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Fair Work Ombudsman v Efes Bakery Pty Ltd [2010] FMCA 48 (24 March 2010)

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Fair Work Ombudsman v Efes Bakery Pty Ltd [2010] FMCA 48 (24 March 2010)

Last Updated: 26 March 2010

FEDERAL MAGISTRATES COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v EFES BAKERY PTY LTD

INDUSTRIAL LAW – Pecuniary penalties – breaches of Workplace Relations Act 1996, Workplace Relations Regulations 2006 and Breadcarter’s (Metropolitan) Award No. 35 of 1963 (WA) – total penalty of $19,500.

Breadcarter’s (Metropolitan) Award No. 35 of 1963 (WA), cl.6, 7, 24 & 24A

Finance Sector Union v Commonwealth Bank of Australia [2005] FCA 1847
Commonwealth Bank of Australia & Anor v Finance Sector Union of Australia [2007] FCAFC 18

Applicant:
FAIR WORK OMBUDSMAN

Respondent:
EFES BAKERY PTY LTD

File Number:
PEG 83 of 2009

Judgment of:
Simpson FM

Hearing date:
2 September 2009

Date of Last Submission:
2 September 2009

Delivered at:
Adelaide

Delivered on:
24 March 2010

REPRESENTATION

Counsel for the Applicant:
Mr Ellery (with Ms Barsby)

Solicitors for the Applicant:
Corrs Chambers Westgarth Lawyers

Counsel for the Respondent:
Mr Lindsay

Solicitors for the Respondent:
Sir Clifford Grant Chambers

ORDERS

THE COURT DECLARES THAT:

(1) In contravention of section 185(2) of the Workplace Relations Act 1966 (Cth) (“WR Act”), the respondent failed to pay the applicable casual loading to Mr Patrick Stacey (“Employee”) during the period of his employment (from on or about 19 July 2006 to 23 September 2008) (“Period of Employment”).
(2) In contravention of clause 6(6) of the notional agreement preserving State awards derived from the Breadcarter’s (Metropolitan) Award No. 35 of 1963 (WA) (“Award”) (“NAPSA”), the respondent failed during the Period of Employment to pay the Employee the applicable 15% “early start premium” on each of the Employee’s ordinary hours where the Employee was required to commence working before 7am.
(3) In contravention of clause 24A(5) of the NAPSA, the respondent failed during the Period of Employment to pay the applicable overtime rates to the Employee for his work on Saturdays.
(4) In contravention of clause 24A(5) of the NAPSA, the respondent failed during the Period of Employment to pay, in addition to normal overtime rates referred to in paragraph 3 of this Order, the applicable loading of 10% of ordinary time earnings for work performed to the Employee.
(5) In contravention of regulation 19.9(1) of Chapter 2 of the Workplace Relations Regulations 2006 (Cth) (“WR Regulations”), the respondent did not keep a record containing the start and finish times for the Employee’s additional work or the number of additional hours worked.
(6) In contravention of regulation 19.11(3) of Chapter 2 of the WR Regulations, the respondent did not, in circumstances where the Employee was entitled to be paid loadings and penalty rates, include in its record in relation to the Employee details of the loadings or penalty rates.
(7) In contravention of regulation 19.4(1) of Chapter 2 of the WR Regulations, the respondent did not make, or cause to be made, a record in accordance with Divisions 3 and 4 relating to the Employee.

THE COURT ORDERS THAT:

