WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

CITATION : 2017 WAIRC 00464

DELIVERED : THURSDAY, 20 JULY 2017

FILE NO. : M 157 OF 2016

FIRST CLAIMANT

Joel Crosswell

SECOND CLAIMANT

Bill Tamainu

THIRD CLAIMANT

Christopher Thelander

FOURTH CLAIMANT

AND

Shagay Pty Ltd as Trustee for the Shagay Unit Trust trading as Western Meat Packers

first Respondent

Andrew Fuda, Chief Executive Officer

second respondent

CatchWords : INDUSTRIAL LAW – FAIR WORK – Enterprise Agreement – Employer entitlement to deduct pay – ‘stoppage of work for any cause for which the employer cannot reasonably be held responsible’ – onus of proof of exception – powers of ‘eligible State or Territory court’ – Assessment of pecuniary penalties for contraventions of Enterprise Agreement

Legislation : Fair Work Act 2009 (Cth)
Biosecurity and Agriculture Management Act 2007 (WA)

Instruments : Western Meat Packers (Boners and Slicers) Meat Processing
  Agreement 2013
  Harvey Industries Group Pty Limited Meat Processing & By
  Products Union Enterprise Agreement 2014

Case(s) referred to
in reasons : United Voice v Phillip Cleaning Service Pty Ltd [2017] FCA 392
  Townsend v General Motors Holden (1983) 4 IR 358
  John Hay v Gardner Perrott a Division of Brambles Australia
  Limited [1996] WAIRComm 7
  Re Jack Gordon Kidd v Savage River Mines NSW [1984] FCA 418
   

Result : Judgment for the claimants

Representation:

Claimants : Ms K. Rogers

Respondents : Mr R. Lewis (of Counsel)

REASONS FOR DECISION

1         Mr Joel Crosswell, Mr Bill Tamainu and Mr Christopher Thelander (‘the Employees’) were employed by Shagay Pty Ltd (‘the Company’) as boners at a meat production facility operated by the Company at Osborne Park, Western Australia. On five days in May and July 2016, the Company instructed the Employees not to attend for work (‘the Stand Down Days’). The Company told the Employees that it was ‘experiencing seasonal shortages in stock availability’ and they ‘had the opportunity to take paid or unpaid leave’ on those days (‘the Stand Down Direction’). The Employees complain that the Stand Down Direction is a contravention of an enterprise agreement.

2         In Schedule I of these reasons, I outline the provisions of the Fair Work Act 2009 (Cth) (‘FW Act’) and any instrument that is relevant to the jurisdiction, powers and procedure of the court in determining this case. I conclude that the Western Meat Packers (Boners and Slicers) Meat Processing Agreement 2013 (‘the Enterprise Agreement’ or ‘EA’) applies to the Company and the Employees.

3         The Company denies that it has contravened the Enterprise Agreement. It relies upon clause 22.4 of the Enterprise Agreement which states that the Company may ‘deduct payment for any day that [an] Employee could not be usefully employed’ provided ‘any stoppage of work was for a cause for which the Company could not reasonably be held responsible’ (‘the EA Reasonable Cause Exception’). The Company argues that the stoppage of work was necessary given that adverse weather in northern Western Australia caused cattle suppliers to fail to meet contractual obligations to the Company (‘the Forward Cattle Contracts’) and that the Company, despite being active in the marketplace, was unsuccessful in attempting to secure replacement cattle. The Company refers to other matters (discussed below) as evidence of its ‘reasonableness’ when dealing with the Employees on this issue, including a calculation suggesting that the Employees’ weekly pay and other entitlements was not reduced as a result of processing the available carcass’ on the four day working weeks that were a result of the Stand Down Days compared to the weekly pay and other entitlements that would have been the result of processing the same carcass’ over the usual five day working weeks.

4         Three issues arise for determination in this case. First, I must determine whether the Employees ‘could not be usefully employed on each of the Stand Down Days for a cause for which the Employer could not reasonably be held responsible’ i.e. whether the EA Reasonable Cause Exception found in clause 22.4 of the EA authorised the Stand Down Direction. If the EA Reasonable Cause Exception did not authorise the Stand Down Direction, the second issue I must determine is whether the Company has contravened any clause of the EA (and also whether the Company has contravened s 323 of the FW Act requiring payment in full) and the appropriate remedy under s 545(3) of the FW Act. The Union and the Employees allege that the unauthorised Stand Down Direction has resulted in contraventions of the EA by the Company by: failing to pay wages (clauses 9.2, 9.3, 11.1 and 24.6); reduced annual leave entitlements (clause 14) and personal leave entitlements (15.5); and failing to pay superannuation (clause 23). Thirdly, if I am satisfied that the Company has contravened any clause of the EA, it will be necessary to determine the appropriate pecuniary penalty (if any) for the contravention and whether Mr Andrew Fuda, the Chief Executive Officer of the Company, (Mr Fuda) was involved in the contravention: see FW Act, s 50 (EA contravention is a civil remedy provision); s 539(2) & 546(2)(b) (maximum penalty for persons and corporations); s 550 (involvement in contravention) and s 557 (course of conduct).

5         Before examining the three issues just noted, it will be convenient to: describe the Company’s operations (see paragraphs 6) and the terms of the Enterprise Agreement (see paragraph 7); and to note the evidence of Mr Fuda to the effect that not working on the Stand Down Days increased the weekly wage of the Employees (see paragraph 8).

The Company’s Operations

6         The facts set out in this paragraph are either not in dispute or are the subject of uncontroverted evidence of Mr Fuda which I consider to be reliable. I am satisfied of each of the facts set out below:

(a)   The Employees are among approximately 100 employees of the Company who work at a meat processing facility in Osborne Park. The Company has operations at other locations, including at an abattoir where cattle are slaughtered before being brought to Osborne Park for processing.

