2024 WAIRC 00853
INDUSTRIAL MAGISTRATES COURT OF WESTERN AUSTRALIA


CITATION
:
2024 WAIRC 00853



CORAM
:
INDUSTRIAL MAGISTRATE D. SCADDAN



HEARD
:
THURSDAY, 5 SEPTEMBER 2024



DELIVERED
:
FRIDAY, 27 SEPTEMBER 2024



FILE NO.
:
M 10 OF 2024, M 11 OF 2024



BETWEEN
:
THE AUSTRALIAN WORKERS' UNION


CLAIMANT





AND





OSM AUSTRALIA PTY LTD


RESPONDENT

CatchWords : INDUSTRIAL LAW – FAIR WORK – Assessment of pecuniary penalties for contraventions of Fair Work Act 2009 (Cth) – Failure to pay over cycle rates under the terms of enterprise agreements
Legislation : Fair Work Act 2009 (Cth)
Industrial Relations Act 1979 (WA)
Industrial Magistrate's Court (General Jurisdiction) Regulations 2005 (WA)
Crimes Act 1914 (Cth)
Instrument : OSM Offshore Decommissioning Enterprise Agreement 2022
OSM Decommissioning Catering Enterprise Agreement 2023
Case(s) referred
to in reasons: : Construction, Forestry, Maritime, Mining & Energy Union v OSM Australia Pty Ltd [2022] WAIRC 00713; 102 WAIG 1298
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450
Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd (No 2) [2018] FCA 480
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482
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
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
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
Milardovic v Vemco Services Pty Ltd (Administrators Appointed) (No 2) [2016] FCA 244
Result : Pecuniary penalty to be paid
Representation:
Claimant : Mr K. Sneddon (of counsel)
Respondent/s : Mr J. Parkinson (of counsel)



REASONS FOR DECISION
Introduction
1 On 24 January 2024, the claimant filed M 10 of 2024 alleging that the respondent contravened the OSM Offshore Decommissioning Enterprise Agreement 2022 (Decommissioning Agreement) as it related to three employees.
2 On the same day, the claimant filed M 11 of 2024 alleging the respondent contravened the OSM Decommissioning Catering Enterprise Agreement 2023 (Catering Agreement) as it related to one employee.
3 The contravention concerned a failure to pay the same entitlement provided in identical terms in each enterprise agreement, namely, the failure to pay over cycle rates for shifts worked offshore in excess of 21 consecutive shifts.
4 By consent, the respondent lodged its response to M 10 and M 11 of 2024 on 12 April 2024 admitting to the contraventions of the Decommissioning Agreement and the Catering Agreement but denied that a penalty should be imposed.
5 On 5 June 2024, the Industrial Magistrates Court of Western Australia (IMC or Court) made orders consolidating M 10 and M 11 of 2024.
6 Programming orders were made in relation to hearing and determining the claimant’s application for the imposition of pecuniary penalties in respect of the admitted contraventions in M 10 and M 11 of 2024.
7 These are the reasons for decision in relation to penalty.
8 In relation to the four employees, the respondent admits it breached:
(a) section 50 of the Fair Work Act 2009 (Cth) (FWA) by failing to pay over cycle rates set out in Schedule 1(3) of the Decommissioning Agreement and Schedule 1(3) of the Catering Agreement; and
(b) section 323 of the FWA by failing to pay the four employees in full for the failed payments.
9 The parties provided the Court outlines of written submissions and additional evidence on the payment of a pecuniary penalty.
10 Schedule I of these reasons outline the jurisdiction, standard of proof and practice and procedure of the IMC.
11 Schedule II of these reasons outline the provisions of the FWA and principles relevant in determining an appropriate pecuniary penalty (if any) for the respondent’s contraventions.
The Agreed Facts
12 Agreed Facts were lodged on 29 July 2024 and the salient facts are as follows.
13 The Decommissioning Agreement covered and applied to the claimant, the respondent and, relevantly, three employees of the respondent: Tama Pou; Dave Murphy; and Mark Cunningham.
14 The Catering Agreement covered and applied to the claimant, the respondent and, relevantly, to one employee, Te Taika Murray.
15 The claimant is an ‘employee organisation’ with standing to commence M 10 and M 11 of 2024.
16 The respondent is a ‘national system employer’ and ‘constitutional corporation’.
17 Under the terms of both agreements, employees are entitled to be paid over cycle rates set out in Schedule 1(3) of the Decommissioning Agreement and Catering Agreement for shifts worked offshore in excess of 21 consecutive shifts. Clause 12.18 of the Decommissioning Agreement and clause 13.18 of the Catering Agreement.