(8) A pecuniary penalty in the sum of FOUR THOUSAND FIVE HUNDRED DOLLARS ($4,500) be imposed on the respondent pursuant to section 719(1) of the WR Act in relation to the respondent’s contraventions of section 185(2) of the WR Act in that the respondent failed to pay the applicable casual loading to the Employee during the Period of Employment.
(9) A pecuniary penalty in the sum of FOUR THOUSAND FIVE HUNDRED DOLLARS ($4,500) be imposed on the respondent pursuant to section 719(1) of the WR Act in relation to the respondent’s contraventions of clause 6(6) of the NAPSA in that the respondent failed during the Period of Employment to pay the applicable 15% “early start premium” on each of the Employee’s ordinary hours where the Employee was required to commence working before 7am.
(10) A pecuniary penalty in the sum of FOUR THOUSAND FIVE HUNDRED DOLLARS ($4,500) be imposed on the respondent pursuant to section 719(1) of the WR Act in relation to the respondent’s contraventions of clause 24A(5) of the NAPSA in that the respondent failed during the Period of Employment to pay the applicable overtime rates to the Employee for his work on Saturdays.
(11) A pecuniary penalty in the sum of FOUR THOUSAND FIVE HUNDRED DOLLARS ($4,500) be imposed on the respondent pursuant to section 719(1) of the WR Act in relation to the respondent’s contraventions of clause 24A(5) of the NAPSA in that the respondent failed during the Period of Employment to pay, in addition to normal overtime rates referred to in paragraph 10 of this Order, the applicable loading of 10% of ordinary time earnings for work performed to the Employee.
(12) A pecuniary penalty in the sum of FIVE HUNDRED DOLLARS ($500) be imposed on the respondent pursuant to regulation 14.4 of Chapter 2 of the WR Regulations in relation to the respondent’s contraventions of regulation 19.9(1) of Chapter 2 of the WR Regulations in that the respondent did not keep a record containing the start and finish times for the Employee’s additional work or the number of additional hours worked.
(13) A pecuniary penalty in the sum of FIVE HUNDRED DOLLARS ($500) be imposed on the respondent pursuant to regulation 14.4 of Chapter 2 of the WR Regulations in relation to the respondent’s contraventions of regulation 19.11(3) of Chapter 2 of the WR Regulations in that in circumstances where the Employee was entitled to be paid loadings and penalty rates, the respondent’s record in relation to the Employee did not contain details of the loadings or penalty rates.
(14) A pecuniary penalty in the sum of FIVE HUNDRED DOLLARS ($500) be imposed on the respondent pursuant to regulation 14.4 of Chapter 2 of the WR Regulations in relation to the respondent’s contraventions of regulation 19.4(1) of Chapter 2 of the WR Regulations in that the respondent did not make, or cause to be made, a record in accordance with Divisions 3 and 4 relating to the Employee.
(15) The respondent pay to the Employee the outstanding amounts of the underpayments, pursuant to section 719(6) of the WR Act, taking into account any payments made by the respondent and received by the Employee in accordance with the respondent’s undertaking dated 17 February 2009.
(16) The respondent do forthwith pay to the Commonwealth of Australia the sum of NINETEEN THOUSAND FIVE HUNDRED DOLLARS ($19,500), being the total of the penalties referred to in paragraphs 8, 9, 10, 11, 12, 13 and 14 of this Order.
(17) The Amended Application filed on 4 September 2009 do otherwise stand dismissed.
FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
ADELAIDE

PEG 83 of 2009

FAIR WORK OMBUDSMAN

Applicant


And


EFES BAKERY PTY LTD

Respondent


REASONS FOR JUDGMENT

Introduction

  1. I have before me an Amended Application in which the applicant, the Fair Work Ombudsman, seeks certain declarations for contraventions by the respondent of the Workplace Relations Act 1996 (Cth) (“WR Act”), the notional agreement preserving State awards derived from the Breadcarter’s (Metropolitan) Award No. 35 of 1963 (WA) (“NAPSA”) and contraventions of certain regulations under the Workplace Relations Regulations 2006 (Cth) (“WR Regulations”). The contraventions relate to the failure of the respondent to pay one of its employees, Mr Patrick Stacey (“Employee”), a 20% casual loading, a 15% early start premium, overtime rates for work performed on Saturdays and a 10% casual loading for overtime worked, as well as the failure by the respondent to keep records in relation to the start and finish times of the Employee’s overtime on Saturdays, details of the Employee’s loadings and penalty rates and certain other records that it was obliged to keep.
  2. Fortunately the parties have been able to reach agreement about the facts giving rise to the application.
  3. The parties have each put affidavit and other material before the Court without the need for any oral evidence.
  4. The applicant relies upon the following documents:
    1. Affidavit of the Employee sworn on 16 July and filed on 14 August 2009;
    2. Affidavit of Scott Stuart Sutherland affirmed on 15 July and filed on 14 August 2009; and
    1. letter from Corrs Chambers Westgarth (solicitors for the applicant) to Mr Robert Lindsay (solicitor for the respondent) dated 1 September 2009.
  5. The evidence relied upon by the respondent is as follows:
    1. Affidavit of Ayjut Sadak affirmed on 19 August 2009 (sic) and filed on 3 August 2009;
    2. Affidavit of Gregory Paul Logan-Scales sworn and filed on 3 August 2009;
    1. Affidavit of Sara Sadak sworn on 19 August 2009 (sic) and filed on 3 August 2009;
    1. Affidavit of Roger Thiraviraja affirmed on 17 August 2009 (sic) and filed on 3 August 2009;
    2. Affidavit of Ting Liu affirmed on 17 August 2009 (sic) and filed on 3 August 2009;
    3. Affidavit of Ting Liu affirmed on 17 August 2009 and filed on 21 August 2009;
    4. Affidavit of Sara Sadak affirmed and filed on 31 August 2009; and
    5. Affidavit of Sara Sadak affirmed and filed on 2 September 2009.

