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Inspector Trundle v M & K Angelopoulos Pty Ltd [2009] FMCA 37 (29 January 2009)

Last Updated: 2 February 2009

FEDERAL MAGISTRATES COURT OF AUSTRALIA

INSPECTOR TRUNDLE v M & K ANGELOPOULOS PTY LTD

INDUSTRIAL LAW – Application for imposition of penalties – underpayment of wages and non-payment of casual loading provisions – statement of agreed facts containing errors and ambiguities – course of conduct finding of 4 contraventions of conduct regarding breaches of hourly rate provisions – application for compensation for damage suffered as a result of breach of provision regarding maximum ordinary hours of work – no damage proven – no compensation.

Workplace Relations Act 1996 (Cth), ss.119(1a), 182(3), 182(4), 226(1), 226(4) 318(1) and 320(a)

Australasian Meat Industry Employees’ Union v Meneling Station Pty Ltd (1987) 16 IR 245
Australian Competition & Consumer Commission v ABV Transmission & Distribution Ltd [2001] FCA 383; (2001) ATPR 41-815
Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd & Ors (1997) 145 ALR 36
Clothing and Allied Trading Union v Snugglerite Industries Pty Ltd (1990) 34 IR 124
Community and Public Sector Union v Telstra Corp Ltd [2001] FCA 1364; (2001) 108 IR 228
Cotis v Pow Juice Pty Ltd [2007] FMCA 140
Flattery v Zeffirelli’s Pizza Restaurant [2007] FMCA 9
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Pearce v The Queen (1998) 194 CLR 610
Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65
Rowe v Capital Territory Health Commission (1982) 39 ALR 39
Salandra v Risborg Services & Ors [2008] FMCA 76

Applicant:
INSPECTOR CAREY TRUNDLE (WORKPLACE OMBUDSMAN)

Respondent:
M & K ANGELOPOULOS PTY LTD

File Number:
ADG 172 of 2007

Judgment of:
Simpson FM

Hearing dates:
5, 8 November 2007, 14 March 2008, 14 April 2008

Date of Last Submission:
14 April 2008

Delivered at:
Adelaide

Delivered on:
29 January 2009

REPRESENTATION

Counsel for the Applicant:
Mr N Healey

Solicitors for the Applicant:
Sparke Helmore

Counsel for the Respondent:
Mr A J Kerin

Solicitors for the Respondent:
Johnston Withers

ORDERS

(1) A penalty of $5,000 is imposed on the respondent for contravening sub-s.182(3) of the Workplace Relations Act 1996 (Cth) in relation to the employee Wayne Toolan during the period 2 April to 25 June 2006.
(2) A penalty of $5,000 is imposed on the respondent for contravening sub-s.182(3) of the Workplace Relations Act 1996 (Cth) in relation to the employee Christopher Humphries during the period 15 April to 23 June 2006.
(3) A penalty of $11,000 is imposed on the respondent for contravening sub-s.182(3) of the Workplace Relations Act 1996 (Cth) in relation to employees Wayne Toolan and Robert Cheel during the period 1 December 2006 to 8 April 2007, Robert Hoyle during the period 1 December 2006 to 26 January 2007 and Wayne Surha during the period 10 December 2006 to 8 April 2007.
(4) A penalty of $10,000 is imposed on the respondent for contravening sub-s.182(4) of the Workplace Relations Act 1996 (Cth) in relation to the employee Robert Caddy during the period 8 November 2006 to April 2007.
(5) A penalty of $9,000 is imposed on the respondent for contravening sub-s.185(3) of the Workplace Relations Act 1996 (Cth) to the employees Christopher Humphries, Robert Cheel, Wayne Surha, Robert Hoyle, Wayne Toolan and Craig Caddy during the whole periods of their employment.
(6) All penalties be paid to the Commonwealth.
(7) It is declared that the respondent has contravened sub-s.226(1) of the Workplace Relations Act 1996 (Cth) in relation to the employee Wayne Toolan.
FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
ADELAIDE

ADG 172 of 2007

INSPECTOR CAREY TRUNDLE (WORKPLACE OMBUDSMAN)