(b)   The Employees work as beef boners in what is known as the ‘big room’ or ‘room number 1’. A beef boner works alongside a beef slicer to form what is known as ‘a team’. The big room was used exclusively for processing beef. Nine or 10 teams work in the big room. Other employees of the Company, performing other duties necessary for processing meat, also work in the big room. In addition to the big room, there is another facility at the Osborne Park site (known as the ‘small room’ or ‘room number 2’) that is used for processing both beef and lamb. In May-July 2016, the workforce in the small room comprised two teams and other workers necessary for processing meat. Mr Fuda gave evidence that the two teams employed in the small room were ‘trainees’ governed by ‘the award’ and that other workers in the small room were ‘supplied by a labour hire company’. The chilled beef carcasses necessary for processing beef in the big room and the small room were transported to Osborne Park from the Company abattoir. In the usual course, the Company purchased a sufficient number of live cattle for killing at the Company’s abattoir to meet the volume of processing it planned for the big room and the small room. The Company purchased live cattle for slaughter at its abattoir from three sources.

(c)   One source of live cattle was as a result of contracts with one or more of three agents (named by Mr Fuda as ‘Landmark’, ‘Elders’ and ‘Primary’). These contracts provided for the supply of a specified number of cattle from northern Western Australia at a specified price (per kilogram) to be delivered intermittently over a specified future period of months. The process for concluding such contracts required the Company to nominate to the agent the price that the Company was willing to pay for the cattle. The Company was subsequently told whether it had been successful (i.e. a contract was made) or unsuccessful (i.e. no contract arose). If unsuccessful, there was no opportunity for the Company to continue negotiations i.e. the Company did not have an opportunity to offer a higher price. If a contract was made, the obligation upon the cattle supplier was, in effect, to use its best endeavours to make weekly deliveries of an equal number of cattle to the Company so that, over the specified period of the contract, the total number of contracted cattle were delivered. Both parties acknowledged that factors beyond the control of a cattle supplier may prevent the weekly delivery of equal numbers of cattle. In this event, the obligation remained on the supplier to deliver the total number of cattle throughout the relevant period. However, the supplier was entitled to vary the number of cattle delivered each week. Mr Fuda gave evidence that the effect of such contracts entered into by the Company in 2016 (i.e. the Forward Cattle Contracts) was for the supply of 1500 head of cattle over the winter of 2016 with an expected delivery of 132 head of cattle on each Monday.

(d)   A second source of live cattle for the Company is regular cattle auctions. In 2016, a representative of the company, Mr Greg Jones, (Mr Jones) attended weekly cattle auctions held at Muchea, Boyanup and Mount Barker and a fortnightly cattle auction held at Manjimup. The number of cattle obtained by the Company at these auctions reflected a range of factors: the number of cattle suitable to the requirements of the Company that were available for purchase; whether the bid(s) placed by Mr Jones was the winning bid and the ‘attitude’ of the auctioneer. Mr Fuda explained it was not unknown for an auctioneer to determine to sell a particular lot to a particular buyer other than the Company, i.e. excluding the Company (and other buyers) from bidding for a particular lot. Mr Fuda stated that, compared to previous years, ‘far lower slaughter type cattle numbers’ were available at cattle auctions in the winter of 2016.

(e)   A third source of live cattle for the Company was said to be ‘direct from the farmer’. Mr Fuda stated that wherever possible the Company participated in ‘online auction websites’. Mr Fuda stated that in winter of 2016, the Company was ‘outbid by other companies on most occasions’.

(f)    It is not reasonably practicable for the Company to source live cattle (for the purpose of slaughter at a Company abattoir and then meat processing at Osborne Park) from interstate or overseas. This is because of the time and cost involved in complying with the quarantine requirements resulting from the Biosecurity and Agriculture Management Act 2007 (WA).

(g)   Although the primary source of chilled beef carcasses used by the Company for meat processing at Osborne Park is an abattoir operated by the Company, it may be reasonably practicable for the Company to source chilled beef carcasses for the same purpose from a third party supplier. Whether it was reasonably practicable for the Company to source chilled carcasses from a third party supplier was said by Mr Fuda to be dependent upon the suitability of the carcass for meat processing, having regard to factors including: quarantine requirements, the age of the carcass and the requirements of the Company.

The Enterprise Agreement

7         The Employees are ‘Full-time employee(s)’ for the purposes of the Enterprise Agreement (clause 9.3). The effect of the Enterprise Agreement is that, with respect to a ‘Full-time employee’:

(a)   Ordinary hours. The ordinary hours of work must not exceed 38 hours in any one week (clause 11.1). Those ordinary hours must ‘be worked consecutively, Monday to Friday inclusive between 5.30am and 7.30pm’ (clause 11.2). The ‘working day’ consists of 7.6 hours (clause 24.6).

(b)   Payment of Wages. Wages must be paid weekly (clause 22.1).

(c)   Calculating pay. An employee’s pay comprise a ‘basic piece rate of pay’ plus any applicable bonuses, allowances and overtime (clauses 9.2; 24.6). The basic piece rate of pay comprises:

(1)     a ‘guaranteed minimum daily payment’ specified in Appendix 1.1 of the EA; and

(2)     a ‘constant unit rate’ calculated in accordance with a formula set out in Appendix 1.1.

The guaranteed minimum daily payment is a fixed daily payment and applies where 16 bodies (64 quarters) or less is completed per team in a working day. In the period May-July 2016, the guaranteed minimum daily payment for a boner was $204.29. The Tally is a rate per quarter of a body and reflects the guaranteed minimum daily payment divided by 64 i.e. $3.19 per quarter in May-July 2016. Where additional bodies (over 16) are processed by a team in a working day, the constant unit rate provides for additional pay calculated on the number of additional quarters: from 17 to 21 bodies, the additional pay is the Tally plus 25% (i.e. $3.99 per quarter); over 21 bodies the additional pay is Tally plus 50% (i.e. $4.79 per quarter).

