2007] FMCA 7 |
| Applicant: | CAROLINE POWER |
| First Respondent: | BOC PTY LTD |
| Second Respondent: | ANDREW FINNIE |
| Third Respondent: | TROY HARRIS |
| File Number: | BRG 167 of 2016 |
| Judgment of: | Judge Vasta |
| Hearing date: | 22 September 2017 |
| Date of Last Submission: | 22 September 2017 |
| Delivered at: | Brisbane |
| Delivered on: | 3 October 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Reidy |
| Solicitors for the Applicant: | Adam Wilson Lawyer |
| Counsel for the Respondents: | Mr Dwyer |
| Solicitors for the Respondents: | AI Group Lawyer Pty Ltd |
ORDERS
The First Respondent pay to the Applicant the sum of $37,842.99 by way of compensation.
The First Respondent pay a pecuniary penalty in the sum of $20,000.00 for the contravention of s.340 of the Fair Work Act 2009 (Cth) to the Applicant.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG167 of 2016
| CAROLINE POWER |
Applicant
And
| BOC PTY LTD |
First Respondent
| ANDREW FINNIE |
Second Respondent
| TROY HARRIS |
Third Respondent
REASONS FOR JUDGMENT
Introduction
On 9 August 2017, I declared that the First Respondent had breached s.340 of the Fair Work Act 2009 (Cth) (“the FW Act”) by bringing for the date of redundancy of the Applicant from 12 November 2015 to 4 November 2015. The Applicant now seeks compensation pursuant to s.545 of the FW Act as well as the imposition of a pecuniary penalty for the breach.
The Effect of s.545
This section reads, relevantly, as follows:
“545 Orders that can be made by particular courts
Federal Court and Federal Circuit Court
(1) The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.
Note 1: For the court’s power to make pecuniary penalty orders, see section 546.
(2) Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:
(a) an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;
(b) an order awarding compensation for loss that a person has suffered because of the contravention;
(c) an order for reinstatement of a person.
There are no legislative guidelines that govern the award of compensation. Broadly speaking, the Court should look at what would have been the position of the Applicant had the breach not occurred and compensate the Applicant accordingly.
In this case, there is a complicating factor. I have made the declaration that the breach of the FW Act committed by the First Respondent is that the First Respondent moved the date of the dismissal by redundancy of the Applicant forward from 12 November 2015 to 4 November 2015. There is no contest that the Applicant was to go on leave on 6 November 2015.
Would the Applicant have been on Maternity Leave from 6 November 2015?
The evidence disclosed that the Applicant had originally applied for “maternity leave” from 27 November 2015. The Applicant, having been told about difficulties with her pregnancy, moved that date forward to 6 November 2015. The Applicant actually made an application for 4 weeks annual leave to be followed by 21 weeks of paid parental leave pursuant to the PPL policy of the First Respondent.
The evidence disclosed that this would mean that the Applicant would be paid her full salary until 9 May 2016 but that she would not receive any commission on sales (obviously because she would not be making any sales in that period). The Applicant envisaged coming back to work on 9 May 2016 but there is evidence that her manager, the Second Respondent, had foreshadowed that the Applicant may wish to take further unpaid leave which she was entitled to do until 5 November 2016.
The First Respondent submits that as at 12 November 2015, when the redundancy would have occurred, the Applicant would not have been on maternity leave but would have been on annual leave.
I do not accept this submission.
Section 70 of the FW Act entitles an employee up to 12 months of unpaid parental leave if the leave is associated with the birth of a child of the employee. Section 71 of the FW Act explains that such leave must be taken in a single continuous period but notes that the employee may take “a form of paid leave at the same time as (she) is on unpaid parental leave.” The section further explains that such leave may start up to 6 weeks before the expected date of birth of the child.
Section 75 of the FW Act allows for an extension of that parental leave to occur in the circumstances foreshadowed by the Second Respondent and described in paragraph 6 above. Section 79 of the FW Act allows for the taking of any other kind of paid leave whilst unpaid parental leave is taken.
