United WORKERS' Union v Serco Group Pty Ltd (No.4)
[2019] FCCA 3665
•13 December 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| UNITED WORKERS' UNION v SERCO GROUP PTY LTD (No.4) | [2019] FCCA 3665 |
| Catchwords: INDUSTRIAL LAW – Fair Work Act – Breach of s.44 – contravention of National Employment Standards – pecuniary penalty. |
| Legislation: Fair Work Act 2009 (Cth) |
| Cases cited: United Voice v SERCO Group Pty Ltd [2018] FCCA 2190 Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission (2003) 131 FCR 529 |
| Applicant: | UNITED WORKERS' UNION |
| Respondent: | SERCO GROUP PTY LTD |
| File Number: | DNG 6 of 2017 |
| Judgment of: | Judge Young |
| Hearing date: | 15 November 2019 |
| Date of Last Submission: | 15 November 2019 |
| Delivered at: | Darwin |
| Delivered on: | 13 December 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Bull |
| Solicitors for the Applicant: | United Workers’ Union |
| Counsel for the Respondent: | Mr Fernon SC |
| Solicitors for the Respondent: | Baker McKenzie |
ORDERS
A penalty of $27,000 is imposed on the respondent pursuant to s 546 of the Fair Work Act2009 (“the Act”).
The penalty is to be paid to the applicant pursuant to s 546(3) of the Act.
The payment is to be made within 28 days.
In respect of the amounts to be paid to the 173 persons pursuant to Order 2 of 14 June 2019 the respondent is to do as follows.
The respondent will arrange to pay the amounts due to those persons by electronic transfer to the person’s last bank account known to respondent or into which the respondent last paid wages to the person.
Within 7 days of the payment referred to in order 5 the respondent is to send correspondence in terms of annexure marked ‘A’ to each person at that person’s last known residential address and last known e-mail address.
If within 14 days of sending the correspondence referred to in order 6, the respondent becomes aware that the person did not receive the amount required to be paid to that person the respondent is to pay the amount by cheque drawn in favour of the person and send it to that person’s last known residential address or such other address as the respondent through reasonable endeavours believes is the person’s residential address.
Within 42 days of sending a cheque pursuant to order 7, the respondent is to provide to the applicant a report which identifies any person whom the respondent believes has not received the amount due to them under the orders of the Court.
For 12 months from the date of this order, the respondent is to hold any amount due that has not been paid pursuant to these orders. After 12 months any unpaid amounts are to revert to the respondent on condition that the respondent undertakes to maintain a record of any unpaid amounts and pay any person to whom money is due under these orders and whom contacts the respondent within 6 years of the making of this order and establishes that they have not been paid the amount due to them.
If, within 12 months from the date of this order, the respondent becomes aware of the residential address, e-mail address or other contact for a person to whom money is due under these orders and who has not been paid the respondent is to make reasonable efforts to contact the person to arrange for the payment of the amount due.
Subject to any order made by the Federal Court of Australia, interest on this judgment pursuant to section 77 of the Federal Circuit Court Act 1999 shall be 0% on and from 12 months of the date of this Order.
These orders are stayed until 5 pm on 16 December 2019.
“A”
Correspondence
[Name]
[Address]
[Email]
Dear [Name]
Payment of remote district allowance – United Workers’ Union (formerly United Voice) v Serco DNG 6 of 2017
On [date of order], the Federal Circuit Court in Darwin ordered that you as an ex-employee of Serco Immigration Services who was made redundant and terminated as a result of the closure of the Wickham Point Immigration Detention Centre is to be paid [amount of payment]. The payment relates to increments of the remote district allowance which the Court has found should have been paid with your accrued annual leave when the leave was paid out with your termination payments.
We have paid [amount of payment] by electronic transfer to the last known bank account held in our records for you. If you have not received the amount or you have any questions concerning this matter please contact Colin Graham on [phone number and email].
Yours sincerely,
[……………..]
Human Resources Director
Immigration and Facility Services
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT DARWIN |
DNG 6 of 2017
| UNITED WORKERS' UNION |
Applicant
And
| SERCO GROUP PTY LTD |
Respondent
REASONS FOR JUDGMENT
The earlier parts of this litigation are to be found in United Voice v Serco Group Pty Ltd [2018] FCCA 2190, United Voice v Serco Group Pty Ltd (No.2) [2018] FCCA 3680 and United Voice v Serco Group Pty Ltd (No.3) [2019] FCCA 1810.