Statement of Agreed Facts

  1. The Amended Statement of Agreed Facts that the parties rely on was in the following terms[1]:

The Applicant and the Court’s Jurisdiction

(e) Pursuant to clause 11(1) of Part 3 of Schedule 2 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act), the Workplace Relations Act 1996 (Cth) (WR Act) continues to apply on and after “the WR Act repeal day” in relation to conduct that occurred before that day.
(f) The WR Act repeal day was 1 July 2009.
(g) Pursuant to clause 25 of Part 5 of Schedule 17 to the Transitional Act, jurisdiction is conferred on the Federal Magistrate’s (sic) Court in relation to any matter arising under the WR Act as it continues to apply because of the Transitional Act.
(h) The amended Application was made to the Federal Magistrate’s (sic) Court under the WR Act which continues to apply because of the Transitional Act.
(i) Pursuant to clause 13(1) of Part 3 of Schedule 18 to the Transitional Act, for the purposes of the application of the WR Act in relation to conduct that occurred prior to 1 July 2009, an application that could have been made by a workplace inspector prior to 1 July 2009 may be made after 1 July 2009 by a Fair Work Inspector.
(j) The Applicant is, by force of section 701 of the FW Act, a Fair Work Inspector.

The Respondent

(k) The Respondent is, and at all material times was, a constitutional corporation within the meaning of section 6(1)(a) of the WR Act.
(l) The Respondent is, and at all material times was, a registered Australian proprietary company limited by shares.
(m) The Respondent operates, and at all material times operated, the business known as “Efes Bakery” based at 10 Forge Street, Welshpool, Western Australia, 6106 (in metropolitan Perth) through which the Respondent, among other things, makes, sells and delivers bread to customers throughout the Perth metropolitan area (Business).
(n) At all material times, the Respondent operated the Business through the premises referred to in paragraph [k] of this Statement.
(o) The Respondent employs, and at all material times employed, a number of employees.
(p) One of the employees that the Respondent employed was Mr Patrick Stacey (Complainant) who was employed by the Respondent as a casual delivery driver (or “breadcarter”) commencing on or about 16 July 2006 until 23 September 2008 (Period of Employment).
(q) The Respondent has not previously been prosecuted for any contraventions of a similar nature to the contravention in these proceedings.

The Complainant

(r) The Complainant was primarily required to deliver bread from the Respondent’s bakery and deliver it to customers throughout metropolitan Perth using a van supplied by the Respondent (Bread Runs). As part of his duties the Complainant was required to pack and unpack the van, deal with paperwork associated with the Bread Runs (including order forms) and perform various other associated duties.

Application of the NAPSA

(s) The Complainant’s employment with the Respondent was subject to the notional agreement preserving State awards derived from the Breadcarter’s (Metropolitan) Award No. 35 of 1963 (WA) (Award) (NAPSA).

Casual Loading - Breach of Section 185(2) of the WR Act

(t) The Complainant was a casual employee.
(u) The Complainant was entitled to receive a 20% casual loading for all hours worked under s.185(2) of the WR Act.
(v) Clause 24(3) of the Award provides for a 20% loading on ordinary time earnings for the work performed by a casual employee.
(w) The casual loading provisions set out in clause 24(3) of the Award fall within the Australian Pay and Classification Scale.
(x) The Complainant was not paid a 20% casual loading in respect of any of the work he performed during the Period of Employment.

Early Start Premium - Breach of Clause 6(6) of the NAPSA

(y) The Complainant was entitled to receive an extra 15% as an early start premium for all hours worked on Mondays to Fridays under clause 6(6) of the NAPSA.
(z) The Complainant was not paid the 15% early start premium for any of the work he performed during the Period of Employment

Overtime Rates - Breach of Clause 8(1) of the NAPSA

(aa) The Complainant was entitled to receive time and one half for the first two hours worked on Saturdays and double time thereafter under clause 24A(5) of the NAPSA (see also clause 7(2) of the NAPSA).
(bb) The Complainant was not paid overtime rates for any of the work he performed on Saturdays during the Period of Employment.

Casual Overtime Loading - Breach of Clause 24A(5) of the NAPSA

(cc) The Complainant was entitled to receive payments that were 10% of ordinary time earnings for the work performed (10% payments). Such payments are in addition to normal overtime rates, for all overtime worked (ie. all hours worked on Saturdays) under clause 24A(5) of the NAPSA.
(dd) The Complainant was not paid the 10% payments which he was entitled to during the Period of Employment.

Record-keeping - Breach of Regulations 19.9, 19.11 and 19.4

(ee) Under regulation 19.9(1) of Chapter 2 of the Regulations, the Respondent was required to keep a record containing the start and finish times for the Complainant’s work on Saturdays.
(ff) Records kept by the Respondent (Records) did not contain the start and finish times for the Complainant’s work on Saturdays.
(gg) The Respondent thereby contravened regulation 19.9(1) of the Regulations.
(hh) Under regulation 19.11(3) of Chapter 2 of the Regulations, the Respondent was required to keep a record containing details of the Complainant’s entitlements.
(ii) The Records did not contain details of the Complainant’s entitlements.
(jj) The Respondent thereby contravened regulation 19.11(3) of the Regulations.
(kk) Under regulation 19.4(1) of Chapter 2 of the Regulations, the Respondent was required to make, or cause to be made, a record in relation to the Complainant in accordance with Divisions 3 and 4 of Chapter 2 of the Regulations.
(ll) As regulation 19.9(1) and 19.11(3) are each contained in Division 3 of Chapter 2 of the Regulations, the Respondent did not comply with this obligation and thereby contravened regulation 19.4(1) of the Regulations.

