2024 WAIRC 00766
INDUSTRIAL MAGISTRATES COURT OF WESTERN AUSTRALIA


CITATION
:
2024 WAIRC 00766



CORAM
:
INDUSTRIAL MAGISTRATE D. SCADDAN



HEARD
:
ON THE PAPERS



DELIVERED
:
WEDNESDAY, 14 AUGUST 2024



FILE NO.
:
M 65 OF 2023



BETWEEN
:
JASON JOWETT


CLAIMANT





AND





COASTAL R.E. PTY LTD ATF COASTAL UNIT TRUST


RESPONDENT

CatchWords : INDUSTRIAL LAW – Fair Work Act 2009 (Cth) – Determination of ‘set-off’ – Payment of a pecuniary penalty – Long Service Leave Act 1958 (WA) – Payment of a pecuniary penalty
Legislation : Fair Work Act 2009 (Cth)
Long Service Leave Act 1958 (WA)
Industrial Magistrate’s Court (General Jurisdiction) Regulations 2005 (WA)
Industrial Relations Act 1979 (WA)
Crimes Act 1914 (Cth)
Instrument : Real Estate Industry Award 2010
Real Estate Industry Award 2020
Case(s) referred
to in reasons: : Workpac Pty Ltd v Rossato [2020] FCAFC 84; 378 ALR 585
James Turner Roofing Pty Ltd v Peters [2003] WASCA 28; 132 IR 122
Raymond Moate v I.P.C Pty Ltd (ACN 061 746 996) [2020] WAIRC 390; 100 WAIG 519
Dorsch v HEAD Oceania Pty Ltd [2024] FCA 484
Canavan Building Pty Ltd [2014] FWCFB 3202
4 yearly review of modern awards - Real Estate Industry Award 2010 [2017] FWCFB 3543
Miller v Minister of Pensions [1947] 2 All ER 372
Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336
Sammut v AVM Holdings Pty Ltd [No 2] [2012] WASC 27
Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450
NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; 71 FCR 285
Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560
Commonwealth v Director, Fair Work Building Inspectorate [2015] HCA 46; 258 CLR 482
Milardovic v Vemco Services Pty Ltd (No 2) [2016] FCA 244; 242 FCR 492
Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4; 239 FCR 336
Result: Pecuniary penalty ordered. Respondent’s application for set-off granted in part.
Representation:
Claimant : Mr S. Farrell (agent)
Respondent : Mr J. Dasey (of counsel)