Applicant


And


M & K ANGELOPOULOS PTY LTD

Respondent


REASONS FOR JUDGMENT

Introduction

  1. This is an application by Inspector Carey Trundle, a Workplace Inspector appointed by and subject to the direction of the Office of the Workplace Ombudsman. The responsibilities of workplace inspectors under the Workplace Relations Act 1996 (Cth) (“the Act”) includes the investigation of allegations that employers have failed to observe the provisions of the Australian Fair Pay and Conditions Standard[1] (“AFPCS”) and, in appropriate cases, to apply to the Court for judicial determination of alleged breaches, the imposition of penalties and for other forms of relief.
  2. The respondent is a registered company and at all material times was the employer of Christopher Humphries (“Humphries”), Robert Cheel (“Cheel”), Wayne Surha (“Surha”), Robert Hoyle (‘Hoyle”), Wayne Toolan (“Toolan”) and Craig Caddy (“Caddy”).
  3. The applicant’s case is that the respondent failed to comply with provisions of the AFPCS relating to rates of pay (s.182(3) and (4)), casual loading (ss.185(3)) and maximum ordinary hours of work (s.226(1)). The applicant sought in her application the following final orders:
  4. A response was filed on 19 October 2007 in which the respondent opposed the making of final orders 1, 2(a), 4 and 5 but consented to the making of final orders 2(b), 3, 6 and 7.
  5. On 29 October 2007 the applicant filed a reply stating that the respondent underpaid the wages of employee Hoyle by $1,602.40.
  6. The applicant has since indicated that she now only seeks final orders 1, 2(a), 3 and 4. The respondent consents to final orders 1, 2(a) and 3 but, for reasons that will be dealt with later in these reasons, opposes the making of final order 4.

The legislation

  1. Part 7 of the Act has the heading “The Australian Fair Pay and Conditions Standard” and contains the sections the respondent admits that it has breached. The relevant sections are as follows:

(2) Guarantee of APCS piece rates of pay. If:

(a) the employment of an employee is covered by an APCS; and
(b) the employee is an APCS piece rate employee:
the employee must be paid basic piece rates of pay for his or her work that are at least equal to the basic piece rates of pay (the guarantee basic piece rates of pay) that are payable to the employee under the APCS.

(3) Guarantee of standard FMW[4] If:

(a) the employment of the employee is not covered by an APCS; and
(b) the employee is not a junior employee, an employee with a disability, or an employee to whom a training arrangement applies;

the employee must be paid a basic periodic rate of pay for each of the employee’s guaranteed hours (pro-rated for part hours) that is at least equal to the standard FMW (the guaranteed basic periodic rate of pay).

(4) Guarantee of special FMW If:

Guarantee of casual loadings

185 (1) This section applies to a casual employee for whom, under section 182, there is a guaranteed basic periodic rate of pay, other than a casual employee in relation to whom the following paragraphs are satisfied:
(2) The casual employee must be paid, in addition to his or her actual basic periodic rate of pay, a casual loading that is at least equal to the guaranteed casual loading percentage of that actual basic periodic rate of pay.
(3) The guaranteed casual loading percentage is as set out in the following table:
Item
In this situation ...
the guaranteed casual loading percentage is ...
1.
...
2.
...
3.
...
4.
If subsection 182(3) or (4) applies to the employment of the employee
the details casual loading percentage.

186 The default casual loading percentage is 20%.
Guarantee of maximum ordinary hours of work
The guarantee

The consequences for employers who breach a provision of the AFPCS are to be found in pt.14 of the Act. The relevant sections from that part provide as follows:

719 (1) An eligible court may impose a penalty in accordance with this Division on a person if:
(b) the person breaches the provision.
(2) [2 or more breaches] Subject to subsection (3), where:
the breaches shall, for the purposes of this section, be taken to constitute a single breach of the term.

(3) ...

(4) [Maximum penalty for breach] The maximum penalty that may be imposed under subsection (1) for a breach of an applicable provision is:

Section 717 of the Act defines ‘applicable provision’ to include the AFPCS.

Agreed facts

  1. The parties have been able to reach agreement about a number of matters. Some of these matters are detailed in a document titled “Statement of agreed matters” filed on 1 November 2007 which states:
Mr Humphries
Mr Toolan
Reasonable additional hours
Mr Cheel
Mr Surha
Mr Caddy
Mr Hoyle

