This case deals with the issue of underpayment of wages and concerns contraventions of the Workplace Relations Act 1996 (‘WR Act’) and Fair Work Act 2009 (‘FW Act’).
Proceedings were commenced by the Fair Work Ombudsman (‘the applicant’) against Butler & Blackberry Melbourne Pty Ltd (‘the first respondent’) and the first respondent’s sole director, Lenny Scalia (‘the second respondent’), for contraventions of the WR Act and FW Act.
These proceedings were commenced after a complaint was made to the applicant by Mr Amit Kumar (‘the employee’), a former employee of the first respondent, regarding underpayment of wages.
The first respondent supplied labour on an on-hire basis in the catering and hospital industry, and to Transfield Services (Australia) Pty Ltd (‘Transfield’) who ran the junior mess hall at the HMAS Cerberus cite in Victoria.
During the employee’s employment with the first respondent, the applicable industrial and fair work instruments were the Australian Fair Pay and Conditions Standard, the Australian Pay and Classification Scale derived from the Catering Victoria Award and the Hospitality Industry Award 2010 (‘the Modern Award’). The WR Act and the FW Act also governed the employee’s employment with the first respondent.
After the commencement of these proceedings and the admissions made by the respondents, the second respondent entered into a payment plan for the amounts it was agreed were owing to the employee. At the date of this hearing, $7 990.81 remained owing to the employee as a result of the respondents’ admitted contraventions.
The applicant in submissions relied on at the penalty hearing took the position, (which was accepted by the Court), that the admitted contraventions should be grouped as follows:
(a) section 185(2) of the WR Act, by failing to pay the employee the full casual loading contained in the APCS for work done between 6 October 2008 and 30 June 2009; item 5 of Schedule 16 of the Transitional Act, by virtue of a contravention of section 185(2) of the WR Act, by failing to pay the employee the full casual loading contained in the APCS for work done between 1 July 2009 and 31 December 2009; and section 45 of the FW Act, by virtue of a contravention of clause 13.1 of the Modern Award, by failing to pay the employee the full casual loading contained in clause 13.1 of the Modern Award for work done between 1 January 2010 and 16 May 2010.;
(b) Section 189(1) of the WR Act, by failing to pay the employee at the end of each engagement or at least fortnightly between 23 June 2008 and 30 June 2009; section 323(1)(c), by failing to pay the employee at least monthly between 1 July 2009 and 31 December 2009; and section 45 of the FW Act, by virtue of a contravention of clause 13.3 of the Modern Award, by failing to pay the employee at the end of each engagement or at least fortnightly between 1 January 2010 and 16 May 2010.
(c) Section 323(1)(a) of the FW Act, by failing to pay the employee in full the amounts payable to him in relation to the performance of work from 1 January 2010 to 16 May 2010; and
(d) Section 536(1) of the FW Act, by failing to provide the employee with pay slips within one working day of paying amounts to him in relation to the performance of work on 26 February 2010, 17 March 2010 and 14 April 2010.
The first respondent admits that the contraventions of the WR Act, the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (‘Transitional Act’), the Modern Award and the FW Act resulted in underpayments in wages and entitlements to the employee totalling $8.990.81.
The second respondent admits to his involvement, within the meaning of section 728(1) of the WR Act and section 550(1) of the FW Act, in each of the contraventions.
The following were relevant considerations made by the Court in coming to its conclusions:
The nature and extent of the offending conduct
The employee was paid a flat hourly rate for all hours worked by the first respondent. He also did not receive the correct casual loading throughout his employment and was not paid at least fortnightly during this time.
This represents a failure to provide basic and important conditions and entitlements under Australia’s workplace relations legislation.
The circumstances in which the conduct took place
The employee was employed by the first respondent between June 2008 until about 16 May 2010. At all relevant times, the first respondent was carrying on a labour hire business that provided on-hire staffing services to Transfield.
The contravening conduct relates to the entire period of employment by the first respondent of the employee, during which the employee was underpaid $8 990.81 (gross).
Additionally, given the employee’s migrant status as a holder of a student visa, followed by a bridging visa, it was open for the Court to find that the employee was a ‘vulnerable employee’.
Consequently, it could be concluded that the contravening conduct extended over a significant period of time and exhibited behaviour by the respondents (in relation to an employee who was particularly vulnerable) that demonstrates a general disregard for compliance with Australia’s workplace laws.
The nature and extent of any loss or damage
The amount of the gross underpayment (i.e. $8 990.81) was significant and represented approximately 16% of the amount the employee should have been paid. Moreover, the employee was reliant on the minimum terms and conditions of employment.
The gross underpayment is yet to be rectified meaning that the employee continues to be deprived of the financial benefits which the timely payment of the correct wages would have provided.
It is also necessary to take into consideration the vulnerability of the employee.
Any similar previous conduct
There is nothing on the evidence to show that there has been similar previous conduct by either of the respondents.
Whether the breaches were prooerly distinct or arose out of one course of conduct
Agreed with Gray J in Gibbs v Mayor, Councillors and Citizens of City of Altona  FCA 374, that where a party’s conduct gives rise “to breaches of several different obligations, there is no reason why it should be treated as immune in respect of its breach of one obligation, merely because it has acted in breach of another”.
Concluded that the common elements have been appropriately taken into account.
The size of the respondent’s business
Agreed with the applicant’s submissions that regardless of its size, the first respondent was not absolved of its legal obligations to comply with its legislative obligations in relation to its employees.
The deliberateness of the breach
Taking into account the applicant’s submissions, the Court concluded that the respondents showed a general disregard for their obligations.
The court also determined that employees should not be required to complain to their employer to make certain they are paid their entitlements and all employees rightfully have an expectation that their employer will abide by the law.
It is only when this is not the case that the Court may sanction such conduct.
The involvement of senior management
The second respondent ultimately had responsibility for the first respondent and consequently was involved with the contravening conduct.
The respondent’s contrition, corrective action and cooperation with the enforcement authorities
Shortly after being served with the Application and Statement of Claim, the respondents made full admissions to all contraventions alleged by the applicant. Moreover, they also cooperated (albeit minimal and late in the proceedings) with the applicant in order to reduce costs and shorten the litigation process.
However, this should be balanced against the failure of the respondent to fully rectify the underpayment and failure to properly participate in the proceedings. These factors render hollow any claim of contrition.
Ensuring compliance with minimum standards
One of the principal objects of the WR Act and the FW Act is the maintenance of an effective safety net of minimum terms and conditions of employment and enforcement mechanisms of the obligation imposed by law. This is reflected in the magnitude of the maximum penalties given for breach of applicable provisions.
The Court recognised the importance it must place on ensuring compliance with minimum standards when considering an appropriate penalty.
There is no need for specific deterrence in this case.
Accepted the applicant’s submission that there is a need for general deterrence to ensure employers understand that they must take steps to ensure correct employee entitlements are paid and statutory requirements are observed.
The Court concluded that penalties in the mid-range were appropriate. A number of mitigating factors including the respondents’ cooperation and resolution by way of penalty hearing were taken into account. Consequently both respondents were penalised 35% of the maximum penalty for the admitted contraventions. These penalties were to be paid to the Commonwealth.
The first respondent was also ordered to pay the total amounts underpaid that are outstanding to the employee including interest (calculated to be $426.00 in accordance with s 722 of the WR Act and s 547 of the FW Act).