Rosa v Daily Planet Australia Pty Ltd

[2017] FCCA 512

FEDERAL CIRCUIT COURT OF AUSTRALIA

ROSA v DAILY PLANET AUSTRALIA PTY LTD & ANOR [2017] FCCA 512

Catchwords:
INDUSTRIAL LAW – Application under Fair Work Act – failure to pay entitlements under award – whether part time or full time – adverse action – penalties and compensation.

Legislation:

Fair Work Act 2009 (Cth), s.384

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7

Applicant: GABRIELLA ROSA

First Respondent: DAILY PLANET AUSTRALIA PTY LTD (IN LIQ)

Second Respondent JOHN DENNIS TRIMBLE

File Number: MLG 63 of 2012

Judgment of: Judge Riethmuller

Hearing date: 19 April 2016

Date of Last Submission: 31 October 2016

Delivered at: Melbourne

Delivered on: 17 March 2017

REPRESENTATION

Counsel for the Applicant: Ms Olsson

Solicitors for the Applicant: Archer Thompson Lawyers

Counsel for the Respondents: Mr Millar

Solicitors for the Respondents: Lennon Mazzeo Lawyers

THE COURT DECLARES THAT:

1. The First Respondent breached the Clerical and Administrative Employees (Victoria) Award 1999 (“the Pre-modern Award”) by:

   (a)Failing to provide the applicant with a meal break as prescribed by cl.22.1 of the Pre-modern Award;

   (b)Failing to provide the Applicant with her penalty rate for work performed on public holidays as prescribed by cl.23.2.1 of the Pre-modern Award;

   (c)Failing to pay the Applicant her penalty rate for hours worked in excess of 38 hours each week as prescribed by cl.23.1.1 of the Pre-modern-Award;

   (d)Failing to make superannuation contributions on behalf of the Applicant in respect of cash payments made to the Applicant as prescribed by cl.20.3.1 of the Pre-modern Award.

2. The First Respondent breached s.318 of the Workplace Relations Act 1999 in;

   (a)Failing to pay the Applicant for personal/carer’s leave as prescribed by s.245 of the Workplace Relations Act 1999 and cls.29.1.1 and 28.1 of the Pre-modern Award;

   (b)Failing to accrue and pay to the Applicant her annual leave accrued between 28 July 2009 and 31 December 2009 and untaken on termination of employment as prescribed by s.235(2) of the Workplace Relations Act 1999 and cl.27.13.1 of the Pre-modern Award.

3. The First Respondent breached s.45 of the Fair Work Act 2009 by contravening the Clerks – Private Sector Award 2010 (“the Modern Award”) in;

   (a)Failing to provide the Applicant with a meal break during her shifts as prescribed by cl.26.1 of the Modern Award;

   (b)Failing to pay to the Applicant her penalty rate following the failure to provide a meal break as prescribed by cl.26.1 of the Modern Award;

   (c)Failing to pay the Applicant her penalty rate for work performed on public holidays as prescribed by cl.31.3 of the Modern Award;

   (d)Failing to pay the Applicant her penalty rate for hours worked in excess of 38 hours each week as prescribed by cl.27.1(a) of the Modern Award;

   (e)Failing to make superannuation contributions on behalf of the Applicant in respect of cash payments made to the Applicant as prescribed by cl.24.2 of the Modern Award.

4. The First Respondent breached s.45 and s.117(2) of the Fair Work Act 2009 in failing to provide pay in lieu of notice of termination.

5. The First Respondent breached s.44(1) of the Fair Work Act 2009 in;

   (a)Failing to pay the Applicant for personal/carer’s leave taken as prescribed by s.99 of the Fair Work Act 2009; and

   (b)Failing to pay to the Applicant her untaken annual leave on termination as prescribed by s.90(2) of the Fair Work Act 2009.

