WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

CITATION : 2019 WAIRC 00651

DELIVERED : Thursday, 22 August 2019

FILE NO. : M 85 OF 2018

CLAIMANT

AND

We R Finance Pty Ltd (ACN 137 850 714)

FIRST Respondent

Harry Charles Ross

SECOND Respondent

CatchWords : INDUSTRIAL LAW – FAIR WORK – Assessment of pecuniary penalties for contraventions of Fair Work Act 2009 (Cth) and award – Application for costs

Legislation : Fair Work Act 2009 (Cth)

Fair Work Regulations 2009 (Cth

Taxation Administration Act 1953 (Cth)

Industrial Relations Act 1979 (WA)

Magistrates Court (Civil Proceedings) Act 2004 (WA)

Crimes Act 1914 (Cth)

Instrument : Banking, Finance and Insurance Award 2010 [MA000019]

Vehicle Industry – Repair, Services and Retail - Award 1983

Case(s) referred to

in reasons : Enkel v We r Finance Pty Ltd and Anors [2019] WAIRC 284

Director, Fair Work Building Industry Inspectorate v Foxville Projects Group Pty Ltd [2015] FCA 492

Ryan v Primesafe [2015] FCA 8

FWO in Fair Work Ombudsman v Valuair Limited (No 3) [2014] FCA 1182

Rentuza v Westside Auto Wholesale [2009] FMCA 1022

Fair Work Ombudsman v Maritime Union of Australia (No 2) [2015] FCA 814

Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate [2015] HCA 46

Trade Practices Commission v CSR Ltd [1990] FCA 521

Briginshaw v Briginshaw [1938] HCA 34

Sammut v AVM Holdings Pty Ltd [No2] [2012] WASC 27

Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557

Kelly v Fitzpatrick [2007] FCA 1080

Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560

Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62

Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832

Milardovic v Vemco Services Pty Ltd (Administrators Appointed) (No 2) [2016] FCA 244

Miller v Minister of Pensions [1947] 2 All ER 372

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7

Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4

Gibbs v The Mayor, Councillors and Citizens of City of Altona [1992] FCA 553

Result : Pecuniary penalty to be paid, no order as to costs

Representation:

Claimant : Mr D. Scaife (of counsel) from Eureka Lawyers

Respondents : Mr G. McCorry (agent) from Labourline

SUPPLEMENTARY REASONS FOR DECISION

1          On 13 June 2019, We R Finance Pty Ltd (the First Respondent) was found to have contravened sections 44 and 45 of the Fair Work Act 2009 (Cth) (the Act) in that the First Respondent was found to have failed to pay Alistair Enkel (the Claimant) an amount under the Banking, Finance and Insurance Award 2010 [MA000019] (the Banking Modern Award) and the Act and failed to comply with the National Employment Standards (NES) and in doing so contravened a civil remedy provision in failing to pay the amount.

2         The First Respondent was ordered to pay:

• $13,826.89 in ordinary pay, overtime and penalty rates;1
•                  $499.22 in accrued untaken annual leave and annual leave loading;2 and
•                  an amount to be determined in relation to superannuation contributions to a superannuation fund for the benefit of the Claimant.3

3          Further, the First Respondent was found to have contravened the Banking Modern Award by failing to provide copies of the Banking Modern Award and NES to the Claimant and did not comply with regulations 3.32 and 3.34 of the Fair Work Regulations 2009 (Cth) (the Regulations) in failing to keep and maintain certain prescribed records of employment.4

4          In brief, the First Respondent's contraventions arose from a dispute concerning the applicability of the Banking Modern Award to the Claimant’s employment by the First Respondent.

5          In Enkel v We r Finance Pty Ltd and Anors [2019] WAIRC 284 the court provided its reasons for decision in respect of the claim, the First Respondent’s contraventions and the court’s construction of the Banking Modern Award as it applied to the Claimant’s employment.

6          These supplementary reasons are in relation to an application by the Claimant for a pecuniary penalty pursuant to s 546(1) of the Act and his application for costs pursuant to s 570 of the Act.

