2016 WAIRC 00198
WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT


CITATION : 2016 WAIRC 00198

CORAM
: INDUSTRIAL MAGISTRATE G. CICCHINI

HEARD
:
WEDNESDAY, 3 FEBRUARY 2016

DELIVERED : WEDNESDAY, 6 APRIL 2016

FILE NO. : M 82 OF 2015

BETWEEN
:
KAREN MORRIS
CLAIMANT

AND

ROGERSTAR PTY LTD AS TRUSTEE FOR THE ROGERSTAR FAMILY TRUST
FIRST RESPONDENT

MRS CHRISTINE ROGERS
SECOND RESPONDENT

Catchwords : Small claim – Alleged contravention of the Fast Food Industry Award 2010 [MA000003] – Alleged failure by first respondent to pay correct rate of pay – Whether employer is entitled to make deductions with respect to breaks taken – Whether the second respondent aided, abetted or procured contraventions of the Fair Work Act 2009 – Accessorial liability of Director – Section 550 of the Fair Work Act 2009.
Legislation : Fair Work Act 2009
Minimum Conditions of Employment Act 1993     
Instruments : Fast Food Industry Award 2010 [MA000003]
Restaurant, Tearoom and Catering Workers’ Award (WA)
Result : Claim against the first respondent is proven in part; Claim against the second respondent is not proven.
Case(s) referred to
in Reasons : Miller v Minister of Pensions
[1947] 2 All ER 372
Yorke v Lucas
[1985] HCA 65
Fair Work Ombudsman v Bird (No.2)
[2012] FMCA 312
Fair Work Ombudsman v Aussie Junk Pty Ltd (In Liquidation) & Anor
[2011] FMCA 391
Guirguis v Ten Twelve Pty Ltd & Anor
[2012] FMCA 307
Potter v Fair Work Ombudsman
[2014] FCA 187
Abigroup Contractors Pty Ltd v CFMEU & Ors
[2012] FMCA 820 (No.2)
REPRESENTATION

CLAIMANT : IN PERSON

FIRST RESPONDENT : MRS C ROGERS (DIRECTOR)