(d)   Clause 24.6: minimum number of cattle supplied by the Company and minimum daily output by the employees. Clause 24.6 of the EA anticipates that the Company will usually supply and that employees will process at least 21 bodies on each 7.6 hour working day with the result that, in accordance with the calculation described in the preceding paragraph, the employees will receiving a wage comprising the guaranteed minimum daily payment and Tally plus 25% for each body between 17 and 21. In the period May-July 2016, the result was that the pay per day for each of the Employees was expected to be at least $284.09 ($204.29 guaranteed minimum daily payment + 20 quarters x $3.99 per quarter). It is important to note that the obligation upon the Company to supply 21 bodies per team is qualified in the EA. Clause 24.6 states that ‘provided the company can supply enough cattle and that there are no factors outside the control of the company supplying cattle’, the employees shall process 21 bodies per working day.

(e)   Annual leave and personal leave: rate of pay. An employee’s rate of pay during annual leave and personal leave is based on the employee’s basic piece rate of pay averaged over the period before going on leave (clauses 14.4, 15.5).

(f)    Annual leave: accruing and taking. An employee is entitled to four weeks annual leave after each 12 months of continuous service (clause 14.2). Periods of unpaid leave do not count for the purpose of determining annual leave entitlements (clause 14.6). The Company and an employee may ‘mutually agree’ to the taking of less than four weeks annual leave (clause 14.4).

(g)   Superannuation. The superannuation levy paid by the Employer is ‘paid on the employee’s basic piece rate of pay’ (clause 23.2).

The Stand Down Direction and the Weekly Wage of the Employees

8         Mr Fuda stated that in each of the five weeks where a Stand Down Direction was given, resulting in the Employees working between Tuesday and Friday (inclusive), there were in fact sufficient chilled carcasses for the Employees to have completed between 15.88 and 17 bodies between Monday and Friday (inclusive) of those weeks (see para [25] of Mr Fuda Witness Statement and Attachment ‘AF2’ to that statement.) The purpose of this evidence was for Mr Fuda to demonstrate the effect of clause 24.6 of the EA on the weekly wages of the Employees as a result of not working on the Stand Down Days. Mr Fuda demonstrated that, after applying the applicable constant unit rate to the number of bodies processed on 4 days (Tuesday – Friday) in those weeks where the Stand Down Direction was given, the Employees received a higher weekly wage compared to a weekly wage calculated on the basis of processing the same number of bodies over five days (Monday-Friday). The difference - an extra $300 per week (on average) when working on four days compared to five days – is a result of applying the guaranteed minimum daily payment only to the bodies processed over five days compared to the application of the guaranteed minimum daily payment and the applicable constant unit rate to the same number of bodies processed over four days. Mr Fuda also noted that, to the extent that annual leave rates of pay, personal leave entitlements and the superannuation levy are calculated on the basis of the basic rate of pay which includes the constant unit rate, the Employees are, again, in a better position by not working on the Stand Down Days, compared to processing the same number of bodies over five days.

9         The Union and the Employees did not dispute the calculations undertaken by Mr Fuda as set out in the previous paragraph (and I am satisfied that the calculations are accurate).

First Issue: Whether the Employees ‘Could Not Be Usefully Employed on Each of the Stand Down Days for a Cause for Which the Company Could Not Reasonably Be Held Responsible’?

10      In Schedule 1 of these reasons I note that the claimants bear the onus of proving the claim and that the standard of proof is, ‘the balance of probabilities’. The claimants continue to carry this onus with respect to the claim overall. However, it has been held that an employer who relies upon an exception to a general obligation to pay wages by reason of a stand-down, bears the onus of proving the exception on the balance of probabilities: United Voice v Phillip Cleaning Service Pty Ltd [2017] FCA 392 [25] (Jagot J) The principle has been applied in a number of ‘stand down’ cases: Townsend v General Motors Holden (1983) 4 IR 358 [363] (Morling J); John Hay v Gardner Perrott a Division of Brambles Australia Limited [1996] WAIRComm 7 (Commissioner Beech); Re Jack Gordon Kidd v Savage River Mines NSW [1984] FCA 418; 6 FCR 398 9 IR 362 [11] (Gray J). In this case, the Company must prove the conditions for the application of the EA Reasonable Cause Exception. It must prove, firstly, that the Employees could not be usefully employed on each of the Stand Down Days and, secondly, it must prove that the Stand Down Direction was for a cause for which the Company could not reasonably be held responsible.

11      Employees could not be usefully employed on each of the Stand Down Days? The Company has failed to prove that the Employees could not be usefully employed on each of the Stand Down Days. This finding is an inevitable consequence of the evidence of Mr Fuda at paragraph 25 of his witness statement (and discussed above at paragraph 8), that the Company ‘could have chosen to only bone the guaranteed bodies for each day and left carcasses in the chiller to fulfil the 5-day work week’. Mr Fuda has confirmed, albeit for the purpose of (successfully) demonstrating that the Employees received a higher wage for their four day week than if they had of worked a five day week, that there was useful employment available to the Employees on each of the Stand Down Days. The figures in Attachment ‘AF2’ to the statement of Mr Fuda suggest that the Employees could have been usefully employed on each of the Stand Down Days by boning 17 bodies on 16 May 2016 and 16 bodies on each of 9, 30 May, 11 and 18 July 2016. It is not relevant that (as explained above at paragraph 7(d)), clause 24.6 of the EA anticipated that, usually, 21 bodies would be supplied by the Company for processing by the Employees. In a context where the EA provides for a guaranteed minimum daily payment for processing up to 16 bodies, the Employees could have been usefully employed in processing the 16–17 bodies that were available on the Stand Down Days. It is also not relevant that the Employees received a higher wage for their four day week than if they had worked a five day week. An employer is not entitled to unilaterally stand down an employee, even in circumstances where, as here, an employee may receive a higher weekly wage as a result. Although the Company has failed prove the application of the EA Reasonable Cause Exception because it has failed to prove that the Employees could not be usefully employed, I will also consider whether the Stand Down Direction was the result of cause for which the Company could not reasonably be held responsible.

