Taylor v Hose Corp Pty Ltd
[2015] FCCA 1804
•8 May 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TAYLOR v HOSE CORP PTY LTD & ANOR | [2015] FCCA 1804 |
| Catchwords: INDUSTRIAL LAW – Penalty hearing – failure to pay termination payment – failure to consult prior to redundancy in accordance with award obligation. |
| Legislation: Fair Work Act2009, ss.44, 44(1), 45, 117(2), 545, 545(1), 546, 550(1), 550(2) |
| CEPU v ThyssenKrupp Elevator Pty Ltd [2014] FCCA 1615 Maslen v Core Drilling Services Pty Ltd [2013] FCCA 460 McIlwain v Ramsey Food Packaging Pty Ltd (No 4) (2006) 158 IR 181 Plancor v Liquor, Hospitality & Miscellaneous Union (2008) 171 FCR 357 Yorke v Lucas (1985) 158 CLR 661 |
| Applicant: | DIANE TAYLOR |
| First Respondent: | HOSE CORP PTY LTD |
| Second Respondent: | ROBERT PRINS |
| File Number: | BRG 967 of 2014 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 8 May 2015 |
| Date of Last Submission: | 8 May 2015 |
| Delivered at: | Brisbane |
| Delivered on: | 8 May 2015 |
REPRESENTATION
| Solicitor for the Applicant: | Mr Mossman |
| Solicitors for the Applicant: | M + K Lawyers |
| Solicitor for the Respondents: | Mr Peters |
| Solicitors for the Respondents: | Anne Murray & Co |
ORDERS
In respect of the first respondent’s contraventions of ss.44 and 45 of the Fair Work Act 2009 (Cth), the first respondent pay a penalty fixed in the sum of $12,000.00.
In respect of the second respondent’s contraventions of the Fair Work Act 2009 (Cth), committed by reason of s.550(1) of that Act, the second respondent pay a penalty fixed in the sum of $1020.00.
The first and second respondents pay those penalties to the applicant.
All other applications, including applications for costs, be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 967 of 2014
| DIANE TAYLOR |
Applicant
And
| HOSE CORP PTY LTD |
First Respondent
| ROBERT PRINS |
Second Respondent
REASONS FOR JUDGMENT
ex tempore
This is an application for the imposition of pecuniary penalties and other orders pursuant to the Fair Work Act 2009 (Cth) between Diane Taylor and Hose Corp Pty Ltd and Robert Prinz.
Ms Taylor was employed by the first respondent. She, according to the facts that are not in dispute between the parties, commenced her employment in or about July, 2007. The terms and conditions of her employment were the subject of an oral agreement between she and Mr Prinz, as well as being governed by the provisions of the Clerks Private Sector Award 2010.
Her employment came to an end on 11 July, 2014. Mr Prinz gave her notice of termination, with immediate effect. She was subsequently paid some wages in lieu of notice, but not the appropriate amount. That led to these proceedings.
In these proceedings the applicant contends that the Fair Work Act has been contravened in two respects, and insofar as the first respondent is concerned there is no dispute about the contraventions.
The first contravention is that pursuant to s.117(2) of the Act, the applicant was not paid the appropriate amount of money upon the termination of her employment or before the termination of her employment. Section 117(2) of the Fair Work Act is part of the National Employment Standards, and a contravention of the National Employment Standards is actionable under the Fair Work Act according to s.44(1) of the Act. It is a civil penalty provision.
The second contention by the applicant – which, again, is not the subject of the dispute – is that there was a provision in the Clerks Award which required the first respondent to notify the applicant about her impending termination or redundancy and to consult with her prior to implementing that. Clause 8.1 of the Clerks Award made that provision.
The significance of those provisions, or provisions like that in awards was discussed by me in CEPU v ThyssenKrupp Elevator Pty Ltd [2014] FCCA 1615. There are many other decisions that deal with the significance of such a provision in an award and the obligations that it casts upon employers and the benefits that it gives to employees.
As I say, there is no dispute here that that provision of the award was breached and the breach of that award provision is actionable pursuant to s.45 of the Fair Work Act.
Both ss.44 and 45 of the Fair Work Act are civil penalty provisions. Section 546 of the Act provides that I might impose a pecuniary penalty upon the first respondent for contraventions of those provisions.
