Rosa v Daily Planet Australia Pty Ltd

FEDERAL CIRCUIT COURT OF AUSTRALIA

ROSA v DAILY PLANET AUSTRALIA PTY LTD & ANOR

[2016] FCCA 312

Catchwords:
INDUSTRIAL LAW – Application under Fair Work Act – failure to pay entitlements under award – whether part time or full time – adverse action claim – threat of dismissal if employee refused to sign casual employee contract

Legislation:

Fair Work Act 2009 (Cth), s.384

Sex Work Act 1994 (Vic) s.49

Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456
Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 557
Byrne, v Australian Airlines Limited [1995] HCA 24

Applicant:

GABRIELLA ROSA

First Respondent:	DAILY PLANET AUSTRALIA PTY LTD
Second Respondent	JOHN DENNIS TRIMBLE

File Number:

MLG 63 of 2012

Judgment of:

Judge Riethmuller

Hearing date:

19 May 2015

Date of Last Submission:

21 August 2015

Delivered at:

Melbourne

Delivered on:

17 February 2016

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

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

The applicant was employed by the first respondent from July 2008 until 3 December 2011 as a receptionist. She was paid a flat rate of pay, working four days per week for 10.5 hours a day. She was not paid sick leave, holiday pay or other benefits beyond her hourly rate.
The first respondent was operated by the second respondent. The respondents’ business is the operation of a brothel in Melbourne, licensed in accordance with the Sex Work Act 1994 (Vic). The relevant industrial award that would have covered the work the applicant did was the Private Sector Award of 2010, as the applicant was employed strictly to carry out administrative duties and did not engage in sex work. The way in which the business is structured is to provide suitable premises and advertising to attract those who wished to pay for sex. The sex workers were contract workers contracting with their clients and paying a share of the fee to the first respondent.
The applicant puts her case on two bases. The first, is a claim of unlawful adverse action. She particularises the adverse action as being a threat to dismiss her, reducing of her shifts, a change of the hours of her shifts and, ultimately, dismissal from the work place.
The adverse action is alleged to be unlawful on the basis that she was exercising her work place right not to sign an employment agreement in circumstances where she says that she was in permanent part-time employment and the agreement provided for casual employment.
The second basis on which the case is brought is that she was underpaid if she were categorised as a permanent part-time employee, as a result of the failure to pay entitlements beyond the hourly rate paid to her. It is also put that the failure to provide her with an appropriate break during her long shifts resulted in an entitlement to increased pay rates even if she were engaged as a casual.
The case against the second respondent is that he as the director and controlling mind of the first respondent was knowingly concerned in the conduct founding the case against the first respondent.
The defence of the first respondent is that the applicant lost her employment as she did not have approval to be a manager under the Sex Work Act 1994 (Vic) and that she would not be eligible to regain the approval until February 2012. The respondents say that this resulted in the need for another person who had the approval to act as a manager under the Act, to be present throughout the period that the applicant was working as a receptionist. The respondents maintain that the rate that the applicant was paid was above the minimum award rate for casual workers, and that she did have an opportunity to have a break, defeating her claim for increased hourly rates under the award that was the result of not receiving a break.
The second respondent denies being aware of the applicant’s employment agreement, termination, or the circumstances leading up to her termination.