Second Respondent : In Person

REASONS FOR DECISION
Introduction
1 At all material times Rogerstar Pty Ltd as trustee for the Rogerstar Family Trust (first respondent) owned the Beachfront Deli (the Deli) at Safety Bay.
2 The first respondent purchased the Deli in about 2005. At that time it was a successful business but its viability progressively declined to the point where it ceased to operate in 2015.
3 Mrs Christine Rogers (the second respondent) is the director of the first respondent. The second respondent and her husband, Mr Andrew Rogers (Mr Rogers), were responsible for the operations at the Deli. Their daughter, Ms Melissa Rogers (Ms Rogers), was its manager.
4 During the material period the Deli opened at 6.00 am and closed variously either at 4.00 pm or 6.00 pm. It operated seven days per week, including public holidays, selling newspapers, drinks, grocery items, and cigarettes. It also prepared and sold a variety of fast food items including sandwiches, rolls, hamburgers and hotdogs. The Deli catered to the public and particularly to tradesmen working in the immediate vicinity. Its busiest periods were in the mornings and at lunch time. It was usually staffed each day by two casual employees. One would commence early in the morning and the other would commence later, resulting in at least two casual staff being available during its busiest periods. The rosters were usually prepared by the second respondent but sometimes by Mr Rogers or Ms Rogers.
5 Ms Karen Morris (the claimant) was employed by the first respondent at the Deli from 27 July 2013. Her duties included the preparation of food, cooking, serving customers, cleaning and procuring stock. The claimant usually worked four or five shifts per week. Each shift was usually for six hours but sometimes more.
6 The claimant usually worked the afternoon shift and was responsible for closing the Deli. At times she worked the morning shift. The claimant was rostered to work on Saturdays, Sundays and public holidays, as well as ordinary weekdays.
Award
7 There is no dispute between the parties that the Fast Food Industry Award 2010 [MA000003] (the Award) applied to the claimant’s employment. Further, it is not in dispute that at all material times the claimant was employed on a casual basis as a Fast Food Employee Level 1, as defined in cl B1 of Schedule B of the Award. The only issue between the parties is whether the claimant was paid her correct entitlements as required by the Award.
8 At the time that the claimant was employed, the second respondent, who ran the first respondent’s financial and administrative affairs, including the payroll, was not aware of the Award. She believed that the claimant’s pay and other entitlements were governed by the provisions of the Minimum Conditions of Employment Act 1993 (WA) (MCE Act). As a result, the claimant was paid in accordance with the requirements of the MCE Act.
9 It was not until March 2015 when the claimant raised issues concerning her pay that the second respondent became aware that the Award covered the claimant’s employment. When the claimant first raised her concerns, the second respondent immediately investigated the situation and was advised that the Restaurant, Tearoom and Catering Workers’ Award (WA) covered the claimant’s employment, however she soon realised that the Award had application by reason of the fact that the first respondent was a national system employer (see s 14 of the Fair Work Act 2009 (FW Act)).
10 After having raised concerns about her pay, the claimant was no longer rostered to work for the first respondent. She ceased working at the Deli on 28 March 2015.
Issues
11 The claimant alleges that she has been underpaid $10,642.10. She seeks to recover that sum plus pre-judgement interest thereon. She also seeks the imposition of penalties by reason of the first respondent’s contravention of s 45 of the FW Act. In addition, the claimant alleges that because the second respondent aided, abetted or procured the contraventions, she is personally liable for any payments due and/or penalties imposed.
12 The first respondent and second respondent (the respondents) contend that the claimant is not entitled to the amount claimed because the first respondent has overpaid the claimant. The respondents say that the claimant took rest and meal breaks amounting to at least 60 minutes in duration each shift which were paid but should not have been. They seek to set off such overpayments against any underpayment due.
13 The issues to be determined in this matter are:
1. whether, during the period of the claimant’s employment, the first respondent contravened s 45 of the FW Act
i. by paying the claimant less than the applicable minimum wage under the Award,
ii. by failing to pay the claimant the penalty rates as required by the Award, and
iii. by failing to pay her public holiday rates as required by the Award; and
2. whether the claimant was overpaid by reasons of being mistakenly paid for breaks taken; and
3. whether the second respondent is personally liable to pay the claimant the total sum of the alleged underpayment plus penalties.
Burden of Proof and Standard of Proof