18 The four employees worked 12-hour offshore shifts from 6 November 2023 to 6 December 2023 with shifts performed from 27 November 2023 to 6 December 2023 properly characterised as over cycle shifts.
19 Accordingly, the four employees were entitled to be paid over cycle rates pursuant to both the Decommissioning Agreement and the Catering Agreement.
20 Following the commencement of proceedings in M 10 and M 11 of 2024, on 20 March 2024, the respondent paid the four employees over cycle rates for the over cycle shifts (i.e. the outstanding amounts), as follows:
Employee
Over cycle rate payable
Tama Pou
$1,808.40
Dave Murphy
$1,915.20
Mark Cunningham
$1,915.20
Te Taika Murray
$1,223.64
21 From 20 March 2024, the respondent has continued to pay over cycle rates to the four employees whenever they have worked offshore in excess of 21 consecutive shifts.
Other Evidence
22 The claimant relies upon a witness statement signed by Jason John Lipscombe (Mr Lipscombe), Organiser employed by the claimant working in the offshore industry, on 30 June 2024 (the Lipscombe Statement).
23 In the Lipscombe Statement, Mr Lipscombe summarises, and annexes, the correspondence between him and the respondent’s employee, Warren Harrower (Mr Harrower), concerning the payments owed to the four employees. Lipscombe Statement at [6].

24 Consistent with the respondent’s evidence (see below), the correspondence commences with Mr Lipscombe sending an email dated 8 December 2023 to Mr Harrower explaining that the nonpayment of over cycle rates ‘was an incorrect interpretation of the relevant industrial instruments’. Lipscombe Statement at [7].

25 Mr Lipscombe says he and Mr Harrower exchanged further emails on 11 December 2023 and a final email on 15 December 2023. Lipscombe Statement at [8].

26 Mr Lipscombe attaches the email chain to the Lipscombe Statement. Lipscombe Statement at JL1.

27 The respondent relies upon a witness statement by Mr Harrower, Employee Relations Manager for OSM Thorne, the respondent’s parent company, dated 9 August 2024 (the Harrower Statement).
28 Mr Harrower commenced employment in July 2023. He was not involved in the bargaining for the Decommissioning Agreement. However, he was involved in the negotiations and approval of the Catering Agreement. Harrower Statement at [2] and [5] to [6].

29 Mr Harrower states that up to March 2024, his understanding was that ‘ad hoc’ clauses, cl 12.5 of the Decommissioning Agreement and cl 13.5 of the Catering Agreement, were one of the circumstances that ‘overrode’ the over cycle clauses in cl 12.18 and cl 13.18 because of the inclusion of the words ‘[e]xcept as noted in this Agreement...’. Harrower Statement at [7] to [9].
On that basis, his understanding was that over cycle clauses did not apply where employees worked short durations or on ad hoc rostering arrangements. Harrower Statement at [9].

30 Mr Harrower also attaches the email chain between him and Mr Lipscombe. Harrower Statement at WH-1.
Mr Harrower states that he tried to telephone Mr Lipscombe after receiving the first email dated 8 December 2023, but Mr Lipscombe did not respond to this call. Harrower Statement at [11].

