Industrial Magistrates Court of Western Australia

The Industrial Magistrates Court has held that no civil penalties would be imposed on Qube Ports Pty Ltd (respondent) for breaching an industrial agreement and contravening the Fair Work Act 2009 (Cth) (Fair Work Act). In exercising its discretion, the Court found that to impose a penalty would be doubly punishing Qube and unsuitable to specifically or generally deter further conduct. 

The circumstances of this matter are identical to another claim heard by the Court with the same parties (M 137 of 2024), save for the affected employee. The respondent did not pay an employee for 13 ‘normal public holidays’ or ‘closed port days’, when they were entitled to be paid under the Qube Ports’ Port of Port Hedland Enterprise Agreements 2016 and 2020. These clauses were identical between the 2016 and 2020 agreements. On some days, the respondent did pay the employee but incorrectly deducted a leave date. Thus, the respondent contravened section 50 of the Fair Work Act by breaching the enterprise agreements, and by not paying the employee in full, they also contravened section 323. Each contravention may be subject to the imposition of a civil penalty. 

Section 557(1) of the Fair Work Act operates so that if two or more civil remedy provisions are contravened, they can be taken to constitute a single contravention if: 

(a)    They are committed by the same person; 
(b)    the contraventions arose out of a course of conduct; and
(c)    the court has not previously imposed a penalty for any prior contraventions of the civil penalty provisions in question.

The Court found that the breaches of sections 50 and 323 satisfied these requirements. Thus, on applying section 557(1) of the Fair Work Act to the contraventions of two identical clauses in two enterprise agreements, the respondent was taken to have committed four contraventions of the Fair Work Act. 

Next, the Court considered whether these four contraventions could be grouped together and classed as a single course of conduct under common law principles. This can be done if there are multiple contraventions which have common elements between them, even if the contraventions arise from different obligations. If the contraventions are considered a single course of conduct then the Court may, if it considers appropriate in the circumstances, impose a single pecuniary penalty so as to avoid punishing the respondent twice or more for the same offending conduct. After considering Patrick Stevedores [2021] FCA 1481 and the Hutchison Ports Appeal [2019] FCAFC 69, the Court agreed that the common law course of conduct principles are not excluded by section 557. Accordingly, having already found there were common elements between each of the contraventions the Court was satisfied that, despite arising out of different obligations, they constituted a single course of conduct for which a single penalty, if any, could be issued (see [95] of the reasons). To do the opposite would result in punishing the respondent twice.  

Thus, at the hearing, the principal issue was: what penalty, if any, should the Court impose on the respondent for the breaches of sections 50 and 323 of the Fair Work Act? 

The answer was: no penalty, as deterrence is the primary aim of pecuniary penalties. Parallels were drawn to two other matters between the same parties, the published reasons for each can be found here and here. These imposed pecuniary penalties across similar date ranges, and related to the same contraventions dealt with in this matter. In addition, there was also no evidence that after the dates for which penalties were issued, the respondent continued to apply its mistaken construction of the relevant clauses. Thus, the Court found there was nothing more that could be achieved by levying further penalties for the same conduct. 

Having considered the above circumstances, the Court did not consider any pecuniary penalty was appropriate in the circumstances of the case. The full decision can be read here. 

The Industrial Magistrates Court of Western Australia has issued $217,950 in penalties following proceedings brought by an industrial inspector with the Department of Energy, Mines, Industry Regulation and Safety (the Department) against five respondents who operated the food business ‘Ocean Keys Hi Thai’ in Clarkson. The penalties were sought by the Department in relation to the respondents’ admitted contraventions of the Restaurant, Tearoom and Catering Workers’ Award (Award) and the Industrial Relations Act 1979 (WA) (Act).  

The respondents admitted to 485 instances of breaching the Award by underpaying two casual employees (affected workers) over several years. The respondents paid flat hourly rates, failed to provide meal breaks, and did not pay appropriate loadings for weekends or public holidays. The Industrial Magistrate viewed the underpayments as significant, with one affected worker being underpaid $61,192.03 and the other $39,411.10. After the admission, the Court issued orders for the outstanding entitlements totalling $100,603.13 along with an order for $19,952.07 in pre-judgment interest.

In addition to the Award contraventions, the respondents admitted to a total of 1,478 contraventions of section 49D(2) of the Act and clause 32 of the Award by not keeping proper employment records. The respondents failed to record the employees’ start dates, job designations under the Award, daily work times, pay periods, meal break information, gross and net pay for each period, and all deductions with their reasons. The Court noted that the lack of proper employment records made it difficult to ascertain the full extent of the underpayments, particularly for one of the affected workers. The Industrial Magistrate commented on the seriousness of the records contraventions, describing the respondents’ recordkeeping as ‘utterly lacking and put simply, unacceptable.’ The Court found that the failure to keep adequate or accurate records facilitated the underpayments and hindered the Department’s ability to investigate. The Industrial Magistrate emphasised that such failures are very serious, especially in the hospitality sector, which is susceptible to exploitation of vulnerable workers.