14 The claimant carries the legal burden of proof for her claim whilst the respondent carries the legal burden of proving those things which it asserts.
15 The standard of proof required to discharge the respective burdens of proof is the balance of probabilities. This standard was explained by Lord Denning in Miller v Minister of Pensions [1947] 2 All ER 372, 374 as follows:
That degree is well settled. It must carry a reasonable degree of probability but not so high as is required in a criminal case. If the evidence is such that the tribunal can say ‘we think it more probable than not’ the burden is discharged, but if the probabilities are equal it is not.
16 Accordingly, where in these reasons I say that ‘I am satisfied’ of a fact or matter or otherwise make a finding as to a fact or matter, I am saying ‘I am satisfied on the balance of probabilities’ of that fact or matter. Where I state that ‘I am not satisfied’ of a fact or matter I am saying that ‘I am not satisfied on the balance of probabilities’ of that fact or matter.
Did the First Respondent Comply With s 45 of the FW Act?
17 The respondents readily concede that at all material times the first respondent failed to pay the claimant the applicable minimum wage, penalty rates and public holiday rates as required by the Award. They say that failure occurred because the first respondent mistakenly believed that the applicable rates were those provided by the MCE Act.
Was the Claimant Overpaid?
18 The respondents contend that breaks taken by the claimant during each shift worked were not payable. They cite cl 27 of the Award in support of that.
19 The respondents say that the MCE Act under which the first respondent mistakenly operated prevented deductions being made for breaks taken. Consequently the claimant was paid for breaks taken despite them not being payable under the Award.
20 Much of the evidence at trial concerned whether or not the claimant had taken breaks and if so, the extent of such breaks. The evidence sits in two camps, being that of the claimant and a co-worker, Ms Michelle Dyer (Ms Dyer), (who also has a claim against the first respondent) in one and that of the second respondent and her family together with the first respondent’s former employee, Ms Jacqueline Bruce (Ms Bruce), in the other.
21 The respondents assert that the evidence given by witnesses called by them enables a conclusion to be drawn that business was very slow and that breaks were taken by the claimant for the purpose of smoking (every half hour), to eat lunch, to have coffee, to chat with her family members and/or her boyfriend, to read magazines, to play games, to access her phone and to gossip. Those breaks accumulated to at least 60 minutes each shift. Their evidence was supported by Ms Bruce who attended the Deli quite regularly, as a customer after ceasing her employment with the first respondent. Ms Bruce testified that she often saw the claimant not working. Ms Bruce said that she would often have a cigarette with the claimant.
22 The claimant and Ms Dyer testified that the Deli was reasonably busy with little time for breaks. They each conceded however that breaks were taken at opportune times, to smoke cigarettes, to eat and to relax during down times.
23 The second respondent, Mr Rogers and Ms Rogers testified that during each shift the claimant had ample opportunity to eat her lunch without interruption. The claimant says (supported by Ms Dyer) that she was not given a dedicated lunch break and that she ate her lunch on the run between serving customers.
24 The fact that the claimant took numerous breaks to smoke cigarettes during each shift is quite apparent. It is clear that she did so with the knowledge and consent of the Rogers family members running the Deli. Indeed she was joined by the Rogers family members whilst smoking. The fact that she took breaks for various purposes was known about and consented to by the first respondent. Her taking the breaks was never the subject of complaint and/or disciplinary action. She was never told that she could not take breaks or that her pay would be docked for having taken such breaks.
25 Although it is easy to conclude that the claimant took several breaks during each shift, the precise quantification of the period of each break taken is difficult to achieve. No record was kept in that regard. There are inherent biases that attach to the evidence of each witness who gave evidence on that point. The only independent witness is Ms Bruce. However her evidence is unhelpful with respect to quantification. Ms Bruce’s evidence establishes only that the claimant had smoking sessions with her at certain times and that is something the claimant concedes in any event. Neither Ms Bruce nor any of the other witnesses called by the respondents can, with any degree of accuracy, attest to the amount of time that the claimant took in breaks each shift. The evidence as it stands does not enable the court to find that the claimant had at least a 60 minute break each shift worked.
26 However, there is in any event, a fundamental flaw which completely undermines the respondents’ argument with respect to deductions for breaks taken.
27 Clause 27 of the Award provides:
27. Breaks
[Varied by PR539921]
27.1 Breaks during work periods