12      A cause for which the Company could not reasonably be held responsible? The Company has failed to prove that it could not reasonably be held responsible for the failure to secure a supply of more than 16 chilled carcasses on each of the Stand Down Days. My reasons for this conclusion appear below.

13      I note my findings above (at paragraph 6(c)) to the effect that Forward Cattle Contracts existed for the supply of 1500 head of cattle over the winter of 2016 with an expected delivery of 132 head of cattle on each Monday. I note also the evidence of Mr Fuda on the limited availability of cattle from the north of Western Australia in 2016, compared to 2015, and the significant effect on supply of ‘much longer seasonal rains’ than usual. I note emails adduced in evidence suggesting, due to unusual weather, an unexpected failure of supply under the Forward Cattle Contracts in mid May 2016 and early-mid June 2016. Given the evidence of the adverse weather and the communications from suppliers, I am satisfied that the Company could not reasonably be held responsible for the failed delivery of cattle that was expected under the Forward Cattle Contracts.

14      Mr Fuda gave evidence of the efforts of the Company to find cattle to ‘replace’ the cattle that had not arrived from the north of Western Australia. I note my findings (at paragraph 6(d)-(g)) that, in the winter of 2016, the Company was active at weekly cattle auctions in the southwest where ‘far lower slaughter type cattle numbers’ than normal were available; the Company was ‘outbid by other companies on most occasions’ when dealing with direct suppliers; whether it was reasonably practicable for the Company to source chilled carcasses from a third party supplier was dependent upon the suitability of the carcass for meat processing having regard to factors including: quarantine requirements, the age of the carcass and the requirements of the Company. There was evidence of two unsuccessful attempts to buy from direct suppliers in circumstances where the Company was not given an opportunity to raise its initial offer (see emails of 14 June 2016 and 23 July 2016). However, there is no evidence of the number of bids placed by the Company at cattle auctions or the price that was bid by the Company compared to the price bid by competitors. There is also no evidence of any investigations by the Company of the availability of suitable chilled carcasses from third parties. I have not ignored the fact that the Company, as a result of the last minute securing of cattle, reversed a decision not to offer work to the Employees on 27 June 2016. However, the absence of evidence with respect to efforts undertaken before each of the Stand Down Days is significant. The Company has failed to satisfy the court of reasonable efforts to secure a supply of more than 16 chilled carcasses on each of the Stand Down Days.

15      The Company raised a number of matters that are of limited relevance to my assessment of whether the Company has proven the EA Reasonable Cause Exception. An enterprise agreement covering a competitor of the Company, the Harvey Industries Group Pty Limited Meat Processing & By-Products Union Enterprise Agreement 2014, contains a clause (clause 17.1) conferring upon the employer a right to deduct payment for ‘any cause for which the employer cannot reasonably be held responsible, including but not limited to an adequate supply of livestock’. The presence of this example of a ‘reasonable cause’ in a similar but not identically worded enterprise agreement does not obviate the Company from discharging the onus of proving, as the EA requires, that it could not reasonably be held responsible for any failure to secure an adequate number of chilled carcasses on each of the Stand Down Days. The Company points to earlier occasions when ‘stand downs’ may have occurred because of supply issues and to a communication from a representative of the Union suggesting an acceptance of this approach to the EA. This history cannot affect my assessment of the significance of the evidence in the case before me.

16      The Union and the Employees have also raised a number of matters that are of limited relevance to my assessment of whether the Company has proven the EA Reasonable Cause Exception. It is a matter for the Company to determine whether to address any ongoing difficulties with its supply of chilled beef carcasses by: utilising ‘daily hire’ employees; shifting supply from the small room to the big room; increasing the price that it is willing to pay for live cattle or for chilled beef carcasses or by utilising some other method. The issue for the court is not whether the Company has put in place appropriate or preferable systems to ensure an adequate supply of chilled beef carcasses. The issue for the court is whether, on any occasion when the Company deducts payment for a stoppage of work, the Company proves that it could not reasonably be held responsible for the stoppage.

Second Issue: Whether the Company Has Contravened Any Clause of the Enterprise Agreement or the FW Act on Payment of Wages, Annual Leave and Superannuation and the Appropriate Remedy?

17      The EA Reasonable Cause Exception did not authorise the Stand Down Direction. Each of the Employees elected to take varying combinations of unpaid leave and holiday pay (to access his annual leave entitlement as provided in clause 14 of the EA) on the Stand Down Days as follows:

• Joel Crosswell elected to take three of the Stand Down Days as unpaid leave and two of the Stand Down Days on holiday pay
• Bill Tamainu elected to take four of the Stand Down Days on holiday pay. (No claim arises from the fifth day as Mr Tamainu was in receipt of workers compensation for that day.)
• Christopher Thelander elected to take four of the Stand Down Days as unpaid leave and one of the Stand Down Days on holiday pay.

It is convenient to identify any resulting contraventions by separately examining the consequences of taking unpaid leave (see paragraph 18 below) and holiday pay (see paragraph 19 below).

