Rehman v Om Sai Indian Grocery; Store Pty Ltd and Ors

[2015] FCCA 181

FEDERAL CIRCUIT COURT OF AUSTRALIA

REHMAN v OM SAI INDIAN GROCERY
STORE PTY LTD & ORS [2015] FCCA 181

Catchwords:
INDUSTRIAL LAW – Fair Work – awarding penalties under the Fair Work Act 2009 – consideration of factors relevant to the amount of penalty.

Legislation:

Fair Work Act 2009, ss.343, 535, 536, 546.

Rehman v Om Sai Indian Grocery Store Pty Ltd & Ors [2014] FCCA 3095

Applicant: SHOEBUR REHMAN

First Respondent: OM SAI INDIAN GROCERY STORE PTY LTD

Second Respondent: SONIA GOEL

Third Respondent: NIKHIL YOGI

File Number: MLG 1973 of 2013

Judgment of: Judge Riethmuller

Hearing date: 22 May 2014

Date of Last Submission: 22 May 2014

Delivered at: Melbourne

Delivered on: 30 January 2015

REPRESENTATION

Counsel for the Applicant: Mr Slonim

Solicitors for the Applicant: Gleeson & Co Lawyers

No appearance by the Respondents

THE COURT DECLARES THAT:

1. The First Respondent breached:

   (a)Section 45 of Fair Work Act 2009:

   (i)by failing to pay the Employee his hourly base rate of pay for work performed on Mondays to Fridays, as prescribed by clause 17 and schedule A.3 of the Modern Award;

   (ii)by failing to pay the Employee his casual loading for work performed Monday to Fridays, as prescribed by clause 13.2 of the Modern Award;

   (iii)by failing to pay the Employee his penalty rate for work performed on Saturdays, as prescribed by clause 29.4(b) of the Modern Award;

   (iv)by failing to pay the Employee his penalty rate for work performed on Sundays, as prescribed by clause 29.4(c) of the Modern Award;

   (v)by failing to pay the Employee his penalty rate for work performed on public holidays, as prescribed by clause 29.4(d) and schedule A.7 of the Modern Award;

   (vi)by failing to pay wages either weekly or fortnightly with respect to the first five days of work (which were described as training), as prescribed by clause 23 of the Modern Award;

   (vii)by failing to pay wages either weekly or fortnightly for the first week of paid employment, on the pretext of it being a security deposit, as prescribed by clause 23 of the Modern Award;

   (b)Section 343 of the Fair Work Act 2009 by attempting to coerce the Applicant into not exercising workplace rights;

   (c)Section 535(1) of the Fair Work Act 2009 by failing to keep records for the Employee, as prescribed by Fair Work Regulations 3.31, 3.32 and 3.33;

   (d)Section 535(5) of the Fair Work Act 2009 by failing to produce the records for the Employee or advise where they are kept, as prescribed by Fair Work Regulations 3.42 and 3.43.

   (e)Section 536(1) of the Fair Work Act 2009 by failing to give the Employee a pay slip within one working day of payment.

2. The Second Respondent and Third Respondent were involved in the breaches by the First Respondent in Declaration 1 herein, pursuant to section 550(1) of Fair Work Act 2009.

ORDERS

1. Pursuant to section 546(1) of the Fair Work Act 2009, the First Respondent pay the Applicant an aggregate penalty of $91,800.00 for breaching the Fair Work Act 2009.

2. Pursuant to section 546(1) of the Fair Work Act 2009, the Second Respondent pay the Applicant an aggregate penalty of $18,360.00 for breaching the Fair Work Act 2009.

3. Pursuant to section 546(1) of the Fair Work Act 2009, the Third Respondent pay the Applicant an aggregate penalty of $18,360.00 for breaching the Fair Work Act 2009.

4. Payment of the pecuniary penalties referred in Orders 1 to 3 herein be made within 28 days of the date of these Orders.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 1973 of 2013

SHOEBUR REHMAN

Applicant

and

OM SAI INDIAN GROCERY STORE PTY LTD

First Respondent

SONIA GOEL

Second Respondent

NIKHIL YOGI

Third Respondent

REASONS FOR JUDGMENT

1. In Rehman v Om Sai Indian Grocery Store Pty Ltd & Ors [2014] FCCA 3095 I set out reasons for ordering the First Respondent to make

   
   

   a payment of underpaid wages and superannuation to the Applicant in the sum of $10,602.62, being wages of $8,807.84 and interest of $625.80, together with outstanding superannuation (with interest thereon) of $1,168.98.