I find that the Applicant would have been on unpaid maternity leave from 6 November 2015 until 9 May 2016 with the option of extending that leave until 5 November 2016. I find that the Applicant would have also taken paid leave, both annual and paid parental, during this period.
Could the Applicant have been made Redundant on 12 November 2015?
This is the pivotal question in this matter. Section 84 of the FW Act states as follows:-
“84 Return to work guarantee
On ending unpaid parental leave, an employee is entitled to return to:
(a) the employee’s pre‑parental leave position; or
(b) if that position no longer exists—an available position for which the employee is qualified and suited nearest in status and pay to the pre‑parental leave position.”
If one looks at the words of the section, the guarantee takes effect upon the ending of the employee’s unpaid parental leave. But this section is silent as to how the leave is actually ended.
A clue may be the wording of the preceding section, s.83:
“83 Consultation with employee on unpaid parental leave
(1) If:
(a) an employee is on unpaid parental leave; and
(b) the employee’s employer makes a decision that will have a significant effect on the status, pay or location of the employee’s pre‑parental leave position;
the employer must take all reasonable steps to give the employee information about, and an opportunity to discuss, the effect of the decision on that position.
(2) The employee’s pre‑parental leave position is:
(a) unless paragraph (b) applies, the position the employee held before starting the unpaid parental leave; or
(b) if, before starting the unpaid parental leave, the employee:
(i) was transferred to a safe job because of her pregnancy; or
(ii) reduced her working hours due to her pregnancy;
the position the employee held immediately before that transfer or reduction.”
The wording of s.83 would indicate that decisions about the position of a person on unpaid maternity leave can be made during that period of leave. This would have to include redundancy because obviously redundancy has “a significant effect on the status” of the position.
That point of view derives some strength from what was said by Justice White in Stanley v Service to Youth Council Incorporated [2014] FCA 643 at paragraphs 225 and 226
“225. The clause “on ending unpaid parental leave” in s 84 is unqualified. It allows for the variety of circumstances in which parental leave may end, for example, on expiration of the agreed period of leave or on an employee’s earlier return to work. A termination of an employee’s employment while the employee is absent on leave necessarily brings the period of leave to an end as an employee cannot be on leave from employment which no longer subsists.
226. I agree that there is some incongruity in the circumstance that an employer’s act in terminating the employment of an employee may, simultaneously, trigger an obligation under s 84 in the employer to allow the employee to return to the pre-parental leave position or, if that is not available, to some available and suitable alternative position. However, that circumstance is necessarily implicit in the “guarantee” which s 84 provides. The evident policy reflected in s 84 should not be able to be frustrated by an employer adopting the expedient of terminating an employee’s services before the expiration of the employee’s unpaid parental leave. Further, an employer who terminates an employee’s employment by reason of genuine redundancy without there being available alternative positions is unlikely to be in breach of s 84.”
The Applicant has referred me to what was said by Lucev FM (as His Honour then was) in Liquor, Hospitality and Miscellaneous Union v Cuddles Management Pty Ltd [2009] FMCA 463. His Honour analysed a number of decisions made by Industrial Commissions as well as the relevant provisions of the then Workplace Relations Act1996 (Cth) (“WR Act”).
At paragraphs 116 and 117, His Honour said the following:
“116. An employer cannot give notice of termination of employment to an employee on approved leave, or, at least, the notice cannot run concurrently with the approved leave because to do so is to deprive the employee of their right to paid leave. The principle has been established in cases concerning the interpretation of Awards and employees’ entitlements on termination. In the The Chief Secretary v The Hospital Employees Industrial Union of Workers of WA (Coastal Branch)[154] the Court of Arbitration in Western Australia held that a government department cannot give notice of dismissal so as to have any portion of the month prescribed for the notice of dismissal running concurrently with the annual holidays of the employee concerned. In McSharer v Hospital Employees Industrial Union of Workers, WA, Burt J held that the right to terminate employment on one weeks notice was subject to an entitlement to leave and therefore an employer cannot give notice which in its terms would terminate employment within a period of annual leave. In AMWSU v Multicon Engineering (WA) Pty Ltd each of the Justices of the Industrial Appeal Court held that notice of termination was not able to run concurrently with a period of annual leave because to do so would be to deny the employee the benefit of the annual leave to the extent of the notice of termination. In Swingler v Methodist Ladies College Smith C (as she then was) applied the same principle to find that notice could not operate at law whilst the employee was on long service leave.
