Workplace Ombudsman v Saya Cleaning Pty Ltd
[2009] FMCA 38
•29 January 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WORKPLACE OMBUDSMAN v SAYA CLEANING PTY LTD & ANOR | [2009] FMCA 38 |
| INDUSTRIAL LAW – Penalty hearing – undefended – no wages or superannuation paid – 2 employees – deliberate conduct – previous contraventions – breaches of s.182(1) and 185(2) of the Workplace Relations Act 1996 (Cth) and clauses of NAPSA – penalty determined. |
| Workplace Relations Act 1996 (Cth), ss.3, 4(1), 182(1), 185(2), 714(4)(a), 718(1), 719(2), 728 and 841(a) Crimes Act 1914 (Cth) s.4AA |
| Attorney General v Tichy (1992) SASR 84 Principles of Sentencing, 2nd Ed (1979) |
| Applicant: | WORKPLACE OMBUDSMAN |
| First Respondent: | SAYA CLEANING PTY LTD |
| Second Respondent: | YOUSEF JELIL |
| File Number: | ADG 289 of 2007 |
| Judgment of: | Simpson FM |
| Hearing dates: | 14 April 2008, 13 May 2008 |
| Date of Last Submission: | 13 May 2008 |
| Delivered at: | Adelaide |
| Delivered on: | 29 January 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr SJ Dowd |
| Solicitors for the Applicant: | Piper Alderman |
| Counsel for the Respondent: | No appearance by or behalf of the respondent |
ORDERS
In relation to the first respondent:
(a)A penalty of $15,000 for contravention of s.182(1) of the Act in relation to the Ms Keny Iglesias;
(b)A penalty of $15,000 for contravention of s.185(2) of the Act in relation to Ms Keny Iglesias;
(c)A penalty of $15,000 for contravention of clause 6.4 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Ms Keny Iglesias.
(d)A penalty of $15,000 for contravention of clause 6.6.1 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Ms Keny Iglesias.
(e)A penalty of $15,000 for contravention of clause 5.9 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Ms Keny Iglesias.
(f)A penalty of $15,000 for contravention of clause 6.1.1 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Ms Keny Iglesias.
(g)A penalty of $25,000 for contravention of s.182(1) of the Act in relation to the Mr Helal Elbehidi;
(h)A penalty of $25,000 for contravention of s.185(2) of the Act in relation to Mr Helal Elbehidi;
(i)A penalty of $25,000 for contravention of clause 6.4 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Mr Helal Elbehidi.
(j)A penalty of $25,000 for contravention of clause 6.6.1 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Mr Helal Elbehidi.
(k)A penalty of $25,000 for contravention of clause 5.9 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Mr Helal Elbehidi.
(l)A penalty of $25,000 for contravention of clause 6.1.1 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Mr Helal Elbehidi.
In relation to the second respondent:
(a)A penalty of $3,000 for contravention of s.182(1) of the Act in relation to the Ms Keny Iglesias;
(b)A penalty of $3,000 for contravention of s.185(2) of the Act in relation to Ms Keny Iglesias;
(c)A penalty of $3,000 for contravention of clause 6.4 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Ms Keny Iglesias.
(d)A penalty of $3,000 for contravention of clause 6.6.1 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Ms Keny Iglesias.
(e)A penalty of $3,000 for contravention of clause 5.9 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Ms Keny Iglesias.
(f)A penalty of $3,000 for contravention of clause 6.1.1 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Ms Keny Iglesias.
(g)A penalty of $5,000 for contravention of s.182(1) of the Act in relation to the Mr Helal Elbehidi;
(h)A penalty of $5,000 for contravention of s.185(2) of the Act in relation to Mr Helal Elbehidi;
(i)A penalty of $5,000 for contravention of clause 6.4 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Mr Helal Elbehidi.
(j)A penalty of $5,000 for contravention of clause 6.6.1 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Mr Helal Elbehidi.
(k)A penalty of $5,000 for contravention of clause 5.9 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Mr Helal Elbehidi.
(l)A penalty of $5,000 for contravention of clause 6.1.1 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia in relation to Mr Helal Elbehidi.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADG 289 of 2007
| WORKPLACE OMBUDSMAN |
Applicant
And
| SAYA CLEANING PTY LTD |
First Respondent
| YOUSEF JELIL |
Second Respondent
REASONS FOR JUDGMENT
This is an application by the Workplace Ombudsman brought against the first respondent, Saya Cleaning Pty Ltd, the employer of Ms Keny Iglesias (“Ms Iglesias”) and Mr Helal Elbehidi (“Mr Elbehidi”), and the second respondent, Yousef Jelil, the sole director, company secretary and shareholder of the first respondent. The applicant alleges numerous breaches of provisions of the Workplace Relations Act 1996 (Cth) (“the Act”) by the first respondent. The applicant says that the second respondent was involved in the first respondent’s contraventions within the meaning of s.728 of the Act. The applicant seeks the imposition of penalties against the respondents and further orders against the first respondent that it pay the workers certain sums of money to ensure that they are not out of pocket as a result of its breaches.
The proceedings were commenced on 11 October 2007 by application supported by affidavit, and were served on the first and second respondents on 19 October 2007 and 7 November respectively. The matter first came on before the Court on 9 November 2007 at which time the second respondent informed the Court that he would be travelling to his country of birth, Iraq, in the next few days to visit family members. His mother had recently died and a brother was seriously ill.