The Applicant’s Evidence

The applicant first commenced working for the respondent around seven years before her final termination. She and the second respondent had a “misunderstanding” and her employment had been terminated. She had left for a few months in 2008. However, she renewed her employment when the second respondent telephoned her and invited her to return. She said that she attended a meeting with him where he offered her four shifts per week at $28 per hour, with one shift to be paid in cash. She found this an attractive offer, particularly as it involved a regular four shifts. She said that the day shifts were quieter and presented less difficulty with clients attending affected by substances. It also suited as she had a child at school.
She believed that she was offered the arrangement because she was a particularly good receptionist. (she won an award on one occasion for the quality of her work). The shifts that she undertook were on Monday, Tuesday, Thursday and Friday, 10 and a half hours each. The pay rate of $28 per hour was, in fact, $26 per hour pay rate with a $2 per hour bonus if her paperwork was in order. In the position of a receptionist it was incumbent upon her to keep records of payments, which at times involved credit card transactions for cash advances on the credit card as the sex worker was a contractor and had to be paid directly. She explained that targets were given by the management and that she would always reach her targets. As a receptionist she said that she could make a significant different to the business, depending upon how she tells the clients about the services on offer and the providers of those services.
The pays were undertaken by staff that worked in the administration section upstairs. The accountant at the relevant time was Ms H who also had a manager’s licence and at times provided some informal counselling for the sex workers. She received payslips each Tuesday in an envelope, showing her hours as 32.5 hours and bonuses at $2 per hour. The pay slips did not show the cash payment in the printed section, although contained notation on the bottom.
The applicant did hold a manager’s licence in the past, but had lost her licence for a period due to a drug offence. She said that two other receptionists didn’t have manager’s licences, one working in the night-time and one on a day shift on Sunday.
At one stage, the accountant sent a note:
Dear Madison
I have spoken with TJ concerning cash payments and he has advised me that I am to only allow one shift to be paid at the rate of $22.00 per hour. He would prefer to make NO cash payments.
This week is the last week of paying more than one shift is cash
After Ms H left other accountants were hired, although the applicant was unaware of whether they had a manager’s licence. She had applied early to renew her licence, as her understanding was that everyone in the business was required to obtain the manager’s licence. Her application was initially refused due to the waiting period as a result of drug offence.
Initially, she had been told that she should not worry and that she would be kept on in the business despite not holding a manager’s licence.
Managers were employed by the business and held a meeting of all the staff to have them sign workplace agreements in the lead up to the applicant’s termination. The applicant wanted to take it home and look at it, as she was worried about signing a workplace agreement that may change the existing arrangement that she had directly negotiated with the second respondent with respect to her shifts (being a single mother who does not receive child support who had a child at a modest private school).
Thereafter, her shift times were changed. She attempted to make complaint to the second respondent, but he was not available. She saw a lawyer and had a letter sent to the business, following which she received a telephone call to tell her there was no more work as she didn’t have a manager’s licence.
There were, from time to time, changes to rosters if someone was sick or she was ill, as she did not receive payment if she was ill and not at work. As a result, some days she undertook different shifts. If she was not able to undertake her shift, she would try to find another receptionist to do the shift, and notify the manager, Ms Austin.
Since termination from employment, she has attempted to find alternative work but had been unable to do so until August 2012, when she obtained employment as a receptionist at an alternative brothel. However, she was concerned about security at the premises, and the hours she was asked to work were at night-time, and so she left after two to three months. She says she has been seeking employment actively and – but unable to do so, in part because of the stigma that attaches to the work that she has undertaken, even though she was only a receptionist. She did eventually obtain employment in 2013 with an estate agent.
She explained that it created considerable anxiety for her to lose her job, as she was placed in financial crisis, had to seek indulgences from the school with respect to fees, at a time when her son was in year 12. She explained she had never felt so helpless and embarrassed.
In cross-examination, she agreed that she had had a number of periods of employment with the respondent as a receptionist and that prior to her last period of employment she was working casually. She confirmed her hours were 9.30 am to 8 pm. When cross-examined about variations in her hours that appeared on the pay slips, she explained that sometimes she had to work longer if someone arrived late, and that after her declining to sign a workplace agreement, her shifts changed.
She confirmed that her hourly rate was $26 per hour, together with $2 per hour bonus for paperwork being in order, and that if targets were met there were bonuses between $50 and $150. It was put to her that the legislation requires a person to be present with a manager’s licence and that there were alternative administration people in the business that had such a licence.
It was also put that if she was working they would need somebody else there who had a licence, which she agreed with. She also agreed that that potentially was a greater expense for the business, but pointed out that another receptionist working on a Sunday day shift was without a manager’s licence. She was firm in her cross-examination that she understood that she either signed the agreement or she would have no job, and that her employment arrangement had been different from the others as a result of the agreement she reached with the second respondent when she was last hired.
It was put to her that the arrangement about receiving cash was one that she reached with the bookkeeper, but she confirmed that it was an arrangement she reached with the second respondent. She denied that it was for her benefit due to Centrelink entitlements rules, saying that it was a detriment as she received no superannuation because of it. She explained that she has since amended her returns to properly reflect her income. She agreed that the list of doctors’ appointments did not necessarily reflect days off but days that she had to attend a doctor, and stated that she was keen to maintain the dates that she had been given, as she wanted a consistent roster.
I generally found the applicant to be an impressive and engaging witness. There appears to be no doubt that she was an effective receptionist, adding to the profitability of the business and maintaining her paperwork in good order. The importance of bookkeeping with receptionists, and the number of persons involved in the business, tell against there being a cash component to the business takings, and therefore payment to her in cash simply made the payments non-deductible by the business in its own tax returns. The benefits to the applicant were potentially reduced rates of taxation for herself personally and increases in benefits from the Department of Social Security. I do not accept that in the structure of the business any payment of cash to the applicant was other than for her benefit. Having said this, I accept that in many sectors cash is sometimes offered to employees as an incentive and is not necessarily requested by the employee, but nonetheless accepted so as not to risk imperilling employment. Having regard to the evidence of Ms H (discussed below), I have ultimately concluded that I do not entirely accept the applicant’s account and find that she had requested the cash payment. Otherwise however, I accept her evidence.

