Waknin v Servcorp Administration Pty Ltd (No 2)
[2023] FedCFamC2G 757
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Waknin v Servcorp Administration Pty Ltd (No 2) [2023] FedCFamC2G 757
File number(s): SYG 207 of 2022 Judgment of: JUDGE D HUMPHREYS Date of judgment: 22 August 2023 Catchwords: INDUSTRIAL LAW – Fair Work Act 2009 – penalty hearing – failure to provide written notice of termination. Legislation: Fair Work Act 2009 (Cth) s 44, 117
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 17.05
Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301
Fair Work Ombudsman v Nobrace Centre Pty Ltd (in Liquidation) [2019] FCCA 2970
Canturi v Sita Coaches Pty Ltd (2002) FCA 349
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union of Australia (2001) 110 IR 372
Ingersole v Castle Hill Country Club Ltd [2015] FCCA 1055
Seyer v Gatwood Management Pty Ltd (No 2) [2023] FedCFamC2G 484
Division: Division 2 General Federal Law Number of paragraphs: 28 Date of last submission/s: 31 July 2023 Date of hearing: In Chambers Place: Parramatta Counsel for the Applicant: Ms Perigo Solicitor for the Respondent: Holman Webb Lawyers ORDERS
SYG 207 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: DANIEL WAKNIN
Applicant
AND: SERVCORP ADMINISTRATION PTY LTD ACN 102 643 667
Respondent
order made by:
JUDGE D HUMPHREYS
DATE OF ORDER:
22 August 2023
THE COURT ORDERS THAT:
1.Pursuant to s 546 of the Fair Work Act 2009 (Cth) (“the Act”), the Respondent to pay a pecuniary penalty in the amount of $30,000.00 for declarations made on 19 July 2023 that the Respondent contravened ss 44 and 117 of the Act by failing to provide the Applicant with written notice of his termination before the minimum period of notice.
2.Pursuant to s 546(3)(c) of the Act, the amount ordered in order 1 above be paid to the Applicant within 28 days of the date of these orders.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order 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 D HUMPHREYS
INTRODUCTION
This judgment concerns the quantum of pecuniary penalties to be imposed on the respondent, Servcorp Administration Pty Ltd (“Servcorp”), following findings in Waknin v Servcorp Administration Pty Ltd [2023] FedCFamC2G 634. In that judgment, the Court found that Servcorp contravened s 117 of the Fair Work Act 2009 (Cth) (“the Act) by failing to provide the applicant, Mr Waknin, written notice of his termination before the minimum notice period.
The Court notes that the parties have agreed and confirmed that the determination of the pecuniary penalty can occur on the papers without the need for a substantive hearing.
THE FORM OF DECLARATIONS
On behalf of the applicant, it was contended that the declaration made by the Court on 19 July 2023 should be amended to include that the respondent breached s 44 of the Act.
The respondent does not oppose the applicant’s proposed variation to the declaration and accepts that s 44 of the Act requires an employer not to contravene a provision of the National Employer Standards, of which s 117 of the Act is part.
The Court proposes to amend the previous declaration pursuant to r 17.05(2)(h) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) to include the contravention of s 44 of the Act.
THE LAW ON PENALTY IN FAIR WORK MATTERS
The Court has a broad discretion as to penalty. In Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 at [71], it was stated that the Court should fix a penalty “it considers fairly and reasonably to be appropriate to protect the public interest from future contraventions of the Act”. Further, at [10], the High Court stated that the penalty must not exceed what is “reasonably necessary to achieve the purpose of section 546: the deterrence of future contraventions of a like kind by the contravener and others”.
In Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301, Bromwich J summarised how the discretion is to be approached at [36], as follows:
1) Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
2) Consider whether each separate contraventions should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
3) Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
4) Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
5) Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23]. [71] and [102].
The purpose of a civil penalty is primarily, if not wholly, promoting the public interest in compliance with the laws that have been contravened, and it does not engage principles of retribution or rehabilitation: Fair Work Ombudsman v Nobrace Centre Pty Ltd (in Liquidation) [2019] FCCA 2970 (“Nobrace”) per Kelly J at [65]. As these principles of retribution or rehabilitation are not involved in the determination of a civil penalty, this intensifies the focus of a civil penalty determination on issues of specific and general deterrence: Nobrace at [66].
The Act does not set out any mandatory criteria, inclusive or exclusive, that the Court must consider when determining whether to impose a penalty or the amount of any penalty: Canturi v Sita Coaches Pty Ltd (2002) FCA 349 at [88]. The choice of penalty must be guided by the “individual circumstances of a case, not by a line-by-line comparison with another case”: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [12]. The process is an intuitive one by the Court and not an application of a scientific process: Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [60]-[63].
In Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 (“”Mason v Harrington”), Mowbray FCM set out what is a now well accepted set of factors relevant in assessing a pecuniary penalty. They are as follows:
a) the nature and extent of the conduct which led to the breaches;
b) the circumstances in which the conduct took place;
c) the nature and extent of any loss sustained as a result of the breaches;
d) whether there has been similar previous conduct by the Respondents;
e) whether the breaches were properly distinct or arose out of one course of conduct;
f) the size of the business enterprise involved;
g) whether or not the breaches were deliberate;
h) whether senior management was involved in the breaches;
i) whether the party committing the breach had exhibited contrition;
j) whether the party committing the breach had taken corrective action;
k) whether the party committing the breach had cooperated with enforcement authorities;
l) the need to ensure compliance with minimum standards by provision of an effective means for the investigation and enforcement of employee entitlements; and
m) the need for specific and general deterrence.
Merkel J in Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union of Australia (2001) 110 IR 372 set out some guiding considerations for the Court at 374:
Matters to be taken into account in determining the appropriate penalty include the cost of the contravention, deterrence, the flagrancy and deliberateness of the breach, the offender’s past record of behaviour and any contrition displayed by the offender.
WHAT IS THE APPROPRIATE PENALTY?
The applicant submitted that the following factors are relevant to the imposition of a penalty:
1) The breach was a consequence of the Respondent’s dismissal of the Applicant, the timing and method of dismissal within the Respondent’s control;
2) The Statement of Claim dated 2 May 202319 clearly set out the contravention alleged. The Respondent denied the contravention in its Defence;
3) The Applicant was dismissed on 3 November 2021;
4) The Respondent’s evidence is that on 9 November 2021, a letter was sent to the Applicant confirming the termination of his employment; and
5) This evidence was given by John Henderson, the Applicant’s manager and Chief Operating Officer of the Respondent.
The respondent urged to approach the issue of penalty similar to that in Ingersole v Castle Hill Country Club Ltd [2015] FCCA 1055 (“Ingersole”). In that case, the Court imposed no penalty on the respondent for a single breach of s 117 of the Act. The Court found the following:
a) The respondent did not ignore or wilfully disregard its obligations under the Act and had made efforts to comply. The Court noted that the respondent had both informed the applicant in person of her termination and gave her subsequent written notice.
b) The applicant was paid her statutory notice in accordance with s 117(2) of the Act.
c) The s 117 breach was a “very small part” of a much broader claim, in which the applicant was largely unsuccessful.
d) The breach did not reveal any systematic or deliberate corporate strategy to interfere with the rights of the applicant or employees generally.
e) In terms of corrective action, the respondent gave evidence of the steps it had taken to engage a specialised industrial relations consultant to provide ongoing consultation and advice services in relation to employment matters, including, relevantly, termination of employment. It also gave evidence about the work done with the consultant in assisting it to ensure that it met its obligations going forward.
It was submitted by the respondent that the circumstances in Ingersole were strikingly similar to this case.
The Applicant referred to paragraph 15 of Ingersole where the Court found that the significance of a breach ought not to be determined by reference to the other claims that were brought in the same proceedings. The applicant also submitted that Ingersole can be distinguished from this case as:
a) The applicant in Ingersole did not take issue with the respondent’s submission that it was appropriate no penalty be imposed.
b) The applicant did not seek to address the Court on penalty and indicated that there was an agreement reached between the parties in relation to penalty.
c) The respondent posted to the applicant a written notification of termination on the date of her termination which showed the respondent attempted to comply with its obligations.
d) The respondent had a mistaken belief in that posting the letter on the date of termination would meet its obligations.
e) The nature of the contravention was misunderstanding as to the date of which notice was deemed to be given under s 117 of the Act.
f) The respondent maintained in the earlier proceedings that it had not breached s 117 of the Act and that is to be seen in light of the technical nature of the provision and the absence of clear authority.
In this case however, the applicant submitted that:
a) A penalty is being sought;
b) Servcorp did not make an attempt to comply with s 117 of the Act and instead emailed the letter of termination to the applicant on 9 November 2021; and
c)
the legislation is clear and there is no lack of clear authority on the effect of
s 117 of the Act.