With the agreement of the parties I proceeded to make trial and other directions for the future conduct of the matter that would allow the second respondent an appropriate period of time in Iraq. I listed the matter for trial on 14 April 2008, made orders for the filing of the respondents’ documents, and referred the matter to mediation. Neither respondent complied with any of the orders or has sought to play any further part in these proceedings.
As the respondents had not complied with the Court orders the matter was called on for directions on 11 March 2008. Counsel for the applicant indicated that the applicant wished the matter to proceed ex parte. The matter was listed for a penalty hearing on 14 April 2008 (the date originally set for trial) at which time the applicant presented its case and put submissions. Further submissions were put on 13 May 2008. The matter was then adjourned.
The matter was brought on again on 13 August 2008 at which time the applicant made oral application to have the Workplace Ombudsman substituted as applicant in place of the Workplace Inspector who had originally brought the proceedings. The respondents did not appear.
The applicant seeks the following final orders:
1.That pursuant to section 719(1) of the Workplace Relations Act 1996 (WR Act) the First Respondent pay to the Commonwealth penalties for the following breaches:
1.1a breach of section 182(1) of the WR Act by failing to pay Ms Keny Iglesias (Iglesias) a basic rate for pay for hours worked between 4 July 2006 and 20 July 2006 inclusive;
1.2a breach of section 185(2) of the WR Act by failing to pay Iglesias a casual loading for hours worked between 4 July 2006 and 20 July 2006 inclusive;
1.3a breach of clause 6.4 of the Notional Agreement Preserving State Awards derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia (NAPSA) by failing to pay a loading to Iglesias for hours worked on Saturday 8 July 2006, Sunday 9 July 2006, Saturday 15 July 2006 and Sunday 16 July 2006;
1.4a breach of clause 6.6.1 of the NAPSA by failing to pay a shift loading to Iglesias for hours worked on Tuesday 4 July 2006, Wednesday 5 July 2006, Thursday 6 July 2006, Friday 7 July 2006, Monday 10 July 2006, Tuesday 11 July 2006, Wednesday 12 July 2006, Thursday 13 July 2006, Friday 14 July 2006, Monday 17 July 2006, Tuesday 18 July 2006, Wednesday 19 July 2006 and Thursday 20 July 2006;
1.5a breach of clause 5.9 of the NAPSA by failing to make superannuation contributions for Iglesias in respect of her ordinary time earnings for the work she performed between 4 July 2006 and 20 July 2006 inclusive;
1.6a breach of clause 6.1.1 of the NAPSA by requiring Iglesias to work shifts on 17 consecutive days between 4 July 2006 and 20 July 2006 inclusive;
1.7a breach of section 182(1) of the WR Act for failing to pay Mr Jelil[1] Elbehidi (Elbehidi) a basic periodic rate of pay for hours worked between 27 March 2007 and 23 April 2007 inclusive;
[1] The employee’s correct name is Mr Helal Elbehidi
1.8a breach of section 185(2) of the WR Act by failing to pay Elbehidi a casual loading for hours worked between 27 March 2007 and 23 April 2007 inclusive;
1.9a breach of clause 6.4 of the NAPSA by failing to pay a loading to Elbehidi for hours worked on Saturday 31 March 2007, Sunday 1 April 2007, Friday 6 April 2007 (Good Friday), Saturday 7 April 2007, Sunday 8 April 2007, Monday 9 April 2007 (Easter Monday), Saturday 14 April 2007, Sunday 15 April 2007, Saturday 21 April 2007 and Sunday 22 April 2007;
1.10a breach of clause 6.6.1 of the NAPSA by failing to pay a shift loading to Elbehidi for hours worked on Tuesday 27 March 2007, Wednesday 28 March 2007, Thursday 29 March 2007, Friday 30 March 2007, Monday 2 April 2007, Tuesday 3 April 2007, Wednesday 4 April 2007, Thursday 5 April 2007, Tuesday 10 April 2007, Wednesday 11 April 2007, Thursday 12 April 2007, Friday 13 April 2007, Monday 16 April 2007, Tuesday 17 April 2007, Wednesday 18 April 2007, Thursday 19 April 2007, Friday 20 April 2007 and Monday 23 April 2007;
1.11a breach of clause 5.9 of the NAPSA by failing to make superannuation contributions for Elbehidi in respect to his ordinary time earnings for the work he performed between 27 March 2007 and 23 April 2007 inclusive;
1.12a breach of clause 6.1.1 of the NAPSA by requiring Elbehidi to work shifts on 28 consecutive days between 27 March 2007 and 23 April 2007 inclusive.
2.That pursuant to section 719(6) of the WR Act, the First Respondent pay to Eglesias $770.45, or such other sum as may be determined by the Court, being the amount the First Respondent was required to pay to her under section 182(1) and section 185(2) of the WR Act and clauses 6.4 and 6.61[2] of the NAPSA for the work referred to in paragraphs 1.1, 1.2, 1.3 and 1.4 hereof.
[2] Should be 6.6.1
3.That pursuant to section 719(7) of the WR Act, the First Respondent pay to Eglesias the amount of the superannuation contributions that the First Respondent was required to make in respect of the work referred to in paragraph 1.5 hereof.
4.That pursuant to section 722 of the WR Act, the First Respondent pay to Iglesias interest at such rate or in such sum as the Court shall think fit in respect of the amounts ordered to be paid to Iglesias by the First Respondent.