The Evidence of Ms H

Ms H is a self‑employed bookkeeper who worked for the business, doing the books for much of the relevant period. She left the business in January 2011, but had been there for many years before that. She was working on a subcontract basis and invoiced the business. She said that the second respondent told her directly that the applicant was employed for four shifts on weekdays, with one day off, from 9.30 am to 8 pm. She confirmed that there were no lunch breaks and that the staff worked through the lunch period. Without referring to the paperwork, she could not recall the specific rates.
She said that she had been told by the second respondent to pay the applicant three days on the books and one day in cash. It seems that for all of the bonuses, the staff each got cash and that this was not recorded on group certificates.
Ms H said that the applicant was the only person with the arrangement for one of her shifts to be paid in cash. She confirmed that the applicant was good at her job and regularly reached her targets. She confirmed that the payslips would always reflect one shift less than the applicant worked due to the cash arrangement. She also confirmed that there was a culture in the workplace of receptionists often covering for each other’s shifts if need be. She confirmed that on occasions, the payslips showed more than 10.5 hours due to the applicant having to cover for others or work late if someone was not on time. She confirmed, more importantly, that on her recollection, 90 per cent of the time, the applicant worked the same days each week.
She said that everyone was aware that the applicant was not eligible for a manager’s licence, and that other receptionists who worked on day shifts also did not have a manager’s licence. She had obtained a licence to assist with the business remaining within the statutory requirements and that others who worked there also had a licence. She was of the view that when she was not there, there would have been another person with a licence present at the premises. After inspections had occurred, she had tried to make sure she tried to work days that the applicant was there to ensure that there was a person with a licence present. There was also an arrangement for staff to telephone her or the second respondent if inspectors arrived on the premises and there was not a person with a licence present.
She was cross‑examined about whether she was present to see the staff working to confirm their hours and said that she worked upstairs but would be going up and down stairs from time to time and would have noticed if staff were not there or not working their hours. She confirmed her evidence that here was rarely another manager present on weekends as she did the time sheets and was aware of who was working. She said that she was told about the cash arrangement for the applicant and that the second respondent confirmed the arrangement with her. She confirmed in her evidence that the applicant was desirous of the cash payment and that the second respondent preferred not to make cash payments.
Ms H was recalled to give evidence, in order to answer the proposition that she was expressly forbidden to pay cash (which had not been put to her in cross-examination), which she emphatically denied.
She also gave evidence that at one stage, a consultant came in to look at the structure of the business and raised a question as to whether or not some of the staff should be permanent part time or full time rather than on casual arrangements. She said that the second respondent had said to leave the issue. She said that the basis of this was that some staff had particularly regular hours, therefore would be permanent part time staff and entitled to sick leave and holidays, but that the second respondent was against making any changes. She believed that the staff were all paid slightly above the award rates for casual staff. She said that part of her job was to telephone and check the minimum rates from time to time, and then she would check with the second respondent before setting the rates.
The witness Ms H, on the resumed date gave further evidence explaining that the bonus was for ensuring that the paperwork amounts match the balance on the credit card statements and the till amount. She also explained that the daily sheets filled in the sign-in and sign-out time and were signed, and that these sheets were used to track the times for calculating wages. She confirmed that the receptionists didn’t have breaks and that there was nothing on the sheet about breaks. She was aware that the second respondent would transpose figures from sheets to an income sheet that he maintained but didn’t believe that he recorded hours.
She confirmed that when the consultant reviewed the employment arrangements she gave the consultant full access to the premises and that they didn’t receive specific changes and recommendations. She confirmed when put to her in cross-examination that the second respondent relied at least in part upon her to ensure lawful operations but repeated that she had a discussion with the second respondent about the hours that some of the staff were working and she considered that they should be part-time employees.
When cross-examined about breaks she maintained that if the receptionists ate it would be at the reception and that they weren’t permitted to leave, for example, to go and run errands or take time off for a meal break. She was quite adamant that there was no system in place to allow for a break and although there had never been complaints about this, she had not spoken to the second respondent about it. She explained that she believed that if somebody was receiving over 30 hours per week that she thought they ought to be a part-time employee.
I found Ms H to be a very impressive witness and accept her evidence.