7          The parties each provided an outline of written submissions on the payment of a pecuniary penalty and costs. The parties also lodged further witness statements tendered into evidence as evidence in chief, including the Claimant and Guiseppi Crisafio (on behalf of the First Respondent) and the Claimant was cross-examined on the content of his statement.

8          Schedule I of these supplementary reasons outline the jurisdiction, standard of proof and practice and procedure of the court.

9          Schedule II of these supplementary reasons outline the provisions of the Act and principles relevant in determining an appropriate pecuniary penalty (if any) for the First Respondent's contraventions.

Payment Of A Civil Penalty

10       The effect of s 557(1) of the Act is that two or more contraventions of the Act are taken to constitute a single contravention if they are committed by the same person and arose out of a course of conduct by that person.

11       I am satisfied having regard to the findings made in the substantive decision with respect to the contraventions that no relevant distinction can be made in the First Respondent's conduct with respect to some of the contraventions. It follows from this that I find a single course of conduct by the First Respondent in failing to pay ordinary pay, overtime and penalty rates, annual leave and annual leave loading and associated superannuation, and these failures will be treated as one single contravention.

12       I intend to deal with the other contraventions relating to failing to provide copies of the NES and the Banking Modern Award and failing to keep and maintain employment records as two separate single contraventions.

13       The maximum penalty with respect to each contravention of s 44 and s 45 of the Act by the First Respondent is 60 penalty units which equates to between $54,000 and $63,000 given the First Respondent is a body corporate.5

14       The maximum penalty with respect to each contravention of s 535 of the Act by the First Respondent is 30 penalty units which equates to between $27,000 and $31,500 given the First Respondent is a body corporate.6

The Claimant’s Submissions

15       In summary, the Claimant submits that the nature and extent of conduct should be regarded as serious where it says:

• the First Respondent’s conduct was a deliberate scheme to avoid minimum protections set out in the Banking Modern Award given the Claimant’s contract of employment stated the Banking Modern Award applied to the Claimant;
• the Claimant was a young employee, vulnerable and inexperienced in workplace rights, trusting the First Respondent to do the right thing;
• the Claimant considers that the First Respondent deliberately exploited him through attempts to dissuade the pursuit of entitlements as the First Respondent had invested in training and helped the Claimant establish himself in the finance industry;
• requests by the Claimant for explanation about his payment in accordance with the Banking Modern Award were repeatedly met with defiance and misdirection by the First Respondent;
• the First Respondent profited from its exploitation of the Claimant; and
• senior management was involved in setting the Claimant’s employment terms and conditions and failed to take corrective action.

16       Further, the Claimant submits that the nature and extent of the loss and damage suffered by the Claimant included a relatively large underpayment over a comparatively short period of time. The underpayment contributed to financial hardship experienced by the Claimant and he suffered emotional harm caused by financial stress and working long hours without proper remuneration.

17       The Claimant accepts the First Respondent has no known previous contraventions of industrial law but says the First Respondent lacks contrition and failed to cooperate with the Claimant when he raised concerns and failed to take corrective action.

18       The Claimant characterises the First Respondent’s conduct as substantial and willful contraventions of the Act where, he says, the First Respondent’s contraventions show open defiance to the Claimant’s concerns and attempts to mediate the issues.

The First Respondent’s Submissions

19       In response and in summary, the First Respondent submits:

• the First Respondent has no previous records of contravening any award or other industrial law;
• contraventions of a comparable industry award applicable to the car sales industry, Vehicle Industry – Repair, Services and Retail - Award 1983 (the Vehicle Award), demonstrate that in an associated industry any contraventions related to underpayment of wages and keeping of employment records were minor or non-existent (in comparison) and do not represent deliberate or negligent exploitation of the Claimant’s age or purported vulnerability;
• accordingly, personal or general deterrence is less relevant;
• the Claimant was overpaid an amount that was not deducted from his annual leave entitlements and the Claimant conceded he was paid annual leave entitlements, albeit not in accordance with the court’s findings, and the amount of annual leave loading not paid was at the lower end of the scale;
• the Claimant’s reference to Director, Fair Work Building Industry Inspectorate v Foxville Projects Group Pty Ltd [2015] FCA 492 as an appropriate guide to penalties for a contravention of failing to provide copies of the Banking Modern Award and NES is erroneous when regard is had to the type of employees and their special vulnerability in Foxville Projects Group Pty Ltd;
• the nature and extent of the contravention related to information on the employment records was at the lower end of the spectrum in terms of seriousness; and
• the nature and extent of the contraventions overall were at the lower end of the spectrum and any penalty should be similarly at the low end of the scale.