The applicant submitted that the respondent did not make any attempt to admit the contravention and amend their Defence accordingly. The respondent submitted that Mr Henderson’s evidence demonstrated that the contravention was inadvertent and that he had taken steps to carry out the redundancy in accordance with the law by seeking guidance from Employment Matters. It was put that Mr Henderson confirmed that he was not aware of the requirements for a minimum notice period, despite consulting with Employee Matters, and that if he were aware he would have given the requisite notice. As the Court found that Mr Henderson was a forthright witness whose evidence remained consistent under cross-examination and whose evidence was accepted, there is no reason to disbelieve him.
The applicant submitted that in relation to Mr Henderson’s evidence concerning him seeking external human resources advice, he did not give this evidence in his trial Affidavit nor did he provide any details of the advice or annexe copies of the advice to his Affidavit.
The Court is of the view that Mr Henderson had access to specialist Human Resources advice, and as a senior manager should either have been aware of the provisions of the Act or sought advice to ensure compliance. This ignorance is not an excuse for the contravention.
In relation to the nature and extent of the conduct and circumstances, the respondent submitted that the declaration related to a single contravention and was not a part of a wider pattern of contraventions or similar conduct. The Court accepts this submission.
In relation to any loss suffered as a result of the contravention, the respondent submitted that there is no dispute between the parties that Mr Waknin was paid his statutory notice. Further, Mr Waknin was verbally informed about his termination prior to receiving a written termination a few days later. The applicant submitted that the email on 4 November 2021 did not confirm Mr Waknin’s dismissal and rather requested he return company property.
The respondent submitted that there has been no similar previous conduct by the applicant and that the respondent has not been the subject of a declaration of a contravention of the Act previously. Servcorp is not a large employer with 48 employees and 167 employees employed by Servcorp and its related entities. Servcorp relies on Employee Matter for human resource services and guidance and now Holman Webb Lawyers.
In respect of contrition, the respondent submitted that Ms Shi and Mr Henderson have both expressed sincere contrition and have filed evidence to demonstrate corrective action taken to ensure that Servcorp complies with its obligations under the Act. It was submitted that the respondent did not admit the s 117 breach given the way in which it was plead, with the Statement of Claim alleging that the respondent had not given Mr Waknin any notice of termination. The applicant submitted that it was open to the respondent to plead that it gave Mr Waknin written notice on 9 November 2021 and therefore contravened the Act.
The Court is of the view that by not admitting what was a clear contravention, the respondent is not entitled to any discount for that reason. While accepting the belated expression of contrition by the respondent, the delay in making such an admission until after the Court has found the contravention proven again diminishes significantly the weight such an expression, even if genuine, can be given.
The applicant’s legal representatives submitted that there is a need for special and general deterrence and that employers need to comply with minimum employment standards. The respondent submitted that the evidence indicates decisive and significant steps to ensure compliance with the Act. The evidence of Ms Shi and Mr Henderson demonstrate that each of them took compliance with the Act extremely seriously and recognise the importance of such compliance. It was further submitted that the need for a specific deterrence is limited where Servcorp has taken meaningful corrective action and because the breach was inadvertent and not deliberate. The applicant submitted that future compliance does not assist Mr Waknin as he is no longer employed by Servcorp and that not understanding its obligations is not a defence.
The applicant made reference to the decision of this Court in Seyer v Gatwood Management Pty Ltd (No 2) [2023] FedCFamC2G 484 (“Seyer”) where the Court imposed a penalty of 80% of the maximum following a breach of s 44 of the Act. The respondent submitted that this case was distinguishable from Seyer for the following reasons:
a) The respondent was found to have engaged in multiple breaches of the Act, not just s 117 of the Act, and that the breaches were “deliberate”.
b) The Court found that there was no contrition by the respondent that was exacerbated by his litany of failures to comply with Court orders and a late adjournment, followed by non-attendance at the hearing.
c) The respondent did not provide any submissions or evidence in relation to penalty.
The Court is of the view that any penalty must reflect the need for businesses to comply with the Act. The need for general deterrence is a matter that must be given some weight. Noting that the maximum penalty is $66,600 for a corporation, a penalty of 50% would be $33,300. The Court considers that a penalty around this amount would send a clear signal to employers that compliance with the Act is not optional and be a penalty that would bring home to the respondent the need for compliance with its employment obligations.
In all of the circumstances, the Court is of the view that the appropriate penalty should be set at $30,000. That penalty is to be paid to the applicant pursuant to s 546(3) of the Act, within 28 days of the date of this order.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of Judge D Humphreys. Deputy Associate:
Dated: 22 August 2023
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