Investigation

(mm) In August 2008 the Applicant received a complaint from the Complainant in relation to the non-payment of his entitlements by the Respondent. The Applicant investigated the matter.
(nn) At all stages of the investigation the Respondent was fully cooperative in that it complied with requests made by the WO in a timely manner to provide documents to participate in interviews with officers of the WO and freely explained the conduct of the Respondent and the reasons for the conduct.
(oo) Following the Applicant’s investigation, the Applicant served a breach notice dated 14 January 2009 on the Respondent in relation to its failure to pay the specified entitlements to the Complainant.

Quantum of Underpayments

(pp) The table below sets out the basic hourly rates of pay under the pay scale derived from the Award (as adjusted by the Australian Fair Pay Commission) for the Complainant’s classification (Grade 2) and the rates of pay applicable to him having regard to entitlements to loadings and penalties under the NAPSA.
Hourly Rate of Pay
Pre 1/12/6
Post 1/12/6
Post 1/10/7
Basic
14.04
14.76
15.03
Casual Basic
16.85
17.71
18.04
Casual Early Start Weekday
19.37
20.37
20.74
Casual Overtime (Saturday) – 1st 2 hours
22.46
23.62
24.05
Casual Overtime (Saturday) - After 1st 2 hours
29.48
30.99
31.56

(qq) In the table in paragraph [42]:
  1. the Casual Basic rates incorporate a 20% casual loading in addition to the Basic Hourly Rates;
  2. the Casual Early Start Weekday rates incorporate a 15% early start premium in addition to the Casual Basic rates;
  3. the Casual Overtime rates incorporate the relevant 50% or 100% overtime loading and the 10% casual loading.
(rr) The Complainant was entitled under clause 24(3) of the NAPSA to be paid for a minimum of four hours per day.
(ss) The Respondent paid the Complainant at the rate of:
  1. $60 per day (19 July 2006 to 3 August 2008); and
  2. $65 per day (4 August 2008 to 22 September 2008).
(tt) Annexed to this Statement is a table that sets out the Applicant’s calculation of the total amount by which the Complainant was underpaid. This total is $16,204.88.
(uu) By a signed agreement dated 17 February 2009, the Respondent acknowledged that it had underpaid the Complainant and undertook to pay outstanding entitlements of $16,204.88 to the Complainant by way of 32 weekly instalments from 18 February 2009, with the last payment due to be paid on 23 September 2009.
(vv) As at 26 August 2009 the Respondent had made each payment due under this agreement to a total of $14,179.28 (gross).

Signed on behalf of Corrs Chambers Westgarth (lawyers for the applicant) and by Mr Robert Lindsay (lawyer for the respondent) on 3 September 2009.

Findings

  1. Although the applicant did not seek to cross-examine the deponents to any of the affidavits relied upon by the respondent, the applicant raised a number of objections to the content of the affidavits of Logan-Scales, Ayjut Sadak, Thiraviraja, Sara Sadak and Ting Liu. These objections were detailed in a document titled “Applicant’s Objection to Evidence” handed up by counsel for the applicant. Counsel for each of the parties were content that I receive the evidence and give it such weight as I consider appropriate in light of the submissions put. I have taken into account the objections raised.
  2. I accept that each of the deponents to the affidavits have been truthful.
  3. On the basis of the evidentiary material referred to, I accept that the Amended Statement of Agreed Facts is accurate and therefore make findings as detailed in that document.
  4. On the basis of these findings, I propose to make declarations in terms of paragraphs 1 to 7 (inclusive) of the relief sought in the Amended Application filed on 4 September 2009 and to impose penalties as sought in paragraphs 8 to 15 (inclusive) of the relief sought in the Amended Application.
  5. It remains to decide whether a penalty should be imposed in relation to each of the contraventions and, if so, the quantum of those penalties.