5.That pursuant to section 719(6) of the WR Act, the First Respondent pay to Elbehidi $3,072.15 or such other sum as may be determined by the Court, being the amount the First Respondent was required to pay to him under section 182(1) and section 185(2) of the WR Act and clauses 6.4 and 6.61 of the NAPSA for the work referred to in paragraphs 1.6, 1.7, 1.8 and 1.9 hereof.
6.That pursuant to section 719(7) of the WR Act, the First Respondent pay to Elbehidi the amount of the superannuation contributions that the First Respondent was required to make in respect to his ordinary time earnings for the work referred to in paragraph 1.10 hereof.
7.That pursuant to section 722 of the WR Act, the First Respondent pay to Elbehidi interest at such rate or in such sum as the Court shall think fit in respect of the amounts ordered to be paid to Elbehidi by the First Respondent.
8.That pursuant to section 719(1) of the WR Act, the Second Respondent pay to the Commonwealth penalties for the following breaches in which the Second Respondent was involved within the meaning of section 728 of the WR Act;
8.1a breach of section 182(1) of the WR Act by failing to pay Iglesias a basic periodic rate of pay for hours worked between 4 July 2006 and 20 July 2006 inclusive;
8.2a breach of section 185(2) of the WR Act by failing to pay Iglesias a casual loading for hours worked between 4 July 2006 and 20 July 2006 inclusive;
8.3a breach of clause 6.4 of the NAPSA by failing to pay a loading to Iglesias for hours worked on Saturday 8 July 2006, Sunday 9 July 2006, Saturday 15 July 2006 and Sunday 16 July 2006;
8.4a breach of clause 6.6.1 of the NAPSA by failing to pay a shift loading to Iglesias for hours worked on Tuesday 4 July 2006, Wednesday 5 July 2006, Thursday 6 July 2006, Friday 7 July 2006, Monday 10 July 2006, Tuesday 11 July 2006, Wednesday 12 July 2006, Thursday 13 July 2006, Friday 14 July 2006, Monday 17 July 2006, Tuesday 18 July 2006, Wednesday 19 July 2006 and Thursday 20 July 2006;
8.5a breach of clause 5.9 of the NAPSAS by failing to make superannuation contributions for Iglesias in respect of her ordinary time earnings for the work she performed between 4 July 2006 and 20 July 2006 inclusive;
8.6a breach of section 182(1) of the WR Act by failing to pay Elbehidi a basic periodic rate of pay for hours worked between 27 march 2007 and 23 April 2007 inclusive;
8.7a breach of section 185(2) of the WR Act by failing to pay Elbehidi a casual loading for hours worked between 27 march 2007 and 23 April 2007 inclusive;
8.8a breach of clause 6.4 of the NAPSA by failing to make payment to Elbehidi for time worked on Saturday 31 March 2007, Sunday 1 April 2007, Friday 6 April 2007 (Good Friday), Saturday 7 April 2007, Sunday 8 April 2007, Monday 9 April 2007 (Easter Monday), Saturday 14 April 2007, Sunday 15 April 2007, Saturday 21 April 2007 and Sunday 22 April 2007;
8.9a breach of clause 6.6.1 of the NAPSA by failing to pay a shift loading to Elbehidi for hours worked on Tuesday 27 March 2007, Wednesday 28 March 2007, Thursday 29 March 2007, Friday 30 March 2007, Monday 2 April 2007, Tuesday 3 April 2007, Wednesday 4 April 2007, Thursday 5 April 2007, Tuesday 10 April 2007, Wednesday 11 April 2007, Thursday 11 April 2007, Friday 13 April 2007, Monday 16 April 2007, Tuesday 17 April 2007, Wednesday 18 April 2007, Thursday 19 April 2007, Friday 20 April 2007 and Monday 23 April 2007;
8.10a breach of clause 5.9 of the NAPSA by failing to make superannuation contributions for Elbehidi in respect of his ordinary time earnings for the work he performed between 27 march 2007 and 23 April 2007 inclusive.
The applicant relied on the following material:
a)Affidavit of Kevin Robert Moffatt filed 14 February 2008 (“Exhibit A1”);
b)Affidavit of Dean Clark Bowen filed 14 February 2008 (“Exhibit A2”);
c)Affidavit of Kevin Robert Moffatt filed 3 March 2008 (“Exhibit A3”);
d)Affidavit of Helal Elbehidi filed 1 April 2008 (“Exhibit A4”);
e)Affidavit of David Gregory Ey filed 7 April 2008 (“Exhibit A5”);
f)Affidavit of Marisa Sophia Salandra filed 8 April 2008 (“Exhibit A6”);
g)Affidavit of Marisa Sophia Salandra filed 11 October 2007 (“Exhibit A7”); and
h)Affidavit of Helal Elbehidi filed 21 April 2008 (“Exhibit A8”).
Background
The applicant has established that in 2006 and 2007 the first respondent ran a business providing cleaning services of commercial premises. Between 4 and 20 July 2006 the respondent employed Ms Keny Iglesias as a cleaner. Between 27 March and 23 April 2007 the respondent employed Mr Helal Elbehidi as a cleaner. Both Ms Iglesias and Mr Elbehidi (jointly “the employees”) worked a substantial number of shifts for the first respondent but were both paid nothing. In addition they were not paid their superannuation entitlements.