SUPPLEMENTARY REASONS FOR DECISION
Determination of the Claim
1 On 5 April 2024, the Industrial Magistrates Court (IMC or, the Court) delivered reasons for decision finding the respondent was liable to pay to the claimant the following (Reasons):
(a) Pursuant to s 545(3) of the amount of $37,400.77 in respect of untaken paid annual leave payable under s 90(2) of the Fair Work Act 2009 (Cth) (FWA) (Annual Leave Entitlement);
(b) Pursuant to s 9(2A)(a) of the Long Service Leave Act 1958 (WA) (LSL Act), the amount of $54,567.22 in respect of his entitlement to pro rata long service leave upon termination of his employment (Long Service Leave Entitlement); and
(c) Pursuant to reg 12 of the Industrial Magistrate’s Court (General Jurisdiction) Regulations 2005 (WA) (IMC Regulations), interest on the judgment amount at the rate of 6% per annum from 20 October 2022 to 5 April 2024.
2 Setoff was relied upon by the respondent in its amended response, but, and perhaps with the benefit of hindsight it should have been argued fully at the substantive hearing, the respondent reserved its position until the issue of liability was determined. The claimant did not contest this course. Accordingly, and as foreshadowed in the Reasons, the parties were provided with an opportunity to make further submissions on the issue of setoff in the event the claimant was successful.
3 The parties did so, and these are the supplementary reasons for decision on the issues of setoff and the penalty to be applied (Supplementary Reasons).
Facts for the purposes of set-off and penalty
4 The following relevant facts are taken from the Reasons.
5 The claimant was a national system employee, and the respondent is a national system employer. The claimant was employed for a period of nine years, 11 months and eight days from 13 November 2012 to 20 October 2022, when the claimant resigned from his employment.
6 The claimant was employed according to the terms of a contract of employment dated 2 November 2012, which was varied on 8 July 2021 in relation to the formula for calculating commission-only (the Contract).
7 The Real Estate Industry Award 2010 (the 2010 Award), as varied in 2018, applied to the claimant for the whole of his employment. The Real Estate Industry Award 2020 (the 2020 Award) applied to the claimant at the time of termination of his employment.
8 During the whole of his employment, the claimant was employed on a commission-only basis.
9 The LSL Act was in force for the whole of the period of the claimant’s employment with the respondent. The LSL Act was amended with effect from 20 June 2022 and, relevant to the issues in dispute, s 5 of the LSL Act was amended.
10 On termination of his employment, the claimant was paid $1,671.72 in long service leave entitlements.
11 A commission was paid by the seller of a property to the respondent and the claimant was paid a portion of the commission in line with the Contract terms. This is referred to in the Contract as ‘commission sharing’.
12 As it relates to commission sharing, cl 2 of the Contract provides as follows:
(a) the respondent retained 7% of the gross commission for ‘Intellectual Property & Systems’; and
(b) of the remaining 93% of the gross commission, 60% plus superannuation was paid to the claimant up to a gross commission total of $270,000 and, thereafter, 65% plus superannuation was paid to the claimant for gross commission over $270,000.
13 Effective from 1 July 2021, the percentage of gross commission was varied, and the claimant was paid 70% of 100% including superannuation on gross commission up to $900,000 and 75% of 100% including superannuation on gross commission over $900,000. No other terms of the Contract were varied.
14 The minimum commission for commission-only employees under the 2010 and 2020 Awards is 31.5% of the gross commission paid for the sale of a property (although there was a time when it was 35%).
15 Once the sale of a property was settled, the claimant’s commission was calculated in accordance with the above percentages, minus costs referred to in schedule 5 of the Contract designated as compulsory sales agent costs (CA), and sales associate costs (SA) (the Claimant’s Commission).
16 Upon the sale of a property, the respondent produced and provided to the claimant a Commission Activity Statement (CAS) on a fortnightly cycle. The CAS recorded every property sold by the claimant and the gross commission received by the respondent, excluding GST. In addition, the CAS recorded the Claimant’s Commission, although details of CA and SA expenses were recorded in a Job Transactions Accrual (JTA) which accompanied the CAS.
17 The Claimant’s Commission was then paid to the claimant, minus taxation and statutory superannuation contributions, on the next pay day.
18 Following amendments to the LSL Act in 2022, the respondent received advice in respect of the ‘payment in advance’ for long service leave. From 20 June 2022, the respondent accrued long service leave for the claimant. When the claimant resigned, the respondent engaged a thirdparty expert to calculate long service leave owing from 20 July 2022 to 23 October 2022 being $1,671.72.
19 The respondent sent a letter dated 2 November 2022 to the claimant explaining the payment of $1,671.72.
20 Clause 8 of the Contract provides that:
An additional percentage amount has been included in the commission remuneration, so that you are paid in advance of all leave entitlements as determined by Legislation, as such any form of leave taken will be taken on an unpaid basis.
Should your employment cease with Realmark whether by your own accord or at Realmark's discretion, no further payment for leave entitlements will be made.
21 Clause 13 of the Contract provides relevantly that:
You agree that should any Legislation be amended and/or become binding on Realmark with regard to your employment or if the legislative minimums applicable to you change and that change results in Realmark having to increase or vary any part of the terms and conditions of employment (including payment of any additional minimum entitlements) of this Offer of Employment, then Realmark may vary any provision of the terms and conditions of employment of this Offer of Employment applicable at the time of such change to offset any additional cost.
22 During his employment with the respondent, and pursuant to the 2010 Award (both original and amended) and the 2020 Award, the claimant was entitled to paid annual leave as a minimum condition under the National Employment Standards (NES).
23 The claimant was entitled to four weeks of paid annual leave for each year of service which accrued each year.
24 The claimant took annual leave on three occasions, but the leave was unpaid in that the claimant was not paid at the time he took leave but was paid the Claimant’s Commission.
25 At the time of the termination of the claimant’s employment, there was a period of untaken paid annual leave.
26 The respondent did not pay the claimant the amount that would have been payable to the claimant had the claimant taken that period of leave contrary to s 90(2) of the FWA.
27 The claimant was entitled to this amount at his base rate of pay pursuant to s 90(1) of the FWA and cl 14.1 of the 2020 Award relevant to Real Estate Employee Level 2 or $940.90 per week.
28 Clause 8 of the Contract says that ‘an additional percentage’ amount has been included in the commission remuneration that is paid in advance of all leave entitlements as determined by ‘Legislation’ but makes no reference to what this additional percentage is. The IMC was unable to make a finding of fact that the additional percentage was in fact in reference to all, or part, of any (or what) leave taken.
29 The Contract and the contents of the File Note File Note is defined in paragraph 60 of the Reasons as the file note prepared by the respondent dated 8 July 2021 annexed to the Statement of Gayle Adams at GA 1.
suggested an increase in the percentage of commission paid was performancebased, which suggests the original terms may also have been, in part, performancebased.
30 The Court was not satisfied to the requisite standard the Claimant’s Commission over the minimum commissiononly rate was solely attributable to all leave or, if not, what percentage was attributable to annual leave or any other leave payment available under the 2010 Award (such as personal leave, compassionate leave and community service leave) or what, if any, percentage was performance based.
31 The respondent could have further varied the Contract to reflect the amended 2010 Award and 2020 Award as it related to annual leave and the payment thereof. It did not do so.
32 For similar reasons, the Court found that while the parties voluntarily entered into the Contract and understood the terms of the Contract, cl 8 of the Contract was not enforceable as it relates to the payment in advance via the Claimant’s Commission in lieu of the claimant’s long service leave entitlement. Clause 8 of the Contract is inconsistent with and contrary to the limited contracting-out provisions in s 5 of the LSL Act (preJune 2022).
33 The Court also considered in the alternative that cl 8 of the Contract, when read with cl 2, did not satisfy the conditions for forgoing the claimant’s long service leave entitlement under s 5 of the LSL Act:
the over-award commission paid to the claimant was a composite additional percentage amount, and it did not distinguish what additional percentage was attributable to annual leave, long service leave, personal leave, compassionate leave or community service leave or what additional percentage was attributable to individual performance;
…
[t]he evidence does not enable an objective assessment of whether the claimant was adequately compensated to forgo future long service leave…
the evidence demonstrates at least from July 2021, the claimant was rewarded with an increase in composite additional percentage commission that had no apparent nexus with any leave; and
to the extent the parties reduced the claimant’s leave arrangements to writing, I am not satisfied cl 8 complies with the requirement of a written agreement under s 5(b) of the LSL Act (pre-June 2022).
34 At the time of the termination of the claimant’s employment, he was entitled to a pro rata amount of long service leave pursuant to s 8(3)(b) of the LSL Act and the respondent did not pay the claimant the full amount that would have been payable to him had he taken that period of long service leave pursuant to s 9(2A)(a) when read with s 9(2) of the LSL Act.
35 The claimant is entitled to this amount at his ordinary pay pursuant to s 7(4)(b) of the LSL Act.
36 The respondent also relies upon an [unsigned] witness statement from Gayle Adams (Ms Adams) filed on 29 July 2024 where Ms Adams explains the respondent’s current practices Witness Statement of Gayle Adams filed on 29 July 2024 at [3] to [7].
.
37 Ms Adams says a review of contracts in December 2022 resulted in the respondent’s employment contracts not including any reference to cashing out of prepayment of long service leave.
38 Since the publishing of the Reasons, the respondent has applied the IMC’s decision as it relates to annual leave. The respondent’s employment contracts since December 2022 have not included the payment in advance for annual leave. No current employee has an employment contract that contains payment in advance for annual leave, and Ms Adams annexed to her statement a copy of the respondent’s template contract.
39 The respondent has engaged a human resource consultancy on retainer to ensure future compliance with employment obligations.
SetOff
40 As discussed in the cases relating to setoff, the substance of the respondent’s claim to setoff is that it should be entitled to have all, or some portion of, the Claimant’s Commission payments brought into account in discharge of its obligation to pay the Annual Leave Entitlement and the Long Service Leave Entitlement WorkPac Pty Ltd v Rossato [2020] FCAFC 84 at [983] per Wheelahan J (with whom White J agreed)
.
41 As observed in Workpac Pty Ltd v Rossato [2020] FCAFC 84; 378 ALR 585 (Rossato) at [219], [820], [985], and like the claimant’s case, the Annual Leave Entitlement and the Long Service Leave Entitlement are statutory entitlements, and the Contract was not effective to the extent it purported to take away these entitlements.
42 Again, as observed in Rossato at [820], [986], the question whether the Claimant’s Commission payments were effective, to any extent, to discharge the Annual Leave Entitlement and the Long Service Leave Entitlement turns on the principles concerning the appropriation of Claimant’s Commission payments.
43 To that end, the respondent relies upon cl 8 of the Contract.
The respondent’s submissions
44 The respondent contends the Contract was freely entered by the parties and its terms were complied with during the whole of the employment period. The claimant took the benefit of the Claimant’s Commission paid to him and never complained about the terms of the Contract as it related to the taking of unpaid leave.
45 The respondent also contends that the additional commission percentage over the minimum commission percentage was all for leave and there is no evidence that the additional commission percentage was for any other reason or purpose.
46 Further, the respondent contends there is no evidence the claimant took any other type of leave (i.e. compassionate leave, jury duty leave or personal leave) during his employment, and in any event, other leave types are contingent leave for which there is no obligation to pay unless it is applied for and taken.
47 The payments made to the claimant demonstrate that the total in excess of the minimum commission far exceed the total value of all of the leave, supporting the contention that all of the Claimant’s Commission payments should be considered as fully available to set-off the Annual Leave Entitlement and Long Service Leave Entitlement.
The claimant’s submissions
48 The claimant contends that cl 8 of the Contract failed to specify an additional percentage amount and did not attribute what additional percentage was referrable to leave and what was referrable to performance. In addition, there was no mention in the Contract of the minimum commission-only rate.
49 The claimant further relies on the content of the File Note, which he says supports the finding that the increase in the Claimant’s Commission was performance based.
50 The claimant further contends that it is unlawful for the respondent to set-off the Annual Leave Entitlement where it would be contrary to s 92 of the FWA having regard to cl 20.8 of the 2020 Award as it relates to cashing out of annual leave.
The Law
51 Notwithstanding the High Court found Mr Rossato was a casual employee and thus obviating the requirement to consider other issues discussed in Rossato, the Full Federal Court considered the principles applicable to set-off determining WorkPac were not entitled to set-off against its liabilities any of the payments made under the contracts of employment. Helpfully, at [865], White J (after lengthy discussion of relevant cases) distilled propositions concerning the entitlement of an employer to set-off in analogous circumstances:
(a) the issue may require the application of the parties’ contract: Poletti v Ecob at 332. If they agree that a sum of money is paid and received for a specific purpose which is over and above or extraneous to an award entitlement, the contract precludes the employer from later seeking to rely on the payment as satisfying an award obligation which is outside the agreed purpose of the payment: ibid. If the payment was made for the purpose of satisfying the kind of award obligation sought to be satisfied, it may be brought into account as satisfaction or part satisfaction of that obligation. If it was paid for some other purpose, then the employer cannot bring the payment into account: Discount Lounge Centre at [23]. Stated more generally, an employer cannot later reallocate an amount agreed to be paid to an employee in respect of subject A (for example, ordinary hours of work) to meet a claim in respect of subject B (for example, overtime): Ray v Radano at 478‑9 (Sheldon J); Pacific Publications at 419; Discount Lounge Centre at [57]. The focus is on the purpose of the payment. If it arises out of the same purpose as the award obligation, it can be set-off: ANZ v FSU at [48]‑[52]. I will refer to this as the “Contractual Principle”;
(b) the issue may involve application of the common law principles concerning payment by a debtor to a creditor: Poletti v Ecob at 332‑3. When there are outstanding award or enterprise agreement entitlements, a payment designated by the employer as being for a purpose other than satisfaction of the award entitlement cannot be regarded as having satisfied the award or enterprise agreement: ibid. I will refer to this as the “Designation Principle”;
(c) close regard must be had to the character of the payment on which the employer relies for the claimed set-off and the purpose (usually, the agreed purpose) for which it was made; and
(d) the purpose for which a payment was made will be a question of fact in each case. It may be express or may be implied from the parties’ agreement or from the employer’s conduct: James Turner at [21(3)]. The “designation and appropriation” are matters to be determined by reference to the whole of the evidence: ANZ v FSU at [56].
52 Similarly, in James Turner Roofing Pty Ltd v Peters [2003] WASCA 28; 132 IR 122 (James Turner), Anderson J also summarised relevant principles (albeit other cases have commented on aspects of these) at [21]:
If no more appears than that (a) work was done; (b) the work was covered by an award; (c) a wage was paid for that work; then the whole of the amount paid can be credited against the award entitlement for the work whether it arises as ordinary time, overtime, weekend penalty rates or any other monetary entitlement under the award.
However, if the whole or any part of the payment is appropriated by the employer to a particular incident of employment the employer cannot later claim to have that payment applied in satisfaction of his obligation arising under some other incident of the employment. So a payment made specifically for ordinary time worked cannot be applied in satisfaction of an obligation to make a payment in respect to some other incident of employment such as overtime, holiday pay, clothing or the like even if the payment made for ordinary time was more than the amount due under the award in respect of that ordinary time.