6. The First Respondent took unlawful adverse action against the Applicant in contravention of s.340(1) of the Fair Work Act 2009 in;

   (a)Threatening to alter the Applicant’s employment arrangements; and

   (b)Dismissing the Applicant.

7. The Second Respondent was involved in the contraventions by the First Respondent set out in paragraphs 1 to 2 above pursuant to s.728(1) of the Workplace Relations Act 1999.

8. The Second Respondent was involved in the contravention by the First Respondent set out in paragraphs 3 to 6 above pursuant to s.550(1) of the Fair Work Act 2009.

THE COURT ORDERS THAT:

1. Pursuant to s.545 of the Fair Work Act 2009, a penalty be imposed upon the First Respondent of $62,700.

2. Pursuant to s.545 of the Fair Work Act 2009, a penalty be imposed upon the Second Respondent of $12,540.

3. The penalties imposed on each of the Respondents are to be paid to the Applicant.

4. The First Respondent pay to the Applicant in the sum of $72,017.90 together with interest to the date of this judgment in the sum of $20,393.47, being a total of $92,411.37.

5. The First Respondent pay to the superannuation fund nominated by the Applicant the sum of $4,208.97 together with interest to the date of this judgment in the sum of $1,508.92.

6. The Second Respondent be jointly and severally liable to pay the amounts set out in order 12 and 13 herein.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 63 of 2012

GABRIELLA ROSA

Applicant

And

DAILY PLANET AUSTRALIA PTY LTD

First Respondent

JOHN DENNIS TRIMBOLE

Second Respondent

REASONS FOR JUDGMENT

1. The relevant facts and circumstances are set out in the previous judgment given in this matter with respect to liability: Rosa v Daily Planet Australia Pty Ltd & Anor [2016] FCCA 312.

2. Following the previous judgment, further submissions were sought on the questions of quantum and penalties, given the complexities of the factual circumstances.  A significant delay followed as a result of the first respondent being placed into liquidation, whilst leave was obtained to continue against the first respondent company.

3. The issues that remain to be determined are as follows:

   a)The quantum of any underpayments to the applicant by the first respondent with respect to annual leave, personal leave, and public holidays and penalty rates (both from extended hours and failure to provide breaks);

   b)Payment in lieu of notice of termination for the requisite period under the Fair Work Act 2009;

   c)Superannuation payments;

   d)Compensation for breach of the provisions prohibiting adverse action;

   e)Interest; and

   f)Penalties.

4. It was argued that the applicant received a base rate paid per hour that was in excess of the minimum provided for under the award.  Over the course of the employment this amounted to around $104,658 on the applicant’s submissions, accepted by the second respondent.  Whilst the applicant casts some doubt on the total, I accept that for the purpose of the decision it is appropriate to use the figure proposed by the applicant and accepted by the first respondent.  As set out in an earlier ruling, the respondents are not able to offset the amount by which the rate of pay exceeded the award against the value of the award entitlements that were not paid.

5. Ultimately the first respondent made no submissions on any of these issues.

6. The second respondent accepts the calculations set out by the applicant in the spreadsheet that counsel provided to the court.  The table setting out the unpaid entitlements in the Applicant’s most recent submissions are based upon the spreadsheet, however the amount for the personal/carer’s leave entitlements is slightly lower in the Applicant’s submissions than on the spreadsheet.  I accept the calculations set out in the submissions for the purpose of the case against the respondents, in particular the first respondent. 

7. To the extent that the calculations refer to interest, I have extrapolated the amounts to the date of judgment.

8. The amounts due for failure to comply with the award flow from the findings in the earlier judgment.  

9. A further issue argued was the argument that had the applicant been provided with appropriate breaks she would have had to finish work later in the day to complete the same number of working hours.  This is self-evidently true.  However, this point provides little assistance.  The award provides for additional payments if an appropriate break is not provided.  Ultimately it is a matter for the employer to decide whether they wish to arrange a break for an employee (as provided for in the award) or have the employee continue to work through: the difference is that the employee must be paid at a higher rate if not provided a break.  To reduce the payment on the basis of a break would simply undermine the award rates.  I reject this argument.