(a) Breaks will be given as follows:
Hours worked
Rest break
Meal break
Less than 4 hours
No rest break
No meal break
4 hours but less than 5 hours
One 10 minute rest break
No meal break
5 hours but less than 9 hours
One 10 minute rest break
One meal break of at least 30 minutes but not more than 60 minutes
9 hours or more
One or two 10 minute rest breaks, with one taken in the first half of the work hours and the second taken in the second half of the work hours, two rest breaks will be given unless a second meal break is provided
One or two meal breaks of at least 30 minutes but not more than 60 minutes
(b) The timing of the taking of a rest break or meal break is intended to provide a meaningful break for the employee during work hours.
(c) An employee cannot be required to take a rest break or meal break within one hour of commencing or ceasing work. An employee cannot be required to take a rest break(s) combined with a meal break.
(d) The time of taking rest and meal breaks and the duration of meal breaks form part of the roster and are subject to the roster provisions of this award.
[27.1(e) varied by PR539921 ppc 01Oct13]
(e) Rest breaks are paid breaks and meal breaks are unpaid breaks.
(f) An employee cannot work more than five hours without a meal break.
28 The respondents’ denial of the claim is at least in part founded on misunderstanding of the meaning of cl 27.1 of the Award.
29 Clause 27 facilitates the taking of rest and meal breaks. It enables the taking of one unpaid meal break of between 30 minutes and 60 minutes and one paid rest break of 10 minutes duration. It does not prevent an employee from having more than one authorised paid rest break. Nothing in cl 27 empowers an employer to accumulate all time taken off as a break and then deduct the value of that time from an employee’s entitlements. Whether or not the claimant took an unpaid lunch break is a question of fact to be resolved on the evidence.
30 The first respondent permitted the claimant to take more than one paid rest break. Such is apparent by its conduct as evidenced by the claimant and witnesses called by the respondents including Mr Rogers. The first respondent cannot retrospectively retract its consent to the taking of multiple rest breaks and contend that the claimant should not have been paid for those breaks.
31 In any event, even if the respondents were correct in their contention (which they are not) it will be for the first respondent to prove the amount of time taken by the claimant each break on each shift. The first respondent is required to prove the exact quantum of time taken by the claimant with respect to each break taken and satisfy the court that with respect to each shift worked that time accumulated to at least 60 minutes. It has failed to do that. Indeed the respondents’ assertion that the claimant’s breaks accumulated 60 minutes is not based on empirical evidence but rather on supposition and speculation about how much break time she had.
32 The respondents’ contentions concerning the first respondent’s entitlement to make deductions for breaks taken by the claimant are not supported by the law, or the evidence, and must therefore fail.
Lunch Breaks
33 The respondents argue that the claimant took at least a 30 minute lunch break during each shift.
34 Clause 27.1 of the Award provides that the taking of a meal break is intended to provide a meaningful break for the employee during work hours. There is no requirement for the employee to remain at the work place during the meal break.
35 The claimant testified that upon commencement of her employment with the first respondent, she was told that she would not be given a lunch break and that she would be required to eat her lunch on the run between duties. The claimant testified that she was not permitted to leave the Deli during her shift. Ms Dyer’s evidence was that neither she nor the claimant took a dedicated lunch break.
36 The second respondent testified that the claimant had sufficient time to take a dedicated lunch break but conceded that a dedicated lunch break was neither rostered, nor instructed to be taken. She suggested that given that there were two employees rostered to work at any given time, those employees could and should have organised between themselves the taking of an uninterrupted meal break of at least 30 minutes.
37 It is obvious from the evidence given that there was no provision for the taking of a dedicated lunch break of at least 30 minutes. If there was, payment would have not been made for the lunch breaks that were in fact taken. Indeed, the evidence overwhelmingly dictates that the first respondent was in breach of cl 27.1(f) of the Award by denying the claimant a meal break. That is not to say she was denied the opportunity to have a meal, but rather she was not given a meaningful meal break of 30 minutes during which she could leave the work premises if desired.
38 Indeed, the claimant’s contention about being told upon commencement that she would not be entitled to a lunch break was conceded by Ms Rogers when cross-examined. Ms Rogers also conceded that the claimant was not, during her shifts, permitted to leave the Deli.
