United Workers Union v Ecec Management Services Pty Ltd

[2021] FCCA 1260

FEDERAL CIRCUIT COURT OF AUSTRALIA

United Workers Union v ECEC Management Services Pty Ltd [2021] FCCA 1260

File number(s):	SYG 366 of 2020
Judgment of:	JUDGE DRIVER
Date of judgment:	7 June 2021
Catchwords:	INDUSTRIAL LAW – Fair Work – non payment of superannuation entitlements – orders for payment.
Legislation:	Fair Work Act 2009 (Cth) s 536
Number of paragraphs:	10
Date of hearing:	7 June 2021
Place:	Sydney
Counsel for the Applicant:	Ms L Saunders
Solicitor for the Applicant:	United Workers Union
Respondent:	Mr S Abdul, with leave

Table of Corrections
17 September 2021	Coversheet ‘Applicant:  Mr S Abdul, with leave’ deleted and ‘Counsel for the Applicant:  Ms L Saunders’ added
Coversheet ‘Counsel for the Respondent:  Ms L Saunders’ deleted and ‘Solicitor for the Applicant:  United Workers Union’ added
Coversheet ‘ Solicitor for the Respondent: United Workers Union’ deleted and ‘Respondent: Mr S Abdul, with leave’

ORDERS

SYG 366 of 2020

BETWEEN:

UNITED WORKERS' UNION

Applicant

AND:

ECEC MANAGEMENT SERVICES PTY LTD
ACN 156 518 053

Respondent

ORDER MADE BY:	JUDGE DRIVER
DATE OF ORDER:	7 JUNE 2021

THE COURT DECLARES THAT:

1.By failing to make superannuation contributions at a level sufficient to satisfy the Superannuation Guarantee (Administration) Act 1992 (Cth) charge to the nominated accounts of Victoria Cini, Jayne Lowden and Charlene Williams in the period March 2018 to date, ECEC Management Service Pty Ltd (ECEC):

(a)Failed to comply with the terms of cl.20.2 of the Children Services Award 2010; and

(b)Thus contravened s.45 of the Fair Work Act 2009 (Cth).

2.By failing to make superannuation contributions at a level sufficient to satisfy the Act charge to the nominated accounts of Kylie Hawkins, Margaret Joyce Kate Van-Veen, Amra Mujezinovic, Glenda Storris, Johnathon Zinsli and Sandra Jenkins, ECEC:

(a)Failed to comply with the terms of cl.20.1 of the SDN Enterprise Agreement 2016 (the Agreement); and

(b)Thus contravened s.50 of the Fair Work Act 2009 (Cth).

3.By providing each of the claimant employees with payslips in the relevant period which represented that ECEC had made superannuation contributions in circumstances where it knew this was misleading, ECEC contravened s.536(3) of the Fair Work Act 2009 (Cth).

THE COURT ORDERS THAT:

4.Pursuant to s.545 and s.547 of the Fair Work Act 2009 (Cth) requiring ECEC to pay, in respect of its contraventions of ss.45 and 50:

(a)$3,459.29 to the nominated superannuation account of Victoria Cini;

(b)$7,804 to the nominated superannuation account of Jayne Lowden;

(c)$10,917.71 to the nominated superannuation account of Charlene Williams;

(d)$4,698.47 to the nominated superannuation account of Kylie Hawkins;

(e)$5,807.33 to the nominated superannuation account of Margaret Joyce;

(f)$10,800.29 to the nominated superannuation account of Kate Van-Veen;

(g)$8,019.51 to the nominated superannuation account of Amra Mujezinovic;

(h)$8,446.29 to the nominated superannuation account of Glenda Storrie;

(i)$15,691.05 to the nominated superannuation account of Jonathon Zinsli; and

(j)$6,872.23 to the nominated superannuation account of Sandra Jenkins.

REASONS FOR JUDGMENT

(revised from transcript)

JUDGE DRIVER

1. I have before me an application for declaration and other orders in relation to non-payment of superannuation entitlements.  For the most part, there is no dispute as to the facts.  A number of the employees of the respondent company, (ECEC) have not received superannuation payments to which they are entitled, either under their award or enterprise agreement.  The matter has required a hearing, essentially, because of the issue of pecuniary penalties for a certain breaches of the Fair Work Act 2009 (Cth). ECEC has not been legally represented in these proceedings, but Mr Abdul, the father of the person responsible for the business has appeared at each court hearing in order to represent the interests of ECEC and, on each occasion, he has been granted leave.

2. The applicant (Union) relies upon its application, an amended statement of claim and affidavit evidence which has been received.  That affidavit evidence has, in two instances, been tested by cross-examination.  There is no doubt as to the truth of the evidence given by them that they have not received their superannuation entitlements.  For its part, ECEC relied upon the affidavit of Benjamin Abdul, made on 3 June 2021, in which he refers to the history of the business and difficult trading circumstances, including the loss of staff and customers.

3. Essentially, while ECEC admits non-payment of superannuation entitlements, it has brought an attention to its practical inability to make timely payments because of shortage of funds.  It is also noteworthy that the business has been the subject of a tax office superannuation guarantee charge audit, which Mr Abdul told me today, has been completed, but no amounts have yet been specified.  It appears likely that the Australian Taxation Office (ATO) will specify how much must be paid and when in a later communication.