The evidence shows that in relation to both employees:
a)they were employed as casuals;
b)they were covered by a preserved Australian Pay and Classification Scale (“APCS”) derived from a Notional Agreement Preserving State Awards (“NAPSA”) which was itself derived from the Caretakers and Cleaners Award of the Industrial Relations Commission of South Australia (“Cleaners Award”) at the classification of Cleaner Grade 1;
c)they were entitled to be paid by the first respondent in accordance with the Australian Fair Pay and Conditions Standard (“AFPCS”), and in particular, pursuant to the guaranteed basic periodic rate of pay pursuant to s.182(1) of the Act and a guaranteed casual loading pursuant to s.185(2) of the Act;
d)the first respondent was at all times bound to comply with the terms of the NAPSA;
e)the work that they performed attracted payment entitlements under:
i)clause 5.9 of the NAPSA in relation to superannuation;
ii)clause 6.4 of the NAPSA in relation to work on Saturdays and Sundays; and
iii)clause 6.6.1 of the NAPSA in relation to work performed between 5:30 pm and 7:30 am on the following day, except Saturdays and Sundays;
f)the first respondent has not made any payment for work performed. It should have paid Ms Iglesias a total of $770.45 gross and Mr Elbehidi a total of $3,072.15 gross for the periods that each worked. It has thereby breached s.182(1) and s.185(2) of the Act and cls.6.4 and 6.6.1 of the NAPSA;
g)by failing to pay the employees their superannuation entitlements the first respondent has breached cl.5.9 of the NAPSA;
h)the first respondent was required to comply with cl.6.1.1 of the NAPSA (which limited the number of consecutive days that an employee can be required to work) but in contravention of that clause required the employees to work more than 6 shifts per week in the case of Ms Iglesias (as is shown in Table 1 in the annexure to these reasons) and 5 shifts per week in the case of Mr Elbehidi (as is shown in Table 2 in the annexure to these reasons).
The second respondent was, within the meaning of s.728 of the Act, involved in each of the said contraventions committed by the first respondent because he was, by act or omission, directly or indirectly, knowingly concerned in each of the contraventions. He is therefore to be treated as having contravened the same provisions as the first respondent has contravened.
Clause 43 of sch.8 of the Act provides that a NAPSA may be enforced as if it were a collective agreement and that a Workplace Inspector (which includes the Workplace Ombudsman) has the same functions and powers in relation to a NAPSA as he or she has in relation to a collective agreement. Section 718(1) provides that a Workplace Inspector may apply for a penalty in respect of a breach of a term of a collective agreement.
The relevant clauses of the NAPSA (clauses 5.9.1; 6.1; 6.4 and 6.6.1 follow:
CLAUSE 5.9 SUPERANNUATION
5.9.1 Definitions
5.9.1.1 The Fund shall mean:
(a) the Australian Retirement Fund (ARF), OR
(b) an Approved Fund which complies with the Superannuation Industry (Supervision) Act 1993 as amended from time to time, and any scheme which may be made in succession thereto.
5.9.1.2 Ordinary time earnings means:
(a) Award classification rate;
(b) over-Award payment;
(c) shift loading, including weekend and public holiday penalty rates earned by shift employees on normal rostered shifts forming the ordinary hours of duty not when worked as overtime;
5.9.1.3 Ordinary time earnings does not include bonuses, commission, payment for overtime or other extraordinary payment, remuneration or allowance.
5.9.2 Superannuation legislation
The subject of superannuation contributions is dealt with extensively by legislation including the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Guarantee Charge Act 1992 and the Superannuation Industry.
5.9.3 Employer contributions
An employer will make contributions for an employee in accordance with the legislative requirements referred to in 5.9.2. These contributions will be based on the employee’s ordinary time earnings.
5.9.4 Voluntary employee contributions
5.9.4.1 Employees who may wish to make contributions to the Fund additional to those being paid by the employer pursuant to clause 5.9.3 shall be entitled to authorise the employer to pay into the Fund from the employee’s wages amounts specified by the employee.
5.9.4.2 Upon such authorisation, the employer shall be required to make the deduction and forward it to the Fund.
5.9.4.3 Employee contributions to the Fund requested under these clauses shall be subject to the following conditions:
(a) The amount of the contribution shall be expressed in whole dollars.
(b) After the first contribution, the amount of the contribution shall only be adjusted from the first full pay period in July each year.
PART 6 – HOURS OF WORK, BREAKS, OVERTIME, SHIFT WORK, WEEKEND WORK AND PUBLIC HOLIDAY WORK
CLAUSE 6.1 ORDINARY HOURS OF WORK
6.1.1 Cleaners
6.1.1.1 In the case of cleaners employed at retail shops a maximum average of 38 per week to be worked in five shifts per week or in six shifts per week of which one shift is not more than three hours or; a maximum of 76 per fortnight to be worked in eleven shifts provided that not more than six shifts shall be worked in any week.
CLAUSE 6.4 SATURDAY, SUNDAY AND PUBLIC HOLIDAYS FOR CLEANERS
6.4.1 Cleaners employed at retail shops
For all time worked within the weekly hours prescribed by clause 6.1 on a Saturday before 12.00 pm shall be paid at the rate of time and a quarter, and for all time worked after 12.00 pm on a Saturday at the rate of time and a half.
6.4.2 In addition to the rates prescribed by this clause an employee shall paid the sum of 35 cents for each Saturday so employed.
