· 2021-09-09T15:57:32+0000 · 465 posts

Parties Dispute Penalties Imposed Upon Respondents

Fair Work Ombudsman v C & H Entertainment Pty Ltd [2021] FedCFamC2G 5 (3 September 2021)

The parties are in dispute over declarations and imposition of penalties following earlier liability judgment. The parties agreed to adopt the approach provided in Fair Work Ombudsman v NSH [2017] FCA 1301. The second respondent sought penalties at approximately 50 per cent of those sought by the applicant while the third respondent sought to avoid all penalties. The Court, in ruling upon this dispute, considered all relevant matters raised by the parties.

Facts:

Ms Jenkins sent an email to the second respondent on 10 April 2019 asserting that she ought to be paid a higher hourly wage and requesting that she be provided with payslips, to which the respondents did not reply. The second respondent was a director with a 50 per cent shareholding in the first respondent. Evidence shows that the other 50 percent shareholder is overseas and played no material part in the running of the first respondent’s business. The second respondent was the person, as the on-the-spot director, to whom the obligations to comply with the requirements under the Act devolved.

Mr Dissanayake was apparently administering the pay of Ms Jenkins but was doing so by clear reference to the authority of the second respondent. He was also responsible for all dealings with the Fair Work Ombudsman. He accepted service on behalf of the first respondent and was reminded of the timeframe for compliance by phone message the week prior to the deadline. The second and third respondents knew by at least December 2017 of their obligations in respect of record keeping and payslip requirements, and that the Hospitality Award contained penalty rates, including for work at nights and on public holidays, through previous involvement with the Fair Work Ombudsman.

The applicant submitted that Ms Jenkins was paid a flat rate of pay including for work on weekends, public holidays and nights, however, Ms Jenkins had informed both respondents that what her base hourly rate of pay should be and that the second respondent told her in reply that “the business could not pay her that sort of wage but that they would come to an agreement on something”. The third respondent’s oral submissions asserted that he had no responsibility for keeping records at all and that it was his job to get money and transfer to the accounts on the instructions he received. However, the third respondent was generally responsible for administering pay and associated records. He knew that the payments to Ms Jenkins were a flat rate of $21 per hour. The applicant seeks that penalties of $16,632 be imposed upon the second respondent and $13,104 on the third respondent.

The second respondent submits that penalties in the sum of $8,316 should be imposed upon him. Third respondent seeks that no penalties be imposed upon him at all.

Issue:

Whether or not the penalties $16,632 be imposed upon the second respondent and $13,104 on the third respondent.

Applicable law:

Fair Work Act 2009 (Cth) - requires the compliance notice, giving pay slips within one working day of payment, giving pay slips with information prescribed by Regulation 3.46(1) of the Regulations.

Fair Work Regulations 2009 (Cth) - prescribes keeping employee records.

Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate[2015] HCA 46 - provides that the primary purpose of civil penalties is to promote the public interest in compliance by attempting to put a price on a contravention that is sufficiently high to deter repetition by the contravener and others who might be tempted to contravene the relevant legislation.

Fair Work Ombudsman & NSH[2017] FCA 1301 - Bromwich J set out the approach to be followed by the Court regarding contraventions.

Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd & Anor [2012] FCMA 258 - Riethmuller FM said that proper pay slips allow employees to understand how their pay is calculated and therefore easily obtain advice.

Trade Practices Commission & CSR Limited (1991) ATPR 41–076 - provides that various factors may be considered in assessing the appropriate penalty for each contravention that there is no obligatory checklist.

Analysis:

The applicant submitted that the Court should follow the approach set out by Bromwich J in Fair Work Ombudsman & NSH North Pty Ltd trading as New Shanghai Charleston [2017] FCA 1301 at [36] by:

(1) identifying separate conventions, with each breach of obligation being a separate contravention, and each breach of a term of the Award being a separate contravention;

(2) considering whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct;

(3) considering whether there should be further adjustment; and,

(4) considering the overall penalties arrived at.

The power to issue compliance notices was introduced into the Fair Work Act to provide a mechanism to address non-compliance as an alternative to commencing litigation. There were numerous endeavours to ensure compliance which the respondent failed to take. The written submissions of the second respondent do not really engage in terms with the applicant’s submissions as to the contravention.

Both of the respondents have asserted an incapacity to pay. The second respondent says he is in effect $160,000 out of pocket. In respect of the third respondent he says he is now unemployed. He likewise has a family to support.

Conclusion:

The Court declared that the second respondent was involved, within the meaning of section 550 of the Fair Work Act 2009 (Cth) (“the Act”), in the each of the contraventions by the first respondent of:

(a) section 716(5) of the Act by failing to comply with the Compliance Notice

(b) section 535(1) of the Act by failing to make and keep employee records prescribed by regulation 3.33(3) of the Fair Work Regulations 2009 (Cth) (”the Regulations”);

(d) section 536(2) of the Act by giving a pay slip without the information prescribed by Regulation 3.46(1) of the Regulations.

The Court concluded that the third respondent was involved, within the meaning of section 550 of the Act, in each of the contraventions by the first respondent of sections 535(1), 536(1), and 536(2) of the Act.

The Court ordered that the second and third respondent pay pecuniary penalties to the Commonwealth with respect to their involvement in the contraventions in the amount of $14,264 and $12,094 respectively within 28 days of the order. The applicant is at liberty to apply on seven days' notice in the event the orders are not complied with.

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