4. The scheme of the superannuation arrangements, both under the Award and under legislation is dealt with in the Union’s submissions at [4]-[10], which I adopt:

   Strictly speaking, an employer does not have a direct obligation under the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGA Act) to make superannuation contributions to an employee. It instead imposes a tax that can be avoided by the making of such contributions. For each quarter that an employer employs an individual, an individual superannuation guarantee shortfall is the equivalent of the employee’s quarterly salary or wages base multiplied by the relevant charge percentage divided by 100: s.19. The relevant charge percentage can be reduced, ultimately to zero, by inter alia the making of contributions to a complying superannuation fund: s.23. This is typically how the SGA Act operates in practice, such that contributions are made by employers for the benefit of their employees without any interference or involvement by the Commissioner.

   However, in this matter both the Award and the Agreement contain stand-alone provisions requiring the contributions to be made. Clause 20.2 of the Award provides (my emphasis):

   An employer must make such superannuation contributions to a superannuation fund for the benefit of an employee as will avoid the employer being required to pay the superannuation guarantee charge under superannuation legislation with respect to that employee.

   The Agreement at cl.20 similarly provides:

   20.1SDN will pay superannuation in accordance with legislative requirements as amended from time to time.

   20.2 Contributions will be made to a superannuation fund of the employee’s choice.

   Although it lacks the clarity of cl.20.2 of the Award, it is nevertheless tolerably clear that this clause should be interpreted as imposing an obligation to actually make contributions (rather than to incur a tax liability). So much is shown by the use of the words ‘pay superannuation’. Given their ordinary meaning, in an industrial context and in light of the way superannuation is considered in a practical sense, these words reflect a commitment to making payments. This is bolstered by cl.20.2, which reflects a presumption that contributions will in fact be made.

   Notwithstanding the employer’s denial at [11], it is inarguable on the evidence that ECEC has, in respect of each of the claimant employees, failed to make sufficient superannuation contributions to their funds to meet its obligations under cl.20.2 of the Award and 20.1 of the Agreement.

   The amounts owing, including interest, are set out in Schedule A to these submissions.

   Accordingly, the Court would be satisfied that ECEC has contravened:

   a.s.44 in respect of Victoria Cini, Jayne Lowden, and Charlene Williams (the Award-covered employees); and

   b.s.50 in respect of Kylie Hawkins, Margaret Joyce, Kate Van-Veen, Amra Mujezinovic, Glenda Storrie, Jonathon Zinsli and Sandra Jenkins (the Agreement-covered employees).

5. Those submissions also deal with the issue of misleading payslips. ECEC contends that the payslips should not be regarded as misleading because they simply stated the employee entitlements and were required to be accurate for the purposes of s 536(2) of the Fair Work Act.

6. I accept that there is an obligation to provide accurate payslips, however, there is also an obligation to pay the amounts referred to in the payslips.  In the case of the superannuation entitlements, that was not done.  The issuing of payslips showing employee entitlements which are in fact not made, in my view, does render the payslips misleading.  In that regard, I agree with the Union’s submissions at [11]-[15]:

   Section 536(3) of the Act provides:

   (3)An employer must not give a pay slip for the purposes of this section that the employer knows is false or misleading.

   The Act is, by s.536, concerned with ensuring not only that employees receive certain information from their employer but that this information is accurate. This is because as a matter of practical common sense, employees are to a large extent reliant on receiving this to be able to ensure they have received their correct entitlements. This is particularly so in respect of superannuation contributions, which are not as immediately obvious to employees as their ordinary wages.

   During the period in which ECEC was not paying, or not paying in full, superannuation contributions, it nevertheless persisted in issuing payslips which represented to employees that contributions were being made.

   On its face, this is false. There is no suggestion that the non-payments were an error or unwitting. Indeed, in his affidavit at [15]-[17], Mr Abdul makes it clear that this was a deliberate choice in response to financial pressure: financial strain can only ‘affect…superannuation payments’ in the sense that it renders a business unable or unwilling to make the contributions.

   Mr Abdul’s state of mind can be imputed to ECEC via s.793(2). Accordingly, the Court would be satisfied that ECEC, by issuing payslips which were materially untrue, contravened s.536(3).

7. The Union also seeks penalties and costs.

8. I do not think that a costs order is called for in this case, noting that the jurisdiction is generally a no cost jurisdiction and in the present case, ECEC has freely admitted non-payment of entitlements, has participated in a mediation and has, in general terms, attempted to conduct its defence reasonably and properly.  The issue of penalties has been a sticking point between the parties which I accept prevented a settlement and has necessitated today’s hearing.  There are various factors at play in relation to penalties, including the importance of receipt of the superannuation benefits by the individual employees, and the importance of the superannuation scheme more generally.

9. Other factors are the apparently parallel ATO audit and the as yet unknown outcome of that audit and the circumstances of ECEC running what appears to be a relatively small business in what it describes as “adverse circumstances”.  These are matters on which I consider I should reserve judgment.  I conclude that I should make the orders in the short minutes provided by the applicant union, which I mark with the letter A, initial and date today.

10. As I have indicated, I will reserve judgment in relation to pecuniary penalties and there will be no order as to costs.  For clarity, I will take into account, prior to judgment on penalties, any payments made to the employees in accordance with the orders for the payment of the superannuation entitlements forthwith.

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Driver.

Associate:

Dated:       5 July 2021