The Evidence of the Second Respondent

The second respondent is the sole director of the first respondent, which operates the business from premises that are owned by a publicly listed company that was floated in 2003. His evidence‑in‑chief was remarkable as a result of his lack of recollection or details concerning the applicant, her return to the business, and any meetings she had with him. He said he did not recall meetings with her, nor which shifts she worked. He said he would not have known what arrangements were in place at the time that she was working.
He said that he did recall that after a period of time, Ms H had told him that the applicant was doing three shifts and would not do four unless she was paid in cash for the fourth shift but could not say when that was. He said that he had told Ms H that there were to be no cash payments, but then said that he could not say if this was the only discussion he had had about cash payments. He maintained that he was not in the business premises very often in that period as he was spending a lot of time with lawyers about licensing issues and time in Indonesia. He said that he was sporadic in his attendance at the business and had Ms Austin and Mr Barnes as managers. Neither Ms Austin nor Mr Barnes remain employed by the business.

Another manager, Mr McDonald, was said to have been hired to put the business in order and to clear up what the second respondent described as a mess of paperwork. He claimed not to know when the applicant finished in the business. Remarkably, even with respect to the letter from the applicant’s solicitors addressed to him personally, dated 28 November 2011, complaining about what had occurred in the workplace, he appeared to have no recollection beyond saying that “It does ring a bell.” He went on to say that everything goes to a PO Box and that the office opens everything, even though this letter was addressed to the physical address of the business premises. He said he had no recollection of when it came to his attention. The manager, Mr McDonald, had finished in late 2012. He was not aware of any operational changes that Mr McDonald had made other than saying that he thought he was looking at cost cutting.
He was aware that the applicant could not hold a licence and said that there was somebody on the premises when she was there who did have a licence. He maintained that the shifts were left to the managers and payroll to the bookkeepers, and that he was not aware of the specific arrangements about who had licences among the receptionists and who was rostered onto which shifts. However, he maintained that so far as he was aware, the company was in compliance with the Sex Work Act. In cross‑examination, he admitted that he had an office at the premises and was there either twice per week or twice per month. He was involved in setting the targets, but maintained that he did not necessarily know whether or not the applicant was meeting her targets.
He admitted that he provided positive feedback to the applicant, but maintained that he generally does that with respect to all of the staff. He was equivocal as to whether or not he had told the applicant that he was “a star”, saying that he could not recall it, but that maybe he had said it. He said that he had no complaints with respect to the applicant.
In cross-examination the second respondent was “circumspect” with respect to questions about whether or not he had seen Mr Barnes, and it transpired that he was taking the question as being whether he had had a face-to-face meeting. Whilst he said he hadn’t seen Mr Barnes since 2013, and later confirmed that he hadn’t had anything to do with him, it transpired he had received ‘a couple’ of text messages, Neither Mr Barnes nor Ms Austin were called to give evidence. It appears that Mr Barnes has, at least, sent a letter from his solicitor to the second respondent and they are in dispute.
The second respondent even claimed that he was unaware of when Mr McDonald started at the business.
As is apparent from the evidence by the applicant, the business took the view that the requirement for a person on the premises with a manager’s licence was, as the second respondent described it, “bureaucratic box ticking”.
He denied that he was involved in the decision to require all of the staff to sign casual contracts, maintaining that the managers would have decided to do that.
On the whole, I found the second respondent a particularly unimpressive witness. His lack of memory, and evasive presentation gave me no confidence in his evidence. Given the nature of the business and the number of managers, and the obvious turnover of managers, I simply do not accept that he was not intimately involved in the day-to-day operations of the business. Such a claim is inconsistent with the evidence of Ms H, and the evidence of the applicant as to circumstances involving her being hired.
I accept that the second respondent has no respect for the regulatory scheme, and the paperwork that would be involved in compliance with it, and thus was eager to have others to assist with that, but I do not accept that he would not have maintained careful oversight and control of such processes.
The cross-examination of the second respondent continued with him agreeing that he was currently speaking to the managers daily, and stating that he had sacked Mr Barnes as a result of allegations concerning behaviour with respect to illegal substances and intimacy with some of the staff. He also maintained that he kept a finger on the pulse of the business. Later he admitted that he possibly gave directions to the managers to get the staff to sign contracts, and that he was aware that Mr Barnes had been dismissed from Victoria Police, although maintained that he did not know why.
He agreed that the applicant had not held a licence for the entire time that she was in this stint of employment. In re-examination he said that back at the relevant time he did not need to spend as much time at the premises as he does now, wherein he is seeing the manager daily. He also said that there had been a previous Fair Work investigation of the business, and that no rectifications were required, nor any claims of breach brought to his attention.
The second respondent was also recalled to give evidence and said that he didn’t usually look at the shift sheets when he compiled his summary. He agreed, however, that the shift sheets did contain the start and finish times. With respect to breaks, he was of the view that the staff had “lots of downtime”, taking coffee, cigarettes and gossip breaks, but said there were no official breaks. He said he simply assumed that someone would come down to look after the desk when the receptionists went out and that the question of breaks hadn't been raised with him before.
In a similar style to the first time he gave evidence, he said that he had no recollection of any discussion about permanent part-time, but then said it doesn’t surprise him that there may have been. He maintained in cross-examination that he wasn’t aware of the precise hours that the applicant worked, just the weekly summary. He said it would have been unusual if a receptionist wanted to leave the premises during the work period, and that Ms Austin would have been able to cover as manager. He maintained he was not aware of what was in the agreements that were sought to be signed, and maintained his previous stance that this was about ‘ticking boxes’ to make sure things were correct. He denied being aware of clause 5 of the proposed employment agreement which stated:
5. No allowance is made for set breaks to be taken during the course of a shift. The employee may take breaks when the opportunity arises provided the break is without detriment to the performance of his/her duties.
Despite seeing the second respondent again in the witness box, this did nothing to improve his credibility. I find that he was deliberately vague in his evidence, as it suited him to distance himself as far as possible from the issues that arise in this proceeding.
On the whole I found the evidence of the second Respondent most unimpressive. Not only was it unreliable, and evasive, but on hearing the evidence one could not help but form the view it was untruthful.

