United Voice v Lead Childcare Pty Ltd - [2011] FMCA 958

FEDERAL MAGISTRATES COURT OF AUSTRALIA

UNITED VOICE v LEAD CHILDCARE PTY LTD

[2011] FMCA 958

INDUSTRIAL LAW – Penalty hearing – contravention of s.44 of the Fair Work Act 2009 (Cth) – failure to correctly calculate redundancy pay – prior continuous service – factors for consideration in assessment of penalty.

Fair Work Act 2009 (Cth), ss.44, 119, 546(1), 546(3)

Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Carr v CEPU & Anor [2007] FMCA 1526
CEPU v QR Limited (No. 2) [2010] FCA 652
Finance Sector Union v Commonwealth of Australia (2005) 47 IR 462
Leighton Contractors & Anor v CFMEU & Ors [2006] WASC 317
National Tertiary Education Industry Union v Central Queensland University [2008] FCA 481
Rojas v Esselte Australia Pty Ltd(No. 2) [2008] FCA 1585

Applicant:

UNITED VOICE

Respondent:

LEAD CHILDCARE PTY LTD

File Number:

BRG 594 of 2011

Judgment of:

Jarrett FM

Hearing date:

1 December 2011

Date of Last Submission:

1 December 2011

Delivered at:

Brisbane

Delivered on:

2 December 2011

REPRESENTATION

Counsel for the Applicant:

Mr Reed

Solicitors for the Applicant:

Directly instructed

Counsel for the Respondent:

Mr Pratt

Solicitors for the Respondent:

Michael Hefford Solicitors

ORDERS

That the funds paid into court pursuant to the order made on

1 November 2011 with accretions thereon, if any, be forthwith paid to Ms Jodie Henderson c/o United Voice, 27 Peel Street, South Brisbane.
That in relation to the respondent’s contravention of s.44 of the Fair Work Act 2009 (Cth) the respondent pay a penalty of $6,000.
That the penalty ordered to be paid under order (2) above be paid by the respondent to United Voice, 27 Peel Street, South Brisbane, by