Material relied upon

  1. The matter was to proceed as a penalty hearing on 5 November 2007. During submissions by Counsel for the applicant, Counsel for the respondent sought an adjournment on the basis that it was necessary for the respondent to put further affidavit material before the Court. After hearing submissions from Counsel for the parties I decided to adjourn the penalty hearing to a later date and to give the respondent the opportunity of filing further material. The penalty hearing continued on 14 March and 14 April 2008 with the parties filing further written submissions some time thereafter.
  2. At the penalty hearing the applicant relied on the following documents:
    1. Affidavit of the applicant sworn 10 July 2007 and filed the same day (Exhibit A1);
    2. Affidavit of the applicant sworn 29 October 2007 and filed the same day (Exhibit A2);
    1. Affidavit of Shannon Lee Vella sworn 2 November 2007 and filed the same day (Exhibit A3);
    1. Document titled “Statement of Agreed Matters” filed on 1 November 2007;
    2. Affidavit of Luke Dominic Paul Holland sworn 8 November 2007 and filed the same day (Exhibit A5);
    3. Affidavit of the applicant sworn 15 February 2008 and filed the same day (Exhibit A6);
    4. Affidavit of the applicant sworn 10 December 2007 and filed on 11 December 2007 (Exhibit A7);
    5. Document titled “Applicant’s submissions as to contentions of Fact and Law” filed on 7 March 2008; and
    6. Document titled “Applicant’s further amended submissions of Fact and law” filed 11 April 2008.
  3. The respondent relied upon the following documents:
    1. Affidavit of Kon Angelopoulos sworn 4 December 2007 and filed 6 December 2007 (Exhibit R1);
    2. Document titled “Respondents submissions as to contentions of Fact and Law” filed 14 March 2008; and
    1. Document titled “respondent’s further submissions as to Fact and Law” filed 10 April 2008.

Findings of fact

  1. The Statement of Agreed Matters contains a number statements that are in conflict with other material relied upon (see paras.4.20, 4.35, 4.51, 4.53, 4.56 and 4.63) or are ambiguous (see paras 4.6, 4.11, 4.13, 4.14, 4.17, 4.18, 4.21, 4.22, 4.23, 4.27, 4.32, 4.33, 4.37, 4.42, 4.51 and 4.61). Many of the ambiguities are as a result of there not being a consistent approach as to whether statements of hourly rates are inclusive or exclusive of the casual loading. These errors and ambiguities are such that I do not consider it appropriate or necessary to hear from the respective Counsel for the parties. After considering all the material put before the Court I make findings in terms of the Statement of Agreed Matters subject to the following alterations and qualifications:
    1. 4.6 The rate of $15.30 per hour comprises an hourly rate of $12.75 plus a 20% casual loading;
    2. 4.11 The respondent employed Mr Toolan for the period 1 April 2006 to 15 April 2007;
    1. 4.13 The respondent paid Mr Toolan $8 per hour for the period 2 April 2006 to 1 July 2006;
    1. 4.14 The respondent paid Mr Toolan $12.75 per hour for the period 2 July 2006 to 15 April 2007;
    2. 4.17 The rate of $15.30 per hour comprises an hourly rate of $12.75 plus a 20% casual loading and was payable from 2 April 2006 to 30 November 2006;
    3. 4.18 The rate of $16.16 per hour comprises an hourly rate of $13.47 per hour plus a 20% loading and was payable from 1 December 2006 to 15 April 2007.
    4. 4.20 The respondent contravened sub-s.182(3) of the Act in relation to Mr Toolan for the period between 2 April 2006 and 25 June 2006 when the respondent started calculating Mr Toolan’s wages on the basis of $12.75 per hour.
    5. 4.21 The respondent contravened sub-s.185(3) # item 4 of the Act in relation to Mr Toolan for the period from 2 April 2006 to 30 November 2006, inclusive. (This paragraph to be read in conjunction with 4.23);
    6. 4.22 The respondent contravened sub-s.182(3) of the Act in relation to Mr Toolan for the period from 1 December 2006 to 15 April 2007;
    7. 4.23 The respondent contravened sub-s.185(3) # item 4 of the Act in relation to Mr Toolan for the period 1 December 2006 to 15 April 2007. (This paragraph to be read in conjunction with paragraph 4.21);
    8. 4.27 The respondent employed Mr Cheel for the period 1 April 2006 to 15 April 2007;