Background

  1. Ayjut Sadak (“Mr Sadak”) is managing director of the respondent. His native language is Turkish but he understands written English.
  2. Mr Sadak says that the Employee was engaged as a delivery driver to deliver bread for the respondent six days a week for a few hours each day. He says that prior to the applicant contacting the respondent, the respondent did not pay its delivery drivers on an hourly basis but on a “run” basis. A run is a set route to be travelled by a delivery driver with deliveries to be made to customers along that route. Employees were paid a fixed amount for each run based on the respondent’s experience of how long the run would usually take. Mr Sadak says that they did this because it had been their experience that payment by the hour resulted in employees wasting time and, as a small business, the respondent could not afford unnecessary costs.
  3. Mr Sadak says that he considered $20 per hour to be “fair value for the work done and which covers everything”. He says that before the applicant started investigating the respondent’s conduct he had never considered what entitlements at law an employee should receive. He says that he considered the Employee to be a “casual” and therefore believed that the respondent did not have to pay for holidays or make superannuation contributions.
  4. Mr Sadak says that he did not have any dealings with the Employee during the period of his employment until very near the end. He says that the Employee was not required to be at work early every morning but he often was. He says that the Employee was not required to do any work packaging the bread or date-stamping the bread.
  5. Mr Sadak said that he remembers being approached by his wife, Sara Sadak (“Mrs Sadak”) saying that they had received a letter from the Workplace Ombudsman about the Employee. He says that after speaking to his wife he then contacted the Ombudsman’s office. He says that he did not understand at the time what the role of the Workplace Ombudsman was. He thought that the Workplace Ombudsman was just somebody from the government that negotiated for employees.
  6. Mr Sadak says that he now accepts that he should have paid the Employee for public holidays, annual leave and superannuation contributions but had previously assumed that he was a casual and that therefore it was not necessary to pay these amounts.
  7. Mrs Sadak says that she is a director of the respondent. She says that she and her husband are the sole shareholders of the business. She says that she has no formal qualifications in business management and has learnt what she has on the job. She says that she and her husband have been in Australia now for twenty years.
  8. Mrs Sadak says that the bakery business was established in the late 1990s, when she and her husband operated a takeaway food establishment. They made Turkish bread at a time when there was only one other bakery in Perth that did so. The respondent was eventually lucky enough to sell its breads to supermarkets, with the result that the business rapidly expanded. Major supermarket chains now account for about eighty-five per cent of the respondent’s business.
  9. In 2002 the respondent moved its business to new premises, at which time they were employing about thirty-five people. The respondent borrowed about $1.5 million to build and equip the new premises. The loan has not yet been paid off. Although the business grew for the first few years after the move it has since declined because of increased competition, such that the level of business is now at the same level as when the move took place.
  10. Mrs Sadak says that the business has earned about $280,000 before interest and taxes for each of the past three years. She says that she is paid $346 gross per week ($320 net) and that her husband is paid $500 gross per week ($445 net). Mrs Sadak says that the business has an overdraft facility with the bank, which, before making payments to the Employee to reimburse him for his lost wages, had an overdraft balance of $80,000. She says that the respondent has recently taken out another overdraft facility of $100,000 to deal with cash-flow problems that have arisen this year and the legal expenses of these proceedings. Mrs Sadak says that the respondent did not intend to underpay the Employee.
  11. Mrs Sadak confirms Mr Sadak’s evidence on the topic when she says that the respondent employed the delivery drivers on a daily rate because this encourages the drivers to not waste time as the respondent is a small business and is unable to afford unnecessary costs. She says that she believed that the daily rate would cover all the respondent’s financial obligations to the Employee. She says that she was not aware that the Employee’s employment was subject to the Breadcarter’s NAPSA but believed that the State Transport Worker’s Award applied. She says that the respondent obtained information about award obligations as a result of her telephoning the State government telephone service known as Wage Line about twice a year. She says that on no such occasions was she told about penalty rates or minimum engagement periods. She was simply provided with information about award wages and conditions. She was never informed that there was a separate award for breadcarters or that there were minimum hours of engagement for casual employees or that penalty rates had to be paid for working particular hours.
  12. Mrs Sadak says that the business has taken steps to ensure that it will be compliant with the NAPSA in future. The respondent has become a member of the RAYCON Group Employer Association since June 2009. The Group is providing advice to the respondent on its business’ employment obligations. She says that the RAYCON has been engaged to conduct an audit on the respondent’s workplace practices and to identify any other underpayments or improper practices, which she says will be corrected.
  13. Mrs Sadak says that as at September 2009 the balance of the respondent’s business loans totalled $1,153,000. She says that the bank valuation of the respondent’s business as at 14 August 2007 was $1,975,000. She has provided the Court with a copy of the respondent’s financial statements for the 2007/2008 financial year. She has also provided a draft of the 2008/2009 financial year financial statements. As she is inexperienced in accounting matters, she is unable to say how accurate these financial statements are. The statements show a gross profit from trading in the 2006/2007 financial year of $1,217,330 and in the 2007/2008 financial year a gross profit from trading of $1,227,633. The draft financial statement for the 2008/2009 financial year is not sufficiently advanced to be if assistance to the Court.
  14. Roger Thiraviraja (“Mr Thiraviraja”) is the respondent’s Operations Manager. He interviewed the Employee when he applied for a job with the respondent in mid-2006 after which he was engaged and provided with training to do the job. Mr Thiraviraja told the Employee that he would be doing a run (ie. a delivery of bakery items to customers on a set route) that should take him three to three and a half hours per day. The Employee said that he was happy with the available hours. Mr Thiraviraja told him that the job paid $60 per shift (or run) and that he would be paid the same amount irrespective of how long it took. He says that the Employee did not have any questions about annual leave, sick leave or public holidays and that he (ie. Mr Thiraviraja) did not say anything about these matters. The Employee indicated that for personal reasons he would like to start the run early so that he could ensure to be finished by 8:30am. The Employee said that this was because his wife had to go to work and he needed to be available to for child-care duties from 8:30am onwards.
  15. Mr Thiraviraja said that in late 2007 the Employee asked for a wage increase and was told that he would have to wait until 2008, at which time Mr Thiraviraja would speak to Mr Sadak about the matter. In August 2008 the Employee’s rate was increased to $65 per run.
  16. Mr Thiraviraja said that he had an argument with the Employee in 2008 that resulted in the Employee resigning his employment with immediate effect. The argument happened as a result of the Employee commencing work so early that the baking and packaging staff had not had an opportunity to properly prepare the goods to be distributed by the Employee on his run.
  17. The Employee says in his Affidavit that he applied for his position with the respondent as a result of an advertisement in the Western Australian newspaper in around June or July 2006. He recollects that the advertisement said that the position with the respondent was to be on a casual basis. He says that he wanted the job because the hours suited him as he had to look after his son from mid-morning. A job with an 8am finish would therefore be perfect for him. He says that the advertisement did not state what the pay was but he thought at the time that it might pay $20 an hour.
  18. The Employee says that he initially had difficulty in finishing the job by 8am as he was not familiar with the route and would sometimes get lost. He says that he would start his delivery run at 4am but that he would be available to load the van by 3:30am. He says that if the bread to be delivered was not completely ready at the time that he arrived he would assist with packing, although this was not strictly speaking part of his job.
  19. The Employee says that the only pay rise that he had was about two months before his employment ceased with the respondent. That pay rise was an extra $30 per week (ie. a daily rate increased from $60 to $65).
  20. The Employee says that in September 2008 he complained to the Workplace Ombudsman that he was not being paid properly by the respondent. Part of his complaint was that the respondent’s van that the Employee was provided with for deliveries would sometimes break-down and he would have wait for someone to pick him up. This would sometimes result in him being very late in completing his deliveries. The result of him finishing work late was that his girlfriend would have to contact her employer to let them know that she too would be late. This created difficulties for the Employee’s family. The Employee was also concerned that on some occasions the deliveries took longer than usual, even without the van breaking down, which would also make him late to return to look after his child. Busy (and therefore longer) days each week were Monday, Wednesday and Friday.
  21. The Employee says that later in his employment he complained every month to his boss that he should be being paid by the hour. His boss would reply with words to the effect that he would speak to Mr Sadak about the matter. Occasionally his boss would say words to the effect that if he was not happy with what he was being paid he should leave. The Employee says that he remained patient as he needed the money, even though it was not very much.
  22. The Employee says that on 22 September 2008 he worked from 4am until 10am. This was later than usual because the van would start. He says that before commencing the bread run he approached Mr Sadak to give him a letter that he had drafted (with the assistance of his girlfriend) complaining about the pay arrangements. He said to Mr Sadak that he wanted to raise concerns about being paid incorrectly. He says that Mr Sadak said words to the following effect:

We need to negotiate what you should be paid. I am prepared to back pay you for $400 and then to pay you $80 for each busy day and $65 a day for Tuesday, Thursday and Saturday.

The Employee says that he said to Mr Sadak words to the following effect:

I need to think about this because that does not sound like what I should be getting paid under the Award. I wrote a letter yesterday that tells you my position.

He says that Mr Sadak said words to the following effect:

I do not want that letter and I am not accepting it.

He says that Mr Sadak also said words to the following effect:

The bread run only takes two to three hours and that is good money for that period of time.

He says that Mr Sadak also suggested that he start work an hour later (ie. 5am) but the Employee found that unacceptable as it would impact on him getting in home in time to care for his son. The Employee says that later that day he telephoned Mr Sadak and said words to the following effect:

I am still not happy with what you are saying you will pay me. I want the Workplace Ombudsman to negotiate on my behalf.

He says that Mr Sadak said to him words to the following effect:

So does that mean that you are not coming in any more?

To this the Employee replied:

No, I am still coming in but I will continue to get the Ombudsman to negotiate on my behalf.

The Employee says that he arrived at work at 5am the next day as suggested by Mr Sadak but noticed on his arrival that another driver was preparing to do his bread run. The new driver told him that he had been told that the Employee would not be doing deliveries any more. The Employee spoke with his boss and asked whether he had been unfairly dismissed, to which his boss replied:

Fuck off, if you don’t want to accept the pay rate, you should fuck off.

The Employee says that his boss was aggressive when he said this and, because of his concern about his safety, he decided to walk away and leave the workplace. The Employee went to Centrelink and was told that for Centrelink benefits he needed to get an Employer’s Separation Certificate (“ESC”). The Employee returned to the workplace soon afterwards and saw Mrs Sadak and said to her words to the following effect:

I did not leave voluntarily. I have been pushed out.