Evidence of Mr McDonald

Mr McDonald was also called to give evidence. He had commenced in the business on 1 December 2011 to oversee operations, and to be a duty manager. He thought that he probably started on a Thursday, and was told that the applicant was not a licence holder. He was aware that she would not be eligible until February the next year. He said that he wanted to expose her to other facets of the business by moving her to night shift, although it is difficult to see what other facets of the business that would have exposed her to. It would certainly have made the employment far less appealing to her, in her personal circumstances and change her employment arrangement she entered into with the first respondent. He said that he directed Mr Barnes to terminate her employment, with an offer to revisit it upon her obtaining a licence, and that he had no knowledge of the request that she sign employment contracts at the time that he did that.
In cross-examination he agreed that the applicant was the only receptionist whose employment was terminated, but said that to his knowledge she was the only receptionist without a licence.
It seems that Mr McDonald did not have a licence, as he was not eligible, having received a suspended sentence for misconduct in the incident where he had notified a manager of a premises that he was coming down to inspect the premises with respect to potential breaches of the Liquor Act. He said that he did not do paperwork, but that he terminated the applicant’s employment simply because it was an unacceptable risk to the business.
He denied that Ms Austin could remain on the premises when the applicant was working, on the basis that there were other tasks for Ms Austin to do, and a need for her to go out, although no satisfying particulars of what that was were forthcoming. He also agreed that others, referred to as “Debbie” and “Vera” were there, and held licences, but said they were in a separate building adjoining by way of a doorway. He denied having seen and acted on the letter from the applicant’s solicitor, saying that it was coincidental with the termination of the applicant. He also denied that he was told that she had not signed a casual agreement.
It was remarkable how much he didn’t know and how gung-ho he must have been if his evidence is to be believed.
On the evidence of Mr McDonald, the receptionists’ duties were to account for cash, check that the workers were on site, and appeared reasonably presented and were sober, answer telephone calls, help with the laundry, and had what was described as a “support role” as a result of the relevant licensing authority requiring there to be a manager. He maintained that there is a lunch area, and that the staff all take breaks. He explained that there were alarms and CCTV, so that even in the lunch area, a receptionist would know if a person came into the business. He denied knowledge of the applicant’s arrangements with the second respondent.
The witness presented as a witness with considerable experience in giving evidence before the courts, which is not surprising given his former work arrangements. His evidence was quite forthright and firm. However, it is difficult to accept that decisions of this type would be made so soon after he commenced in the business, with respect to a long-term receptionist, of his own accord without consultation with the second respondent and the other managers. Ultimately I do not accept that his state of knowledge was as limited as he says, particularly when one looks at the circumstances as a whole and the nature of his evidence. Ultimately I do not find that I am able to rely upon the evidence of this witness and reject it.