    1. 4.32 The rate of $15.30 per hour comprises an hourly rate of $12.75 per hour plus a 20% loading and was payable from 2 April 2006 to 30 November 2006;
    1. 4.33 The rate of $16.16 per hour comprises an hourly rate of $13.47 per hour plus a 20% casual loading;
    2. 4.35 The respondent contravened sub-s.182(3) of the Act in relation to Mr Cheel from 1 December 2006 (when the Standard FMW hourly rate was increased to $13.47 per hour) and 8 April 2007;
    3. 4.37 The respondent employed Mr Surha for the period from 10 December 2006 to 8 April 2007;
    4. 4.42 The rate of $16.16 per hour comprised an hourly rate of $13.47 plus a 20% loading;
    5. 4.51 Caddy was entitled to be paid $15.30 per hour (comprising an hourly rate of $12.75 plus a 20% casual loading) from 8 November 2006 to 30 November 2006 and $16.16 per hour (comprising an hourly rate of $13.47 plus 20% casual loading) from 1 December 2006 to April 2007;
    6. 4.53 The respondent contravened sub-s.182(3) of the Act for the period 8 to 30 November 2006 and sub-s.182(4) of the Act in relation to Mr Caddy for the period 1 December 2006 to April 2007 as there was no Special FMW hourly rate prior to 1 December 2006;
    7. 4.56 The respondent employed Mr Hoyle between 1 December 2006 and 26 January 2007 (not 26 January 2006);
    8. 4.61 The rate of $16.16 per hour comprised an hourly rate of $13.47 plus a 20% loading;
    9. 4.63 The respondent contravened sub-s.182(3) (not subs182(4)) of the Act in relation to Mr Hoyle for the whole period of his employment.
  2. The respondent is a company that became registered on 22 August 1996. The sole directors and shareholders of the company since the date of registration have been two brothers, Milton and Kon Angelopoulos. Milton is also company secretary. The company’s principal place of business is South Australia. Its business has been a cleaning operation and a coffee shop. As will be seen, for a relatively short period it also was in the business of providing trolley collection services to supermarkets.
  3. In late 2005 Kon was approached by a business acquaintance to see whether he would take over a trolley collection business conducted by a company, Advanced National Services Pty Ltd (“ANS”), at a number of sites in and around Adelaide. This would require the respondent to take over certain existing contracts between ANS and a number of retail businesses (eg Woolworth, Coles and the like) for the provision of trolley collection services in suburban Adelaide. Although neither brother had experience with this line of work Kon was keen to assist the business acquaintance that had approached him.
  4. Somewhat surprisingly, prior to agreeing to take on the new business Kon did not closely examine the terms of the existing contracts (which appear to have been oral) to determine whether this new business was going to be profitable for the respondent. He says that he was told by the business acquaintance that there was no industrial award in place for trolley collectors. This was correct. However Kon was not warned by the business associate that changes were likely to occur to the Act that would create the AFCPS which was intended to provide minimum standards that would apply to all employees covered by the Act which would include trolley collectors.
  5. After the Angelopoulos brothers had negotiated the terms of their employment the respondent then progressively engaged employees to carry out trolley collections at the various sites.
  6. The Angelopoulos brothers became aware that in March 2006 changes were taking place to the law which may have an effect on the payments that had to be made to their workers. They contacted the former owner of the trolley collection business and enquired as to whether the rates that they were paying the workers were “accurate” but never received a detailed response. Kon was aware that there may be some underpayment occurring and that the respondent’s employee trolley collectors would be entitled to back-pay. Neither Kon nor Milton got to the bottom of what the respondent’s legal obligations were in relation to the employee trolley collectors. On behalf of himself and Milton, Kon says in his affidavit “We accept that the responsibility for ensuring proper wages is ours. The underpayment evolved through neglect rather than a deliberate desire to not pay the workers”.