18      Unpaid Leave The Union and the Employees allege that the taking of unpaid leave resulted in a contravention of s 323 of the FW Act and a contravention of the following clauses of the EA: cl 9.2, 9.3, 11.1, 14.4, 15.5, 23 and 24.6. Notwithstanding that the Stand Down Direction was not authorised by the EA, I have explained in paragraph 8 above that: the Employees weekly wage was higher in those weeks by working a four day week compared to working a five day week; annual leave rates of pay (clause 14.4), personal leave rates of pay (clause 15.5) and the superannuation levy (clause 23) are calculated in a manner such that the Employees were also advantaged by not working on the Stand Down Days. Against this background, I make the following findings where the Employees have elected to take unpaid leave:

• Section 323 of the FW Act creates an obligation on the Company to pay an employee amounts that are payable ‘in full’. The Company has not contravened this provision.
• Clause 9.2 and 9.3 are ‘definition’ clauses. No contravention arises.
• Clause 11.1 (and 11.2) creates an obligation on the Company to provide work, ‘Monday to Friday inclusive’. The Company has contravened this clause. It did not provide work on the Stand Down Days. However, subject to what is said below about clause 24.6, no amount is payable by the Company arising from this contravention because the weekly wage paid by the Company to an Employee who took unpaid leave on a Stand Down Day was higher than if the Employee had worked on that day.
• Clauses 14.4, 15.5 and 23 provide for the calculation of entitlements to, respectively, annual leave pay, personal leave pay and a superannuation levy, in accordance with the basic rate of pay. The basic rate of pay includes the constant unit rate that was paid as part of the weekly wage during each week of a Stand Down Day; the Company has not contravened this clause and there has been no loss by any Employee.
• Clause 14.6 provides that any period of unpaid leave does not count for the purpose of determining annual leave entitlements. It follows from the Stand Down Direction that the Company has contravened this clause. The Union and the Employees seek orders to address this ‘lost chance’ to accrue annual leave by way of an order for the ‘credit’ of hours of annual leave or pay ‘in lieu’ (see paragraph 11 and 12 under ‘Orders Sought’ of the Claimants Outline of Submissions.) The power of this court to make orders in this case is prescribed by s 545(3) of the FW Act: the court may order that the Company pay an amount to the Employees if the court is satisfied that the Company was required to pay the amount under the Act or the Enterprise Agreement. I have reservations about whether the court has the power to make either of the orders which have been sought by the claimants. However, the issue was not addressed by either party at the trial. I will invite submissions from the parties on the question before determining whether to make any orders.
• Clause 24.6 provides for a guaranteed minimum daily payment for processing up to 16 bodies ($204.29) . The Union and the Employees allege a contravention of this obligation where an Employee has taken unpaid leave on one of the Stand Down Days and seek orders for payment of that amount for each day of unpaid leave (see paragraphs 4 and 5 under ‘Orders Sought’ of the Claimants Outline of Submissions.) However, because the weekly wage paid by the Company to an Employee who took unpaid leave on a Stand Down Day was higher than if the Employee had worked on that day, there has not been a contravention of this clause. I infer from the fact that the Union and the Employees have not made a claim under clause 24.6 for the lost ‘opportunity’ to process 21 bodies on the Stand Down Days ($284.09) that the claimants have not assumed the burden of proving ‘there were no factors outside of the control of the Company in supplying 21 cattle’. For completeness I will observe that the Union and the Employees would, in any event, have failed to discharge this burden. The claimants led evidence and made submissions about factors relevant to the availability of cattle in the context of rebutting the Company’s reliance upon the EA Reasonable Cause Exception. Mr Graham Smith, the Secretary Treasurer of the Union, asserted that the Company was unwilling to pay the market price necessary to secure sufficient chilled carcasses. However, the claimants failed to adduce evidence of any suitable cattle being available at any price on the Stand Down Days.

19      Holiday pay I make the following findings where the Employees have elected to take holiday pay:

• Clause 11.1 (and 11.2) creates an obligation on the Company to provide work, ‘Monday to Friday inclusive’. The result is the same as for an Employee who took unpaid leave: there is a contravention by the Company, but there is no ‘loss’ by the Employee.
• Clause 14.4. The Union and the Employees allege that taking of holiday pay on the Stand Down Days resulted in the contravention of the part of clause 14.4 of the EA which provides that ‘annual leave may be taken in periods of less than four weeks with the mutual agreement of the Employer and the employee’. The taking of annual leave by the Employees was a result of the Stand Down Direction. It was not a result of mutual agreement between the Company and the Employees. The Company has contravened this clause. Orders are sought that the Company either ‘re-credit’ the Stand Down Days that were taken as holiday pay or that the Company pay each of the Employees an amount which is the equivalent of the holiday pay to which the Employees were entitled (and paid) for those days (see paragraphs 6, 7 and 8 under ‘Orders Sought’ of the Claimants Outline of Submissions.) Again, I have reservations about whether the court has the power to make either of the orders which have been sought and I will invite submissions from the parties.

Third Issue: The Appropriate Pecuniary Penalty (if any) to be Paid by the Company and by any Person Involved in any Contravention of a Civil Remedy Provision.

20      I have explained in paragraph 18 and 19 above that I am satisfied that the Company has contravened the following clauses of the EA:

• Clause 11.1 (and 11.2) in that the Company was required to provide work on ‘Monday to Friday inclusive’ and it failed to do so on the Stand Down Days (‘the Stand Down Contravention’). I also noted that the weekly wage paid by the Company to an Employee as a result of this contravention was, in fact, higher than if the Employee had worked on that day. This finding applies to each of the three Employees on each of the five Stand Down Days.
• Clause 14.6 in that the Company did not ‘count’ unpaid leave taken on Stand Down Days for the purpose of determining future annual leave entitlements (‘the Annual Leave Accrual Contravention’). This finding applies to Joel Crosswell on three of the Stand Down Days and Christopher Thelander on four of the Stand Down Days.
• Clause 14.4 in that the giving of the Stand Down Direction by the Company resulted in the Employees taking annual leave other than by ‘mutual agreement’ as required by clause 14.4 (‘the Annual Leave Entitlement Contravention’). This finding applies to Joel Crosswell on two of the Stand Down Days, Bill Tamainu on four of the Stand Down Days and Christopher Thelander on one of the Stand Down Days.

