Workplace Ombudsman v LUIK - [2009] FMCA 922

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WORKPLACE OMBUDSMAN v LUIK

[2009] FMCA 922

INDUSTRIAL LAW – Workplace Relations – admitted contraventions of Workplace Relations Act 1996 – consideration of matters relevant to penalty.

Workplace Relations Act 1996, ss.182(1), 235(2)

Mason v Harrington Corporation Pty Ltdt/as Pangaea Restaurant & Bar [2007] FMCA 7
Kelly v Fitzpatrick [2007] FCA 1080

Applicant:

WORKPLACE OMBUDSMAN

Respondent:

ADRIAN LUIK

File Number:

BRG 852 of 2008

Judgment of:

Jarrett FM

Hearing date:

14 April 2009

Date of Last Submission:

14 April 2009

Delivered at:

Brisbane

Delivered on:

14 April 2009

REPRESENTATION

Counsel for the Applicant:

Ms Hay

Solicitors for the Applicant:

Harmers Workplace Lawyers

Counsel for the Respondent:

Mr Skinner

Solicitors for the Respondent:

Hollingsworth & Spencer Lawyers

ORDERS

Pursuant to s.719 of the Workplace Relations Act 1996 the respondent pay the following penalties for breaches of the said Act:
(a)$1,600 for breach of s.182(1) of the Workplace Relations Act 1996 in relation to Mr Terrance Towner;
(b)$1,600 for breach of s.235(2) Workplace Relations Act 1996 in relation to Mr Terrance Towner;
(c)$1,600 for breach of clauses 6.3.1. and 6.3.6 of the Queensland Notional Agreement Preserving State Award in relation to Mr Terrance Towner;
(d)$1,600 for breach of clauses 7.6.1. the Queensland Notional Agreement Preserving State Award in relation to Mr Terrance Towner;
(e)$1,600 for breach of clauses 4.8.2 of the Queensland Notional Agreement Preserving State Award in relation to Mr Terrance Towner.
Pursuant to s.841(a) of the Workplace Relations Act 1996 the aggregate of the penalties be paid to the following persons and Commonwealth Consolidated Revenue Fund in the following amounts:
(a)three thousand, two hundred and sixty seven dollars and eighty eight cents ($3,267.88) to Mr Terrance Towner; and
(b)the remainder payable to the Commonwealth Consolidated Revenue Fund.
The Respondent make payment of such sums within six (6) calendar months of the date of this order.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRG 852 of 2008