20       Further, the First Respondent submits that it is ‘notorious’ in the car sales industry of employees in the Claimant’s position being paid on a retainer/commission basis with usually a vehicle and fuel supplied. Therefore, the First Respondent was doing no less than what the industry circumstances dictated.

21       The First Respondent says the Claimant has not suffered loss and damage and remains employed in the same industry carrying out the same work and is not paid overtime in that capacity. In addition, the Claimant worked until 1.00 pm on Saturdays and went to five or six family dinners because he worked late (the inference being that the Claimant overstated the stress caused by the work hours).

Determination

22       The following considerations are significant in assessing penalties in this case:

• the determination of the claim required consideration and construction of the Banking Modern Award and its applicability to the Claimant;
• the First Respondent failed in that context to pay the Claimant the correct award rates relevant to ordinary pay, overtime, annual leave and annual leave loading (the superannuation follows as a result), but it was not a gross failure to pay entitlements or otherwise deprive an employee of an entitlement often seen by the court. Of course, any underpayment has serious consequences for the Claimant and must be treated accordingly by the court;
• the Claimant and the First Respondent did not adduce evidence concerning the size of the company and the Claimant failed to satisfy the court to the requisite standard of the involvement of Harry Charles Ross (the Second Respondent) in the contraventions, notwithstanding the Second Respondent carried out decision making concerning the Claimant;
• the more sinister character attributed by the Claimant to the Second Respondent and to the emails between him and the Second Respondent is not made out from the content of the emails. There is clearly a disagreement between the Claimant and the Second Respondent and the Second Respondent is disgruntled with the Claimant but nothing in the emails suggests the Second Respondent is ‘taking advantage’ of the Claimant, being oppressive, or threatening;
• the Claimant remains employed in the same industry with another employer on ostensibly the same terms as he was employed by the First Respondent, including not being paid overtime, diminishing his assertion employment with the First Respondent impacted on his personal relationships and prevented him from attending the occasional 5.30 pm dinner. In that sense, I found the Claimant’s evidence concerning the impact of the First Respondent’s actions to be overstated;
• while the Claimant was approximately 21 years of age at the time of the contraventions, he did not strike me as especially vulnerable in the same way as indicated in Foxville Projects Group Pty Ltd (that is, multiple migrants with English as a second language). The Claimant had previous employment and has gone on to secure further employment in the same industry;
• the lack of contrition is not an aggravating circumstance which might increase the penalty;7
• there is no evidence the First Respondent either ‘exploited’ the Claimant or ‘profited’ from its ‘exploitation’ of the Claimant;
• the Respondent has not been found to have previously contravened the Act; and
• while there was a course of conduct because of the failure of the First Respondent to apply the Banking Modern Award, the First Respondent properly accounted to the Claimant for all wages and commissions paid and entitlements owed (by way of pay slips, albeit incorrectly applied rates). Therefore, in that sense the First Respondent did not attempt to ‘hide’ any contraventions.

23       While criminal penalties import notions of retribution and rehabilitation, the primary purpose of a civil penalty is to promote the public interest in compliance with the law and not as an additional award of compensation for financial or emotional stress, hurt feelings, inconvenience or legal fees.8

24       Considering the above, while considerations of punishment and specific deterrence are of importance, it is perhaps of less importance in this case than the need to deter employers from making assumptions about the applicable terms of employment and disregard of award considerations, ensuring vigilance in applying the correct award and thereafter adhering to the requirements of the terms of the correct award and to the Act. The conduct in all the circumstances is properly categorised in the low range.