6.4.3 All time worked by cleaners on a Sunday shall be paid for at the rate of double time.
6.4.4 All time worked by cleaners on a public holiday shall be paid at the rate of two and one half times the rate ordinarily applicable.
CLAUSE 6.6.1 AFTERNOON AND NIGHT SHIFT WORK FOR CLEANERS
6.6.1 For all time worked between 5.30 pm and 7.30 pm (on the following day), the ordinary hourly rates as prescribed in S1.4 of Schedule 1 shall be increased by an amount equivalent to 30% of the full-time ordinary hourly rate.
The first respondent has contravened the six provisions referred to on numerous occasions during the employees’ periods of employment. I find that the breaches of each provision in relation to each employee were pursuant to courses of conduct in relation to each employee not to pay either of them anything. There will therefore be a total of 12 penalties imposed on the first respondent: 6 in relation to Ms Iglesias and 6 in relation to Mr Elbehidi. For the reasons stated earlier there will also be 12 penalties imposed on the second respondent.
I find that the amounts that each of the employees should have been paid and the basis for those amounts is as detailed in Table 1 and Table2 in the annexure to these reasons.
Factors relevant to penalty
I turn now to the question of penalty. The only material and submissions that I have before me are on behalf of the applicant. On the material before me I consider it appropriate to impose penalties for breaches of the Act and the NAPSA. I acknowledge that my reasons for imposing the penalties rely heavily on the submissions put on behalf of the applicant.
A non-exhaustive list of the factors relevant to the imposition of a penalty under the Act has been summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 at paras.[26]-[59], as follows:
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 had 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 taken corrective action;
j)whether the party committing the breach had cooperated with the enforcement authorities;
k)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
l)the need for specific and general deterrence.
This summary was adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080, [14]. While the summary is a convenient checklist, it does not prescribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion: Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550, [11]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 [91] of Buchanan J and (2008) 246 ALR 35.
Each of the factors identified in Pangaea is addressed in turn below.
Nature and extent of the conduct
The broad ranging nature of the applicable provisions which form the subject of the contraventions reveals the respondents’ disregard for the statutory obligations imposed by the Act. The breaches would have continued had not each of the employees decided to terminate their employment with the first respondent.
Circumstances in which the conduct took place
Ms Iglesias was 18 years of age at the time of the contraventions concerning her. Mr Elbehidi was a person who had newly arrived in Australia from Iraq. It is reasonable to conclude that he had limited experience both of working in Australia and of his legal entitlements. Both employees were vulnerable employees. The vulnerability of these employees and the way they were exploited by the respondents is a significant factor when assessing the quantum of penalty: Cotis v Pow Juice Pty Ltd [2007] FMCA 140 at [57-58]; Jones v Hanssen Pty Ltd [2008] FMC 291 at [8].
Nature and extend of loss or damage
Neither employee was paid anything for their work. Ms Iglesias should have been paid $770.45 plus superannuation. Mr Elbehidi should have been paid $3,072.15 plus superannuation. I believe that the sums that each of these employees lost as a result of the first respondent’s conduct would have been a significant blow to each. Neither respondent has made any attempt to rectify the underpayments. Both employees remain out of pocket.
Similar previous conduct
The contraventions which are the subject of the present proceedings are not the first time that the Workplace Ombudsman has investigated non-compliance with the Act by the first respondent. Representatives of the Workplace Ombudsman investigated complaints by 5 employees of the first respondent in the first half of 2006 after which they met with the second respondent and fully explained the first respondent’s legal obligations under the Act, regulations and NAPSA. The first respondent made good the 5 employees wages and the Workplace Ombudsman decided to take no further legal action. The second respondent was warned that if there was a repetition there would likely be legal action taken by the Workplace Ombudsman. Whilst I acknowledge that the second respondent’s meeting with representatives of the Workplace Ombudsman (1 August 2006) was after Ms Iglesias’ period of employment (4 to 20 July 2006) it is a serious matter that the respondents took no steps to pay Ms Iglesias her entitlements after finding out the serious consequences of non-compliance with the Act and, in relation to Mr Elbehidi, embarked on a course of similar conduct between 27 March and 23 April 2007.
Whether the breaches arose out of the one course of conduct
Each term was breached repeatedly by the respondents in respect of both employees. The applicant accepts as they must that the respondents have the benefit of s.719(2) of the Act in relation to repeated breaches of a term of the NAPSA or AFPCS concerning Ms Iglesias. Similarly the applicant accepts that the respondents have the benefit of s.719(2) of the Act in relation to repeated breaches of a term of the NAPSA or AFPCS concerning Mr Elbehidi.
The applicant does not accept that s.719(2) has any application to group the contraventions by the respondents concerning Ms Iglesias and Mr Elbehidi. It was submitted that the employees were engaged at quite different periods of time, such that the contraventions, whilst similar, did not arise out of the same course of conduct. I agree (see McIver v Healey [2008] FCA 425).
The multiple breaches of each applicable term by the first respondent concerning Ms Iglesias occurred as part of the one course of conduct. The respondents have the benefit of s.719(2) of the Act in relation to repeated breaches of a term of the NAPSA or AFPCS. There was a separate course of conduct by the first respondent in relation to Mr Elbehidi.
Size and financial circumstances of the business
The first respondent is a small company and, I infer, has very few if any assets. However as Justice Tracey said in Kelly v Fitzpatrick (supra):
“No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does not it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction must be imposed at a meaningful level.”
In Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at paras.27 to 29 it was said:
“Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to a Court’s consideration of penalty.”
Notwithstanding financial hardship that an employer may be experiencing Lynch v Buckley Sawmills Pty Ltd (1984) 3 FCR 503, 508 Keely J said:
“In this connection it is important that the respondent – and other employers bound by the award or by other awards under the Act – understand the importance of complying with an award and it follows that any decision taken by them which is regarded as affecting their obligations to comply with particular provisions of the award or the award generally should only be taken after careful consideration. They must not be left under the impression that in times of financial difficulty they can breach an award made under the Act either with impunity or in the belief that no substantial penalty will be imposed in respect of a breach found by a court to have been committed.”
In PKIU and Others v Vista Paper Products Pty Ltd and Another (1994) 127 ALR 673 Wilcox CJ, in penalising both a company in receivership and its bankrupt controlling director said:
“While this evidence suggests that both Vista and Mr McNamee may have difficulty in paying penalties, I do not think I should allow it to deflect me from imposing whatever penalties are otherwise appropriate.”
Driver FM said in Cotis v MacPherson [2007] FMCA 2060 [12]; (2007) 169 IR 30:
“It is, in my view, important to make the point that employers should not and cannot regard insolvency, either personal or corporate, as a refuge from their responsibilities under the Workplace Relations Act.”
The penalties that I propose to impose will take into account what was said in these cases.
Deliberateness of the breaches
There is no doubt that the breaches in relation to Mr Elbehidi’s employment were entirely deliberate. As previously referred to, the respondents were fully informed by representatives of the applicant about their rights and obligations arising under the Act. The respondents nevertheless subsequently breached the Act in relation to Mr Elbehidi. The breaches in relation to Ms Iglesias were in my opinion entirely deliberate. Although the second respondent may not have then been fully aware of the obligations in the Act he clearly knew that Ms Iglesias was entitled to payment for her services.
Involvement of senior management
At all material times the second respondent was the sole director and company secretary of the first respondent. He had the day to day running of the business. He was the decision maker.
Contrition, corrective action, co-operation with the authorities
Neither of the respondents has exhibited any contrition at any stage of these proceedings. Instead they have shown a cavalier attitude towards the statutory obligations and the role of the Workplace Ombudsman as an enforcement agency.
Neither of the respondents has taken any corrective action at any stage of these proceedings. Whilst the second respondent at one stage wrote out a cheque for the sum owing to Ms Iglesias, he has admitted that cancelled that cheque prior to Ms Iglesias having the opportunity to bank it.
The respondents have demonstrated only minimal cooperation with the Office of the Workplace Ombudsman. The applicant has been required to undertake significant work incurring additional expenditure of time and money in order to locate the second respondent to effect service and attempt to communicate with him.
Neither of the respondents has filed a Response. Neither of the respondents attended the Court-appointed mediation in this matter. The applicant has thereby been required to prove all aspects of its case and consequently incurred avoidable resource and money costs.
As suggested earlier in these reasons, if the first respondent wished to demonstrate contrition, then after the applicant’s first investigation into its non-compliance it might have paid Ms Iglesias what she was owed and ensured that in future no other employee was underpaid.
Ensuring compliance with minimum standards
In considering the appropriate penalties I take into account what Tracey J said in Kelly v Fitzpatrick (supra):
“One of the principal objects of the Act is the maintenance of a safety net of minimum terms and conditions of employment and effective enforcement of the obligations imposed by Awards and other industrial instruments. To this end the Act makes provision for the investigation of alleged breaches where it is established that breaches have occurred. As already noted, those penalties were significantly increased by parliament in 2004.”
Specific and general deterrence
The penalty in this matter must reflect the need for general deterrence, and in the case of the second respondent particularly, specific deterrence.
As there has been no demonstration of contrition or remorse on behalf of either respondent the need for specific deterrence is high: Australian Ophthalmic Supplies Pty Ltd (supra) [17]; Fryer v Yoga Tandoori House Pty Limited [2008] FMCA 288 [35].
As has been detailed earlier in these reasons, the second respondent was aware of his and the first respondent’s obligations. There is nothing to indicate that if in the future the second respondent had another business there would not be a repetition of the conduct here complained of. Penalties at the higher end of the scale are called for.
In Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [93] Lander J summarised the purpose of imposing penalties for breaches of the Act as follows:
“There are three purposes at least for imposing a penalty: punishment; deterrence; and rehabilitation. The punishment must be proportionate to the offence and in accordance with the prevailing standards of punishment: R v Hunter (1984) 36 SARC 101 at 103. Therefore the circumstances of the offence or contravention are especially important. The penalty must recognise the need for deterrence, both personal and general. In regard to personal deterrence, an assessment must be made of the risk of re-offending. In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. IF the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217. In some cases, although hardly in this type of contravention, rehabilitation is an important factor.”
In Kelly v Fitzpatrick (supra), his Honour referred with approval to the comments of Finkelstein J in CPSU v Telstra Corporation Limited (2001) 108 IR 228 at 231 where his Honour said:
“Even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law’s disapproval of the conduct in question, and act as a warning to others not to engage in similar conduct.”