6 January, 2012.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT BRISBANE

BRG 594 of 2011

UNITED VOICE

Applicant

And

LEAD CHILDCARE PTY LTD

Respondent

REASONS FOR JUDGMENT

On 1 December, 2011 I conducted a hearing to determine the appropriate penalty to impose upon the respondent pursuant to s.546(1) of the Fair Work Act2009 (Cth) for its admitted breach of s.44 of the Act.
The hearing before me proceeded upon written submissions, supplemented by oral argument. Both the applicant and the respondent relied upon an affidavit - in the case of the applicant sworn by John Barrie Spreckley and filed on 14 November, 2011 and in the case of the respondent sworn by Nina Hefford and filed on 25 November, 2011. Neither deponent was cross-examined.
The admitted contravention occurred in the context of the following facts:
a)Jodie Henderson commenced employment with the respondent on 1 June, 2009 as the Director of a child care centre known as the Maryborough No. 1 Centre. That centre formed part of a business purchased by the respondent from ABC Developmental Learning Centres Pty Ltd (in administration).
b)Between 1 July, 2008 and 31 May, 2009 Ms Henderson was employed by ABC as the Director of the Maryborough No.1 Centre.
c)Leading up to the transition of the child care business from ABC to the respondent, there were an offer of employment made by the respondent to Ms Henderson. The offer was contained in a letter of 24 April, 2009 (subsequently accepted by Ms Henderson) in which the respondent promised to recognise all of Ms Henderson’s continuous service with ABC as continuous service with the respondent for the purposes of calculating all of Ms Henderson’s entitlements that might be based upon service.
d)Between 14 January, 2002 and 30 June, 2008 Ms Henderson was employed by various entities in child care centres, including the Maryborough No. 1 Centre, in businesses operated by those entities. It appears that the business of those entities was acquired by ABC in 2008.
e)On 10 December, 2010 Ms Henderson’s position with the respondent was made redundant and she was retrenched. She received 4 weeks redundancy pay, calculated by reference to her period of service with the respondent only – it did not take into account any of her service with ABC.
f)As early as 16 November, 2010 Ms Henderson had made a claim for a total of 14 weeks redundancy pay based on her continuous service “with ABC” from 14 January, 2002.
g)On 2 December, 2010 the applicant, of which Ms Henderson was a member, made the same claim on Ms Henderson’s behalf, together with a claim for pro-rata long service leave based on her continuous service “with ABC” from 14 January, 2002. The claim went unresolved and on 10 December, 2010 the applicant notified the respondent of a dispute concerning Ms Henderson’s unpaid entitlements to redundancy pay and long service leave.
h)The claim proceeded to conciliation in Fair Work Australia but it was not resolved.
Ms Henderson’s claimed long service leave entitlement was paid on 10 June, 2011 but the claim for redundancy pay of 10 weeks remained outstanding. An exchange of correspondence in June 2011 again failed to resolve that dispute.
These proceedings were commenced on 6 July, 2011. An amended statement of claim was filed on 9 August, 2011.
On 18 October, 2011 the respondent admitted that it had contravened s.44 of the Act as alleged and consented to an order that it pay compensation to Ms Henderson in the sum of $10,000 including interest, and agreed to a further hearing for the court to determine the amount of any pecuniary penalty and to whom the penalty should be paid.
The parties agree that there has been only one contravention of a civil remedy provision of the Act. The contravention was not paying Ms Henderson her entitlement to redundancy pay worked out in accordance with s.119 of the Act. The respondent characterises the failure to pay her the appropriate amount of redundancy pay as a miscalculation of the quantum of it. She was paid 4 weeks pay as a redundancy payment rather than 14 weeks. The miscalculation was not so much the period of weeks’ pay to which Ms Henderson was entitled, but rather the relevant period of service to be taken into account for the purposes of s.119 of the Act.
Rather than there being an error in that process, the evidence reveals a disagreement between Ms Henderson (and later the applicant on her behalf) about the period to be taken into account. Ms Henderson’s position was always that the relevant period of service commenced in January, 2002. The respondent simply refused to accept that proposition at face value. To an extent the respondent’s stance is understandable in that the relevant period of service commenced some years before the respondent came to acquire ABC’s business. Nonetheless, the evidence reveals a steadfast refusal to acknowledge Ms Henderson’s claims until October, 2011.
As the respondent points out, the Court’s task is to consider the ‘appropriate’ penalty, if any, to be imposed upon the respondent for the breach. I say ‘if any’ because the respondent’s ultimate submission was that the circumstances justified the imposition of no penalty upon the respondent.
I accept the respondent’s submissions that the relevant considerations for the assessment of penalty are:
a)the circumstances of the conduct (including whether or not there has been a deliberate defiance or disregard of the relevant provision);
b)the respondent’s record, if any, of civil penalty contraventions;
c)whether the contraventions are distinct or arise from a single course of conduct;
d)the consequences of the contravening conduct;
e)deterrence, both general and specific;
f)the size and financial resources of the respondent;
g)evidence of contrition;
h)the size of the maximum penalty; and
i)if relevant, the totality principle.
Many cases in this court have set out the relevant considerations and approach to the task that I must now perform. It is worth bearing in mind, however, the words of Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [91]:
Checklists ........ can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day, the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligation.

Circumstances of the conduct

There was much disagreement between the parties about this aspect of the matter. The applicant seeks to characterise the respondent’s behaviour as a flagrant breach of the Act. The respondent says it was an honest mistake made against a confused and confusing set of factual and legal circumstances. I tend to think that it was neither.
The early correspondence between the applicant and the respondent between 2 and 10 December, 2010 reveals that the respondent was alive to its responsibility to make some form of redundancy payment to Ms Henderson if she did not take up an offer of alternative employment with the respondent. At one point, the respondent sought to characterise what it was doing as merely making Ms Henderson’s “status” redundant, not the employee herself.
As early as Ms Henderson’s correspondence of 16 November, 2010 to the respondent, the respondent was put on notice of Ms Henderson’s position – that her service for the purposes of calculating her redundancy payment should take into account her prior service with ABC (and its predecessors). Her stance was entirely understandable and consistent with the letter of offer of employment she received from the respondent dated 24 April, 2009.
On numerous occasions after December, 2010, the basis of Ms Henderson’s claim was spelt out. It seems from the material that the fact of her service with ABC and the respondent was not in issue. What was in issue was the legal basis upon which she promoted her claim.
I accept that the industrial laws in place since January, 2002 have changed, and changed frequently. However, the respondent was able, with the assistance of legal advisers, to reach conclusions about the veracity of Ms Henderson’s claim. The course taken in this matter indicates that her claim was made in accordance with those laws.
In my view there is a degree of seriousness attending this breach, particularly in light of the offer of employment made on 24 April, 2009 and the promises that:
3. Your position and the terms and condition of your employment will be the same as those that currently apply to you with ABC (including any applicable award or workplace agreement) other than in respect of those matters described in this letter.
4. The Company will recognise all of you continuous service with ABC as continuous service with it.
5. All of your personal/carer’s, annual leave, annual leave loading, and long service leave accrued with ABC as at the date immediately prior to completion of the Sale will be recognised by the Company and the Company will accept liability for such entitlements.
The making of such an offer tends to suggest that the respondent was aware of the relevant facts and in particular the “continuous service with ABC”. However, the respondent’s actions, until at least October, 2010 seem inconsistent with that inference. Whilst the breach with which I am dealing has nothing to do with the promises made in the letter of offer, the promises give context to the respondent’s subsequent conduct and the sincerity with which it now expresses regret for the breach.