Reasons for the Applicant’s termination

The question of the reasons for the applicant’s termination is central. She had been employed for a significant period without a manager’s licence, yet when there was only two months before she could again obtain a manager’s licence she was terminated ostensibly for this reason. It simply does not have the ring of truth about it.
Not surprisingly, she is of the view that the termination occurred as a result of her refusal to sign the workplace agreement to convert to casual employment and run the risk of losing the shifts that she had specifically negotiated to regularly have with the second respondent. I accept that a threat of termination of employment is adverse action, as is a threat to reduce her shifts and schedule them at times that she had not been employed to ordinarily work.
It is remarkable that, after issues have been raised with respect to the potential of some staff being permanent part-time, that employment agreements were pressed upon all of the staff, including the following clause:
Acknowledgement by employee
11. The employee acknowledges that he/she is engaged as a casual employee and has no entitlement to annual leave, sick leave and long service leave and is not entitled to make any claim for unfair dismissal under the Workplace Relations Act or Regulations.
I am persuaded that her failure to sign the agreement was the operative reason behind her termination, even if she bore the onus of proof on this issue.
A further difficulty with respect to the claim by the respondents that the termination was as a result of her not holding a manager’s licence is that there was no evidence that when she was on the premises she had the powers and authorities necessary to carry out the duties of a manager in the sense the term appears to be used in the Sex Work Act.    In this respect the evidence of the second respondent is, in my view, accurate, where he claims that he took the view that a person having a manager’s licence was simply to tick a box. I do not accept that he took the view that the position was to fulfil the substantive purpose that lies behind the requirements in the legislation. The Sex Work Act relevantly provides:
Division 5—[Approved managers]
49. [Personal supervision of business] (1)    A licensed business of a kind referred to in the definition in section 3 of brothel must at all times when open for business be personally supervised by the licensee or an approved manager.
(2)    A licensee or approved manager who is not on the premises at which the business is being carried on at a particular time cannot be regarded as personally supervising the business at that time.
(3)    If subsection (1) is contravened with respect to a licensed sex work service providing business—
(a)     the licensee; and
(b)     the approved manager (if any) whose duty it was to personally supervise the business at the relevant time—
are each guilty of an offence and liable to a penalty of not more than 60 penalty units or imprisonment for not more than 6 months.
In this regard even if the applicant held a manager’s licence, based upon the evidence in these proceedings with respect to her duties, it appears that the first respondent would still not have been, complying with the Sex Work Act, if one of the managers such as Ms Austin, were not present and holding a managers license.
In the circumstances, I find that the first respondent took adverse action in threatening to alter the applicant’s employment arrangements and dismissing the applicant which was unlawful under the Fair Work Act, and that the second respondent was knowingly involved in the breach.