Breaches regarding underpayment

  1. The respondent should have been paying employees Humphries, Cheel, Surha, Hoyle and Toolan at a rate no less favourable than the guaranteed basic periodic rate of pay that was equal to the Standard FMW[6]. This was set at $12.75 per hour from 27 March 2006 and $13.47 from 1 December 2006. As these employees of the respondent were casuals they were also entitled to be paid a casual loading[7] which at all times after 27 March 2006 was 20%.
  2. The respondent further breached its obligations to Toolan by requesting or requiring him to work additional hours that were not reasonable (within the meaning that this has in s.226 of the Act) in addition to his normal hours of 38 per week[8].
  3. The position concerning rates of pay in relation to the employee Caddy was slightly different as he suffered from a disability and this effected which FMW applied to his employment. He was paid only $5.00 per hour for the whole period of his employment. The Standard FMW only applied to disabled employees so long as there was no Special FMW. There was no Special FMW until 1 December 2006. Caddy was therefore entitled to be paid on the same basis as the other five employees up until this time, namely pursuant to the Standard FMW. After 1 December 2006 he was entitled to be paid at a rate no less favourable than the guaranteed basic periodic rate of pay that was equal to the Special FMW. This “Special” rate was set at the same rate as the “Standard” rate, namely $13.47 per hour. The respondent’s breaches of the rates provisions for Caddy were therefore breaches of s.182(3) from 27 March 2006 to 30 November 2006 after which the breaches were of s.182(4). Caddy was also entitled to (but did not receive) a casual loading of 20% from 27 March 2006. The respondent therefore breached s.185 for the whole period of Caddy’s employment.
  4. On the 7 August 2006 the Workplace Ombudsman received a complaint from Humphries of underpayment of wages by the respondent. The Workplace Ombudsman’s office carried out an investigation that finalised in October 2006 with the respondent agreeing to pay Mr Humphries an additional sum of money being the amount of the shortfall in the wages that Humphries was entitled to as a result of the respondent’s breaches of the provisions of the Act. After that investigation concluded the applicant carried out further investigations in relation to the respondent’s other employee trolley collectors. This disclosed the additional breaches of the Act that had been referred to earlier in relation to the employees Cheel, Surha, Hoyle, Toolan and Caddy.