31 On 11 December 2023, Mr Harrower emailed Mr Lipscombe requesting to meet to discuss and work through the issue, but Mr Lipscombe declined to do so, referring to his earlier email. Harrower Statement at [12] to [13].

32 On 15 December 2023, Mr Harrower emailed Mr Lipscombe, setting out the respondent’s position and interpretation of the clauses, and invited Mr Lipscombe to contact him if the issue was not resolved from the claimant’s perspective. Mr Lipscombe did not respond to Mr Harrower or anyone else from the respondent. Mr Harrower then became aware the claimant had commenced these proceedings. Harrower Statement at [14] to [15].

33 Mr Harrower thought the issue was resolved and the claimant accepted his position put on behalf of the respondent. Mr Harrower expressed surprise at the commencement of the proceedings, particularly as an issue with the Catering Agreement was never mentioned by Mr Lipscombe. Harrower Statement at [17] to [18].

34 The commencement of the proceedings caused Mr Harrower and others to seek advice, and following that advice, the respondent accepted that over cycle rates were payable for work in excess of 21 days, regardless of whether the work was ad hoc or within a work cycle. Following this, the respondent took steps to pay over cycle rates to employees who had previously worked over cycle shifts. Harrower Statement at [19] to [21].

35 On 21 March 2024, Matthew Chadwick (Mr Chadwick), TVI Decommissioning Project Manager, emailed all employees covered by the Decommissioning Agreement and the Catering Agreement notifying them about the updated approach to over cycle payments. Harrower Statement at [22] and WH-2.

36 The respondent has also updated its payroll systems and process to ensure that shifts worked in excess of 21 consecutive days are recognised and paid at over cycle rates. He understands that all over cycle shifts have now been paid at the over cycle rates. Harrower Statement at [24].