The maximum penalty to which the first respondent is exposed is $51,000 in respect of each of the contraventions. The second respondent – and I will deal with his position shortly but if he is found to be liable under the Act, then he is liable to penalties on two occasions, the maximum of which is $10,200. The applicant also claims compensation and declarations.
It is said that declarations are necessary in this case because they perform a public benefit role in recording the contraventions that the first respondent has admitted to in these proceedings and the recording of them in formal declarations will have a deterrent effect specifically in respect of the first respondent and perhaps the second but, more generally, employers who might be tempted to breach the Act in similar ways.
However, this is not a case which has any particular public interest about it. That is not, for a moment, to minimise the significance of this case to either of these parties. I am sure that both of them see that it is a very important case to them and it is. But in the scheme of cases that come before this Court in terms of litigation under the Fair Work Act, it is a case at the lower end of the scale in terms of the benefit to be derived by the public from the making of declarations. I am not satisfied that in this case there is any utility, public or otherwise, in making the declarations sought. These reasons for judgment, however, record the contraventions that the first respondent has admitted.
The second matter to be dealt with, before I move to the penalties, is the question of compensation. The Court has power to make an order for compensation under s.545 of the Fair Work Act. Subsection 545(1) provides that this Court:
…may make any order the court considers appropriate if the court is satisfied that a person has contravened a civil remedy provision.
Here, the facts demonstrate that by reason of the Clerks Award, the applicant, had she completed three more days’ service, would have been entitled to accumulate on a pro-rata basis, long service leave. She says that as part of the compensation or as, indeed, the only component of the compensation to be awarded in this case, she should be awarded the amount that she has lost by way of pro-rata long service leave because her employment was terminated three days short of that seven year period.
It was argued with some force by her solicitor that had the Clerks Award not been breached and the appropriate consultation been engaged in by the first respondent, the three days would have probably passed and the applicant would have become entitled to her long service leave. There are some indications in the evidence that that argument, to the extent that it suggests that there may have been a period of time – of days – that might have elapsed from the commencement of such a negotiation period, is correct.
The first respondent, by its director the second respondent, gave some evidence that there have been occasions of negotiation with other employees that have taken place over the course of days and there have been times in the past, particularly when the business suffered some flooding, where the first respondent, through the agency of the second respondent, and the applicant have been able to negotiate changes to the applicant’s employment to accommodate various matters.
Those things do point towards the notion that had a period of negotiation or discussion commenced, it might not have completed for a number of days but it says nothing about when the period of negotiation might have commenced. And the argument made by the applicant is premised on the basis that it might have, should have or would have commenced on the day that the applicant was terminated.
There are indications in the evidence that had the first and second respondents understood the obligation cast upon the first respondent by clause 8 of the Clerks Award, that that discussion process would have started much earlier. Those indications in the evidence come from the affidavit of the second respondent to the effect that he had decided some three weeks prior to the actual termination of the applicant that her employment should be terminated. He gave evidence in his affidavit and referred to it in his evidence-in-chief that for reasons that suited the business the termination of the applicant was delayed by some three weeks.
One would have thought that if the first respondent truly appreciated the obligation cast on it by clause 8 of the Clerks Award, that the negotiation period would have commenced when the first respondent decided to terminate the applicant’s employment, which occurred some three weeks earlier than the termination, it seems. There are also some other indications in the applicant’s own evidence that the decision had been made some time before the day on which it occurred.
Those indications come from the applicant’s evidence that another person in the first respondent’s office was being trained to do her job and, in particular, take care of payroll and the like. She was concerned that, notwithstanding that in the past she had always been able to put in place arrangements to take care of payroll, the second respondent had asked her to train another person to look after the wages in the event that she might take holidays.
She thought that was curious because she did not have any holidays planned. The applicant seems to suggest in her evidence that that might be some indication that the second respondent and first respondent had decided to do away with her position. Those matters point to the conclusion, it seems to me, at least on the balance of probabilities that if the first and second respondents had properly appreciated the obligations cast on them by clause 8 of the Award, the relevant negotiations, discussion and consultation would have occurred well before the applicant’s actual termination.
In those circumstances, I am not satisfied on the balance of probabilities that the contravention of s.45 of the Fair Work Act and clause 8 of the Clerks Award is causally linked to the compensation which the applicant claims by way of the loss of her long service leave entitlements. In my view, it is not appropriate to make an order providing to the applicant a sum which represents her lost long service leave as compensation for the contraventions to which the first respondent has admitted.