Involvement of the Second Respondent

The principles of accessorial liability are discussed in detail by White J in Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456 as follows:
[227] In order to be knowingly concerned in, or party to, a contravention, a person must have engaged in some conduct which “implicates or involves“ him or her in the contravention, so that there is a “practical connection“ between the person and the contravention: Qantas Airways Ltd v Transports Workers’ Union of Australia [2011] FCA 470 ; (2011) 280 ALR 503 at [324]–[325]. See also Construction, Forestry, Mining and Energy Union v Clarke [2007] FCAFC 87 ; (2007) 164 IR 299 at [26]. In Trade Practice Commission v Australian Meat Holdings Pty Ltd (1988) 83 ALR 299, Wilcox J at 357 quoted with approval the following passage from the judgment of the Full Court of the Supreme Court of Western Australia in Ashbury v Reid(1961) WAR 49:
The question which a Court should ask itself in determining whether an act or omission on the part of an individual comes within the terms of section 54 is whether on the facts it can reasonably be said that the act or omission shown to have been done or neglected to be done by the defendant does in truth implicate or involve him in the offence, whether it does show a practical connection between him and the offence.
The statement in Ashbury v Reid was also approved in R v Nifadopoulos(1988) 36 A Crim R 137 at 140 with the Court (Kirby ACJ, Maxwell and Carruthers JJ agreeing) saying that “a person cannot become criminally involved in an act made unlawful by mere knowledge or inaction on his part — some act or conduct on his part is necessary.
[228] In Yorke v Lucas (1983) 49 ALR 672 at 681, the Full Court of this Court approved the following statement of Pennycuick V-C in Re Maidstone Buildings Provisions Ltd [1971] 1 WLR 1085 at 1092–3:
[T]he expression “party to“ must on its natural meaning indicate no more than “participates in“ or “concurs in“. And that, it seems to me, involves some positive steps of some nature.
See also Sent v Jet Corporation of Australia(1984) 2 FCR 201 at 208–9.
[229] In order for a person to have been knowingly concerned in a statutory contravention, that person must have been an intentional participant, with knowledge of the essential elements constituting the contravention: Yorke v Lucas (1985) 158 CLR 661 at 670. However, it is not necessary that a person with knowledge of the essential elements making up the contravention also know that those elements do amount to a contravention: Yorke v Lucas at 667; Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75 ; (2003) 216 CLR 53 at [48]. An accessory does not have to appreciate that the conduct involved is unlawful: Australian Competition and Consumer Commissioner v Giraffe World Australia Pty Ltd (No 2) [1999] FCA 1161 ; (1999) 95 FCR 302 at [186].
[230] Actual knowledge of the essential elements constituting the contravention is required. Imputed or constructive knowledge is insufficient: Young Investments Group Pty Ltd v Mann [2012] FCAFC 107 at [11]; (2012) 293 ALR 537 at 541.
[231] Proof that a person had actual knowledge of each of the essential elements making up a contravention may be derived from direct evidence but more commonly will be a matter of inference from all the circumstances found to be proved. In some cases, actual knowledge can be inferred from the combination of a respondent’s knowledge of suspicious circumstances and the decision by the respondent not to make enquiries to remove those suspicions. Nevertheless it is actual knowledge which is required. In this respect, Wilson, Deane and Dawson JJ in Giorgianni v R (1985) 156 CLR 473 at 505 said:
[A]lthough it may be a proper inference from the fact that a person has deliberately abstained from making an inquiry about some matter that he knew of it and, perhaps, that he refrained from inquiry so that he could deny knowledge, it is nevertheless actual knowledge which must be proved and not knowledge which is imputed or presumed.
And later (at 507–8):
The fact of exposure to the obvious may warrant the inference of knowledge. The shutting of one’s eyes to the obvious is not, however, an alternative to the actual knowledge which is required as the basis of intent to aid, abet, counsel or procure.
[232] The conclusion that a person has actual knowledge of the elements of a contravention by reason of that person’s knowledge of suspicious circumstances coupled with a deliberate failure to make enquiries which may have confirmed those suspicions requires consideration of the person’s knowledge of the matters giving rise to the suspicion, the circumstances in which the person did not make the obvious enquiry and the person’s reasons, to the extent that they are known, for not having made the enquiry. It is not every deliberate failure to make enquiry which will support the inference of actual knowledge. In several cases, including Official Trustee in Bankruptcy v Mitchell [1992] FCA 521 ; (1992) 38 FCR 364 at 371 and Richardson & Wrench (Holdings) Pty Ltd v Ligon No 174 Pty Ltd [1994] FCA 1222 ; (1994) 123 ALR 681 at 693–4, this Court has referred with approval to a passage from the advice of Lord Sumner in Zamora (No 2)[1921] 1 AC 891 at 812–3 in which his Lordship noted two senses in which a person may be said not to know something because they do not wish to know it:
A thing may be troublesome to learn, and knowledge of it, when acquired, may be uninteresting or distasteful. To refuse to know any more about the subject or anything at all is then a wilful but a real ignorance. On the other hand, a person is said not to know because he does not want to know, where the substance of a thing is borne in upon his mind with a conviction the full details or precise proofs may be dangerous, because they may embarrass his denials or compromise his protests. In such a case he flatters himself that whereas ignorance is safe, ‘tiz folly to be wise, but there he is wrong, for he has been put upon notice and his further ignorance, even though actual and complete, is a mere affectation and disguise.
[233] In the former circumstance described by Lord Sumner, the person will not have actual knowledge of the matter. In the latter circumstance, the person does have that knowledge but deliberately refrains from asking questions or seeking further information in order to maintain a state of apparent ignorance. That is not a circumstance of constructive or imputed knowledge, but of actual knowledge reduced to minimum by the person’s wilful conduct: Richardson & Wrench at 694 (Burchett J).
[234] The requisite actual knowledge must be present at the time of the contravention. A later acquisition of knowledge of the essential matters is not sufficient.
[235] A company may be knowingly concerned in a statutory contravention. The knowledge of an officer of a corporation is imputed to the corporation: s 826 of the WR Act and s 793 of the FW Act.

It is notable that imputed or constructive knowledge is insufficient to prove accessorial liability.
In this case, the manager who terminated the applicant’s employment had only been employed for a short period. The applicant had been a long-term employee working four days per week with the employer undertaking 10 and a half hour shifts. The applicant’s position within the company was as a receptionist who had won an award for her work and regularly obtained bonuses for carrying out her duties to a high standard. I find it inconceivable that a manager, even with authority to do so, who had been employed for such a short period would not have discussed a proposal to sack a long-term staff member working so many hours per week, with the second respondent.
This is not a case where the second respondent was in substance an absentee owner. He clearly involved himself in the day-to-day running of the business, including regularly reviewing the takings and timesheets with the bookkeeper. I simply don’t accept that all of these dealings with staff would have taken place without his imprimatur. His evidence that he had no knowledge of what the managers were doing through this period is risible.
In the circumstances of the case I find that the second respondent was knowingly involved in the termination. In making this finding I note that it is based upon circumstantial evidence and that in respect of the second respondent’s accessorial liability the onus of proof lies on the applicant.
With respect to the requests to have the applicant sign the employment agreement. Again, I cannot accept that decisions to place all of the employees of such a business operation onto written employment agreements containing the clauses referred to above would have occurred without consultation by the middle-level managers with the second respondent. Further, in light of the evidence that there had been issues raised as to whether staff were properly considered casual rather than part time, directly with the second respondent, and by a person of such standing as Ms H, I find it inconceivable that the middle managers would embark upon such a course without consultation, at a minimum, with the second respondent.
In circumstances of the case, I therefore, find that the second respondent was involved in and aware that the staff were to be told they had to sign workplace agreements for casual employment. He was also aware that some staff that were working longer hours on a regular basis were likely to be categorised as part-time employees. He was aware of the terms of her employment as he engaged her. I am also satisfied that he was aware that the first respondent was to be terminated.