Appropriation of a money payment to a particular incident of employment may be express or implied and may be by unilateral act of the employer debtor or by agreement express or implied.
A periodic sum paid to an employee as wages is prima facie an appropriation by the employer to all of the wages due for the period whether for ordinary time, overtime, weekend penalty rates or any other monetary entitlement in respect of the time worked. The sum is not deemed to be referable only to ordinary time worked unless specifically allocated to other obligations arising within the employer/employee relationship.
Each case depends on its own facts and is to be resolved according to general principles relating to contracts and to debtors and creditors.
53 To that I would also add his Honour’s comment at [44]:
There is nothing in the cases referred to which is to the effect that, where payments are made pursuant to a contractual arrangement without regard for award obligations, they are to be completely ignored and left out of account in looking to see whether an obligation imposed by the award has been satisfied. At their highest they are authority for the proposition that if an employer impliedly or expressly appropriates a payment of money to a particular obligation arising in the employment relationship (ie to a particular incident of employment) the employer is to be held to that appropriation and cannot seek later to reappropriate or “reprobate”. The cases are not authority for the proposition (upon which the judgments below seem to have proceeded) that unless there is an express appropriation to a particular award entitlement the sums paid by the employer to the employee are to be ignored or treated as referable only to ordinary time worked.
54 In Raymond Moate v I.P.C Pty Ltd (ACN 061 746 996) [2020] WAIRC 390; 100 WAIG 519 at [102], Industrial Magistrate Flynn summarised the principles to be applied where an employer claims that a payment to an employee is to be set-off against an obligation to the employee under the FWA, including an obligation under a modern award:
An employer’s payment to an employee may be applied in satisfaction of the FW Act Obligation, if (before payment) the employer designates the payment to be for the purpose of satisfying the obligation, i.e., the employer appropriates the payment: [Irving M, The Contract of Employment (2nd ed 2019) (Irving)] [12.42]
There must be a ‘clear correlation’ between, on the one hand, the employer’s purpose in making the relevant payment and, on the other hand, the purpose of the relevant FW Act Obligation: Irving [12.42] - [12.43], [12.46]; [Linkhill Pty Ltd v Director, Office of the Fair Work Building Industry Inspectorate [2015] FCAFC 99; 240 FCR 578 (Linkhill)] [84].
Appropriation by an employer in satisfaction of a FW Act Obligation may arise from: an agreement between the parties or from ‘a unilateral act by the employer prior to payment’: Irving [12.42].
Agreement. If the parties have agreed that an employer’s payment is to be appropriated for an agreed purpose, the payment is to be applied in satisfaction of FW Act Obligation that clearly correlate to the agreed purpose; the payment will not be applied in satisfaction of obligations that do not correlate to the agreed purpose: Irving [12.46]; Poletti v Ecob (No2) (1989) 31 IR 321
‘Unilateral act by the employer prior to payment’. If the intention of the employer in making a payment is to appropriate the payment in satisfaction of a purpose that closely correlates to the purpose of the relevant FW Act Obligation, the payment is to be applied in satisfaction of that obligation: Irving [12.46]; Linkhill [98]. The appropriation must be communicated to the employee. The intention of the employer is ascertained objectively by inference from facts known to both parties; the subjective intention of the employer is irrelevant: OShea v Heinemann Electric Pty Ltd (2008) FCR 475 [49]. A statement in a payslip that an amount is paid to satisfy specified FW Act Obligation is evidence of an intention to appropriate the payment stated in the payslip to the identified obligation: Irving [12.52]. However, labels used by the parties are not determinative: Irving [12.53]; Australian and New Zealand Banking Group Ltd v FSU [2001] FCA 1785 [55]) ‘The intention may be inferred from the circumstances in which the payment was made’: Irving [12.52]; Fair Work Ombudsman v Transpetrol TM AS [2019] FCA 400. The subject matter of the contractual obligation to make the payment must closely correlate to the FW Act Obligation, although it is not necessary that the same terminology be used in the contract as the obligation in the FW Act: Irving [12.46]; Linkhill [98]; Australian and New Zealand Banking Group Ltd v FSU [2001] FCA 1785 [52].
The purpose of an employer in making a payment to an employee on the basis of a set rate for each hour that is worked will need to be assessed. The whole of an amount paid by an employer may be credited against all FW Act Obligation if (and only if) the purpose of the payment by the employer is found, as a fact, to ‘cover all the monetary obligations arising in the employment relationship whatever they may be’: James Turner Roofing [24], [43]; Linkhill [96] - [98]. In James Turner Roofing such a purpose was inferred by the parties’ agreement to an ‘all in’ hourly rate. By way of contrast with an ‘all in’ rate, an inference commonly be drawn from the employer’s payment of a ‘flat hourly rate’ is that each payment satisfies the FW Act Obligation to pay for each hour worked and was not for another purpose: Linkhill [97]. Similarly, a failure to follow a proscribed procedure for variation of a FW Act Obligation may permit an inference that an employer payment is not in satisfaction of the obligation: Irving [12.49] - [12.50].
What did the parties agree?
55 The parties understood the effect of cl 8 of the Contract in that they understood that if the claimant took annual leave or other leave, such leave would be unpaid on account of the Claimant’s Commission being more than the minimum commission rate of 31.5% under the 2010 Award.
56 There was no evidence as to what, if any, discussions occurred at the time the Contract was signed by the claimant, nor was there any evidence of what ‘additional percentage amount’ was included in the commission remuneration. However, the parties understood, at least during the employment period, that any leave would be unpaid as a result and that was on account of a higher than award commission rate.
57 Further, the parties also understood that if the claimant’s employment was terminated, there would be no further payment for leave entitlements.
58 It is the case that the Claimant’s Commission was between 29.5% and 33.5% over the minimum commission rate under the 2010 Award depending on total sales. Further, from 1 July 2021, the Claimant’s Commission was between 39.5% and 43.5% over the minimum commission rate.
59 The respondent relied upon a spreadsheet that compared the respondent’s gross commission, the 31.5% minimum commission rate and the amount paid to the claimant: Schedule III to the Reasons. A complicating factor with information contained in Schedule III are the payments made to the claimant’s wife, which meant that no commission was payable to the claimant at certain times.
60 The respondent says the whole of the Claimant’s Commission over 31.5% was referrable to only leave. However, that submission is inconsistent with the finding of fact by the IMC that the increase in commission amount from 1 July 2021 was not referrable to leave but followed on from negotiations between the parties.
61 Notably, at the time the Contract was signed, cl 17.5(a) of the 2010 Award (pre-2 April 2018) enabled the payment in advance of annual leave and other leave entitlements under the NES, provided the monetary component for each entitlement was in addition to the minimum commission-only rate. This changed from 2 April 2018 as set out in the Reasons.
62 Of course, this did not change the legal effect of entitlements under the NES.
63 The 2010 Award and its subsequent iterations did not provide for long service leave, which was determined by the LSL Act.
Determination on setoff
Annual Leave Entitlement
64 For the following reasons, for the period of employment from 13 November 2012 to 2 April 2018, I am satisfied the respondent is entitled to setoff its liability in relation to the Annual Leave Entitlement:
(a) the claimant was employed in accordance with the 2010 Award and the Contract;
(b) the common purpose as it related to the payment of the Claimant’s Commission, as understood by the parties, was contained in cl 2 and cl 8 of the Contract and this common purpose was also reflected in cl 17.5(a) of the 2010 Award (pre2 April 2018), and reduced to writing;
(c) the common purpose was the claimant would be paid as a minimum 29.5% over the minimum award rate, which would then increase as the total sales increased, and that an additional percentage amount [albeit unspecified] had been included for payment in advance of all leave entitlements (and thus leave was taken on an ‘unpaid’ basis);