Course of conduct

  1. In light of an agreement between the applicant and respondent of the following matters and the material relied upon I find that:
  2. It is conceded on behalf of the respondent that the breaches of each of the three terms (ie. sub-ss.182(3), 182(4) and 185(3)) are to be treated as separate breaches and cannot be consolidated and treated as a single breach pursuant to s.719(2) of the Act. It is however submitted on behalf of the respondent that where there have been multiple breaches of a term, whether in relation to a single or multiple employees, that they should be treated as a single breach pursuant to s.719(2) of the Act on the basis that those breaches arose out of a course of conduct. It is further submitted therefore that, on this basis, the breaches should be taken to constitute single breaches of each of the three terms referred to (ie. ss.182(3), 182(4) and 185(3)).
  3. The applicant submitted that the 185 breaches of the three terms in relation to each of the six employees should be treated as, firstly, single breaches of the rates of pay provisions in relation to each relevant employee and, secondly, single breaches of the casual loading provision in relation to each employee. This is because, it was submitted, there were different and separate courses of conduct by the respondent in relation to each of the employees. On this basis there would be a total of twelve breaches of the relevant provisions: five breaches of s.182(3) relating to each of Humphries, Cheel, Surha, Hoyle and Toolan; one breach of s.182(4) relating to Caddy; and, six breaches of s.185(3) relating to each of Humphries, Cheel, Surha, Hoyle, Toolan and Caddy.
  4. It was submitted on behalf of the applicant that unless there was clear and unequivocal evidence in the applicant’s case of a course of conduct in relation to breaches of each of the provisions in relation to all employees (which in this case there was not) that it was incumbent upon the respondent to provide satisfactory evidence in support of their submission. It was submitted that no such evidence was tendered. The cases of Rowe v Capital Territory Health Commission (1982) 39 ALR 39 at 65 per Keely J and Australasian Meat Industry Employees’ Union v Meneling Station Pty Ltd (1987) 16 IR 245 were referred to by the applicant.
  5. Rowe’s case dealt with s.119(1a) of the Conciliation and Arbitration Act 1904 (Cth) which section also included the term “course of conduct.” The case concerned alleged breaches of the Hospital Employees etc (Nursing Staff ACT) Award 1980 in relation to two trainee nurses: Miss Sims and Miss Pfeiffer. The Court found that the two breaches (one in relation to each of the trainee nurses) did not arise out of a single course of conduct by the respondent within the meaning of s.119(1a) as:
  6. It was submitted on behalf of the applicant that the facts of Rowe’s case are analogous to the present case as:
  7. Contrary to the applicant’s submission concerning the breaches occurring at different times the tendered material leads me to the conclusion that, where employees’ periods of employment overlap, they were all paid on the same day on a weekly basis. I do not consider that the fact that the employees commenced and ceased their employment at different times or performed their work at different locations leads to the conclusion that there can not be a course of conduct as suggested by the respondent. The differences in the rates of pay for some of the six employees does however present an impediment to the conclusion that the respondent asks the Court to come to concerning course of conduct.
  8. It was submitted by Counsel for the respondent that the required course of conduct should be found to exist as “... the terms were breached in the same way with all employees, who were performing the same work ...”. The cases of Clothing and Allied Trading Union v Snugglerite Industries Pty Ltd (1990) 34 IR 124 at 126 and Cotis v Pow Juice Pty Ltd [2007] FMCA 140 at para.44 were referred to.
  9. In my view, it can not be said that there was a course of conduct that led to the underpayment breaches occurring in relation to all six employees in circumstances where employees were performing the same type of work but were being paid at different rates of pay. At some stage somebody on behalf of the respondent decided to pay some employees $12.75 per hour and others at lesser rates.
  10. The information before me shows that employees Toolan and Cheel both commenced their employment on 2 April 2006. For reasons that the respondent has not explained Cheel was paid at the rate of $12.75 per hour (the correct rate) whereas Toolan was only paid $8.00 per hour. Toolan continued to be paid $8.00 per hour until 25 June 2006 when his rate of pay was increased to $12.75 per hour. When the Standard rate was increased to $13.47 on 1 December 2006 the respondent wrongly continued to pay Toolan and Cheel at the rate of $12.75 per hour until they ceased work on 8 April 2007.
  11. Humphries commenced work on 15 April 2006 and was paid $6.00 per hour until he ceased employment with the respondent on 23 June 2006. He should have been paid at the rate of $12.75 per hour for this whole period.
  12. The next employee to be engaged by the respondent was the disabled employee, Caddy, on 8 November 2006. Caddy was paid the paltry sum of $5.00 per hour for the full period of his employment which ceased in April 2007. He should have initially been paid at the rate of $12.75 per hour and $13.47 per hour from 1 December 2006.
  13. Hoyle was employed by the respondent from 1 December 2006 and Surha from 10 December 2006. Both were paid at the rate of $12.75 per hour when they should have been paid at the rate of $13.47 per hour.
  14. It will be seen therefore that the respondent’s only breaches of the hourly rate provisions prior to 1 December 2006 (when the FMW hourly rate increased from $12.75 per hour to $13.47 per hour) were during the short periods that the respondent was paying Toolan at the rate of $8 per hour (for about 8 weeks), Humphries at the rate of $6 per hour (for 10 weeks) and Caddy at the rate of $5 per hour (for about 3 weeks). From 1 December 2006 the respondent was incorrectly paying all employees less than the proper hourly rate of $13.47: Toolan, Cheel, Hoyle and Surha were incorrectly continued to be paid at the hourly rate of $12.75, Toolan and Cheel for about 18 weeks each, Hoyle for about 9 weeks and Surha for about 17 weeks. Caddy continued to be paid at the rate of $5 per hour for about a further 18 weeks. Whilst the respondent generally paid its trolley collecting employees $12.75 per hour, at various times some were being paid $8.00, $6.00 or $5.00 per hour.
  15. On the limited information on the topic of course of conduct that has been provided to me by the respondent and after considering all of the material relied upon by the parties and on the basis of the approach adopted in Rowe’s case I consider it appropriate to find that the breaches by the respondent of sub-s.182(3) should be taken to constitute three courses of conduct in relation to that term: The first course of conduct relates to the breaches resulting from the respondent paying Toolan on the basis of $8.00 per hour from 2 April 2006 to 25 June 2006; the second course of conduct relates to the breaches resulting from the respondent paying Humphries on the basis of $6.00 per hour from 15 April 2006 to 23 June 2006; the third course of conduct relates to the breaches resulting from the respondent continuing to pay Cheel, Hoyle, Surha and Toolan from 1 December 2006 on the basis of $12.75 per hour when the hourly rate had been increased to $13.47. There will therefore be 3 penalties imposed for the breaches of s.182(3) of the Act.
  16. I find that the breaches of s.182(4) in relation to the payments to Caddy constitutes a single breach of the term by reason of s.719(2) of the Act and that there will be one penalty imposed for breach of that section.
  17. In relation to s.185(3) I find that the breaches in relation to all six employees should be taken to constitute a single breach pursuant to s.719(2) of the Act on the basis that they arose from a single course of conduct by the respondent that a casual loading would not be paid to any employees. There will therefore be one penalty imposed for breach of that section.
  18. The findings in relation to the appropriate number of penalties for the hourly rate breaches are summarised in the following table:
Employee Name
Periods of Breach
Rate of Pay per hour
Correct rate of pay per hour