The terms of the applicant’s employment.

In some cases it is difficult to determine whether a person’s employment is permanent or casual. I note that s.384 of the Fair Work Act provides circumstances where casual employment can be regular, providing:
384. [Period of employment] (1) An employee’s period of employment with an employer at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee.
(2) However:
(a) a period of service as a casual employee does not count towards the employee’s period of employment unless:
(i) the employment as a casual employee was on a regular and systematic basis; and
(ii) during the period of service as a casual employee, the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis; and
(b) if:
(i) the employee is a transferring employee in relation to a transfer of business from an old employer to a new employer; and
(ii) the old employer and the new employer are not associated entities when the employee becomes employed by the new employer; and
(iii) the new employer informed the employee in writing before the new employment started that a period of service with the old employer would not be recognised;
the period of service with the old employer does not count towards the employee’s period of employment with the new employer.

Some awards, such as the Hospitality Industry Award, have provisions that convert casual to permanent part-time, such as clause 13.4.
Incidents of the arrangements relevant to deciding if the work is casual or part time include whether it is informal, uncertain or irregular, the description by the parties of the arrangement, the expectation or otherwise of ongoing availability of work, and the expectation of continuity of the arrangement. Ultimately it is a question of fact in individual cases.
In this case I accept that the applicant was in substance employed to work four days a week for day shifts. She had regular shifts and was not ringing her employer to obtain details of the shift. It is only in the last month of her work that her shifts appeared to have been significantly altered. When she had discussions with Ms Austin she was told that the alterations were only for a week.
In her earlier periods of employment the employment contract had referred to casual work, although it does not appear to have been a condition of her employment on this occasion.
The termination letter describes her as a day shift receptionist. She undertook a significant number of hours in the workplace. She had been in the position for over three years.
On looking at the circumstances of the case as a whole, it appears to me that the employment arrangement is properly described as a permanent part-time arrangement, not one of casual work.

Superannuation

The obligation to pay superannuation is absolute. That the parties had a ‘cash’ payment arrangement does not alter the employers obligation. This is simply one of the incidents of employment that must be complied with by the employees that (like the tax obligations), are employment breaches by entering into a cash arrangement. I find that the superannuation entitlement should be calculated on the employee full income amount and therefore the respondents were in breach.

Public Holidays and Personal Days

The evidence as to public holidays is thin. The applicant has a usual roster and then public holidays fall on her days she would have worked, on the balance of probabilities. I accept her evidence that she did not understand that she could leave the business during her shift within the terms of her employment. Ultimately I am persuaded that weeks where she attended a doctor and she did not work one of her usual days and did not receive four days’ work for the week she would be entitled to pay for a personal day.

Breaks

The applicant says she did not receive a break during her shift.
At best the evidence for the second respondent was that she could have eaten whilst watching her post using CCTV. The arrangements for her work clearly contemplated that she would not cease to be available to perform her tasks during her shift. Hence, she was unable to leave the premises. Such arrangements are not breaks as contemplated in the award. A break requires a cessation of duties and responsibilities. This is not even a case where there was a proper break, but occasional interruptions if the employee chose to stay on the premises, or the time of the break being postponed due to work demands. This is clear case of no scheduled break being in place, nor any capacity to take a proper break.
I therefore find no breaks were provided and that therefore she ought to have been paid the additional amounts as set out in the award.

Summary

I find the applicant:
a)did not receive breaks during her shifts;
b)did not receive termination pay;
c)did not receive holiday pay;
d)did not receive personal / carers leave;
e)did not receive overtime pay for public holidays;
f)did not receive overtime following the failure to provide a meal break.
In the circumstances of this case, despite valiant attempts by counsel to make submissions as to possible consequential orders based upon the various possible facts I may find I have formed the view that I should hear brief further submissions on consequential orders as to the form of declarations, the calculation of underpayments, damages and penalties that may flow from these findings.

I certify that the preceding eighty eight (88) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller

Date: 17 February 2016

[2016] FCCA 312

17 February 2016

Key Legal Topics

Areas of Law

Negligence & Tort

Employment Law

Legal Concepts

Duty of Care

Negligence

Causation

Damages

Vicarious Liability