The Emails
37 I do not intend to restate the content of the parties’ emails where it relates to the parties’ views on how the clauses are to be applied. However, the following is relevant for the purposes of the imposition of a penalty:
a) in his email dated 8 December 2024, Mr Lipscombe refers to the relevant clauses for the Decommissioning Agreement. No reference is made to the clauses relevant to the Catering Agreement. Mr Lipscombe demands confirmation from Mr Harrower that the respondent will back pay the respondent’s affected employees (although he does not name them). He further states ‘[i]n the absence of the requested confirmation… will commence proceedings against [the respondent] which will include prosecution for breaching the over cycle provisions …’;
b) on 11 December 2023, Mr Harrower responds ‘[a]re you free to discuss? It may be helpful to work through it in person to resolve.’ He then gives several days he is free;
c) on 11 December 2023, Mr Lipscombe responds that he is not able to meet to discuss, and reiterates the timeframes in the email dated 8 December 2023
d) on 15 December 2023, Mr Harrower responds to Mr Lipscombe’s earlier email, assuring Mr Lipscombe that the respondent is not avoiding the payment of over cycle rates to employees. He concludes, ‘I trust this explains [the respondent’s] position and resolves the matters. Please don’t hesitate to contact me if either of the queries aren’t resolved in the [claimant’s] view; and
e) Mr Chadwick’s email dated 21 March 2024, informs employees of the correct payment of over cycle rates and advises that affected employees should have been paid in the pay cycle ending 17 March 2024 (received on 21 March 2024).
The Claimants’ Submissions on Penalty
38 Both parties refer to the law in respect of the determination of an appropriate pecuniary penalty for contraventions of the FWA, and I will not recite the parties’ submissions on the law (unless necessary to reconcile a dispute on the law).
39 In summary, the claimant submits:
· the IMC is empowered to order a person to pay a pecuniary penalty the court considers appropriate if the court is satisfied the person has contravened a civil remedy provision: s 546(1) of the FWA;
· contraventions of s 50 and s 323 of the FWA are contraventions of a civil remedy provision: s 539(2) of the FWA;
· from November 2023 to December 2023, the respondent contravened two enterprise agreements and failed to properly pay four employees over a period of ten days;
· the respondent has shown no contrition. While it has rectified the contravention it offered no apology or displayed remorse;
· the respondent has a prior contravention for failing to comply with an enterprise agreement and quotes a passage from another Industrial Magistrate (Construction, Forestry, Maritime, Mining & Energy Union v OSM Australia Pty Ltd [2022] WAIRC 713; 102 WAIG 1298 (2022 Decision) at [20]);
· the respondent is a large, sophisticated, and profitable company, who should be expected to have sufficient structures in place to ensure compliance with the legislation; and
· there is no evidence indicating the lessons that have been learned from previous contraventions or positive steps to ensure future compliance.
40 Therefore, there is the need for specific and general deterrence.
The Respondent’s Submissions on Penalty
41 In summary, the respondent submits:
· the breach is admitted in relation to s 50 and s 323 of the FWA, the contraventions are properly categorised at the lower end of offending, and no penalty should be applied;
· the breach occurred where the respondent did not treat the over cycle shifts as attracting over cycle rates, and it did not do so because it genuinely, but erroneously, believed that the over cycle payments only arose where employees were engaged to perform work on prescribed work cycles set out in the agreements;
· the four employees were not working a prescribed work cycle but working a ‘campaignstyle’ roster which were at irregular time durations. The effect of this was that the respondent believed it was not obliged to pay over cycle payments for the over cycle shifts;
· there is no evidence the respondent’s actions were motivated by mala fide intent or it acted maliciously or in flagrant disregard of its obligations under the enterprise agreements;
· when the claimant and the respondent’s representative were discussing the respondent’s application of the terms of the Decommissioning Agreement, the conversation concludes with the respondent outlining its position and no further response or grappling with the respondent’s position before the filing of the proceedings;
· at no point did the parties discuss the Catering Agreement;
· while the claimant suggested it would seek to press the matter in a dispute, this was prior to the respondent putting its position to which no response was received. Thus, from the respondent’s perspective, the respondent thought the matter was resolved and it left open the possibility of further discussions if the claimant did not agree with the respondent’s position;
· the circumstance did not equate to the respondent electing to ‘take the odds’ by appreciating a risk it might be wrong;
· the respondent admitted to the breaches at the earliest stage of the proceedings, and the respondent has rectified the outstanding payments;
· it has demonstrated cooperation and taken corrective action by making payments to the four employees, taking remedial steps to ensure its systems and processes make payment for the over cycle shifts, admitted the contraventions prior to a pre-trial conference, and avoided the time and expense associated with a liability hearing;
· there is no evidence of the involvement of senior management;
· the contraventions of s 50 and s 323 of the FWA should be considered a single course of conduct for the purposes of s 557 of the FWA;
· while there are two separate proceedings, there is a single contravention of each of the Decommissioning Agreement and the Catering Agreement, arising from the respondent’s single decision-making process;
· the respondent does not have a history of contumeliously failing to pay their employees their lawful entitlements with one prior contravention for which a penalty of $1.00 was ordered;
· the respondent is in the business of providing ship management, crew management and marine services supporting offshore industries, and ultimately the size of the respondent’s enterprise is a neutral factor in the Court’s assessment in these proceedings;
· it can otherwise be concluded that there is a culture of compliance, and the evidence does not demonstrate any systemic, wilful, or deliberate contravention of the FWA; and
· accordingly, this is not a matter in which an imposition of penalties is necessary to encourage specific deterrence. In relation to general deterrence, the circumstances are such public policy in seeking compliance with industrial laws is not necessarily achieved in issuing penalties on ‘a per se basis’.