Notwithstanding the fact that the parties in Carr v CEPU and Anor [2007] FMCA 1526 had agreed the proposed penalties in advance, the Court still had to assess them for their appropriateness. In doing so it had to have regard to all relevant considerations, one of which was deterrence. It said at [29]:
“General and specific deterrence are significant considerations given that deterrence is a primary objective if imposing penalties. It is necessary for deterrence to be both specific and general. Specific deterrence relates to the need to deter a contravener from further contravention of the BCII Act, whilst general deterrence refers to the need to deter others from contravening the BCII Act by showing the seriousness with which the Court considers the contraventions. The penalties must be meaningful and consistent with other considerations to be taken into account in determining an appropriate penalty.”
This approach was cited with approval in Jones v Hanssen Pty Ltd (supra) at [24-25] where Lucev FM described it as capable of being adapted to the Act context.
I take note that the principal object of the Act is to provide a framework for cooperative workplace relations which promotes the economic prosperity and welfare of the people of Australia. (See s.3 of the Act). This principal object is to be achieved by, amongst other things:
a)providing an economically sustainable safety net of minimum wages and conditions for those whose employment is regulated by the Act; and
b)ensuring compliance with minimum standards, industrial instruments and bargaining processes by providing effective means for the investigation and enforcement of employee entitlements and the rights and obligations of employers and employees.
The need for general deterrence is particularly high in industries such as those operated here where often young, low paid, vulnerable workers are frequently engaged: Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412.
Penalty
Section 714(4)(a) of the Act prescribes that the maximum penalty in the case of an individual is 60 penalty units, and for a body corporate 300 penalty units. Section 4(1) of the Act provides that “penalty unit” has the same meaning as in the Crimes Act 1914 (Cth). Section 4AA of the Crimes Act defines “penalty unit” to be $110. The maximum penalty that may be imposed by the Court for breach of a term of a NAPSA or AFPCS is therefore $6,600 by an individual and $33,000 for a body corporate. These maximum penalties were in force during the whole of the employees’ employment.
Earlier in these reasons I found that there have been 12 separate breaches of applicable terms by each of the respondents. Accordingly, the maximum total penalty that I can impose in this matter is $396,000.00 in relation to the first respondent and $79,200.00 in relation to the second respondent.
I consider the breaches in relation to Mr Elbehidi to be more serious than those relating to Ms Iglesias: they occurred after representatives of the Workplace Ombudsman had spent time with the second respondent explaining the first respondent’s legal obligations. In addition these contraventions occurred over a longer period and resulted in the employee losing a greater sum of money.
I consider an appropriate penalty for each of the 6 contraventions concerning Ms Iglesias is $15,000 for the first respondent and $3,000 in relation to the second respondent. The total penalty in relation to the contraventions regarding the employee Ms Iglesias is therefore $90,000 in relation to the first respondent and $15,000 in relation to the second respondent.
In relation to the 6 contraventions concerning Mr Elbehidi I consider the appropriate penalty to be $25,000 for each contravention by the first respondent and $5,000 for each contravention by the second respondent. The total penalty in relation to the contraventions regarding the employee Mr Elbehidi is therefore $125,000 in relation to the first respondent and $30,000 in relation to the second respondent.
I have considered whether the aggregate of the penalties is just and appropriate in the circumstances appertaining to the offending conduct and the offender (see Australian Competition and Consumer Commission v Australian Safeway Stores Pty Limited (No 4) [2006] ATPR 42-101 at 82, 83. In R v Rossi (1988) 142 LSJS 451, 453, King CJ referred to the totality principle saying that where the total effect of the sentences merited by the individual crimes becomes so crushing, the merciful intervention of the Court may be warranted in order to reduce the total effect.
In Wong v The Queen (2001) 207 CLR 584, 611, Gaudron, Gummow and Hayne JJ said:
“… the task of the sentencer is to take account of all of the relevant factors and to arrive at a single result which takes due account of them all. That is, what is meant by saying that the task is to arrive at an ‘instinctive synthesis’.”
In Markarian v The Queen (2005) 228 CLR 357, Gleeson CJ, Gummow, Hayne and Callinan JJ approved the proposition in Wong that a mathematical approach of adding or subtracting increments or decrements from a predetermined range of sentences should not be adopted.
In a separate and not dissenting judgment McHugh J said (p.378):
“By instinctive synthesis, I mean the method of sentencing by which the judge identifies all the factors that are relevant to the sentence, discusses their significance and then makes a value judgment as to what is the appropriate sentence given all the factors of the case. Only at the end of the process does the judge determine the sentence.”
He went on to say (p.387):
It recognises that, where a variety of considerations, often ending in opposing directions, operate in the context of a statutory maximum, there must be a synthesising of the relevant factors. In that process, greater and lesser weight will be allocated to some factors depending on their relevance to the person convicted and his or her crime.
Understood in this way the ‘instinctive synthesis’ approach was applied in Australian Ophthalmic Supplies Pty Ltd (supra) by both Graham J [555], [78] and Gray at [27-28].
I have satisfied myself taking into account all of the above factors that the penalties are just and appropriate.
Conclusion
The applicant seeks an order under s.841(a) of the Act that any penalty imposed on the respondents be paid within 60 days of the date of judgment as follows:
·$770.45 plus superannuation plus interest to Ms Iglesias; and
·$3,072.15 plus superannuation plus interest to Mr Elbehidi;
·the remainder payable to the Commonwealth.
There are difficulties in making the orders sought. I propose to give the applicant the opportunity of addressing me further on the topic of the orders for payment.
There will be orders in terms of the orders to be found at the beginning of these reasons.