25       For these reasons, and having regard to principles of totality, penalties fixed in the sum of:

• $15,000 for the failure to pay minimum weekly hours of pay, overtime, untaken paid annual leave and leave loading and associated superannuation in accordance with the terms of the Banking Modern Award and NES;
• $3,000 for failing to provide copies of the Banking Modern Award and NES; and
• $2,500 for failing to keep the prescribed employment records,

is a proportionate reflection of the gravity of the contravening conduct by the First Respondent.

26       The Claimant seeks an order pursuant to s 546(3)(c) of the Act that the penalties be paid to him and an order is made that the First Respondent pay the penalty of $20,500 to the Claimant.

Costs

27       Pursuant to s 570(1) of the Act, a party to proceedings in relation to a matter arising under the Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2), s 569, or s 569A of the Act.

28       Relevant to the claim, subsection (2)(b) of the Act provides that a party may be ordered to pay costs only if the court is satisfied that the party’s unreasonable act or omission caused the other party to incur costs.

29       As I understand the Claimant’s submission on costs, he says:

• the First Respondent’s defence in this matter was wholly without merit and rises to the level of unreasonableness required to trigger s 570(2)(b) of the Act;
• the First Respondent defended the matter solely based on a misconceived submission that it was not an employer to whom the Banking Modern Award applied as it was not in the ‘banking, finance and insurance industry’ within the definition of that phrase in the Banking Modern Award; and
• to support this defence, the First Respondent relied on irrelevant decisions relating to the construction of awards, maintained that the Banking Modern Award needed to be tended into evidence, failed to lead evidence relating to business activities, or from the Second Respondent, and failed to challenge or disturb business records put into evidence by the Claimant.

30       As I understand the First Respondent’s submission in response to the application for costs, it says:

• the First Respondent was entitled to raise a ‘no case to answer’ submission because of the evidentiary hiatus or failure to adduce any evidence as to an essential element in the cause of action;
• the fact the court did not uphold the no case submission does not mean a misconceived submission was made such as to enliven s 570 of the Act; and
• there is nothing in the First Respondent’s conduct during the proceedings that would enliven s 570 of the Act.

31       In Ryan v Primesafe [2015] FCA 8, Mortimer J states (omitting citations):

The discretion conferred by the confined terms of s 570(2) should be exercised cautiously, and the case for its exercise should be clear. The reason for caution is the potential for discouraging parties’ pursuit in a complete and robust way of the claims for contravention which they seek to make under the Fair Work Act, or the defense of such claims. The policy behind s 570 is to ensure that the spectra of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular, in my opinion) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings. It is an access to justice provision. Insofar as it operates to the benefit of respondents, it is designed to ensure respondents feel free to pursue arguable legal and factual responses to the claims made against them (my emphasis) [64].

32       In Fair Work Ombudsman v Skilled Offshore (Australia) Pty Ltd (No 2) [2015] FCA 1509, Gilmour J states (omitting citations):

[8] The purpose of s 570 is to ensure that litigants, including respondents, are not deterred from ‘complete[ly] and robust[ly]’ defending claims for contravention.

[9] In light of this purpose, costs will rarely be awarded under [s 570] and exceptional circumstances are required to justify the making of such an order. Courts should be particularly cautious before finding that a party has engaged in an unreasonable act or omission, lest that discourages parties from pursuing litigation in the manner which they deem best.

[10] That a party has a ‘self-evidently weak case’ is not enough to warrant a costs order. There must be ‘a higher level of criticism or disapprobation’ Indeed, costs were not awarded against the FWO in Fair Work Ombudsman v Valuair Limited (No 3) [2014] FCA 1182 even though elements of the FWO's case were ‘artificial and unsatisfactory’ and ‘potentially bizarre’.

[11] Where a party relies on s 570(2)(b), the Court must be satisfied of two matters: there must be an unreasonable act or omission; and that act or omission must have ‘caused’ costs to be incurred.

[12] The pursuit of a case by a party in circumstances where, on the materials before the party at the time, there was no substantial prospect of success may constitute an unreasonable act or omission. However, that an argument is ultimately not accepted does not mean it is unreasonable to put it.

[13] Even if the Court is satisfied of a s 570(2) precondition, it retains a discretion not to order costs.