117. In this case the provisions of the WR Act reinforce the proposition that an employee on approved leave, and specifically maternity leave, cannot have that leave interfered with by a period of notice. In this case, even though the prerequisite period of service for entitlement to maternity leave had not been met by Ms Poppas, Cuddles Management granted her maternity leave. Section 265 of the WR Act relevantly provides that maternity leave is “a single, unbroken period of unpaid leave (ordinary maternity leave)”. Section 279(1) of the WR Act entitles an employee to terminate employment during maternity leave “subject to any notice required to be given by the employee”. There is no co-related right given to an employer to terminate an employee’s service during maternity leave. Section 280 of the WR Act guarantees an employee who has taken maternity leave the right to return to the position held immediately before the start of the maternity related leave period. In the Court’s view those provisions make it clear that an employer is not entitled to terminate an employee’s service whilst the employee is on maternity leave. Furthermore, and in any event, to do so would entitle an employer to give notice during a period during which the employee is not being paid. If notice were to run during this period the employee’s entitlement to a paid notice period, or pay in lieu of notice, would be vitiated. Having regard to the provisions of ss.265, 279 and 280 of the WR Act the Court’s view is that that cannot have been the intention of the Parliament. Furthermore, it is contrary to the law as established in the Chief Secretary, McSharer and Multicon Engineering.”
The reasoning of His Honour relies upon the fact that s.279 of the WR Act entitled an employee to terminate employment during maternity leave. His Honour pointed out that there was no reciprocal section that allowed an employer to terminate employment during maternity leave.
The logical conclusion using the expressio unius est exclusio alterius principle of statutory interpretation would be that an employer could not terminate an employee’s employment while they were on maternity leave.
As is obvious, His Honour was referring to an Act that has since been repealed. While s.265 and s.280 of the WR Act survived and were incorporated into the FW Act, s.279 did not fare so well and does not have a corresponding section in the FW Act.
Because s.279 of the WR Act did not migrate to the FW Act and the legislature enacted s.83 of the FW Act that did not have a corresponding section in the WR Act, it should be inferred that the Parliament was “changing the landscape” with respect to the area of parental leave. A quick comparison of Part 7 Division 6 of the WR Act with Chapter 2 Part 2-2 Division 5 of the FW Act bears this out.
For those reasons, I do not consider that the statement made by His Honour that “an employer is not entitled to terminate an employee’s service while the employee is on maternity leave” is a statement of the current state of the law.
I find that since the enactment of the FW Act, an employer is entitled to terminate the employment of an employee who is on maternity leave, as long as that termination is for a genuine reason.
It seems to me then that the Applicant could have been made redundant by the First Respondent on 12 November 2015.
What Are the Consequences of Redundancy?
There is still much force in the observations made by Judge Lucev in the Cuddles (Supra) case. Where there has been an agreement by an employer to allow an employee to be on some form of paid leave, an employer cannot dismiss the employee while the employee is on the leave. As His Honour noted “to do so is to deprive the employee of their right to paid leave”.
In this case, the Applicant had the right to take the annual leave plus the paid parental leave as leave during her unpaid maternity leave. As noted earlier in these reasons, this “paid leave” is the leave referred to in s.84 of the FW Act.
In keeping with the line of authority summarised by His Honour Judge Lucev, that leave could not be used as part of any “notice period” and any termination must be taken to occur at the end of that leave. In real terms, it means that any leave must be totally paid out before the other entitlements due at termination are to be calculated.
Whilst this may be a different result to that adjudicated by Justice White in the Stanley (Supra) case, this is because the right to paid leave is a concurrent right to unpaid maternity leave. In the present case, the concurrent right conferred by s.79 of the FW Act distinguishes it factually from Stanley (Supra).