I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of Simpson FM
Associate: Julie Davey
Date: 29 January 2009
ANNEXURE
Table 1
Wage rates for Keny Iglesias
| Date | Day | Span of Hours | Total Hours | Guaranteed entitlement calculation | Guaranteed entitlement sum |
| 4/7/2006 | Tuesday | 6:30 – 8:30 | 2 | (16.5x1)+30%+16.5x1 | $ 37.95 |
| 5/7/2006 | Wednesday | 6:00 – 8:00 | 2 | (16.5x1.5)+30%16.5x0.5 | $ 40.43 |
| 6/7/2006 | Thursday | 5:30 – 8:00 | 2.5 | (16.5x2)+30%+16.5x 0.5 | $ 51.15 |
| 7/7/2006 | Friday | 5:30 – 7:30 | 2 | (16.5x2)+30% | $ 42.90 |
| 8/7/2006 | Saturday | 5:30 – 7:30 | 2 | (16.5+4.13)x2+$0.35 | $ 41.61 |
| 9/7/2006 | Sunday | 9:00 – 11:00 | 2 | (16.5x2)x2 | $ 66.00 |
| 10/7/2006 | Monday | 6:00 – 8:00 | 2 | (16.5x1.5)+30%+16.5xo.5 | $ 40.43 |
| 11/7/2006 | Tuesday | 6:30 – 8:30 | 2 | (16.5x1)+30%+16.5x1 | $ 37.95 |
| 12/7/2006 | Wednesday | 6:00 – 8:00 | 2 | (16.5x1.5)+30%+16.5x0.5 | $ 40.43 |
| 13/7/2006 | Thursday | 5:30 – 8:00 | 2.5 | (16.5 x 2)+30%+16.5x0.5 | $ 51.15 |
| 14/7/2006 | Friday | 5:30 – 7:30 | 2 | (16.5x2)+30% | $ 42.90 |
| 15/7/2006 | Saturday | 5:30 – 7:30 | 2 | (16.5+4.13)x2+$0.35 | $ 41.61 |
| 16/7/2006 | Sunday | 9:00 – 11:00 | 2 | (16.5x2)x2 | $ 66.00 |
| 17/7/2006 | Monday | 6:00 – 8:00 | 2 | (16.5x1.5)+30%+16.5x0.5 | $ 40.43 |
| 18/7/2006 | Tuesday | 6:00 – 8:00 | 2 | (16.5x1.5)+30%+16.5x0.5 | $ 40.43 |
| 19/7/2006 | Wednesday | 6:00 – 8:00 | 2 | (16.5x1.5)+30%+16.5+0.5 | $ 40.43 |
| 20/7/2006 | Thursday | 6:00 – 8:30 | 2.5 | (16.5x1.5)+30%+16.5x1 | $ 48.68 |
| Total | $770.45 (Gross) |
Annexure
Table 2
Wage rates for Helal Elbehidi
| Date | Day | Time (am) | Hours | Award Calculation | Total |
| 27/03/2007 | Tuesday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 28/03/2007 | Wednesday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 29/03/2007 | Thursday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 30/03/2007 | Friday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 31/03/2007 | Saturday | 7:30pm – 12:30am | 5 | ($14.50+20%+50%)x5+$0.35 | $ 130.85 |
| 1/04/2007 | Sunday | 10:00pm – 12:00am | 2 | ($14.50+20%+100%)x2 | $ 69.60 |
| 2/04/2007 | Monday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 3/04/2007 | Tuesday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 4/04/2007 | Wednesday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 5/04/2007 | Thursday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 6/04/2007 | Friday | 7:30pm – 12:30am | 5 | ($14.50+20%+ 50%)x5 | $ 217.50 |
| 7/04/2007 | Saturday | 10:00pm – 12:00am | 2 | ($14.50+20%+150%)x2 | $ 87.00 |
| 8/04/2007 | Sunday | 10:00pm – 12:00am | 2 | ($14.50+20%+100%)x2 | $ 69.60 |
| 9/04/2007 | Monday | 7:30pm – 12:30am | 5 | ($14.50+20%+150%)x5 | $ 217.50 |
| 10/04/2007 | Tuesday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 11/04/2007 | Wednesday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 12/04/2007 | Thursday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 13/04/2007 | Friday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 14/04/2007 | Saturday | 10:00pm – 12:00am | 2 | ($14.50+20%+50%)x2+$0.35 | $ 52.55 |
| 15/04/2007 | Sunday | 10:00pm – 12:00am | 2 | ($14.50+20%+100%)x2 | $ 69.60 |
| 16/04/2007 | Monday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 17/04/2007 | Tuesday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 18/04/2007 | Wednesday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 19/04/2007 | Thursday | 7:30pm – 12:30am | 5 | ($14.50+20%+30%)x5 | $ 113.10 |
| 20/04/2007 | Friday | 7:30pm – 12:30am | 5 | ($14.50+20%+ 30%)x5 | $ 113.10 |
| 21/04/2007 | Saturday | 10:00pm – 12:00am | 2 | ($14.50+20%+50%)x2+$0.35 | $ 52.55 |
| 22/04/2007 | Sunday | 10:00pm – 12:00am | 2 | ($14.50 20%+100%)x2 | $ 69.60 |
| 23/04/2007 | Monday | 10:00pm – 12:00am | 2 | ($14.50+20%+30%)x5 | $ 113.10 |
| Total | $3,072.15 |
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