2. The matter was then adjourned to 22 May 2014 for determination of the allegations of breach of the Fair Work Act 2009 (“the Act”) and, if proved, the determination of penalty.

3. On 22 May 2014, the Respondents were called and did not appear (as they had not appeared on the previous occasion).  There is no doubt that the Respondents were aware of the hearing date, as the Second and Third Respondents attended in person at the directions hearing in February and were represented.  In fact, all Respondents were represented by counsel on that occasion.  It seems that four days after the directions hearing they sold their business and left the country.  Their lawyers have ceased to act.

4. As at 22 May 2014, the judgment with respect to outstanding wages had not been paid. 

5. The evidence before me consists of two affidavits by Mr Rehman, the Applicant (18 November 2013 and 13 March 2014) and an affidavit of his solicitor, Mr Prawer (14 March 2014), and an affidavit of the Third Respondent, Mr Yogi (3 December 2013).

6. Mr Yogi did not attend and I accept the description of his affidavit by counsel for the Applicant as:

   …a narrative of events, most of which he could not have possibly had first-hand knowledge of.  It is internally inconsistent with regard to the few facts that are alleged therein, and insofar as he deposes to any factual material, it is controverted by the evidence relied upon by the applicant.

   Indeed, the affidavit appears to be a draft prepared by a solicitor but not actually settled.  As in para.8, there is a note “[who paid Rehman???]” in the middle of a sentence. 

7. The Applicant, who was studying at university, frequented the shop run by the First Respondent and came to know the woman that was regularly working at the store, Veena, who he understood was married to Sanjeev Yogi, the parents of the Third Respondent, Nikhil Yogi.

8. After commencing at the store, following negotiations with the Third Respondent’s mother, the Applicant deposes that the Third Respondent opened the store each morning, and that the Second Respondent, the Third Respondent’s wife, would manage the store on days that only the Third Respondent’s mother was not able to be there.

9. When the Applicant gave notice as he was returning to university, he received a telephone call from the Third Respondent’s mother advising him that she:

   …would not let me go free that easily…

   and that she:

   …would do something to kick me out of this country.

10. After the Applicant had consulted a solicitor, he received a telephone call from the Third Respondent threatening him and with words to the effect that:

    …I should take my case back and if I did anything against him he would not let me go free.

11. Mr Yogi also threatened to cause trouble to the Applicant with the Department of Immigration if he or the company had any trouble

    
    

    as a result of this incident.  This happened on a second occasion.  Fortunately, the Applicant had already contacted a solicitor in whom

    
    

    he had confidence and was able to be supported by his solicitor. 

    
    

    The Applicant also sent his solicitor details of telephone text messages from both the Second and Third Respondents with respect to his hours of employment.  The Applicant confirms that he was not provided with a copy of his employment agreement or any other documents

    
    

    setting out his conditions of employment and that he did not receive any payslips from the First Respondent or its agents during his employment, or, indeed, at any time.

12. The Third Respondent in his affidavit confirms that he and his wife are the directors of the First Respondent.  He confirms that Veena Goel

    
    

    is his mother, but denies that she manages the store, and says that she only resides in Australia for three months of the year and claims that she only attends the store to collect his wife from work.  I prefer the evidence of the Applicant with respect to the work that Ms Goel carries out. 

13. Mr Yogi sets out in his affidavit that it was his wife, Sonia, who discussed the pay rate, working requirements and training with the Applicant, rather than his mother.  He also says that there was some delay with the provision of a tax file number by the Applicant which was discussed with his wife.  He claims that pay slips had been provided and annexes some to the affidavit.  Again, I prefer the evidence of the Applicant with respect to whether or not pay slips were ever provided.  Similarly, I prefer the evidence of the Applicant

    
    

    with respect to the allegations of an employment agreement.  Notably,

    
    

    the employment agreement annexed does not have signatures.  The employment agreement as drafted was to be signed by the Second Respondent as a director of the First Respondent.

14. On the material before me, I am persuaded that there have been breaches of the Act by the company. The breaches in this case fall within the following categories:

    a)failure to pay a minimum prescribed rate of pay by the award;

    b)failure to pay casual loading;

    c)failure to pay Saturday rates;

    d)failure to pay Sunday rates;

    e)failure to pay public holiday rates;

    f)failure to pay wages with respect to the first five days described as training;

    g)retaining wages for the first week of paid employment on the pretext of it being a security deposit;

    h)failure to provide payslips;

    i)

    failure to maintain employee records, and, consequentially,

    
    

    a failure to produce the records or advise where they are kept. 

    j)attempting to coerce the Applicant into not exercising workplace rights in breach of s.343 of the Act.