WORKPLACE OMBUDSMAN

Applicant

And

ADRIAN LUIK

Respondent

REASONS FOR JUDGMENT

ex tempore

This is an application for the imposition of penalties on the respondent pursuant to the Workplace Relations Act 1996. It arises against the following background facts.
The respondent was the sole director and shareholder of a company, Alexander Rose Proprietary Limited, which traded as Javelin Security Services, a company which provided security services in the nature of patrols, static security guards and the installation of security systems.
Alexander Rose had an employee, a Mr Towner. Mr Towner worked or Alexander Rose for a period just on two months, during which period he was employed as a security officer. He started at one level within the company and moved to a higher level but his conditions of employment were governed by a Notional Agreement Preserving a State Award, pursuant to the provision of the Workplace Relations Act that guaranteed to Mr Towner certain basic rates of pay, penalty rates and an entitlement to annual leave, sick leave and long service leave. Mr Towner was not paid his entitlements. There is no dispute between the parties about that. Indeed, this application has proceeded on the basis of a statement of agreed facts.
Mr Towner gave notice of resignation to Alexander Rose. He gave the requisite period of notice of his intended resignation. When Mr Towner's employment ceased on 9 May, 2006 he had not served out his notice period. His employment was summarily terminated before the expiry of the notice period. He was sent on his way. After his employment was terminated, he took up with the respondent about his employment entitlements. There seems to be no dispute that he sent a letter to the respondent querying his employment entitlements, although that letter is not in evidence before me.
A little while later, on 31 May, 2006 the respondent sent a text message to Mr Towner stating that there were some outstanding moneys that would be deposited to Mr Towner's bank account by 2 June, 2006 but no payments were made. The text message is not in evidence. I am not privy to the exact terms of it. Mr Towner followed up the payment on 6 June, 2006 but it was not made and consequently he took the matter up with the Queensland Office of Workplace Services, as it then was.
Things have moved on in a number of respects since then and the Office of Workplace Services has been replaced, in practical terms, by the Workplace Ombudsman, who now brings this application.
In this application it is alleged and the respondent agrees that he has breached s.182(1) and s.235(2) of the Workplace Relations Act and various clauses of the Notional Agreement Preserving a State Award, which was in operation between Alexander Rose Proprietary Limited and Mr Towner.
The respondent is a proper respondent to these proceedings. He is a person concerned in the contravention of the Act and admits to be so. He accepts that the proceedings are properly commenced and brought against him.
I am asked to impose penalties on the respondent in respect of, effectively, five breaches of the Act, s.182(1) as I have set out, s.235(2) as I have mentioned, and those clauses of the Notional Agreement Preserving a State Award which relate to the failure to pay penalty rates, the failure to make payments in lieu of notice periods of termination, and failure to pay appropriate overtime.
The breach of s.182(1) catches the failure to pay under the Notional Agreement Preserving a State Award, the basic periodic rate of wage and the claim under s.235(2) catches the requirement under the Notional Agreement Preserving a State Award to pay accrued annual leave on termination of Mr Towner's employment.
There is agreement between the parties that Mr Towner was underpaid by $3,267.88 and that given the period of his employment with the company that represented something slightly in excess of 41 per cent of the money that he would otherwise have been entitled to for his work.
I have been assisted in this case by extensive written submissions filed on behalf of both the applicant and the respondent, for which I am grateful. The submissions set out very clearly the legislative framework, parts of which I have referred to already, and the principles which are appropriate to an application such as this.
The applicant points out the provisions of s.719(2) of the Workplace Relations Act, which effectively provide that where a person commits two or more breaches of an applicable provision and the breaches arise out of a course of conduct, the breaches should be taken to constitute a single breach of the relevant provision rather than be dealt with as separate contraventions. I accept, however, the applicant's submission in this case that each of the five contraventions particularised in the applicant's submission on penalty ought to be dealt with separately. They are breaches of different provisions, some of the Act - two, in fact, of the Act - the others in respect of the Notional Agreement Preserving a State Award. They are separate and distinct provisions and ought to be dealt with separately.
The approach to be taken on a sentencing application such as this is not in dispute. Both parties have referred me to what I might describe compendiously as the Harrington Principles. Those factors are set out in both of the written submissions as follows. The Court should take into account:
a)the nature and extent of the conduct which led to the breaches;
b)the circumstances in which that conduct took place;
c)the nature and extent of any loss or damage sustained as a result of the breaches;
d)whether there has been similar previous conduct by the respondent;
e)whether the breaches were properly distinct or arose out of the 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 the enforcement authorities;
l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
m)the need for specific and general deterrence.
I have already referred in a general sense to the nature and extent of the conduct and the circumstances in which the conduct took place. Mr Towner's employment was of relatively short compass, about two months, and the application before me deals only with Mr Towner. There is no complaint that any other employee was similarly disadvantaged.