I turn then to the question of penalty. The first respondent contends that no or a minimal penalty is appropriate. There are a number of matters pointed to which the first respondent suggests indicates that no penalty or a very small penalty is appropriate. Those matters include the following.
The size of the first respondent business. It is, on any view of the evidence, a small business. It has few employees. The second respondent is in control of the first respondent’s business in a practical day-to-day sense. He is at pains to point out in his affidavit that he is not a sophisticated businessman and does not pretend to know everything about running a business. The first respondent’s business does not have access to a large human resources department. But as I have said on a number of occasions now, employees of a small concern are just as much entitled to the protections of the Fair Work Act as are the employees of large concerns.
I accept the force of Mr Peters’ submissions, however, that the size of the business is something which is relevant to the fixing of a penalty. The depth of the pockets of the respondent is of some moment. However, there is no evidence here about the depth of the respondents’ pockets. There is no financial material before me at all. There are no balance sheets. There are no other financial details, just assertions in the evidence from the second respondent that the first respondent’s business is not particularly well off financially and that the termination of the applicant’s employment came about because of the financial circumstances in which the first respondent had found itself.
The first respondent argues that through the second respondent’s agency, it sought to take advice about how it ought to handle its industrial obligations towards the applicant when it decided to terminate her employment. It is relevant to take into account that the first respondent and second respondent simply did not act on its own accord and take action without seemingly trying to take some advice about it.
That the advice was wrong, ultimately, seems to me to be neither here nor there or that the advice might have been incomplete seems to be neither here nor there because, ultimately, it is an employer’s obligation to ensure that it knows the industrial laws that apply to its employees. Those matters sound in mitigation in some senses but their effects are not as significant, I think, as the first and second respondents would have me accept.
The applicant suggests that a number of matters require attention in terms of penalty.
The applicant points out that the breaches that occurred in this case are breaches of what might be described as minimum provisions. One of them was one of the National Employment Standards, a standard which is designed to create a safety net for employees. The other is a provision in an award which, again, was essentially a minimum entitlement provided by an industrial instrument. It is significant that the matters that were breached in this case were such basic entitlements.
The applicant asks me to take into account the circumstances in which the termination of her employment came about, that is to say, she was a longstanding employee, seemingly well regarded by the first and second respondents, whose employment was brought to an end in a rather abrupt and difficult fashion. I am not sure that those matters are matters which I can take into account on this contravention application and I decline to do so.
It is very relevant to note that by reason of the breach of s.117(2) of the Act, the applicant was held out of money to which she was otherwise entitled for a considerable period.
Whilst the underpayment of her termination entitlements has been rectified, it was only rectified relatively recently. And the circumstances in which the applicant was held out of at least the last component of those funds is really, quite frankly, extraordinary. There is no question that she was entitled to the funds that were ultimately paid to her. The notion that either this court or the industrial commission would order the respondents to pay that sum again, if the respondent paid it to her, is really quite extraordinary. The applicant was either entitled to the money or she was not. As it turns, she was and she was held out of it for far too long. That the respondents might say that they undertook the actions they did on advice does not militate against the significance of that conduct.
There is no evidence before me of any previous contraventions of the Fair Work Act nor does the applicant suggest that there was.
The contraventions by the first respondent came about through the actions of the second respondent. The second respondent, as I apprehend the evidence, is the only person who might be described as in a management position for the first respondent, so the contraventions involved the management of the first respondent. This is not a case, for example, that involves a large employer where the contraventions are committed by a person down the chain of management. This is essentially a company which, for all intents and purposes as far as I can tell, is run by the second respondent and owned by him.
The late payment of the amounts due to the applicant demonstrates to me a lack of contrition on the part of the first and second respondents. The late acceptance of the first respondent’s responsibility for a breach of the Clerks Award, apparently which for the first time became apparent this morning, also demonstrates a lack of contrition.
This is not a case, however, where I have formed a view that a penalty is necessary to provide a strong message to the first or second respondents by way of specific deterrent. That has a role to play but, in my view, it is a role which is easily overstated in the circumstances of this case.
As I have already indicated, the maximum penalty for the first respondent in respect of each of the contraventions is $51,000. In respect of the contraventions, it seems to me that in respect of the first one, the contravention of s.44 of the Fair Work Act relating to the breach of the National Employment Standards, an appropriate penalty is 15 per cent of the maximum. On my calculations that is $7,650. In respect of the second contravention of s.45 of the Fair Work Act, a similar penalty is appropriate. The combined penalty then is $15,300.