33       In Rentuza v Westside Auto Wholesale [2009] FMCA 1022, Lucev FM states (omitting citations):

[27] Whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case.

[28] The exercise of the discretion in s.570(2)(b) is not necessarily engaged because:

(a) a party does not conduct litigation efficiently;

(b) a concession is made late;

(c) a party may have acted in a different or timelier fashion;

(d) a party has adopted a genuine but misguided approach.

34       Three things immediately arise. Firstly, the First Respondent is not required to lead evidence of business activities, or from the Second Respondent, to demonstrate or assist the Claimant’s claim or to defend the claim. The Claimant bears the onus of proving his claim to the requisite standard.

35       Secondly, the Claimant successfully proved part of the claim. The aspect of his claim as it related to the Second Respondent was not proven to the requisite standard.

36       Thirdly, forensic decisions made by a respondent in defending a claim are entirely a matter for the respondent and/or his or her or its representative. The only issue for the court to determine in respect of the application for costs is whether there is any unreasonable act or omission causing the other party to incur costs.9

37       The First Respondent and Second Respondent made a no case to answer submission. They were entitled to do so but were unsuccessful as it related to the underpayment and other non-monetary aspects of the claim relevant to the First Respondent. The claim and the defence to the claim largely turned on the construction and application of the Banking Modern Award upon which the parties had firmly held but divergent views.

38       However, as stated, the Claimant was unsuccessful in proving his claim as it related to the Second Respondent.

39       The parties conducted the litigation in an efficient manner and there were, in fact, limited factual matters in dispute. The First Respondent did not engage in protracted or irrelevant cross-examination or prolix submissions.

40       Notwithstanding some of the First Respondent’s legal arguments may have been misguided, I am not satisfied that there was no substantial prospect of success such that there was an unreasonable act or omission by the First Respondent causing the Claimant to incur legal costs in the manner contemplated by s 570(2)(b) of the Act and as outlined in the above cases.

41       The Claimant’s application for costs is refused.

Orders

42       Having heard from the parties, subject to any liability to the Commissioner of Taxation under the Taxation Administration Act 1953 (Cth) (if any), the First Respondent is ordered to pay to the Claimant the following amounts within 28 days:

• $13,826.89 in ordinary pay, overtime and penalty rates;
• $499.22 in accrued untaken annual leave and annual leave loading; and
• a penalty of $20,500.

43       Further, the First Respondent is ordered to pay within 28 days:

• $297.05 in superannuation contribution to the relevant superannuation fund for the benefit of the Claimant; and
• interest on the judgment amount of $14,326.11 fixed in the amount of $1,537.80.

D SCADDAN

INDUSTRIAL MAGISTRATE

1 Contravening s 45 of the FWA by failing to comply with the Banking Modern Award – item 2 of the Civil Remedy Provisions in s 539(2) of the FWA.

2 Contravening s 44 of the FWA as it relates to accrued annual leave by failing to comply with the NES and s 45 of the FWA as it relates to annual leave loading by failing to comply with the Banking Modern Award – items 1 and 2 of the Civil Remedy Provisions in s 539(2) of the FWA, respectively.

3 Contravening s 45 of the FWA by failing to comply with the Banking Modern Award – item 2 of the Civil Remedy Provisions in s 539(2) of the FWA.

4 Contravening s 535 of the FWA by failing to keep prescribed records.

5 The contravention period was from 15 March 2017 to 30 October 2017 and an increase in the penalty rate per penalty unit occurred on 1 July 2017.

6 See footnote 5.

7 Fair Work Ombudsman v Maritime Union of Australia (No 2) [2015] FCA 814.

8 Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 [55] (referring to Trade Practices Commission v CSR Ltd [1990] FCA 521).

9 See also Fair Work Ombudsman v Maritime Union of Australia (No 2) [2015] FCA 814 [97] - [101] for refence to ‘baseless defence’ and the respondents successfully defeating part of the claim.