39 I accept the claimant’s evidence that she was told that she would not be given an unpaid lunch break and that she was expected to eat her lunch as the opportunity arose. Such is consistent with Ms Rogers’ evidence and the conduct of the first respondent in paying the claimant for the entire shift without deduction for a lunch break.
Underpayment
40 As indicated earlier, the respondents concede that that the claimant was not paid in accordance with the Award. Indeed, the evidence overwhelmingly shows that the claimant was paid a flat rate throughout whether she worked weekends or public holidays. There can be no doubt that the first respondent has contravened s 45 of the FW Act by failing to pay the claimant her correct minimum wage, penalty rates and public holiday rates.
41 The claimant seeks to prove the quantum of her claim by reference to spreadsheets (exhibits 3, 5, 6, 8 and 9) which she has produced. The information in those spreadsheets has been sourced from work rosters, payslips and group certificates. They correlate to the time and wage records produced by the first respondent (exhibit 15).
42 I am satisfied that the claimant’s calculations as expressed in the summary (exhibit 9) are correct as to method.
43 There is no dispute about the correctness of the pay rates the claimant has used in her calculations with respect to the 2014-2015 financial year, however, there is an issue between the parties as to whether the claimant has used the correct rates in her calculations with respect to 2013-2014 financial year.
44 The respondents contend that the claimant has, in calculating her claim with respect to the 2013-2014 financial year, failed to take into account the transitional provisions contained in Schedule A of the Award. I accept that submission. I find that the claimant has not used the correct rate and accept that the correct rate is that suggested by the respondents (see exhibit 14). The applicable hourly rates during the 2013-2014 financial year are slightly lower in the first respondent’s favour.
45 A recalculation of the claimant’s entitlement using the lower rates results in her entitlement being reduced by $713.81. I find therefore that the first respondent has, during the period of the claimant’s employment, underpaid her $9,928.29.
46 The first respondent will be ordered to pay to the claimant $9,928.29 plus interest thereon calculated at the rate of 6% per annum from 1 April 2015 (first pay date after the claimant’s last work day) until judgement fixed in the sum of $605.48.
Accessorial Liability of the Second Respondent
47 Liability for contravening any of the civil remedy provisions of the FW Act can attach to the director of a corporate employer or anyone else involved in a contravention. A person who is involved in the contravention is subject to the same civil penalties as the contravener.
48 Section 550 of the FW Act provides:
550 Involvement in contravention treated in same way as actual contravention
(1) A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2) A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
49 The intent of an accessory is found in their knowledge or belief that they are assisting or encouraging a primary offender to do something, which goes to make up the facts which constitute the relevant contravention.
50 Directors and others who are directly involved in the day to day management of the company may be personally liable for any breach of the FW Act committed by the corporation. In most instances liability attaches because such a person will have been found to have been knowingly concerned in the contravention.
51 In Fair Work Ombudsman v Bird (No.2) [2012] FMCA 312 [6] Smith FM said that it was significant to the question of accessorial liability that Mr Bird was the sole director and secretary of the company which was liable for primary contraventions under the FW Act. Mr Bird was held to be a person ‘involved in’ all of the employer’s contraventions, including the underpayment of wages, because he had day-to-day control and supervision over the relevant company’s affairs and finances.
52 In Fair Work Ombudsman v Aussie Junk Pty Ltd (In Liquidation) & Anor [2011] FMCA 391 a sole director was ordered to pay a civil penalty of $72,000 for being involved in the company’s breaches by failing to pay employees their entitlements. His Honour Neville FM found the director to be liable because:
1. he had knowledge of the facts and matters constituting the contravention by virtue of his position as a sole director and company secretary of the employer;
2. he was the person solely responsible for determining and setting wage rates and conditions for the employees;
3. he did not take any steps to increase pay rates for employees at all during the course of the Fair Work Ombudsman’s investigation;
4. he was aware, before the commencement of the proceedings, that the employees entitlements were outstanding to the relevant employees;
5. he had control of the company’s finances; and
6. he was the person with the authority to direct payment of outstanding entitlements.
53 The fact that one is the sole director does not however necessarily mean that he or she is personally liable for the company’s contravention of the FW Act. The level of control and management of the particular director in question will be a significant consideration (see Guirguis v Ten Twelve Pty Ltd & Anor [2012] FMCA 307).