He says that Mrs Sadak responded with the words:

That is not what I have heard and anyway your run only takes two to three hours.
  1. The Employee says that he was given an ESC, which incorrectly stated that he left the respondent voluntarily. This created difficulties for him with Centrelink. Being without a job or Centrelink benefits caused the Employee great stress and anxiety until the matter was sorted out with Centrelink.
  2. I accept the truthfulness of the evidence of the Employee.

Penalty

  1. These breaches occurred after the commencement of the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) (“Work Choices Act”) on 27 March 2006. Pursuant to cl.11(1) of Part 3 of Schedule 2 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), the WR Act continues to apply on and after the WR Act repeal day in relation to conduct that occurred before that day. The WR Act repeal day was 1 July 2009.
  2. It is submitted on behalf of the applicant that the respondent’s contraventions of s.185(2) of the WR Act and of cl.6(6) of the NAPSA arose out of a single course of conduct by it. It is further submitted that both contraventions relate to what can be described as “weekly” contraventions (ie. they arose out of obligations from payment for the weekday work performed). It is then submitted that they should be taken to constitute a single breach for the purposes of s.719 of the WR Act. It is further submitted that these submissions should apply equally to the respondent’s contraventions of cl.24A(5) and cl.8(1) of the NAPSA as they can be described as “Saturday” contraventions and should be taken to constitute a single breach for the purposes of s.719 of the WR Act. I do not agree.
  3. Section 185(2) of the WR Act provides as follows:
  4. Clause 6(6) of the NAPSA provides as follows:
  5. Neither the statutory provision nor the NAPSA provision can be described as “weekday” contraventions. They both apply to any day that a casual employee works. The statutory provision provides for the payment of a loading to any person employed as a casual. The NAPSA provision provides for the payment of a loading of 15% whenever a casual employee is required to work before 7am. These are quite separate obligations placed on employers and cannot and should not be dealt with as a single breach of s.719 of the WR Act.
  6. In relation to the so-called “Saturday” contraventions, cl.24A(5) of the NAPSA states:
  7. Clause 8(1) of the NAPSA provides as follows:
  8. Again, neither provision can be described as “Saturday” contraventions. Whilst both provisions deal with the payments to be paid where overtime is worked, cl.8(1) deals with the payment to be made where an employee works overtime whether inside or outside of ordinary hours. Clause 24A(5) provides for an extra loading where overtime is worked outside of ordinary hours. Again, these are separate obligations that the respondent failed to adhere to. They should be dealt with as separate breaches. I take into account, however, that the respondent failed to pay any loading, whether for:
    1. the employee being casual;
    2. working before 7am; or
    1. working overtime, whether:
      1. inside; or
      2. outside,

of ordinary working hours.

  1. By reasons of s.719(2) of the WR Act and reg.14.5 of the WR Regulations respectively numerous breaches of the same applicable provision in relation to the WR Act or civil remedy provision of the WR Regulations are to be treated as single contraventions of each applicable provision. The respondent’s conduct would therefore be treated as four breaches of the applicable provisions and three breaches of the WR Regulations.
  2. Penalty for breach of an applicable provision (including s.185(2) of the WR Act and cls.6(6), 8(1) and 24A(5) of the NAPSA) is determined by s.719(4) of the WR Act. The maximum penalty that can be imposed on a company for a contravention of an applicable provision is 300 penalty units which equates to $33,000. Penalty for breach of a civil remedy provision of the WR Regulations (including WR regs.19.9(1), 19.11(3) and 19.4(1)) is determined by WR Regulation 14.4. The maximum penalty that can be imposed on a company for a contravention of a regulation is 10 penalty units which equates to $1,100. Accordingly, the maximum penalty that can be imposed in this case is $135,300.
  3. Many of the considerations that need to be addressed when considering penalty in matters such as the present case have been identified in decisions of the Federal Court of Australia and the Federal Magistrates Court of Australia.[2] They are as follows:
    1. the nature and extent of the conduct which led to the breaches;
    2. the circumstances in which the conduct took place;
    1. the nature and extent of any loss or damage sustained as a result of the breaches;
    1. whether there has been similar previous conduct by the party;
    2. whether the breaches were properly distinct or arose out of the one course of conduct;
    3. the size of the business enterprise involved;
    4. whether or not the breaches were deliberate;
    5. whether senior management was involved in the breaches;
    6. whether the party committing the breach had exhibited contrition for the breach firstly, by taking action to make reparation for any loss resulting from the breach whether or not there was a legal obligation to do so and second, in any other manner;
    7. whether the party committing the breach has taken corrective action to ensure further breaches do not occur;
    8. whether the party committing the breach has co-operated with the enforcement authorities;
    1. the need to ensure compliance with minimum standards by provision of an effective means for investigating and enforcement of employee entitlements;
    1. the need for specific and general deterrence;
    2. if the party has admitted the breaches of the applicable provisions, that fact; and
    3. if the party is an individual, the character, antecedents, age, means and physical and mental condition of the party.
  4. The principal objects of the WR Act are set out in s.3. Those objects include:
  5. These objects highlight the importance of compliance under the WR Act and the responsibility of parties, particularly employers.
  6. Major changes were made to the WR Act as a result of the Work Choices Act. The Explanatory Memorandum to the Bill for the Work Choices Act outlined that the major changes were to:

...