Schedule I: Jurisdiction, Practice and Procedure of the Industrial Magistrates Court (WA) under the Fair Work Act 2009 (Cth)

Jurisdiction

[1]               An employee, an employee organization or an inspector may apply to an eligible state or territory court for orders regarding a contravention of the civil penalty provisions identified in s 539(2) of the Act. The Industrial Magistrates Court (WA) (IMC), being a court constituted by an industrial magistrate, is ‘an eligible State or Territory court’: s 12 of the Act (see definitions of ‘eligible State or Territory court’ and ‘Magistrates Court’); Industrial Relations Act 1979 (WA), s 81, 81B.

[2]               The application to the IMC must be made within six years after the day on which the contravention of the civil penalty provision occurred: s 544 of the Act.

[3]               The civil penalty provisions identified in s 539 of the Act include:

• section 44 of the Act;
• section 45 of the Act; and
• section 535 of the Act.

[4]               An ‘employer’ has the statutory obligations noted above if the employer is a ‘national system employer’ and that term, relevantly, is defined to include ‘a corporation to which paragraph 51(xx) of the Constitution applies’: s 14, s 12 of the Act. The obligation is to an ‘employee’ who is a ‘national system employee’ and that term, relevantly, is defined to include ‘an individual so far as he or she is employed by a national system employer’: s 13 of the Act. It is not in dispute and it was found that the First Respondent is a corporation to which paragraph 51(xx) of the Constitution applies and that the Claimant was employed by the First Respondent.

[5]               Where the IMC is satisfied that there has been a contravention of a civil penalty provision, the court may make orders for a person to pay a pecuniary penalty: s 546 of the Act.

Burden And Standard Of Proof

[6]               In an application under the Act, the Claimant carries the burden of proving the claim. The standard of proof required to discharge the burden is proof ‘on the balance of probabilities’. In Miller v Minister of Pensions [1947] 2 All ER 372, 374, Lord Denning explained the standard in the following terms:

It must carry a reasonable degree of probability but not so high as is required in a criminal case. If the evidence is such that the tribunal can say 'we think it more probable than not' the burden is discharged, but if the probabilities are equal it is not.

[7]               In the context of an allegation of the breach of a civil penalty provision of the Act it is also relevant to recall the observation of Dixon J said in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336:

The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences [362].

[8]               Where in this decision it is stated that a finding has been made, the finding is made on the balance of probabilities. Where it is stated that a finding has not been made or cannot be made, then no finding can be made on the balance of probabilities.

Practice And Procedure Of The Industrial Magistrates Court

[9]               The Industrial Relations Act 1979 (WA) provides that, except as prescribed by or under the Act, the powers, practice and procedure of the IMC is to be the same as if the proceedings were a case under the Magistrates Court (Civil Proceedings) Act 2004 (WA): s 81CA. Relevantly, regulations prescribed under the Industrial Relations Act 1979 (WA) provide for an exception: a court hearing a trial is not bound by the rules of evidence and may inform itself on any matter and in any manner as it thinks fit: regulation 35(4).

[10]           In Sammut v AVM Holdings Pty Ltd [No2] [2012] WASC 27, Commissioner Sleight examined a similarly worded provision regulating the conduct of proceedings in the State Administrative Tribunal and made the following observation (omitting citations):

… The tribunal is not bound by the rules of evidence and may inform itself in such a manner as it thinks appropriate. This does not mean that the rules of evidence are to be ignored. The more flexible procedure provided for does not justify decisions made without a basis in evidence having probative force. The drawing of an inference without evidence is an error of law. Similarly, such error is shown when the tribunal bases its conclusion on its own view of a matter which requires evidence [40].

Schedule II: Pecuniary Penalty Orders Under The Fair Work Act 2009 (Cth)

Pecuniary Penalty Orders

[1]               The Act provides that the court may order a person to pay an appropriate pecuniary penalty if the court is satisfied that the person has contravened a civil remedy provision: s 546(1). The maximum penalty for each contravention by a natural person, expressed as a number of penalty units, set out in a table found in s 539(2) of the Act: s 546(2) of the Act. If the contravener is a body corporate, the maximum penalty is five times the maximum number of penalty units proscribed for a natural person: s 546(2) of the Act.