(d) there was no evidence the Claimant’s Commission went below the minimum income threshold reflected in cl 16.3 of the 2010 Award (pre2 April 2018);
(e) the claimant took the benefit of the additional percentage amount over this period and the parties operated in accordance with their common understanding; and
(f) the appropriation of the money by the respondent is for, if not the same purpose, a very close purpose rather than for a purpose other than satisfaction of an award entitlement.
65 In making this determination, I accept my comments in paragraph [138] of the Reasons. However, these comments were made in relation to the respondent’s alternative argument on liability. Further, I also noted that additional percentage commission paid to the claimant may have adequately reflected leave paid in advance, but I was not able to attribute what percentage applied to leave and what percentage applied to performance: paragraphs [139] to [141] of the Reasons. What I am satisfied of is that for this period there was no underpayment as it related to annual leave.
66 For the following reasons for the period of employment from 3 April 2018 to 20 October 2022, I am not satisfied the respondent is entitled to set-off its liability in relation to the Annual Leave Entitlement:
(a) clause 17.5(a) of the 2010 Award (post 2 April 2018) varied the basis upon which commissiononly employees were to be paid leave. That is, a commissiononly employee could no longer be paid in advance for leave and was required to be paid the base rate of pay which could then be debited on the employee’s [presumably] CAS on account of the additional percentage. This was required to be in writing;
(b) the claimant remained employed in accordance with the 2010 Award (post 2 April 2018) and the Contract;
(c) there was a mechanism available to the respondent to vary the Contract in accordance with the 2010 Award (post 2 April 2018), but it did not do so;
(d) notwithstanding the parties continued to operate in accordance with their prior common understanding [albeit erroneous], the purpose of the appropriation by the respondent could no longer be for payment of leave in advance or to satisfy ‘unpaid’ leave. Thus, any close connection between the purpose of the appropriation and the desire to satisfy any award entitlement was, in my view, severed.
67 In making this determination, I accept my comments in paragraph [139] of the Reasons and the table referred to therein. I also note the comments by his Honour Anderson J in James Turner at [29] as it relates to the possibility of a claim for double payment of wages in this case.
68 The outcome of these determinations is the amount of Annual Leave Entitlement ordered in the Reasons is setoff by the amount equivalent to five years, 20 weeks and one day, or 21.54 weeks. As a monetary amount this is 21.54 weeks × $940.90 or $20,266.98.
69 Therefore, the amount ordered to be paid by the respondent in respect of its liability for the Annual Leave Entitlement is $17,133,79.
Long Service Leave Entitlement
70 For the following reasons I am not satisfied the respondent is entitled to setoff its liability in relation to the Long Service Leave Entitlement:
(a) as set out in the Reasons, an entitlement to long service leave crystallises upon an employee completing a certain number of years’ continual service;
(b) the 2010 Award and its successors make no reference to the provision of long service leave entitlements;
(c) the Contract refers to ‘all leave entitlements as determined by Legislation’, but does not define or expand on what legislation or what leave, and there was no evidence of what the parties understood this to mean (over and above award conditions) at the time the Contract was signed;
(d) while it might have been desirable, the claimant’s continued employment with the respondent was unknown at the time the Contract was signed;
(e) in the absence of further evidence and specificity in the Contract, it cannot be said with sufficient certainty that a percentage commission paid over the minimum commissiononly percentage under the 2010 Award was intended to meet the future, but unknown, obligation of long service leave entitlements. It is open to speculate that it might have been intended, but I am not satisfied to the requisite standard that it was; and
(f) accordingly, in my view, the purpose of the appropriation by the respondent and any close connection between the purpose of the appropriation and the desire to satisfy any long service leave entitlement was, again, severed.
71 The outcome of this determination is that the amount of Long Service Leave Entitlement ordered in the Reasons cannot be set-off by the respondent and the respondent is required to pay the whole of the amount ordered.
Penalty
72 The respondent was found to have contravened s 90(2) of the FWA by failing to pay to the claimant an amount in respect of untaken paid annual leave.
73 Section 44 of the FWA provides that an employer must not contravene a provision of the NES, and that any contravention of the NES is a civil remedy provision. Section 90(2) of the FWA is a provision of the NES.
74 The claimant applied for an order requiring the respondent to pay a pecuniary penalty pursuant to s 546(1) of the FWA.
75 The respondent was also found to have failed to pay the claimant’s long service leave entitlement pursuant to s 9(2A) of the LSL Act, which is capable of an order under s 83(4) of the Industrial Relations Act 1979 (WA) (IR Act).
76 The claimant applied for an order requiring the respondent to pay a pecuniary penalty pursuant to s 83(4A) of the IR Act.
The claimant’s submissions
77 The parties refer to well settled principles as it relates to the imposition of a pecuniary penalty.
78 The claimant contends that a substantial penalty should be imposed to deter it and others in the real estate industry from breaching their lawful obligations to pay employee entitlements.
79 The claimant, in referring to Dorsch v HEAD Oceania Pty Ltd [2024] FCA 484 at [16], contends that the claimant’s case is objectively more serious where the respondent’s contravention is a complete failure to pay accrued leave, not merely a delay in payment.
80 The respondent relied upon cl 8 of the Contract to justify why it did not pay the claimant’s entitlement. While the IMC found the respondent’s failure was an error, the respondent’s incorrect position was available to it following the decisions in Canavan Building Pty Ltd [2014] FWCFB 3202
and the Fair Work Commission’s review of the 2010 Award (Review Decision) 4 yearly review of modern awards - Real Estate Industry Award 2010 [2017] FWCFB 3543
. The claimant contends that all employers have an obligation to know and understand their obligations under the FWA and ignorance of the law is no excuse.
81 The claimant accepts that the respondent’s failure did not have any damage on him or cause him significant hardship, however, this is merely an absence of an aggravating factor.
82 The claimant says the respondent is a franchisee of the ‘Realmark’ brand. The claimant contends the Contract indicates an attempt by the respondent to avoid their legislative entitlements, and, of itself, warrants a penalty to specifically deter it from further contraventions.
83 The claimant asserts, without any evidence, the respondent gained an unfair advantage over competitors by failing to comply with the FWA and information purporting to be from the respondent’s website. I put to one side these assertions and information. The claimant was given an opportunity to put evidence before the IMC as it related to penalty, and he did not do so. It is not now open to the claimant to rely upon these assertions, unsupported by evidence, in submissions for the purposes of arguing penalty.
84 The claimant says the respondent is not contrite and has defended its position in the proceedings.
85 The claimant accepts the respondent does not have a history of contravening its employment obligations.
86 The claimant contends that in relation to the contravention of the FWA and the LSL Act, a penalty in the range of 50  55% of the maximum penalty is appropriate.
87 The claimant submits the penalty should be paid to him personally.
The respondent’s submissions
88 The respondent contends that the parties complied with the terms of the Contract during the claimant’s employment. That is, the claimant was paid a higher commission on the understanding that this included payment in advance for any leave taken.
89 As it relates to the Long Service Leave Entitlement, the respondent says the claimant’s case is a ‘test case’ where the issue before the IMC is the first time it has been directly determined. Therefore, it is reasonable for there to be differing views and for the respondent to defend the Long Service Leave Entitlement.
90 The respondent’s understanding of s 5 of the LSL Act is that it was permitted to treat long service leave as it did. When s 5 of the LSL Act was amended, the respondent obtained advice and changed its process. From the time of the amendment, the respondent complied with the law and paid the claimant what it was advised it owed on termination of the claimant’s employment.