Relevant record of civil penalty contraventions

I accept that the respondent has no history of any contraventions of civil remedy provisions of the Act or equivalent legislation.

Distinct event

I accept that the contravention appears to be an isolated incident and not an ongoing contravention.

Consequences of the contravening conduct

As a result of the contravening conduct, Ms Henderson was held out of 10 weeks pay for nearly one year. The sum due to her, plus interest, was paid into court (for reasons that are not apparent) rather than paying that sum directly to her. Having regard to the terms of her letter to the respondent dated 16 November, 2010, I have no doubt that being held out of those funds is a significant impost upon her.

Deterrence

Both parties submit that general deterrence is a significant consideration given that deterrence is a primary objective of imposing penalties: Leighton Contractors & Anor v CFMEU & Ors [2006] WASC 317; Carr v CEPU & Anor [2007] FMCA 1526.
I accept that this is not a breach which could be characterised as ongoing. However, for the reasons given above, I consider that this breach is serious. I do not accept that the breach represents “an honest and reasonable mistake that was rectified swiftly and in a way that fully compensated the employee in question”. In my view the respondent’s attitude towards Ms Henderson’s claim ceased to be reasonable once particulars (of the legal basis of the claim) had been supplied to it by the applicant in April, 2011 for the purposes of proceedings in Fair Work Australia. Although imperfect, those particulars set out clearly enough, in my view, the basis for Ms Henderson’s claim.
Her claim has been outstanding for some 12 months. It has not been rectified swiftly by the respondent, although her long-service leave has been paid. The public purse has been saved little.
I accept that there is no evidence of a course of conduct or proposed course of conduct which would heighten the importance of imposing a penalty with an eye to the specific deterrence of this particular respondent.

Size and resources of the respondent

I accept that the respondent operates a number of small childcare businesses and that it does not have an in-house dedicated human resources manager or lawyer.

Respondent's contrition

I do not accept that the respondent honestly believed it had paid the correct amount of redundancy pay to Ms Henderson. The correspondence of 29 April, 2009 is inconsistent with the notion that her entitlements, whatever they may be, would be calculated using her period of service with the respondent only. If that is not so, clauses 3, 4 and 5 of the letter of offer serve very little, if any, purpose. At best for the respondent, the evidence discloses a degree of recklessness when it came to Ms Henderson’s entitlements.
The respondent argues that it “had no access to prior records of employment or the facts of the numerous transactions said to constitute transmissions of business which occurred long before the respondent arrived on the scene as an employer of Ms Henderson”. That assertion is entirely inconsistent with the implication that fairly arises from clauses 3, 4 and 5 of the letter of offer that the respondent knew that Ms Henderson did indeed have prior continuous service with ABC that needed to be taken into account when calculating her entitlements. Its immediate approach however, was to ignore her entitlements and present its own view of her entitlements at a meeting of 15 November, 2010 when Ms Henderson was informed of her redundancy. The respondent’s subsequent correspondence demonstrates a continued refusal to recognise her entitlements earlier recognised by it in the letter of 29 April, 2009.

The appropriate penalty

The maximum penalty for the contravention in question is 60 penalty units or $6,600, which, when multiplied by five for a corporation, exposes the respondent to a maximum penalty of $33,000.
In light of all of the circumstances I consider relevant as set out above, I do not consider that not imposing a penalty is appropriate.
I accept that it would not be appropriate for the maximum penalty to be ordered in this case. Penalties approaching the maximum available ought to be reserved for the most egregious breaches.
In the circumstances described above, I consider a penalty of $6,000 is appropriate. I have taken into account in arriving at that figure the fact that the respondent has now admitted the breach and avoided the costs (to the public and the applicant) of a trial on liability.

To whom penalty payable

The applicant has prosecuted this application on behalf of Ms Henderson, to promote her legitimate interests as a member of the applicant organisation. The extensive endeavours undertaken by the applicant (acting in the interests of its members and the public) to bring, and then prosecute, the present proceedings is a sufficient reason to order that the penalty be paid to the applicant pursuant to s.546(3) of the Act: cf. Finance Sector Union v Commonwealth of Australia (2005) 47 IR 462, Rojas v Esselte Australia Pty Ltd(No. 2) [2008] FCA 1585, National Tertiary Education Industry Union v Central Queensland University [2008] FCA 481, CEPU v QR Limited (No. 2) [2010] FCA 652.
I make the orders set out at the commencement of these reasons.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Jarrett FM

Date: 2 December 2011