Australia, Federal Circuit and Family Court of Australia, 5 July 2022, [2022] FedCFamC2G 543
Case overview
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Deciding body (English)
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Link to the full text of the decision
General Summary
The Applicant (The Fair Work Ombudsman representing the employee) claimed that the Respondent (the Employer) contravened section 716(5) of the Fair Work Act 2009 (Cth) by failing to comply with a compliance notice issued on 23 February 2021. The remedy sought by the Applicant on behalf of the employee was that the Respondent pay to the employee her entitlements plus interest and pay a pecuniary penalty for non compliance with the compliance notice. The maximum penalty payable was $33,300; however considering the circumstances, the Applicant was seeking an amount in the range of $14,985.00 - $17,982.00 on behalf of the employee. The Court found in the Applicant’s favour in that she should be paid her entitlements plus interest, but decreased the pecuniary penalty to $5000 due to lack of business caused by COVID-19 lockdowns.
Facts of the case
The Applicant claimed that the Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) by failing to comply with a compliance notice issued on 23 February 2021. The Applicant sought that the Respondent pay the employee her entitlements plus interest and that the Respondent pay a pecuniary penalty for not complying with the compliance notice. The maximum penalty payable was $33,300 however considering the circumstances, the Applicant was seeking in the range of $14,985.00 - $17,982.00.
The Applicant represented a former employee of the Respondent whose employment was terminated on 24 March 2020 and re-employed as a casual employee (rather than a permanent ongoing employee). Upon termination it was claimed that the employee’s entitlements were not paid by the Respondent including accrued and unused annual leave and when working as a casual, she was not paid the award wage and was not paid penalty rates for working weekends. A payment plan was agreed to with the Fair Work Ombudsman to pay the employee $6,654.25 plus interest; however it was not complied with by the Respondent.
The Court found in favour of the Applicant; however, in considering an appropriate penalty the court gave judicial notice of the fact that “many businesses throughout the nation have failed as a result of business disruptions caused by the COVID virus and the reactions of State Governments by it…” (at [11]). The Court acknowledged that the Respondent attempted to pay the outstanding amounts but, due to the slowdown of his business as a result of lockdowns, he was unable to do so. The Court ordered a reduced penalty of $5000.
Type of measure challenged
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Individual / collective enforcement
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Private individualDefendant(s)
Private collective
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Reasoning of the deciding body
The Court took into consideration the Fair Work Act 2009 (Cth) and s716(5) which provided that the maximum penalty for non compliance with a Compliance Notice was $33,300. The Court acknowledged that the penalty imposed must consider the circumstances in which the non compliance occurred and the need to “…sustain public confidence in the statutory regime which imposes the obligation.” The Court had regard to case law Kelly v Fitzpatrick [2007] FCA 1080 which outlined the relevant considerations when faced with imposing a pecuniary penalty. These considerations at paragraph [9] were:
a) The nature and extent of the conduct which led to the breaches.
b) The circumstances in which that conduct took place.
c) The nature and extent of any loss or damage sustained as a result of the breaches.
d) Whether there had been similar previous conduct by the respondent.
e) Whether the breaches were properly distinct or arose out of the one course of conduct.
f) The size of the business enterprise involved.
g) Whether or not the breaches were deliberate.
h) Whether senior management was involved in the breaches.
i. Whether the party committing the breaches had exhibited contrition.
j) Whether the party committing the breach had taken corrective action.
k) Whether the party committing the breach had cooperated with the enforcement authorities.
l. The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
m) The need for specific and general deterrence. The Court also had regard to the Applicant’s submissions as regards an appropriate penalty being $14,985.00 - $17,982.00.
The Court also took judicial notice of the fact that the COVID-19 lockdowns had resulted in significant business disruptions throughout the country and that the proposed penalty was too high. The Court acknowledged the Respondent’s unsuccessful efforts to pay the relatively modest outstanding amount and imposed a pecuniary penalty of $5000.
Conclusions of the deciding body
The Court upheld the claim of the Applicant and ordered that the Respondent pay to the employee unpaid wages and pay to the Applicant a pecuniary penalty of $5000.
Fundamental Right(s) involved
Rights and freedoms specifically identified as (possibly) conflicting with the right to health
General principle applied
Balancing techniques and principles (proportionality, reasonableness, others)
The Court considered the pecuniary penalty in proportion with the modest amount still owed to the employee. The Court also took a reasonable approach in acknowledging the business impact of the COVID-19 shutdowns and the loss of income available to the business to be able to honour all outstanding employee payments.