91 This demonstrates the respondent’s intention to do the right thing.
92 Thus, specific deterrence is of less importance.
93 For similar reasons, the respondent says the circumstances are not amendable by general deterrence.
94 Accordingly, the respondent submits a caution is the appropriate penalty, or, if a pecuniary penalty is warranted, a penalty at the lower end is appropriate.
95 As it relates to the Annual Leave Entitlement, the respondent contends the claimant was paid a higher commission to account for leave. The respondent says the effect is the claimant was not underpaid or ‘cheated’ of the value of his entitlements.
96 Both parties applied cl 8 of the Contract during the claimant’s employment. The respondent says it could not have unilaterally changed the Contract.
97 The respondent says it now complies with the terms of the 2020 Award, and any penalty should be at the lower end.
98 The respondent again submits that the circumstances of the claimant’s claim are not amendable by general deterrence.
99 The respondent also refers to the claimant being an accessory pursuant to s 550 of the FWA and s 83(2A) of the IR Act. In doing so, the respondent appears to suggest that if a penalty is applied to the respondent, it should also be applied to the claimant where the claimant agreed to the terms of the Contract, accepted the benefit and never suggested the Contract should be varied. The respondent says the claimant is equally culpable in any contravention.
100 The difficulty with the respondent’s submission is that with respect to the contraventions, the statutory obligations were always on the respondent. Further, the respondent’s case was never prosecuted on the basis that the claimant was an accessory and, unsurprisingly, the Court never made findings to requisite standard that the claimant was involved in the contravention of a civil remedy provision for the purposes of s 550(2) of the FWA or s 83(2A) of the IR Act.
101 In addition, it is a denial of procedural fairness to now claim the claimant is an accessory for the purposes of imposing a penalty.
102 Finally, the evidence, at its highest, found the parties negotiated mutually agreeable contract terms, and thereafter key contract terms were found to be contrary to the FW Act and the LSL Act.
103 The evidence did not extend to demonstrating the claimant aided, abetted, counselled or procured any contravention or induced any contravention or conspired with others to affect the contravention or in some other way was knowingly involved in any contravention.
Determination on penalty
104 The IMC is empowered to order a person to pay a pecuniary penalty the Court considers appropriate if the Court is satisfied that the person has contravened a civil remedy provision: s 546(1) of the FWA.
105 A contravention of s 44 of the FWA is a contravention of a civil remedy provision: s 539(2) of the FWA.
106 The maximum penalty with respect of a contravention of s 44 of the FWA by the respondent is 300 penalty units, given the respondent is a body corporate. The maximum penalty in respect of the FWA contravention is $66,000.
107 The IMC is also empowered to order a person pay a pecuniary penalty if a contravention of an entitlement provision under the LSL Act is proven: s 83(1)(e)(ii) and (4) of the IR Act.
108 The maximum penalty with respect to a contravention of an entitlement provision under the LSL Act in the case of a body corporate, which is not a serious contravention, is $65,000 The parties did not submit any contravention found in this case was a serious contravention.
: s 83(4A)(a)(ii) of the IR Act.
109 It is also open for the IMC to impose a caution pursuant to s 83(4)(a) of the IR Act.
110 Pursuant to s 83F(2) of the IR Act, an order made under s 83(1)(e) imposing a penalty may be made payable to: (a) a person directly affected by the conduct to which the contravention relates; (b) the applicant; or (c) the Treasurer. In making an order for payment to a person directly affected by the conduct to which the contravention relates, the court must take into account any other compensation that the person has received or is likely to receive in respect of the conduct concerned: s 83F(3) of the IR Act.
111 The following considerations are significant in assessing the appropriate penalties in this case (both in relation to the Annual Leave Entitlement and the Long Service Leave Entitlement):
whether the organisation has engaged in similar conduct: the respondent has not been found to have previously contravened the FWA or the LSL Act:
whether the conduct was deliberate and the circumstances of the conduct: the difficulty with respect to the conduct is that both parties believed during the claimant’s employment that the terms of the Contract enabled the respondent to pay the claimant’s leave in advance as part of the negotiated higher commission rate. The basis for this belief was borne out in the terms of the Contract. Accordingly, while the respondent’s conduct was deliberate, it was also in compliance with the agreed terms of the Contract to which the claimant was a willing party. In addition, I am satisfied the respondent’s conduct was not to escape any lawful employment obligation or to act in an underhanded way to its advantage but because the respondent believed the higher commission rate in the Contract accounted for the claimant’s leave entitlements;
corrective action: the respondent has updated its employment contracts and since December 2022 has not included the payment in advance for leave in its contracts. The respondent has engaged a Human Resources consultancy on retainer to ensure future compliance with its employment obligations;
contrition and avoidance of repetition: the respondent has not shown contrition but it has shown it will abide by the IMC’s decision as it relates to annual leave. In addition, I accept the issue relating to long service leave was the first of its type for determination. To that end, the responsible government department sought to be heard on the issue. In my view, the respondent should not be punished for reasonably seeking a determination on the payment of long service leave. In addition, the issues relating to the payment of unpaid annual leave upon termination of employment was not limited to the question of liability but extended to quantum and set-off (where the respondent was partially successful);
the size of the entity and involvement of senior management: there is limited information about the respondent’s business beyond it being a franchise and having access to industry bodies. It is reasonable to infer that senior management were involved in negotiating the terms of the Contract but the evidence also demonstrates the claimant was active in negotiating his terms and conditions; and
loss or damage suffered as a result: the claimant accepts that he suffered minimal, if any, consequential loss as a result of the contraventions. The claimant was demonstrably paid a higher commission, which the parties [erroneously] believed during the claimant’s employment included payment for any leave taken.
112 In my view, this is a somewhat unique case where there was no apparent power imbalance and where the parties voluntarily negotiated (and varied) the Contract, and its terms were readily accepted by both parties.
113 Following the Review Decision, relevant annual leave clauses were amended and there is no explanation for why the respondent was not aware of the amendments when industry bodies made submissions on those amendments. Whether the respondent was able to subsequently vary the Contract is a separate issue to its obligations under the FWA and where the Contract referred to the claimant’s employment under the 2010 Award. However, there was a time when the terms of the Contract and the 2010 Award were consistent with one another.
114 Notwithstanding this, having regard to the whole of the circumstances, I am of the view that the contravening conduct in all of the circumstances of this case is properly categorised in the low range.
115 I accept there is a public interest in the protection of employee entitlements and to ensure deterrence if not in respect of the respondent specifically, then for employers more generally. However, there were peculiarities with respect to the Claim, including the mutual bargaining by the parties and the nature of the determinations sought. I also note the respondent has taken corrective action since December 2022 and sought advice on the Long Service Leave Entitlement.
116 While criminal penalties import notions of retribution and rehabilitation, the primary purpose of a civil penalty is to promote the public interest in compliance with the law and not as an additional award of compensation for financial or emotional stress, hurt feelings, inconvenience or legal fees. Commonwealth of Australia v Director, Fair Work Building Inspectorate [2015] HCA 46; 258 CLR 482 [55] (referring to Trade Practices Commission v CSR Ltd [1990] FCA 521)
This purpose is met by imposing an ‘appropriate penalty’ striking a balance between oppressive severity and the need for deterrence in respect of the particular case. Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 275 CLR 450 [46].