The respondent (“Serco”), contrary to s.44 of the Fair Work Act (“the Act”), contravened a provision of the National Employment Standards by failing to pay 186 of its employees a Remote District Allowance in accordance with an enterprise agreement as required by s.90(2) of the Act. The total of the underpayments was $126,361. There are additional amounts for interest.
The applicant has sought the imposition of a pecuniary penalty under s.546 of the Act. It concedes the respondent’s contravention was a course of conduct and is to be taken to constitute a single contravention for the purposes of s.557 of the Act. The parties agree that the maximum penalty, if a penalty is to be imposed, is $54,000 under item 1, column 4 of s.539(2). The applicant seeks a penalty of 50% of the maximum.
The respondent submitted that in the exercise of its discretion the court should not impose any penalty. It relied strongly on a passage from the judgment of Gordon J in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Ltd [2007] FCA 1607 at [18]:
Where the unlawful conduct arises out of an arguable but erroneous construction of a relevant term, and the subsequent breach cannot be characterised as demonstrating a flagrant or wilful disregard for the agreement, this legislative purpose is not furthered by imposition of a penalty. In these circumstances, neither general nor specific deterrence is a significant factor weighing in favour of imposing a penalty.
The respondent submitted that the court’s consideration of its argument demonstrated that its construction of the relevant term of the enterprise agreement was arguable, if erroneous, and there was no evidence to suggest that the respondent’s conduct was a flagrant or wilful disregard for the agreement.
Background
The respondent operated immigration detention facilities on behalf of the Commonwealth Government on mainland Australia and Christmas Island. One of the detention facilities was at Wickham Point near Darwin (“the Wickham Point facility”). Approximately 300 to 400 staff worked there. The relevant enterprise agreement, the proper construction of which was the main issue in the proceedings, provided that the employees covered by the agreement were to be paid a remote district allowance.
During the currency of the enterprise agreement until about June 2016 the remote district allowance was paid to the employees while those employees took annual leave. On 7 June 2016 the respondent terminated the employment of the employees as a result of a direction by the Commonwealth Government to close the Wickham Point facility.
The payments made by the respondent to the employees for accrued annual leave on termination did not include the remote district allowance.
The respondent argued that on its proper construction the enterprise agreement did not oblige the respondent to pay the remote district allowance while the employees were not actually located at the Wickham Point facility during periods of annual leave. It asserted, in substance, that its previous payment of the remote district allowance during periods of annual leave was gratuitous.
The respondent’s argument about the construction of the enterprise agreement was unsuccessful.
The 13 former employees who were represented by the applicant union have been paid the money owed to them. The money owed to the other 173 former employees is the subject of a stay order pending the respondent’s appeal to the Federal Court.
One consequence of the respondent’s decision to refrain from refusing to pay the employees their entitlement to remote district allowance until the end of their employment is that difficulties have arisen in locating and paying the, now dispersed, former employees the money owed to them.
The applicant does not have any contact details for them. I requested the parties to confer on how those employees might be contacted and the money owed to them paid. Although there is no consent order, I understand the parties have conferred and the applicant proposes that the money be paid into the last known bank accounts of the employees along with an explanatory letter to their last known address. Whether this will result in all employees being paid the money owed to them is unknown. The respondent apparently does not object to this course.
The amounts owed to the various employees vary from a few dollars to more than $2,000. In most cases the amounts owed are hundreds of dollars.
Whether the respondent’s decision to refrain from acting on its preferred construction of the enterprise agreement until the end of the employees’ employment was the result of cynicism or coincidence or some other factor is unknown. There was no evidence that in belatedly adopting a construction of the agreement that it had not previously adopted, one that was advantageous to it and disadvantageous to its employees, that the respondent was deliberately avoiding any potential for inconvenient responses from a disgruntled workforce. On the other hand, there was no evidence to the contrary. The respondent gave no evidence about the matter. It did not assert it had an honest and reasonable belief in the correctness of the course it followed. There was no evidence at all about the subjective beliefs or intentions, expressed through its senior management, of the respondent.
Mr Fernon, senior counsel for the respondent, submitted, as noted, that there was no evidence of a “flagrant or wilful disregard for the agreement” and the respondent’s position was “arguable”. Although I consider that the argument lacked intrinsic merit, and reflected the ingenuity of an able advocate, I accept that, narrowly understood, his submission is correct. However, in truth there was no evidence one way or the other about the respondent’s subjective beliefs about whether it believed its conduct was not, or was, or risked being a contravention of the Act.