10. I therefore find that the underpayments are as calculated by the applicant, as follows:

    a)Annual leave  $13,241.91

    b)Personal/carer’s leave  $1,482.00

    c)Public holidays  $4,652.81

    d)Penalty rates (over 38 hours per week)  $6,953.23

    e)Penalty rates for lack of a meal break  $1,059.95

    f)Total  $27,389.90

    g)Interest  $9,643.87

    h)TOTAL  $37,033.77

11. I also accept the calculations with respect to superannuation at the statutory rate of 9% of wages, as made by the applicant and accepted by the second respondent.  Superannuation entitlements owing on cash payments are $4,280.97, which together with interest comes to $5,789.89. 

12. In the applicant’s spreadsheet, the calculations for the interest contained minor errors and I have therefore amended the interest calculations.

13. I will therefore order that the first respondent make payment to the applicant of the above amounts and that the applicant forward the superannuation amount (and interest thereon) to her superannuation fund with a copy of the orders and these reasons. 

14. As I have found that the second respondent was knowingly concerned in the breach, I make orders that provide for him to be jointly and severally liable for the amounts.

Damages

1. In this case there is a claim for the payment of the minimum period of notice under the Act and a claim for damages.  I treat these as being in the alternative to the extent that the damages claim is with respect to loss of earnings, otherwise the award could result in double compensation to the applicant.  As the amount of damages I will order includes compensation for a period of lost wages in excess of the statutory minimum notice period, I provide no further amount for the failure to pay the minimum notice period.

2. The period for which compensation for loss of income should be provided is in dispute between the applicant and the second respondent.  The applicant seeks compensation for the equivalent of 18 months loss of income.  The second respondent says that the minimum statutory period of 3 weeks is appropriate as it represents the least burdensome form of performance of the employment arrangement that the respondents could have lawfully engaged in.  It is important to look at the circumstances of this case, as set out in the earlier judgment.  Importantly, on the facts of this case:

   a)There is no evidence that the applicant’s work performance in her day to day tasks was at issue.  Indeed the applicant had come back to the business on a number of occasions, met her targets and won an award for her role.

   b)Positive feedback had been given to her for her performance.  Whilst the second respondent could not recall telling her that she was a ‘star’, I accept her evidence in this regard.

   c)Whilst there had been disagreements in the past between the applicant and the second respondent, leading to cessation of work arrangements, she had been asked to return to the work place, provided with higher than award rates on the basic hourly rate and an arrangement that was overly favourable with respect to taxation (payment in cash contrary to the tax legislation).

3. I accept that the workplace, being a brothel, was likely to have a higher turnover of staff than other industries, and that the issues in the past weighed against the applicant’s case.

4. I also accept that to look only at the statutory minimum notice period would mean that damages would not represent the true loss of the applicant.  Had the respondents not sought to interfere with her workplace rights there is nothing to suggest that she would have then been provided with notice to leave.  That is, had the respondents acted lawfully, the applicant would not have been given minimum notice to terminate her employment. 

5. I find that the reality is the applicant was likely to have continued to remain in the job as long as she could due to the suitability of the hours, her financial needs in supporting her child, and the stigma that working in such a business would have when attempting to find alternative employment.  However, I also take into account the chance that she would have chosen to leave due to the type of work (even though she was only a receptionist and did not provide sex worker services) or had a falling out with the operators at some point. 

6. Ultimately, I find that 6 months of wages is warranted in this case.  Based upon the calculations provided by the applicant (and accepted by the second respondent), I assess this at $34,628.  Interest on this sum from the date 6 months after her employment ceased is $10,749.60.