The amount by which Mr Towner was underpaid is a significant amount. It is a little more than 41 per cent of what he was otherwise entitled to receive. That is something of some significance, it seems to me.
There is no suggestion in the material that the respondent in this case has been guilty of similar conduct in the past.
Some submissions were made to me, particularly in response, about the size of the respondent's enterprise. I do not lose sight of the fact that he conducted the enterprise through a company which is now in liquidation but the fact is that he was the director, the senior manager and the shareholder of the company that carried on the business and so his involvement in the breaches was significant and substantial.
There is no real evidence before me about the size of the business, other than that it has failed, no longer exists and it was managed essentially by one person. The number of other employees is not really clear from the evidence but it seems on any view of it, that it was a relatively small enterprise.
I accept, however, the submissions of the applicant that the size of the enterprise is really not to the point. As Tracey J pointed out in Kelly v Fitzpatrick large employers and small employers alike are obliged to comply with the law and it has never been an excuse or an explanation for failure to comply with the law to suggest that one's enterprise is not very large. Employees of small enterprises, small organisations and small employers are just as entitled to the protection that the Workplace Relations Act offers as are employees of large organisations.
The respondent in this case says that his breaches were not deliberate. He says that really the breaches came about because he honestly relied on a document that was provided to him by the relevant union, which set out pay rates. His actions, however, seem to me to belie his words because once there was issue taken with the pay rates soon after Mr Towner's employment ceased, and there was a seeming acceptance by the respondent that something was astray, nothing was ever paid to Mr Towner. It seems to me that if the respondent was properly motivated to ensure that he complied with the law, then the underpayment would have been investigated more thoroughly by him and remedied well before now.
I am not satisfied that the respondent took appropriate action when the difficulty with Mr Towner's entitlements was brought to his attention and that difficulty has remained to today. In answer to my concern, he submits that if he had paid Mr Towner his due, he risked being punished twice. I do not understand that submission. One of the matters to be taken into account is that there has been no restitution to the employee in this case. In his submissions the respondent seeks that the penalty to be imposed upon him be sufficient to ensure that Mr Towner gets what he is entitled to but beyond that, he should be punished no more.
One wonders then, why those entitlements have not been paid well before now. As I say, I do not understand the submission that there was some confusion on his part or some concern not to be punished twice for the breach.
It is more indicative, it seems to me, of an unwillingness to accept the obligations cast on him as the employer or as the person controlling the employer in this case. There is some other evidence of that in the respondent's submissions. He says that he thought that Mr Towner would be taken care of – they are my words, not his – by the liquidator of the company. He says in particular:
“The respondent had not initially made good the underpayment as he had thought that this matter was dealt with during the winding up of the company through the liquidators.”
There is nothing in the submissions and no evidence about what occurred with the liquidators or Mr Towner's claim or the respondent's state of knowledge of that or the basis upon which he came to the conclusion that he says he came, namely that Mr Towner's claim was dealt with by the liquidator. That, it seems to me consistent with the notion that the respondent really was not interested in paying Mr Towner what he was due. Perhaps some clue to the source of that attitude might be found in paragraph five of the respondent's written submissions, namely:
“The respondent states that the reason for the termination of the employment by Mr Towner was that Mr Towner desired to establish his own business in competition with the respondent's company.”
I am not satisfied that the respondent is contrite. He has cooperated with the investigation but it has taken these proceedings for him to accept his obligations and responsibilities. It is something to be taken into account that he has not put the applicant to the trouble and expense of a trial and that these proceedings have been conducted efficiently.
It is important that minimum standards are complied with and, as I have already expressed, employees of small companies are just as much entitled to the protection of the Workplace Relations Act as employees of larger companies. General deterrence plays an important part in fixing the level of penalty that is imposed. I am not so sure about the relevance of specific deterrence in this case. There is little information before me to suggest what it is that the respondent is doing now or plans on doing in terms of operating businesses but there is a place for general deterrence. Employers generally need to be aware that they cannot simply underpay their employees and expect not to receive a penalty for such conduct.
I intend to assess a penalty in respect of each of the five breaches and then to aggregate those penalties to determine whether the totality principle demands that the penalty be reduced. I fix on a penalty for each of the five breaches of $2000 per breach but I will reduce that to $1600 per breach to take into account the respondent's cooperation with these proceedings and his admission of the facts upon which this application is based.
In aggregate that is a total penalty of $8000 which, in the circumstances of this case, seems to me to be appropriate. I am aware, through the respondent's submissions, that he is not in a particularly good financial position and I have taken that into account in determining the original penalty that I spoke of, of $2000 per breach.

I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of Jarrett FM

Associate: B Henderson

Date: 17 September 2009