When assessing appropriate penalties, the Industrial Magistrate grouped the 1,963 contraventions into two groups to avoid double punishment, with the first group being the 485 underpayment contraventions and the second group being the 1,478 records contraventions. The Industrial Magistrate initially considered the total maximum penalty for each group. Then, in accordance with the reasoning in Callan v Smith [2021] WAIRC 00216; (2021) 101 WAIG 1155 at [94] – [97], the Industrial Magistrate applied the ‘course of conduct’ principles to adjust the individually assessed penalties of clause 11(3) and clause 11(4) of the Award, and the breaches of three separate provisions of section 49D(2) of the Act, for each effected employee relevant to the claim. After consideration of all relevant factors with a focus on both specific and general deterrence, an aggregate penalty of $242,500 resulted for the underpayment contraventions, and an aggregate penalty of $484,000 resulted for the records contraventions. 

A 50% reduction was then made to avoid any double penalty being imposed due to overlap between the contraventions, as well as a further 20% reduction due to the respondents admitting the contraventions at the commencement of the proceedings which negated the need for a trial. Finally, a further 20% reduction was made in consideration of the totality principle to ensure that the multiple penalties were just, appropriate and proportionate to the whole of the conduct. The Court therefore imposed a total penalty of $72,750 for the underpayment contraventions and $145,200 for the records contraventions. The penalties were ordered to be paid to the Department.

The Department also sought a formal declaration from the Court that the respondents had engaged in ‘wage theft’. This was carefully considered but ultimately declined by the Industrial Magistrate. Her Honour found that due to the way the case was pleaded and the evidence regarding the respondents’ knowledge and intent such a declaration could not be made as it would have been procedurally unfair. Further, the Industrial Magistrate concluded that while there was insufficient evidence to find that the partnership as a whole engaged in deliberate and systematic non-compliance, the lack of supervision and ignorance of regulatory obligation resulted in serious and sustained breaches.

The full decision can be read here.

Jillian Dixon (the claimant), an industrial inspector with the Department of Mines, Industry Regulation and Safety, brought proceedings against Kahraman Karakuyu and Done Karakuyu (the respondents), proprietors of Newroz Kebab & Turkish Bakery (Newroz) in East Perth. Findings on liability were made by the Court in respect of the respondent’s failure to keep employment records in accordance with the requirements of s 49D(2) of the Industrial Relations Act 1979 (WA) (IR Act), as well as numerous breaches of the Restaurant, Tearoom and Catering Workers’ Award (award). It was found that the respondents:

• contravened the requirements under s 49D(2) to keep employment records on 738 separate occasions between 19 December 2016 and 31 December 2018 (records contraventions); and
• during the same period, breached the award 392 times (award breaches) which resulted in Mr Zeyrek being underpaid, in respect of which the Court ordered the respondents to pay the sum of $102,483.74 (underpayment amount).

The claimant submitted that the respondent had engaged in ‘wage theft’, involving the systematic and deliberate underpayment of a vulnerable worker in the hospitality industry. Noting the number of contraventions, the objective seriousness of these contraventions and the need for general deterrence, particularly in response to the reported prevalence of wage theft in the hospitality industry, the claimant submitted a penalty in the upper range to be appropriate. 

The respondents submitted that Newroz operated mainly as a family business, with most work performed by family members, and they were not involved in the day-to-day operations. They argued that any contraventions were due to carelessness or ignorance, not intentional or deliberate actions, and that they believed they were treating Mr. Zeyrek fairly and lawfully. Additionally, they contended that there was no need for specific deterrence as they no longer operate a business or employ anyone.

The Industrial Magistrate considered the parties’ submissions alongside the various findings made in the liability decision and applied established principles to determine the appropriate penalties. The records contraventions and award breaches were dealt with separately.

Records Contraventions

When applying the principles set out in Callan v Smith [2021] WAIRC 00216, the Court noted that a maximum aggregated penalty for each of the records contraventions would be very large. His Honour concluded that if the more appropriate penalty of $1,500 for each contravention was imposed, a total aggregate penalty in this amount would not be a just and proportionate response. Having regard to the ‘one transaction principle’, the records contraventions were grouped together to set a theoretical maximum penalty by reference to the pattern of conduct that was committed week to week. This was to ensure that the aggregate penalty to be imposed was neither crushing nor oppressive and that there would be no double penalty. Given this, the Industrial Magistrate imposed a penalty of $1,500 for each of the 106 pay periods that fell during the contravention period, equating to a theoretical aggregate penalty of $159,000.

Due to the respondents having admitted the records contraventions, the Industrial Magistrate considered a 20% reduction to this amount appropriate. The totality principle was also applied to reduce the amount by a further 40%. This resulted in a total penalty of $76,320 for the records contraventions.

Award Breaches

The Industrial Magistrate noted that the award breaches committed by the respondents were serious, for which the Court should impose stiff penalties. However, when applying the principles in Callan v Smith, the total theoretical maximum penalty for the award breaches would also be very large. His Honour considered that a penalty of $300 per award breach, resulting in an overall theoretical aggregate penalty of $117,600, be appropriate.

Although committed as part of a single, continuous course of conduct, the amounts of the underpayments were such that His Honour did not consider it appropriate to apply the one transaction principle by grouping the award breaches together to reduce the penalty amount. A 20% reduction was however given due to the effort the respondents had made towards rectifying the underpayment amount. The totality principle was also applied, resulting in a further 40% reduction to ensure the total penalty to be imposed for the award breaches was just, appropriate and a proportionate response to the conduct the respondents engaged in. Therefore, a total penalty of $56,448 was imposed for the award breaches.

The sum of the penalties imposed for both the records contraventions and award breaches totalled $132,768, to be paid to the claimant under s 83F of the IR Act. The full decision on penalty can be read here.