[2]               The rate of a penalty unit is set by s 4AA of the Crimes Act 1914 (Cth): s 12 of the Act. The relevant rate is that applicable at the date of the contravening conduct:

[3]               The purpose served by penalties was described by Katzmann J in Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 in the following terms (omitting citations):

In contrast to the criminal law, however, where, in sentencing, retribution and rehabilitation are also relevant, the primary, if not the only, purpose of a civil penalty is to promote the public interest in compliance with the law. This is achieved by imposing penalties that are sufficiently high to deter the wrongdoer from engaging in similar conduct in the future (specific deterrence) and to deter others who might be tempted to contravene (general deterrence). The penalty for each contravention or course of conduct is to be no more and no less than is necessary for that purpose [338].

[4]               In Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 [14], Tracey J adopted the following ‘non-exhaustive range of considerations to which regard may be had in determining whether particular conduct calls for the imposition of a penalty, and if it does the amount of the penalty’ which had been set out by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7:

• The nature and extent of the conduct which led to the breaches.
• The circumstances in which that conduct took place.
• The nature and extent of any loss or damage sustained as a result of the breaches.
• Whether there had been similar previous conduct by the respondent.
• Whether the breaches were properly distinct or arose out of the one course of conduct.
• The size of the business enterprise involved.
• Whether or not the breaches were deliberate.
• Whether senior management was involved in the breaches.
• Whether the party committing the breach had exhibited contrition.
• Whether the party committing the breach had taken corrective action.
• Whether the party committing the breach had cooperated with the enforcement authorities.
• The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
• The need for specific and general deterrence.

[5]               The list is not ‘a rigid catalogue of matters for attention. At the end of the day the task of the court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations.’ (Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 [91]).

[6]               ‘Multiple contraventions’ may occur because the contravening conduct done an employer:

(a)     resulted in a contravention of a single civil penalty provision or resulted in the contravention of multiple civil penalty provisions;

(b)     was done once only or was repeated;

(c)     was done with respect to a single employee or was done with respect to multiple employees.

[7]               The fixing of a pecuniary penalty for multiple contraventions is subject to s 557 of the Act. It provides that two or more contraventions of specified civil remedy provisions (including contraventions of an enterprise agreement and a contravention on s 323 on the payments) by an employer are taken be a single contravention if the contraventions arose out of a course of conduct by the employer. Subject to proof of a ‘course of conduct’, the section applies to contravening conduct that results in multiple contraventions of a single civil penalty provision whether by reason of the same conduct done on multiple occasions or conduct done once with respect to multiple employees: Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62; (2014) 221 FCR 153; Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832 [22] (White J) The section does not to apply to case where the contravening conduct results in the contravention of multiple civil penalty provisions (example (a) above): Grouped Property Services Pty Ltd (No 2) [411] ff (Katzmann J).

[8]               The totality of the penalty must be re-assessed in light of the totality of the offending behaviour. If the resulting penalty is disproportionately harsh, it may be necessary to reduce the penalty for individual contraventions. Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; 246 ALR 35; [2008] FCAFC 8; [47] - [52].

[9]               Section 546(3) of the Act also provides:

Payment of penalty

(3) The court may order that the pecuniary penalty, or a part of the penalty, be paid to:

(a) the Commonwealth; or

(b) a particular organisation; or

(c) a particular person.

[10]           In Milardovic v Vemco Services Pty Ltd (Administrators Appointed) (No 2) [2016] FCA 244 [40] - [44], Mortimer J summarised the law (omitting citations and quotations) on this provision in light of Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4:

The power conveyed by s 546(3) is ordinarily to be exercised by awarding any penalty to the successful applicant. The initiating party is normally the proper recipient of the penalty as part of a system of recognising particular interests in certain classes of persons in upholding the integrity of awards and agreements the subject of penal proceedings. Where a public official vindicates the law by suing for and obtaining a penalty, it is appropriate that the penalty be paid to the Consolidated Revenue Fund. Otherwise, the general rule remains appropriate, that the penalty is to be paid to the party initiating the proceeding, with the ‘Gibbs exception’ (Gibbs v The Mayor, Councillors and Citizens of City of Altona [1992] FCA 553) that the penalty may be ordered to be paid to the organisation on whose behalf the initiating party has acted.