The Industrial Magistrate has imposed penalties totalling $2,500 on an employer who was found to have failed to pay his employee annual leave and payment in lieu of notice.

Reasons for decision

By Reasons for decision delivered on 12 February 2021, the employer was found to have contravened the Minimum Conditions of Employment Act 1993 (WA) (MCE Act) by failing to pay his employee annual leave. The employer was also found to have contravened s 117 of the Fair Work Act 2009 (Cth) (FW Act) by failing to pay his employee payment in lieu of notice.

The employer was ordered to pay a total of $10,576.50 to the employee.

The decision can be read here.

Supplementary Reasons for decision

Industrial Magistrate Hawkins noted that the relevant penalty provision for unpaid annual leave under the MCE Act is s 83(4)(a)(ii) of the Industrial Relations Act 1979 (WA) (IR Act), and contraventions in respect to payment in lieu of notice is subject to the FW Act.

The employee submitted that a total of $4,150 in penalties was proportionate to the overall offending and the loss to him. He contended that a mid-way penalty was appropriate in respect to the breach under the IR Act, and in respect to the breach under the FW Act, it was submitted that the type of penalty fell within 25% of the maximum.

The employee argued that the employment was for a relatively long period, the totality of the loss suffered by him was substantial compared to his annual earnings, the employer had not shown remorse or contrition, and no payments had had been made to him yet.

The employer submitted that no penalties should be imposed. He argued that the failure to pay accrued annual leave resulted from a mistaken belief that the employee had been engaged as an independent contractor. He also contended that there was no evidence of refused requests to pay annual leave and there was no need for specific or general deterrence as the employer’s business was small and this was a one-off event.

Hawkins IM noted that several considerations were significant in assessing penalties in this case. These included:

• It was conceded by the employee that the contravention of the MCE Act and FW Act were single contraventions;
• The dispute primarily arose due to the employer’s ignorance of the law. However, ignorance and complacency of the law affords no mitigation;
• Although the behaviour of the employer could be characterised as deliberate, Her Honour was not satisfied that it arose because of a more sinister motive, rather than sheer complacency;
• There was no evidence that the employer exploited or profited from any exploitation;
• Specific deterrence is low as the employer operates a small business with no current employees; and
• The offending is properly characterised as falling in the low range, but the amounts unpaid were not insignificant and thus a caution is not appropriate nor is imposing no penalty appropriate.

Her Honour found that, having regard to principles of totality, imposing penalties in the sum of $2,500 was appropriate. She also awarded a sum of $1,544.69 in interest.

The decision can be read here.