21      In Schedule II of these reasons, I outline the provisions of the FW Act and the principles relevant in determining an appropriate pecuniary penalty for the above contraventions and whether Mr Fuda was involved in any of those contraventions.

22      The effect of s 557(1) of the FW Act is that two or more contraventions of the EA are taken to constitute a single contravention if they are committed by the same person and arose out of a course of conduct by that person. I am satisfied that no relevant distinction can be made between the Company’s treatment of the situation of any one of the Employees and nor can any distinction be made in the conduct of the Company with respect to any one of the Stand Down Days. It follows from this finding of single course of course of conduct by the Company that the Stand Down Contravention, the Annual Leave Accrual Contravention and the Annual Leave Entitlement Contravention will be treated as three single contraventions notwithstanding there are separate contraventions with respect to each of the Employees on each of the Stand Down Days.

23      The following considerations are of significance to me in assessing penalties in this case:

• The maximum penalty with respect to each contravention by the Company is 60 penalty units which equates to $54,000 given that the Company is a body corporate.
• The Stand Down Direction reflected an honest, albeit incorrectly held, view of Company management that the EA permits the standing down of employees by an assertion of reliance upon ‘seasonal factors’. The correct position is that the Company must be in a position to prove a reasonable cause for any stoppage of work that results in a deduction of pay. The Annual Leave Accrual Contravention and the Annual Leave Entitlement Contravention were inevitable consequences of the Stand Down Contravention.
• The Employees did not suffer any reduced weekly wage as a result of the Stand Down Contravention. In fact, their weekly wage was higher than if the Stand Down Contravention had not occurred. The Employees did suffer effects on their entitlements as a result of the Annual Leave Accrual Contravention (a delay in accrual) and the Annual Leave Entitlement Contravention (taking a holiday at a time not of the Employee choosing).
• In light of the above, considerations of punishment and specific deterrence are less important in this case than the need to deter other employers from unlawfully standing down employees without pay.

• The Company is an enterprise of some sophistication given the evidence of its size and work systems. I infer that the decision to issue the Stand Down Direction involved senior management of the Company, albeit the evidence does not permit me to identify the relevant managers.

24      I have reached a conclusion that penalties fixed in the sum of $2,000 on account of the Stand Down Contravention, $500 on account of the Annual Leave Accrual Contravention and $1,500 on account of the Annual Leave Entitlement Contravention, being total penalties of $4,000 is an proportionate reflection of the gravity of the contravening conduct by the Company. In fixing these penalties I have had regard to: the Stand Down Contravention being of clause 11.1 of the EA with respect to each of the Employees on each of five days; the Annual Leave Accrual Contravention being of clause 14.6 with respect to Mr Crosswell on three days and Mr Thelander on four days and the Annual Leave Entitlement Contravention being of clause 14.4 with respect to Mr Crosswell on two days, Mr Tamainu on four days and Mr Thelander on one day.

25      The Union and the Employees seek orders pursuant to s 546(1) of the FW Act that the penalties be paid in equal shares to the claimants and I propose to order that the Company pay the penalty of $4,000 by way of payments of $1,000 to each of the Union and the (three) Employees.

26      The Union and the Employees have failed to satisfy me that Mr Fuda was involved in either the Stand Down Contravention, the Annual Leave Accrual Contravention or the Annual Leave Entitlement Contravention. I have already noted that I infer that the decision to issue the Stand Down Direction involved senior management of the Company but that the evidence does not permit me to identify the relevant managers. The identity of the author of the Company memorandum of 4 April 2016 foreshadowing the Stand Down Direction that was to follow is not apparent from the evidence. The facts relied upon at paragraphs 43–47 of the Claimants Outline of Submissions are consistent with Mr Fuda having a significant role in the senior management of the Company. That finding does not support an inference that Mr Fuda intentionally participated in or urged or counselled a particular decision of Company management, namely, the giving of the Stand Down Direction (and the consequential Annual Leave Accrual Contravention or the Annual Leave Entitlement Contravention).

Conclusion

27      For the reasons set out above, there will be an order that the Company pay a penalty of $4,000 ($2,000 on account of the contravention of clause 11.1 of the EA with respect to each of the Employees on each of five days); $500 on account of the contravention of clause 14.6 with respect to Mr Crosswell on three days and Mr Thelander on four days and $1,500 on account of the contravention of clause 14.4 with respect to Mr Crosswell on two days, Mr Tamainu on four days and Mr Thelander on one day). The $4,000 penalty will be paid by way of payments of $1,000 to each of the Union and the (three) Employees.

28      I will hear further from the parties on the issues that I have raised at paragraphs 18 and 19 before determining whether to make any other orders.

M. FLYNN

INDUSTRIAL MAGISTRATE

Schedule I: Jurisdiction, Practice and Procedure of the Industrial Magistrates Court (WA) under the Fair Work Act 2009 (Cth)

Jurisdiction

[1]   An employee, an employee organization or an inspector may apply to an eligible state or territory court for orders regarding a contravention of the civil penalty provisions identified in s 539(2) of the FW Act. The Industrial Magistrates Court (WA) (‘IMC’ or ’the Court’), being a court constituted by an industrial magistrate, is ‘an eligible State or Territory court’: FW Act, s 12 (see definitions of ‘eligible State or Territory court’ and ‘Magistrates Court’); Industrial Relations Act 1979 (WA), ss 81, 81B.

[2]   The application to the IMC must be made within six years after the day on which the contravention of the civil penalty provision occurred: FW Act, s 544.