15. The maximum penalty with respect to each of the matters (other than (h) and (i), broadly, record-keeping and payslips), is 60 penalty units.  With respect to each the failure to provide pay-slips and maintain employee records, the maximum penalty is 30 penalty units. Thus, the total maximum penalty is $33,000.00 for each of items (a) to (g) and (j), and $16,000.00 for items (h) and (i).  This is a total of $296,000.00.

16. In this case, the conduct of the employer can only be described as outrageous.  The employer has clearly breached the relevant industrial laws.  Having regard to the affidavit filed by the Third Respondent, there is little doubt that the employer was well aware of all of the relevant industrial provisions, including the different rates of pay for public holidays.  It is not clear-cut, however, from the material that the employer was aware of the different rates of pay that would apply on Saturdays and Sundays, nor that the employee would be classified as casual rather than part-time.

17. The business was a small business, being an Indian grocery store, operated on a family basis with the Third Respondent’s mother undertaking much of the work and management of the business whilst she was in the country.

18. The conduct involved a very low-paid worker seeking money during university holidays prior to returning to studies. 

19. The conduct of the Respondents was greatly exacerbated by their conduct after the termination, and, in particular, threatening the Applicant directly, and threatening to cause difficulties with respect to his immigration status.

20. The fact that they have sold their business and appear to have fled the jurisdiction further exacerbates the circumstances of this conduct.

21. I have not been provided with any evidence as to the actual financial circumstances of the Respondents.  The Applicant put his case on the basis that many more of the breaches ought to be grouped, such that there were four groups of statutory breaches, one with respect to pay generally, one with respect to record-keeping, one with respect to pay slips, and one with respect to coercion.  This means that the maximum penalty would be $153,000.00 for the corporation and $30,600.00 for the individuals.

22. Whilst I am of the view that the maximum, properly calculated, would be higher, it is appropriate to proceed upon the basis of the penalty contended for by the Applicant in these circumstances.

23. This is not a case where there is any record of previous penalty contraventions. 

24. Whilst the contraventions arise, in a sense, from a course of conduct, the nature of them is disparate. 

25. In this case there is clearly a need not only for specific deterrence

    
    

    should the Respondents engage in business again in Australia, but also for general deterrence, particularly with regards to the conduct involved in retaining wages as a security deposit and the coercion which go beyond any question of a lack of knowledge of the law

    
    

    or obligations under the relevant legislation, and enter the realm

    
    

    of conduct which is obviously inappropriate, even to the reasonable person who has no knowledge of the industrial laws.

26. The Respondents have engaged in no cooperation, but simply conduct to attempt to defend the matter on bases that have not been proved before abandoning their defences.

27. The Respondents have not shown any contrition, and, significantly, they are yet to rectify the underpayments, thus completely frustrating the primary purpose of the industrial scheme of ensuring that minimum payments are received by employees.

28. Having regard to the conduct involved it appears to me that

    
    

    the submissions for penalties in the range of 40 per cent are at the low end of the range for the contraventions concerning underpayments

    
    

    and record-keeping.  With respect to the withholding of wages and coercion, it appears to me that penalties in the range of 60 per cent

    
    

    of the maximum are more appropriate for the First Respondent. 

    
    

    In those circumstances, I would impose a penalty of $91,800.00 with respect to the First Respondent.

29. I am not persuaded that the culpability of the Second and Third Respondents is significantly different.  The Second Respondent was the person who dealt with the Applicant, and the Third Respondent clearly had management involvement given his affidavit and the text messages. 

30. It appears to me that similar percentages ought to apply with respect to the Second and Third Respondents, based upon the maximums applicable to them.

31. In the circumstances I therefore impose penalties on each of the Second and Third Respondents in the sum of $18,360.00.

32. In this case the Applicant has borne the costs and risks of pursuing the claim. The conduct affected him directly. The Act provides under s.546(3) the penalties that can be made payable to the Applicant. In this case, having regard to the unlikelihood of recovering in full against the First Respondent, it is appropriate that the penalties be payable to the Applicant.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller

Associate: 

Date:  30 January 2015