117 Further, in certain cases a modest penalty, if any, may reasonably be thought to be sufficient to provide effective deterrence against future contraventions where, by way of example, the contravention is a “one off” result of inadvertence and not part of a deliberate strategy to circumvent the law, the person responsible for the contravention has been disciplined or counselled, there is genuine remorse, or, the contravention is unlikely to arise again having regard to the reduced risk of future contraventions. Pattinson [46] and [47].

118 I am satisfied that the risk of future contraventions is low, and the contravention is unlikely to arise again and was not part of any deliberate strategy by the respondent. I am satisfied a modest penalty is appropriate to provide effective deterrence.
119 In respect of the penalty to be applied for the contravention of the NES, I impose a penalty of $7,000. This is an appropriate penalty ‘that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case.’ Pattinson
This is also consistent with the principle that the penalty must not be excessive and be just and appropriate in all the circumstances of the case.
120 The claimant seeks an order pursuant to s 546(3)(c) of the FWA that the penalty be paid to him. An order will be made that the respondent pay the penalty of $7,000 to the claimant.
121 There are additional considerations in respect of the penalty to be applied for the contravention of the Long Service Leave Entitlement, including that the contravention arose out of the same circumstances as the Annual Leave Entitlement. Further, the respondent obtained advice after the s 5 amendments to the LSL Act and complied with that advice by paying what it thought was the correct entitlement. Otherwise, the respondent’s conduct was consistent with the parties’ belief as it related to the entitlements under the Contract.
122 There is limited guidance in relation to the effect of s 5 of the LSL Act (pre and post amendments), and it was not unreasonable for the parties to seek a determination on the issue.
123 I am not satisfied the circumstances of this case are such that specific deterrence as it relates to the Long Service Leave Entitlement requires a pecuniary penalty. Further, in my view, the circumstances of this case are such that general deterrence, and the public interest can be appropriately achieved by a caution.
124 Accordingly, I impose a caution pursuant to s 83(4)(a)(i) of the IR Act.
Orders
125 The amount of $37,400.77 ordered in Order 2 of the Reasons is reduced on account of set-off in the amount of $20,266.98, and the amount liable to be paid by the respondent is $17,133.79.
126 Pursuant to s 546(3) of the FWA, the respondent pay a pecuniary penalty of $7,000 to the claimant in respect of the Annual Leave Entitlement; and
127 Pursuant to s 83(4)(a)(i) of the IR Act, the respondent is cautioned in respect of the Long Service Leave Entitlement.