7. With respect to compensation for hurt and humiliation, I have regard to the matters set out in the previous judgment.  I accept that the conduct caused considerable distress to the applicant, at a time where she had a dependent child.  The conduct itself was high handed, and without regard to the rights or interests of an employee who had performed her position well for a number of years in a difficult industry.  I assess damages for hurt and humiliation at $10,000.

Penalties

1. In this case, I accept the applicant’s counsel’s submissions as to the grouping of breaches into the following categories, with the relevant maximum penalty rates under the Act, to which must be added the penalty provision for taking adverse action against the applicant:

Contravention Penalties	Penalty ($) First Respondent	Penalty ($) Second Respondent
Adverse action	$33,000	$6,600
Failure to provide notice of termination or payment in lieu	$33,000	$6,600
Failure to pay superannuation on cash payments	$33,000	$6,600
Failure to pay annual leave on termination	$33,000	$6,600
Failure to provide paid personal/carer’s leave	$33,000	$6,600
Failure to provide a meal break	$33,000	$6,600
Failure to pay overtime on public holidays/pay for public holidays	$33,000	$6,600
Failure to pay overtime for hours in excess of hours fixed for an ordinary week’s work	$33,000	$6,600
TOTALS	$264,000	$52,800

1. I have regard to the factors identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 when considering penalty.

The nature and extent of the conduct

1. The conduct in this case is somewhat unusual, in that the hourly rate was in excess of the award.  The real gravamen of the conduct was pressing the applicant to a new workplace arrangement that ended her part-time status and made her a casual employee, and ending her employment as a result of her refusal to accede to such an arrangement. 

2. The certainty of the existing arrangement was of great importance to the applicant who had a child to support.  Whilst her standard hourly rate was above the award rate, she was nonetheless a low income earner.

3. The actions of the employer were at best ham fisted and at worst high handed, showing no regard for the needs of the employee.  The mid-level managers at the centre of the conduct were obviously out of their depth and had no real expertise in human resources management or industrial issues.  This reflects a lack of insight by the second respondent in his choices with respect to staff appointments.

The circumstances in which the conduct took place

1. The circumstances in which the conduct took place are set out in detail in the previous judgment.

The nature and extent of any loss or damage

1. The extent of the monetary loss is set out in this judgment. The overall loss compared to award penalty rates is not insignificant, however, for the purpose of penalty I take account of the fact that overall the applicant was on above award rates with respect to the day to day payments.

2. The more serious breach relates to the adverse action and the losses she suffered from losing her job.  This was a significant loss for a person in the applicant’s circumstances.

Similar previous conduct

1. There is no specific previous conduct that I take into account against the respondents.

Whether the breaches were properly distinct or arose out of one course of conduct

1. The breaches with respect to the award rates arise out of one course of conduct.  As set out above, in the context of the overall payment rates these are not at the serious end of the scale.

2. The breaches with respect to breaks are more serious as it created a pressure upon the applicant to work without a real break, however, this must also be tempered by the recognition of the rate at which she was being paid overall.

3. The adverse action was a separate course of conduct that can only be seen as a serious breach as it was designed to destroy the applicant’s workplace rights.

Size of the company

1. The overall size of the enterprise is not large.  The business structure is unusual, in that the sex workers are all contractors and the business provides the facilities for their contracting and payment.  There are a relatively small number of staff, certainly not sufficient for a separate human resources manager or department.

Deliberateness of breaches

1. I accept that the award breaches were not deliberate, but reflect a negotiated arrangement between the employee and employer, albeit that the employee had conditions less than the statutory minimum in some respects.  In the overall scheme of the arrangement this breach was not one I would characterise as an error borne of incompetence in human resources management, and not a deliberate exploitation of the employee.

2. The adverse action was a deliberate attempt to ensure that the employee did not retain her workplace rights.  It was serious and aimed at exploiting the employee.