The consequence is that the Applicant ought to have been paid her full entitlement to annual leave and paid parental leave before any by-product of the redundancy took effect.
The other consequence is that s.83 of the FW Act should have been utilised in conjunction with the “Leaving BOC policy”.
Compensation
Any compensation I order to be paid to the Applicant can only be for the loss that she has suffered as a result of the contravention of the FW Act. The contravention is a narrow one and whilst it could not be described as “technical”, it is hardly the worst contravention that has come before this Court.
I must look at this issue in terms of what would have occurred if the contravention had not occurred and what the First Respondent should have done. The contravention occurred because the First Respondent brought forward the day of redundancy from 12 November 2015 to 4 November 2015. Therefore, the issue of compensation must be looked at through that lens.
Economic Loss
It is agreed by all parties that the Applicant was paid a severance package upon her redundancy. That package included a payment for 4 weeks annual leave which was to be taken as part of her overall maternity leave. It is also agreed that the Applicant was not paid the balance of her paid parental leave approved by Management.
On the analysis that I have conducted, it is difficult to see what other economic loss was suffered by the Applicant. If the contravention had not occurred, the Applicant would have been made redundant on 12 November 2015. She would have been entitled to have been paid out the full amount of the paid parental leave.
There was an arrangement made that during the period of maternity leave, the Applicant would still have use of some property of the First Respondent, such as the car. However, once the employment ends, the entitlement to that property is also at an end.
For this reason, I cannot see that loss of the car or any other associated property of the First Respondent ought to be part of the calculation that I make for economic loss.
The Applicant was to be paid a figure of $1,715.71 per week which included her 13% superannuation payment but did not include any entitlement to commission. The scheme was to last for 21 weeks. This meant that the Applicant was entitled to be paid a gross total of $36,029.91.
The Applicant was paid $11,826.00 by the Federal Government because she still met the criteria for the government paid parental scheme which paid eligible persons the minimum wage for a period of 18 weeks of maternity leave.
This leaves a loss of $24,203.91. There must be a payment of interest on this amount. Using an interest rate of 10% per annum for a period of 23 months, I have calculated an interest payment of $4,639.08.
The Guarantee provided by s.84
If the redundancy had occurred on 12 November 2015, pursuant to s.84 of the FW Act, the Applicant was entitled to return to an available position for which she was qualified and suited nearest in status and pay to her previous position.
I accept the evidence of the witnesses for the First Respondent (and that of the Applicant herself) that there was no such position in Mt Isa. The Applicant, in her affidavit, gave evidence that she was qualified for positions with the First Respondent that were situated in Adelaide and other parts of Australia.
However, the Applicant gave evidence before me that she had not applied for any position outside of Mt Isa since her redundancy from the First Respondent. This was because all of her support network was in Mt Isa which included her husband who had employment in Mt Isa.
I cannot accept that the Applicant was ready, willing and able to move from Mt Isa in November 2015 so that she could maintain employment with the First Respondent. I do not accept that there were any true available alternative positions for the Applicant.
Therefore, in the circumstances of this particular case, the protection provided to the Applicant by s.84 and the other sections contained in Division 5 were limited to the payment of the paid parental leave approved by Management.
There was also a claim for out-of-pocket expenses but I am not convinced that those same expenses would not have been occasioned if the redundancy had occurred on 12 November 2015.
Hurt, Suffering and Humiliation
There is no doubt that the Applicant suffered hurt and humiliation when she was told that she was being made redundant. The question is whether she would have suffered that same degree of hurt and humiliation if she had been made redundant on 12 November 2015 instead of 4 November 2015.
In my view, the Applicant would have had the benefit of the “Leaving BOC policy” if she had been made redundant on 12 November 2015. The First Respondent would also have had to comply with s.83 of the FW Act if the Applicant had been made redundant on 12 November 2015. This certainly would have made a great difference in how the Applicant received the news of her redundancy.
Because of the contravention, the Applicant was deceived into believing that the Second Respondent had arrived to speak to her about what would happen whilst she was on leave. She was taken into a lunchroom and spoken to by the Second Respondent with the only other person in the room being the Third Respondent whom she hardly knew.