  1. In Finance Sector Union v Commonwealth Bank of Australia[3], Merkel J noted the significant increase in the maximum penalties available for breaches industrial laws and observed:
  2. Although the penalty imposed by Merkel J in respect of the contravention of s.298K of the pre-reform Act ($600,000) was overturned on appeal[5] and a substituted penalty of $300,000 imposed, Branson J (with whom Spender J agreed in relation to the reduction of penalty) indicated that there was no demonstrable error of principle affecting the penalty imposed by Merkel J at first instance. Her Honour reaffirmed the warning that it may well be that it is appropriate for penalties imposed under the WR Act to rise and rise appreciably.
  3. This Court has applied the approach in Mason v Harrington Corporation Pty Ltd[6], in which Mowbray FM stated:
  4. The nature of the respondent’s conduct was a failure over little more than two years to do that which the legislation required to be done, namely, to pay casual loading, to pay the early start premium, to pay the applicable rates for Saturday work, to pay the additional loading for work performed on Saturdays and to keep proper records in accordance with the applicable regulations.
  5. It is to be noted that in this case there were a significant number of contraventions, all in relation to one employee. The amount of the underpayments was also significant (in total $16,204.88), especially having regard to the fact that the Employee had relatively low wage entitlements.
  6. I take into account in relation to the respondent’s contravention of the record keeping provisions of the WR Regulations that the contraventions were in relation to one casual employee only and that they extended over a period of a little over two years. The failure to keep appropriate records made it difficult for the applicant and the Employee to identify the precise number of hours in excess of four that the Employee worked each shift. I am not prepared to infer, as the applicant has suggested that I should, that the Employee worked more hours than had been identified and was not paid for them.
  7. I take into account the evidence of Mrs Sadak as detailed earlier in these Reasons concerning the establishment and operations of the respondent business. I also take into account the fact that nobody on behalf of the respondent at the appropriate time knew what the respondent’s obligations were in relation to penalty rates, minimum engagement periods or the obligation to maintain records.
  8. I take into account that this is first occasion that the respondent has been before the Court in relation contraventions of industrial provisions.
  9. The applicant acknowledges that the respondent is not a large business with extensive assets. I take into account the likely impact that the penalty will have on a company such as the respondent.
  10. The applicant acknowledges that the respondent responded to all the requests made by the applicant for information and fully co-operated with the applicant at all stages during the investigation. Notwithstanding this, the applicant says that the respondent has not been frank and candid with the Court in relation to its true size and financial resources. I do not agree. The most recent affidavits of the respondent provide substantial information about the respondent’s true size and financial resources.
  11. An important factor that needs to be acknowledged is the respondent’s conduct in repaying the Employee his losses of $16,204.88. The last repayment instalment was due to be paid to the Employee on 23 September 2009. I assume, since I have heard nothing to the contrary, that this final payment has been made.
  12. I accept that the respondent is contrite and that there is unlikely to be a repetition by it of contraventions such as these. I also take into account the respondent’s admission of the contraventions, which have resulted in unnecessary expense, time and effort being avoided.
  13. In deciding the penalties to be imposed I acknowledge the totality principle, which requires that I consider the overall penalty to ensure that it is just and appropriate in all of the circumstances. The penalty that I impose should not be a crushing blow to the respondent nor should it be so light as to not properly reflect the seriousness of the respondent’s conduct.
  14. The total penalty that I propose to impose is $19,500, which sum is to be paid to the Commonwealth.
  15. I make the orders to be found at the beginning of these Reasons.

I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of Simpson FM


Associate: Ms N. Julius


Date: 24 March 2010

[1] The numbering of the paragraphs has been changed from the original as a result of the original containing two paragraphs numbered 29 and two paragraphs numbered 30.
[2] See Salandra v Risborg Services Pty Ltd & Ors [2008] FMCA 76; Olsen v Sterling Crown Pty Ltd [2008] FMCA 1392; Construction, Forestry, Mining & Energy Union v Coal & Allied Operations Pty Ltd (No.2) [1999] FCA 1714; (1999) 94 IR 231; Mason v Harrington Corporation Pty Ltd [2007] FMCA 7; and Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14.
[3] [2005] FCA 1847
[4] [2005] FCA 1847 at para.[72]
[5] Commonwealth Bank of Australia & Anor v Finance Sector Union of Australia [2007] FCAFC 18
[6] [2007] FMCA 7
[7] [2007] FMCA 7 at para.[22]

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