COURT DETERMINES IF MATCRAFT SHOULD BE PENALIZED FOR NOT COMPLYING WITH THE COMPLIANCE NOTICE TO PAY THEIR EMPLOYEE

Fair Work Ombudsman v Matcraft Pty Ltd [2021] FCCA 272 (18 February 2021)

This is a penalty proceeding where the respondents admitted to having contravened the Fair Work Act 2009 and failing to comply with the Compliance Notice.

Facts:

The applicant, the Fair Work Ombudsman, filed an application in this Court claiming that the first respondent, Matcraft Pty Ltd, had breached S.716 of the Fair Work Act 2009 . The applicant also claimed that the second respondent, Mr Ruthenberg, and the third respondent, Mrs Ruthenberg, were involved in the contravention as per S.550  of the Act.

Matcraft is a manufacturing business. Mr Ruthenberg is a director and secretary of Matcraft. Mrs Ruthenberg is a director of Matcraft.

Mr and Mrs Ruthenberg admitted that they had not paid the employee for the period between 1 July 2017 and 30 June 2019 and undertook to pay the employee pursuant to a payment plan from 19 July 2019. From 19 August 2019, Matcraft ceased making payments to the employee as required by the payment plan.

The applicant issued a Compliance Notice to Matcraft pursuant to S.726(2) of the Act. The Inspector sent Matcraft a “Failure to comply with a Compliance Notice” letter. No response was provided.

On 23 October 2020, the parties filed a statement of agreed facts. Relevantly, the respondents admitted failing to comply with the Compliance Notice.

The parties agreed to the Court making various declarations and orders in light of the admitted contraventions. The sole issue for the Court is what penalty, if any, should be imposed on each of the respondents for their respective contraventions.

Issue: Should a penalty be imposed against the respondents for failing to comply with the compliance notice?

Law:

• Fair Work Act 2009  SS.539, 546, 550, 557, 716
• Crimes Act 1914  1914 S.4AA

Analysis:

It is noted that the Inspector explained to Mrs Ruthenberg and Mr Ruthenberg  separately  what was required by the Compliance Notice. Neither of them took any action. Accordingly, they are both equally but separately liable for the contravention. Each will be the subject of a penalty at the same level as that imposed on Matcraft.

The applicant gave Matcraft numerous opportunities to take corrective action. Nothing was done.  It appears corrective action was not a priority. For example, Matcraft used available funds to purchase materials as opposed to paying their employee. Further, Matcraft chose to stop the payment plan and not return to it despite indicating that it would do so.

The filing of the statement of agreed facts is not evidence of a willingness to facilitate the course of justice to any significant degree. While it has reduced the time and costs spent litigating this matter, it appears that the reason the respondents agreed to the contravention was because they eventually accepted the inevitable. However, the Court does accept that this has at least ensured that this matter can be resolved efficiently and without further expense.

The Court has considered that a penalty in the mid-high range is appropriate and there has been little established by way of mitigation. Allowing for a 10 percent discount for cooperation, the Court considers a penalty of 70 percent of the maximum penalty to be appropriate. In circumstances where the respondents have shown no contrition and their contravention remains ongoing, it is necessary to impose a meaningful penalty.

Conclusion: The court has determined that the appropriate penalty to be imposed on each of the respondents is as follows:  (a) $22,050 for Matcraft; and (b) $4,410 for each of Mr Ruthenberg and Mrs Ruthenberg.

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