How does the Fedreal Court deal with fines imposed pursuant to the Fair Work Act (“FW Act”) when there are multiple breaches?
As a result of Federal Circuit Court proceedings in late 2013, Rocky Holdings Pty Limited, a medical practice based in Liverpool NSW, was fined $88,870 for, over three years, underpaying an 18 to 21 year old, vision-impaired, worker by more than $20,000 and discriminating against her in respect of the disability affecting her vision.
The court also fined two Directors, brothers Dr Ahmed Mohamed and Dr Ismail Mohamed, $17,410 each.
The victim was a patient of Dr Ismail Mohamed when he offered her work at the practice in December 2009. She was required to do more than a month of unpaid training before being paid a flat rate of $7 to $8 an hour between 2010 and 2012. However, she was entitled to more than $10 an hour for normal hours and more than $17 an hour for some weekend, public holiday and overtime work.
Not having learned their lesson, the employer and Directors appealed the quantum of their fines to the Federal Court.
In the original litigation the statement of agreed facts before the primary Judge identified that the Employer and the Directors contravened three different terms of the National Employment Standard (NES) on multiple occasions and contravened six different terms of a Modern Award, also on multiple occasions.
As each contravention of a provision of the NES and each contravention of a term of the Modern Award constituted a contravention of, respectively, ss.44 and 45 of the FW Act, the statement of agreed facts identified hundreds of contraventions of a civil remedy provision.
Section 557 of the FW Act states that when there are multiple contraventions of the civil penalty provisions they are to be treated as a single contravention.
Pursuant to that section the Trail Judge issued fines on the basis of the contravention of each relevant part of ss.44 and 45 of the FW Act, effectively grouping the number of breaches to avoid multiplicity.
For example, with respect to multiple failures to pay the minimum rates of pay (being breaches of s.45 of the FW Act), the Trial Judge fined the Company $21,120 out of a maximum of $33,000. The Company was then fined for each other form of (multiple) breach.
The Trial Judge then fined the Directors on a similar basis in respect of their multiple breaches.
The Appellants argued that the original Trial Judge erred in two respects. They contended that the primary Judge misconstrued s.557(1) of the FW Act in that the section required only one penalty to be imposed on each of them in respect of the six contraventions of s 45. Also that only one penalty should be imposed on each of them in respect of the three contraventions of s.44(1) of the FW Act.
If successful, the Appellants would have been able to substantially reduce their fines.
They failed, with the Appeal Bench noting a number of reasons. In particular, it had regard to the Explanatory Memorandum for the Fair Work Bill 2008 (Cth). The Explanatory Memorandum at  and , gives two examples of the operation of s.557(1) of the FW Act, as follows:
For example, if a company contravenes a single term of a modern award in respect of ten employees, these ten contraventions are taken to be a single contravention. This means that the maximum penalty that the Court can impose for the contravention is 300 penalty units.
Similarly, if a company contravenes five separate terms of a modern award in respect of ten employees, these 50 contraventions are taken to be five contraventions. This means that the maximum penalty that the Court can impose is five times a maximum penalty of 300 penalty units.
The section does not allow breaches of separate terms of the NES or separate terms of Modern Awards to be grouped and only one fine to be applied.
The original decision of the Trail Judge was upheld. In failing to succeed on the Appeal, the Appellants will have to pay the legal fees of the FWO.
(image courtesy of http://401kcalculator.org)