D. SCADDAN
INDUSTRIAL MAGISTRATE


SCHEDULE I: Jurisdiction, Practice and Procedure of the Industrial Magistrates Court of Western Australia 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 FWA. The IMC, being a court constituted by an industrial magistrate, is ‘an eligible State or Territory court’: s 12 of the FWA (see definitions of ‘eligible State or Territory court’ and ‘magistrates court’); Industrial Relations Act 1979 (WA) s 81, s 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: s 544 of the FWA.
[3] The civil penalty provisions identified in s 539 of the FWA include:
128 Section 44 – contravening a provision of the NES
[4] 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’: s 14 and s 12 of the FWA. 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’: s 13 of the FWA.
[5] Where the IMC is satisfied that there has been a contravention of a civil penalty provision, the court may make orders for a person to pay a pecuniary penalty: s 546 of the FWA.
Burden and Standard of Proof
[6] In an application under the FWA, 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.
[7] In the context of an allegation of the breach of a civil penalty provision of the Act it is also relevant to recall the observation of Dixon J said in Briginshaw v Briginshaw [1938] HCA 34; 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).
[8] Where in this decision it is stated that a finding has been made, the finding is made on the balance of probabilities. Where it is stated that a finding has not been made or cannot be made, then no finding can be made on the balance of probabilities.
Practice and Procedure of the Industrial Magistrates Court of Western Australia
[9] Subject to the provisions of the FWA, the procedure of the IMC relevant to claims under the FWA is contained in the IMC Regulations. Notably, reg 35(4) of the IMC Regulations provides the court is not bound by the rules of evidence and may inform itself on any matter and in any manner as it thinks fit.
[10] In Sammut v AVM Holdings Pty Ltd [No 2] [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:
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 [40]. (citations omitted)


Schedule II: Pecuniary Penalty Orders Under the Fair Work Act 2009 (Cth)
Pecuniary Penalty Orders
[1] The FWA provides that the IMC 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) of FWA. The maximum penalty for each contravention by a natural person, expressed as a number of penalty units, is set out in a table found in s 539(2) of the FWA: s 546(2) of the FWA. If the contravener is a body corporate, the maximum penalty is five times the maximum number of penalty units proscribed for a natural person: s 546(2) of the FWA.
[2] The rate of a penalty unit is set by s 4AA of the Crimes Act 1914 (Cth): s 12 of the FWA. The relevant rate is that applicable at the date of the contravening conduct:
October 2023 to February 2024
$313
[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 [388] in the following terms:
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. (citations omitted)
[4] In Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450 (Pattinson) [42], the plurality confirmed that civil penalties ‘are not retributive, but rather are protective of the public interest in that they aim to secure compliance by deterring repeat contraventions’. However, ‘insistence upon the deterrent quality of a penalty should be balanced by insistence that it “not be so high as to be oppressive”’: [40], citing NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; 71 FCR 285.
[5] In Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 [14], Tracey J adopted the following ‘nonexhaustive 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.
[6] 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 (Australian Ophthalmic Supplies) [91]).
[7] Although these factors provide useful guidance, the task of assessing the appropriate penalty is not an exact science: Commonwealth v Director, Fair Work Building Inspectorate [2015] HCA 46; 258 CLR 482 [47]. The Court must ultimately fix a penalty that pays appropriate regard to the contraventions that have occurred: Pattinson [19]. ‘[A] court empowered by s 546 to impose an “appropriate” penalty must act fairly and reasonably for the purpose of protecting the public interest by deterring future contraventions of the Act:’ Pattinson [48].
[8] 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 [47] - [52].
[9] Section 546(3) of the FWA 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.
[10] In Milardovic v Vemco Services Pty Ltd (No 2) [2016] FCA 244; 242 FCR 492 [40] - [44], Mortimer J, in light of Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4; 239 FCR 336, summarised the law: (omitting citations)
[T]he power conveyed by s 546(3) is ordinarily to be exercised by awarding any penalty to the successful applicant. … [T]he 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 [Gibbs v The Mayor, Councillors and Citizens of City of Altona [1992] FCA 553; 37 FCR 216] … exception that the penalty may be ordered to be paid to the organisation on whose behalf the initiating party has acted. (original emphasis)