The manner in which the Applicant was told of her redundancy was extremely poor. This would not have happened if the redundancy had occurred on 12 November 2015 with the First Respondent complying with the provisions of their own policy and of the FW Act.
Added to this was the fact that the Applicant was facing an uneasy pregnancy. The fact that she felt secure in that she had no financial worries because of her paid parental leave was something that she was entitled to feel. By committing the contravention, the First Respondent deprived her of this security. Instead, she had to hurriedly make an application for the paid parental scheme of the Federal government which still left her over $24,000.00 worse off than she was entitled to be.
These things should simply not have happened. The hurt, suffering and humiliation endured by the Applicant was avoidable if the First Respondent had simply complied with their obligations under the FW Act.
I assess the compensation due to the Applicant under this heading at $9,000.00.
Pecuniary Penalty
Because there has been a contravention of s.340 of the FW Act, the First Respondent is liable for a pecuniary penalty. The maximum amount of such penalty is $54,000.00.
The principles applicable in assessing the quantum of such penalties are well settled and the factors to be taken into account have been set out in the Mason & Harrington Corporation Pty Ltd t/as Pangea Restaurant & Bar [2007] FMCA 7.
In this matter, I have taken into account the most relevant aspects. The starting point is the nature of the contravention. As explained in Power v BOC Ltd & Ors [2017] FCCA 1868, the First Respondent, through Mr Newnham, did not maliciously act against the Applicant.
The First Respondent acted genuinely and with what it thought were the best interests of the Applicant in the given situation. In hindsight, such actions can be seen as incompetent, ignorant and patronising. But it was not a deliberate attempt to deprive the Applicant of her rights under the FW Act.
The decision was made by upper middle management and was made without reference to the specialised HR section of the First Respondent. It was a clumsy attempt at trying to balance the perceived needs of the First Respondent with the best interests of the Applicant.
The decision has cost the Applicant a significant amount of money and also caused her hurt, suffering and humiliation. There has been little contrition shown, however this must be tempered by the fact that the eventual decision of the Court as to the breach of s.340 was not a matter that was really pursued in this litigation.
Still, in the submissions made on quantum by the First Respondent, there is a deal of minimising the effect of this contravention. Again this must be tempered against the submissions of the Applicant that have almost called for the Court to somehow “strike a blow for pregnant women in the workforce”.
The High Court in Commonwealth of Australia v Director, Fair Work Building Industry Assessment [2015] HCA 46 said:
“No less importantly, whereas criminal penalties import notions of retribution[74] and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance[75]:
‘Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. ... The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.’”
Whilst deterrence, both specific and general, is a major factor in determining the proper penalty, the circumstances that have led to the present contravention are circumstances that would be very rare.
In all the circumstances, I am of the view that a pecuniary penalty should be imposed in the sum of $20,000.00.
To whom should such a Penalty be Paid?
It is my very firm view that when offences are committed against the FW Act, they are not just committed against the particular Applicant. They are, in fact, committed against the whole of society.
The FW Act regulates the industrial relations regime of this country. When there is a breach of that Act, it means that the community is damaged by that breach.
Therefore, it is only right that the community is repaid for the breach.
But in this case, there are some exceptional circumstances that draw me to the conclusion that I ought order that the pecuniary penalty be paid to the Applicant herself.
While the breach of the Act is an affront to the community as a whole, as previously expressed, the circumstances that have led to this breach are extremely rare indeed. It would be very rare for another member of the community to be in the position that this Applicant has found herself. In this exceptional case, it may be said that the Applicant is representative of the community itself.
It must be acknowledged that the Applicant was mostly unsuccessful in her claim against the First Respondent. However, that does not derogate from anything that I have just said.
Orders
I order that the First Respondent pay to the Applicant the sum of $37,842.99 by way of compensation.
I order that the First Respondent pay a pecuniary penalty in the sum of $20,000 for the contravention of s.340 of the FW Act
I order that that sum be paid to the Applicant.
I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of Judge Vasta
Date: 3 October 2017
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