[3]   The civil penalty provisions identified in s 539 of the FW Act include:

• The terms of an enterprise agreement, to the extent that the agreement applies to the parties before the Court: s 539; s 50(1); s 51 FW Act. An enterprise agreement applies to an employer and an employee if the agreement is expressed to cover them and it is in operation as a result being approved by the Fair Work Commission: s 52, 53 and 54 FW Act. It is not in dispute in this case and I am satisfied that an enterprise agreement known as the Western Meat Packers (Boners and Slicers) Meat Processing Agreement 2013 (‘the Enterprise Agreement’ or ‘EA’) was approved by the Fair Work Commission and that, as a result of the coverage clause of the EA, it is has the effect of covering the Company and the Employees.
• Other terms and conditions of employment as set out in Part 2 – 9 of the FW Act. For example, s 323 sets out the obligation of an employer on the method and frequency of amounts payable to employees in relation to the performance of work.
• An ‘employer’ has the statutory obligations noted above if the employer is a ‘national system employer’ and that term, relevantly, is defined to include ‘a corporation to which paragraph 51(xx) of the Constitution applies’: FW Act, s 14, s 12. The obligation is to an ‘employee’ who is a ‘national system employee’ and that term, relevantly, is defined to include ‘an individual so far as he or she is employed by a national system employer’: FW Act, s 13. It is not in dispute in this case and I am satisfied that the Company is a corporation to which paragraph 51(xx) of the Constitution applies and that the Employees are employed by the Company.

[4]   Where the IMC is satisfied that there has been a contravention of a civil penalty provision, the court may make orders for:

• An employer to pay to an employee an amount that the employer was required to pay under the FW Act or an enterprise agreement: FW Act, s 545(3). In contrast to the powers of the Federal Court and the Federal Circuit Court, an eligible state or territory court has no power to order payment by an entity other than the employer of amounts that the employer was required to pay under the FW Act. For example, the IMC has no power to order that the director of an employer company make payments of amounts payable under the FW Act: Mildren and Anor v Gabbusch [2014] SAIRC 15.
• A person to pay a pecuniary penalty: FW Act, s 546.

Burden and standard of proof

[5]   In an application under the FW Act, the claimant carries the burden of proving the claim. The standard of proof required to discharge the burden is proof ‘on the balance of probabilities’. In Miller v Minister of Pensions [1947] 2 All ER 372, 374, Lord Denning explained the standard in the following terms:

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.

[6]   In the context of an allegation of the breach of a civil penalty provision of the FW Act it is also relevant to recall the observation of Dixon J said in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336:

 The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences [362].

[7]   Where in this decision I state that 'I am satisfied' of a fact or matter I am saying that '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.

Practice and Procedure of the Industrial Magistrates Court

[8]   The Industrial Relations Act 1979 (WA) (IRA) provides that, except as prescribed by or under the Act, the powers, practice and procedure of the IMC is to be the same as if the proceedings were a case under the Magistrates Court (Civil Proceedings) Act 2004 (WA): IRA, s 81CA Relevantly, regulations prescribed under the IRA provide for an exception: a court hearing a trial is not bound by the rules of evidence and may inform itself on any matter and in any manner as it thinks fit: Regulation 35(4).

[9]   In Sammut v AVM Holdings Pty Ltd [No2] [2012] WASC 27, Commissioner Sleight examined a similarly worded provision regulating the conduct of proceedings in the State Administrative Tribunal and made the following observation (omitting citations):

40 … The tribunal is not bound by the rules of evidence and may inform itself in such a manner as it thinks appropriate. This does not mean that the rules of evidence are to be ignored. The more flexible procedure provided for does not justify decisions made without a basis in evidence having probative force. The drawing of an inference without evidence is an error of law. Similarly, such error is shown when the tribunal bases its conclusion on its own view of a matter which requires evidence.

Schedule II Pecuniary Penalty Orders and Accessorial liability under the Fair Work Act 2009 (Cth)

Pecuniary Penalty Orders

[1] The FW Act provides that the Court may order a person to pay an appropriate pecuniary penalty if the court is satisfied that the person has contravened a civil remedy provision: s 546(1). The maximum penalty for each contravention by a natural person, expressed as a number of penalty units, set out in a table found in section 539(2) of the FW Act: FW Act, s546(2). If the contravener is a body corporate, the maximum penalty is five times the maximum number of penalty units proscribed for a natural person: FW Act, s546(2).

[2] The rate of a penalty unit is set by s 4AA of the Crimes Act 1914 (Cth): FW Act, s 12. The relevant rate is that applicable at the date of the contravening conduct:

[3] The purpose served by penalties was described by Katzmann J in Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 at [338] in the following terms (omitting citations):
In contrast to the criminal law, however, where, in sentencing, retribution and rehabilitation are also relevant, the primary, if not the only, purpose of a civil penalty is to promote the public interest in compliance with the law. This is achieved by imposing penalties that are sufficiently high to deter the wrongdoer from engaging in similar conduct in the future (specific deterrence) and to deter others who might be tempted to contravene (general deterrence). The penalty for each contravention or course of conduct is to be no more and no less than is necessary for that purpose.

[4] In Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [14], Tracey J adopted the following ‘non-exhaustive range of considerations to which regard may be had in determining whether particular conduct calls for the imposition of a penalty, and if it does the amount of the penalty’ which had been set out by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7:

• The nature and extent of the conduct which led to the breaches.
• The circumstances in which that conduct took place.
• The nature and extent of any loss or damage sustained as a result of the breaches.
• Whether there had been similar previous conduct by the respondent.
• Whether the breaches were properly distinct or arose out of the one course of conduct.
• The size of the business enterprise involved.
• Whether or not the breaches were deliberate.
• Whether senior management was involved in the breaches.
• Whether the party committing the breach had exhibited contrition.
• Whether the party committing the breach had taken corrective action.
• Whether the party committing the breach had cooperated with the enforcement authorities.
• The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
• The need for specific and general deterrence.