54 In Potter v Fair Work Ombudsman [2014] FCA 187 a company director, Mrs Potter, was partially successful in appealing against a finding that she was an accessory in the company’s failure to pay correct wages to staff. The case concerned a call centre that failed to pay correct wages to its employees. Mrs Potter was aware that the company’s employees were likely to be covered by an award or enterprise agreement but wrongly decided that no award applied and caused the company to pay its employees under a defective workplace agreement.
55 The Federal Circuit Court imposed penalties against Mrs Potter on the basis that she was ‘knowingly concerned’ in the company’s underpayments even if she did not know that the employees were being paid less than what was required. She was found personally liable as an accessory to the company’s contraventions of the FW Act because she was responsible for deciding each employee’s wages.
56 On appeal, the Federal Court noted that to be ‘knowingly concerned’ in the company’s contraventions of the FW Act, the alleged accessory must have actual knowledge of the essential facts that constituted the contravention. Mere ignorance of the law may not be sufficient to attract personal liability. The Court held that Mrs Potter could only be personally liable for the company’s underpayment if she had known the correct award that applied to the employees. As that was not the case throughout the employment, Mrs Potter’s appeal against the contraventions was partially successful. However, she was still held liable for underpayments made after she received professional advice that the award did apply.
57 The decision in Potter departs from previous authorities where company directors with control over staff wages have been held to be personally responsible for underpayments regardless of whether they knew that a particular award or enterprise agreement applied to staff or that particular staff were being underpaid.
58 In the present matter I accept the second respondent’s evidence that she was ignorant about the existence of the Award. In the circumstances she did not wilfully contravene the Award. I find that she was not wilfully blind to the existence of the Award because she enquired about which industrial instrument covered the first respondents’ employees and was told by a government instrumentality that it was the MCE Act. Given the circumstances it cannot be found that she was reckless in her conduct with respect to employees’ entitlements. The second respondent’s conduct arose as a result of a mistake.
59 Consequently had it been contended that the second respondent was knowingly concerned in the contraventions, the claim against her could not have succeeded. However, that is not what has been alleged in this case. What is alleged is that she has ‘aided, abetted, or procured’ such contraventions because she had organised the claimant’s pays. The claimant bears the onus of proving her contention.
60 In Yorke v Lucas [1985] HCA 65 the High Court of Australia considered the meaning of ‘aided, abetted and procured’. It held that ‘aiding and abetting’ in the context of criminal proceedings refers to a person who is present at the time of the commission of an offence whereas ‘procuring’ refers to a person who, although not present at the commission of the offence, is an accessory before the fact.
61 In Jarrett FM in Abigroup Contractors Pty Ltd v CFMEU & Ors [2012] FMCA 820 (No.2) the court referred to the Macquarie dictionary to define ‘aid’. It defines aid as ‘to afford support or relief to, to provide support’. ‘Abet’ is defined to mean ‘to urge on, to incite, instigate, to encourage’. In Guirguis the court observed that one ‘procures a contravention if he or she causes it to be committed, persuades the principal to commit it, or brings about its commission’. The second respondent’s conduct in merely organising the claimant’s pay cannot be said to provide support to the contraventions. She in no way urged, incited, instigated or encouraged the contraventions.
62 Having regard to what was said in Potter, I conclude that the necessary intent of an accessory is found in their knowledge or belief that they are assisting, encouraging or causing a primary offender to do something which goes to make up the relevant contraventions. Such participation must be intentional and aimed at the commission of a contravention, albeit not the specific contravention.
63 As indicated earlier I have accepted the second respondent’s evidence that her actions which resulted in the first respondent’s contravention of the Award, arose by mistake. There was never any intent on her part that the first respondent pay the claimant anything other than her correct entitlements. For those reasons I cannot be satisfied that the second respondent has aided, abetted or procured the contraventions committed by the first respondent.
64 The claim as against the second respondent is not proven.
Penalties and Other Orders
65 I will now hear from the parties concerning the issue of penalties and other orders.


G. CICCHINI
INDUSTRIAL MAGISTRATE