United Workers Union v Ecec Management Services Pty Ltd (No 2)
[2021] FedCFamC2G 55
•29 September 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
United Workers Union v ECEC Management Services Pty Ltd (No 2) [2021] FedCFamC2G 55
File number(s): SYG 366 of 2020 Judgment of: JUDGE DRIVER Date of judgment: 29 September 2021 Catchwords: INDUSTRIAL LAW – FAIR WORK – assessment of penalties for established breaches Legislation: Fair Work Act 2009 (Cth), ss 45, 50, 536, 546, 557A Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) (2010) 199 IR 373
Commonwealth v Director of the Fair Work Building Industry Inspectorate (Civil Penalties Case) (2015) 258 CLR 482
Construction, Forestry, Maritime, Mining and Energy Union & Anor v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) (2018) 264 FCR 155
Kelly v Fitzpatrick (2007) 166 IR 14
Rojas v Esselte Australia Pty Limited (No 2) (2008) 177 IR 306
United Workers Union v ECEC Management Services Pty Ltd [2021] FCCA 1260
Division: Division 2 General Federal Law Number of paragraphs: 14 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 ORDERS
SYG 366 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: UNITED WORKERS UNION
Applicant
AND: ECEC MANAGEMENT SERVICES PTY LTD
Respondent
ORDER MADE BY:
JUDGE DRIVER
DATE OF ORDER:
29 SEPTEMBER 2021
THE COURT ORDERS THAT:
1.The respondent is to pay to the applicant a total penalty of $60,000 under s 546(3)(b) of the Fair Work Act 2009 (Cth).
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE DRIVER:
INTRODUCTION AND BACKGROUND
On 7 June 2021 I gave an ex tempore judgment in this matter concerning contraventions of the Fair Work Act 2009 (Cth) (Fair Work Act).[1] I made declarations identifying breaches of the Fair Work Act and orders for the payment of superannuation benefits to 10 employees. There was no costs order. I reserved judgment in relation to pecuniary penalties.
[1] United Workers Union v ECEC Management Services Pty Ltd [2021] FCCA 1260
This judgment deals with the issue of penalties.
CONSIDERATION
The primary purpose of penalty orders is protective; ie to deter a repeat of the conduct by either the contravenor or others.[2] This must be distinguished from questions of “retribution, denunciation and rehabilitation”.[3]
[2] Commonwealth v Director of the Fair Work Building Industry Inspectorate (Civil Penalties Case) (2015) 258 CLR 482 at [55]
[3] Construction, Forestry, Maritime, Mining and Energy Union & Anor v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) (2018) 264 FCR 155 at [19]
The discretion as to whether to impose a penalty must be exercised in this light. The fact that an employer has not deliberately or consciously contravened a civil remedy provision is of particular significance. However, it is equally important that employers be dissuaded from reckless contraventions, and the importance of careful compliance with industrial instruments be reaffirmed.
In assessing the level of penalty, the Court accordingly must determine where the conduct sits on the spectrum of seriousness for contraventions of its kind.[4]
[4] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) (2010) 199 IR 373 at [5]
The factors relevant to assessing penalty include those discussed in Kelly v Fitzpatrick:[5]
[5] (2007) 166 IR 14 at [14]: cf Rojas v Esselte Australia Pty Limited (No 2) (2008) 177 IR 306 at [64]
(a)the nature and extent of the conduct which lead to the breach;
(b)the circumstances in which the conduct took place;
(c)the nature and extent of any loss or damage suffered as a result of the breach;
(d)any antecedent conduct by the contravener;
(e)the seniority and authority of the persons engaging in the contravention;
(f)whether the contraventions were deliberate and premeditated;
(g)contrition on the part of the contravener;
(h)any corrective action taken by the contravener; and
(i)the extent of any cooperation between the contravener and the applicant seeking to enforce the law.
Here, a number of factors weigh in favour of a penalty on the higher end of the scale:
(a)first, the contraventions have resulted from a deliberate decision to not make payments of minimum employee entitlements of particular importance, and to misrepresent this to employees;
(b)secondly, the loss sustained by employees was significant in respect of their personal circumstances, and when the importance of compounding in the context of superannuation is considered;
(c)thirdly, although Mr Abdul, the father of the person responsible for the respondent company, ECEC Management Services Pty Ltd (ECEC), and who represented it with leave in this proceeding, has spoken of financial pressure there is no evidence to suggest impossibility;
(d)fourthly, ECEC has expressed no contrition and at least up until the date of my principal judgment, had taken no serious steps to correct the contravention, pointing to a particular need for specific deterrence; and
(e)finally, ECEC has not co-operated with the applicant, the United Workers Union (Union), to resolve the matter or within the proceeding, including by its failure to comply with Court timetables.
On the other hand, certain factors call for a more moderate approach:
(a)first, there is no evidence of antecedent conduct by ECEC;
(b)secondly, the cohort of employees is reasonably small, as are the sums of money involved, while significant to the employees individually; and
(c)thirdly, the loss suffered by employees was indirect rather than direct, in that they were not entitled to access the payments immediately.
The maximum penalty is $66,600 for each contravention provided that it is not a serious contravention, which is not in dispute.[6] The Union contends that an appropriate penalty range is in the mid – low to middle of the scale, being between $16,650 to $33,300 for each contravention. Penalties in this range do not, considered in aggregate, offend the totality principle.
[6] See s 557A
There are, relevantly, three courses of conduct involving three contraventions. These are:
(a)the contravention of s 45;
(b)the contravention of s 50; and
(c)the contravention of s 536(3).
I agree with the Union that the penalty should be fixed in the low to middle range. In my principal judgment, I stated at [10] that I would take into account any payments made to the employees in accordance with the payment of superannuation entitlements in that judgment. I have received no information from the parties concerning any such payments. On 16 September 2021 the Union informed my chambers that no payments had been made. At the trial, I was also told that ECEC was the also the subject of an audit by the Australian Taxation Office but I am unaware of any further developments about that.
In my view, a pecuniary penalty of $20,000 for each of the contraventions is the appropriate penalty to fix.
I will order that ECEC pay a total penalty of $60,000 to the Union under s 546(3)(b) of the Fair Work Act.
Consistently with my principal judgment, there will be no order as to costs.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Driver. Associate:
Dated: 29 September 2021
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