42 The respondent says that applying the principles in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450 (Pattinson), it remains open that in a particular case it may be appropriate not to order a penalty notwithstanding the existence of a contravention. This is that case.
Determination On Penalty
43 The maximum penalty with respect to a contravention of s 50 and s 323 of the FWA by the respondent is 300 penalty units, given the respondent is a body corporate. The maximum penalty in respect of each contravention for M 10 and M 11 of 2024 is $93,900.
Section 557 of the FWA
44 The effect of s 557(1) of the FWA is that two or more contraventions of the FWA referred to in subsection (2) 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. Notably, s 50 and s 323 of the FWA are referred to in s 557(2) of the FWA.
In addition to the statutory course of conduct provision, it is open to the Court to consider the application of common law course of conduct principles where the contraventions contain common elements or can be said to overlap with each other… It may be appropriate for the Court to group contraventions where, if they were treated separately, this would potentially penalise a respondent twice…
45 I am satisfied that in relation to M 10 and M 11 of 2024, as it relates to the four employees, the contraventions of s 50 and s 323 of the FWA is a single contravention where the contravention was by the respondent and arose from a single contravention by the respondent to pay each employee over cycle rates for over cycle shifts.
46 Having regard to the parties’ submissions, the Agreed Facts, and the parties’ evidence, the following considerations are significant in assessing the appropriate penalty in this case.
Whether the organisation has engaged in similar conduct
47 I am satisfied the respondent has not engaged in similar conduct in respect of either enterprise agreement. The claimant refers to another claim involving the respondent. In the 2022 Decision, the respondent admitted to contravening s 50 of the FWA where an inexperienced payroll employee inadvertently recorded a period of employment as a ‘Dead Day’ rather than as a ‘Duty Day’, the effect of which was that two employees were not accorded their leave entitlements. As soon as the respondent was aware of the error, it made out-of-cycle payments in full satisfaction of their entitlements. As I understand the circumstances, the contravention was discovered as part of the Court proceedings. The same claimant conceded the contravention was at the lowest end of the scale and any penalty should be nominal, and a penalty of $1 was imposed.
48 In my view, the 2022 Decision has limited, if any, relevance in demonstrating the respondent’s failure to adhere to employment law as it relates to M 10 and M11 of 2024.
Whether the conduct was deliberate
49 I am satisfied the respondent did not deliberately deprive the four employees of the over cycle payments.
50 The claimant did not, in fact, contest the respondent’s reason for non-payment and the respondent’s construction of the Decommissioning Agreement and the Catering Agreement. I accept the claimant informed the respondent of the claimant’s view and the reasons why the claimant held that view. However, the respondent promptly responded setting out its own view, inviting the claimant to participate in further discussions if the claimant maintained the respondent was wrong. I also note the claimant did not invoke the dispute resolution clauses of either enterprise agreement to which it is a party, and rather than engaging in any further discussion, commenced the proceedings. This is unfortunate because the matters may have been resolved without the need to commence these proceedings.
51 In the circumstances, while the respondent’s position was wrong, this is not a case where the respondent ‘can be characterised as having “taken the odds”’: Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd (No 2) [2018] FCA 480 (Hail Creek) at [17]. That is, I am satisfied that this is not a case where the respondent must have been aware of, and elected to, take the risk that its conduct if not would, then might, contravene s 50 of the FWA. Having left the communications in the way the claimant did, it is understandable why the respondent thought the issue was concluded.
52 Further, unlike in Hail Creek, there is no evidence the respondent should have been on notice or have had a heightened awareness of the risk it took from an erroneous construction because it had previously been found to have contravened the Decommissioning Agreement or the Catering Agreements and had pecuniary penalties imposed: Hail Creek at [18].
53 There is also no evidence that in not making the payments, the respondent obtained, or sought to obtain, any financial benefit.
Corrective action
54 The four employees have been paid the amounts owed to them.
55 In terms of other corrective actions, the respondent has taken steps to ensure its systems and processes make the payments for over cycle shifts and has made payments for all over cycle shifts. The respondent also notified all employees about the updated approach to over cycle payments via email sent by Mr Chadwick on 21 March 2024.
Contrition and avoidance of repetition
56 The respondent has cooperated in the court process by admitting the claims at an early point in the proceedings and preparing agreed facts. Considering the corrective action already taken, I find that it is unlikely the contravention will occur again in the future. In those circumstances, I am circumspect about the utility of an expression of contrition.
57 A percentage discount of 40% is appropriate for the respondent’s cooperation in the proceedings and the corrective action already undertaken.
The size of the entity and involvement of senior management
58 The respondent can reasonably be expected to have in place systems that reduce the risk of underpayment to employees. True enough, mistakes can happen, and there may be differences in opinion in interpreting industrial instruments. However, it is also reasonable to infer that the respondent is well resourced and can reasonably reduce its risks.
Loss or damage suffered as a result
59 The four employees’ consequential ‘loss’ (being the actual entitlements) is reasonably modest and has been fully addressed, albeit after the proceedings commenced. There is no evidence that the four employees have otherwise suffered loss or damage because of the contraventions.
60 The contravening conduct in all circumstances is properly categorised in the low range.
61 Considering the above, specific deterrence is less important, but certainly not unimportant, than the need to deter employers more generally in contraventions of the FWA and ensure the public interest in the protection of employee entitlements.
62 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 Industry Inspectorate [2015] HCA 46; 258 CLR 482 [55] (referring to Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076).
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; 274 CLR 450 (Pattinson) [46].