The contraventions in this case arise out of one set of circumstances. They arise out of the termination of the applicant’s employment in circumstances where the first respondent was in financial difficulty. I do not accept the proposition that termination of the applicant’s employment was the only alternative available because, whilst it may have been the only alternative available from the first and second respondents’ point of view, other alternatives might well have been suggested by the applicant.
And that is one of the purposes of clause 8 of the Clerks Award – to permit alternatives to be considered by employers; alternatives which might not otherwise be apparent to them especially having regard to the willingness and ability of employees to tailor their employment circumstances to suit their employer’s conditions.
The contraventions arise out of the same set of circumstances. Applying, as I am obliged to do, an instinctive synthesis to the exercise of setting an appropriate penalty and, as a separate exercise, considering the totality of the penalty on the first respondent of $15,300, it seems to me that an appropriate response to the offending conduct in this case is to reduce the total penalty to a sum of $12,000.
In those circumstances, the penalty for the first respondent will be $12,000.
The applicant seeks the imposition of a penalty against the second respondent. The second respondent is said to be liable pursuant to s.550(1) of the Fair Work Act because he was a person involved in the contravention. Subsection 550(2) provides that:
A person is involved in a contravention:
(a)if they have aided, abetted, counselled or procured the contravention;
(b)if they have induced the contravention, whether by threats or promises or otherwise;
(c)whether they have in any way, by act or omission, directly or indirectly, been knowingly concerned in or a party to the contravention; or
(d)whether they have conspired with others to effect the contravention.
The import of s.550(1) was explained in Maslen v Core Drilling Services Pty Ltd [2013] FCCA 460. The parties have both taken me to the decision in Maslen. It is, as Mr Peters for the respondents points out, based in the reasoning of the High Court of Australia in Yorke v Lucas (1985) 158 CLR 661. Yorke v Lucas was at pains to point out, in the context of s.52 of the Trade Practices Act1974 (Cth) and the accessorial liability provisions of that Act, that a person could only be seen to be an accessory to a breach of that Act if he or she acted in some way other than being a mere conduit for the provision of information.
In that case, the person who sought to have accessorial liability attached to them acted as a mere conduit rather than being a person who was truly involved in the contravention. But that is different to the position here. The second respondent is the only person through whom the first respondent acts, at least in a managerial sense, according to the evidence before me. The second respondent is clearly involved in the contravention of the civil remedy provisions which the first respondent has committed.
In those circumstances, by reason of s.550(1) of the Fair Work Act, the second respondent is taken to have contravened the two provisions that the first respondent has contravened. It is not appropriate that the Court take into account the penalty that has been imposed on the first respondent when it determines what penalty ought to be imposed on the second respondent. That is because the legislature has seen fit to provide in s.550(1) that a person who is otherwise involved in a contravention is taken to have contravened the provisions contravened by the primary contravenor.
It is appropriate that a penalty be imposed on the second respondent in respect of the contraventions. It seems to me that in respect of each of the contraventions, a penalty of five per cent is appropriate.
If the total penalty is $10,200 for each contravention, the penalty is $520 for each contravention. The total penalty then for each contravention together is $1020. In my view, having regard to the totality principle, that is not a penalty which is beyond the range of that which is appropriate.
I order, therefore, that in respect of the first respondent’s contraventions of ss.44(1) and 45 of the Fair Work Act, the first respondent pay a penalty fixed in the sum of $12,000.
In respect of the second respondent’s contraventions of the Fair Work Act, committed by reason of s.550(1) of the Fair Work Act, he pay a penalty fixed in the sum of $1020.
The applicant asks for those penalties to be paid to her. The Fair Work Act provides that those penalties might be paid to her and the principles are set out, as the applicant’s solicitor suggests, in Plancor v Liquor, Hospitality & Miscellaneous Union (2008) 171 FCR 357, though also referred to by Greenwood J in McIlwain v Ramsey Food Packaging Pty Ltd (No 4) (2006) 158 IR 181. Having regard to what fell from the Full Court in Plancor and Greenwood J in McIlwain, it is appropriate to order that the first and second respondents pay those penalties to the applicant and I so order.
I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 8 May, 2015.
Associate:
Date: 7 July 2015
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