In my view, the respondent ought to have known that its conduct risked being in contravention of the Act. No argument raised in the hearing before me suggested that the respondent had any reason to be confident that its construction of the enterprise agreement was certainly correct or even likely to be correct. The fact that the respondent had previously paid its employees the remote district allowance during periods of annual leave and its decision not to pay the allowance occurred only at the end of their employment hardly suggests it was confident on the point either.
Consideration
The decision of Bromberg J in Australian Building and Construction Commissioner v Powell (No.2) [2019] FCA 972 contains a useful summary of the relevant principles. His Honour observed:
[34] … there is no general principle that, if a person contravenes a civil penalty provision on a genuine but mistaken view on an arguable question of law, there should be no penalty. Whether or not a penalty should be imposed will always depend on all the circumstances considered principally by reference to the need for specific and general deterrence.
[35]It is well-settled and not in contest that an honest and reasonable belief may be a relevant mitigating or ameliorating factor in determining whether or not a penalty is to be imposed and, if so, the extent of the penalty imposed [citations omitted].
[36]A contravention based on the mistaken belief of the law is mitigated be principally because that circumstances likely to either diminish or negate the need for specific and/or general deterrence. That connection is apparent from what the Full Court said in Flight Centre at [64][1]:
“Usually a belief in the innocence of conduct that is a contravention of the statute is not an ameliorating factor. Nevertheless the object of the imposition of a penalty is substantially deterrence – specific and general. It is relevant to know that the conduct was done believing it to be innocent and knowing that the party, now disabused of its belief, will not, or is likely not to, reoffend. Specific deterrence in such circumstances is of less significance.”
[37]To like effect, Gordon J stated in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Limited (2007) FCA 1607 at [18): [quoting the passage reproduced in paragraph [4] above].
[38]A further weighty consideration relevant to the nature and seriousness of the contravention is that Mr Powell’s conduct involved little or no impact or consequence for innocent third parties.…
[1] Flight Centre Ltd v Australian Competition and Consumer Commission (No.2) (2018) 260 FCR 68
His Honour also referred to a submission relying on the decision of the Full Court of the Federal Court in Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission (2003) 131 FCR 529. That case concerned anti-competitive conduct. The Full Court observed at [308]:
… It was conduct which, at least, ran a serious risk of being in breach of the Act. If this was appreciated, then the fact that the risk came home against expectations does not entitle the perpetrator to a discount. If the existence of the risk was not appreciated, then the company concerned misunderstood the law applicable to an important area of commerce and would not be entitled to any discount.
The subjective intention or beliefs of a respondent may be relevant but the more pertinent question to ask is whether specific and general deterrence require the imposition of a penalty: ABCC v Powell at [42]. The nature of the contravention and the nature of the loss or harm flowing from it are also relevant: ABCC v Powell at [43].
In this case the respondent does not have any record of prior contraventions. I accept there is no evidence of a flagrant or wilful disregard for the agreement. However, there was no direct evidence of the subjective belief of the respondent’s senior management at all. I am satisfied that the respondent was pursuing commercial purposes and ought to have known that acting on its construction of the agreement involved a risk that it would be found to be in contravention of the Act.
Another relevant factor is that 173 employees have been underpaid. They are owed a total amount of $114,791, excluding interest. That underpayment has still not been remedied and, unless each of the employees can be traced, an indeterminate number may remain unpaid.
The fact that the respondent did not act on its construction of the agreement until the end of the employment of these employees, at a time when the employees were dispersing, has added to the difficulty of providing redress. The object of the Act places particular emphasis on fairness in workplace relations. There is real unfairness resulting from the way that the respondent has conducted itself. In my view this requires both specific and general deterrence to discourage repetition of such conduct.
While, as noted, the respondent has not previously committed any contravention, and that merits a significant discount, the amount involved in the contravention, the number of employees affected, the uncertainty about whether all of the employees will be paid and the circumstances of the contravention are strongly countervailing factors and merit the conclusion that the contravention was serious.
I accept the applicant’s submission that 50% of the maximum penalty is appropriate. I impose a penalty of $27,000. In all the circumstances it is appropriate that the penalty be paid to the applicant pursuant to subsection 546(3) of the Act.
I will also make the orders the applicant seeks in relation to payment and notification of the unpaid 173 employees. These orders are not opposed by the respondent.
I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge Young
Associate:
Date: 13 December 2019
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