Start
Finish
Penalty 1
Toolan
2 April 2006
25 June 2006
$8.00
$12.75
Penalty 3
1 December 2006
8 April 2007
$12.75
$13.47
Penalty 2
Humphries
15 April 2006
23 June 2006
$6.00
$12.75
Penalty 3
Cheel
1 December 2006
8 April 2007
$12.75
$13.47
Penalty 3
Hoyle
1 December 2006
26 February 2007
$12.75
$13.47
Penalty 3
Surha
10 December 2006
8 April 2007
$12.75
$13.47

Penalty 4
Caddy
8 November 2006
April 2007
$5.00
$12.75 until 30 November 2006

$13.47 from 1 December 2006

Breaches regarding maximum ordinary hours of work

  1. Orders 3 and 4 as sought by the applicant and as detailed earlier in these reasons relate to the respondent’s admitted contravention of sub-ss.226(1)(a)(i) and 226(1)(b)[9] of the Act in relation to the employee Toolan. If a declaration is granted it should be expressed to be a contravention of sub-s.226(1) of the Act rather than the 2 sub-sections mentioned. Sub-section 226(1) imposes an obligation on an employer not to require or request an employee to work more than a certain number of hours each week. Section 226 does not of course prevent an employer from requesting that an employee work additional hours, or an employee from working those additional hours.
  2. In the circumstances of this case the section simply prohibits the respondent from requiring or requesting an employee to work more than 38 hours per week unless those additional hours are reasonable. Reasonable additional hours are to be determined after a consideration of the matters referred to in sub-s.226(4). What, if any, are reasonable additional hours will obviously vary from case to case.
  3. On the basis of the material before me and the respondent’s admissions I consider it appropriate to make a declaration that the respondent has contravened sub-s.226(1) of the Act in relation to the employee Toolan. It is admitted that Toolan worked greater than the guaranteed maximum ordinary hours of work and reasonable additional hours for the duration of his employment with the respondent. He was employed from 2 April 2006 to 8 April 2007, a period of nearly 53 weeks. I find that the provision was breached each week that the respondent required or requested Toolan to work unreasonable additional hours. I therefore find that the provision has been contravened 52 times. The Court has not been informed why the additional hours worked by Toolan were not reasonable nor can the reason be inferred from the material relied upon which includes a record of interview of Toolan conducted by the applicant and Aaron Rilstone on 2 May 2007.
  4. The applicant does not seek, as she could have, the imposition of a penalty or penalties in relation to the breaches above referred to. Instead the applicant seeks an order pursuant to sub-ss.318(1) and 320(a) of the Act that the respondent pay an amount to Toolan as compensation for damage suffered as a result of the contravention above referred to. Section 318 provides as follows:

Subsection 226(1) is therefore a civil remedy provision.

Court orders
  1. Counsel for the applicant submitted that the Court should award compensation in this case “... because it is such a gross breach of (the) provision ...” and that a “... nominal figure ...” should be awarded “... in line with the idea of punitive damages”. Without knowing why the additional hours were unreasonable it is not possible for the Court to say this was a gross breach of the provision. Irrespective of whether it was a gross breach, I do not consider it appropriate to award compensation for damage unless damage is proven. The only facts that the applicant relies upon for the order that she seeks are contained in paragraphs 4.11 to 4.26 of the Statement of Agreed Facts reproduced earlier in these reasons. These paragraphs do not suggest that Toolan has suffered any loss. Nor does any of the other material put before the Court show that Toolan has suffered damage as a result of the respondent’s conduct. The respondent has made good the payment of additional monies as a result of the respondent breaching the FMW hourly rate and casual loading provisions for the full period of his employment. Mr Toolan is therefore not out of pocket so far as his wages are concerned. In these circumstances it is not appropriate to make any order for any further amount without damage being proven. I therefore decline to make the order sought.