Involvement of senior management

1. I have found that the manager, the second respondent, was knowingly involved in the breaches.

Contrition, corrective action and cooperation with the enforcement authorities

1. I find no evidence of contrition or corrective action by the respondents.  Since the proceedings the first respondent has been placed in liquidation, yet no payments have been made to the employee, despite the priority employee entitlements would receive in company liquidations.  Clearly the operation of the company did not prioritise meeting entitlements of the employees before other creditors.

Ensuring compliance with minimum standards by providing effective means for investigation and enforcement of employee entitlements

1. This is not a case where corrective action has been taken by the employer or second respondent.  Whilst the first respondent is in liquidation there is no evidence that the second respondent will operate differently in the future.  The second respondent’s presentation in the witness box leads me to have no confidence that his conduct would be any different in the future.

Deterrence

1. It is important that there be deterrence in the future, particularly for the second respondent, however this cannot overshadow the recognition that some of the breaches are minor in the overall circumstances.  This is reflected in the wide range of different penalties that I impose for the different breaches.

Conclusion

1. In this case it is appropriate to distinguish between the contraventions as some are more serious than others. 

2. The adverse action is a serious breach of the Act.  I assess the penalty for this breach at 70% of the maximum.

3. With respect to the failure to provide notice of termination or payment in lieu, I assess the penalties for that breach at 10% of the maximum, given that it was effectively the same as the conduct in the taking of adverse action.

1. The balance of the breaches largely came from a misconception as to the terms of the employment and a lack of care with respect to following the award.  The seriousness of these breaches is greatly reduced by the fact that the overall remuneration of the applicant through the period (as a result of her hourly rate being greater than the award) remained greater than that of a person paid minimum award rates, in accordance with the award.  This would ordinarily result in a much reduced penalty, however in this case the employer was on notice of the problem, and did not seek to rectify it, rather took adverse action.  Thus, whilst this may have begun as an honest mistake (which did not leave the employee on a total package below the award) the employer did not seek to rectify the error but took adverse action against the employee.  Taking all of the matters into account I assess the penalties for these breaches at 20% of the maximum.

2. With respect to the superannuation breach, it must be noted that it was a failure to pay superannuation on cash payments.  The arrangement was one to defraud the tax office and potentially social security.  Both participated in the arrangement, and it is difficult to see that it was in any real sense to the employer’s advantage (save that it may have had to offer higher rates if the employee was paying tax on the total remuneration) as the business was not set up to take cash and not declare it to the tax office.  Ultimately I assess this breach, in the very unusual circumstances of this case, as warranting a penalty of only 10% of the maximum.

3. The penalties therefore come to the following:

Contravention Penalties	Penalty ($) First Respondent	Penalty ($) Second Respondent
Adverse action	$23,100	$4,620
Failure to provide notice of termination or payment in lieu	$3,300	$660
Failure to pay superannuation on cash payments	$3,300	$660
Failure to pay annual leave on termination	$6,600	$1,320
Failure to provide paid personal/carer’s leave	$6,600	$1,320
Failure to provide a meal break	$6,600	$1,320
Failure to pay overtime on public holidays/pay for public holidays	$6,600	$1,320
Failure to pay overtime for hours in excess of hours fixed for an ordinary week’s work	$6,600	$1,320
TOTALS	$62,700	$12,540

1. In this case the costs of the trial would have been significant.  The applicant had to prosecute the case from her own resources.  The applicant has been successful.  I am satisfied that it is appropriate that the penalties be paid to the applicant rather than consolidated revenue, and so order.

Costs

1. Costs are not ordinarily ordered in cases of this type as a result of the statutory provisions.  There was an adjournment of the case required as a result of failures by the applicant to efficiently peruse the case, which gives rise to consideration of her paying part of the respondent’s costs.  However, taking this matter into account in the overall conduct of the parties and the litigation, and carefully weighing the matters set out in the legislation I am ultimately of the view that I should make no orders as to costs in this case. 

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller

Associate: 

Date:  17 March 2017