63 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 ‘oneoff’ 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].
I am not satisfied that this is a case for no penalty to be applied, although I am satisfied it is a case where a very modest penalty only is appropriate. Pattinson [46] and [47].

64 For these reasons, the penalty to be applied in each of M 10 of 2024 and M 11 of 2024 is:

Maximum
Penalty applied
Breach of Agreement contravention
$93,900

Payment in full contravention
$93,900

One single contravention (s 557(1) and (2))
M 10 of 2024 with 40% discount

$1,200
One single contravention (s 557(1) and (2))
M 11 of 2024 with 40% discount

$500
65 In my view, no reduction for totality is required, where $1,200 and $500 are appropriate penalties ‘that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case.’ Pattinson [46].
This would also be consistent with the principle that the penalty must not be excessive and be just and appropriate in all the circumstances of the case.
66 The claimant seeks an order pursuant to s 546(3)(c) of the FWA that the penalties be paid to the claimant. An order will be made that the respondent pay the penalties of $1,200 and $500 to the claimant
Orders
67 In respect of M 10 of 2024, pursuant to s 546(1) and (3) of the FWA, the respondent is to pay to the claimant a pecuniary penalty of $1,200.
68 In respect of M 11 of 2024, pursuant to s 546(1) and (3) of the FWA, the respondent is to pay to the claimant a pecuniary penalty of $500.

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:
· Section 50 – contravention of an enterprise agreement; and
· Section 323 – failing to make payments in full
[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 [Australian] Constitution applies’: s 14, 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 Industrial Magistrate's Court (General Jurisdiction) Regulations 2005 (WA) (IMC Regulations). Notably, regulation 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, 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:
November and December 2023
$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 (Grouped Property Services) [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 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] ‘Multiple contraventions’ may occur because the contravening conduct done by 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; and
(c) was done with respect to a single employee or was done with respect to multiple employees.
[9] The fixing of a pecuniary penalty for multiple contraventions is subject to s 557 of the FWA. It provides that two or more contraventions of specified civil remedy provisions (including contraventions of an enterprise agreement and a contravention on s 323 of the FWA 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 [22] (White J). The section does not to apply to cases where the contravening conduct results in the contravention of multiple civil penalty provisions (example (a) above): Grouped Property Services [411] (Katzmann J).
[10] 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].
[11] 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.
[12] In Milardovic v Vemco Services Pty Ltd (Administrators Appointed) (No 2) [2016] FCA 244 [40] - [44], Mortimer J, in light of Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4; 239 FCR 336, summarised the law:
[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) (citations omitted)