Penalty

  1. Turning to the question of penalty, I take note of the numerous cases that have been referred to by the parties that indicate how questions of penalty should be determined and in particular the cases of Mason v Harrington Corporation Pty Ltd [2007] FMCA 7; Flattery v Zeffirelli’s Pizza Restaurant [2007] FMCA 9; Community and Public Sector Union v Telstra Corp Ltd [2001] FCA 1364; (2001) 108 IR 228; Kelly v Fitzpatrick [2007] FCA 1080; Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd & Ors (1997) 145 ALR 36; Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65; Salandra v Risborg Services & Ors [2008] FMCA 76). In assessing what the appropriate penalty is I have had regard to the lists of factors referred to in many of the cases. I acknowledge however that the matters that I have to consider are not all necessarily to be found in any such checklists.
  2. In his affidavit of 6 December 2007 Kon Angelopoulos explains how it came about that the respondent was conducting the trolley collection business. In doing so he stated that he and his brother “... were conscious of the fact that there were some changes to the law in March 2006 which may have effected the respondent company’s position in terms of the payments made to the workers.” I take this to mean that he and his brother were aware of the changes that came into effect in March 2006.
  3. Notwithstanding this knowledge neither brother took appropriate steps to ensure that their employees were receiving their correct entitlements. Kon says that he looked to ANS, being the company that transferred the trolley collection business to the respondent, to find out whether the rates that the respondent was paying the workers were correct. He says that after the Workplace Ombudsman’s office contacted the respondent concerning Humphries complaint he contacted ANS at which point ANS terminated the respondent’s services, which I assume to mean that they took back the contract for trolley collection services that the respondent had accepted.
  4. Other information indicates that the Workplace Ombudsman’s office contacted Milton Angelopoulos on 5 September 2006. The applicant says in her affidavit of 11 December 2007 that on 5 September 2008 she discussed Humphries complaint with Milton and obtained certain information about the number of hours that Humphries had worked. On 13 September 2006 the applicant sent a letter to the respondent advising it of her preliminary findings in relation to the Humphries complaint. That letter gave full details of s.182, 185, 186 and 195 of the Act. Notwithstanding this notice given to the respondent it:
  5. No satisfactory explanation has been given for this. There is also no satisfactory explanation why some of these employees at times were being paid $12.75 per hour when others were receiving as little as $8.00, $6.00 and $5.00 per hour. I have in an earlier decision referred to the possibility of exploitation of the vulnerable members of our community who seek work such as trolley collecting[10]. In the absence of a satisfactory explanation from the respondent I can only assume that there was a level of exploitation in relation to hourly rates in relation to Humphries, Toolan and Caddy.
  6. Although each of the employees suffered loss and damage as a result of the breaches concerning rates of pay and casual loading the respondent has made good their losses. The underpayments totalled $29,352.70 and occurred over the period 2 April 2006 to 8 April 2007. This amount is significant for any employees let alone the employees who seek this type of work.
  7. There is no evidence that the respondent has ever been involved in any earlier breaches of the Act.
  8. The respondent is a relatively small company. It is owned by the two directors mentioned. The respondent’s other business, known as The Bean Bar Coffee Shop, is a successful but small business operation.
  9. I take into account that prior to contact with the Office of the Workplace Ombudsman the Angelopoulos brothers may not have fully understood the company’s obligations in relation to exactly what the rates of pay should be or what casual loading applied. They were conscious that changes were taking place in March 2006 but took no proper or reasonable steps to find out what the company’s obligations were exactly. What is harder to understand is why the Angelopoulos brothers allowed the numerous breaches to occur in relation to casual loading from the time that they were contacted by the Workplace Ombudsman in early September 2005 in relation to rates of pay from early November 2006 until April 2007. I do not accept that at that stage they did not understand the respondent’s obligations in relation to casual loadings and rates of pay. I treat the continuing breaches in relation to the non-payment of the casual loading provisions to be done deliberately from September 2006 as were the recommencement of breaches of the hourly rate provisions from 8 November 2006 when Caddy was employed and paid $5 per hour.
  10. Any contrition shown by the respondent is a proper matter to take into account. The respondent did not take steps to rectify the breaches being committed by it (at that time the only breaches being committed were in relation to casual loading) as soon as it was advised by the Workplace Ombudsman of the breaches that had been occurring. The respondent took a long time to provide reparation to each of the employees concerned, with payment being made as late as during the course of these proceedings. This corrective action being taken by the respondent is however a relevant matter for me to take into consideration.
  11. There has not been the level of cooperation I would have hoped to see from the respondent towards the inquiries undertaken by the Workplace Ombudsman. The respondent was very slow to provide the information that the Workplace Ombudsman required.
  12. I make proper allowance for the fact that the respondent has admitted liability thereby avoiding the necessity of a trial.
  13. An important object of the Act is to maintain a safety net of minimum terms and conditions of employment. In determining the appropriate penalties I should take into account this important principal. I also need to ensure that a repetition of this or similar breaches by the respondent or by the wider business community is less likely to occur. This can only be achieved by ensuring that the penalties imposed are sufficiently high to be a warning to the respondent and others. The penalty “must be imposed at a meaningful level” (see Australian Competition & Consumer Commission v ABV Transmission & Distribution Ltd [2001] FCA 383; (2001) ATPR 41-815).
  14. In fixing pecuniary penalties for multiple breaches I must take into account the totality principle. Underlying this principle is the proposition that a defendant should not be punished more than once for the same failures. In Pearce v The Queen (1998) 194 CLR 610 the proposition was stated by Justices McHugh, Hayne and Callinan in the following terms:
  15. Tracey J in Kelly v Fitzpatrick [2007] FCA 1080 said:
  16. Having regard to the foregoing matters I consider that the just and appropriate penalty for each of the admitted breaches is as follows:

I have considered whether the aggregate figure of $40,000 is appropriate and am confident that such a penalty is justified when the respondent’s conduct is viewed as a whole.

  1. The penalties should be paid to the Commonwealth (see s.841(a) of the Act).
  2. I make the orders to be found at the beginning of these reasons.

I certify that the preceding 62Error! Style not defined.!Syntax Error, !Error! Style not defined.Error! Style not defined.!Syntax Error, !sixty-twosixty-two (62) paragraphs are a true copy of the reasons for judgment of Simpson FM


Associate: Julie Davey


Date: 29 January 2009

[1] For powers of workplace inspectors see s.169 of the Act.
[2] Paragraphs 2(a) and 2(b) were both numbered “2” in the original application and have been renumbered in these reasons for clarification purposes.
[3] APCS is short for Australian Pay and Conditions Scale.
[4] FMW is short for Federal Minimum Wage.
[5] I have assumed that this is a typographical error and that the year referred to should be 2007.
[6] Section 182(3) of the Act.
[7] Sections 185 and 186 of the Act.
[8] Section 226 of the Act.
[9] The sub-section is reproduced earlier in these reasons.
[10] Salandra v Risborg Services Pty Ltd [2008] FMCA 76.

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