[5] The list is not ‘a rigid catalogue of matters for attention. At the end of the day the task of the court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations.’ (Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [91]).

[6] “Multiple contraventions” may occur because the contravening conduct done an employer: (a) resulted in a contravention of a single civil penalty provision or resulted in the contravention of multiple civil penalty provisions; (b) was done once only or was repeated; (c) was done with respect to a single employee or was done with respect to multiple employees. The fixing of a pecuniary penalty for multiple contraventions is subject to:

• Section 557 of the FW Act. It provides that 2 or more contraventions of specified civil remedy provisions (including contraventions of an enterprise agreement and a contravention on section 323 on the payments) by an employer are taken be a single contravention if the contraventions arose out of a course of conduct by the employer. Subject to proof of a “course of conduct”, the section applies to contravening conduct that results in multiple contraventions of a single civil penalty provision whether by reason of the same conduct done on multiple occasions or conduct done once with respect to multiple employees: Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62; (2014) 221 FCR 153; Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832 at [22] (White J) The section does not to apply to case where the contravening conduct results in the contravention of multiple civil penalty provisions (example (a) above): Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 at [411] ff (Katzmann J); ,
• The application of the totality principle. The totality of the penalty must be re-assessed in light of the totality of the offending behaviour. If the resulting penalty is disproportionately harsh, it may be necessary to reduce the penalty for individual contraventions. Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; 246 ALR 35; [2008] FCAFC 8; [47] – [52].

[7] Section 546(3) of the FW Act also provides:

Payment of penalty
(3) The court may order that the pecuniary penalty, or a part of the penalty, be paid to:
(a) the Commonwealth; or
(b) a particular organisation; or
(c) a particular person.

[8]  In Milardovic v Vemco Services Pty Ltd (Administrators Appointed) (No 2) [2016] FCA 244 at [40] - [44], Mortimer J summarised the law (omitting citations and quotations) on this provision in light of Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4:

The power conveyed by s 546(3) is ordinarily to be exercised by awarding any penalty to the successful applicant. The initiating party is normally the proper recipient of the penalty as part of a system of recognising particular interests in certain classes of persons in upholding the integrity of awards and agreements the subject of penal proceedings. Where a public official vindicates the law by suing for and obtaining a penalty, it is appropriate that the penalty be paid to the Consolidated Revenue Fund. Otherwise, the general rule remains appropriate, that the penalty is to be paid to the party initiating the proceeding, with the “Gibbs exception” (Gibbs v The Mayor, Councillors and Citizens of City of Altona [1992] FCA 553) that the penalty may be ordered to be paid to the organisation on whose behalf the initiating party has acted.”

Accessorial Liability

[9]                         Section 550 of the FWA provides:

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.

[10]                      Decisions on this (or a comparable) provision have established the following principles:

1. Section 550 is in the same or similar form as the accessorial provision of other legislation, including s 75B of the Trade Practices Act 1974 (Cth) (now see the definition of 'involved' in the Australian Consumer Law. Decisions on those provisions provide guidance to interpreting s 550 of the FWA not least because Parliament is assumed to have appreciated the effect those decisions when enacting s550 of the FWA.
   See Australian Building & Construction Commissioner v Abbott (No 4) [2011] FCA 950 at [188] (Gilmour J); Devonshire v Magellan Powertronics Pty Ltd (2013) 275 FLR 273; 231 IR 198; [2013] FMCA 207.
2. In order to establish whether any individual respondent was involved in a contravention, it is necessary to examine the state of mind of each respondent separately in relation to each alleged contravention.
   See Construction, Forestry, Mining and Energy Union v Director of the Fair Work Building Industry Inspectorate (as successor to the Australian Building and Construction Commissioner) [2012] FCAFC 178 at [38].
3. The respondent must intentionally participate in the contravention and to form the requisite intent the respondent must have knowledge of the essential matters which go to make up the contravention, whether or not the respondent knows that those matters amount to a contravention.
   See Construction, Forestry, Mining and Energy Union v Director of the Fair Work Building Industry Inspectorate (as successor to the Australian Building and Construction Commissioner) [2012] FCAFC 178 at [38].
4. What constitutes 'the essential matters of the contravention' will depend upon the facts and circumstances of each case.
   See the cases reviewed by White J in Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 at [182] ff including Potter v Fair Work Ombudsman [2014] FCA 187 and Fair Work Ombudsman v Al Hilfi [2012] FCA 1166.
5. ‘Aided, abetted, counselled or procured … have the same meaning as in the common law where they designate participation in a crime as a principal in the second degree or as an accessory before the fact. "Aiding" and "abetting" refer to a person who is present at the time of the commission of an offence and "counselling" and "procuring" refer to a person who, although not present at the commission of the offence, is an accessory before the fact. A person counsels a contravention by another if he or she urges its commission, advises its commission or asks that it be committed and procures a contravention if he or she causes it to be committed, persuades the principal to commit it or brings about its commission; there must also be a causal connection between that action and the conduct impugned:' Cameron FM in Guirguis v Ten Twelve Pty Ltd & Anor [2012] FMCA 307 at [150] - [151] (omitting citations).
6. 'To be knowingly concerned in a contravention, the respondent must have engaged in some act or conduct which "implicates or involves him or her" in the contravention so that there be a "practical connection between" the person and the contravention': White J in Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 at [178].
7. 'For a person to be liable as an accessory to a contravention on the basis that they are wilfully blind to a certain fact, it still must be shown, albeit by inference, that the person had actual knowledge of such fact. If the term "wilful blindness" is used merely as a shorthand expression to indicate circumstances which warrant the drawing of the necessary inference, then it is acceptable. But it is unacceptable if it is used as a basis for imputing knowledge where actual knowledge is not proved.
   Cowdroy J in Potter v Fair Work Ombudsman [2014] FCA 187 at [82].