Staggering fines issued for serious contraventions of the Fair Work Act

Staggering fines issued for serious contraventions of the Fair Work Act

09 March 2021 Authored by: Megan Pool   |   Topics: Workplace relations and safety

In Fair Work Ombudsman v Tac Pham Pty Ltd & Anor [2020] FCCA 3036, the Federal Circuit Court took a firm stance on repeated instances of underpaying workers and issued their first penalty for a ‘serious contravention’ of the Fair Work Act 2009 (Cth) (FW Act).

In this recent decision, a café and its general manager were ordered to pay penalties exceeding a combined total of $230,000 for contraventions of the FW Act described by the Court as being brought about by ‘deliberate indifference’ to obligations arising under the FW Act and the applicable modern award.

The case was the first successful prosecution for an alleged breach of the serious contravention provision set out in section 557A of the FW Act.

Facts

In January 2017, following an audit conducted by a Fair Work Inspector, a café and its general manager (the Respondents) were notified they had underpaid 25 employees during the period between December 2014 and December 2015 (Original Contraventions).

In June 2017, proceedings were commenced in the Federal Court against the Respondents in relation to the Original Contraventions during which the Respondents admitted multiple contraventions of the FW Act and the applicable modern award.

On 20 February 2018, the Federal Court delivered its judgment in relation to the Original Contraventions and ordered that:

  • the café pay a penalty of $37,500
  • the general manager pay a penalty of $7,500
  • all persons with managerial responsibility of the café attend training in relation to compliance with the FW Act and the applicable modern award.

A follow-up audit conducted by the FWO in May 2018 revealed that the Respondents had continued to underpay its employees while the proceedings for the Original Contraventions were afoot and after the judgment for the Original Contraventions had been handed down. The further underpayments involved 11 employees during the period between September 2017 and April 2018 (Further Contraventions).

In December 2019, the matter proceeded to Court in relation to the Further Contraventions and the Respondents agreed to a statement of facts in which they admitted to multiple contraventions of the FW Act including contraventions which were the same or similar to the Original Contraventions. The statement of facts included admissions in relation to each of the alleged breaches and admissions of serious contraventions of the FW Act.

During the proceedings for the Further Contraventions, the Respondents attempted to resile from their statement of agreed facts and re-characterise their conduct as not being deliberate and thereby argued that the contraventions should not be considered serious misconduct. The FWO opposed this re-characterisation.

Decision

Ultimately, the court found that the Respondents had taken a ‘cavalier and entirely unacceptable approach’ towards satisfying their obligations under the FW Act. The café was ordered to pay $191,646 and the general manager was ordered to pay $38,394. The Court observed that:

  • There were at least 172 contraventions of the applicable modern award between 2017 and 2018 by the Respondents.
  • The contraventions by the Respondents were serious because they represent comprehensive non-compliance with the applicable modern award.
  • Following the proceedings for the Original Contraventions, the extent of non-compliance continued and increased.
  • The Respondents ‘had no intention of changing their conduct’ following the earlier proceedings.
  • Although the Respondents operated a small family business, the size of the business did not excuse it from compliance with its statutory obligations. Further, the ‘need for specific deterrence must be at a level that is meaningful to deter future conduct of the sort seen here’.

Conclusion

This case is a timely reminder that a repeated failure to comply with the FW Act or the applicable modern award is a serious matter. Further, employers who have been previously investigated and/or prosecuted by the Fair Work Ombudsman should be alert to the possibility of further audits and should ensure that all necessary steps have been taken to achieve compliance.

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