Penalties imposed on finance company for failure to pay employee entitlements

The Industrial Magistrate has imposed penalties totalling $53,000 on a finance company and its director for a failure to pay an employee entitlements under the Banking, Finance and Insurance Award 2010 (Cth) (Award).


On 13 June 2019, Industrial Magistrate Scaddan found that the First Respondent, the finance company, contravened the Fair Work Act 2009 (Cth) (Act) by:

  • failing to pay the claimant, the employee, an amount under the Award; and
  • failing to comply with the National Employment Standards (NES), and in doing so, contravening a civil remedy provision in failing to pay the amount.

Further, the First Respondent was found to have contravened the Award by failing to provide copies of the Award and the NES to the claimant, as well as failing to comply with the Fair Work Regulations 2009 (Cth) by not keeping and maintaining certain prescribed records of employment.

On appeal, the Second Respondent, the director, was found to be involved in, and liable for, the First Respondent’s contraventions of the Act comprising of the failures to pay the claimant his entitlements under the Award and NES. However, he was not found to be involved in, or liable for, the First Respondent’s failure to provide copies of the Award and the NES, and its failure to keep certain employment records.

Following the claimant’s successful appeal to the Federal Court of Australia, the question of penalties was remitted back to the Industrial Magistrates Court for further hearing and determination.

Further Reasons for decision

The claimant contended that the respondents’ conduct was a deliberate exploitation of a young employee, that they lacked contrition, failed to cooperate with the claimant when he raised concerns, and that they profited from the contraventions. He proposed a penalty of $115,000 for the First Respondent and $17,000 for the Second Respondent.

The respondents contended that they did not profit from its contraventions, have no prior contraventions, that the contraventions were not deliberate, that they had demonstrated contrition, and had made a payment for the sum ordered following the decision at first instance. They proposed a penalty of $25,000 for the First Respondent and $5,000 for the Second Respondent.

Industrial Magistrate Scaddan noted that the following considerations were significant in assessing penalties in this case. These included:

  • Her Honour did not accept the sinister character of the failures attributed by the claimant, and there was no evidence that the respondents profited from its contraventions;
  • The respondents have not been found to have previously contravened the Act;
  • The circumstances surrounding the respondents’ failures demonstrate some reliance by the Second Respondent on the erroneous advice of others;
  • The business remains in a poor, albeit improving, financial state;
  • The Second Respondent has expressed contrition and has taken steps to ensure that, as the First Respondent’s business improves and expands, the contraventions will not occur again; and
  • The Claimant overstated the impact of the First Respondent’s actions.

Scaddan IM was of the view that the conduct in all circumstances is properly categorised in the low range.

Her Honour found that imposing a penalty of $44,800 on the First Respondent, and $8,800 on the Second Respondent, was appropriate.

The decision can be read here.